Q2 2026 Seadrill Ltd Earnings Call

August 10, 2026

Operator 3: Hello, everyone. Thank you for joining us, and welcome to the Seadrill Q2 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Kevin Smith. Please go ahead.

Operator: Hello, everyone. Thank you for joining us, and welcome to the Seadrill Q2 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Kevin Smith. Please go ahead.

Speaker #1: If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Kevin Smith, please go ahead.

Speaker #2: Hello, and welcome to Seadrill's Q2 2026 earnings call. I'm Kevin Smith, Vice President of Corporate Finance and Investor Relations, and I'm joined today by Samir Ali, President and Chief Executive Officer; Grant Creed, Executive Vice President and Chief Financial Officer; and Jacob Taylor, Vice President, Commercial.

Kevin Smith: Hello, and welcome to Seadrill's Q2 2026 earnings call. I am Kevin Smith, Vice President of Corporate Finance and Investor Relations, and I am joined today by Samir Ali, President and Chief Executive Officer, Grant Creed, Executive Vice President and Chief Financial Officer, and Jacob Taylor, Vice President Commercial. Our call will include forward-looking statements that involve risks and uncertainty. Actual results may differ materially. No one should assume these forward-looking statements remain valid later in the quarter or year, and we assume no obligation to update them except as required by securities laws. Our filings with the U.S. Securities and Exchange Commission provide a more detailed discussion of our forward-looking statements and the risk factors affecting our business. During the call, we will also reference non-GAAP measures. Our earnings release, furnished to the SEC and available on our website, includes reconciliations with the nearest corresponding GAAP measures.

Speaker #2: Our call will include forward-looking statements that involve risks and certainty. Actual results may differ materially. No one should assume these forward-looking statements remain valid later in the quarter or year, and we assume no obligation to update them except as required by securities laws.

Speaker #2: Our filings with the U.S. Securities and Exchange Commission provide a more detailed discussion of our forward-looking statements and the risk factors affecting our business.

Speaker #2: During the call, we will also reference non-GAAP measures. Our earnings release furnished to the SEC and available on our website includes reconciliations with the nearest corresponding GAAP measures.

Speaker #2: Our use of the term EBITDA on today's call corresponds with the term adjusted EBITDA as defined in our earnings release. I'll now turn the call over to Samir.

Kevin Smith: Our use of the term EBITDA on today's call corresponds with the term adjusted EBITDA as defined in our earnings release. I will now turn the call over to Samir.

Speaker #3: Thanks, Kevin. Welcome, everyone. Thank you for joining us. I'll begin with our Q2 highlights, including continued progress against our core priorities and our recent contracting successes.

Samir Ali: Thanks, Kevin. Welcome, everyone. Thank you for joining us. I will begin with our Q2 highlights, including continued progress against our core priorities and our recent contracting successes. I will then discuss the market backdrop and regional outlook before turning the call over to Grant to review our financial results and updated full-year 2026 guidance. Q2 financial performance was very strong, exceeding expectations. We delivered EBITDA of $144 million, underpinning our decision to raise full-year revenue and EBITDA guidance. This marks our second guidance increase this year. The quarter also reflected continued execution against our core priorities, delivering safe, reliable operations, generating free cash flow, and capturing the upside ahead of us. Let's start with our first priority, safe and reliable operations. We delivered another solid quarter, achieving economic utilization of 96%. We also successfully completed the West Tellus reacceptance on schedule and on budget.

Speaker #3: I'll then discuss the market backdrop and regional outlook before turning the call over to Grant to review our financial results and updated Q2 guidance.

Speaker #3: Q2 financial performance was very strong. Exceeding expectations, we delivered EBITDA of $144 million underpinning our decision to raise Q2 revenue and EBITDA guidance. This marks our second guidance increase this year.

Speaker #3: The quarter also reflected continued execution against our core priorities. Delivering safe, reliable operations, generating free cash flow, and capturing the upside ahead of us.

Speaker #3: Let's start with our first priority: safe and reliable operations. We delivered another solid quarter, achieving economic utilization of 96%. We also successfully completed the West Tellis re-acceptance on schedule and on budget.

Speaker #3: Seadrill's one-team culture met all client expectations, and the rig has been successfully operating since mid-June. This is an important milestone. It marks the second of three rigs to roll off legacy day-rate contracts and begin generating revenue at substantially higher rates.

Samir Ali: Seadrill's one team culture met all client expectations, and the rig has been successfully operating since mid-June. This is an important milestone. It marks the second of three rigs to roll off legacy day rate contracts and begin generating revenue at substantially higher rates. Safety remains our top priority. We are proud of the progress we have made, but we are never satisfied with standing still. By continuing to invest in training, knowledge sharing, and leadership development, we are building an even stronger organization for the future. I want to take this moment to remind our dedicated crews, everyone has stop-work authority, and no task is worth compromising our high safety standards. Priority two, free cash flow generation. We remain on track to generate meaningful free cash flow in H2 2026.

