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Seadrill Ltd

Seadrill LtdSDRL财报

NYSE · 能源 · 石油和天然气钻井

Seadrill is an offshore drilling contractor providing worldwide offshore drilling services to the oil and gas industry. Its primary business is the ownership and operation of drillships, semi-submersible rigs, and jack-up rigs for operations in shallow to ultra-deep water in both benign and harsh environments. It provides a contract-based service and primarily serves the oil super-majors, integrated oil and gas, state-owned national oil, and independent oil and gas companies.

What changed in Seadrill Ltd's 10-K — 2024 vs 2025

Top changes in Seadrill Ltd's 2025 10-K

317 paragraphs added · 319 removed · 235 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

36 edited+9 added−8 removed77 unchanged
International Maritime Regimes Applicable international maritime regime requirements include, but are not limited to, the International Convention on Civil Liability for Bunker Oil Pollution Damage, the International Convention for the Safety of Life at Sea of 1974, as from time to time amended, the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, the MODU Code, and the International Convention for the Prevention from Ships International Convention for the Control and Management of Ships’ Ballast Water and Sediments of 2004, as from time to time amended (the "BWM Convention").
International Maritime Regimes Applicable international maritime regime requirements include, but are not limited to, the International Convention on Civil Liability for Bunker Oil Pollution Damage, the International Convention for the Safety of Life at Sea of 1974, as from time to time amended, the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention, the MODU Code, the International Convention for the Prevention of Pollution from Ships, and the International Convention for the Control and Management of Ships’ Ballast Water and Sediments of 2004, as from time to time amended (the "BWM Convention").
Drillships are suitable for drilling in remote locations because of their mobility and large load-carrying capacity. Depending on the country of operation, drillships operate with crews of 120 to 160 people. Semi-submersible drilling rigs: Semi-submersible rigs consist of an upper working and living quarters deck connected to a lower hull consisting of columns and pontoons.
Drillships are suitable for drilling in remote locations because of their mobility and large load-carrying capacity. Depending on the country of operation, drillships operate with crews of 120 to 160 people. Semi-submersible drilling units: Semi-submersible rigs consist of an upper working and living quarters deck connected to a lower hull consisting of columns and pontoons.
Under its requirements, only ballast water treatment will be accepted from the next International Oil Pollution Prevention renewal survey (after September 8, 2019). All Seadrill units considered in operational status and operating in areas subject to the BWM Convention by International Maritime Organization guidelines are in full compliance therewith. iii.
Under its requirements, only ballast water treatment will be accepted from the next International Oil Pollution Prevention renewal survey (after September 8, 2019). All Seadrill units considered in operational status and operating in areas subject to the BWM Convention by International Maritime Organization guidelines are in full compliance therewith. 9 iii.
For details of these laws and regulations, refer to Part I, Item 1A, "Risk Factors - Risks Relating to Our Business and Industry - We are subject to complex environmental laws and regulations that can adversely affect us." 9 The BWM Convention requires mandatory ballast water treatment. The BWM Convention entered into force on September 8, 2017.
For details of these laws and regulations, refer to Part I, Item 1A, "Risk Factors - Risks Relating to Our Business and Industry - We are subject to complex environmental laws and regulations that can adversely affect us." The BWM Convention requires mandatory ballast water treatment. The BWM Convention entered into force on September 8, 2017.
Wieggers holds a Bachelor’s in Engineering, Drilling and Production Technology from Amsterdam University of Applied Sciences. He has completed the Accelerated Development Program from London Business School and the Advanced Management Program from the International Institute for Management Development (IMD). Mr. Wieggers is a Dutch citizen and resides in Texas. 11 Board of Directors of Seadrill Limited Ms. Julie J.
Wieggers holds a Bachelor’s in Engineering, Drilling and Production Technology from Amsterdam University of Applied Sciences. He has completed the Accelerated Development Program from London Business School and the Advanced Management Program from the International Institute for Management Development (IMD). Mr. Wieggers is a Dutch citizen and resides in Texas. Board of Directors of Seadrill Limited Ms. Julie J.
In addition, if material spill events similar to the Deepwater Horizon Incident were to occur in the future, or if other environmental or safety issues were to cause significant public concern, the United States or other countries could elect to, again, issue directives to cease drilling activities in certain geographic areas for lengthy periods of time. v.
In addition, if material spill events similar to the Deepwater Horizon Incident were to occur in the future, or if other environmental or safety issues were to cause significant public concern, the United States or other countries could elect to, again, issue directives to cease drilling activities in certain geographic areas, potentially for lengthy periods of time. v.
Commencing his journey as a Toolpusher, he ascended the ranks, culminating in his recent position as Vice President, Operations overseeing the Company’s Floater and Harsh Environment fleets prior to his appointment to Senior Vice President, Operations. His seasoned experience encompasses both offshore and onshore capacities, spanning continents including Africa, Asia, Europe, South America, and North America. Mr.
Commencing his journey as a Toolpusher, he ascended the ranks, culminating in his position as Vice President, Operations overseeing the Company’s Floater and Harsh Environment fleets prior to his appointment to Senior Vice President, Operations. His seasoned experience encompasses both offshore and onshore capacities, spanning continents including Africa, Asia, Europe, South America, and North America. Mr.
On February 22, 2022 ("Effective Date"), Seadrill Limited and certain of its subsidiaries, that filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court ("the Debtors") emerged from bankruptcy proceedings in accordance with the terms and conditions of Seadrill's Plan of Reorganization.
On February 22, 2022 ("Effective Date"), Seadrill Limited and certain of its subsidiaries, that filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court emerged from bankruptcy proceedings in accordance with the terms and conditions of Seadrill's Plan of Reorganization.
Robertson – Chair of our Board of Directors and Former Executive Chairman, President and Chief Executive Officer of Noble Corporation plc and its predecessor companies. Mr. Jean Cahuzac – Former Chief Executive Officer of Subsea 7 S.A. Mr. Jan Kjærvik – Former Interim Treasurer for GE Energy businesses (Vernova). Mr.
Robertson – Chairman of our Board of Directors and Former Executive Chairman, President and Chief Executive Officer of Noble Corporation plc and its predecessor companies. Mr. Jean Cahuzac – Former Chief Executive Officer of Subsea 7 S.A. Mr. Jan Kjærvik – Former Interim Treasurer for GE Energy businesses (Vernova). Mr.
Seadrill Limited (previously known as "Seadrill 2021 Limited") (the "Successor"), is an exempted company limited by shares incorporated under the laws of Bermuda and in accordance with the Bermuda Companies Act 1981 (the "Bermuda Companies Act"). Successor was incorporated on October 15, 2021, under the name Seadrill 2021 Limited.
Seadrill Limited (previously known as "Seadrill 2021 Limited") is an exempted company limited by shares incorporated under the laws of Bermuda and in accordance with the Bermuda Companies Act 1981 (the "Bermuda Companies Act"). Seadrill Limited was incorporated on October 15, 2021, under the name Seadrill 2021 Limited.
We operate in a single, global offshore drilling market, as our drilling units are mobile assets and are able to be moved according to prevailing market conditions. For details of our revenues and fixed assets by geography, refer to Note 6 – "Segment information" to the Consolidated Financial Statements included herein.
We operate in a single, global offshore drilling market, as our drilling units are mobile assets and are able to be moved according to prevailing market conditions. For details of our revenues and fixed assets by geography, refer to Note 4 – "Segment information" to the Consolidated Financial Statements included herein.
Simon William Johnson serves as the President and Chief Executive Officer of the Company. Mr. Johnson was appointed to such roles in March 2022. Mr. Johnson has worked internationally for the past 28 years for a number of publicly listed offshore drilling contractors, including the Company, Diamond Offshore, Noble Corporation, and Borr Drilling.
Simon William Johnson serves as the President and Chief Executive Officer of the Company. Mr. Johnson was appointed to such roles in March 2022. Mr. Johnson has worked internationally for the past 29 years for a number of publicly listed offshore drilling contractors, including the Company, Diamond Offshore, Noble Corporation, and Borr Drilling.
Maintenance of class certification requires expenditure and can require taking a drilling unit out of service from time to time for repairs or modifications to meet class requirements. Our drilling units must generally undergo class surveys annually and a renewal survey once every five years.
Maintenance of class certification requires expenditures and can require taking a drilling unit out of service from time to time for repairs or modifications to meet class requirements. Our drilling units must generally undergo class surveys annually and a renewal survey once every five years.
From July 2, 2018, to the Effective Date, the ultimate parent holding company of the Group was Seadrill Limited, an exempted company limited by shares incorporated under the laws of Bermuda on March 14, 2018 with registration number 53439 ("Old Seadrill Limited" or the "Predecessor").
From July 2, 2018, to the Effective Date, the ultimate parent holding company of the Group was Seadrill Limited, an exempted company limited by shares incorporated under the laws of Bermuda on March 14, 2018 with registration number 53439 ("Old Seadrill Limited").
Grant Creed serves as Executive Vice President and Chief Financial Officer of the Company. Mr. Creed was appointed to such roles in May 2021. Mr. Creed joined the Company in 2013 and has held various positions within the Seadrill Group including Chief Restructuring Officer, VP Mergers & Acquisitions, and VP Corporate and Commercial Finance.
Grant Creed serves as Executive Vice President, Chief Financial Officer of the Company. Mr. Creed was appointed to such role in May 2021. Mr. Creed joined the Company in 2013 and has held various positions within Seadrill including Chief Restructuring Officer, VP Mergers & Acquisitions, and VP Corporate and Commercial Finance.
However, the cost associated with mobilizing rigs between regions is sometimes substantial, as entering a new region could necessitate upgrades of the unit and its equipment to specific regional requirements. Human Capital As of December 31, 2024, we had approximately 3,300 employees worldwide, including contracted-in staff.
However, the cost associated with mobilizing rigs between regions is sometimes substantial, as entering a new region could necessitate upgrades of the unit and its equipment to specific regional requirements. Human Capital As of December 31, 2025, we had approximately 3,000 employees worldwide, including contracted-in staff.
We are recognized for providing high quality operations, in some of the most challenging sectors of offshore drill ing and have worldwide operations based on where activities are conducted in the global oil and gas industry . As of December 31, 2024 , we employed approximately 3,300 employees across the globe.
We are recognized for providing high quality operations, in some of the most challenging sectors of offshore drill ing and have worldwide operations based on where activities are conducted in the global oil and gas industry . As of December 31, 2025 , we employed approximately 3,000 employees across the globe.
Our customers include oil super-majors, state-owned national oil companies and independent oil and gas companies. 6 Drilling units The following table, presented as of December 31, 2024 , provides certain specifications for our drilling units.
Our customers include oil super-majors, state-owned national oil companies and independent oil and gas companies. 6 Drilling units The following table provides certain specifications and the location of our drilling units as of December 31, 2025 .
The 11 operating units include 10 benign floaters (comprising seven 7th generation drillships, two 6th generation drillships and one benign environment semi-submersible) and one harsh environment unit (comprising of one jackup). In addition to our owned assets, as of December 31, 2024, we managed two drilling units owned by Sonangol.
The 10 operating units include nine benign floaters (comprising six 7th generation drillships, two 6th generation drillships and one benign environment semi-submersible) and one harsh environment jackup. In addition to our owned assets, as of December 31, 2025, we managed two drilling units owned by Sonangol.
For details of environmental laws and regulations affecting our operations, refer to Part I, Item 1A, "Risk Factors – Risks Relating to Our Business and Industry – Increasing attention to environmental, social and governance matters and climate change may impact us." i.
For details of environmental laws and regulations affecting our operations, refer to Part I, Item 1A, "Risk Factors – Risks Relating to Our Business and Industry – Changing sentiments with respect to environmental, social and governance matters and climate change may impact us." i.
Available Information We make available free of charge through our website, www.seadrill.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
Ana Zambelli – Former Managing Director in Brookfield’s Private Equity Group. 11 Available Information We make available free of charge through our website, www.seadrill.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.
Unit Drilling unit type Year built Water depth (feet) Drilling depth (feet) Location as of December 31, 2024 Estimated month of rig availability West Carina Drillship 2015 12,000 37,500 Brazil January 2026 West Jupiter Drillship 2014 12,000 37,500 Brazil March 2029 West Neptune Drillship 2014 12,000 37,500 USA April 2026 West Saturn Drillship 2014 12,000 37,500 Brazil October 2026 West Tellus Drillship 2013 12,000 37,500 Brazil April 2029 West Auriga Drillship 2013 12,000 37,500 Brazil December 2027 West Vela Drillship 2013 12,000 37,500 USA September 2025 West Gemini Drillship 2010 10,000 37,500 Angola May 2025 West Capella Drillship 2008 10,000 37,500 South Korea February 2025 West Polaris Drillship 2008 10,000 37,500 Brazil February 2028 Sevan Louisiana Semi-submersible 2013 10,000 35,000 USA June 2025 West Eclipse Semi-submersible 2011 10,000 40,000 Namibia Available West Aquarius Semi-submersible 2009 10,000 34,500 Norway Available West Phoenix Semi-submersible 2008 10,000 29,500 Norway Available West Elara Jackup 2011 492 35,000 Norway Mar 2028 Contract Drilling Operations In general, we contract our drilling units to oil and gas companies to provide offshore drilling services at an agreed dayrate for a fixed contract term or on a well completion basis.
Unit Drilling unit type Year built Water depth (feet) Drilling depth (feet) Location as of December 31, 2025 West Carina Drillship 2015 12,000 37,500 Brazil West Jupiter Drillship 2014 12,000 37,500 Brazil West Neptune Drillship 2014 12,000 37,500 USA West Saturn Drillship 2014 12,000 37,500 Brazil West Tellus Drillship 2013 12,000 37,500 Brazil West Auriga Drillship 2013 12,000 37,500 Brazil West Vela Drillship 2013 12,000 37,500 USA West Gemini Drillship 2010 10,000 37,500 Angola West Polaris Drillship 2008 10,000 37,500 Brazil West Capella Drillship 2008 10,000 37,500 Singapore Sevan Louisiana Semi-submersible 2013 10,000 35,000 USA West Eclipse Semi-submersible 2011 10,000 40,000 Namibia West Aquarius Semi-submersible 2009 10,000 34,500 Norway West Phoenix Semi-submersible 2008 10,000 29,500 Norway West Elara Jackup 2011 492 35,000 Norway Contract Drilling Operations In general, we contract our drilling units to oil and gas companies to provide offshore drilling services at an agreed dayrate for a fixed contract term or on a well completion basis.
Marcel Wieggers serves as the Senior Vice President, Operations of Seadrill Management. Mr. Wieggers was appointed to such role in December 2023. Mr. Wieggers has over 25 years of experience in the offshore drilling industry. During his extensive tenure spanning over 14 years within Seadrill, Mr. Wieggers has demonstrated remarkable progression through various key roles.
Wieggers was appointed to such role in December 2023. Mr. Wieggers has over 25 years of experience in the offshore drilling industry. During his extensive tenure spanning over 15 years within Seadrill, Mr. Wieggers has demonstrated remarkable progression through various key roles.
During the year ended December 31, 2024, our TRIR was 0.36, which was below the IADC average of 0.44 for the areas in which Seadrill operates.
During the year ended December 31, 2025, our TRIR was 0.17, which was below the IADC average of 0.34 for the areas in which Seadrill operates.
As part of our commitments to attract and retain talent, we empower our employees to take ownership of their careers by: • Hiring the right people for the right roles; • Cultivating a high performance culture supported by effective performance management processes; • Supporting our people to fulfill their potential and to build their careers through training and personal development; and • Providing competitive and consistent reward policies that recognize and celebrate individual team contributions.
We are committed to providing a positive employee experience and fostering a safe and supportive work environment that aligns with our values and meets the diverse needs of our people. 8 As part of our commitments to attract and retain talent, we empower our employees to take ownership of their careers by: • Hiring the right people for the right roles; • Cultivating a high performance culture supported by effective performance management processes; • Supporting our people to fulfill their potential and to build their careers through training and personal development; and • Providing competitive and consistent reward policies that recognize and celebrate individual team contributions.
As part of our strategy, we aim to recruit, retain, and develop the best people in the industry and to build a dynamic organization that continually adapts to ever-evolving business needs. 5 Our Fleet We categorize the drilling units in our fleet as (a) floaters, (b) jackup rigs and (c) harsh environment. a) Floaters Drillships : Drillships are self-propelled ships equipped for drilling offshore in water depths ranging from 1,000 to 12,000 feet and are positioned over the well through a dynamic positioning thruster system with multiple levels of redundancy for safety.
