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Seadrill Limited (SDRL)
NYSE:SDRL
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Seadrill Limited
(NYSE:SDRL)
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Rating:56Neutral
Price Target:
$46.00
▲(2.47% Upside)
Action:ReiteratedDate:03/19/26
The score is held back primarily by weakened 2025 profitability and cash flow despite a currently improved balance sheet. Offsetting this, technicals are solid and the latest earnings call pointed to stronger 2026–2027 fundamentals supported by backlog and repriced contracts, while valuation remains less supportive due to loss-making results and no dividend.
Positive Factors
Contracted Backlog / Revenue Coverage
High contracted backlog and ~90% revenue coverage for 2026 provide durable cashflow visibility across the underwriting year. This reduces near-term market exposure, supports operational planning, and underpins the firm's path to consistent free cash flow as re‑priced and reactivated contracts commence.
Fleet Repricing on Multi‑year Contracts
Meaningful dayrate uplifts on multi‑year contracts create sustained margin and cashflow tailwinds once active. Higher contracted dayrates over multiple years improve earnings leverage, reduce revenue sensitivity to spot cycles, and materially boost mid‑term EBITDA and FCF durability.
Improved Balance Sheet Leverage
Conservative leverage and a sizable equity base give the company flexibility to fund reactivations, service debt maturities and absorb cyclical volatility. Stronger balance sheet metrics lower refinancing risk and provide strategic optionality during the sector recovery window.
Negative Factors
Weak Cash Generation
Negative operating and free cash flow in 2025 indicates fragile cash conversion and reduces self‑funding capacity for capex or reactivations. Persistent cash burn would force reliance on liquidity or capital markets, increasing funding risk during cyclical troughs.
Volatile Profitability
Large swings to negative EBITDA and net loss reflect high operating leverage and exposure to dayrate cycles. Continued volatility in profitability undermines margin sustainability and makes multi‑period planning and consistent free cashflow generation dependent on sustained market improvement.
Stacked Low‑Spec Rigs & Reactivation Risk
A portion of the fleet is stacked or low‑spec and needs significant reactivation spend, which may not be recoverable if dayrates remain subdued. This raises capex unpredictability and execution/timing risk, limiting upside unless customers share costs or demand firmizes.
Seadrill Limited (SDRL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.79B
Dividend YieldN/A
Average Volume (3M)1.05M
Price to Earnings (P/E)―
Beta (1Y)1.12
Revenue Growth-9.31%
EPS Growth-91.57%
CountryUS
Employees3,300
SectorEnergy
Sector Strength52
IndustryOil & Gas Drilling
Share Statistics
EPS (TTM)-0.16
Shares Outstanding62,449,448
10 Day Avg. Volume793,352
30 Day Avg. Volume1,053,471
Financial Highlights & Ratios
PEG Ratio0.23
Price to Book (P/B)0.75
Price to Sales (P/S)1.50
P/FCF Ratio-15.57
Enterprise Value/Market Cap1.10
Enterprise Value/Revenue2.16
Enterprise Value/Gross Profit13.32
Enterprise Value/Ebitda11.84
Forecast
1Y Price Target
$52.00Price Target Upside15.84% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)0.69
Revenue Forecast (FY)$1.43B
Seadrill Limited Business Overview & Revenue Model
Company DescriptionSeadrill Limited provides offshore contract drilling services to the oil and gas industry worldwide. It operates in three segments: Harsh Environment, Floaters, and Jack-ups Rigs. The company owns and operates drillships, semi-submersible rigs, and jack-up rigs for operations in shallow and ultra-deep-water in benign and harsh environments. It offers operation support and management services to third parties, as well as related and non-related companies. As of April 8, 2022, the company owned a fleet of 21 offshore drilling units consisting of two harsh-environment rigs, two benign-environment semi-submersible rigs, six drill-ships, and 11 jack-up rigs. It serves oil super-majors, state-owned national oil companies, and independent oil and gas companies. Seadrill Limited was incorporated in 2005 and is headquartered in London, the United Kingdom.