Speaker #3: Safety remains our top priority. We are proud of the progress we've made, but we are never satisfied with standing still. By continuing to invest in training, knowledge sharing, and leadership development, we are building an even stronger organization for the future.

Speaker #3: I want to take this moment to remind our dedicated crews: everyone has stop-work authority, and no task is worth compromising our high safety standards.

Speaker #3: Priority two: free cash flow generation. We remain on track to generate meaningful free cash flow in the second half of 2026. With that visibility, we resume shareholder returns during the second quarter.

Samir Ali: With that visibility, we resumed shareholder returns during Q2, opportunistically repurchasing $20 million of shares under our repurchase program during the last week of June. Priority three, capturing the upside. Our recent contracting success strengthens 2027 revenue visibility and demonstrates Seadrill's ability to capture the upside ahead of us. Since our May call, we have added approximately $200 million of backlog, including new contracts and contract extensions on three rigs in the US Gulf and Malaysia. In the US Gulf, the West Vela secured a 12-month contract with Talos beginning in June 2027, in direct continuation of its current program. The award adds approximately $161 million to backlog, excluding additional services, and reflects the strength of our operational execution and customer relationships.

Speaker #3: Opportunistically, repurchasing $20 million of shares under our repurchase program during the last week of June. Priority three: capturing the upside. Our recent contracting success strengthens 2027 revenue visibility and demonstrates Seadrill's ability to capture the upside ahead of us.

Speaker #3: Since our May call, we have added approximately $200 million of backlog, including new contracts and contract extensions on three rigs in the U.S. Gulf and Malaysia.

Speaker #3: In the U.S. Gulf, the West Tellis secured a 12-month contract with Tellis beginning in June 2027. In direct continuation of its current program, the award adds approximately $161 million to backlog, excluding additional services.

Speaker #3: And reflects the strength of our operational execution and customer relationships. We are pleased to extend our partnership with Tellis and thank the crew of the West Tellis for their superior performance that is the foundation for what's next.

Samir Ali: We are pleased to extend our partnership with Talos and thank the crew of the West Vela for their superior performance that is the foundation for what is next. Staying in the US Gulf, the Sevan Louisiana has worked steadily throughout the year. The rig is expected to wrap up its current program with Walter Oil & Gas Corporation later this week, following the successful completion of earlier campaigns with Guardian Energy Partners and LLOG in July. We also want to recognize Harbour Energy and LLOG for their continued trust in Seadrill. Earlier this year, Harbour Energy and LLOG extended the West Neptune once again and selected the West Vela for a 270-day campaign beginning later this year. Harbour Energy also contracted the Sevan Louisiana for a short campaign at the end of July, meaning they will have had all of Seadrill's US Gulf fleet under contract in 2026.

Speaker #3: Staying in the U.S. Gulf, the Savannah, Louisiana, has worked steadily throughout the year. The rig is expected to wrap up its current program with Walter Oil & Gas later this week.

Speaker #3: Following the successful completion of earlier campaigns with Guardian and Log in July. We also want to recognize Harbor and Log for their continued trust in Seadrill.

Speaker #3: Earlier this year, Harbor and Log extended the West Neptune once again and selected the West Tellis for a $270-day campaign beginning later this year.

Speaker #3: Harbor also contracted the Savannah, Louisiana, for a short campaign at the end of July. Meaning they will have had all of Seadrill's U.S. Gulf fleet under contract in 2026.

Speaker #3: We appreciate their confidence and remain focused on delivering safe, efficient, and reliable operations across every rig. And in Malaysia, our customer recently exercised a priced option for approximately $75 days on the West Capella, extending operations into the second half of 2027.

Samir Ali: We appreciate their confidence and remain focused on delivering safe, efficient, and reliable operations across every rig. In Malaysia, our customer recently exercised a priced option for approximately 75 days on the West Capella, extending operations into the H2 2027. Turning to the broader market, the current tender pipeline points to a materially tighter environment in 2027. If these tenders convert into awards as expected, we believe drillship utilization could reach the mid-90% range by next year. Collectively, developments across strategic reserves, offshore investment, and exploration activities support our view of growing demand for deepwater rigs. The U.S. Energy Information Administration's latest outlook shows OECD inventories falling to their lowest levels since at least 2003, as supply disruptions accelerate stock draws.

Speaker #3: Turning to the broader market, the current tender pipeline points to a materially tighter environment in 2027. If these tenders convert into awards as expected, we believe Drill Ship utilization could reach the mid-90% range by next year.

Speaker #3: Collectively, developments across strategic reserves, offshore investment, and exploration activity support our view of growing demand for deepwater rigs. The U.S. Energy Information Administration's latest outlook shows OECD inventories falling to their lowest levels since at least 2003.

Speaker #3: As supply disruptions accelerate stock draws, oil majors have also highlighted tightening supply conditions, which Chevron, noting that supply crunch could soon be felt globally, and ExxonMobil noting that the U.S.