Our Fleet We categorize the drilling units in our fleet as (a) floaters, (b) jackup rigs and (c) harsh environment. a) Floaters Drillships : Drillships are self-propelled ships equipped for drilling offshore in water depths ranging from 1,000 to 12,000 feet and are positioned over the well through a dynamic positioning thruster system with multiple levels of redundancy for safety.
Sauer-Petersen holds an MBA from the International Institute of Management Development (IMD) in Lausanne, Switzerland. Mr. Sauer-Petersen is a Danish citizen and resides in Texas. Todd Strickler. Todd Strickler serves as Senior Vice President and General Counsel of the Company. Mr. Strickler was appointed to such roles in February 2023. Mr.
Prior to joining the Company, he held various leadership positions within Maersk Drilling. Mr. Sauer-Petersen holds an MBA from the International Institute of Management Development (IMD) in Lausanne, Switzerland. He is a Danish citizen and resides in Texas. Todd Strickler. Todd Strickler serves as Senior Vice President, General Counsel of the Company. Mr.
Torsten Sauer-Petersen serves as Executive Vice President, Human Resources of the Company. Mr. Sauer-Petersen was appointed to such role in March 2022. Mr. Sauer-Petersen joined Seadrill in February 2011 and has over 25 years of experience in the drilling industry. Prior to joining the Company, he held various human resources positions within Maersk Drilling. Mr.
Torsten Sauer-Petersen serves as Executive Vice President and was appointed to such role in March 2022. He also serves as Chief Technology and Sustainability Officer and was appointed to such role in August 2025. Mr. Sauer-Petersen joined Seadrill in February 2011 and has over 25 years of experience in the drilling industry.
Strickler has over 15 years’ experience in the offshore drilling and oilfield services sectors. Prior to joining the Company, he served as General Counsel and Chief Administrative Officer at Wellbore Integrity Services since 2019. Mr. Strickler was the SVP of Administration, General Counsel, and Corporate Secretary for Paragon Offshore from its inception in 2014 until its sale in 2018.
Strickler was appointed to such role in February 2023. Mr. Strickler has over 15 years’ experience in the offshore drilling and oilfield services sectors. Prior to joining the Company, he served as General Counsel and Chief Administrative Officer at Wellbore Integrity Services since 2019. Mr.
The following customers had total revenues greater than 10% of our consolidated operating revenues in any of the periods presented: Successor Predecessor Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022 Sonadrill 22 % 17 % 21 % 9 % Petrobras 18 % 16 % — % — % Var Energi 7 % 9 % 14 % 11 % Equinor 7 % 6 % 14 % 10 % ConocoPhillips 7 % 5 % 13 % 13 % Lundin — % — % 1 % 12 % Others 39 % 47 % 37 % 45 % 100 % 100 % 100 % 100 % Competition The offshore drilling industry is highly competitive, with market participants ranging from large multinational companies to small locally-owned companies.
The following customers had total revenues greater than 10% of our total operating revenues in any of the periods presented: Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023 Petrobras 36 % 18 % 16 % Sonadrill 22 % 22 % 17 % Talos 11 % 2 % 7 % LLOG 10 % 9 % 9 % Others 21 % 49 % 51 % 100 % 100 % 100 % Competition The offshore drilling industry is highly competitive, with market participants ranging from large multinational companies to small locally-owned companies.
Prior to that, he served as Associate General Counsel for Noble Drilling from 2009 to 2014. Mr. Strickler holds a Bachelor of Science in Mechanical Engineering from the University of Texas at Austin and a Doctor of Law from The University of Texas Law School. Mr. Strickler is a U.S. citizen and resides in Texas. Marcel Wieggers.
Strickler holds a Bachelor of Science in Mechanical Engineering from the University of Texas at Austin and a Doctor of Law from The University of Texas Law School. Mr. Strickler is a U.S. citizen and resides in Texas. Marcel Wieggers. Marcel Wieggers serves as the Senior Vice President, Operations of Seadrill Management. Mr.
The CBA in place in Brazil is negotiated annually and was successfully negotiated for the period from September 2024 to August 2025, when it is up for its annual negotiations. 8 Talent Our success is driven by the passion and expertise of our people, and we are dedicated to attracting and retaining the best talent in the industry and the markets where we operate.
Talent Our success is driven by the passion and expertise of our people, and we are dedicated to attracting and retaining the best talent in the industry and the markets where we operate.
As of December 31, 2024, we owned a total of 15 drilling units, of which 11 were operating (inclusive of one leased to the Sonadrill joint venture), one 6th generation drillship was undergoing contract preparations for a contract that commenced during February 2025, and three were cold stacked.
As of December 31, 2025, we owned a total of 15 drilling units, of which 10 were operating, one was undergoing capital upgrade projects for a contract commencing in the second quarter of 2026, one was undergoing repairs and maintenance projects and three were cold stacked.
There is no assurance that compliance with current laws and regulations or amended or newly adopted laws and regulations can be maintained in the future or that future expenditures required to comply with all such laws and regulations in the future will not be material. 10 Information About Our Executive Officers The following sets forth information regarding our executive officers as of February 27, 2025: Name Age Position Simon Johnson 54 President and Chief Executive Officer Grant Creed 44 Executive Vice President and Chief Financial Officer Samir Ali 39 Executive Vice President, Chief Commercial Officer Torsten Sauer-Petersen 52 Executive Vice President, Human Resources Todd Strickler 47 Senior Vice President and General Counsel Marcel Wieggers 52 Senior Vice President, Operations Simon Johnson.
Information About Our Executive Officers The following sets forth information regarding our executive officers as of February 26, 2026: Name Age Position Simon Johnson 55 President and Chief Executive Officer Grant Creed 45 Executive Vice President, Chief Financial Officer Samir Ali 40 Executive Vice President, Chief Commercial Officer Torsten Sauer-Petersen 53 Executive Vice President, Chief Technology and Sustainability Officer Todd Strickler 48 Senior Vice President, General Counsel Marcel Wieggers 53 Senior Vice President, Operations 10 Simon Johnson.
The last day of trading our common shares on the OSE was September 9, 2024, with our common shares being delisted from the OSE on September 10, 2024. Overall Strategy Our vision is to set the standard in offshore drilling, and we deliver this vision through the four pillars of our strategy: i.
The Company submitted an application to delist its common shares on the OSE, on April 30, 2024. The last day of trading our common shares on the OSE was September 9, 2024, with our common shares being delisted from the OSE on September 10, 2024.
Customer focused We have established robust, long-term relationships with key players in the industry, and we will seek to deepen and strengthen these relationships further. This involves identifying additional value-adding services for our customers and developing long-term, mutually beneficial partnerships. We strive to provide the best possible service to our customers and be valued partners in their success. iv.
Customer partnership and growth We have established robust, long-term relationships with key customers and suppliers in the industry, and we seek to continuously deepen and strengthen these relationships further. We aim to do this by identifying strategic partnerships that are mutually beneficial and focused on delivering greater value through collaboration and execution excellence.
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The Company submitted an application to delist its common shares on the OSE, on April 30, 2024. Oslo Bors approved the Company’s delisting from the OSE, following an affirmative shareholder vote at the Company’s Annual General Meeting in April 2024.
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Overall Strategy Our vision is to set the standard in deepwater oil and gas drilling, and we deliver this vision through the four pillars of our strategy: i. Operational excellence Our objective is to unlock energy safely, efficiently, and responsibly for our clients globally.
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Best, safe, efficient, and reliable operations Our objective is to unlock energy safely, efficiently, and responsibly for our clients globally. In order to achieve this, we leverage a modern rig fleet combined with a motivated, highly skilled and experienced workforce. ii.
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We strive to achieve this by maximizing asset availability through best-in-class operational performance, rigorous safety standards, and consistent execution. We are committed to maintaining safe and reliable operations through disciplined maintenance and continuous improvement. We also focus on driving cost efficiency across our operating model to strengthen reliability, reduce downtime, and deliver predictable performance for customers. ii.
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Fleet competitiveness Having the right rigs in the right regions allows us to offer a range of assets to suit the diverse and specific needs of our customers, while positioning ourselves for future growth in the industry. Our modern rig fleet with key technological upgrades offers superior technical capabilities, resulting in high operational reliability. iii.
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Fleet and portfolio strength Maintaining a competitive fleet requires having the right rigs in the right areas, supported by a disciplined and focused portfolio. We upgrade and future-proof our fleet through targeted investments, technical enhancements, and planned reinvestment that improve performance and extend asset longevity. This approach enhances flexibility to meet evolving customer requirements and positions us for future growth.
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Leading organization We are proud of our culture and we recognize that our business is built on people.
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We apply prudent financial management to support disciplined investment, execute our strategy with resilience, and aim to continue creating sustainable value through cycles. By actively managing our portfolio, we strengthen operational resilience and protect long-term value creation. iii.
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Unless otherwise noted, the stated location of each drilling unit indicates either the drilling location as of December 31, 2024, if the drilling unit was operating, or the next operating location, if the drilling unit was mobilizing for a new contract.
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In addition, we seek to diversify revenue streams by identifying value-adding services, improving how we support customers across the drilling lifecycle, and expanding opportunities aligned with our operational strengths. We strive to provide the best possible service and be valued partners in our customers' success. 5 iv.
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We are committed to providing a positive employee experience and fostering a safe and supportive work environment that aligns with our values and meets the diverse needs of our people.
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People and performance We are proud of our culture, and we recognize that our business is built on people. We aim to recruit, retain, and develop the best talent in the industry and build a dynamic organization that adapts to evolving business needs. Developing internal talent and strengthening leadership depth are essential to delivering consistent performance and long-term competitiveness.
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It is not possible to predict the impact of the Trump Administration on U.S. climate and energy initiatives at this time. While the Trump Administration may seek to reverse some or all of these U.S. initiatives, it is unknown whether such reversals will ultimately be successful.
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The CBA in place in Brazil is negotiated annually and was successfully negotiated for the period from September 2025 to August 2026, when it will be up for its next annual negotiation.
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Ana Zambelli – Former Managing Director in Brookfield’s Private Equity Group.
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There is no assurance that compliance with current laws and regulations or amended or newly adopted laws and regulations can be maintained in the future or that future expenditures required to comply with all such laws and regulations in the future will not be material.
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Strickler was the SVP of Administration, General Counsel, and Corporate Secretary for Paragon Offshore from its inception in 2014 until its sale in 2018. Prior to that, he served as Associate General Counsel for Noble Drilling from 2009 to 2014. Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

104 edited+38 added−13 removed307 unchanged
Generally, these projects become more time consuming and expensive the older the fleet becomes and are subject to risks of cost overruns or delays as a result of numerous factors, including the following: • shortages of equipment, materials or skilled labor; • work stoppages and labor disputes; • unscheduled delays in the delivery of ordered materials and equipment; • local customs strikes or related work slowdowns that could delay importation of equipment or materials; • weather interferences; • difficulties in obtaining necessary permits or approvals or in meeting permit or approval conditions; • design and engineering problems; 14 • inadequate regulatory support infrastructure in the local jurisdiction; • latent damages or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions; • unforeseen increases in the cost of equipment, labor and raw materials, particularly steel due to inflation or other factors; • unanticipated actual or purported change orders; • customer acceptance delays; • disputes with shipyards and suppliers; • delays in, or inability to obtain, access to funding; • shipyard availability, failures and difficulties, including as a result of financial problems of shipyards or their subcontractors; and • failure or delay of third-party equipment vendors or service providers.
Generally, these projects become more time consuming and expensive the older the fleet becomes and are subject to risks of cost overruns or delays as a result of numerous factors, including the following: • shortages of equipment, materials or skilled labor; • work stoppages and labor disputes; • unscheduled delays in the delivery of ordered materials and equipment; • local customs strikes or related work slowdowns that could delay importation of equipment or materials; • weather interferences; 14 • difficulties in obtaining necessary permits or approvals or in meeting permit or approval conditions; • design and engineering problems; • inadequate regulatory support infrastructure in the local jurisdiction; • latent damages or deterioration to hull, equipment and machinery in excess of engineering estimates and assumptions; • unforeseen increases in the cost of equipment, labor and raw materials, particularly steel due to inflation or other factors; • unanticipated actual or purported change orders; • customer acceptance delays; • disputes with shipyards and suppliers; • delays in, or inability to obtain, access to funding; • shipyard availability, failures and difficulties, including as a result of financial problems of shipyards or their subcontractors; and • failure or delay of third-party equipment vendors or service providers.
For example, we operate in Brazil; the Brazilian government frequently intervenes in the country’s economy and occasionally makes significant changes in policy and regulations, including, for example, (i) the changes in Brazilian laws related to the importation of rigs and equipment that may impose bonding, insurance or duty-payment requirements and (ii) its actions to control inflation and other policies and 21 regulations which have often involved, among other measures, changes in interest rates, changes in tax policies, changes in legislation, wage controls, price controls, currency devaluations, capital controls and limits on imports of goods and services.
For example, we operate in Brazil; the Brazilian government frequently intervenes in the country’s economy and occasionally makes significant changes in policy and regulations, including, for example, (i) the changes in Brazilian laws related to the importation of rigs and 21 equipment that may impose bonding, insurance or duty-payment requirements and (ii) its actions to control inflation and other policies and regulations which have often involved, among other measures, changes in interest rates, changes in tax policies, changes in legislation, wage controls, price controls, currency devaluations, capital controls and limits on imports of goods and services.
We conduct our operations through various subsidiaries in countries throughout the world. Tax laws, regulations and treaties are highly complex and subject to interpretation. Consequently, we are subject to changing tax laws, regulations and treaties in and between the countries in which we operate, including treaties between the United States and other countries.
We conduct our operations through various subsidiaries in countries throughout the world. Consequently, we are subject to changing tax laws, regulations, and treaties in and between the countries in which we operate, including treaties between the United States and other countries. Tax laws, regulations, and treaties are highly complex and subject to interpretation.
While we maintain a cybersecurity program, which includes administrative, technical, and organizational safeguards, a significant cyberattack or other cyber incident (whether involving our systems, those of a critical third-party, or both) could disrupt our operations and result in 23 downtime, loss of revenue, harm to the Company’s reputation, or the loss, theft, corruption or unauthorized or unlawful release of critical data of us or those with whom we do business, as well as result in higher costs to correct and remedy the effects of such incidents, including potential extortion payments associated with ransomware or ransom demands.
While we maintain a cybersecurity program, which includes administrative, technical, and organizational safeguards, a significant cyberattack or other cyber incident (whether involving our systems, those of a critical third-party, or both) could disrupt our operations and result in downtime, loss of revenue, harm to the Company’s reputation, or the loss, theft, corruption or unauthorized or unlawful release of critical data of us or those with whom we do business, as well as result in higher costs to correct and remedy the effects of such incidents, including potential extortion payments associated with ransomware or ransom demands.
Companies that do not adapt to or comply with investor, lender or other industry shareholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition or share price of such a company could be materially and adversely affected.
Companies that do not adapt to or comply with investor, lender or other industry shareholder expectations and standards, which are evolving, or which are perceived to have not responded appropriately to the concern for ESG issues, regardless of whether there is a legal requirement to do so, may suffer from reputational damage and the business, financial condition or share price of such a company could be materially and adversely affected.
We may also enter into drilling contracts involving operations in countries or with government-controlled entities that are subject to sanctions and embargoes imposed by the U.S. government or identified by the U.S. 24 government as state sponsors of terrorism, provided that entering into such contracts would not violate U.S. law. However, this could negatively affect our ability to obtain investors.
We may also enter into drilling contracts involving operations in countries or with government-controlled entities that are subject to sanctions and embargoes imposed by the U.S. government or identified by the U.S. government as state sponsors of terrorism, provided that entering into such contracts would not violate U.S. law. However, this could negatively affect our ability to obtain investors.
Beyond regulatory and financial impacts, the projected severe effects of climate change, including severe weather, such as hurricanes, monsoons and other catastrophic storms, have the potential to directly affect our facilities, drilling units and operations and those of our customers and suppliers, which could result in more frequent and severe disruptions to our business and those of our customers and suppliers, increased costs to repair damaged facilities or drilling units or maintain or resume operations, and increased insurance costs.
