Seadrill Limited — Capital/Financing Update 2023

Jul 11, 2023

Seadrill Limited (SDRL) Provides Further Information Regarding New Revolving Credit Facility and Certain Other Information Regarding Offering of Senior Secured Second Lien Notes

Seadrill Limited (SDRL) Provides Further Information Regarding New Revolving Credit Facility and Certain Other Information Regarding Offering of Senior Secured Second Lien Notes

Hamilton, Bermuda, July 11, 2023 - Seadrill Limited ("Seadrill" or the

"Company") (NYSE & OSE: SDRL) provides further information regarding the

Revolving Credit Facility (as defined herein) and certain other information

being delivered to potential investors in connection with the offering of the

Notes (as defined herein).

Revolving Credit Agreement

On July 11, 2023, Seadrill and its wholly owned subsidiary Seadrill Finance

Limited ("Seadrill Finance"), an exempted company limited by shares incorporated

under the laws of Bermuda, entered into the Senior Secured Revolving Credit

Agreement (the "New Credit Agreement") with certain lenders and issuing banks

party thereto, J.P. Morgan SE as the administrative agent for the lenders, and

GLAS Trust Company LLC as the common security agent. Subject to the conditions

set forth below, the New Credit Agreement will establish a revolving credit

facility for Seadrill Finance, as the borrower, with commitments for revolving

borrowings of $225.0 million, a letter of credit sublimit of $50.0 million, and

an accordion feature of up to $100.0 million (the "Revolving Credit Facility").

All obligations of Seadrill Finance under the New Credit Agreement, certain cash

management obligations, certain letter of credit obligations, and certain swap

obligations are unconditionally guaranteed, on a joint and several basis, by

Seadrill and certain of its direct and indirect subsidiaries (together with

Seadrill Finance and Seadrill, the "Credit Parties"). All such obligations,

including the guarantees of the Revolving Credit Facility, are secured by senior

priority liens on substantially all assets of, and the equity interests in, each

Credit Party (to the extent owned by another Credit Party), including certain

rigs owned by the Credit Parties as of the effective date of the New Credit

Agreement (the "Effective Date"), along with certain other rigs in the future

such that rigs constituting part of the collateral shall generate at least 80%

of the revenue of all rigs (other than certain non-core rigs) owned by Seadrill

and its restricted subsidiaries and the ratio of the aggregate rig value of the

collateral rigs to the commitments under the Revolving Credit Facility is at

least 3.50 to 1.00, in each case, subject to certain exceptions and limitations

described in the New Credit Agreement.

The loans outstanding under the Revolving Credit Facility bear interest at a

rate per annum equal to the applicable margin plus, at Seadrill Finance's

option, either: (i) the Term SOFR (as defined in the New Credit Agreement) plus

0.10%; or (ii) the Daily Simple SOFR (as defined in the New Credit Agreement)

plus 0.10%. For both the Term SOFR loans and Daily Simple SOFR loans, the

applicable margin is initially 2.75% per annum and may vary based on Seadrill's

Credit Ratings (as defined in the Credit Agreement), from 2.50% to 3.50% per

annum.

Seadrill Finance is required to pay a quarterly commitment fee to each lender

under the Revolving Credit Facility, which accrues at a rate per annum equal to

(i) 0.50% on the average daily unused portion of such lender's commitments under

the Revolving Credit Facility during the period from and including the Effective

Date to and including the third anniversary of the Effective Date; (ii) a rate

per annum equal to 0.75% during the period from the third anniversary of the

Effective Date to and including the fourth anniversary of the Effective Date;

and (iii) thereafter, a rate per annum equal to 1.00%. Seadrill Finance is also

required to pay customary letter of credit and fronting fees.

Borrowings under the New Credit Agreement may be used for working capital and

other general corporate purposes. The Effective Date and availability of

borrowings under the Revolving Credit Facility are subject to the satisfaction

of certain conditions, including (i) the issuance of the senior secured second

lien notes (the "Notes") that will be offered and sold pursuant to Rule 144A and

Regulation S promulgated under the Securities Act of 1933, as amended (the

"Securities Act"); (ii) the redemption or discharge of all of the obligations

under the existing Super Senior Term and Revolving Facilities Agreement dated

February 22, 2022 and the existing Senior Secured Credit Facility Agreement

dated February 22, 2022; and (iii) that, after giving effect to any such

borrowings and the application of the proceeds thereof, the aggregate amount of

Available Cash (as defined in the New Credit Agreement) would not exceed $250

million.

Mandatory prepayments and, under certain circumstances, commitment reductions

are required under the Revolving Credit Facility in connection with certain

asset sales, asset swaps, and events of loss (subject to reinvestment rights if

no event of default exists). Available Cash in excess of $250 million at the end

of any month must also be applied to prepay loans (without a commitment

reduction). The loans under the Revolving Credit Facility may be voluntarily

prepaid, and the commitments thereunder voluntarily terminated or reduced, by

Seadrill Finance at any time without premium or penalty, other than customary

breakage costs.

