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Seadrill Limited (SDRL)
NYSE:SDRL
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Seadrill Limited
(NYSE:SDRL)
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Rating:62Neutral
Price Target:
$40.00
▲(5.15% Upside)
The score is held back primarily by weakening TTM profitability and weak/negative free cash flow, with valuation also a concern due to the high P/E. Offsetting these are strong technical momentum and a reasonably supportive earnings-call backdrop driven by backlog growth and constructive longer-term market expectations, despite near-term operational and pricing headwinds.
Positive Factors
Contracted Backlog / Revenue Visibility
A ~$2.5B contracted backlog with a recent >$300M addition materially extends revenue visibility and reduces near-term utilization risk. Multi-rig contract coverage supports predictable dayrate cashflows into 2026–27, enabling steadier EBITDA and better planning of fleet deployment and capex.
Balance Sheet Strength
Manageable leverage (~0.21) and restored positive equity (~$2.9B) provide financial flexibility in a cyclical industry. A healthier capital structure lowers refinancing risk, supports bidding for new contracts, funds upgrades, and cushions operational downturns without immediate reliance on dilutive financing.
Operational Reliability & Technology
Investments in technology (MPD on West Neptune) and rig upgrades improve drilling accuracy, safety and uptime, increasing appeal for premium deepwater contracts. Sustained high uptime and modernized assets reduce non-productive time, supporting customer retention and long-term margin sustainability.
Negative Factors
Weak Cash Generation
Very weak cash conversion (low OCF and negative FCF) limits the company’s ability to self-fund capex, debt repayment or strategic investments. Persistent negative free cash flow forces dependence on external financing or asset recycling, increasing execution risk in a capital-intensive, cyclical drilling business.
Declining Revenues and Compressed Margins
A ~15% revenue decline with sharply compressed margins indicates structural pressure on pricing and utilization. Lower margins reduce return on equity and spare cash for reinvestment, making profitability more sensitive to market cycles and hindering consistent improvement in long-term operating performance.
Commercial & Operational Risks (Pricing, Idle Rigs, Downtime)
Management noted competitive day-rate softness, technical downtime in Brazil and idle-rig concerns. These commercial and operational headwinds can prolong underutilization, compress realized dayrates and increase the likelihood of contract gaps, restraining revenue recovery and utilization improvements over several quarters.
Seadrill Limited (SDRL) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.46B
Dividend YieldN/A
Average Volume (3M)708.38K
Price to Earnings (P/E)76.2
Beta (1Y)1.16
Revenue Growth-9.31%
EPS Growth-91.57%
CountryUS
Employees3,300
SectorEnergy
Sector Strength52
IndustryOil & Gas Drilling
Share Statistics
EPS (TTM)-0.17
Shares Outstanding62,374,172
10 Day Avg. Volume771,611
30 Day Avg. Volume708,375
Financial Highlights & Ratios
PEG Ratio0.11
Price to Book (P/B)0.91
Price to Sales (P/S)1.91
P/FCF Ratio-38.37
Enterprise Value/Market Cap1.06
Enterprise Value/Revenue1.92
Enterprise Value/Gross Profit13.06
Enterprise Value/Ebitda10.74
Forecast
1Y Price Target
$43.80Price Target Upside15.14% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)1.1
Revenue Forecast (FY)$1.41B
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 generates revenue primarily through the provision of drilling services under long-term contracts with major oil and gas companies. The company's revenue model is largely based on day-rate contracts, where clients pay a fixed daily rate for the use of its drilling rigs and associated services. Key revenue streams include drilling contracts, project management services, and ancillary services such as maintenance and logistical support. Significant partnerships with major industry players, along with strategic alliances in various regions, enhance Seadrill's market presence and contribute to its earnings. Additionally, the company's focus on maintaining a modern and efficient fleet helps optimize operational costs and improve profitability.