Beyond regulatory and financial impacts, the projected severe effects of climate change, including severe weather, such as hurricanes, monsoons, floods and other catastrophic storms, have the potential to directly affect our facilities, drilling units and operations and those of our customers and suppliers, which could result in more frequent and severe disruptions to our business and those of our customers and suppliers, increased costs to repair damaged facilities or drilling units or maintain or resume operations, and increased insurance costs.
As a result, we or our customers may become subject to court orders compelling a reduction of greenhouse gas emissions or requiring mitigation of the effects of climate change. 26 Our drilling contracts with national oil companies may expose us to greater risks than with non-governmental customers. We currently own and operate rigs that are contracted with national oil companies.
As a result, we or our customers may become subject to court orders compelling a reduction of greenhouse gas emissions or requiring mitigation of the effects of climate change. Our drilling contracts with national oil companies may expose us to greater risks than with non-governmental customers. We currently own and operate rigs that are contracted with national oil companies.
A failure to comply with applicable laws and regulations may result in administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Because such laws, regulations and standards are often revised, we cannot predict the ultimate cost of complying with them or the impact thereof on the resale prices or useful lives of our rigs.
A failure to comply with applicable laws and regulations may result in 22 administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Because such laws, regulations and standards are often revised, we cannot predict the ultimate cost of complying with them or the impact thereof on the resale prices or useful lives of our rigs.
If we are not able to obtain visas and work permits for the employees we need for operating our rigs on a timely basis, or for third-party technicians needed for maintenance or repairs, we might not be able to perform our obligations under our drilling contracts, which could allow our customers to cancel the contracts.
If we are not able to obtain visas and work permits for the employees we need for operating our rigs on a timely basis, or for third-party technicians needed for 16 maintenance or repairs, we might not be able to perform our obligations under our drilling contracts, which could allow our customers to cancel the contracts.
We will continue to evaluate the impact of the Inflation Reduction Act, and actions of the Trump Administration with respect thereto, as further information becomes available. Further, on December 27, 2023, Bermuda enacted the Corporate Income Tax Act 2023 (the "CIT Act"). Entities subject to tax under the CIT Act are the Bermuda constituent entities of multi-national groups.
We will continue to evaluate the impact of the Inflation Reduction Act and OBBBA, and actions of the Trump Administration with respect thereto, as further information becomes available. On December 27, 2023, Bermuda enacted the Corporate Income Tax Act 2023 (the "CIT Act"). Entities subject to tax under the CIT Act are the Bermuda constituent entities of multi-national groups.
These hazards can cause personal injury or loss of life, severe damage to or destruction of property and equipment, or pollution, environmental or natural resource damage, resulting in claims by third parties or customers, investigations and other proceedings by regulatory authorities, which may involve fines and other sanctions, and suspension of operations.
These hazards can cause personal injury or loss of life, severe damage to or destruction of property and equipment, or pollution, environmental or natural resource damage, resulting in claims by third parties or customers, investigations and other proceedings by 17 regulatory authorities, which may involve fines and other sanctions, and suspension of operations.
These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of financings, mergers, amalgamations, acquisitions and other corporate opportunities and affecting our ability to compete 28 effectively with our competitors to the extent that they are subject to less onerous restrictions.
These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of financings, mergers, amalgamations, acquisitions and other corporate opportunities and affecting our ability to compete effectively with our competitors to the extent that they are subject to less onerous restrictions.
In addition, our ability to work with national oil companies is subject to our ability to negotiate and agree upon acceptable contract terms. There can be no assurance that the use of our drilling units will not infringe the intellectual property rights of others.
In addition, our ability to work with national oil companies is subject to our ability to negotiate and agree upon acceptable contract terms. 27 There can be no assurance that the use of our drilling units will not infringe the intellectual property rights of others.
We may also be unable to repatriate revenues because of a shortage of convertible currency available in the country of operation, controls over currency exchange or controls over the repatriation of income or capital. A change in tax laws in any country in which we operate could result in higher tax expense.
We may also be unable to repatriate revenues because of a shortage of convertible currency available in the country of operation, controls over currency exchange or controls over the repatriation of income or capital. 30 A change in tax laws in any country in which we operate could result in higher tax expense.
Due to the nature of cyber-attacks, breaches to our systems or our service or equipment providers’ systems could go undetected for a prolonged period of time. A breach could also compromise or originate from our customers’, vendors’, or other third-party systems or networks outside of our control.
Due to the nature of cyber-attacks, breaches to our systems or our service or equipment providers’ systems could go undetected for a prolonged period of time. 23 A breach could also compromise or originate from our customers’, vendors’, or other third-party systems or networks outside of our control.
We may also be subject in the future to additional reporting requirements that are developing in response to such increased focus. If we do not take these measures or comply with the additional reporting requirements, our business or our ability to access capital could be harmed.
We may also be subject in the future to additional reporting requirements that are developing in response to such focus. If we do not take these measures or comply with the additional reporting requirements, our business or our ability to access capital could be harmed.
If our sustainability assumptions or practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees and our attractiveness as an investment or business partner could be negatively affected.
If our sustainability assumptions or practices do not meet investor, regulatory or other stakeholder expectations and standards, which continue to evolve, our reputation, our ability to attract or retain employees and our attractiveness as an investment or business partner could be negatively affected.
We cannot predict with any certainty the full impact of any new laws, regulations, executive 27 actions or regulatory initiatives on our customers’ drilling operations or the opportunity to pursue such operations, or on the cost or availability of insurance to cover the risks associated with such operations.
We cannot predict with any certainty the full impact of any new laws, regulations, executive actions or regulatory initiatives on our customers’ drilling operations or the opportunity to pursue such operations, or on the cost or availability of insurance to cover the risks associated with such operations.
We may be unable to obtain drilling contracts for our rigs that are currently operating upon the expiration or termination of such contracts, and there may be a gap in the operation of the rigs between the current contracts and subsequent contracts.
We may be unable to obtain drilling contracts for our drilling units that are currently operating upon the expiration or termination of such contracts, and there may be a gap in the operation of the rigs between the current contracts and subsequent contracts.
We may not generate sufficient cash flow from operations, or have future borrowings available under the Revolving Credit Facility, to enable us to repay our debt or other obligations or to fund our other liquidity needs.
We may not generate sufficient cash flow from operations, or have future borrowings available under the Revolving Credit Facility, to enable us 28 to repay our debt or other obligations or to fund our other liquidity needs.
The offshore drilling industry is a global market requiring flexibility for rigs, depending on their technical capability, to relocate and operate in various environments, moving from one area to another.
The offshore drilling industry is a global market requiring flexibility for rigs, depending on their technical capability, to relocate and operate in various environments and jurisdictions, moving from one area to another.
Due to the interaction of numerous factors beyond our control we cannot predict the ultimate impact of achieving sustainability goals, or the various implementation aspects, on our financial condition and results of operations.
Due to the interaction of numerous factors beyond our control we cannot predict the ultimate impact of setting or achieving sustainability goals, or the various implementation aspects, on our financial condition and results of operations.
The market value of such equity interests have been, and may continue to be, volatile and has fluctuated, and may continue to fluctuate, in response to changes in oil and gas prices and activity levels in the offshore oil and gas industry.
The market value of such equity interests has been, and may continue to be, volatile and has fluctuated, and may continue to fluctuate, in response to changes in oil and gas prices and activity levels in the offshore oil and gas industry.
In April 2018, the IMO adopted an initial strategy to, among other things, reduce the 2008 level of greenhouse gas emissions from the shipping industry by 50% by the year 2050.
In April 2018, the IMO adopted an initial strategy to, among other things, reduce the 26 2008 level of greenhouse gas emissions from the shipping industry by 50% by the year 2050.
Department of Treasury, and what actions, if any, the Trump Administration may take with respect thereto, and what, if any, impact the tax law changes or actions of the Trump Administration will have on our tax rate.
Department of Treasury, and what actions, if any, the Trump Administration may take with respect thereto, and what, if any, impact any other tax law changes or actions of the Trump Administration will have on our tax rate.
Securities and Exchange Commission adopted final rules that will require a registrant to disclose, among other things: material climate-related risks; activities to mitigate or adapt to such risks; information about the registrant's board of directors' oversight of climate-related risks and management's role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant's business, results of operations, or financial condition.
Securities and Exchange Commission adopted final rules that would require a registrant to disclose, among other things: material climate-related risks; activities to mitigate or adapt to such risks; information about the registrant's board of directors' oversight of climate-related risks and management's role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant's business, results of operations, or financial condition.
Please see " Note 27 – Commitments and contingencies" to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this annual report for a discussion of the Sete Brazil matter. Some of these customers and other parties may be highly leveraged and subject to their own operating and regulatory risks.
Please see Note 24 – "Commitments and contingencies" to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this annual report for a discussion of the Sete Brazil matter. Some of these customers and other parties may be highly leveraged and subject to their own operating and regulatory risks.
For additional information on tax assessments and claims issued, refer to Note 11 - "Taxation" to the Consolidated Financial Statements. Regulatory and Legal Risks The issuance of share-based awards may dilute investors’ holding of Shares, and substantial sales of or trading in Shares could occur, which could cause the price of Shares to be adversely affected.
For additional information on tax assessments and claims issued, refer to Note 9 - "Taxation" to the Consolidated Financial Statements. Regulatory and Legal Risks The issuance of share-based awards may dilute investors’ holding of Shares, and substantial sales of or trading in Shares could occur, which could cause the price of Shares to be adversely affected.
As a result of no longer qualifying as a foreign private issuer, we may incur significant additional costs related to the increased regulatory and compliance requirements of applicable U.S. securities laws and the NYSE corporate governance listing standards as a U.S. domestic issuer. 31 Item 1B. Unresolved Staff Comments None.
As a result of no longer qualifying as a foreign private issuer, we may incur significant additional costs related to the increased regulatory and compliance requirements of applicable U.S. securities laws and the NYSE corporate governance listing standards as a U.S. domestic issuer. 32 Item 1B. Unresolved Staff Comments None.
Unless otherwise indicated, all information concerning our business and our assets is as of December 31, 2024. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.
Unless otherwise indicated, all information concerning our business and our assets is as of December 31, 2025. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.
The laws and regulations concerning import and export activity and economic sanctions are complex and constantly changing, and we cannot predict what changes will be made by the U.S. or other governments, nor can we predict the effects that any such changes would have on our business.
The laws and regulations concerning import and export activity and economic sanctions are complex and constantly changing, and we cannot predict what changes will be made by the U.S., U.K., EU or other governments, nor can we predict the effects that any such changes would have on our business.
We still face resistance from some customers when attempting to reduce our contractual risk allocation, including when we seek to mitigate our liability exposure in relation to potential damages resulting from pollution or contamination and negotiating lower caps for damage caused by our gross negligence or willful misconduct.
We still face resistance from some customers when attempting to reduce our contractual risk allocation, including when we seek to mitigate our liability exposure in relation to potential damages resulting from pollution or environmental damage and negotiating lower caps for damage caused by our gross negligence or willful misconduct.
See Part I, Item 1C, "Cybersecurity" of this annual report for a description of our cybersecurity policies and procedures. In addition, a patchwork of laws and regulations governing, or proposing to govern, cybersecurity, data privacy and protection, and the unauthorized disclosure of confidential or protected information, including the U.K.
See Part I, Item 1C, "Cybersecurity" of this annual report for a description of our cybersecurity policies and procedures. In addition, a variety of laws and regulations governing, or proposing to govern, cybersecurity, data privacy and protection, and the unauthorized disclosure of confidential or protected information, including the U.K.
Oil and gas prices and the level of activity in offshore oil and gas exploration and development are extremely volatile and are affected by numerous factors beyond our control, including, but not limited to, the following: • worldwide production of, and demand for, oil and gas, geographical dislocations in supply and demand, and our customers’ views of future demand for oil and gas, which are impacted by changes in the rate of economic growth in the global economy; • the cost of exploring for, developing, producing and delivering oil and gas; • expectations regarding future energy prices and production; • advances in exploration, development and production technology either onshore or offshore, and the relative cost of offshore oil and gas exploration versus onshore oil and gas production; • the availability of, and access to, suitable locations from which our customers can produce hydrocarbons and the rate of decline of reserves; • the ability of oil and gas companies to raise capital, and the allocation of capital to exploration and production operations within customers’ broader portfolios; • the development and exploitation of alternative fuels and unconventional hydrocarbon production, including shale; • potential acceleration in the investment in, and the development, price and availability of, alternative energy sources; • technical advances affecting energy consumption, including the displacement of hydrocarbons; • inventory levels, and the cost and availability of storage and transportation of oil, gas and their related products; • oil refining capacity; • the ability or willingness of the Organization of the Petroleum Exporting Countries ("OPEC"), and other non-member nations, including Russia, to set and maintain levels of production and pricing, and the level of production in non-OPEC countries; • international sanctions on oil-producing countries, or the lifting of such sanctions, and export licensing requirements; • government regulations, including restrictions on offshore transportation of oil and natural gas; • local and international political, economic and weather conditions; • domestic and foreign tax policies; • merger, acquisition and divestiture activity among oil and gas industry participants; • worldwide economic and financial problems, including, for example, inflationary pressures and supply chain disruptions, the resulting fears of recession and the corresponding decline in the demand for oil and gas and, consequently, our services; • the occurrence or threat of a major natural disaster, catastrophic event, epidemic or pandemic, as well as any governmental response to such occurrence or threat; • changes in and compliance with environmental laws, regulations and other initiatives, including those involving alternative energy sources, the phase-out of fossil fuel consuming vehicles, and the risks of global climate change; and • the worldwide political and military environment, including uncertainty or instability resulting from civil disorder, geopolitical instability, border disputes or an escalation or additional outbreak of armed hostilities or other crises in the Middle East, Eastern Europe or other geographic areas or acts of terrorism in the United States, Europe or elsewhere, including, for example, the ongoing conflicts in Ukraine and the Middle East and the Guyana-Venezuela dispute, and their respective regional and global ramifications.
Oil and gas prices and the level of activity in offshore oil and gas exploration and development are extremely volatile and are affected by numerous factors beyond our control, including, but not limited to, the following: • worldwide production of, and demand for, oil and gas, geographical dislocations in supply and demand, and our customers’ views of future demand for oil and gas, which are impacted by changes in the rate of economic growth in the global economy; • the cost of exploring for, developing, producing and delivering oil and gas; • expectations regarding future energy prices and production; • advances in exploration, development and production technology either onshore or offshore, and the relative cost of offshore oil and gas exploration versus onshore oil and gas production; • the availability of, and access to, suitable locations from which our customers can produce hydrocarbons and the rate of decline of reserves; • the ability of oil and gas companies to raise capital, and the allocation of capital to exploration and production operations within customers’ broader portfolios; • the development and exploitation of alternative fuels and unconventional hydrocarbon production, including shale; • potential acceleration in the investment in, and the development, price and availability of, alternative energy sources; • technical advances affecting energy consumption, including the displacement of hydrocarbons; • inventory levels, and the cost and availability of storage and transportation of oil, gas and their related products; • oil refining capacity; • the ability or willingness of the Organization of the Petroleum Exporting Countries ("OPEC"), and other non-member nations, including Russia, to set and maintain, or to be influenced to set and maintain, levels of production and pricing, and the level of production in non-OPEC countries, including the ability of OPEC to successfully coordinate and enforce production quotas; • international sanctions on oil-producing countries, or the lifting of such sanctions, and export licensing requirements; • government regulations, including restrictions on offshore transportation of oil and natural gas; • local and international political, economic and weather conditions; • domestic and foreign tax policies; • merger, acquisition and divestiture activity among oil and gas industry participants; • worldwide economic and financial problems, including, for example, inflationary pressures, supply chain disruptions and disruptions in global trade (including as a result of trade policies, tariffs and other trade restrictions), the resulting fears of recession and the corresponding decline in the demand for oil and gas and, consequently, our services; • the occurrence or threat of a major natural disaster, catastrophic event, epidemic or pandemic, as well as any governmental response to such occurrence or threat; • changes in and compliance with environmental laws, regulations and other initiatives, including those involving alternative energy sources, the phase-out of fossil fuel consuming vehicles, and the risks of global climate change; and • the worldwide political and military environment, including uncertainty or instability resulting from civil disorder, geopolitical instability, border disputes or an escalation or additional outbreak of armed hostilities or other crises in the Middle East, Eastern Europe, Central and South America, or other geographic areas or acts of terrorism in the United States, Europe or elsewhere, including, for example, the ongoing conflicts in Ukraine and the Middle East and the Guyana-Venezuela dispute, and their respective regional and global ramifications.
