Latest news with #Seadrill
Yahoo
3 days ago
- Business
- Yahoo
Seadrill: A Battle Between Potential and Risk
Seadrill Limited (SDRL, Financial) is at a crossroads right now. After investors became optimistic about the company, recent results have raised questions about whether the company can keep up its performance amid volatility in the offshore drilling sector. A decrease in rig utilization, higher maintenance costs and falling earnings have all dampened the mood. However, there are good reasons to keep following it. It has signed contracts with leading companies, has kept its fleet up to date and enjoys a solid cash reserve. Even now, respected value investors are watching the company and believing in its rise. Keeping all the aspects in consideration, Seadrill still isn't an obvious buy, but it's also not one to ignore. People should keep a close watch and wait patiently until the company shows it can carry out its plans well. Seadrill operates a large and modern fleet of drillships, semi-submersible platforms and jack-up rigs. Currently, the company operates 13 rigs that are under active contract and also has three additional rigs stacked in Namibia and Norway. Since these rigs can be reinstated fast if demand rises, it could boost the company's income. SDRL has won contracts in many regions, including Brazil and the US Gulf of Mexico, from leading energy companies such as TotalEnergies (TTE), Petrobras (PBR), and Equinor (EQNR). In Brazil, SDRL's contracts with Petrobras total more than $2 billion and cover four agreements that will end between 2027 and 2029. The company still sees South America as a major growth region. Looking closely at its backlog, nearly half the backlog comes from Petrobras which has a BB- credit rating and can be cancelled with a 90-day notice. So, if Petrobras chooses to leave before the contract ends, much of the expected income would be at risk. However, if Petrobras completes the whole contract term, Seadrill will receive the entire amount. Meanwhile, TotalEnergies has 18% of the backlog and contracts that cannot be canceled unless there is a force majeure. Though the total number of backlog contracts is promising, the varied creditworthiness and flexible arrangements of clients increase some instability. Hence, investors should not completely rely on the full backlog. Source: Author Generated Based on Data Seadrill's current fleet use, in contrast, tells a better story. So far, about 70% of the fleet is booked for this year, but that number drops to 43% for 2026. Nearly all the rigs in the fleet are recent and advanced such as West Auriga (7th gen) and West Polaris (6th gen). In 2024, the company secured a new backlog of $1 billion for contracts in Brazil at West Jupiter and West Tellus. The company's main strategic goals now are to secure new contracts for West Capella and three drillships and to renew the legacy contract for West Carina. Restarting the West Carina contract at the current market rates is predicted to immediately boost revenues. Source: Seadrilling Market (Investor Material) Moreover, offshore development is expected to receive $95 billion in 2025, rising further to $115 billion in 2026. According to predictions, the percentage of energy provided by oil will go from 30% now to 27% by 2050, while coal will fall from 26% to just 6%. It means offshore oil drilling will keep playing a major role in the world's energy sector. The Sevan Louisiana, a 6th generation semi-submersible rig built in 2013 and brought into service in 2014, is considered a key asset for SDRL in the US Gulf. At this moment, the rig is on a contract with Walter Oil & Gas and advanced talks are taking place to extend the deal until July. With so many rigs not being used in the Gulf, getting this contract extension is crucial to holding onto a robust position in the market. The Q1 2025 results from Seadrill demonstrate a slow beginning to the year, caused by reduced rig utilization and lower contract revenues that affected both income and profits. Although it wasn't all good news, some better contracts in Brazil and the U.S. Gulf helped dayrate numbers and the company still managed to increase management contract revenue. With that, let's find out what is really happening and dig into the nitty-gritty of the company's Q1 results. Soft Topline Performance Reflects Lower Utilization and Fewer Operating Rigs: Seadrill's Q1 2025 revenue clocked in at $335 million, which is a 9% drop from $367 million annually. The decrease was mainly a result of contract revenue falling from $275 million to $248 million because companies operated fewer rigs and used them less. The rig count went down from ten to nine mainly because the West Phoenix was still stacked and both West Neptune and West Capella worked fewer days. Even though Dril-Quip received higher dayrates due to premium rates in Brazil and the U.S. Gulf, the company's use of its equipment decreased from 97% to 84%, probably because of extra breaks in drilling. Though management contract revenue increased, it did not stop the decline in the company's total revenue. Revenue Mix Shift Highlights Structural Changes in Operations: Seadrill's revenue mix in the first quarter of 2025 also shows changes in the way it operates. The company's management contract income went up to $61 million due to consistent work under the Sonadrill joint venture. However, because there were fewer customer-requested services, reimbursable revenue fell by $5 million and the 2024 disposal of Gulfdrill rigs on lease led to a $3 million decline in leasing revenue. The change reveals that income is coming more from services as investment offshore becomes more limited. With the start of contracts for the West Auriga, West Polaris and West Capella, amortization of mobilization revenue increased by $11 million. Essentially, these actions prove that Seadrill is being flexible as contract and customer spending fall, though they also show how its major drilling operations are at risk. Profitability Hit by Maintenance Costs and Rising Depreciation: Seadrill's operating profit fell sharply, from $80 million last year to just $18 million this year. A big part of the $17 million increase in depreciation and amortization was related to investment in new capital and new rigs. The company also saw expenses in management contracts rise 18%, because of more costs for staff and for keeping things running, though other operating expenses stayed about the same. Significantly, the business did not receive the $16 million of one-time income from Brazilian tax credits that it reported last year. Because of increased costs and less income, margins started to shrink significantly. While the cost of rig operations did not change much, the fact that fixed costs increase while income falls puts the company at risk yet offers opportunities, depending on what happens with future demand. Bottom Line Turns Negative as Free Cash Flow Weakens: The company suffered a $14 million net loss in Q1 2025 versus a $60 million profit for the same quarter last year. The decline was caused by both falling operating income and a 50% rise in tax expenses, mainly because of lost deferred tax benefits and an unprofitable mix of income from different countries. For this reason, earnings per share decreased to a loss of $0.23, down from $0.83. In addition, the business saw operations cash fall to $(27) million which was much lower than the $29 million it received last year, as it spent more on long-term maintenance and its working capital was strained. This development may appear unimportant alone, but it reveals Seadrill's exposure to fluctuating utilization. If rig