How the Company Makes MoneySeadrill primarily makes money by contracting its offshore drilling units to oil and gas companies under drilling service agreements. The main revenue stream is dayrate-based contract revenue, where customers pay a negotiated daily rate for the use of a rig and the provision of crew and operational capabilities; revenues are therefore driven by contracted dayrates, contract duration, rig utilization, and uptime/operational performance. In addition to base dayrates, contracts may include provisions for reimbursable items and pass-through costs (e.g., certain third-party services, logistics, or materials incurred on behalf of the customer), which can contribute to reported revenue depending on contract structure. Earnings are also influenced by commercial terms such as performance incentives/penalties, planned downtime allowances, and mobilization or demobilization arrangements when applicable; if specific contract terms are not publicly available for a given rig/period, they are null. Significant factors affecting Seadrill’s revenue and cash generation include offshore exploration and development spending cycles, oil and gas price expectations, regional demand for specific rig types, fleet availability, and the company’s ability to secure and renew contracts at favorable dayrates. Specific material partnerships are null if not publicly disclosed in a way that is clearly attributable as a significant earnings driver.
Seadrill Limited Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 27, 2026
Earnings Call Sentiment Positive
The call emphasized strong operational performance, record safety, meaningful backlog additions and clear guidance for a 2026–2027 earnings and cash flow improvement driven by repriced contracts, rig reactivations and reduced capital spend. Short-term headwinds were acknowledged: a challenging 2025 market, Q4 cash outflows including a $43 million legal payment, stacked low-spec assets with high reactivation costs, and near-term availability/contracting risk for several rigs. On balance, the positives—EBITDA outperformance, backlog growth (+$0.5B to ~$2.5B), 90% revenue coverage at midpoint for 2026, committed utilization at 88% and a visible path to stronger free cash flow in H2 2026—outweigh the near-term negatives.Q4-2025 Updates
Positive Updates
Record Safety and Operational Excellence
Seadrill achieved its best safety performance in company history with total recordable incident rate 50% better than the IADC offshore industry benchmark. Operational milestones include West Neptune completing a record 6-zone completion in 11 days (60% faster than prior benchmark), West Tellus achieving 400 consecutive days of BOP subsea deployment (second longest in fleet history), over 100 MPD wells drilled fleetwide, West Elara winning ConocoPhillips Supplier of the Year, and Sevan Louisiana executing first U.S. Gulf deployment of Trendsetter's Trident intervention system.
Full Year 2025 Financial Results — EBITDA Beat
Full year 2025 adjusted EBITDA was $353 million, exceeding the midpoint of prior guidance. Fourth quarter EBITDA was $88 million. Q4 total operating revenues were $362 million (essentially flat vs prior quarter: down $1 million), contract drilling revenues were $273 million (sequential decrease of $7 million, ~2.5%), reimbursable revenues rose $5 million to $16 million, total operating expenses for Q4 were $344 million (sequential +$7 million, ~+2.1%), and SG&A was flat at $27 million.
Backlog Growth and Recent Contract Awards
Seadrill added $0.5 billion to contracted backlog, bringing it to approximately $2.5 billion (implying ~25% growth vs prior balance). Notable awards/extensions: West Capella 14-month PTTEP award contributing ~$152 million (≈440 days) starting Q2 2026; West Neptune 4-month extension adding $48 million; TotalEnergies exercised option in Angola (Sonangol Quenguela) into Feb 2027; Equinor exercised option on West Saturn through Oct 2027; West Carina extended to April 2026; West Talara secured a 450-day accommodation contract. Management reports committed drillship utilization at 88% and ~90% of the midpoint of 2026 revenue guidance is covered by firm backlog.
2026 Guidance and Clear Path to Cash Flow Inflection
Full year 2026 guidance: total operating revenues $1.4–1.45 billion (excludes $50 million reimbursables) and EBITDA $350–400 million (includes $26 million noncash amortization/mobilization). CapEx and long-term maintenance guidance $200–240 million, a material step down from prior two years. Management expects Q1 2026 to be lower, a step-up in Q2 when reactivated contracts commence, and a meaningful inflection to stronger earnings and free cash flow in H2 2026 and into 2027.
Fleet Repricing and Earnings Leverage
Management disclosed repricing of legacy assets: West Jupiter and West Tellus are being repriced to 3-year contracts at day rates roughly $200,000 per day higher than before, with the benefit expected to amplify in H2 2026 and into 2027—providing direct upside to earnings and cash flow as contracts commence.
Positive Industry Tailwinds and Market Signals
Management highlighted an improving ultra-deepwater market entering 2026: IEA now projects oil & gas demand growth through 2050; Westwood forecasts floater utilization rising to 91% in 2026 and 96% in 2027; subsea tree installations have increased for five consecutive quarters. Share price appreciation of over 50% in the last three months was noted, with stock still trading at a discount to peers on forward multiples.