If drilling unit values fall significantly, we may have to record an impairment adjustment in our Consolidated Financial Statements, which could adversely affect our financial results and condition. 29 Fluctuations in exchange rates and the non-convertibility of currencies could result in losses to us.
If drilling unit values fall significantly, we may have to record an impairment in our Consolidated Financial Statements, which could adversely affect our financial results and condition. Fluctuations in exchange rates and the non-convertibility of currencies could result in losses to us.
However, we regularly are required to assume liability for pollution damage caused by our negligence, which liability generally has caps; though in the event the damage is caused by our gross negligence or willful misconduct, our liability may not be limited.
However, we regularly are required to assume liability for pollution and environmental damage caused by our negligence, which liability generally has caps; though in the event the damage is caused by our gross negligence or willful misconduct, our liability may not be limited.
As of December 31, 2024 , we owned 12 floaters (comprising seven 7th-generation drillships, three 6th-generation drillships and two benign environment semi-submersible units) and three harsh environment rigs. Our drilling unit fleet is concentrated in drillships and semisubmersible rigs.
As of December 31, 2025 , we owned 12 floaters (comprising seven 7th-generation drillships, three 6th-generation drillships and two benign environment semi-submersible units) and three harsh environment rigs. Our drilling unit fleet is concentrated in drillships and semisubmersible rigs.
As a result of our international operations, we have been and may be exposed to political or governmental risks and other uncertainties, particularly in less developed jurisdictions, including risks of: • t errorist acts, armed hostilities, war and civil disturbances, including, for example, the ongoing conflicts in Ukraine and the Middle East and the Guyana-Venezuela dispute, and their respective regional and global ramifications; 20 • acts of piracy, which have historically affected ocean-going vessels; • abduction, kidnapping and hostage situations; • significant governmental influence over many aspects of local economies; • the seizure, nationalization or expropriation of property or equipment; • uncertainty of outcome in foreign court proceedings, including Brazil; • the repudiation, nullification, modification or renegotiation of contracts; • limitations on insurance coverage, such as war risk coverage, in certain areas; • foreign and U.S. monetary policy, capital controls and foreign currency fluctuations and devaluations; • the inability to repatriate income or capital; • complications associated with repairing and replacing equipment in remote locations; • public health threats, including pandemics and epidemics; • import-export quotas, wage and price controls, and the imposition of sanctions or other trade restrictions; • U.S., the United Kingdom (the "U.K."), the European Union (the "EU") and other foreign sanctions; • customs delays or disputes; • receiving a request to participate in a foreign boycott unsanctioned by U.S. law; • compliance with and changes in regulatory or financial requirements, including local ownership, presence or labor requirements; • compliance with and changes to taxation, including any resulting tax disputes; • interacting and contracting with government-controlled organizations; • other forms of government regulation and economic conditions that are beyond our control; • legal and economic systems that are not as mature or predictable as those in more developed countries, which may lead to greater uncertainty in legal and economic matters; and • corruption, payment of bribes to government officials, money laundering, or kleptocracy (i.e., political corruption in which the government seeks personal gain and status at the expense of the governed).
As a result of our international operations, we have been and may be exposed to political or governmental risks and other uncertainties, particularly in less developed jurisdictions, including risks of: • t errorist acts, armed hostilities, war and civil disturbances, including, for example, the ongoing conflicts in Ukraine and the Middle East and the Guyana-Venezuela dispute, and their respective regional and global ramifications; • acts of piracy, which have historically affected ocean-going vessels; 20 • abduction, kidnapping and hostage situations; • significant governmental influence over many aspects of local economies; • the seizure, nationalization or expropriation of property or equipment; • uncertainty of outcome in foreign court proceedings, including Brazil; • the repudiation, nullification, modification or renegotiation of contracts; • limitations on insurance coverage, such as war risk coverage, in certain areas; • foreign and U.S. monetary policy, capital controls and foreign currency fluctuations and devaluations; • the inability to repatriate income or capital; • complications associated with repairing and replacing equipment in remote locations; • public health threats, including pandemics and epidemics; • import-export quotas, wage and price controls, and the imposition of sanctions, tariffs or other trade restrictions; • U.S., U.K., EU and other foreign sanctions; • customs delays or disputes; • receiving a request to participate in a foreign boycott unsanctioned by U.S. law; • compliance with and changes in regulatory or financial requirements, including local ownership, presence, local immigration, visa requirements for personnel or labor requirements; • complexity involving conflicts of law between jurisdictions in which we operate; • compliance with and changes to taxation, including any resulting tax disputes; • interacting and contracting with government-controlled organizations; • other forms of government regulation and economic conditions that are beyond our control; • legal and economic systems that are not as mature or predictable as those in more developed countries, which may lead to greater uncertainty in legal and economic matters; and • corruption, payment of bribes to government officials, money laundering, or kleptocracy (i.e., political corruption in which the government seeks personal gain and status at the expense of the governed).
For example, in April 2024, the Bureau of Ocean Energy Management published a final rule, which took effect June 29, 2024, that updates requirements for the posting of bonds and other financial assurance for oil, gas and sulfur lessees and certain other parties operating in the offshore Outer Continental Shelf, which could increase bonding requirements and other financial assurance for some of our customers.
Bureau of Ocean Energy Management ("BOEM") published a final rule, which took effect June 29, 2024, that updates requirements for the posting of bonds and other financial assurance for oil, gas and sulfur lessees and certain other parties operating in the offshore Outer Continental Shelf, which could increase bonding requirements and other financial assurance for some of our customers.
The increased focus and activism related to ESG and similar 15 matters may hinder access to capital as investors and lenders may decide to reallocate capital or not to commit capital as a result of their assessment of a company’s ESG practices.
The focus and activism related to ESG and similar matters may hinder access to capital as investors and lenders may decide to reallocate capital or not to commit capital as a result of their assessment of a company’s ESG practices.
Changes in U.S. trade policy have resulted and could again result in reactions from U.S. trading partners, including adopting responsive trade policies making it more difficult or costly for us to conduct business across the jurisdictions in which we operate or source goods and services from third-party providers.
Changes in U.S. trade policy have resulted and could again result in reactions from U.S. trading partners, including adopting responsive trade policies making it more difficult or costly for us to conduct business across the jurisdictions or source goods and services from third-party providers.
We cannot predict the effect that future sales of 30 Shares will have on the price at which Shares trade or the size of future issuances of Shares or the effect, if any, that future issuances will have on the market price of Shares.
We cannot predict the effect that future sales of Shares will have on the price at which Shares trade or the size of future issuances of Shares or the effect, if any, that future issuances will have 31 on the market price of Shares.
Failure to comply with applicable laws and regulations, including those relating to sanctions and export restrictions, may subject us to criminal or civil proceedings and related liability, including fines and penalties, the denial of export privileges, injunctions or seizures of assets, and may affect the availability of our existing financing arrangements and our ability to secure financing in the future.
Failure to comply with applicable laws and regulations, including those relating to sanctions, tariffs and other trade, import or export restrictions, may subject us to criminal or civil proceedings and related liability, including fines and penalties, the denial of export privileges, injunctions or seizures of assets, and may affect the availability of our existing financing arrangements and our ability to secure financing in the future.
Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG practices and in recent years have placed growing importance on the implications and social cost of their investments.
Certain investor advocacy groups, institutional investors, investment funds, lenders and other market participants and certain regulators are focused on ESG practices and in recent years have placed importance on the implications and social cost of their investments.
Such debt and debt service obligations may adversely affect us. As of December 31, 2024, we had (i) $625 million aggregate principal amount of long-term debt and (ii) $225 million of committed availability for future borrowings under the Revolving Credit Facility (as defined herein), of which $225 million was available.
Such debt and debt service obligations may adversely affect us. As of December 31, 2025, we had (i) $625 million aggregate principal amount of long-term debt and (ii) $225 million of committed availability for future borrowings under the Revolving Credit Facility (as defined herein), of which approximately $185 million was available.
ANP has the ability to suspend operations in Brazil when deviations from regulations or safety procedures are identified as imposing a grave and imminent risk to people, the environment or installations. For the year ended December 31, 2024 , 25% of our revenues were derived from our Brazilian operations.
ANP has the ability to suspend operations in Brazil when deviations from regulations or safety procedures are identified as imposing a grave and imminent risk to people, the environment or installations. For the year ended December 31, 2025 , 43% of our revenues were derived from our Brazilian operations.
We may face increasing pressures from investors, lenders and other market participants, who are increasingly focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability.
We may face pressures from investors, lenders and other market participants and certain regulators, who are increasingly focused on climate change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability.
Foreign Corrupt Practices Act of 19 77 (the "US Foreign Corrupt Practices Act"), the United Kingdom Bribery Act 2010 (the "UK Bribery Act"), the Bermuda Bribery Act 2016 or other applicable anti-bribery and anti-corruption laws to which we may be subject (collectively, the "Legislation").
Foreign Corrupt Practices Act of 19 77 (the "US Foreign Corrupt Practices Act"), the United Kingdom Bribery Act 2010 (the "UK Bribery Act"), the Bermuda Bribery Act 2016 or other applicable laws to which we may be subject (collectively, the "Legislation").
Moreover, mergers, acquisitions, dispositions and other strategic transactions involve various risks, including, among other things, (i) difficulties relating to integrating or disposing of a business, including changes to our employee workforce and unanticipated changes in customer, vendor and other third-party relationships, (ii) failure to integrate operations and internal controls, including those related to financial reporting, disclosure and cybersecurity and data protection, (iii) the assumption of liabilities as a result of these transactions, (iv) diversion of management’s attention from day-to-day operations, (v) failure to realize the anticipated benefits of such transactions, such as cost savings and revenue enhancements, (vi) potentially substantial transaction costs associated with such transactions, (vii) failure to identify significant losses at the target during the due diligence process, which could result in financial or legal exposure, (viii) potential impairment resulting from the overpayment for an acquisition and (ix) the risk that any such strategic transaction may not close on its expected timeframe or at all, in each case, the realization of which could have a material adverse effect on our business.
Moreover, mergers, acquisitions, dispositions and other strategic transactions involve various risks, including, among other things, (i) difficulties relating to integrating or disposing of a business or assets, including changes to our employee workforce and unanticipated changes in customer, vendor and other third-party relationships, (ii) failure to integrate operations and internal controls, including those related to financial reporting, disclosure and cybersecurity and data protection, (iii) the assumption of liabilities as a result of these transactions, (iv) diversion of management’s attention from day-to-day operations, (v) failure to realize the anticipated benefits of such transactions, such as cost savings and revenue enhancements, (vi) potentially substantial transaction costs associated with such transactions, (vii) failure to identify significant losses at the target during the due diligence process, which could result in financial or legal exposure, (viii) applicable antitrust laws and other regulations that may limit our ability to acquire targets or require us to divest an acquired business or assets, (ix) potential impairment resulting from the overpayment for an acquisition and (x) the risk that any such strategic transaction may not close on its expected timeframe or at all, in each case, the realization of which could have a material adverse effect on our business.
The drilling industry in Brazil is also subject to the regulations of the National Agency for Petroleum, Natural Gas and Biofuels ("ANP"), which is the regulatory body for the activities within the oil, natural gas and biofuels industries in Brazil.
The drilling industry in Brazil is also subject to the regulations of the ANP, which is the regulatory body for the activities within the oil, natural gas and biofuels industries in Brazil.
As of December 31, 2024, we held equity interests in Sonadrill, where we provide various services , including the provision of operating and technical support and management and administrative services agreements. As of December 31, 2024, the carrying value of this equity method investment was $68 million.
As of December 31, 2025, we held equity interests in Sonadrill, where we provide various services, including the provision of operating and technical support and management and administrative services agreements. As of December 31, 2025, the carrying value of this equity method investment was $58 million.
Our contract drilling business is subject to the risks associated with having a limited number of customers for our services. For the year ended December 31, 2024 , our largest custom ers, which individually contributed more than 10% of our total revenues, were Sonadrill and Petrobras, and a ccounted for approximately 40 % of our total revenues in aggregate.
Our contract drilling business is subject to the risks associated with having a limited number of customers for our services. For the year ended December 31, 2025 , our largest custom ers, which individually contributed more than 10% of our total revenues, were Petrobras, Sonadrill, Talos and LLOG and a ccounted for approximately 79% of our total revenues in aggregate.
In addition, the Credit Agreement (as defined herein) contains financial covenants requiring us to maintain a quarterly maximum consolidated total net leverage ratio and a quarterly minimum interest coverage ratio. Any future agreements governing debt may also require us to comply with similar or other financial covenants.
In addition, the Credit Agreement (as defined herein) contains financial covenants requiring us to maintain a quarterly maximum consolidated total net leverage ratio and a quarterly minimum interest coverage ratio. Any future agreements governing debt may also require us to comply with similar or other financial covenants. The agreements governing our debt also contain change of control provisions.
While we believe these tax law changes have no immediate effect on us and are not expected to have a material adverse effect on our results of operations going forward, it is unclear how they will be implemented by the U.S.
While we believe the tax law changes under the Inflation Reduction Act and OBBBA have no immediate effect on us and are not expected to have a material adverse effect on our results of operations going forward, it is unclear how they will be implemented by the U.S.
Our contract backlog for our fleet of drilling units may not be realized. As of December 31, 2024 , our contract backlog was approximately $3 billion . The contract backlog described herein and in our other public disclosures is only an estimate.
Our contract backlog for our fleet of drilling units may not be realized. As of December 31, 2025 , our contract backlog was approximately $2.4 billion . The contract backlog described herein and in our other public disclosures is only an estimate.
As an example of the volatility in oil prices, Brent fell to $9 a barrel in April 2020 before a recovery in oil and gas prices toward the end of 2020 through part of 2022. As of December 31, 2024, Brent closed at a price of $74.64 a barrel.
As an example of the volatility in oil prices, Brent fell to $9 a barrel in April 2020 before a recovery in oil and gas prices toward the end of 2020 through part of 2022. As of December 31, 2025, Brent closed at a price of $60.85 a barrel.
The 11 operating units include 10 benign floaters (comprising seven 7th generation drillships, two 6th generation drillships and one benign environment semi-submersible) and one harsh environment unit (comprising of one jackup). In addition to our owned assets, as of December 31, 2024, we managed two drilling units owned by Sonangol.
The 10 operating units include nine benign floaters (comprising six 7th generation drillships, two 6th generation drillships and one benign environment semi-submersible) and one harsh environment jackup. In addition to our owned assets, as of December 31, 2025, we managed two drilling units owned by Sonangol.
If unprecedented interpretations are applied by the customs and tax authorities governing such programs and regimes, including those that would deny us the use of such incentives granted historically in the ordinary course, and assuming we are unable to successfully challenge such interpretation or otherwise able to recover any amounts pursuant to the contractual provisions of the applicable drilling contract, then the amount of the applicable tariff, which would depend on many factors, could reasonably be expected to increase our operating costs.
If unprecedented interpretations are applied by the customs and tax authorities governing such programs and regimes, including those that would deny us the use of such incentives granted historically in the ordinary course, and assuming we are unable to successfully challenge such interpretation or otherwise able to recover any amounts pursuant to the contractual provisions of the applicable drilling contract, then the amount of the applicable tariff, which would depend on many factors, could reasonably be expected to increase our operating costs. 15 Changing sentiments with respect to environmental, social and governance matters and climate change may impact us.
For the year ended December 31, 2024, operations in the United States, Brazil and Angola accounted for approximately 26%, 25% and 24%, respectively, of our revenues in the aggregate. Operating and maintenance costs of our rigs may be significant and may not correspond to revenue earned.
For the year ended December 31, 2025, operations in the Brazil, United States and Angola accounted for approximately 43%, 26% and 23%, respectively, of our revenues in the aggregate. 18 Operating and maintenance costs of our rigs may be significant and may not correspond to revenue earned.
Import activities are governed by unique customs laws and regulations in each of the countries of operation. Moreover, many countries, including the United States, control the export, re-export and transfer (in country) of certain goods, services and technology and impose related export recordkeeping and reporting obligations.
Import activities are governed by unique customs laws and regulations in each of the countries of operation. Moreover, many countries and governing bodies, including the United States, the United Kingdom (the "U.K.") and the European Union (the "EU"), control the export, re-export and transfer (in country) of certain goods, services and technology and impose related export recordkeeping and reporting obligations.