activity or dayrate efficiency does not improve, the pressure on free cash flow will not be resolved. Liquidity Remains Strong, But Execution Will Be Key: Last but not least, Seadrill finished the quarter with a good amount of cash on hand. At the time, the company had $404 million in cash and could use its $225 million revolving credit facility which amounted to $629 million in total available cash. Thanks to its low and easily managed debt and zero approaching maturity, this capital structure gives the company useful flexibility. Even so, a $269 million drop in the contract backlog, down to $2.91 billion, makes us worry about future earnings and demand. In addition, while the company is enjoying better dayrates and is participating in more activities in Brazil, the gains are being canceled out by cost increases and periods where operations are not running. The company's near-term success will depend largely on how well it can regain stability for its vessels, keep a lid on expenses and ensure it is investing its funds properly. The company appears to be priced low when you first look at it, although the lower price mainly comes from investors' concerns about the risks involved. Source: SDRL stock valuation versus peers (Seeking Alpha) First, the forward P/E GAAP ratio is 22.75 which is higher than Helmerich & Payne (HP, Financial) 17.71, possibly reflecting growth, but the trailing ratio is just 4.10, much lower than HP's 7.11. The difference probably stems from the major drop in profitability in Q1 2025 which indicates investors have doubts about how long the earnings can last. Since Patterson-UTI Energy (PTEN, Financial) and Transocean (RIG, Financial) have undefined P/E ratios, Seadrill seems better positioned, though it still reflects that the whole industry is struggling with earnings. Therefore, the low trailing P/E at Seadrill may only represent a brief problem, as its strong past performance is unlikely to be repeated shortly. Though the P/B ratio of 0.49 is appealing, especially when set against PTEN's and HP's 0.64 and 0.53 respectively, it also shows that the market is valuing Seadrill's assets less than others. With a pile of rigs and lower utilization, investors are right to ask about how much these assets will earn in the future. Similarly, by measuring EV/EBITDA forward multiple of 4.59, slightly above HP's 4.21 and well below RIG's 6.44, Seadrill appears to be reasonably valued. Even so, this is based on steady EBITDA, but recent developments make that unclear. The most serious sign is the price-to-cash-flow ratio which has reached 44.37. This is better than HP's 2.67, PTEN's 2.16 and even RIG's 3.81. The wide difference suggests that traders think Seadrill is overpriced in terms of liquidity because Q1 brought low operating cash flow and high spending on maintenance. Even with these low headline multiples, Seadrill's valuation is unattractive as long as this situation remains unchanged. In short, Seadrill looks inexpensive on some measures, but after further analysis, it's clear that the market is accounting for the significant risk of inconsistent operations and cash flow problems and i see it as a value trap as of now. If the company cannot stabilize utilization, improve how it collects cash and recover margins, the market is treating its current valuation like a protective move, not a chance to buy. Seadrill's 1-year price chart paints a troubling picture. The past 1-year's price chart for SDRL stock tells a concerning story. The stock dropped more than 55% in the last year, likely because investors are worried about the company's shifting operations, fewer renewals and less profit. Rig utilization and decreasing cash flows began to lower by Q4 2024 which is when the decline started to pick up pace. Even though May 2025 saw a small rise, the downward trend in the stock has not yet been interrupted by a technical breakaway. Even so, Seadrill is currently near its past support of between $20 and $22. When utilization remains stable and the company's liquidity buffer is secure, there is a good chance the stock could rise to the $2730 level. Yet, the company can only recover fully if it improves its project output and increases margins. For now, any upside can only go so far and another weak report could send prices back towards their previous lows. Though the company's share price has fallen by nearly half in just a year, analysts are still expecting some improvement. On average, experts see the average 12-month price target for Seadrill at $41 which is a 77.72% surge from the current level and the high end of the range is $80. It's worth mentioning that $23, the low estimate, is just above the stock's present value, so a limited downside is expected. This positive tilt is supported by analysts, whose average rating of 1.6 and "Outperform" recommendation from ten firms. That said, I'm not entirely sold on chasing this potential upside just yet. The stock's fundamentals raise valid concerns. I believe the valuation, while cheap on certain metrics, reflects justified skepticism. Unless Seadrill can meaningfully boost rig activity and restore profitability, I view it as more of a speculative hold than a confident buy. I would expect the stock to trade in a range of $20 to $35 over the near to medium term, with a sustainable breakout unlikely unless operational performance significantly improves. The latest Guru trading in Seadrill outlines a stock at a crucial turning point. During the past three years, investors have gone from buying a lot to reconsidering their positions. Between mid-2022 and late 2023, Gurus added to their positions when the stock rose, a sign they believed in Seadrill's comeback because of better drilling conditions and lower debt. There was little selling at this time which continued to support a positive sentiment. Things shifted in the market heading into early 2024. Although buying went on, Guru sells started to appear more significantly which meant that that institutional investors were not all on the same page. Subsequently, the resilience started to decrease. Guru sells escalated, especially during Q4, despite the fact the stock price remained fairly high. Worries about pricing, external factors or how the company works triggered this approach. Still, increased buying in Q1 2025 pointed to the fact that Gurus weren't totally losing their confidence in stocks. Interestingly, Ray Dalio (Trades, Portfolio), David Einhorn (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio) all increased their holdings of the company. This suggests they believe Seadrill's true value is higher than what the market thinks today. That said, uncertainty remains as Paul Tudor Jones (Trades, Portfolio) sold off 89% of his shares in the stock. All in all, the confidence is not the same as before, however, Seadrill is still the focus of the Gurus and they are watching it closely. Seadrill is dealing with several major challenges at this time. Seeing that rig use has dropped and the backlog is smaller, it's evident that the core drilling area is struggling. Still, the company owns modern aircraft and has strong ties in markets like Brazil which gives them a solid start for future growth. The toughest thing is to pick up activity and get higher dayrates locked in so that cash flow increases. It's good that the company has plenty of money on hand and debt is low for it, helping it recover. Nonetheless, being conservative in pricing reflects the real risks of doing business today. At this point, Seadrill has to gain stability before being a true buy. Until that happens, it's not a solid investment. This article first appeared on GuruFocus.
