Seadrill Announces Contracts for West Auriga and West Polaris in Brazil

Rhea-AI Summary

Seadrill Limited (SDRL) has been awarded 1,064-day fixed-term contracts for the West Auriga and the West Polaris by Petrobras, with a total contract value of approximately $1.1 billion. The contracts are expected to commence in the fourth quarter of 2024 and represent a significant expansion of Seadrill's rig count in Brazil, strengthening their long-term relationship with Petrobras.

Insights

Financial Analyst

The awarding of 1,064-day contracts to Seadrill Limited by Petrobras for the West Auriga and West Polaris drilling units represents a significant financial commitment, with a total contract value of approximately $1.1 billion. This development is noteworthy for investors as it directly influences Seadrill's revenue stream and backlog, providing a clearer visibility of future earnings. The announcement is likely to instigate a positive reaction in the stock market, reflecting increased investor confidence in Seadrill's operational stability and growth prospects.

From a financial perspective, long-term contracts such as these enhance the predictability of cash flows and can improve the company's negotiating position with creditors and suppliers. However, the specific terms of the contracts, including day rates and operational expenses, are crucial in determining the profitability of the deals. It is also important to consider the broader implications for the offshore drilling industry, as contract awards of this magnitude could signal a positive outlook for oil exploration and production activities.

Industry Analyst

The engagement of Seadrill's high-specification drillships by a major oil company such as Petrobras underscores the ongoing demand for advanced offshore drilling technology, particularly in the Brazilian oil fields. The transition of the West Auriga and West Polaris from third-party managers to Seadrill's direct management could lead to operational efficiencies and cost savings, potentially improving Seadrill's competitive edge in the market.

However, the offshore drilling sector is subject to geopolitical, environmental and regulatory risks that can affect project timelines and costs. Analysts must monitor global oil prices and demand, as these are key drivers of exploration activities. Furthermore, the sector's cyclicality requires a careful assessment of Seadrill's long-term sustainability and its ability to navigate market downturns.

Energy Sector Legal Expert

The establishment of long-term contracts with Petrobras carries legal and regulatory implications for Seadrill. Ensuring compliance with Brazilian laws and international maritime regulations will be critical for the successful execution of these contracts. It is also essential to consider the legal ramifications of transitioning the management of the drilling units from third parties to Seadrill, as this process may involve complex contractual agreements and potential liabilities.

Investors should be aware of the legal stability and robustness of such contracts, which can be influenced by changes in regulatory landscapes and political climates. A detailed understanding of the contractual protections against operational risks, such as indemnification clauses and insurance requirements, is vital for assessing the potential impact on Seadrill's financial health.

HAMILTON, Bermuda--(BUSINESS WIRE)-- December 22, 2023-- Seadrill Limited ("Seadrill" or the "Company") (NYSE & OSE: SDRL) today announced that Petrobras has awarded 1,064-day fixed-term contracts to each of the West Auriga and the West Polaris following a competitive bidding process. The contracts are expected to commence in the fourth quarter of 2024 and represent total contract value of approximately $1.1 billion, inclusive of additional services and mobilization fees. The West Auriga and the West Polaris will transition to Seadrill from the existing third-party managers before undertaking the campaigns with Petrobras.

Commenting on the awards, Simon Johnson, Seadrill’s President & Chief Executive Officer, stated, “We have secured long-term contracts for the West Auriga and the West Polaris alongside our four high-specification drillships already working in Brazil. Petrobras are an important and longstanding customer for Seadrill. We are excited to expand our contractual relationship with them and increase our rig count in this key geography.”

In connection with these contract awards, today the Company published an updated fleet status report that can be found on its website, www.seadrill.com/investors.

For additional information, visit www.seadrill.com.

About Seadrill Limited

Seadrill is a leading offshore drilling contractor utilizing advanced technology to unlock oil and gas resources for clients across harsh and benign locations around the globe. Seadrill's high-quality, technologically-advanced fleet spans all asset classes allowing its experienced crews to conduct operations across geographies, from shallow to ultra-deepwater environments.

Forward-looking Statements

The new release includes forward-looking statements. All statements other than statements of historical facts included in this communication, including those regarding the Company’s plans, strategies, business prospects, changes and trends in its business and the markets in which it operates, are forward-looking statements. These forward-looking statements can often, but not necessarily, be identified by the use of forward-looking terminology, including the terms “assumes”, “projects”, “forecasts”, “estimates”, “expects”, “anticipates”, “believes”, “plans”, “intends”, “may”, “might”, “will”, “would”, “can”, “could”, “should” or, in each case, their negative, or other variations or comparable terminology. These statements are based upon management's current plans, expectations, assumptions and beliefs concerning future events impacting the Company and therefore involve a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, which speak only as of the date of the new release. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, offshore drilling market conditions, including supply and demand, dayrates, fluctuations in the price of oil, international financial market conditions, changes in governmental regulations that affect the Company or the operations of the Company’s fleet, the review of competition authorities and other factors described from time to time in the reports filed or furnished by the Company with the U.S. Securities and Exchange Commission (“SEC”). The Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for the Company to predict all of these factors. Further, the Company cannot assess the impact of each such factor on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement. Consequently, no forward-looking statement can be guaranteed. When considering these forward-looking statements, you should also keep in mind the risks described from time to time in the Company’s filings with the SEC, including its Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on April 19, 2023 (File No. 001-39327), and subsequent reports on Form 6-K.

This announcement is considered to contain inside information as defined in article 7 of the EU Market Abuse Regulation, is subject to disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act, and was made public by Benjamin Wiseman at the Company on the date and time stated above.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231222257178/en/

Benjamin Wiseman

Corporate Finance Manager & Investor Relations

+44 786 713 9312

benjamin.wiseman@seadrill.com

Source: Seadrill Limited

FAQ

What contracts has Seadrill Limited (SDRL) been awarded by Petrobras?

Seadrill Limited has been awarded 1,064-day fixed-term contracts for the West Auriga and the West Polaris by Petrobras.

What is the total contract value of the awarded contracts for Seadrill Limited (SDRL)?

The total contract value of the awarded contracts for Seadrill Limited is approximately $1.1 billion.

When are the contracts expected to commence for Seadrill Limited (SDRL)?

The contracts are expected to commence in the fourth quarter of 2024 for Seadrill Limited.

What does the contract award signify for Seadrill Limited (SDRL)?

The contract award signifies a significant expansion of Seadrill's rig count in Brazil, strengthening their long-term relationship with Petrobras.