Samir Ali: Oil majors have also highlighted tightening supply conditions, with Chevron noting that supply crunch could soon be felt globally, and ExxonMobil noting that the U.S. is approaching unheard-of inventory levels. Wood Mackenzie forecasts offshore project FIDs to rise to $165 billion in 2027, representing a 132% increase from 2025, underscoring the strength of the offshore cycle. Further, we continue to see offshore exploration activity gaining momentum, driven by structurally higher oil price, energy security coming back into vogue, slowing non-OPEC production growth, and operators' need to rebuild reserve bases. Equinor validated this theme in its Capital Markets Day in June, guiding to an international exploration budget for the first time and highlighting plans to step up exploration along the Atlantic margin, supported by its view that oil and gas demand will remain higher for longer.

Speaker #3: is approaching unheard-of inventory levels. Wood McKinsey forecasts offshore project FIDs to rise to $165 billion in 2027, representing a $132% increase from 2025. Underscoring the strength of the offshore cycle.

Speaker #3: Further, we continue to see offshore exploration activity gaining momentum. Driven by structurally higher oil price, energy security coming back into vogue, slowing non-OPEC production growth, and operators' need to rebuild reserve bases.

Speaker #3: Equinor validated this theme in its capital markets day in June. Guiding to an international exploration budget for the first time. And highlighting plans to step up exploration along the Atlantic margin, supported by its view that oil and gas demand will remain higher for longer.

Speaker #3: Recent exploration announcements also reinforced this momentum. With TotalEnergies securing offshore exploration agreements in Egypt and Syria, Chevron signing an early exploration deal offshore Guinea, Exxon applying for new exploration permits offshore Guyana, and Repsol entering into an exploration agreement in Venezuela.

Samir Ali: Recent exploration announcements also reinforce this momentum, with TotalEnergies securing offshore exploration agreements in Egypt and Syria, Chevron signing an early exploration deal offshore Guinea, Exxon applying for new exploration permits offshore Guyana, and Repsol entering into an exploration agreement in Venezuela. Moving to the outlook for key regions where Seadrill operates. The U.S. Gulf remains in transition, with several drillships expected to become available before year-end. Seadrill is ahead of the curve by recently securing a 365-day contract at leading-edge day rates for the West Vela, bringing total year-to-date backlog added in the region to nearly half a billion dollars. The West Neptune is already contracted into late 2027 and is well positioned for attractive follow-on opportunities. We remain confident that the supply-demand balance of drillships in the region will improve in 2027.

Speaker #3: Moving to the outlook for key regions where Seadrill operates. The U.S. Gulf remains in transition, with several drill ships expected to become available before year-end.

Speaker #3: Seadrill is ahead of the curve, having recently secured a 365-day contract at leading-edge day rates for the West Tellus, bringing total year-to-date backlog added in the region to nearly half a billion dollars.

Speaker #3: The West Neptune is already contracted into late 2027 and is well positioned for attractive follow-on opportunities. We remain confident that the supply-demand balance of drill ships in the region will improve in 2027.

Speaker #3: Our semi-submersible, the Savannah, Louisiana, is also favorably positioned as market conditions in the U.S. Gulf strengthen into 2027. While we have a strong track record of winning programs with short lead times, visibility for the bounce to 2026 remains limited.

Samir Ali: Our semi-submersible, the Sevan Louisiana, is also favorably positioned as market conditions in the U.S. Gulf strengthen into 2027. While we have a strong track record of winning programs with short lead times, visibility for the balance of 2026 remains limited. We will continue to manage the asset with commercial discipline while preserving flexibility. Turning to Brazil. Seadrill remains well-contracted in one of the industry's most important deepwater geographies. Recent multi-year awards and extensions reinforce our view that Brazil will remain a core source of drillship demand through the end of the decade. 25 drillships are currently contracted in the region, with only three expected to become available before the end of 2027, if options on a couple of rigs are exercised. A recent Petrobras prequalification exercise may be an indication of tendering activity to come.

Speaker #3: We will continue to manage the asset with commercial discipline, while preserving flexibility. Turning to Brazil, Seadrill remains well contracted in one of the industry's most important deepwater geographies.

Speaker #3: Recent multi-year awards and extensions reinforce our view that Brazil will remain a core source of drill ship demand through the end of the decade.

Speaker #3: Twenty-five drillships are currently contracted in the region, with only three expected to become available before the end of 2027, if options on a couple of rigs are exercised.

Speaker #3: A recent Petrobras pre-qualification exercise may be an indication of tendering activity to come. We expect Brazil to remain balanced and competitive. With opportunities favoring rigs that align closely with customer needs and based on requirements.