As of December 31, 2024, there were a total of 857,350 non-vested restricted share units subject to service or external market conditions and 224,840 non-vested restricted share units subject to internal performance conditions under the Management Incentive Plan. Vested awards may be settled in cash or Shares at the election of the Joint Nomination and Remuneration Committee.
As of December 31, 2025, there were a total of 914,352 non-vested restricted share units subject to service or external market conditions and 173,260 non-vested restricted share units subject to internal performance conditions under the Management Incentive Plan. Vested awards may be settled in cash or Shares at the election of the Joint Nomination and Remuneration Committee.
If we or our business partners fail to comply with applicable laws, regulations, safety codes, employment practices or human rights standards, our reputation and image could be harmed, and we could be exposed to litigation. Compliance with laws could increase costs of operations and reduce profits.
If we or our business partners fail to comply with applicable laws, regulations, safety codes, employment practices or human rights standards, our reputation and image could be harmed, and we could be exposed to litigation.
If our drilling units are located in or connected to countries that are subject to, or targeted by, economic sanctions, export restrictions, or other operating restrictions imposed by the United States, the United Kingdom, the European Union or other governments, our reputation and the market for our debt and our common shares could be adversely affected.
Compliance with laws could increase costs of operations and reduce profits. 24 If our drilling units are located in or connected to countries that are subject to, or targeted by, economic sanctions, export restrictions, or other operating restrictions imposed by the United States, the United Kingdom, the European Union or other governments, our reputation and the market for our debt and our common shares could be adversely affected.
Our capital allocation framework includes a goal of returning at least 50% of Free Cash Flow (defined as cash flows from operating activities minus capital expenditures) to our shareholders in the form of share repurchases or dividends.
Our capital allocation framework includes a goal of returning at least 50% of Free Cash Flow (defined as cash flows from operating activities less additions to drilling units and equipment) to our shareholders in the form of share repurchases or dividends.
We are subject to the risk that we, our affiliated entities or their respective officers, directors, employees and agents may take action determined to be in violation of such anti-corruption laws, including the U.S.
We operate in countries known to have a reputation for corruption. We are subject to the risk that we, our affiliated entities, agents, service providers or their respective officers, directors, employees and agents may take action determined to be in violation of such anti-corruption laws, including the U.S.
As of the date of this filing, 2,783,814 Shares remain available for issuance, with respect to awards that have been or may be granted from time to time under the Management Incentive Plan. In addition, a limited number of shareholders own a substantial portion of Shares.
As of February 20, 2026, 2,330,410 Shares remain available for issuance, with respect to awards that have been or may be granted from time to time under the Management Incentive Plan. In addition, a limited number of shareholders own a substantial portion of Shares.
Additional laws, regulations and standards may be adopted which could limit our ability to do business or increase the cost 22 of our, or our customers, doing business and which may materially adversely affect our operations.
Additional laws, regulations and standards may be adopted which could limit our ability to do business or increase the cost of our, or our customers, doing business and which may materially adversely affect our operations. For example, in April 2024, the U.S.
These new tariffs may put upwards pressure on the prices of goods and services across the jurisdictions in which we operate, including those we source from third-party providers (as defined below), which could reduce our ability to offer competitive pricing to potential customers.
Such tariffs may put upwards pressure on the prices of goods and services across the jurisdictions in which we operate, including those we source from third-party providers (as defined below), which could reduce our ability to offer competitive pricing to potential customers. In addition, the scope and durability of existing and future tariff measures remain uncertain.
Our contracts may also be subject to court assessment whereby a court could decide that certain contractual indemnities in current or future contracts are not enforceable. Going forward, we could decide or be required to accept more contractual risk in the future, resulting in higher risk of losses, which could be material.
Our contracts may also be subject to judicial review and application of public policy principles whereby relevant authorities could decide that certain contractual indemnities in current or future contracts are not enforceable. Going forward, we could decide or be required to accept more contractual risk in the future, resulting in higher risk of losses, which could be material.
As part of our business strategy, we have pursued and completed, and may continue to pursue, mergers, acquisitions or dispositions of businesses or assets or other strategic transactions that we believe will enable us to strengthen or broaden our business. 19 We may be unable to implement these merger, acquisition and disposition elements of our strategy if we cannot identify suitable companies, businesses or assets, reach agreement on potential strategic transactions on acceptable terms, manage the impacts of such transactions on our business, obtain required consents under our debt agreements or for other reasons.
We may be unable to implement these merger, acquisition and disposition elements of our strategy if we cannot identify suitable companies, businesses or assets, reach agreement on potential strategic transactions on acceptable terms, manage the impacts of such transactions on our 19 business, obtain required consents under our debt agreements or for other reasons.
We cannot predict what other changes to trade policy will be made by the Trump Administration, the U.S. Congress or other governments, including whether existing tariff policies will be maintained or modified or whether the entry into new bilateral or multilateral trade agreements will occur, nor can we predict the effects that any such changes would have on our business.
We cannot predict future changes to trade policy, including whether existing or future tariff policies will be maintained or modified or whether the entry into new trade agreements will occur, nor can we predict the effects that any such changes would have on our business.
In the past several years, the pace of consolidation in our industry has increased, and may continue to increase, leading to the creation of a number of larger and financially stronger competitors.
In the past several years, the pace of consolidation in our industry has increased, and may continue to increase, leading to the creation of a number of larger and financially stronger competitors. For example, in February 2026, two of our competitors announced the signing of a definitive agreement to combine.
While we expect that the Company would be treated as a Bermuda constituent entity for the purposes of the CIT Act and therefore subject to taxation in Bermuda, we do not currently expect the CIT Act to have a material adverse effect on our results of operations going forward but will continue to assess as additional clarification becomes available.
While we expect that Seadrill and several of its subsidiaries will be treated as Bermuda constituent entities for purposes of the CIT Act and therefore subject to taxation in Bermuda, we do not currently expect the CIT Act to have a material adverse effect on our results of operations going forward.
Governments also may impose trade and economic sanctions against certain countries, persons and other entities that restrict or prohibit transactions involving such countries, persons or entities. For example, the U.S. government has imposed sanctions that are designed to restrict or prohibit doing business in certain countries that are heavily involved in the petroleum and petrochemical industries, which includes drilling activities.
For example, the U.S. government has imposed sanctions that are designed to restrict or prohibit doing business in certain countries that are heavily involved in the petroleum and petrochemical industries, which includes drilling activities.
More 25 recently, however, on January 20, 2025, the Trump Administration issued an executive order that initiated the process to withdraw the United States from the Paris Agreement, mandated ending the United States’ financial commitments under the UN Framework Convention on Climate Change, and revoked the U.S. International Climate Finance Plan.
On January 20, 2025, the Trump Administration issued an executive order that mandated ending the United States’ financial commitments under the UN Framework Convention on Climate Change ("UNFCCC") and revoked the U.S. International Climate Finance Plan.
We may be unable to meet our capital allocation framework goal of returning at least 50% of Free Cash Flow to shareholders through dividends and share repurchases, which could decrease expected returns on an investment in our Shares.
This could have serious consequences to our financial condition and results of operation and could cause us to become bankrupt or insolvent. 29 We may be unable to meet our capital allocation framework goal of returning at least 50% of Free Cash Flow to shareholders through dividends and share repurchases, which could decrease expected returns on an investment in our Shares.
Of the 12 owned rigs either currently or future contracted, we expect four will become available before the end of 2025.
Of the 12 owned drilling units either currently or future contracted, we expect five will become available before the end of 2026.
Even so, higher prices do not necessarily translate into increased drilling activity because our customers take into account a number of considerations when they decide to invest in offshore oil and gas resources. 13 Adverse developments affecting the industry as a result of one or more of the above factors, including a decline in the price of oil and gas from their current levels or the failure of the price of oil and gas to remain consistently at a level that encourages our customers to maintain or expand their capital spending, would have a material adverse effect on our business, financial condition and results of operations.
Adverse developments affecting the industry as a result of one or more of the above factors, including a decline in the price of oil and gas from their current levels or the failure of the price of oil and gas to remain consistently at a level that encourages our customers to maintain or expand their capital spending, would have a material adverse effect on our business, financial condition and results of operations.
Increasing attention to environmental, social and governance matters and climate change may impact us. Companies across all industries are facing increasing scrutiny relating to their ESG policies, including those related to climate change, sustainability, diversity and inclusion initiatives and heightened governance standards.
Companies across all industries are experiencing changing sentiments and scrutiny relating to their ESG policies, including those related to climate change, sustainability, diversity and inclusion initiatives and heightened governance standards.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The ISIT Function leads ongoing training and awareness initiatives that applies to all Seadrill personnel, including employees, contractors and contingent workers, emphasizing cybersecurity as a critical organizational priority and mitigating the potential human factor in cyber incidents. To date, Seadrill’s business strategy, operations, and financial condition have not been materially affected by large-scale cybersecurity threats or incidents.
The ISIT Function leads ongoing training and awareness initiatives that apply to all Seadrill personnel, including employees, contractors and contingent workers, emphasizing cybersecurity as a critical organizational priority and mitigating the potential human factor in cyber incidents. To date, Seadrill’s business strategy, operations, and financial condition have not been materially affected by large-scale cybersecurity threats or incidents.
As a principal risk, cybersecurity is also included in our rolling Internal Audit & Assurance program and is subject to external ISO 9001 quality management certification, certified by DNV. Oversight of these efforts is provided by the Assurance, Quality & Enterprise Risk Function, which ensures the robustness of key mitigations and controls.
As a principal risk, cybersecurity is also included in our rolling Internal Audit & Assurance program and is subject to external ISO 9001 quality management certification, certified by Det Norske Veritas. Oversight of these efforts is provided by the Assurance, Quality & Enterprise Risk Function, which ensures the robustness of key mitigations and controls.
Item 1C. Cybersecurity Seadrill is dedicated to upholding comprehensive cybersecurity policies and procedures to safeguard our assets, data, and stakeholders. We achieve this by continuously assessing, identifying, and managing material risks associated with cybersecurity threats. Our cybersecurity program is built upon the U.S. Department of Commerce's National Institute of Standards and Technology ("NIST") Cybersecurity Framework.
Item 1C. Cybersecurity Seadrill is dedicated to upholding comprehensive cybersecurity policies and procedures to safeguard our assets, data, and stakeholders. We achieve this by continuously assessing, identifying, and managing material risks associated with cybersecurity threats. Our cybersecurity program is built upon the U.S.
Cybersecurity risk is an integral part of our Enterprise Risk Management ("ERM") program, which evaluates potential impacts to our operations, financial stability, and reputation. The Vice President of Technical Services serves as the Senior Management sponsor for cybersecurity risk and mitigation plans.
Cybersecurity risk is an integral part of our Enterprise Risk Management (“ERM”) program, which evaluates potential impacts to our operations, financial stability, and reputation. The Executive Vice President, Chief Technology and Sustainability Officer serves as the Senior Management sponsor for cybersecurity risk and mitigation plans.
Day-to-day management of cybersecurity risks falls under the responsibility of the Director of Information Security and Information Technology ("ISIT") and the Cybersecurity Manager. Our Cybersecurity Manager is a retired U.S. Military Cyber Warfare Officer with over 15 years of experience in Cybersecurity Operations and a member of the International Association of Drilling Contractors Cybersecurity Committee.
Day-to-day management of cybersecurity risks falls under the responsibility of the Director of Information Security and Information Technology ("ISIT").
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Department of Commerce’s National Institute of Standards and Technology (“NIST”) Cybersecurity Framework for Information Technology (“IT”) environments, and complemented by the IEC 62443 series of standards for securing Operational Technology (“OT”) and industrial control systems. Together, these frameworks provide a structured, risk-based approach to managing cybersecurity across both enterprise and operational domains.
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Our Director of Information Security is a seasoned cybersecurity and risk management leader with over 20 years of experience directing enterprise-wide security programs and IT governance for Fortune 1000 organizations in the energy sector, specializing in the development of global cybersecurity frameworks and the mitigation of digital risks within complex offshore environments.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. Properties 1) Drilling units The description of our rig fleet included under Part I, Item 1, "Business” is incorporated by reference herein. 2) Office and Equipment We lease offices and other properties in several locations including Houston in the United States, Rio de Janeiro in Brazil, Stavanger in Norway, Luanda in Angola, and Liverpool in the United Kingdom.
Item 2. Properties 1) Drilling units The description of our rig fleet included under Part I, Item 1, "Business” is incorporated by reference herein. 2) Office and Equipment We lease offices and other properties in several locations including Houston, United States, Rio de Janeiro, Brazil, Stavanger, Norway, Luanda, Angola, and Liverpool, United Kingdom.
Our Consolidated Balance Sheet includes office equipment, IT equipment and leasehold improvements held in these locations. As previously announced, during 2024, we completed the closure of our London, England office and consolidated our corporate offices in Houston, Texas.
Our Consolidated Balance Sheet also includes office equipment, IT equipment and leasehold improvements held in these locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Legal Proceedings Except as set forth in "Note 27 – Commitments and contingencies" to our consolidated financial statements included in Part II, Item 8, "Financial statements and Supplementary Data" of this annual report, we were involved in a number of lawsuits, regulatory matters, disputes, and claims, asserted and unasserted, all of which have arisen in the ordinary course of our business and for which we do not expect the liability, if any, to have a material adverse effect on our consolidated financial position, results of operations, or cash flows.
Legal Proceedings Except as set forth in Note 24 – "Commitments and contingencies" to our consolidated financial statements included in Part II, Item 8, "Financial statements and Supplementary Data" of this annual report, we were involved in a number of lawsuits, regulatory matters, disputes, and claims, asserted and unasserted, all of which have arisen in the ordinary course of our business and for which we do not expect the liability, if any, to have a material adverse effect on our consolidated financial position, results of operations, or cash flows.
Additional information regarding legal proceedings is presented in “Note 27 — Commitments and Contingencies” to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this annual report. Item 4. Mine Safety disclosures Not applicable 32 PART II
Additional information regarding legal proceedings is presented in Note 24 - "Commitments and contingencies" to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this annual report. Item 4. Mine Safety disclosures Not applicable 33 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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(Amounts in US$) Indexed Returns Company/Index October 14, 2022 December 31, 2022 December 31, 2023 December 31, 2024 SDRL 100.0 130.6 189.1 155.7 OSX Index 100.0 120.9 123.2 108.9 Industry Index 100.0 122.8 128.8 118.6 The above graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
(Amounts in US$) Indexed Returns Company/Index October 14, 2022 December 31, 2022 December 31, 2023 December 31, 2024 December 31, 2025 SDRL 100.0 130.6 189.1 155.7 138.4 OSX Index 100.0 120.9 123.2 108.9 112.7 Industry Index 100.0 122.8 128.8 118.6 128.0 The above graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
During the second quarter of 2024, as announced on May 16, 2024, the Company's Board of Directors authorized a new $500 million share repurchase program that will run for a period of two years from June 25, 2024, the date of completion for the programs initiated in 2023 (the "Current Repurchase Program").
As announced on May 16, 2024, the Company's Board of Directors authorized a new $500 million share repurchase program that will run for a period of two years from June 25, 2024, the date of completion for the programs initiated in 2023 (the "Current Repurchase Program").
Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market for Shares and Related Shareholder Information Our Shares are listed on the New York Stock Exchange under the ticker symbol “SDRL.” On February 20, 2025, we had 19 holders of record of our Shares.
Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Market for Shares and Related Shareholder Information Our Shares are listed on the New York Stock Exchange under the ticker symbol “SDRL.” On February 20, 2026, we had 833 holders of record of our Shares.
Cumulative Total Shareholder Return The chart below presents a comparison of the cumulative total shareholder return, assuming $100 invested on October 14, 2022 (first trading date on the NYSE after our emergence from the Chapter 11) for Seadrill Limited ("SDRL"), the PHLX Oil Service Sector Index (the "OSX Index") and Dow Jones US Select Oil Equipment & Services Index (the "Industry Index").
During the fourth quarter of 2025, the Company did not repurchase any Shares, and therefore, as of December 31, 2025, $208 million of the $500 million authorized amount remained available under the Current Repurchase Program. 34 Cumulative Total Shareholder Return The chart below presents a comparison of the cumulative total shareholder return, assuming $100 invested on October 14, 2022 (first trading date on the NYSE after our emergence from the Chapter 11) for Seadrill Limited ("SDRL"), the PHLX Oil Service Sector Index (the "OSX Index") and Dow Jones US Select Oil Equipment & Services Index (the "Industry Index").