Negative Updates
Q4 Cash Outflows and Legal Payment
Seadrill used $63 million of cash in Q4 primarily related to a $43 million payment for an unfavorable legal judgment tied to the Sonadrill joint venture, accelerated capital and long-term maintenance spending (noted $69 million of CapEx/LTM activity in Q4 to prepare rigs) and timing of accounts payable disbursements. Year-end cash balance was $365 million (including $26 million restricted) with total liquidity of $524 million and gross principal debt of $625 million maturing through 2030.
Challenging and Competitive 2025 Market
Management described 2025 as a very challenging market. Contracting remained competitive, certain geographies showed near-term softness, and day rates were described as stable but uncertain (recently in the low $400ks/day for top-tier rigs). Management expects Q1 2026 EBITDA to be lower as several rigs undergo contract preparations.
Stacked Assets and High Reactivation Costs
Several stacked/low-spec rigs (Aquarius, Phoenix, Eclipse) remain inactive and would require material capital to reactivate. West Eclipse in particular is low-spec and has a lower likelihood of reactivation. Management is seeking customer contribution or sufficiently attractive contracts before committing to expensive reactivations.
Availability & Timing Risk for Several Rigs
Seven drillships (including West Neptune and West Vela) were noted as becoming available in 2026, creating potential competition for work; while some are contracted for H1, several rigs (Vela, Neptune, Carina, and others) will roll off and require new contracts—introducing execution and timing risk for revenue coverage beyond current backlog.
Legacy Legal and JV Exposure
The $43 million unfavorable legal judgment related to the Sonadrill joint venture highlights residual legal and legacy risks that have an immediate cash impact and underscore ongoing JV-related exposure.
Company Guidance
Seadrill guided full-year 2026 total operating revenues of $1.40–$1.45 billion (excludes ~$50 million of reimbursables) and adjusted EBITDA of $350–$400 million (which includes a $26 million non‑cash amortization/mobilization expense), noting Q1 will be lower with a step‑up in Q2 as the West Jupiter, West Tellus and West Capella commence contracts; management said ~90% of the midpoint of 2026 revenue is covered by firm backlog, contracted backlog stands at ≈$2.5 billion after adding $0.5 billion (including $152 million from West Capella’s ~440‑day award and $48 million from a 4‑month West Neptune extension), full‑year CapEx and long‑term maintenance are guided to $200–$240 million, and an inflection to strong cash generation is expected mid‑2026; liquidity and balance‑sheet metrics include $365 million of cash (incl. $26 million restricted), $524 million total liquidity and $625 million gross principal debt (maturities through 2030), while market indicators cited committed drillship utilization at 88% and Westwood forecasts floater utilization of 91% in 2026 and 96% in 2027—with repricing tailwinds such as West Jupiter and West Tellus being repriced to three‑year contracts at roughly $200,000/day higher than prior rates.Seadrill Limited Financial Statement Overview
Summary
Financials are mixed: the balance sheet is currently supportive with conservative leverage, but profitability and cash generation weakened in 2025 (net loss, negative EBITDA, and negative operating/free cash flow), reinforcing a cyclical and volatile earnings profile.Income Statement
Results are volatile. Revenue rose modestly in 2025 (annual) after declines in 2024, but profitability deteriorated sharply: 2025 moved back to a net loss (-$77M) and negative EBITDA (-$402M) versus strong profitability in 2023–2024. Margins also swung meaningfully across years (including very weak 2020–2021), highlighting a less stable earnings profile and higher operating leverage to the cycle.44
Neutral
Balance Sheet
Leverage is currently conservative, with debt-to-equity around ~0.21 in 2023–2025 and total debt roughly stable near $0.6B, supported by a sizable equity base (~$2.9B). However, the company has a history of balance sheet stress (negative equity in 2020–2021), and returns on equity turned negative in 2025, indicating that while the balance sheet looks improved, performance must stabilize to keep it that way.67