Seadrill Limited Earnings Call Summary
Earnings Call Date:Nov 05, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 25, 2026
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment. Seadrill demonstrated strong operational performance and secured multiple new contracts, contributing to a significant backlog. However, challenges such as decreased revenues, technical downtime, and competitive pricing pressures in certain markets were also highlighted. The overall market outlook remains positive, with an anticipated recovery in the coming years.Q3-2025 Updates
Positive Updates
Increased Backlog and Contract Wins
Seadrill added over $300 million to its backlog, bringing the total contracted backlog to approximately $2.5 billion, securing new contracts across 5 rigs.
Strong Performance in Angola
The Sonadrill joint venture in Angola secured new work for all 3 rigs, including a 525-day program for the Sonangol Libongos and a 210-day program for the Sonangol Quenguela, reaffirming Seadrill's position as the #1 drillship operator in Angola.
Operational Excellence in the U.S. Gulf
Seadrill's rigs in the U.S. Gulf, including the West Vela and Sevan Louisiana, secured new contracts and demonstrated high operational performance, with the West Vela achieving near-perfect technical uptime in excess of 99.7%.
Technological Advancements
The West Neptune commenced operations with a new Managed Pressure Drilling (MPD) system, and the Sevan Louisiana is being upgraded to enhance its capabilities, showcasing Seadrill's commitment to incorporating advanced technologies.
Positive Market Outlook
Seadrill sees constructive contracting momentum and an uptick in global tendering activity, supporting a broad-based market recovery moving into 2026 and 2027.
Negative Updates
Decreased Operating Revenues and EBITDA
Total operating revenues for the third quarter were $363 million, a sequential decrease of $14 million, and adjusted EBITDA was $86 million, a decrease of $20 million from the prior quarter.
Technical Downtime in Brazil
One of Seadrill's rigs in Brazil experienced operational downtime due to a design-related equipment failure, impacting economic utilization for the quarter.
Competitive Pricing Pressure
Seadrill acknowledges potential softness in day rates in certain regions such as West Africa and Brazil, indicating a competitive market environment.
Idle Rig Concerns
The West Capella remains idle, and there are potential gaps in contracts for rigs like the Carina, indicating challenges in securing continuous work.
Company Guidance
During Seadrill's Third Quarter 2025 Earnings Conference Call, the company provided updated guidance for the fiscal year. The call highlighted Seadrill's strategy to build backlog coverage through 2026, with recent contract awards adding over $300 million to its backlog, bringing the total contracted backlog to approximately $2.5 billion. The company emphasized its operational excellence, with three of its rigs in the Sonadrill joint venture achieving technical uptime in excess of 99.7%. Financially, Seadrill reported third quarter operating revenues of $363 million and adjusted EBITDA of $86 million. They narrowed their full-year adjusted EBITDA guidance to a range of $330 million to $360 million, with expected operating revenues of $1.36 billion to $1.39 billion, excluding $50 million of reimbursable revenues. Capital expenditure guidance for the year was refined to $280 million to $300 million, with expectations for reduced capital expenditure in 2026. The company remains optimistic about the market outlook, anticipating increased contracted utilization and day rate progression from 2026 into 2027.Seadrill Limited Financial Statement Overview
Summary
Balance sheet strength (moderate leverage and restored positive equity) is a support, but current performance is pressured: TTM revenue is down ~15%, margins have compressed sharply, and cash generation is weak with negative free cash flow (TTM). Overall earnings quality and cash-flow durability are the main financial risks.Income Statement