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For more information on Share repurchases, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - 2) Capital allocation framework and share repurchase program" 33 For the three months ended December 31, 2024, Seadrill repurchased outstanding common shares as follows: Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced programs Maximum dollar value of shares that may yet be purchased under the programs (1) October 1 - October 31 — $ — — $ 307,755,016 November 1 - November 30 1,188,832 $ 40.59 1,188,832 $ 259,745,309 December 1 - December 31 1,312,071 $ 39.44 1,312,071 $ 207,997,229 Total 2,500,903 $ 39.99 2,500,903 $ 207,997,229 (1) Relates to the $500 million share repurchase program authorized by the Company's Board of Directors and announced on May 16, 2024, which will run for a period of two years from June 25, 2024, the date of completion for the programs initiated in 2023.
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For more information on share repurchases, refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - 2) Capital allocation framework and share repurchase program".

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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The loans outstanding under the Credit Agreement bear interest at a rate per annum equal to the applicable margin plus, at Seadrill Finance’s option, either: (i) the Term SOFR (as defined in the Credit Agreement) plus 0.10%; or (ii) the Daily Simple SOFR (as defined in the Credit Agreement) plus 0.10%.
The loans outstanding under the Credit Agreement bear interest at a rate per annum equal to the applicable margin plus, at Seadrill Finance’s option, either: (i) the Term SOFR Rate (as defined in the Credit Agreement) plus 0.10%; or (ii) Daily Simple SOFR (as defined in the Credit Agreement) plus 0.10%.
The contractual operating dayrate may also differ to the actual dayrate we ultimately receive because of several other factors, including rig downtime or suspension of operations. In certain contracts, the dayrate may be reduced to zero if, for example, repairs extend beyond a stated period.
The contractual operating dayrate may also differ from the actual dayrate we ultimately receive because of several other factors, including rig downtime or suspension of operations. In certain contracts, the dayrate may be reduced to zero if, for example, repairs extend beyond a stated period.
Significant estimates and assumptions in determining the fair value of drilling units and intangible assets and liabilities include off-contract revenue estimates, off-contract operating expense assumptions, contract probabilities, the weighted average cost of capital ("WACC") rate used to discount free cash flow projections and drilling unit market valuations.
Significant estimates and assumptions are used in determining the fair value of drilling units and intangible assets and liabilities, and include off-contract revenue estimates, off-contract operating expense assumptions, contract probabilities, the weighted average cost of capital ("WACC") rate used to discount free cash flow projections and drilling unit market valuations.
However, there are many situations that give rise to a dayrate being earned that is less than a contractual operating rate, such as planned downtime for maintenance. In such situations, economic utilization reduces below 100%.
However, there are many situations that give rise to a dayrate being earned that is less than the contractual operating rate, such as planned downtime for maintenance. In such situations, economic utilization reduces below 100%.
While we intend to announce the initiation of any Board approved repurchase programs in the future, as well as periodic information required under U.S. securities laws and regulations, we do not intend to announce any sub-authorizations for share repurchases made pursuant to the Current Repurchase Program or any successor program given that we are no longer required to comply with European regulations requiring onerous disclosure in connection with repurchase programs. 3) Liquidity Our level of liquidity fluctuates depending on a number of factors.
While we intend to announce the initiation of any Board approved repurchase programs in the future, as well as periodic information required under U.S. securities laws and regulations, we do not intend to announce any sub-authorizations for share repurchases made pursuant to the Current Repurchase Program or any successor program given that we are no longer required to comply with European regulations requiring onerous disclosure in connection with repurchase programs. 2) Liquidity Our level of liquidity fluctuates depending on a number of factors.
Furthermore, if the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges.
Furthermore, if the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges. 46
Actual results may differ from these estimates. Critical accounting estimates that are significant for the year ended December 31, 2024 are as follows: Impairment considerations (drilling units) The carrying values of our long-lived assets are reviewed for impairment when certain triggering events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable.
Actual results may differ from these estimates. Critical accounting estimates that are significant for the year ended December 31, 2025 are as follows: Impairment considerations (drilling units) The carrying values of our long-lived assets are reviewed for impairment when certain triggering events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable.
You should also carefully read the following sections of this annual report entitled "Forward-Looking Statements," Part I, Item 1, "Business" and Part I, Item 1A, "Risk Factors". The discussion of our results of operations and liquidity in this section includes comparisons for the years ended December 31, 2024 and December 31, 2023.
You should also carefully read the following sections of this annual report entitled "Forward-Looking Statements," Part I, Item 1, "Business" and Part I, Item 1A, "Risk Factors". The discussion of our results of operations and liquidity in this section includes comparisons for the years ended December 31, 2025 and December 31, 2024.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations In this section, we present management’s discussion and analysis of results of operations and financial condition. It should be read in conjunction with our Consolidated Financial Statements and accompanying notes thereto included in this annual report for the year ended December 31, 2024.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations In this section, we present management’s discussion and analysis of results of operations and financial condition. It should be read in conjunction with our Consolidated Financial Statements and accompanying notes thereto included in this annual report for the year ended December 31, 2025.
There are certain transactions for which the ultimate tax determination is unclear due to uncertainty in relation to the interpretation of tax law that arises in the ordinary course of business. We recognize liabilities for uncertain tax positions based on a two-step process.
There are certain transactions for which the ultimate tax determination is unclear due to uncertainty concerning interpretation of tax law that arises in the ordinary course of business. We recognize liabilities for uncertain tax positions based on a two-step process.
Our income tax expense is based on our interpretation of tax laws in various jurisdictions in which we operate and requires significant judgment and use of estimates and assumptions regarding significant future events, such as amounts, timing and character of income, deductions and tax credits.
Our income tax expense is based on our interpretation of tax laws in various jurisdictions in which we operate or derive income and requires significant judgment and use of estimates and assumptions regarding significant future events, such as amounts, timing and character of income, deductions, and tax credits.
Our cash on hand, available borrowings under the Revolving Credit Facility, and contract and other revenues are expected to generate sufficient cash flow to fund our anticipated debt service and working capital requirements for the next twelve months.
Our cash on hand, available borrowings under the Revolving Credit Facility, and contract and other revenues are expected to generate sufficient cash flow to fund our anticipated debt service and working capital requirements for the next 12 months.
As of December 31, 2024, $208 million of the $500 million authorized amount remained available under the Current Repurchase Program. While the Current Repurchase Program has a fixed expiration, it may be modified, suspended or discontinued at any time.
As of December 31, 2025, $208 million of the $500 million authorized amount remained available under the Current Repurchase Program. While the Current Repurchase Program has a fixed expiration, it may be modified, suspended or discontinued at any time.
For both the Term SOFR loans and Daily Simple SOFR loans, the applicable margin was 2.75% per annum as of December 31, 2024, and may vary based on Seadrill’s Credit Ratings (as defined in the Credit Agreement), from 2.50% to 3.50% per annum.
For both the Term SOFR Rate loans and Daily Simple SOFR loans, the applicable margin was 2.75% per annum as of December 31, 2025, and may vary based on Seadrill’s Credit Ratings (as defined in the Credit Agreement), from 2.50% to 3.50% per annum.
Additional factors that could affect the amount and timing of actual revenue to be recognized include customer liquidity issues and contract terminations, which are available to our customers under certain circumstances. 37 RESULTS OF OPERATIONS The tables included below set out financial information for the years ended December 31, 2024 and December 31, 2023 (Successor).
Additional factors that could affect the amount and timing of actual revenue to be recognized include customer liquidity issues and contract terminations, which are available to our customers under certain circumstances. RESULTS OF OPERATIONS The tables included below set out financial information for the years ended December 31, 2025 and December 31, 2024.
So long as Seadrill is able to meet its net leverage and liquidity targets on a forward-looking basis, as well as comply with its Revolving Credit Facility covenant requirements, Seadrill would seek to provide a return to our shareholders of at least 50% of Free Cash Flow (defined as cash flows from operating activities minus capital expenditures) in the form of share repurchases or dividends.
So long as Seadrill is able to meet its net leverage and liquidity targets on a forward-looking basis, as well as comply with its Revolving Credit Facility covenant requirements, Seadrill would seek to provide a return to our shareholders of at least 50% of Free Cash Flow (defined as cash flows from operating activities minus additions to drilling units and equipment) in the form of share repurchases or dividends.
Refer to Note 24 - "Related party transactions" for further details on these related parties. d) Leasing revenues Leasing revenues relate to the charter of the West Castor , West Telesto and West Tucana to Gulfdrill prior to disposal in June 2024, and West Gemini to Sonadrill.
Refer to Note 21 - "Related party transactions" for further details. d) Leasing revenues Leasing revenues relate to the charter of the West Gemini to Sonadrill and the West Castor , West Telesto and West Tucana to Gulfdrill prior to their disposal in June 2024.
During the second quarter of 2024, as announced on May 16, 2024, the Company's Board of Directors authorized a new $500 million share repurchase program that will run for a period of two years from June 25, 2024, the date of completion for the programs initiated in 2023.
During the second quarter of 2024, the Board of Directors authorized a new $500 million share repurchase program that will run for a period of two years from June 25, 2024, the date of completion for the programs initiated in 2023 (the "Current Repurchase Program").
Refer to Note 19 – Debt for further details of these facilities. 44 Financial covenants The Credit Agreement obligates Seadrill and its restricted subsidiaries to comply with the following financial covenants: • as of the last day of each fiscal quarter, the Interest Coverage Ratio (as defined in the Credit Agreement) is not permitted to be less than 2.50 to 1.00; and • as of the last day of each fiscal quarter, the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) is not permitted to be greater than 3.00 to 1.00.
Financial covenants The Credit Agreement obligates Seadrill and its restricted subsidiaries to comply with the following financial covenants: • as of the last day of each fiscal quarter, the Interest Coverage Ratio (as defined in the Credit Agreement) is not permitted to be less than 2.50 to 1.00; and • as of the last day of each fiscal quarter, the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) is not permitted to be greater than 3.00 to 1.00.
Vessel and rig operating expenses Vessel and rig operating expenses represent the costs we incur to operate a drilling unit that is either in operation or stacked. This includes the remuneration of offshore crews, rig supplies, expenses for repair and maintenance and onshore support costs. Vessel and rig operating expenses are mainly driven by rig activity.
Vessel and rig operating expenses Vessel and rig operating expenses represent the costs we incur to operate a drilling unit that is either in operation or stacked. This includes the remuneration of offshore crews, rig supplies, expenses for repair and maintenance, onshore support costs, and the amortization of deferred mobilization costs.
The average contractual dayrate earned for the year ended December 31, 2024 was $296 thousand compared to $284 thousand for the year ended December 31, 2023, resulting in a $22 million increase in contract revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023.
The average contractual dayrate earned for the year ended December 31, 2025 was $326 thousand, compared to $296 thousand for the year ended December 31, 2024, resulting in a $75 million increase in contract revenues in the year ended December 31, 2025 compared to the year ended December 31, 2024.
Current income tax expense reflects an estimate of our income tax liability for the current year, withholding taxes, changes in prior year tax estimates as tax returns are filed, or from tax audit adjustments.
Current income tax expense reflects an estimate of our income tax liability for the current year, withholding taxes, and changes in prior year tax estimates as tax returns are filed or adjusted upon tax audits.
These were partially offset by increased receipts from customers and decreased disbursements to other suppliers. b) Net cash provided by investing activities The $226 million cash provided by investing activities during the year ended December 31, 2024 is primarily related to the proceeds received on disposal of our three jackup rigs, West Castor , West Telesto and West Tucana , together with our 50% equity interest in the Gulfdrill joint venture of $338 million during the second quarter, and the proceeds related to the disposal of the West Prospero jackup rig of $45 million during the fourth quarter.
The $226 million net cash provided by investing activities during the year ended December 31, 2024 was primarily related to the proceeds received on the disposal of our three jackup rigs, West Castor , West Telesto and West Tucana , together with our 50% equity interest in the Gulfdrill joint venture of $338 million during the second quarter, and the proceeds related to the disposal of the West Prospero jackup rig of $45 million during the fourth quarter.
(In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023 Change Change % Contract revenues (a) 1,009 1,154 (145) (13) % Reimbursable revenues (b) 70 58 12 21 % Management contract revenues (c) 247 245 2 1 % Leasing revenues (d) 54 33 21 64 % Other revenues (e) 5 12 (7) (58) % Operating revenues 1,385 1,502 (117) (8) % a) Contract revenues Contract revenues represent the revenues we earn from contracting drilling units to customers, primarily on a dayrate basis, and are primarily driven by the average number of rigs under contract during a period, the average dayrates earned and economic utilization achieved by those rigs under contract. i.
(In $ millions, except percentages) Year ended December 31, 2025 Year ended December 31, 2024 Change Change % Contract revenues (a) 1,089 1,009 80 8 % Reimbursable revenues (b) 58 70 (12) (17) % Management contract revenues (c) 254 247 7 3 % Leasing revenues (d) 33 54 (21) (39) % Other revenues 3 5 (2) (40) % Total operating revenues 1,437 1,385 52 4 % a) Contract revenues Contract revenues represent the revenues we earn from contracting our drilling units to customers, primarily on a dayrate basis, and are predominately driven by the average number of rigs under contract during a period, the average dayrates earned and economic utilization achieved by those rigs under contract.
We estimate the December 31, 2024 contract backlog to be realized over the following periods: (In $ millions) Contract backlog Total 2025 2026 2027 Thereafter Drilling units 3,034 1,059 852 737 386 Other 146 146 — — — Total 3,180 1,205 852 737 386 The actual amounts of revenues earned and the actual periods during which revenues are earned will differ from the amounts and periods shown in the tables above due to various factors, including shipyard and maintenance, survey, upgrade and regulatory projects, unplanned downtime and other factors that result in lower applicable dayrates than the full contractual operating dayrate.
We estimate the December 31, 2025 contract backlog to be realized over the following periods: (In $ millions) Contract backlog Total 2026 2027 2028 Thereafter Drilling units 2,095 962 692 353 88 Other 285 244 41 — — Total 2,380 1,206 733 353 88 The actual amounts of revenues earned and the actual periods during which revenues are earned will differ from the amounts and periods shown in the tables above due to various factors, including shipyard and maintenance, survey, upgrade and regulatory projects, unplanned downtime and other factors that result in lower applicable dayrates than the full contractual operating dayrate.
For the year ended December 31, 2024 , reimbursable revenues primarily related to rigs managed for the Sonadrill joint venture for long term maintenance projects on the Libongos and Quenguela , and for the year ended December 31, 2023 , reimbursable revenues related to services provided across various customers.
We classify such revenues as reimbursable revenues. For the years ended December 31, 2025 and December 31, 2024 , reimbursable revenues primarily related to rigs managed for the Sonadrill joint venture for long term maintenance projects on the Libongos and Quenguela , along with some reimbursable revenues related to services provided across various customers .
In aggregate, during the year ended December 31, 2024, the Company repurchased approximately 11.6 million common shares amounting to $527 million with a weighted average share price of $45.31, compared to 6.2 million common shares amounting to $266 million, with a weighted average share price of $43.12, during the year ended December 31, 2023.
In aggregate, during the year ended December 31, 2024, the Company repurchased approximately 11.6 million common shares amounting to $527 million with a weighted average share price of $45.31. The Company did not repurchase any common shares during the year ended December 31, 2025.
Such adjustments could be material. 2) Capital allocation framework and share repurchase program In July 2023, in connection with the issuance of the Notes (as defined herein), Seadrill announced capital allocation principles designed to prioritize a conservative capital structure and liquidity position, focused capital investment in its fleet, and returns to shareholders.
Refer to Note 9 –"Taxation" for further details. LIQUIDITY AND CAPITAL RESOURCES 1) Capital allocation framework and share repurchase program In July 2023, in connection with the issuance of the Notes (as defined herein), Seadrill announced capital allocation principles designed to prioritize a conservative capital structure and liquidity position, focused capital investment in its fleet, and returns to shareholders.
Dividends and share repurchases will be authorized and determined by the Board of Directors in its sole discretion and depend upon a number of factors, including those described above, its future prospects, market trend evaluation and such other factors as the Board of Directors may deem releva nt.