Positive
Cash Flow
Cash generation weakened materially in 2025, with operating cash flow turning slightly negative (-$28M) and free cash flow also negative (-$28M), following mixed conversion in prior years (strong positive free cash flow in 2023, but negative in 2022 and 2024). The recent shift back to cash burn reduces financial flexibility and suggests earnings quality/cash conversion is not yet consistent.38
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Mar 2023 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.44B | 1.39B | 1.47B | 936.00M | 907.00M |
| Gross Profit | 173.00M | 293.00M | 565.00M | 281.00M | -38.00M |
| EBITDA | 248.00M | 562.00M | 494.00M | 224.00M | -336.00M |
| Net Income | -77.00M | 446.00M | 300.00M | 3.91B | -587.00M |
Balance Sheet | |||||
| Total Assets | 3.95B | 4.16B | 4.22B | 2.80B | 3.90B |
| Cash, Cash Equivalents and Short-Term Investments | 339.00M | 478.00M | 697.00M | 480.00M | 293.00M |
| Total Debt | 613.00M | 618.00M | 610.00M | 518.00M | 908.00M |
| Total Liabilities | 1.09B | 1.24B | 1.24B | 1.10B | 7.61B |
| Stockholders Equity | 2.86B | 2.92B | 2.98B | 1.70B | -3.72B |
Cash Flow | |||||
| Free Cash Flow | -138.00M | -69.00M | 186.00M | -140.00M | -183.00M |
| Operating Cash Flow | -28.00M | 88.00M | 287.00M | 9.00M | -154.00M |
| Investing Cash Flow | -113.00M | 226.00M | 42.00M | 343.00M | 37.00M |
| Financing Cash Flow | -3.00M | -532.00M | -200.00M | -363.00M | 0.00 |
Seadrill Limited Technical Analysis
Positive
44.89
Price Trends
40.34
Positive
35.90
Positive
32.81
Positive
Market Momentum
0.87
Positive
57.29
Neutral
70.99
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SDRL, the sentiment is Positive. The current price of 44.89 is above the 20-day moving average (MA) of 43.59, above the 50-day MA of 40.34, and above the 200-day MA of 32.81, indicating a bullish trend. The MACD of 0.87 indicates Positive momentum. The RSI at 57.29 is Neutral, neither overbought nor oversold. The STOCH value of 70.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SDRL.
Seadrill Limited Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $6.62B | 3.62 | 38.72% | ― | 6.81% | -61.94% | |
67 Neutral | $1.49B | 23.49 | 4.41% | 5.99% | 5.83% | -11.86% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
65 Neutral | $4.07B | -25.02 | -2.83% | 5.42% | -16.59% | 83.95% | |
65 Neutral | $7.12B | -1.36 | -32.62% | ― | 16.93% | -335.82% | |
58 Neutral | $3.59B | -7.33 | -11.45% | 3.24% | 35.89% | -148.39% | |
56 Neutral | $2.79B | -54.06 | -2.68% | ― | -9.31% | -91.57% |
* Energy Sector Average
SDRL
Seadrill Limited
44.89
19.77
78.70%
HP
Helmerich & Payne
35.95
11.71
48.29%
PTEN
Patterson-UTI
10.72
2.75
34.57%
RIG
Transocean
6.46
3.22
99.38%
BORR
Borr Drilling
4.84
2.42
100.00%
VAL
Valaris
95.68
55.32
137.07%
Seadrill Limited Corporate Events
Executive/Board Changes
Seadrill Names Samir Ali as New Chief Executive
Positive
Mar 18, 2026
On March 12, 2026, Seadrill Limited’s board appointed Samir Ali as president and chief executive officer, replacing Simon Johnson with immediate effect, as part of a leadership transition at the offshore driller. Ali, 40, previously served as Seadrill’s executive vice president and chief commercial officer and brings experience from Diamond Offshore, Bain Capital, and Simmons & Company, underscoring the board’s emphasis on commercial, financial, and capital-markets expertise at the top of the company.
In conjunction with his appointment, Seadrill significantly enhanced Ali’s compensation and severance package, including a higher base salary, performance-linked annual bonus opportunity, and a $3.5 million mix of performance- and time-vested equity awards. The revised employment terms, including expanded severance protections, signal the board’s effort to align the new CEO’s incentives with shareholder returns and provide stability through potential change-of-control scenarios, while former CEO Johnson is set to receive contractual severance benefits under a forthcoming separation agreement.
The most recent analyst rating on (SDRL) stock is a Hold with a $46.00 price target. To see the full list of analyst forecasts on Seadrill Limited stock, see the SDRL Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.