Yahoo
13-05-2025
- Business
- Yahoo
Seadrill Announces First Quarter 2025 Results
HAMILTON, Bermuda, May 12, 2025--(BUSINESS WIRE)--Seadrill Limited ("Seadrill" or the "Company") (NYSE: SDRL) today announced its first quarter 2025 results. Quarterly Highlights Reported a net loss of $14 million and Adjusted EBITDA(1) of $73 million West Auriga and West Polaris commenced their respective contracts in December 2024 and February 2025 Maintains the previously issued 2025 guidance ranges Financial Highlights Figures in USD million, unless otherwise indicated Three months endedMarch 31, 2025 Three months endedDecember 31, 2024 Total operating revenues 335 289 Contract revenues 248 204 Net (loss)/income (14 ) 101 Adjusted EBITDA(1) 73 28 Adjusted EBITDA Margin(1) 21.8 % 9.7 % Diluted (loss)/earnings per share ($) (0.23 ) 1.54 "Our strategy to operate a floater-focused fleet at the heart of the deepwater market positions Seadrill well to navigate near-term volatility," said President and CEO Simon Johnson. "We remain focused on adding to our durable backlog, which extends meaningfully through 2028, and we are actively engaged with customers for opportunities starting in the next 12 months. This proactive approach and our robust financial position provide a platform for long-term value creation." Financial and Operational ResultsFirst quarter 2025 total operating revenues increased $46 million to $335 million, compared to $289 million in the prior quarter. Contract revenues, up $44 million to $248 million, drove almost all the sequential improvement. An increase in operating days attributable to the West Auriga and West Polaris, which commenced their respective contracts in December 2024 and February 2025, was partially offset by lower economic utilization principally related to rigs operating in Brazil. First quarter 2025 total operating expenses decreased by $6 million to $317 million, compared to $323 million in the previous quarter. The decrease reflects a reduction in merger and integration costs following the handover of the final two Aquadrill rigs in 2024, and lower selling, general and administrative expenses. These decreases were partially offset by increases in vessel and rig operating expenses and depreciation and amortization following recent contract commencements for the West Auriga and West Polaris. Net loss for the first quarter was $14 million. Adjusted EBITDA(1) was $73 million, compared to $28 million in the prior quarter. Balance Sheet and Cash FlowAt quarter-end, Seadrill had gross principal debt of $625 million and $430 million in cash and cash equivalents, including $26 million of restricted cash. Net cash used in operating activities during the first quarter of 2025 was $27 million and payments for capital additions captured in net cash used in investing activities were $45 million. Free Cash Flow(1) was negative $72 million. Free Cash Flow(1) in the first quarter included payments for contract preparation and mobilization, primarily related to the West Auriga and West Polaris, in addition to other working capital movements. Order BacklogAs of May 12, 2025, Seadrill's Order Backlog(2) was approximately $2.8 billion. The Company today provided an updated fleet status report on the Investor Relations section of its website, OutlookFor the full year 2025, Seadrill maintains the previously issued guidance for total operating revenues in the range of $1,300 million to $1,360 million, which excludes reimbursable revenues of $35 million, Adjusted EBITDA(3) in the range of $320 million to $380 million, and capital expenditures in the range of $250 million to $300 million. Conference Call InformationThe Company will host a conference call to discuss its results on Monday, May 12 at 08:00 CT / 15:00 CET. Interested participants may join the call by dialing +1 (800) 715-9871 (Conference ID: 5348977) at least 15 minutes prior to the scheduled start time. The Company will webcast the call live on the Investor Relations section of its website, where a replay will be available afterwards. (1) These are non-GAAP measures. For a definition and a reconciliation to the most comparable GAAP measure, see Appendices. (2) Order Backlog includes all firm contracts at the contractual operating dayrate multiplied by the number of days remaining in the firm contract period. It includes management contract revenues and leasing revenues from bareboat charter arrangements and excludes revenues for mobilization, demobilization, contract preparation, and other incentive provisions and backlog relating to non-consolidated entities. (3) Due to the forward-looking nature of Adjusted EBITDA, the Company cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measure, net income/(loss). Accordingly, the Company is unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measure to the most directly comparable forward-looking GAAP financial measure without unreasonable effort. The unavailable information could have a significant effect on Seadrill's full year 2025 GAAP financial results. About SeadrillSeadrill is setting the standard in deepwater oil and gas drilling. With its modern fleet, experienced crews, and advanced technologies, Seadrill safely, efficiently, and responsibly unlocks oil and gas resources for national, integrated, and independent oil companies. For further information, visit Forward-Looking StatementsThis news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this news release, including, without limitation, those regarding the Company's outlook and guidance, plans, strategies, business prospects, financial performance, operations, rig activity and 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. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: those described under Part I, Item 1A, "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission (the "SEC") on February 27, 2025, offshore drilling market conditions including supply and demand, dayrates, customer drilling programs and effects of new or reactivated rigs on the market, contract awards and rig mobilizations, contract backlog, dry-docking and other costs of maintenance, special periodic surveys, upgrades and regulatory work for the drilling units in the Company's fleet, the performance of the drilling units in the Company's fleet, delay in payment or disputes with customers, the Company's ability to successfully employ its drilling units, procure or have access to financing, ability to comply with loan covenants, fluctuations in the international price of oil, international financial market conditions, United States ("U.S.") trade policy and tariffs and worldwide reactions thereto, inflation, changes in governmental regulations that affect the Company or the operations of the Company's fleet, increased competition in the offshore drilling industry, the review of competition authorities, the impact of global economic conditions and global