Seadrill will consider additional returns to shareholders from the proceeds of any asset sales in the absence of identified, accretive opportunities. 42 Dividends and share repurchases will be authorized and determined by the Board of Directors in its sole discretion and depend upon a number of factors, including those described above, its future prospects, market trend evaluation and such other factors as the Board of Directors may deem releva nt.
Gain on disposals Gain on disposals of $234 million for the year ended December 31, 2024 relates to the disposal of the West Castor , West Telesto and West Tucana jackup rigs, along with our 50% equity interest in the Gulfdrill joint venture during the second quarter of 2024, and the disposal of the West Prospero during the fourth quarter of 2024, compared to the gain on disposal of $14 million during the year ended December 31, 2023 of capital spares relating to jackup rigs and to the West Hercules , and spare parts on previously recycled rigs. ii.
Gain on disposals Gain on disposal of $234 million during the year ended December 31, 2024 related to the disposal of the West Castor , West Telesto and West Tucana jackup rigs, along with our 50% equity interest in the Gulfdrill joint venture during the second quarter of 2024, and the disposal of the West Prospero during the fourth quarter of 2024. iii.
Other operating income Other operating income for the year ended December 31, 2024 relates to the recovery of historical import duties in the form of tax credits following the approval by the applicable tax authorities. 4) Interest expense (In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023 Change Change % Interest on debt facilities (i) (54) (54) — — % Other (7) (5) (2) 40 % Interest expense (61) (59) (2) 3 % i.
Other operating income Other operating income for the year ended December 31, 2024 related to the recovery of historical import duties in the form of tax credits following the approval by the applicable tax authorities, which did not recur during the year ended December 31, 2025. 41 4) Interest expense (In $ millions, except percentages) Year ended December 31, 2025 Year ended December 31, 2024 Change Change % Interest on debt facilities (i) (53) (54) 1 (2) % Other (8) (7) (1) 14 % Interest expense (61) (61) — — % i.
Our contract backlog includes only firm commitments represented by signed drilling contracts. The full contractual operating dayrate may differ to the actual dayrate we ultimately receive. For example, an alternative contractual dayrate, such as a waiting‑on‑weather rate, repair rate, standby rate or force majeure rate, may apply under certain circumstances.
The full contractual operating dayrate may differ from the actual dayrate we ultimately receive. For example, an alternative contractual dayrate, such as a waiting‑on‑weather rate, repair rate, standby rate or force majeure rate, may apply under certain circumstances.
Our deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities as reflected on the balance sheet. Valuation allowances are determined to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Valuation allowances are determined to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Drilling units owned December 31, 2024 December 31, 2023 December 31, 2022 Benign environment drillships 10 10 6 Benign environment semi-submersible rigs 2 2 2 Benign environment jackup rigs — 4 4 Harsh environment semi-submersible rig 2 2 1 Harsh environment jackup rig 1 1 1 Total drilling units 15 19 14 The decrease in benign environment jackup rigs during 2024 was due to the disposal of the West Castor, West Tucana, West Telesto and West Prospero .
Changes to our fleet The below table shows the number of owned drilling units included in our fleet for each of the periods covered by this report: Drilling units owned December 31, 2025 December 31, 2024 December 31, 2023 Benign environment drillships 10 10 10 Benign environment semi-submersible rigs 2 2 2 Benign environment jackup rigs — — 4 Harsh environment semi-submersible rig 2 2 2 Harsh environment jackup rig 1 1 1 Total drilling units 15 15 19 The decrease in benign environment jackup rigs during 2024 was due to the disposal of the West Castor, West Tucana, West Telesto and West Prospero .
Interest income Interest income relates to interest earned on bank deposits. The decrease in interest income for the year ended December 31, 2024 compared to the year ended December 31, 2023 , is primarily attributable to the decrease in cash and cash equivalents. 41 ii.
Interest income Interest income relates to interest earned on bank deposits. The $11 million decrease in interest income for the year ended December 31, 2025 compared to the year ended December 31, 2024 , was primarily attributable to lower cash balances. ii.
This was partially offset by capital expenditures of $157 million primarily related to capital upgrades on the West Auriga and West Polaris during their preparations for Petrobras contracts, with the West Auriga having started in December 2024 and West Polaris starting during the first quarter of 2025.
This was partially offset by capital expenditures of $157 million primarily related to capital upgrades on the West Auriga and West Polaris during their preparations for Petrobras contracts, with the West Auriga having started in December 2024 and West Polaris starting during the first quarter of 2025. c) Net cash used in financing activities The $3 million net cash used in financing activities during the year ended December 31, 2025 was related to taxes withheld on vested employee share-based compensation awards.
We recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the Consolidated Statement of Operations as income tax expense (or benefit) in the period of sale or transfer occurs.
Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities calculated according to local tax rules. We recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the Consolidated Statement of Operations as income tax expense (or benefit) in the period of sale or transfer occurs.
Deferred tax assets and liabilities are based on temporary differences that arise between carrying values used for financial reporting purposes and amounts used for taxation purposes of assets and liabilities and the future tax benefits of tax benefits of tax attributes.
Deferred tax assets and liabilities are based on temporary differences that arise between carrying values used for financial reporting purposes and their values for taxation purposes and on the future tax benefits of tax attributes. Our deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities as reflected on the balance sheet.
The 11 operating units include 10 benign floaters (comprising seven 7th generation drillships, two 6th generation drillships and one benign environment semi-submersible) and one harsh environment unit (comprising of one jackup). In addition to our owned assets, as of December 31, 2024, we managed two drilling units owned by Sonangol.
The 10 operating units include nine benign floaters (comprising six 7th generation drillships, two 6th generation drillships and one benign environment semi-submersible) and one harsh environment jackup. In addition to our owned assets, as of December 31, 2025, we managed two drilling units owned by Sonangol. For a detailed description of our business, please read Part I, Item 1, "Business".
These were partially offset by proceeds of $576 million from the issuance of the Notes, excluding issuance costs of $18 million. 4) Borrowing Activities An overview of our debt as of December 31, 2024, divided into (i) secured debt and (ii) unsecured senior convertible notes, is presented in the table below: (In $ millions) Principal value as of December 31, 2024 Debt Premium Debt Issuance Costs Carrying value as of December 31, 2024 Maturity date Bonds $575 million secured bond 575 1 (16) 560 August 2030 Unsecured Senior convertible bond 50 — — 50 August 2028 Total debt 625 1 (16) 610 Collateral package Revolving Credit Facility In July 2023, the Company entered into a $225 million, 5-year Senior Secured Revolving Credit Agreement in respect of the Revolving Credit Facility (the “Credit Agreement”).
The $532 million net cash used in financing activities during the year ended December 31, 2024 was related to share repurchases. 3) Borrowing Activities An overview of our debt as of December 31, 2025, divided into (i) secured debt and (ii) unsecured debt, is presented in the table below: (In $ millions) Principal value Debt Premium Debt Issuance Costs Carrying value Maturity date Secured $575 million secured bond 575 1 (13) 563 August 2030 Unsecured Unsecured senior convertible bond 50 — — 50 August 2028 Total debt 625 1 (13) 613 Collateral package Revolving Credit Facility In July 2023, the Company entered into a $225 million, 5-year Senior Secured Revolving Credit Agreement in respect of the Revolving Credit Facility (the “Credit Agreement”).
Economic utilization increased to 95% for the year ended December 31, 2024, compared to 93% for the year ended December 31, 2023, resulting in a $24 million increase in contract revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023.
The economic utilization was 90% for the year ended December 31, 2025, compared to 95% for the year ended December 31, 2024, resulting in a $37 million decrease in contract revenues in the year ended December 31, 2025 compared to the year ended December 31, 2024.
(In $ millions) December 31, 2024 December 31, 2023 Unrestricted cash 478 697 Undrawn revolving credit facility 225 225 Total available liquidity 703 922 We have shown our sources and uses of cash by category of cash flows in the table below: (In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023 Change Change % Net cash provided by operating activities (a) 88 287 (199) (69) % Net cash provided by investing activities (b) 226 42 184 438 % Net cash used in financing activities (c) (532) (200) (332) 166 % Effect of exchange rate changes in cash and cash equivalents (5) 1 (6) (600) % Change in period (223) 130 (353) (272) % a) Net cash provided by operating activities Cash flows from operating activities include cash receipts from customers, cash paid to employees and suppliers (except for additions to drilling units and equipment), interest and dividends received (except for returns of capital), interest paid, income taxes paid and other operating cash payments and receipts. 43 Cash flows provided by operating activities during the year ended December 31, 2024 were $88 million compared to $287 million for the year ended December 31, 2023 .
The below table shows unrestricted cash balances and total available liquidity as of each date presented: (In $ millions) December 31, 2025 December 31, 2024 Unrestricted cash 339 478 Undrawn Revolving Credit Facility 185 225 Total available liquidity 524 703 43 We have shown our sources and uses of cash by category of cash flows in the table below: (In $ millions, except percentages) Year ended December 31, 2025 Year ended December 31, 2024 Change Change % Net cash (used in)/provided by operating activities (a) (28) 88 (116) (132) % Net cash (used in)/provided by investing activities (b) (113) 226 (339) (150) % Net cash used in financing activities (c) (3) (532) 529 (99) % Effect of exchange rate changes in cash and cash equivalents 4 (5) 9 (180) % Change in period (140) (223) 83 (37) % a) Net cash (used in)/provided by operating activities Cash flows from operating activities include cash receipts from customers, cash paid to employees and suppliers (except for additions to drilling units and equipment), interest and dividends received (except for returns of capital), interest paid, income taxes paid and other operating cash payments and receipts.
The average number of rigs on contract decreased from 11 in the year ended December 31, 2023 to 9 in the year ended December 31, 2024, resulting in a $170 million decrease in contract revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023.
The average number of rigs on contract increased to 10 in the year ended December 31, 2025 from nine in the year ended December 31, 2024, resulting in a $27 million increase in contract revenues in the year ended December 31, 2025 compared to the year ended December 31, 2024.
Contract backlog Contract backlog includes all firm contracts at the contractual operating dayrate multiplied by the number of days remaining in the firm contract period. For contracts which include a market indexed rate mechanism, we utilize the current applicable dayrate multiplied by the number of days remaining in the firm contract period.
For contracts which include a market indexed rate mechanism, we utilize the current applicable dayrate multiplied by the number of days remaining in the firm contract period. Contract backlog includes management contract revenues and leasing revenues from bareboat charter arrangements, denoted as "other" in the tables below.
Consequently, income taxes have been recorded in these jurisdictions when applicable. Our income tax expense is based on our income and statutory tax rates in the jurisdictions we operate. Refer to "Note 11 – "Taxation".
Certain subsidiaries operate in or realize income from sources within other jurisdictions that impose income taxes or withholding taxes. Consequently, income taxes for these jurisdictions have been recorded when applicable. Our income tax expense is based on our income and the statutory tax rates of relevant jurisdictions. Refer to Note 9 – "Taxation".
On average, we incur higher vessel and rig operating expenses when a rig is operating compared to when it is stacked. For stacked rigs, we incur higher vessel and rig expenses for warm stacked rigs compared to cold stacked rigs. We incur one-time costs for activities such as preservation and severance when we cold stack a rig.
Vessel and rig operating expenses are mainly driven by rig activity. On average, we incur higher vessel and rig operating expenses when a rig is operating compared to when it is stacked. For stacked rigs, we incur higher vessel and rig expenses for warm stacked rigs compared to cold stacked rigs.
As a result, we record a contract liability for mobilization fees received, which is amortized ratably to contract drilling revenue as services are rendered over the initial term of the related drilling contract. Amortization of deferred mobilization revenues decreased by $19 million during the year ended December 31, 2024, compared to the year ended December 31, 2023.
Deferred mobilization revenues We receive fees for the mobilization of our rigs, where the associated revenue is recognized ratably over the expected term of the related drilling contract. As a result, we record a contract liability for mobilization fees received, which is amortized ratably to contract revenues as services are rendered over the initial term of the related drilling contract.
In addition, we provide management services to certain affiliated entities. As of December 31, 2024, we owned a total of 15 drilling units, of which 11 were operating (inclusive of one leased to the Sonadrill joint venture), one 6th generation drillship was undergoing contract preparations for a contract that commenced during February 2025, and three were cold stacked.
In addition, we provide management services to certain affiliated entities. As of December 31, 2025, we owned a total of 15 drilling units, of which 10 were operating, one was undergoing capital upgrade projects for a contract commencing in the second quarter of 2026, one was undergoing repairs and maintenance projects and three were cold stacked.
The use of different estimates and assumptions could result in significantly different carrying values of our assets and could materially affect our results of operations. An impairment loss is recorded in the period in which it is determined that the aggregate carrying amount is not recoverable.
The use of different estimates and assumptions could result in significantly different carrying values of our assets and could materially affect our results of operations.
Average number of rigs on contract We calculate the average number of rigs o n contract by dividing the aggregate days our rigs were on contract during the reporting period by the number of days in that reporting period.
We have set out movements in these key indicators of performance in the sections below. i. Average number of rigs on contract We calculate the average number of rigs on contract by dividing the aggregate days our rigs (excluding managed rigs) were on contract during the reporting period by the number of days in that reporting period.
In addition, inflationary pressures may impact the cost base in our industry, including personnel costs, and the prices of goods and services required to reactivate or operate rigs.
This has led to the continued deferral of offshore capital expenditures and contracting of offshore drilling services and could have a negative impact on near-term future demand for offshore drilling services. In addition, inflationary pressures may impact the cost base in our industry, including personnel costs and the prices of goods and services required to reactivate or operate rigs.
Amortization of intangibles Amortization increased by $3 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to unfavorable contracts being fully amortized related to the West Polaris , which was fully amortized in 2023, and the West Auriga and West Vela , which were fully amortized in February 2024.
Amortization of intangibles Amortization expense increased by $10 million during the year ended December 31, 2025 compared to the year ended December 31, 2024 mainly attributable to unfavorable contracts being fully amortized related to the West Jupiter and West Tellus during the third quarter of 2025, and the West Auriga and West Vela during the year ended December 31, 2024 . iii.
This was primarily related to the West Capella, West Polaris and West Phoenix, as their respective contracts ended in 2024. b) Reimbursable revenues We generally receive reimbursements from our customers for the purchase of supplies, equipment, personnel and other services provided at their request in accordance with a drilling contract. We classify such revenues as reimbursable revenues.
There was a decrease in contract revenues, from add-on services and performance bonuses of $12 million during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily attributable to the West Phoenix earning revenues from add-on services and a performance bonus during the year ended December 31, 2024, which did not recur during the year ended December 31, 2025. b) Reimbursable revenues We generally receive reimbursements from our customers for the purchase of supplies, equipment, personnel and other services provided at their request in accordance with a drilling contract.
A commitment fee is incurred under the Revolving Credit Facility on undrawn amounts, at a rate of 0.5% per annum to and including July 27, 2026, 0.75% per annum from and including July 28, 2026 to and including July 27, 2027, and 1.00% per annum thereafter. $575 million Notes Offerings Also in July 2023, Seadrill Finance issued the Notes in a private offering.
A commitment fee is incurred under the Revolving Credit Facility on undrawn amounts, at a rate of 0.5% per annum to and including July 27, 2026, 0.75% per annum from and including July 28, 2026 to and including July 27, 2027, and 1.00% per annum thereafter. 44 In August 2025, the Company issued a NOK403 million guarantee (approximately $40 million as of December 31, 2025) under the Revolving Credit Facility related to the SFL Hercules Ltd. claim, which reduced the available borrowings under the Revolving Credit Facility to approximately $185 million.
As of December 31, 2024, Seadrill had available liquidity of $703 million, which consisted of unrestricted cash of $478 million, and available borrowings under our Revolving Credit Facility of $225 million. The below table shows unrestricted cash balances, and total available liquidity, as of each date presented.
As of December 31, 2025, Seadrill had available liquidity of $524 million, which consisted of unrestricted cash of $339 million, and available borrowings under our Revolving Credit Facility of $185 million.
We also incur significant costs when re-activating a rig from cold stack, a proportion of which is expensed as incurred. Where a rig is leased to another operator, the majority of vessel and rig expenses are incurred by the operator.
We incur one-time costs for activities such as preservation and severance when we cold stack a rig. We also incur significant costs when re-activating a rig from cold stack, a proportion of which is expensed as incurred.