Samir Ali: We expect Brazil to remain balanced and competitive, with opportunities favoring rigs that align closely with customer needs and basin requirements. Following the completion of the West Carina contract at the end of June, we mobilized the rig outside of Brazil, consistent with typical post-contract process in the country. We are in advanced discussions for follow-on opportunities and remain confident in our ability to secure work commencing in H1 2027. In Southeast Asia, a region we have repeatedly identified as a source of growing demand, momentum is building. A recent leading-edge fixture awarded for work commencing in mid-2028 is a positive data point. Customers' willingness to secure assets at leading-edge rates for future work is an indicator that the balance of supply and demand is expected to tighten. With limited drillship availability in the region, the West Capella is in a strong position to capture potential upside.

Speaker #3: Following the completion of the West Carina contract at the end of June, we mobilized the rig outside of Brazil, consistent with typical post-contract process in the country.

Speaker #3: We are an advanced discussions for follow-on opportunities and remain confident in our abilities to secure work commencing at a first half of 2027. In Southeast Asia, a region we have repeatedly identified as a source of growing demand, momentum is building.

Speaker #3: A recent leading-edge fixture awarded for work commencing in mid-2028 is a positive data point. Customers' willingness to secure assets at leading-edge rates for future work is an indicator that the balance of supply and demand is expected to tighten.

Speaker #3: With limited drillship availability in the region, the West Capella is in a strong position to capture potential upside. In West Africa, and particularly Angola, the Sana Drill Joint Venture continues to demonstrate the strength of our local partnership and the reliability of our operations.

Samir Ali: In West Africa, and particularly Angola, the Sonadrill joint venture continues to demonstrate the strength of our local partnership and the reliability of our operations, with all three rigs delivering technical uptime above 99% during Q2. Our near-term commercial focus is on the West Gemini, which is due to roll off contract later this year. While the rig is well-positioned for future work in Angola, we continue to market it across West Africa. We expect upcoming FIDs and tenders in countries such as Angola, Ghana, Cote d'Ivoire, Nigeria, and Namibia to absorb a meaningful share of available rig capacity. Bringing it all together, the broader deepwater market continues to tighten, supported by improving market fundamentals, rising offshore investment, and exploration momentum.

Speaker #3: With all three rigs delivering technical uptime above 99% during the second quarter, our near-term commercial focus is on the West Gemini, which is due to roll off contract later this year.

Speaker #3: While the rig is well positioned for future work in Angola, we continue to market it across West Africa. We expect upcoming FIDs and tenders in countries such as Angola, Ghana, Cote d'Ivoire, re, Nigeria, and Namibia to absorb a meaningful share of available rig capacity, bringing it all together.

Speaker #3: The broader deepwater market continues to tighten, supported by improving market fundamentals, rising offshore investment, and exploration momentum. We remain encouraged by the outlook across our key regions and believe Seadrill is entering 2027 from a position of strength, well positioned to capitalize on the opportunities ahead.

Samir Ali: We remain encouraged by the outlook across our key regions and believe Seadrill is entering 2027 from a position of strength, well-positioned to capitalize on the opportunities ahead. With that, I'll hand it over to Grant.

Speaker #3: With that, I'll hand it over to Grant.

Speaker #1: Thanks, Samir. I'll now discuss our second quarter, 2026 financial results. Recap the refinancing completed in June. And then provide an update on our outlook for the balance of the year.

Grant Creed: Thanks, Samir. I'll now discuss our Q2 2026 financial results, recap the refinancing completed in June, and then provide an update on our outlook for the balance of the year. Seadrill delivered strong Q2 financial performance, with total operating revenues of $449 million and adjusted EBITDA of $144 million. The quarter-on-quarter increase was primarily driven by more operating days and an improving average day rate. In Malaysia and Brazil, the West Capella and West Jupiter contributed full quarters of revenue after commencing their new programs in late March. While increased activity on the Sevan Louisiana in the US Gulf also supported revenue growth. This was partially offset by the impact of fewer operating days for the West Tellus, which underwent reacceptance testing before commencing its contract in Brazil as planned late in Q2.

Speaker #1: Seadrill delivered strong second quarter financial performance, with total operating revenues of $449 million and adjusted EBITDA of $144 million. The quarter-on-quarter increase was primarily driven by more operating days and an improving average day rate.

Speaker #1: In Malaysia and Brazil, the West Capella and West Jupiter contributed full quarters of revenue after commencing their new programs in late March. While increased activity on the Savannah, Louisiana, and the U.S.

Speaker #1: Gulf also supported revenue growth. This was partially offset by the impact of fewer operating days for the West Tellus, which underwent re-acceptance testing before commencing its contract in Brazil as planned late in the second quarter.

Grant Creed: Importantly, both the West Jupiter and West Tellus have now commenced contracts at materially higher day rates, representing a meaningful step-up in revenue of roughly $400,000 per day between the two rigs compared with their prior contracts. Repricing these legacy contracts has long been a strategic objective and is now strengthening the cash generation from our active fleet as we move into the H2 of the year and into 2027. Also contributing to Q2 revenue was an uplift in management contract revenues, reflecting an increase in the daily management fee Seadrill earns for providing management, operational, and technical support to Sonadrill. The increase was applied retroactively from 1 January 2026. Moving to operating expenses, which were $377 million in the Q2, up $43 million from the prior quarter.