health threats, pandemics and epidemics, our ability to maintain relationships with suppliers, customers, employees and other third parties, our ability to maintain adequate financing to support our business plans, our ability to successfully complete and realize the intended benefits of any mergers, acquisitions and divestitures, and the impact of other strategic transactions, our liquidity and the adequacy of cash flows to satisfy our obligations, future activity under and in respect of the Company's share repurchase program, our ability to satisfy (or timely cure any noncompliance with) the continued listing requirements of the New York Stock Exchange, the cancellation of drilling contracts currently included in reported contract backlog, losses on impairment of long-lived fixed assets, shipyard, construction and other delays, the results of meetings of our shareholders, political and other uncertainties, including those related to the conflicts in Ukraine and the Middle East, and any related sanctions, the effect and results of litigation, regulatory matters, settlements, audits, assessments and contingencies, including any litigation related to acquisitions or dispositions, the concentration of our revenues in certain geographical jurisdictions, limitations on insurance coverage, our ability to attract and retain skilled personnel on commercially reasonable terms, the level of expected capital expenditures, our expected financing of such capital expenditures and the timing and cost of completion of capital projects, fluctuations in interest rates or exchange rates and currency devaluations relating to foreign or U.S. monetary policy, tax matters, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, legal and regulatory matters in the jurisdictions in which we operate, customs and environmental matters, the potential impacts on our business resulting from decarbonization and emissions legislation and regulations, the impact on our business from climate change generally, the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems, including our rig operating systems, and other important factors described from time to time in the reports filed or furnished by us with the SEC. The foregoing risks and uncertainties are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond our control. In many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to us or to any person(s) acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. We expressly disclaim any obligations or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations or beliefs with regard to the statement or any change in events, conditions or circumstances on which any forward-looking statement is based, except as required by law. Investors should note that we announce material financial information in SEC filings, press releases and public conference calls. Based on guidance from the SEC, we may use the Investors section of our website ( to communicate with investors, and we intend to post presentations and fleet status reports there, among other things. It is possible that the financial and other information posted there could be deemed to be material information. The information on our website is not part of, and is not incorporated into, this news release. Furthermore, references to our website URLs are intended to be inactive textual references only. SEADRILL LIMITEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited) Three months ended March 31, (In $ millions, except per share data) 2025 2024 Operating revenues Contract revenues 248 275 Reimbursable revenues (1) 15 20 Management contract revenues (1) 61 58 Leasing revenues (1) 8 11 Other revenues (1) 3 3 Total operating revenues 335 367 Operating expenses Vessel and rig operating expenses (179 ) (180 ) Reimbursable expenses (15 ) (20 ) Depreciation and amortization (55 ) (38 ) Management contract expenses (45 ) (38 ) Selling, general and administrative expenses (23 ) (25 ) Merger and integration related expenses — (2 ) Total operating expenses (317 ) (303 ) Other operating items Other operating income — 16 Total other operating items — 16 Operating profit 18 80 Financial and other non-operating items Interest income 4 7 Interest expense (15 ) (15 ) Equity in earnings of equity method investments (net of tax) 8 4 Other financial and non-operating items (14 ) (6 ) Total financial and other non-operating items, net (17 ) (10 ) Profit before income taxes 1 70 Income tax expense (15 ) (10 ) Net (loss)/income (14 ) 60 Basic (LPS)/EPS ($) (0.23 ) 0.83 Diluted (LPS)/EPS ($) (0.23 ) 0.81 (1) Includes revenue from related parties of $79 million and $76 million, for the three months ended March 31, 2025, and March 31, 2024, respectively. SEADRILL LIMITEDCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited) (In $ millions, except share data) March 31, 2025 December 31, 2024 ASSETS Current assets Cash and cash equivalents 404 478 Restricted cash 26 27 Accounts receivables, net 143 193 Other current assets 228 230 Total current assets 801 928 Non-current assets Equity method investments 76 68 Drilling units (net of accumulated depreciation of 491 as of March 31, 2025 (December 31, 2024: 430) 2,969 2,946 Deferred tax assets 60 63 Equipment 5 5 Other non-current assets 152 146 Total non-current assets 3,262 3,228 Total assets 4,063 4,156 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable 78 118 Other current liabilities 321 383 Total current liabilities 399 501 Non-current liabilities Long-term debt 611 610 Deferred tax liabilities 11 11 Other non-current liabilities 134 116 Total non-current liabilities 756 737 Commitments and contingencies Shareholders' equity Common shares of par value $0.01 per share: 375,000,000 shares authorized as of March 31, 2025 (December 31, 2024: 375,000,000) and 62,163,028 issued as of March 31, 2025 (December 31, 2024: 62,154,422) 1 1 Additional paid-in capital 1,973 1,969 Accumulated other comprehensive income 1 1 Retained earnings 933 947 Total shareholders' equity 2,908 2,918 Total liabilities and shareholders' equity 4,063 4,156 SEADRILL LIMITEDCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited) Three months ended March 31, (In $ millions) 2025 2024 Cash flows from operating activities Net (loss)/income (14 ) 60 Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities: Depreciation and amortization 55 38 Equity in earnings of equity method investments (net of tax) (8 ) (4 ) Deferred tax expense/(benefit) 3 (5 ) Unrealized (gain)/loss on foreign exchange (1 ) 3 Amortization of debt issue costs 1 1 Share based compensation expense 4 3 Other 12 — Other cash movements in operating activities Additions to long-term maintenance (54 ) (29 ) Changes in operating assets and liabilities Trade accounts receivable 42 25 Trade accounts payable (35 ) 11 Prepaid expenses/accrued revenue (2 ) (7 ) Deferred revenue (9 ) 5 Deferred mobilization costs 6 4 