This was partially offset by other financial items during the year ended December 31, 2023, including a make-whole fee of $10 million related to the prepayment of the first lien debt. 6) Income tax benefit/expense Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities related to our ownership and operation of drilling units and may vary significantly depending on jurisdictions and contractual arrangements.
This was partially offset by favorable foreign exchange movements due to the depreciation of the USD against the Brazilian Real and Norwegian Krone. 6) Income tax (expense)/benefit Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities related to our ownership and operation of drilling units and may vary significantly depending on jurisdictions and contractual arrangements.
(In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023 Change Change % Gain on disposals (i) 234 14 220 1571 % Other operating income (ii) 16 — 16 100 % Other operating items 250 14 236 1686 % i.
(In $ millions, except percentages) Year ended December 31, 2025 Year ended December 31, 2024 Change Change % Loss on impairment of long-lived assets (i) (22) — (22) 100 % Gain on disposals (ii) 1 234 (233) (100) % Other operating income (iii) — 16 (16) (100) % Other operating items (21) 250 (271) (108) % i.
This level of demand has been sustained by the combination of growing confidence in commodity prices, heightened focus on energy security, and relative attractiveness of offshore plays with respect to both cost and carbon emissions. During the first quarter of 2024, Brent oil prices generally rose due to heightened geopolitical risks largely associated with the growing Middle East conflict.
This level of demand was sustained by the combination of commodity prices, heightened focus on energy security, and relative attractiveness of offshore plays with respect to both cost and carbon emissions. The price of Brent oil averaged $68 per barrel in 2025, down from $80 per barrel in 2024.
Please refer to Note 1 - "General information" for reclassifications of reimbursable revenues and reimbursable expenses related to our joint ventures, including $26 million of management contract revenues and management contract expenses for the year ended December 31, 2023 , reclassified to reimbursable revenues and reimbursable expenses, respectively. c) Management contract revenues Management contract revenues include revenues related to contracts where we provide management, operational and technical support services and comprise revenue from our joint venture, Sonadrill, relating to the Libongos , Quenguela and the West Gemini .
The $12 million decrease for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to reduced reimbursable services provided to the Libongos and Quenguela for long-term maintenance during the year ended December 31, 2025, compared to the year ended December 31, 2024. c) Management contract revenues Management contract revenues include revenues related to contracts where we provide management, operational and technical support services and are comprised of revenues from our joint venture, Sonadrill, relating to the Libongos , Quenguela and West Gemini.
(In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023 Change Change % $575 million secured bond in issue (48) (21) (27) 129 % Post-emergence first lien senior secured — (12) 12 (100) % Post-emergence second lien senior secured — (16) 16 (100) % Post-emergence unsecured senior convertible bond (6) (5) (1) 20 % Interest on debt facilities (54) (54) — — % 5) Other financial and non-operating items (In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023 Change Change % Interest income (i) 25 35 (10) (29) % Share in results from associated companies (net of tax) (ii) (9) 37 (46) (124) % Other financial items (iii) (34) (25) (9) 36 % Other financial and non-operating items (18) 47 (65) (138) % i.
(In $ millions, except percentages) Year ended December 31, 2025 Year ended December 31, 2024 Change Change % $575 million secured bond (48) (48) — — % Unsecured senior convertible bond (5) (6) 1 (17) % Interest on debt facilities (53) (54) 1 (2) % 5) Other financial and non-operating items (In $ millions, except percentages) Year ended December 31, 2025 Year ended December 31, 2024 Change Change % Interest income (i) 14 25 (11) (44) % Equity in losses of equity method investment (net of tax) (10) (9) (1) 11 % Other financial and non-operating items (ii) (41) (34) (7) 21 % Other financial and non-operating items (37) (18) (19) 106 % i.
(In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023 Change Change % Operating revenues 1,385 1,502 (117) (8) % Operating expenses (1,223) (1,187) (36) 3 % Other operating items 250 14 236 1686 % Operating profit 412 329 83 25 % Interest expense (61) (59) (2) 3 % Other financial and non-operating items (18) 47 (65) (138) % Profit before income taxes 333 317 16 5 % Income tax benefit/(expense) 113 (17) 130 (765) % Net income 446 300 146 49 % 1) Operating revenues Operating revenues consist of contract revenues, reimbursable revenues, management contract revenues, leasing revenues and other revenues.
(In $ millions, except percentages) Year ended December 31, 2025 Year ended December 31, 2024 Change Change % Operating revenues 1,437 1,385 52 4 % Operating expenses (1,369) (1,223) (146) 12 % Other operating items (21) 250 (271) (108) % Operating profit 47 412 (365) (89) % Interest expense (61) (61) — — % Other financial and non-operating items (37) (18) (19) 106 % (Loss)/profit before income taxes (51) 333 (384) (115) % Income tax (expense)/benefit (26) 113 (139) (123) % Net (loss)/income (77) 446 (523) (117) % 38 1) Operating revenues Operating revenues consist of contract revenues, reimbursable revenues, management contract revenues, leasing revenues and other revenues.
For a similar discussion, including comparisons for the year ended December 31, 2023, the periods from February 23, 2022 through December 31, 2022 (Successor) and from January 1, 2022 through February 22, 2022 (Predecessor), see Part I, Item 5, "Operating and Financial Review and Prospects” of our annual report on Form 20-F for the year ended December 31, 202 3 , filed with the SEC on March 27, 2024.
For a similar discussion, including comparisons for the years ended December 31, 2024 and December 31, 2023, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2024 , filed with the SEC on February 27, 2025.
On June 25, 2024, the Company announced it had completed the additional $250 million of repurchases, with the cancellation of 5,250,707 treasury shares acquired under the program on June 28, 2024. 42 During the second quarter of 2024, the Company's Board of Directors authorized a new $500 million share repurchase program that will run for a period of two years from June 25, 2024, the date of completion for the programs initiated in 2023.
On June 25, 2024, the Company announced it had completed the additional $250 million of repurchases, with the cancellation of 5,250,707 treasury shares acquired under the program on June 28, 2024.
These were partially offset by lower amortization related to favorable contracts for the West Phoenix , Quenguela , West Capella and SeaMex, which were fully amortized during 2023. iii. Management contract expenses Management contract expenses include costs related to Sonadrill's rigs, Quenguela and Libongos , and the Seadrill rig novated to Sonadrill, the West Gemini .
Management contract expenses Management contract expenses include costs related to Sonadrill's rigs, Quenguela and Libongos , and the Seadrill rig leased to Sonadrill, the West Gemini .
Depreciation increased by $10 million in the year ended December 31, 2024 compared to the year ended December 31, 2023 , primarily due to the additional rigs from the Aquadrill acquisition completed in April 2023, partially offset by the disposal of the Gulfdrill rigs in June 2024.
Leasing revenues decreased by $21 million for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily attributable to the disposal of the Gulfdrill rigs in June 2024.
Refer to Note 24 - "Related party transactions" for further details and to Note 1 - "General information" for reclassifications of leasing revenues, including $33 million of other revenues for the year ended December 31, 2023, reclassified to leasing revenues. 2) Operating expenses Total operating expenses include vessel and rig operating expenses, depreciation of drilling units and equipment, amortization of intangibles, reimbursable expenses, management contract expenses, selling, general and administrative expenses and merger and integration related expenses. 39 (In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023 Change Change % Vessel and rig operating expenses (i) (681) (705) 24 (3) % Reimbursable expenses (68) (55) (13) 24 % Depreciation and amortization (ii) (168) (155) (13) 8 % Management contract expenses (iii) (175) (174) (1) 1 % Merger and integration related expenses (24) (24) — — % Selling, general and administrative expenses (iv) (107) (74) (33) 45 % Operating expenses (1,223) (1,187) (36) 3 % i.
(In $ millions, except percentages) Year ended December 31, 2025 Year ended December 31, 2024 Change Change % Vessel and rig operating expenses (i) (736) (681) (55) 8 % Reimbursable expenses (58) (68) 10 (15) % Depreciation and amortization (ii) (238) (168) (70) 42 % Management contract expenses (iii) (232) (175) (57) 33 % Merger and integration related expenses (iv) (2) (24) 22 (92) % Selling, general and administrative expenses (103) (107) 4 (4) % Total operating expenses (1,369) (1,223) (146) 12 % i.
This was partially offset by a $36 million increase in vessel and rig operating expenses attributable to the West Vela and West Capella operating for more days during the year ended December 31, 2024, compared to the year ended December 31, 2023, as the rigs were acquired in April 2023 as a part of the Aquadrill acquisition. ii.
This was partially offset by a $73 million decrease in vessel and rig operating expenses during the year ended December 31, 2025 primarily related to the West Phoenix and West Capella, which were stacked for the majority of the year ended December 31, 2025, and lower managed service agreement fees of $27 million, as the rigs acquired through the Aquadrill transaction are now managed by Seadrill, rather than by third parties. ii.
The below table shows the number of managed drilling units included in our fleet for each of the periods covered by this report: Drilling units managed December 31, 2024 December 31, 2023 December 31, 2022 Managed rigs Floater 2 2 2 Jackup rigs — — 5 Total managed rigs 2 2 7 The decrease in managed jackup rigs during 2023 was due to the termination of the SeaMex MSA on November 17, 2023.
The below table shows the number of managed drilling units included in our fleet for each of the periods covered by this report: Drilling units managed December 31, 2025 December 31, 2024 December 31, 2023 Managed rigs Benign environment drillships 2 2 2 Total managed rigs 2 2 2 Contract backlog Contract backlog includes all firm contracts at the contractual operating dayrate multiplied by the number of days remaining in the firm contract period.
The Notes mature on August 1, 2030. The Notes are guaranteed by the Company and the same subsidiaries of the Company that guarantee the Credit Agreement. The Notes are secured by a second priority lien on the same assets that secure the Credit Agreement.
For further details, please refer to Note 24 – "Commitments and contingencies". $575 million Notes Offerings In July 2023, Seadrill Finance issued the Notes in a private offering. The Notes mature on August 1, 2030. The Notes are guaranteed by the Company and the same subsidiaries of the Company that guarantee the Credit Agreement.
During the year ended December 31, 2024, there was an increase of $11 million in the managed contract expenses, primarily related to higher repair and maintenance costs pertaining to the Sonadrill managed rigs.
During the year ended December 31, 2025, there was a $155 million increase in vessel and rig operating expenses compared to the year ended December 31, 2024, primarily related to the West Auriga and West Polaris commencing operations in Brazil, of which $43 million related to increased amortization of deferred mobilization costs, along with higher repair and maintenance costs across the fleet.
These decreases were partially offset by the West Capella and West Vela operating for more days during the year ended December 31, 2024, compared to the year ended December 31, 2023, as the rigs were acquired in April 2023 as a part of the Aquadrill acquisition. ii.
The increase was partially offset by the impact of the West Phoenix and West Capella being stacked for the majority of the year ended December 31, 2025, compared to operating for most of the year ended December 31, 2024. ii.
The contract backlog for our fleet was as follows as of the dates specified: (In $ millions) Contract backlog December 31, 2024 December 31, 2023 December 31, 2022 Drilling contracts 3,034 2,612 1,925 Other (1) 146 408 390 Total 3,180 3,020 2,315 (1) Decrease is primarily due to divestment of three Qatar jackup rigs, partially offset by increased bareboat charter rate on West Gemini.
Contract backlog excludes revenues for mobilization, demobilization and contract preparation or other incentive provisions and excludes backlog relating to non-consolidated entities. 37 The contract backlog for our fleet was as follows as of the dates specified: (In $ millions) Contract backlog December 31, 2025 December 31, 2024 December 31, 2023 Drilling contracts 2,095 3,034 2,612 Other 285 146 408 Total 2,380 3,180 3,020 Our contract backlog includes only firm commitments represented by signed drilling contracts.
The decrease is primarily related to the West Auriga and West Polaris operating for fewer days during the year ended December 31, 2024, as the rigs underwent preparation work for contracts with Petrobras in Brazil, with the West Auriga commencing work in late December 2024, and the West Polaris commencing work in the first quarter of 2025.
The increase was primarily related to the West Auriga and West Polaris having commenced work in Brazil in December 2024 and February 2025, respectively, and therefore, were operating for more days during the year ended December 31, 2025, compared to the year ended December 31, 2024, along with the Sevan Louisiana and West Neptune operating for more days during the year ended December 31, 2025 due to special periodic survey activities during the year ended December 31, 2024.
The average number of rigs on contract decreased for the year ended December 31, 2024 compared to the year ended December 31, 2023 , driven primarily by the West Auriga and West Polaris undergoing preparations for contracts with Petrobras in Brazil during the year ended December 31, 2024 , with certain operating expenses being capitalized.
The increase was driven by higher-than-average dayrates for the West Neptune and West Vela operating in the U.S. Gulf, the West Auriga and West Polaris operating in Brazil, and the West Elara operating in Norway during the year ended December 31, 2025, compared to the year ended December 31, 2024.
As a result, our vessel and rig operating expenses was $57 million lower for the year ended December 31, 2024 compared to the year ended December 31, 2023 .
Where a rig is leased to another operator, the majority of vessel and rig expenses are incurred by the operator. 40 Vessel and rig operating expenses increased by $55 million during the year ended December 31, 2025 compared to the year ended December 31, 2024.
Selling, general and administrative expense increased by $33 million during the year ended December 31, 2024 compared to the year ended December 31, 2023 , due to increased onshore employee costs, additional costs attributable to the closure of our London office and increased professional service fees. 40 3) Other operating items Other operating items include gains on the sale of assets and other operating income.
Merger and integration related expenses decreased by $22 million during the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily attributable to lower integration costs incurred related to the acquisition of Aquadrill. 3) Other operating items Other operating items include loss on impairment of long-lived assets, gain on the sale of assets and other operating income.
Other financial items Other financial items remained relatively consistent for the year ended December 31, 2024 compared to the year ended December 31, 2023. Movements to other financial items included increased foreign exchange losses of $19 million during the year ended December 31, 2024, primarily related to the strengthening of the U.S.
Other financial and non-operating items Other financial and non-operating items increased by $7 million during the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily related to the recognition of indirect tax liabilities and a provision related to assets sold in 2023.
As of December 31, 2024, Seadrill was in compliance with these financial covenants. 5) Contractual Obligations The following table summarizes our significant contractual obligations as of December 31, 2024 and the periods in which such obligations are due: Payments due by period (In $ millions) 2025 2026 and 2027 2028 and 2029 Thereafter Total Principal payments on long-term debt — — 50 575 625 Interest payments on long-term debt 54 108 100 28 290 Operating leases 4 5 3 — 12 Total (1) 58 113 153 603 927 (1) Contractual obligations exclude $55 million of uncertain tax position, inclusive of interest and penalties, included on our Consolidated Balance Sheet as of December 31, 2024.
As of December 31, 2025, Seadrill was in compliance with these financial covenants. 4) Contractual Obligations As of December 31, 2025, we have $22 million of uncertain tax position, inclusive of interest and penalties, included on our Consolidated Balance Sheet.
The Brent oil price on February 20, 2025 was $76.48. 2024 2023 2022 2021 2020 Average Brent oil price ($/bbl) 80 82 101 71 42 Source: Bloomberg In 2020, the oil and gas industry faced significant uncertainty due to a substantial reduction in oil and gas prices caused by the pandemic, despite Brent prices stabilizing in previous years.
The Brent oil price on February 20, 2026 was $72.23. 2025 2024 2023 2022 2021 Average Brent oil price ($/bbl) 68 80 82 101 71 Source: Bloomberg In recent years, oil prices have generally remained at levels that support offshore exploration and development activity, where global rig demand has been steady.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Foreign exchange risk It is customary in the oil and gas industry that a majority of our revenues and expenses are denominated in U.S. dollars, which is the functional currency of our subsidiaries and equity method investees. However, a portion of the revenues and expenses of certain of our subsidiaries and equity method investees are denominated in other currencies.
Foreign exchange risk It is customary in the oil and gas industry that a majority of our revenues and expenses are denominated in U.S. dollars, which is the functional currency of our subsidiaries and equity method investee. However, a portion of the revenues and expenses of certain of our subsidiaries and equity method investee are denominated in other currencies.
Interest rate risk The majority of our debt portfolio is on a fixed interest rate. Please refer to Note 19 – "Debt" for further details. 47
Interest rate risk The majority of our debt portfolio is on a fixed interest rate. Please refer to Note 16 – "Debt " for further details. 47