The New Credit Agreement obligates Seadrill and its restricted subsidiaries to

comply with the following financial covenants:

· as of the last day of each fiscal quarter, the Interest Coverage Ratio (as

defined in the New Credit Agreement) is not permitted to be less than 2.50 to

1.00; and

· as of the last day of each fiscal quarter, the Consolidated Total Net

Leverage Ratio is not permitted to be greater than 3.00 to 1.00.

The New Credit Agreement contains negative covenants that limit, among other

things, the Company's ability and the ability of its restricted subsidiaries to:

(i) incur, assume, or guarantee additional indebtedness; (ii) pay dividends or

distributions on capital stock or redeem or repurchase capital stock (other than

with the proceeds of certain sales of non-core assets); (iii) make investments;

(iv) repay, redeem or amend certain indebtedness; (v) sell stock of its

subsidiaries; (vi) transfer or sell assets; (vii) create, incur, or assume

liens; (viii) enter into transactions with controlling affiliates; (ix) merge or

consolidate with or into any other person or undergo certain other fundamental

changes; and (x) enter into certain burdensome agreements. These negative

covenants are subject to a number of important limitations and exceptions.

Additionally, the New Credit Agreement contains other covenants, representations

and warranties, and events of default that Seadrill considers customary for this

type of financing. Events of default, include, among other things: nonpayment of

principal or interest; breach of covenants; breach of representations and

warranties; failure to pay final judgments in excess of a specified threshold;

failure of a guarantee to remain in effect; failure of a security document to

create an effective security interest in collateral; bankruptcy and insolvency

events; cross-default to other material indebtedness; and a change of control.

The occurrence of any event of default under the New Credit Agreement would

permit all obligations under the Revolving Credit Facility to be declared due

and payable immediately and all commitments thereunder to be terminated.  The

occurrence of a payment default under the New Credit Agreement would, in

general, increase the applicable interest rate under the Revolving Credit

Facility by 2.0% per annum.

The foregoing description of the New Credit Agreement is qualified in its

entirety by the full text of the New Credit Agreement, which is attached hereto.

Certain other information

In connection with the offering of the Notes, the Company is providing the

information below and attached hereto. The information below and attached hereto

is excerpted from information being delivered to potential investors in

connection with the offering of the Notes.

Approach to capital allocation

Seadrill has developed capital allocation principles and is installing a capital

allocation framework based on those principles which will be designed to

prioritize a conservative capital structure and liquidity position, focused

capital investment in its fleet, and returns to its shareholders. Within this

framework, we intend to maintain a net leverage target of not more than 1.0x

under current market conditions, with a maximum through-cycle net leverage

target of not more than 2.0x. We also intend to maintain a strong liquidity

position in order to provide resilience even in a downturn scenario by

establishing a target minimum cash-on-hand of $250 million. Further, we intend

to evaluate the potential for accretive additions in our core asset categories.

So long as we are able to meet our net leverage and liquidity targets on a

forward-looking basis, as well as comply with our credit facility covenant

requirements, we would seek to provide a return to our shareholders of at least

50% of Free Cash Flow (defined as cash flows from operating activities minus

capital expenditures) in the form of share repurchases and/or dividends. We will

consider additional returns to shareholders from the proceeds of any asset sales

in the absence of identified, accretive opportunities. Dividends and share

repurchases will be authorized and determined by our Board of Directors in its

sole discretion and depend upon a number of factors, including those described

above, our future prospects, market trend evaluation and such other factors as

our Board of Directors may deem relevant. We can provide no assurance that we

will pay dividends or make share repurchases in accordance with our capital

allocation framework and our shareholder return goals or at all, nor can we

provide assurance regarding our Free Cash Flow measurement periods or potential

dividend or repurchase dates.

The information contained in this press release, including attachments hereto,

is neither an offer to sell nor a solicitation of an offer to buy the securities

described herein, nor shall there be any sale of these securities in any

jurisdiction in which such an offer, solicitation or sale would be unlawful

absent registration or an applicable exemption from the registration

requirements of the securities laws of any such jurisdiction. The securities to

be offered have not been registered under the Securities Act, any state

securities laws or any foreign jurisdiction.  The Company plans to offer and

sell the securities only to persons reasonably believed to be qualified

institutional buyers pursuant to Rule 144A under the Securities Act and to

persons outside the United States pursuant to Regulation S under the Securities

Act.

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 Simon Woods at Hawthorn Advisors on the date and time

hereof.

Contact Information

For additional information, visit www.seadrill.com.

Benjamin Wiseman

Investor Relations

T: +44 (0)7867139312

E: benjamin.wiseman@seadrill.com

About Seadrill

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

This communication includes forward-looking statements within the meaning of

Section 27A of the Securities Act and Section 21E of the Exchange Act. All

statements other than statements of historical facts included in this

communication, including those regarding the size of the offering of notes, the

use of proceeds therefrom, the closing and availability of borrowings under the

New Credit Agreement, our target leverage and liquidity, shareholder returns and

our capital allocation framework, and statements about 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 on 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 this communication. Important

factors that could cause actual results to differ materially from those in the

forward-looking statements include, but are not limited to, the factors

described from time to time in the reports filed or furnished by us with the

U.S. Securities and Exchange Commission ("SEC"). 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 filings.

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 us to predict all of these factors.

Further, the Company cannot assess the impact of each such factors 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.

seadrill@hawthornadvisors.com