Speaker #1: Importantly, both the West Jupiter and West Tellus have now commenced contracts at materially higher day rates, representing a meaningful step up in revenue of roughly $400,000 per day between the two rigs compared with their prior contracts.

Speaker #1: Repricing these legacy contracts has long been a strategic objective and is now strengthening the cash generation from our active fleet as we move into the second half of the year, and into 2027.

Speaker #1: Also contributing to second quarter revenue was an uplift in management contract revenues, reflecting an increase in the daily management fee Seadrill earns for providing management, operational, and technical support to Sonadrill.

Speaker #1: The increase was applied retroactively from January 1, 2026. And now moving to operating expenses, which were $377 million in the second quarter, up $43 million from the prior quarter.

Speaker #1: The increase was primarily attributable to the West Capella and West Jupiter returning to operations for the full quarter. Resulting EBITDA was $144 million, a sequential increase of $47 million compared to the prior quarter, with an EBITDA margin excluding reimbursables of $33.5%.

Grant Creed: The increase was primarily attributable to the West Capella and West Jupiter returning to operations for the full quarter. Resulting EBITDA was $144 million, a sequential increase of $47 million compared to the prior quarter, with an EBITDA margin excluding reimbursables of 33.5%. Turning to the balance sheets and cash flow statements. I will start by providing a recap of the refinancing completed in June. The refinancing strengthens our financial flexibility, extends debt maturities further into the next decade, and reinforces our commitment to maintaining a resilient through-cycle capital structure. Seadrill issued $700 million of 6.75 senior notes due in 2034 and used part of the proceeds to redeem $575 million of 8.38 senior secured second lien notes due in 2030. We also increased the revolving credit facility from $225 million to $300 million and extended the maturity by three years to 2031.

Speaker #1: And now turning to the balance sheet and cash flow statement. I'll start by providing a recap of the refinancing completed in June. The refinancing strengthens our financial flexibility, extends debt maturities further into the next decade, and reinforces our commitment to maintaining a resilient, through-cycle capital structure.

Speaker #1: Seadrill issued $700 million of 6.75% senior notes due in 2034, and used part of the proceeds to redeem $575 million of 8.38% senior secured secondary notes due in 2030.

Speaker #1: We also increased the revolving credit facility from $225 million to $300 million and extended the maturity by three years to 2031. We ended the quarter with total cash of $360 million.

Grant Creed: We ended the quarter with total cash of $360 million, a $31 million increase from the prior quarter. The net proceeds from the refinancing, as well as a $30 million lump sum receipt for mobilization revenue related to the West Jupiter's contract in Brazil, were partially offset by $57 million of capital expenditures, a $16 million final payment for a legal judgment related to the Sonadrill joint venture, as previously disclosed in 2025, an accelerated interest payment of $20 million relating to the redemption of the old notes, and a build in accounts receivable primarily related to the commencement of West Jupiter and West Capella contracts, plus timing of receipts across the remainder of the fleet. Notably, we are entering a stronger phase of cash generation. Major project-related outflows are now behind us.

Speaker #1: A $31 million increase from the prior quarter. The net proceeds from the refinancing, as well as a $30 million lump sum receipt for mobilization revenue related to the West Jupiter's contract in Brazil, were partially offset by $57 million of capital expenditures, a $16 million final payment for a legal judgment related to the Sana Drill Joint Venture, as previously disclosed in 2025, an accelerated interest payment of $20 million, relating to the redemption of the old notes, and a billed-in accounts receivable primarily related to the commencement of West Jupiter and West Capella contracts.

Speaker #1: Plus, timing of receipts across the remainder of the fleet. Notably, we are entering a stronger phase of cash generation. Major project-related outflows are now behind us, with cash benefits from the West Capella, West Jupiter, and West Tellus contracts ahead of us.

Grant Creed: With cash benefits from the West Capella, West Jupiter, and West Tellus contracts ahead of us, we expect cash flow to strengthen through the H2 of the year, including the anticipated collection of the West Tellus mobilization fee in the Q3. Seadrill remains focused on three financial priorities to enhance long-term shareholder value: generating free cash flow, disciplined capital deployments, and maintaining a robust balance sheet. on 22 June, the board of directors authorized an extension of the $208 million remaining on the share repurchase program through the end of the current calendar year. During the last week of June, we repurchased $20 million worth of shares. Turning to our outlook for the remainder of the year. Strong project execution and higher than anticipated utilization have driven the increase in the revenue and EBITDA guidance ranges set out in our press release.

Speaker #1: We expect cash flow to strengthen through the second half of the year, including the anticipated collection of the West Tellis mobilization fee in the third quarter.

Speaker #1: Seadrill remains focused on three financial priorities to enhance long-term shareholder value: generating free cash flow, disciplined capital deployment, and maintaining a robust balance sheet.

Speaker #1: On June 22, the Board of Directors authorized an extension of the $208 million remaining on the share repurchase program through the end of the current calendar year.

