Seadrill Limited (NYSE:SDRL) Q2 2023 Results Conference Call August 15, 2023 9:00 AM ET

Company Participants

Lydia Mabry - Director, IR

Simon Johnson - President and CEO

Grant Creed - EVP and CFO

Samir Ali - EVP and Chief Commercial Officer

Leif Nelson - Chief Operating and Technology Officer

Conference Call Participants

Greg Lewis - BTIG

Ben Nolan - Stifel

Fredrik Stene - Clarkson Securities

David Smith - Pickering Energy Partners

Eddie Kim - Barclays

Hamed Khorsand - BWS Financial

Lydia Mabry

Welcome to Seadrill’s Second Quarter 2023 Earnings Call.

With me today are Simon Johnson, our President and Chief Executive Officer; Grant Creed, Executive Vice President and Chief Financial Officer; and Samir Ali, Executive Vice President and Chief Commercial Officer.

Before we begin, I would like to remind you that some of today’s comments are forward-looking statements within the meaning of federal securities laws. They involve risks and uncertainty and actual results may differ materially. No one should assume these forward-looking statements remain valid later in the quarter or year. For a more detailed discussion of the major risk factors affecting our business, please refer to our latest Form 6-K filed with the U.S. Securities and Exchange Commission. Our comments also include non-GAAP measures. Reconciliations to the nearest corresponding GAAP measures are in our earnings release available on our website. Later in the call following our prepared remarks, we will host a question-and-answer session. Please limit yourself to 1 question and 1 follow-up to permit more participation.

Now let me turn the call over to Simon.

Simon Johnson

Hello, everyone, and thank you for joining us on today’s call. For the second quarter of 2023, Seadrill reported adjusted EBITDA of $159 million on $414 million of revenue, which resulted in an industry-leading adjusted EBITDA margin of 38.4%. We benefited from a full quarter’s contribution from contracted rigs acquired via our Aquadrill transaction. A larger fleet size along with continued solid performance from existing operations drove the 56% increase in revenue and 87% increase in adjusted EBITDA from the prior quarter. We’ve had a lot of activity at Seadrill over the past 18 months that have simplified and strengthened our business. This includes monetizing noncore assets, streamlining our operating structure, enhancing scale and capacity, high grading our fleet and establishing a more efficient capital structure.

So before Samir discusses commercial activity and outlook and Grant reviews financial results, I want to spend the initial part of today’s call reintroducing you to Seadrill. At Seadrill, we strive to operate at scale achieved through a combination of market selection and fleet refinement supported by capital discipline. Why do we care about scale? Because simply put, scale supports success. It affords contracting flexibility, lowers our cost to operate and helps attract and retain critical talent. We’re able to offer customers a more complete rig portfolio with options on technologies, pricing and availability, which makes us more commercially competitive. We can share shore-based support, people and spare parts across a larger base of operations as well as performance gains and best practices improving overall efficiency.