Third quarter 2026
Filed Nov 3, 2026Seadrill reported a third-quarter net loss of $30 million and Adjusted EBITDA of $121 million, generated $179 million of Free Cash Flow, secured approximately $800 million of Total Contract Value, and increased full-year 2026 revenue and Adjusted EBITDA guidance.
Third-quarter revenue, Adjusted EBITDA, margins, and economic utilization declined sequentially, while Free Cash Flow was $179 million, contract awards and extensions added approximately $800 million of Total Contract Value, and the company increased full-year revenue and Adjusted EBITDA guidance.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total operating revenues, three months ended September 30, 2026GAAP | $428M | decreased | – |
| Contract revenues, three months ended September 30, 2026GAAP | $329M | – | – |
| Reimbursable revenues, three months ended September 30, 2026GAAP | $24M | – | – |
| Management contract revenues, three months ended September 30, 2026GAAP | $66M | – | – |
| Leasing revenues, three months ended September 30, 2026GAAP | $9M | – | – |
| Other revenues, three months ended September 30, 2026GAAP | — | – | – |
| Vessel and rig operating expenses, three months ended September 30, 2026GAAP | −$211M | – | – |
| Reimbursable expenses, three months ended September 30, 2026GAAP | −$23M | – | – |
| Depreciation and amortization, three months ended September 30, 2026GAAP | −$77M | – | – |
| Management contract expenses, three months ended September 30, 2026GAAP | −$48M | – | – |
| Selling, general and administrative expenses, three months ended September 30, 2026GAAP | −$25M | – | – |
| Merger and integration related expenses, three months ended September 30, 2026GAAP | — | – | – |
| Total operating expenses, three months ended September 30, 2026GAAP | −$384M | increased by $7 million | – |
| Operating profit, three months ended September 30, 2026GAAP | $44M | – | – |
| Interest income, three months ended September 30, 2026GAAP | $3M | – | – |
| Interest expense, three months ended September 30, 2026GAAP | −$15M | – | – |
| Equity in earnings/(losses) of equity method investment (net of tax), three months ended September 30, 2026GAAP | $5M | – | – |
| Other financial and non-operating items, three months ended September 30, 2026GAAP | −$48M | – | – |
| Total financial and other non-operating items, net, three months ended September 30, 2026GAAP | −$55M | – | – |
| (Loss)/profit before income taxes, three months ended September 30, 2026GAAP | −$11M | – | – |
| Income tax expense, three months ended September 30, 2026GAAP | −$19M | – | – |
| Net loss, three months ended September 30, 2026GAAP | −$30M | – | – |
| Basic LPS, three months ended September 30, 2026GAAP | −$490K | – | – |
| Diluted LPS, three months ended September 30, 2026GAAP | −$490K | – | – |
| Adjusted EBITDA, three months ended September 30, 2026non-GAAP | $121M | decreased | – |
| Adjusted EBITDA margin, three months ended September 30, 2026non-GAAP | 28.3 % | – | – |
| Adjusted EBITDA excluding Reimbursables, three months ended September 30, 2026non-GAAP | $120M | – | – |
| Adjusted EBITDA margin excluding Reimbursables, three months ended September 30, 2026non-GAAP | 29.7 % | – | – |
| Net loss margin, three months ended September 30, 2026GAAP | (7.0) % | – | – |
| Net cash provided by operating activities, three months ended September 30, 2026GAAP | $195M | – | – |
| Additions to drilling units and equipment, three months ended September 30, 2026GAAP | −$16M | – | – |
| Free Cash Flow, three months ended September 30, 2026non-GAAP | $179M | – | – |
| Capital additions and long-term maintenance, third quarter 2026other | $56M | – | – |
| Average number of rigs on contract, three months ended September 30, 2026other | 9 | – | – |
| Average contractual dayrates, three months ended September 30, 2026other | $376K | – | – |
| Economic utilization, three months ended September 30, 2026other | 94.5 % | – | – |
| Total operating revenues, nine months ended September 30, 2026GAAP | $1.24B | – | – |
| Contract revenues, nine months ended September 30, 2026GAAP | $961M | – | – |