Speaker #1: And during the last week of June, we repurchased $20 million worth of shares. And now, turning to our outlook for the remainder of the year.

Speaker #1: Strong project execution and higher-than-anticipated utilization have driven the increase in the revenue and EBITDA guidance range as set out in our press release. We now anticipate operating revenues of $1.5 billion to $1.55 billion.

Grant Creed: We now anticipate operating revenues of $1.5 billion to $1.55 billion, that excludes $50 million of reimbursable revenues. An EBITDA of $420 million to $450 million. Our updated guidance ranges reflect two factors for the H2 of the year. Assumed utilization for the Sevan Louisiana, which was fully contracted in the Q2, but has less visibility for the remainder of 2026, and the timing of repair and maintenance expenses, which we expect to be higher of the balance of the year. Our EBITDA guidance includes a non-cash net expense of $30 million related to the amortization of mobilization costs and revenues, of which $16 million has been recognized through the end of the Q2. Full-year capital expenditure guidance range is maintained at $200 million to $240 million.

Speaker #1: And that excludes $50 million of reimbursable revenues. An EBITDA of $420 to $450 million. Our updated guidance range is to reflect two factors for the second half of the year.

Speaker #1: Assumed utilization for the Savannah, Louisiana, which was fully contracted in the second quarter but has less visibility for the remainder of 2026, and the timing of repair and maintenance expenses, which we expect to be higher for the balance of the year.

Speaker #1: Our EBITDA guidance includes a non-cash net expense of $30 million, related to the amortization of mobilization costs and revenues, of which $16 million has been recognized through the end of the second quarter.

Speaker #1: Full-year capital expenditure guidance range is maintained at $200 to $240 million. With three major projects delivered on time and on budget, a strengthened balance sheet, and a supportive commercial backdrop, Seadrill is well positioned to generate meaningful free cash flow in the second half of the year and create long-term shareholder value.

Grant Creed: With three major projects delivered on time and on budget, a strengthened balance sheet and a supportive commercial backdrop, Seadrill is well-positioned to generate meaningful free cash flow in the H2 of the year and create long-term shareholder value. With that, I will hand back to Samir for his closing remarks.

Speaker #1: And with that, I'll hand back to Sameer for his closing remarks.

Speaker #2: Thanks, Grant. For Seadrill, the message is straightforward: our commercial approach remains centered on winning direct continuation work and maximizing the total economic value of contracts.

Samir Ali: Thanks, Grant. For Seadrill, the message is straightforward. Our commercial approach remains centered on winning direct continuation work and maximizing the total economic value of contracts. In the US Gulf, we secured work for the West Vela at leading-edge day rates despite near-term oversupply. In Brazil, West Africa, and Southeast Asia, our fleet remains well-positioned for both established and emerging sources of deepwater demand. Across the rest of the world, the demand outlook continues to support our conviction that available high-specification floaters will become increasingly scarce as the cycle progresses. Taken together, Seadrill is well-positioned to create long-term shareholder value through disciplined contracting, free cash flow generation, and a relentless focus on safe and reliable operations. With that, I will hand the call over for questions.

Speaker #2: In the US Gulf, we secured work for the Westfella at leading-edge day rates, despite near-term oversupply. In Brazil, West Africa, and Southeast Asia, our fleet remains well positioned for both established and emerging sources of deepwater demand.

Speaker #2: Across the rest of the world, the demand outlook continues to support our conviction that available high-specification floaters will become increasingly scarce as the cycle progresses.

Speaker #2: Taken together, Seadrill is well positioned to create long-term shareholder value through disciplined contracting, free cash flow generation, and a relentless focus on safe and reliable operations.

Speaker #2: With that, I'll hand the call over for questions.

Speaker #3: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

Operator 3: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Doug Becker with Capital One Securities. Please go ahead. Your line is now open.

Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Doug Becker with Capital One Securities. Please go ahead. Your line is now open.

Speaker #3: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question is from the line of Doug Becker.

Speaker #3: With Capital One Securities. Please go ahead, your line is now open.

Speaker #2: Thank you. Sameer, you extended the share repurchase program through December. We actually saw the restart of buybacks of about 20 million shares in the second quarter.

Doug Becker: Thank you. Samir, you extended the share repurchase program through December. We actually saw the restart of buybacks with about 20 million shares in Q2. Just how would you frame the scale and the pace of buybacks once we see the free cash flow inflection in the H2 of the year?

Speaker #2: How would you frame the scale and the pace of buybacks once we see the free cash flow inflection in the second half of the year?

Speaker #1: Sure. Hey, Doug. I'll start, and then I'll hand over to Grant. Holistically, our job at Seadrill, as a management team, is to maximize free cash flow.

Samir Ali: Sure. Hey, Doug. I will start and I will hand over to Grant. Holistically, our job at Seadrill as a management team is to maximize free cash flow. Every contract we look at, everything we are doing around here, we are hyper-focused on generating as much free cash flow as possible. Grant can kind of speak to the mechanics of how we are thinking about it.