Related party receivables — (5 ) Other assets (2 ) (21 ) Other liabilities (25 ) (50 ) Net cash (used in)/provided by operating activities (27 ) 29 Cash flows from investing activities Additions to drilling units and equipment (45 ) (23 ) Other (4 ) — Net cash used in investing activities (49 ) (23 ) Cash flows from financing activities Shares repurchased — (119 ) Net cash used in financing activities — (119 ) Effect of exchange rate changes on cash 1 (3 ) Net decrease in cash and cash equivalents, including restricted cash (75 ) (116 ) Cash and cash equivalents, including restricted cash, at beginning of the period 505 728 Cash and cash equivalents, including restricted cash, at the end of period 430 612 Appendix I - Reconciliation of Net (loss)/income to Adjusted EBITDA (Unaudited) Adjusted EBITDA represents Net (loss)/income before depreciation and amortization, taxes, total financial items and other income and similar non-cash charges. Additionally, in any given period, the Company may have significant, unusual or non-recurring items which may be excluded from Adjusted EBITDA for that period. When applicable, these items are fully disclosed and incorporated into the reconciliation provided below. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of Total operating revenues. Adjusted EBITDA excluding Reimbursables, represents Adjusted EBITDA, excluding Reimbursable revenues and Reimbursable expenses. Adjusted EBITDA Margin excluding Reimbursables represents Adjusted EBITDA excluding Reimbursables as a percentage of Total operating revenues excluding Reimbursable revenues. Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables are non-GAAP financial measures. The Company believes that the aforementioned non-GAAP financial measures assist investors by excluding the potentially disparate effects between periods of depreciation and amortization, income tax benefit/expense, total financial items and non-operating items, merger and integration related expenses, gain on disposals and other adjustments specified, which are affected by various and possibly changing financing methods, capital structure and historical cost basis and which may significantly affect Net (loss)/income between periods. Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables should not be considered as alternatives to Net (loss)/income or any other indicator of Seadrill Limited's performance calculated in accordance with GAAP. Because the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables (or similar measures) may vary among companies and industries, they may not be comparable to other similarly titled measures used by other companies. The tables below reconcile Net (loss)/income, the most directly comparable GAAP measure, to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables. Figures in USD million, unless otherwise indicated Three months endedMarch 31,2025 Three months endedDecember 31,2024 Net (loss)/income (a) (14 ) 101 Depreciation and amortization 55 45 Income tax expense/(benefit) 15 (133 ) Total financial and other non-operating items, net 17 29 Merger and integration related expenses — 17 Gain on disposal — (31 ) Adjusted EBITDA (b) 73 28 Total operating revenues (c) 335 289 Net (loss)/income margin (a)/(c) (4.2 )% 34.9 % Adjusted EBITDA margin (b)/(c) 21.8 % 9.7 % Figures in USD million, unless otherwise indicated Three months endedMarch 31,2025 Three months endedDecember 31,2024 Adjusted EBITDA (b) 73 28 Reimbursable revenues (15 ) (15 ) Reimbursable expenses 15 15 Adjusted EBITDA excluding Reimbursables (d) 73 28 Total operating revenues (c) 335 289 Reimbursable revenues (15 ) (15 ) Total operating revenues excluding Reimbursable revenues (e) 320 274 Adjusted EBITDA margin excluding Reimbursables (d)/(e) 22.8 % 10.2 % Appendix II - Contract Revenues Supporting Information (Unaudited) Contract Revenues Supporting Information(1) Three months endedMarch 31, 2025 Three months endedDecember 31, 2024 Average number of rigs on contract(2) 9 8 Average contractual dayrates(3) (in $ thousands) 323 289 Economic utilization(4) 83.9 % 93.0 % (1) Excludes three drillships managed on behalf of Sonadrill (West Gemini, Sonangol Quenguela, Sonangol Libongos); and excludes rigs bareboat chartered to Sonadrill (West Gemini) and Gulfdrill, before disposal in June 2024 (West Telesto, West Castor, West Tucana). (2) The average number of rigs on contract is calculated by dividing the aggregate days the Company's rigs were on contract during the reporting period by the number of days in that reporting period. (3) The average contractual dayrate is calculated by dividing the aggregate contractual dayrates during a reporting period by the aggregate number of days for the reporting period. (4) Economic utilization is defined as dayrate revenue earned during the period, excluding bonuses, divided by the contractual operating dayrate, multiplied by the number of days on contract in the period. If a drilling unit earns its full operating dayrate throughout a reporting period, its economic utilization would be 100%. However, there are many situations that give rise to a dayrate being earned that is less than the contractual operating rate, such as planned downtime for maintenance. In such situations, economic utilization reduces below 100%. Appendix III - Reconciliation of Net cash flows (used in)/provided by operating activities to Free Cash Flow (Unaudited) The Company also presents Free Cash Flow as a non-GAAP liquidity measure. Free Cash Flow is calculated as Net cash (used in)/provided by operating activities less Additions to drilling units and equipment. The Company believes Free Cash Flow is useful to investors, as it allows greater transparency of the utilization or generation of cash by the business. Because the definition of Free Cash Flow may vary among companies and industries, it may not be comparable to other similarly titled measures used by other companies. The table below reconciles Net cash flows (used in)/provided by operating activities, the most directly comparable GAAP measure, to Free Cash Flow for the three months ended March 31, 2025 and December 31, 2024. Figures in USD million Three months endedMarch 31,2025 Three months endedDecember 31,2024 Net cash flows (used in)/provided by operating activities (27 ) 7 Additions to drilling units and equipment (45 ) (38 ) Free Cash Flow (72 ) (31 ) View source version on Contacts Kevin SmithVP - Corporate Finance & IRir@
Washington Post
12-05-2025
- Business
- Washington Post
Seadrill: Q1 Earnings Snapshot
HAMILTON, Bermuda — HAMILTON, Bermuda — Seadrill Ltd. (SDRL) on Monday reported a loss of $14 million in its first quarter. The Hamilton, Bermuda-based company said it had a loss of 23 cents per share. The offshore drilling services provider posted revenue of $335 million in the period. Seadrill expects full-year revenue in the range of $1.3 billion to $1.36 billion.