Profitability has weakened materially in TTM (Trailing-Twelve-Months): revenue fell ~15% versus the prior annual period and margins compressed sharply (gross margin ~10% and net margin ~2.5%) compared with 2024’s much stronger profitability. While the company remains modestly profitable on a trailing basis, the earnings profile looks volatile across years (including outsized 2022 net income that is not reflective of the underlying operating margin), which lowers confidence in sustainability.58
Neutral
Balance Sheet
Leverage appears manageable and stable with debt-to-equity around ~0.21 in both 2024 and TTM (Trailing-Twelve-Months), and total debt roughly flat (~$0.61B). Equity is positive and sizable (~$2.9B), a notable improvement versus the negative equity position seen in 2020–2021. The main weakness is that returns on equity have fallen to very low levels in TTM (Trailing-Twelve-Months), signaling weaker profitability despite a healthier capital structure.72
Positive
Cash Flow
Cash generation is currently weak: operating cash flow in TTM (Trailing-Twelve-Months) is low (~$19M) and free cash flow is negative (~-$38M), representing a sharp deterioration from 2023 when free cash flow was meaningfully positive. Free cash flow has also been negative in multiple recent annual periods (2022 and 2024), suggesting inconsistent conversion of earnings into cash and potentially higher reinvestment needs or working-capital pressure.33
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.35B | 1.39B | 1.47B | 936.00M | 907.00M | 961.00M |
| Gross Profit | 199.00M | 293.00M | 565.00M | 281.00M | -38.00M | -323.00M |
| EBITDA | 242.00M | 562.00M | 494.00M | 224.00M | -336.00M | -3.71B |
| Net Income | 34.00M | 446.00M | 300.00M | 3.91B | -587.00M | -4.66B |
Balance Sheet | ||||||
| Total Assets | 4.07B | 4.16B | 4.22B | 2.80B | 3.90B | 3.96B |
| Cash, Cash Equivalents and Short-Term Investments | 402.00M | 478.00M | 697.00M | 480.00M | 293.00M | 491.00M |
| Total Debt | 629.00M | 618.00M | 610.00M | 518.00M | 908.00M | 6.09B |
| Total Liabilities | 1.20B | 1.24B | 1.24B | 1.10B | 7.61B | 7.10B |
| Stockholders Equity | 2.87B | 2.92B | 2.98B | 1.70B | -3.72B | -3.14B |
Cash Flow | ||||||
| Free Cash Flow | -38.00M | -69.00M | 186.00M | -140.00M | -183.00M | -447.00M |
| Operating Cash Flow | 19.00M | 88.00M | 287.00M | 9.00M | -154.00M | -420.00M |
| Investing Cash Flow | -84.00M | 226.00M | 42.00M | 343.00M | 37.00M | -32.00M |
| Financing Cash Flow | -101.00M | -532.00M | -200.00M | -363.00M | 0.00 | -163.00M |
Seadrill Limited Technical Analysis
Positive
38.04
Price Trends
34.22
Positive
32.57
Positive
29.98
Positive
Market Momentum
1.38
Positive
57.08
Neutral
61.52
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 38.04 is above the 20-day moving average (MA) of 37.10, above the 50-day MA of 34.22, and above the 200-day MA of 29.98, indicating a bullish trend. The MACD of 1.38 indicates Positive momentum. The RSI at 57.08 is Neutral, neither overbought nor oversold. The STOCH value of 61.52 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 |
|---|---|---|---|---|---|---|---|
76 Outperform | $4.32B | 10.38 | 17.49% | ― | 6.81% | -61.94% | |
68 Neutral | $1.60B | 17.73 | 7.08% | 5.99% | 5.83% | -11.86% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
62 Neutral | $2.46B | 76.17 | 1.18% | ― | -9.31% | -91.57% | |
58 Neutral | $3.01B | ― | -2.80% | 5.42% | -16.59% | 83.95% | |
57 Neutral | $5.88B | -1.51 | -32.05% | ― | 16.93% | -335.82% | |
54 Neutral | $3.70B | -10.86 | -5.87% | 3.24% | 35.89% | -148.39% |
* Energy Sector Average
SDRL
Seadrill Limited
38.04
5.17
15.73%
HP
Helmerich & Payne
34.53
8.95
34.98%
PTEN
Patterson-UTI
8.17
>-0.01
-0.12%
RIG
Transocean
4.94
1.36
37.99%
BORR
Borr Drilling
4.94
1.72
53.42%
VAL
Valaris
58.21
12.35
26.93%
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.