Seadrill Limited — Earnings Release 2015

Aug 27, 2015

SDRL - Seadrill Limited Announces Second Quarter 2015 Results

SDRL - Seadrill Limited Announces Second Quarter 2015 Results

Highlights

·           EBITDA  of US$651 million

·           93% economic utilization

·           Net income of $423 million and diluted earnings per share of $0.77

·           The West Tellus and West Carina drillships commenced operations with

Petrobras in Brazil on three year contracts

·           Deferred the deliveries of two drillships currently under

construction, the West Draco and West Dorado, until the end of the first quarter

of 2017

·           Deferred the deliveries of eight jack-ups currently under

construction into 2016 and 2017

·           Agreed to a revised leverage ratio with our banking group

·           The West Polaris drillship was sold to Seadrill Partners

·           The Seadrill Group  achieved 94% economic utilization

·           Seadrill Group orderbacklog of approximately $14.0 billion

·           Seadrill Group cash savings of approximately $500 million expected

during 2015

Financial information

Second quarter 2015

Revenues for the second quarter of 2015 were $1,147 million compared to $1,244

million in the first quarter of 2015.

Operating profit for the quarter was $384 million compared to $703 million in

the preceding quarter. The decrease was primarily due to the gain on

deconsolidation of SeaMex during the first quarter, and a loss on the sale of

the West Polaris to Seadrill Partners during the second quarter.  Taken

together, these items account for approximately $261 million, or 82%, of the

sequential decline in operating profit.  Excluding these non-recurring items,

operating profit declined 11% sequentially.  On a like for like basis, the

decline in operating profit can be primarily attributed to the deconsolidation

of SeaMex and increased idle time across the fleet.

The loss on disposal is related to the dropdown of the West Polaris to Seadrill

Partners. Seadrill's accounting policy is not to recognize any contingent forms

of consideration before they are realized. This has resulted in an initial loss

on disposal despite an expectation of additional contingent consideration to be

received in the future in excess of the loss.

Net financial and other items for the quarter showed a gain of $84 million

compared to a loss of $197 million in the previous quarter.  The change in

financial items was largely impacted by the sequential change in derivative

financial instruments which accounted for $225 million of the quarter over

quarter change in financial items.  The movement was also driven by Seadrill's

share in results of associated companies, which includes the share of Seadrill

Partners' net income. The increase is primarily related to favorable unrealized

mark to market revaluations of derivatives within Seadrill Partners.

Income taxes for the second quarter were $45 million, a decrease of $13 million

from the previous quarter.  The change was primarily due to a net tax benefit

recognized during the quarter in respect of return-to-provision ("RTP")

adjustments, offset by higher relative components of our estimated 2015

earnings.

Net income for the quarter was $423 million representing basic and diluted

earnings per share of $0.77.

Balance sheet

As of June 30, 2015, total assets were $25,144 million, a decrease of $529

million compared to the previous quarter.

Total current assets increased to $3,188 million from $2,981 million over the

course of the quarter, primarily driven by an increase in amounts due from

related parties and the transfer of deferred consideration relating to the sale

of the tender rig business from non-current to current.  These increases were

partially offset by a reduction in accounts receivable as a result of disposals.

Total non-current assets decreased to $21,956 million from $22,692 million

primarily due to the disposal of the West Polaris.

Total current liabilities increased to $3,451 million from $3,329 million

primarily due to an increase in the current portion of long term debt, partially

offset by a decrease in short term debt due to related party.

Long-term external interest bearing debt decreased to $9,518 million from

$10,537 million over the course of the quarter and total net interest bearing

debt decreased to $10,337 million from $11,202 million as at March 31, 2015.

The decrease was primarily due to the transfer of the West Polaris loan to

Seadrill Partners and debt repayments on the $950 million credit facility.

Total equity increased to $11,159 million as of June 30, 2015 from $10,710

million as of March 31, 2015, primarily driven by net income during the quarter.

Cash flow

As of June 30, 2015, cash and cash equivalents were $918 million, an increase of

$15 million compared to the previous quarter.

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

30, 2015 was $899 million and net cash provided by investing activities for the

same period was $100 million.  Net cash used in financing activities was $913

million.

This information is subject of the disclosure requirements pursuant to section

5-12 of the Norwegian Securities Trading Act.

[HUG#1947836]