Seadrill Limited — Earnings Release 2020

Jun 2, 2020

Seadrill Limited (SDRL) - First Quarter 2020 Results

Seadrill Limited (SDRL) - First Quarter 2020 Results

Material impairments on assets [and investments] and a focus on restructuring

Highlights

·

Revenue down 19% at $321 million with lower proportion of reimbursable revenues

·

Technical utilization of 95% and economic utilization of 93%

·

Operating Loss of $1,284 million after making material asset impairments

·

Adjusted EBITDA of $55 million, representing 17.1% margin

·

Net loss attributable to shareholder of $1,564 million equivalent to net loss

per share of $15.59

·

During the quarter we added $77 million in backlog, maintaining a total backlog

figure of $2.5 billion

·

Closing cash of $1.2 billion

Subsequent Events

·

Significant market challenges arising from the sharp decline in the oil price

·

Additional operational and logistic challenges arising through COVID-19 pandemic

restrictions

·

Financial and legal advisors appointed to evaluate comprehensive restructuring

alternatives to reduce debt service costs and overall indebtedness

·

Announced on June 1, 2020, decision to delist from NYSE and maintain a single

listing on the Oslo Stock Exchange

Anton Dibowitz, President and CEO, commented:

"First and foremost, we need to recognize the way in which the whole Seadrill

community has risen to the operational and logistical challenges arising because

of COVID-19. We have continued our record of strong operational delivery in the

quarter, working across 28 locations with over 4,000 employees from 57 different

countries. Whilst our onshore personnel get used to a new mode of working, we

have many offshore personnel whose continuous time working to maintain safe

operations for our customers is now measured in terms of months rather than

weeks. I continue to be humbled by the dedication of our people who deliver safe

and efficient operations during this trying time, including some of whom will be

leaving us as we maintain our focus on our cost competitiveness and adjust

staffing levels to account for lower activity levels.

"This industry has two fundamental challenges which are emphasized by recent

events - there are too many rigs carrying too much debt. In the quarter we took

an impairment of $1.2 billion as we recognize, along with others in the sector,

that a number of our assets are increasingly unlikely to return to the market

and need to be scrapped. Assets across the industry also carry debt levels which

are unlikely to be sustainable and consequently we should expect to see

substantial indebtedness being converted to equity. Only when the industry

addresses both of these issues will we be in a position where the balance of

market supply and demand can deliver reasonable investment returns to

stakeholders."

This information is subject to the disclosure requirements pursuant to Section 5

-12 the Norwegian Securities Trading Act.

seadrill@hawthornadvisors.com