Speaker #1: So every contract we look at, everything we're doing around here, we are hyper-focused on generating as much free cash flow as possible. But Grant can kind of speak through the mechanics of how we're thinking about it.

Speaker #4: Yeah, thanks. And hey, Doug. And just to add to that, look, when we think about the buyback, first thing we look at is our cash position.

Grant Creed: Yeah, thanks. Hey, Doug, just to add to that. Look, when we are thinking about the buyback, first thing we look at is our cash position. Of course, we had a very healthy cash position in June, and that was further supported by a successful refinancing that was executed in June. Then we look at forecast cash going forward. As we discussed on our prepared remarks, we are at this inflection point that we have been looking forward to for some time, primarily related to the repricing off of legacy contracts under spot rate contracts. We are starting to enjoy the step-up in earnings, and we saw during Q2, as expected, we had some working capital build, but that is going to be behind us from the Q3 onwards. We are looking healthy in that perspective.

Speaker #4: And of course, we had a very healthy cash position in June, and that will be further supported by a successful refinancing that was executed in June.

Speaker #4: Then we look at forecast cash going forward. And as we discussed in our prepared remarks, we're at this inflection point that we've been looking forward to for some time, primarily related to the repricing of legacy contracts under spot-rate contracts.

Speaker #4: So we're starting to enjoy the step-up in earnings. As we saw during Q2, as expected, we had some working capital build, but that's going to be behind us from Q3 onwards.

Speaker #4: So we're looking healthy in that perspective. And then deploying the capital is all about assessing the alternatives through a disciplined and deliberate lens. When the share price started trading in the 30s in June, it became apparent to us that a buyback was going to be a very accretive use of that capital.

Grant Creed: Deploying the capital is all about assessing the alternatives through a disciplined and deliberate lens. When the share price started trading in the 30s in June, it became apparent to us that a buyback was going to be a very accretive use of that capital. That is a little bit of insight as to how we approach the buybacks. Hope that helps.

Speaker #4: So that's a little bit of insight as to how we approach the buybacks, and, yeah, hope that helps.

Speaker #2: No, that's helpful context. Is the plan to utilize the full remaining share authorization over the course of this year, or will that just be determined based on the parameters you just laid out?

Doug Becker: No, that's helpful context. Is the plan to utilize the full remaining share authorization over the course of this year, or just to be determined based on the parameters you just laid out?

Speaker #4: Yeah, look, Doug, it's to be determined. We take those decisions at any point in time. And yeah, we'll see how it goes the rest of the year.

Grant Creed: Yeah, look, Doug, it's to be determined. We take those decisions at any point in time, and we'll see how it goes the rest of the year.

Speaker #4: Yeah.

Speaker #1: Yes, it's a discussion we have with our board on a regular basis. But coming back to it, the management team's focus is maximizing cash flow, and then we have an in-depth discussion with the board about how we want to deploy that capital.

Samir Ali: Yeah. It's a discussion, obviously, we have with our board on a regular basis. But coming back to it, the management team's focus is maximizing cash flow, and then we have an in-depth discussion with the board of how we want to deploy that capital.

Speaker #2: Got it. Thank you very much.

Doug Becker: Got it. Thank you very much.

Operator 3: Your next question comes from the line of Eddie Kim with Barclays. Please go ahead. Your line is now open.

Operator: Your next question comes from the line of Eddie Kim with Barclays. Please go ahead. Your line is now open.

Speaker #3: Your next question comes from the line of Eddie Kim with Barclays. Please go ahead. Your line is now open.

Speaker #5: Hi, good morning. So this is the second consecutive quarter where you've raised full-year guidance, which is particularly notable as offshore drillers are more commonly known to lower full-year guidance than to raise it.

Eddie Kim: Hi, good morning. This is the second consecutive quarter where you have raised full-year guidance, which is particularly notable as offshore drillers are more commonly known to lower full-year guidance than to raise. Could you just talk about what has surprised you to the upside compared to when you first provided full-year guidance at the beginning of the year? Is it contracts you secured that you did not necessarily expect to, or better operational performance or costs maybe getting pushed into 2027? Just some more color on the main drivers of the guidance raises the past two quarters would be great.

Speaker #5: Could you talk about what has surprised you to the upside compared to when you first provided your full guidance at the beginning of the year?

Speaker #5: Is it contracts you secured that you didn't necessarily expect to, or better operational performance, or costs maybe getting pushed into 2027? Just some more color on the main drivers of the guidance raises over the past two quarters would be great.

Speaker #4: Hey, Eddie. Yeah, thanks. I'd say, first and foremost, operational execution has been great this year. So, the operations team has done a fantastic job on executing work.

