Seadrill Limited — Earnings Release 2014

Aug 27, 2014

SDRL - Seadrill Limited Announces Second Quarter 2014 Results

SDRL - Seadrill Limited Announces Second Quarter 2014 Results

Highlights

·       Seadrill Limited reports second quarter 2014 EBITDA* of US$641 million

·       The Seadrill Group* on a consolidated basis reports record EBITDA of

US$865 million

·       Seadrill Limited reports second quarter 2014 net income of US$653

million and earnings per share of $1.29

·       Seadrill Limited maintains quarterly dividend at US$1 per share

·       Seadrill Group on a consolidated basis maintains orderbacklog of

approximately US$20 billion

·       Seadrill secures contracts for the jack-up units West Tucana, West

Telesto, West Ariel, and West Prospero and extends contract for the West

Mischief.  The total revenue potential for the new contracts is approximately

US$433 million.

·       Seadrill sells 230 million shares of SapuraKencana raising

approximately US$300 million in proceeds.

·       Seadrill Partners completes US$1.1 billion add-on term loan B

·       North Atlantic Drilling announces extensive Investment and Co-

operation Agreement with Rosneft to partner in the Russian market.

·       Seadrill secures a contract with Total for employment of the West

Jupiter.  The contract is for a firm period of 5 years and has a total revenue

potential for the primary contract term of approximately US$1.1 billion

inclusive of mobilization.

Subsequent events

·       Seadrill and SapuraKencana's Joint Venture commenced operations of its

first pipe-laying support vessel for Petrobras.  The contract is for a period of

five years with an extension option for an additional five years. Total revenue

potential for the firm contract period is estimated at US$445 million.

·       Seadrill receives a commitment for a US$1.35 billion credit facility

to refinance the credit facilities secured by the West Pegasus, West Gemini, and

West Orion.

·       Seadrill completes voluntary exchange offer for US$650mm convertible

bond

·       Seadrill sells an additional 28% interest in Seadrill Operating LP to

Seadrill Partners for approximately $373 million

·       North Atlantic Drilling secures 5 contracts with Rosneft commencing in

Russian waters from 2015 through 2017 with a total revenue potential for the

primary contract term of US$4.1 billion.

·       Seadrill secures a contract with ExxonMobil for employment of the West

Saturn.  The contract is for a firm period of two years plus a one year option

and has a total revenue potential for the primary contract term of approximately

US$497 million, inclusive of mobilization.

·       North Atlantic Drilling enters into agreement to acquire a significant

portion of Rosneft's land drilling fleet in Russia.  Rosneft will receive a 30%

ownership stake in NADL.

·       Seadrill completes US$1.5 billion ECA facility to finance the West

Saturn, West Neptune, and West Jupiter.

* EBITDA is defined as earnings before interest, depreciation and amortization

equal to operating profit plus depreciation and amortization.

* Seadrill Group defined as all companies currently consolidated or formerly

consolidated into Seadrill Limited

Financial information

Second quarter 2014 results

Revenues for the second quarter of 2014 were US$1,222 million compared to

US$1,221 million in the first quarter of 2014.

Operating profit for the quarter was US$476 million compared to US$890 million

in the preceding quarter. The decrease is primarily due to inclusion of the gain

on sale of the West Auriga sale of US$440 million in first quarter results.

Net financial and other items for the quarter showed a gain of US$71 million

compared to a gain of US$2,239 million in the previous quarter. The gain is

primarily related to the sale of SapuraKencana shares and income received from

Seadrill Partners of US$59 million, partially offset by a loss from Archer of

US$5 million and a loss on derivative positions of US$95 million.

Income taxes for the second quarter were (US$106 million), a decrease of US$141

million from the previous quarter.  The overall tax benefit for the quarter is

primarily due to the release of a reserve following the resolution of uncertain

tax positions.

Net income for the quarter was US$653 million representing basic and diluted

earnings per share of $1.29 and $1.24, respectively.

Balance sheet

As of June 30, 2014, total assets were US$26,604 million, a decrease of US$887

million compared to the previous quarter.

Total current assets decreased to US$3,185 million from US$4,031 million over

the course of the quarter, primarily driven by a decrease in cash and decrease

in related party receivables from Seadrill Partners resulting from the

refinancing of debt by Seadrill Partners.

Total non-current assets decreased to US$23,419 million from US$23,460 million

primarily due to a decrease in non-current related party receivables from

Seadrill Partners resulting from the refinancing of debt by Seadrill Partners

offset by overall increases in newbuildings and drilling units.

Total current liabilities decreased to US$4,103 million from US$4,394 million

largely due to a decrease in short term debt to related party as a result of

settlement of balances with Seadrill Partners and a reduction in other current

liabilities.

Long-term interest bearing debt decreased to US$10,025 million from US$10,728

million over the course of the quarter and total net interest bearing debt

decreased to US$12,205 million from US$12,277 million.  The decrease is

primarily due to the repayment of third party debt related to Seadrill Partners

rigs which was refinanced by Seadrill Partners and normal quarterly

installments.

Total equity increased to US$10,747 million from US$10,673 million as of

June 30, 2014, primarily driven by net income for the quarter and offset by

dividends paid.

Cash flow

As of June 30, 2014, cash and cash equivalents were US$543 million, a decrease

of US$369 million compared to the previous quarter.

Net cash provided by operating activities for the six month period ended

June 30, 2014 was US$881 million and net cash provided by investing activities

for the same period was US$1,100 million.  Net cash used in financing activities

was US$2,165 million.

This information is subject of the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

[HUG#1851370]