Seadrill Limited — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total operating revenues for the three months ended September 30, 2026, were $428 million, a decrease from $449 million in the prior quarter (June 30, 2026).
• Contract revenues were $329 million in Q3 2026, down from $355 million in Q2 2026.
• Net loss was $30 million for Q3 2026, compared to net income of $29 million in Q2 2026; the loss includes a legal provision booked in the quarter.
• Adjusted EBITDA was $121 million for Q3 2026, down from $144 million in Q2 2026.
• Adjusted EBITDA margin excluding reimbursables was 29.7% in Q3 2026, compared to 33.5% in Q2 2026.
• Diluted loss per share was $0.49 in Q3 2026, compared to diluted earnings per share of $0.47 in Q2 2026.
• Net cash provided by operating activities was $195 million in Q3 2026.
• Free Cash Flow was $179 million in Q3 2026.
• Total operating expenses increased to $384 million in Q3 2026 from $377 million in Q2 2026.
• At quarter-end, gross principal debt was $750 million, with $506 million in cash, cash equivalents, and restricted cash, resulting in a net debt position of $244 million.
• Capital additions and long-term maintenance totaled $56 million in Q3 2026.

Guidance and Future Outlook:

• Full year 2026 Total operating revenues guidance range increased to $1.56 - $1.58 billion (excluding $90 million of reimbursable revenues), up from the previous range of $1.50 - $1.55 billion (excluding $50 million of reimbursable revenues).
• Full year 2026 Adjusted EBITDA guidance range increased to $440 - $460 million, up from the previous range of $420 - $450 million.
• Full year 2026 Capital Expenditure and Long-Term Maintenance guidance range narrowed to $210 - $230 million, down from the previous range of $200 - $240 million.
• Over 85% of available drillship days are contracted in 2027.
• The West Carina award secures the third and final repricing of three legacy contracts, with improved dayrates effective in 2027.

Business Segments and Product Lines:

• Subsequent to the August fleet status report, Seadrill secured contract awards and extensions totaling approximately $800 million in Total Contract Value.
• Indonesia: The West Carina was awarded a contract with an undisclosed operator for approximately $420 million in Total Contract Value, with an estimated firm duration of 880 days and priced options for an additional 880 days; the program is expected to commence in the first half of 2027.
• Malaysia: All remaining priced options were exercised for the West Capella, extending operations by 120 days and adding approximately $41 million in Total Contract Value; unpriced options were exercised for a further 120 days, adding approximately $53 million in Total Contract Value; the rig is now expected to work in direct continuation through February 2028.
• Angola: Sonadrill Holding Ltd (a 50:50 joint venture with Sonangol E.P.) was awarded a contract extension for the Sonangol Libongos, exercising all remaining priced options to extend operations by approximately three years and committing the rig into 2030.
• U.S. Gulf: The Sevan Louisiana was awarded a 25-day contract with Kosmos commencing in November 2026, followed by an approximate 60-day contract with LLOG, securing the rig into 2027.
• As of November 3, 2026, the Contract Backlog was approximately $3.3 billion.

Market and Competitive Landscape:

• Management cited a healthy tender pipeline and growing deepwater demand as reinforcing confidence in the market outlook.
• The West Carina award represents the final repricing of three legacy contracts.
• Economic utilization was 94.5% in Q3 2026, compared to 95.5% in Q2 2026.
• Average contractual dayrates were $376,000 in Q3 2026, up from $360,000 in Q2 2026.
• The average number of rigs on contract was 9 in Q3 2026, down from 10 in Q2 2026.

Risks and Challenges:

• The press release notes a legal provision booked in the third quarter that contributed to the net loss.
• Forward-looking statements include risks related to offshore drilling market conditions, supply and demand, dayrates, contract awards, mobilization delays, maintenance costs, and regulatory work.
• Risks include potential delays in payment or disputes with customers, fluctuations in oil prices, geopolitical conflicts (including Ukraine, Middle East, and Iran), and the impact of decarbonization and emissions legislation.
• The Company notes that Adjusted EBITDA guidance cannot be reconciled to GAAP net income without unreasonable effort due to the forward-looking nature of the measure.

Management Commentary and Tone:

• Samir Ali, President and CEO, stated the company delivered on its commitment to convert backlog into cash, generating $179 million in Free Cash Flow.
• Management expressed confidence in the market outlook, citing a healthy tender pipeline and growing deepwater demand.
• The tone indicates a focus on building on commercial achievements to capture further upside.

Other Key Points:

• Seadrill repurchased approximately $22 million of shares in the third quarter.
• Cash flow in Q3 2026 benefited from the receipt of lump-sum mobilization revenue relating to the West Tellus and a working capital release.
• The West Tellus commenced a long-term contract in June, offsetting revenue decreases from other rigs.
• The West Carina completed its contract in the second quarter, contributing to the revenue decrease in Q3.
• The West Vela, West Elara, and Sevan Louisiana experienced time between contracts in Q3 2026.
• The Company will host a conference call on November 4, 2026, to discuss results.