| Reimbursable revenues, nine months ended September 30, 2026GAAP | $53M | – | – |
| Management contract revenues, nine months ended September 30, 2026GAAP | $196M | – | – |
| Leasing revenues, nine months ended September 30, 2026GAAP | $25M | – | – |
| Other revenues, nine months ended September 30, 2026GAAP | — | – | – |
| Total operating expenses, nine months ended September 30, 2026GAAP | −$1.09B | – | – |
| Operating profit, nine months ended September 30, 2026GAAP | $140M | – | – |
| Net loss, nine months ended September 30, 2026GAAP | −$8M | – | – |
| Diluted LPS, nine months ended September 30, 2026GAAP | −$130K | – | – |
| Net cash provided by operating activities, nine months ended September 30, 2026GAAP | $155M | – | – |
| Net cash used in investing activities, nine months ended September 30, 2026GAAP | −$54M | – | – |
| Net cash provided by financing activities, nine months ended September 30, 2026GAAP | $40M | – | – |
| Net increase/(decrease) in cash and cash equivalents, including restricted cash, nine months ended September 30, 2026GAAP | $141M | – | – |
Full year 2026 outlook
- Revenue$1.56 - $1.58 billion, excluding $90 million of Reimbursable revenues
- NoteAdjusted EBITDA: $440 - $460 million
- NoteCapital Expenditure and Long-Term Maintenance: $210 - $230 million
Capital returns
- Repurchased approximately $22 million of shares in the third quarter.
- Shares repurchased: $(42) million for the nine months ended September 30, 2026.
What drove it
- The sequential revenue decrease was primarily driven by fewer operating days for the West Carina after it completed its contract in the second quarter and time between contracts for the West Vela, West Elara, and Sevan Louisiana.
- The decrease was partially offset by increased operating days for the West Tellus, which commenced its long-term contract in June.
- Seadrill secured contract awards and extensions in Indonesia, Malaysia, Angola, and the U.S. Gulf, adding approximately $800 million of Total Contract Value subsequent to the August fleet status report.
- As of November 3, 2026, Contract Backlog was approximately $3.3 billion.
- 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 the improved dayrate effective in 2027.
Concerns
- Total operating revenues decreased to $428 million from $449 million in the prior quarter.
- Adjusted EBITDA decreased to $121 million from $144 million in the prior quarter.
- Adjusted EBITDA margin excluding Reimbursables declined to 29.7 % from 33.5 % in the prior quarter.
- Economic utilization declined to 94.5 % from 95.5 % in the prior quarter.
- The company reported a Net loss of $30 million, including the impact of a legal provision booked in the third quarter.
- Time between contracts affected the West Vela, West Elara, and Sevan Louisiana.
What to watch
- Execution of the West Carina program, expected to commence in the first half of 2027, including the improved dayrate under the repriced legacy contract.
- West Capella operations through February 2028 following exercise of priced and unpriced options.
- The Sonangol Libongos extension, which commits the rig into 2030.
- Commencement of the Sevan Louisiana contracts with Kosmos and LLOG, which secure the rig into 2027.
- Delivery against full-year 2026 Total operating revenues guidance of $1.56 - $1.58 billion, excluding $90 million of Reimbursable revenues.
- Delivery against full-year 2026 Adjusted EBITDA guidance of $440 - $460 million and Capital Expenditure and Long-Term Maintenance guidance of $210 - $230 million.
Balance sheet and cash flow
- Gross principal debt was $750 million at quarter-end.
- Cash, cash equivalents, and restricted cash were $506 million at quarter-end.
- Net debt position was $244 million at quarter-end.
- Cash and cash equivalents were $483 million as of September 30, 2026, compared with $339 million as of December 31, 2025.
- Restricted cash was $23 million as of September 30, 2026, compared with $26 million as of December 31, 2025.
- Long-term debt was $737 million as of September 30, 2026, compared with $613 million as of December 31, 2025.