Business Wire
12-05-2025
- Business
- Business Wire
Seadrill Announces First Quarter 2025 Results
HAMILTON, Bermuda--(BUSINESS WIRE)--Seadrill Limited ('Seadrill' or the 'Company') (NYSE: SDRL) today announced its first quarter 2025 results. Quarterly Highlights Reported a net loss of $14 million and Adjusted EBITDA (1) of $73 million West Auriga and West Polaris commenced their respective contracts in December 2024 and February 2025 Maintains the previously issued 2025 guidance ranges Financial Highlights Figures in USD million, unless otherwise indicated Three months ended March 31, 2025 Three months ended December 31, 2024 Total operating revenues 335 289 Contract revenues 248 204 Net (loss)/income (14 ) 101 Adjusted EBITDA (1) 73 28 Adjusted EBITDA Margin (1) 21.8 % 9.7 % Diluted (loss)/earnings per share ($) (0.23 ) 1.54 Expand 'Our strategy to operate a floater-focused fleet at the heart of the deepwater market positions Seadrill well to navigate near-term volatility," said President and CEO Simon Johnson. "We remain focused on adding to our durable backlog, which extends meaningfully through 2028, and we are actively engaged with customers for opportunities starting in the next 12 months. This proactive approach and our robust financial position provide a platform for long-term value creation." Financial and Operational Results First quarter 2025 total operating revenues increased $46 million to $335 million, compared to $289 million in the prior quarter. Contract revenues, up $44 million to $248 million, drove almost all the sequential improvement. An increase in operating days attributable to the West Auriga and West Polaris, which commenced their respective contracts in December 2024 and February 2025, was partially offset by lower economic utilization principally related to rigs operating in Brazil. First quarter 2025 total operating expenses decreased by $6 million to $317 million, compared to $323 million in the previous quarter. The decrease reflects a reduction in merger and integration costs following the handover of the final two Aquadrill rigs in 2024, and lower selling, general and administrative expenses. These decreases were partially offset by increases in vessel and rig operating expenses and depreciation and amortization following recent contract commencements for the West Auriga and West Polaris. Net loss for the first quarter was $14 million. Adjusted EBITDA (1) was $73 million, compared to $28 million in the prior quarter. Balance Sheet and Cash Flow At quarter-end, Seadrill had gross principal debt of $625 million and $430 million in cash and cash equivalents, including $26 million of restricted cash. Net cash used in operating activities during the first quarter of 2025 was $27 million and payments for capital additions captured in net cash used in investing activities were $45 million. Free Cash Flow (1) was negative $72 million. Free Cash Flow (1) in the first quarter included payments for contract preparation and mobilization, primarily related to the West Auriga and West Polaris, in addition to other working capital movements. Order Backlog As of May 12, 2025, Seadrill's Order Backlog (2) was approximately $2.8 billion. The Company today provided an updated fleet status report on the Investor Relations section of its website, Outlook For the full year 2025, Seadrill maintains the previously issued guidance for total operating revenues in the range of $1,300 million to $1,360 million, which excludes reimbursable revenues of $35 million, Adjusted EBITDA (3) in the range of $320 million to $380 million, and capital expenditures in the range of $250 million to $300 million. Conference Call Information The Company will host a conference call to discuss its results on Monday, May 12 at 08:00 CT / 15:00 CET. Interested participants may join the call by dialing +1 (800) 715-9871 (Conference ID: 5348977) at least 15 minutes prior to the scheduled start time. The Company will webcast the call live on the Investor Relations section of its website, where a replay will be available afterwards. (1) These are non-GAAP measures. For a definition and a reconciliation to the most comparable GAAP measure, see Appendices. (2) Order Backlog includes all firm contracts at the contractual operating dayrate multiplied by the number of days remaining in the firm contract period. It includes management contract revenues and leasing revenues from bareboat charter arrangements and excludes revenues for mobilization, demobilization, contract preparation, and other incentive provisions and backlog relating to non-consolidated entities. (3) Due to the forward-looking nature of Adjusted EBITDA, the Company cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measure, net income/(loss). Accordingly, the Company is unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measure to the most directly comparable forward-looking GAAP financial measure without unreasonable effort. The unavailable information could have a significant effect on Seadrill's full year 2025 GAAP financial results. Expand About Seadrill Seadrill is setting the standard in deepwater oil and gas drilling. With its modern fleet, experienced crews, and advanced technologies, Seadrill safely, efficiently, and responsibly unlocks oil and gas resources for national, integrated, and independent oil companies. For further information, visit Forward-Looking Statements This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this news release, including, without limitation, those regarding the Company's outlook and guidance, plans, strategies, business prospects, financial performance, operations, rig activity and 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. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: those described under Part I, Item 1A, 'Risk Factors' in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission (the 'SEC') on February 27, 2025, offshore drilling market conditions including supply and demand, dayrates, customer drilling programs and effects of new or reactivated rigs on the market, contract awards and rig mobilizations, contract backlog, dry-docking and other costs of maintenance, special periodic surveys, upgrades and regulatory work for the drilling units in the Company's fleet, the performance of the drilling units in the Company's fleet, delay in payment or disputes with customers, the Company's ability to successfully employ its drilling units, procure or have access to financing, ability to comply with loan covenants, fluctuations in the international price of oil, international financial market conditions, United States ("U.S.") trade policy and tariffs and worldwide reactions thereto, inflation, changes in governmental regulations that affect the Company or the operations of the Company's fleet, increased competition in the offshore drilling industry, the review of competition authorities, the impact of global economic conditions and global health threats, pandemics and epidemics, our ability to maintain relationships with suppliers, customers, employees and other third parties, our ability to maintain adequate financing to support our business plans, our ability to successfully complete and realize the intended benefits of any mergers, acquisitions and divestitures, and the impact of other strategic transactions, our liquidity and the adequacy of cash flows to satisfy our obligations, future activity under and in respect of the Company's share repurchase program, our ability to satisfy (or timely cure any noncompliance with) the continued listing requirements of the New York Stock Exchange, the cancellation of drilling contracts currently included in reported contract backlog, losses on impairment of long-lived fixed assets, shipyard, construction and other delays, the results of meetings of our shareholders, political and other uncertainties, including those related to the conflicts in Ukraine and the Middle East, and any related sanctions, the effect and results of litigation, regulatory matters, settlements, audits, assessments and contingencies, including any litigation related to acquisitions or dispositions, the concentration of our revenues in certain geographical jurisdictions, limitations on insurance coverage, our ability to attract and retain skilled personnel on commercially reasonable terms, the level of expected capital expenditures, our expected financing of such capital expenditures and the timing and cost of completion of capital projects, fluctuations in interest rates or exchange rates and currency devaluations relating to foreign or U.S. monetary policy, tax matters, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, legal and regulatory matters in the jurisdictions in which we operate, customs and environmental matters, the potential impacts on our business resulting from decarbonization and emissions legislation and regulations, the impact on our business from climate change generally, the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems, including our rig operating systems, and other important factors described from time to time in the reports filed or furnished by us with the SEC. The foregoing risks and uncertainties are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond our control. In many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to us or to any person(s) acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. We expressly disclaim any obligations or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations or beliefs with regard to the statement or any change in events, conditions or circumstances on which any forward-looking statement is based, except as required by law. Investors should note that we announce material financial information in SEC filings, press releases and public conference calls. Based on guidance from the SEC, we may use the Investors section of our website ( to communicate with investors, and we intend to post presentations and fleet status reports there, among other things. It is possible that the financial and other information posted there could be deemed to be material information. The information on our website is not part of, and is not incorporated into, this news release. Furthermore, references to our website URLs are intended to be inactive textual references only. (1) Includes revenue from related parties of $79 million and $76 million, for the three months ended March 31, 2025, and March 31, 2024, respectively. Expand SEADRILL LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In $ millions, except share data) March 31, 2025 December 31, 2024 ASSETS Current assets Cash and cash equivalents 404 478 Restricted cash 26 27 Accounts receivables, net 143 193 Other current assets 228 230 Total current assets 801 928 Non-current assets Equity method investments 76 68 Drilling units (net of accumulated depreciation of 491 as of March 31, 2025 (December 31, 2024: 430) 2,969 2,946 Deferred tax assets 60 63 Equipment 5 5 Other non-current assets 152 146 Total non-current assets 3,262 3,228 Total assets 4,063 4,156 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Trade accounts payable 78 118 Other current liabilities 321 383 Total current liabilities 399 501 Non-current liabilities Long-term debt 611 610 Deferred tax liabilities 11 11 Other non-current liabilities 134 116 Total non-current liabilities 756 737 Commitments and contingencies Shareholders' equity Common shares of par value $0.01 per share: 375,000,000 shares authorized as of March 31, 2025 (December 31, 2024: 375,000,000) and 62,163,028 issued as of March 31, 2025 (December 31, 2024: 62,154,422) 1 1 Additional paid-in capital 1,973 1,969 Accumulated other comprehensive income 1 1 Retained earnings 933 947 Total shareholders' equity 2,908 2,918 Total liabilities and shareholders' equity 4,063 4,156 Expand SEADRILL LIMITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In $ millions) 2025 2024 Cash flows from operating activities Net (loss)/income (14 ) 60 Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities: Depreciation and amortization 55 38 Equity in earnings of equity method investments (net of tax) (8 ) (4 ) Deferred tax expense/(benefit) 3 (5 ) Unrealized (gain)/loss on foreign exchange (1 ) 3 Amortization of debt issue costs 1 1 Share based compensation expense 4 3 Other 12 — Other cash movements in operating activities Additions to long-term maintenance (54 ) (29 ) Changes in operating assets and liabilities Trade accounts receivable 42 25 Trade accounts payable (35 ) 11 Prepaid expenses/accrued revenue (2 ) (7 ) Deferred revenue (9 ) 5 Deferred mobilization costs 6 4 Related party receivables — (5 ) Other assets (2 ) (21 ) Other liabilities (25 ) (50 ) Net cash (used in)/provided by operating activities (27 ) 29 Cash flows from investing activities Additions to drilling units and equipment (45 ) (23 ) Other (4 ) — Net cash used in investing activities (49 ) (23 ) Cash flows from financing activities Shares repurchased — (119 ) Net cash used in financing activities — (119 ) Effect of exchange rate changes on cash 1 (3 ) Net decrease in cash and cash equivalents, including restricted cash (75 ) (116 ) Cash and cash equivalents, including restricted cash, at beginning of the period 505 728 Cash and cash equivalents, including restricted cash, at the end of period 430 612 Expand Appendix I - Reconciliation of Net (loss)/income to Adjusted EBITDA (Unaudited) Adjusted EBITDA represents Net (loss)/income before depreciation and amortization, taxes, total financial items and other income and similar non-cash charges. Additionally, in any given period, the Company may have significant, unusual or non-recurring items which may be excluded from Adjusted EBITDA for that period. When applicable, these items are fully disclosed and incorporated into the reconciliation provided below. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of Total operating revenues. Adjusted EBITDA excluding Reimbursables, represents Adjusted EBITDA, excluding Reimbursable revenues and Reimbursable expenses. Adjusted EBITDA Margin excluding Reimbursables represents Adjusted EBITDA excluding Reimbursables as a percentage of Total operating revenues excluding Reimbursable revenues. Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables are non-GAAP financial measures. The Company believes that the aforementioned non-GAAP financial measures assist investors by excluding the potentially disparate effects between periods of depreciation and amortization, income tax benefit/expense, total financial items and non-operating items, merger and integration related expenses, gain on disposals and other adjustments specified, which are affected by various and possibly changing financing methods, capital structure and historical cost basis and which may significantly affect Net (loss)/income between periods. Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables should not be considered as alternatives to Net (loss)/income or any other indicator of Seadrill Limited's performance calculated in accordance with GAAP. Because the definitions of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables (or similar measures) may vary among companies and industries, they may not be comparable to other similarly titled measures used by other companies. The tables below reconcile Net (loss)/income, the most directly comparable GAAP measure, to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EBITDA excluding Reimbursables and Adjusted EBITDA Margin excluding Reimbursables. Figures in USD million, unless otherwise indicated Three months ended March 31, 2025 Three months ended December 31, 2024 Adjusted EBITDA (b) 73 28 Reimbursable revenues (15 ) (15 ) Reimbursable expenses 15 15 Adjusted EBITDA excluding Reimbursables (d) 73 28 Total operating revenues (c) 335 289 Reimbursable revenues (15 ) (15 ) Total operating revenues excluding Reimbursable revenues (e) 320 274 Adjusted EBITDA margin excluding Reimbursables (d)/(e) 22.8 % 10.2 % Expand Appendix II - Contract Revenues Supporting Information (Unaudited) Contract Revenues Supporting Information (1) Three months ended March 31, 2025 Three months ended December 31, 2024 Average number of rigs on contract (2) 9 8 Average contractual dayrates (3) (in $ thousands) 323 289 Economic utilization (4) 83.9 % 93.0 % Expand (1) Excludes three drillships managed on behalf of Sonadrill (West Gemini, Sonangol Quenguela, Sonangol Libongos); and excludes rigs bareboat chartered to Sonadrill (West Gemini) and Gulfdrill, before disposal in June 2024 (West Telesto, West Castor, West Tucana). (2) The average number of rigs on contract is calculated by dividing the aggregate days the Company's rigs were on contract during the reporting period by the number of days in that reporting period. (3) The average contractual dayrate is calculated by dividing the aggregate contractual dayrates during a reporting period by the aggregate number of days for the reporting period. (4) Economic utilization is defined as dayrate revenue earned during the period, excluding bonuses, divided by the contractual operating dayrate, multiplied by the number of days on contract in the period. If a drilling unit earns its full operating dayrate throughout a reporting period, its economic utilization would be 100%. However, there are many situations that give rise to a dayrate being earned that is less than the contractual operating rate, such as planned downtime for maintenance. In such situations, economic utilization reduces below 100%. Expand Appendix III - Reconciliation of Net cash flows (used in)/provided by operating activities to Free Cash Flow (Unaudited) The Company also presents Free Cash Flow as a non-GAAP liquidity measure. Free Cash Flow is calculated as Net cash (used in)/provided by operating activities less Additions to drilling units and equipment. The Company believes Free Cash Flow is useful to investors, as it allows greater transparency of the utilization or generation of cash by the business. Because the definition of Free Cash Flow may vary among companies and industries, it may not be comparable to other similarly titled measures used by other companies. The table below reconciles Net cash flows (used in)/provided by operating activities, the most directly comparable GAAP measure, to Free Cash Flow for the three months ended March 31, 2025 and December 31, 2024.