- Third-quarter cash benefited from receipt of lump-sum mobilization revenue relating to the West Tellus and a working capital release.
- Proceeds from issuance of senior bond were $700 million for the nine months ended September 30, 2026.
- Repayment of secured bond was $(575) million for the nine months ended September 30, 2026.
- Payment of make whole premium on secured bond was $(25) million for the nine months ended September 30, 2026.
- Payment of debt issuance costs was $(16) million for the nine months ended September 30, 2026.
Analysis
Seadrill reported third-quarter Total operating revenues of $428 million, below $449 million in the prior quarter, while Total operating expenses increased by $7 million to $384 million. The company attributed the revenue decline primarily to fewer operating days for the West Carina following completion of its contract in the second quarter and time between contracts for the West Vela, West Elara, and Sevan Louisiana. Increased operating days for the West Tellus, which began its long-term contract in June, partially offset those pressures.
Profitability and operating metrics declined sequentially. Adjusted EBITDA was $121 million compared with $144 million in the prior quarter, while Adjusted EBITDA margin excluding Reimbursables was 29.7 % compared with 33.5 %. Economic utilization was 94.5 % compared with 95.5 %, although average contractual dayrates increased to $376 thousand from $360 thousand. Seadrill recorded a Net loss of $30 million, including the impact of a legal provision booked in the third quarter, compared with Net income of $29 million in the prior quarter.
Cash conversion was the central positive in the period. Net cash provided by operating activities was $195 million and Free Cash Flow was $179 million, compared with Net cash used in operating activities of $(18) million and Free Cash Flow of $(43) million in the prior quarter. Third-quarter cash benefited from lump-sum mobilization revenue relating to the West Tellus and a working capital release. The company repurchased approximately $22 million of shares in the quarter, while quarter-end gross principal debt was $750 million, cash, cash equivalents, and restricted cash were $506 million, and net debt was $244 million.
Commercial activity expanded Seadrill's forward coverage. Awards and extensions added approximately $800 million of Total Contract Value subsequent to the August fleet status report, and Contract Backlog was approximately $3.3 billion as of November 3, 2026. The West Carina award is expected to commence in the first half of 2027, while the West Capella is expected to work in direct continuation through February 2028 and the Sonangol Libongos is committed into 2030. Management stated that over 85% of available drillship days are contracted in 2027.
Management increased full-year 2026 Total operating revenues guidance to $1.56 - $1.58 billion, excluding $90 million of Reimbursable revenues, from $1.50 - $1.55 billion, excluding $50 million of Reimbursable revenues. It also increased Adjusted EBITDA guidance to $440 - $460 million from $420 - $450 million and narrowed Capital Expenditure and Long-Term Maintenance guidance to $210 - $230 million from $200 - $240 million. The higher guide and commercial backlog contrast with the sequential decline in third-quarter revenue, EBITDA, margins, and utilization.
Management, verbatim
Seadrill generated $179 million of Free Cash Flow in the third quarter, delivering on our commitment to convert backlog into cash. Over 85% of available drillship days are now contracted in 2027, further enhancing visibility into next year’s earnings and cash flow.
Samir Ali, President and Chief Executive Officer
The West Carina award secures the third and final repricing of three legacy contracts, with the improved dayrate effective in 2027. A healthy tender pipeline and growing deepwater demand reinforce our confidence in the market outlook, positioning Seadrill to build on these commercial achievements and capture further upside.
Samir Ali, President and Chief Executive Officer
Not in the filing
stated, not guessed- GAAP gross margin was not reported.
- Non-GAAP earnings per share was not reported.
- A quarterly prior-year comparison for Adjusted EBITDA and Adjusted EBITDA margins was not reported.
- Year-over-year percentage changes for the reported third-quarter metrics were not stated.
- Reportable segment revenue, segment profit, and segment margins were not reported.
- Full-year 2026 guidance for gross margin, operating expenses, and tax rate was not reported.
- A separate previous outlook section was not provided; therefore, no actual-versus-prior-guidance comparison is included.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.