Yahoo
10-05-2025
- Business
- Yahoo
Seadrill Limited (SDRL): Among Billionaire Paul Singer's Stock Picks with Huge Upside Potential
We recently published a list of Billionaire Paul Singer's 10 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where Seadrill Limited (NYSE:SDRL) stands against other stock picks with huge upside potential. Paul Singer founded Elliott Investment Management in 1977 in New York. It is one of the oldest hedge funds under continuous management and is also one of the largest activist funds in the world. It is the management affiliate of American hedge funds Elliott Associates and Elliott International Limited. Launched in 1994, Elliott International Limited has consistently outperformed the S&P 500 index by ~5 percentage points annually since its inception, which is a track record mirrored by Elliott Associates. Paul Singer earned a BS in psychology from the University of Rochester and a JD from Harvard Law School. He then spent 4 years working in corporate law firms and the investment bank Donaldson, Lufkin & Jenrette before founding Elliott Investment Management. Elliott Management has 38 clients and discretionary assets under management (AUM) of $97.37 billion, according to the Form ADV dated 13 February 2025. The last reported 13F filing for Q4 2024 included $16.66 billion in managed 13F securities and a top 10 holdings concentration of 82.44%. Singer has built a reputation on Wall Street for his aggressive tactics that often generate significant shareholder value by exploiting weaknesses in various asset classes. His initial approach to investing was to target companies and even governments while purchasing extremely distressed debt. In February 2025, Singer appeared on a Podcast titled 'In Good Company with Nicolai Tangen', where he also discussed what he believes is the reason behind bad investments. While bad luck remains a relevant factor, he believes that these failures result from oversights and inadequate and/or incorrect hedging strategies: 'Sometimes it's bad luck, but more frequently it's (that) we missed something. We missed. Or the hedges weren't, they weren't the right hedges. The tracking error was much more than we expected. At the beginning of my career, 1977 to like 1987, hedging was much more simple, because we were long a convertible bond and short the stock into which the convertible was convertible. So that's very straightforward. And tracking error wasn't really a factor. We've become much more sophisticated in hedging, in creating bespoke hedges for different kinds of trades. But even those don't work out exactly, you know, all the time. But sometimes, you know, the worst trades, and I don't mind mentioning them, it's a kind of a form of therapy and a pedagogical exercise. The worst trades are the trades that you misunderstand the risk. You put it into the wrong category.' To compile the list of billionaire Paul Singer's 10 stock picks with huge upside potential, we sifted through Q4 2024 13F filings of Elliott Management from Insider Monkey. From these filings, we checked the upside potential from CNN for the top 20 stock picks and ranked the stocks in ascending order of this upside potential. We have also added Elliott Management's stake in each stock as well as the broader hedge fund sentiment for it. Note: All data was sourced on May 8. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here). Drilling rig silhouetted against a setting sun in an offshore location. Elliott Management's Stake: $144.19 million Number of Hedge Fund Holders: 42 Average Upside Potential as of May 8: 66.08% Seadrill Limited (NYSE:SDRL) provides offshore drilling services to the oil & gas industry worldwide. It owns and operates drill ships and semi-submersible rigs for operations in shallow and ultra-deep water in benign and harsh environments. It serves oil super-majors, state-owned national oil companies, and independent oil and gas companies. The company reported a $1.3 billion contracted backlog in 2024, which saw a net increase of $700 million during the year. This backlog provides revenue visibility, which extends through 2028 and into 2029, with ~90% of the midpoint of the 2025 revenue guidance already secured within this backlog. This revenue guidance is between $1.3 and $1.36 billion. According to the CEO, Seadrill is positioned to navigate market volatility due to a strong balance sheet and durable backlog. Seadrill Limited (NYSE:SDRL) secured two significant long-term contract awards in Brazil in December 2024 as well, which are to commence in 2026. These added $1 billion to the company's backlog and included a mobilization fee exceeding $70 million. These awards for the West Jupiter and the West Telus are for 3-year terms each with Petrobras. Patient Capital Opportunity Equity Strategy is positive on the company and stated the following regarding Seadrill Limited (NYSE:SDRL) in its Q1 2025 investor letter: 'Seadrill Limited (NYSE:SDRL) is the fourth largest pure play deepwater drilling specialist. The company emerged from bankruptcy in February 2022 with a net cash position and is positioned to benefit from limited supply and increasing demand in the deepwater drilling rig market. Nearly half of all deepwater drilling rigs worldwide were scrapped during the last decade, while industry consolidation has created a more rational competitive landscape than we've seen historically. Although oil demand has remained reasonably healthy, surprisingly strong onshore production from the USA, Canada and Russia has helped keep a lid on prices. While this has negatively impacted contract rates near-term, we believe that long-term future shale supply growth will be limited, and more offshore supply will be required benefitting offshore drillers. Given its highly specialized rig fleet and minimal debt, we believe the company is well positioned to benefit from improving prices when demand rebounds. We believe Seadrill could either lead industry consolidation or become an acquisition target.' Overall, SDRL ranks 2nd on our list of billionaire Paul Singer's stock picks with huge upside potential. While we acknowledge the potential of SDRL as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than SDRL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. This article is originally published at Insider Monkey. Sign in to access your portfolio