Grant Creed: Hey, Eddie. Yeah, thanks. I would say first and foremost, operational execution has been great this year. So the operations team has done a fantastic job on executing work. The projects, we know that those projects are key to determining our results in any year, and we executed those very well for the Jupiter, Capella and Tellus. On the rig activity side, I would say Karina ended up working longer than we anticipated at the beginning of the year. We call the Louisiana the Show Me rig, where we do not get too far ahead of ourselves in booking or estimating or forecasting revenue for that rig. She ended up working more in the H1 of the year than we anticipated.

Speaker #4: The projects—we know that those projects are key to determining our results in any year. And we executed those very well for the Jupiter, Capella, and Tellus.

Speaker #4: And then on the rig activity side, I'd say Carina ended up working longer than we anticipated at the beginning of the year. And then we call the Louisiana the “Show Me” rig, where we don't get too far ahead of ourselves in booking or estimating or forecasting revenue for that rig.

Speaker #4: She ended up working more in the first half of the year than we anticipated. On the expense side, I think it's more or less in line with how we are seeing expenses, but I would say that repairs and maintenance are skewed to the second half of the year.

Grant Creed: On the expense side, I think it is more or less in line with how we are seeing expenses, but I would say that repairs and maintenance is skewed to the H2 of the year. We see that quite often in our business that, the H1 of the year, we spend less on repairs and maintenance projects in particular than in the H2.

Speaker #4: We see that quite often in our business, that in the first half of the year, we spend less on repairs and maintenance projects, in particular, than in the second half.

Speaker #5: Understood. Thanks for that color. And then, my follow-up is just more broadly—I mean, the outlook you laid out was pretty constructive, with drillship utilization potentially reaching the mid-90s by next year.

Eddie Kim: Understood. Thanks for that color. My follow-up is just more broadly, I mean, the outlook you laid out was pretty constructive with drillship utilization potentially reaching the mid-90s by next year. It feels like leading edge day rates are now firmly in the mid-400s, as indicated by the most recent contract you signed on the West Vela, as well as other contracts industry wide. Is there any reason to believe that leading edge day rates shouldn't continue to move higher next year off of this current mid-400 level, just given tightness in the market? If not, what would you say are the potential headwinds or roadblocks that might prevent that from happening?

Speaker #5: It feels like leading-edge day rates are now firmly in the mid-400s, as indicated by the most recent contract you signed on the West Vela, as well as other contracts industry-wide.

Speaker #5: Is there any reason to believe that leading-edge dayrates shouldn't continue to move higher next year, off of this current mid-$400,000 level, just given tightness in the market? If not, what would you say are the potential headwinds or roadblocks that might prevent that from happening?

Speaker #1: Eddie, so look, the day rate progression is purely driven by utilization, right? So we continue to expect utilization to improve. I mean, it is a global market, and rigs are going to continue to move from the Western Hemisphere into the Eastern Hemisphere.

Jacob Taylor: Eddie, so look, the day rate progression is purely driven by utilization, right? We continue to expect utilization to improve. It is a global market and rigs are going to continue to move from Western Hemisphere into Eastern Hemisphere. So that should drive day rate momentum. But the other thing, I'd say at least for Seadrill, we look at it holistically. It's not just day rate, right? It is the full contract value. It is mobilization fees, it's Ts and Cs. How do we make sure that we are maximizing the cash out of that contract? Not just, we don't have a huge ego around here. It's not about getting the highest day rate. It is getting the best potential contract for our rigs. But that's how I'd say we holistically look at it. It's definitely not just day rate driven for us.

Speaker #1: So that should drive kind of day rate momentum. But the other thing I'd say, at least procedurally, is we look at it holistically. It's not just day rate, right?

Speaker #1: It is the full contract value. It is mobilization fees. It's Ts and Cs. How do we make sure that we are maximizing the cash out of that contract? We don't have a huge ego around here.

Speaker #1: It's not about getting the highest day rate. It is about getting the best potential contract for our rigs. But that's how I'd say we holistically look at it.

Speaker #1: It's definitely not just day-rate driven for us.

Speaker #5: Got it. Great, thank you. I'll turn it back.

Eddie Kim: Got it. Great. Thank you. I'll turn it back.

Speaker #3: Your next question is from the line of Frederick Bain with Clarkson Securities. Please go ahead, your line is open.

Operator 3: The next question is from the line of Fredrik Stene with Clarksons Securities. Please go ahead. Your line is open.

Operator: The next question is from the line of Fredrik Stene with Clarksons Securities. Please go ahead. Your line is open.

Speaker #5: Hey Samir and team, congratulations on a very strong operational quarter. I wanted to thank you for actually providing quite detailed commentary on the regions already.

Fredrik Stene: It's Samir and team, and congratulations on a very strong operational quarter.

Jacob Taylor: Thanks, Fredrik.

Samir Ali: Thanks, Fredrik.

Fredrik Stene: Thanks for actually providing quite detailed commentary on the regions already. I wanted to be a bit more rig specific, maybe. Obviously, the West Carina, the West Gemini, I'm pretty sure that those are very high on your list in terms of getting recontracted. You seem relatively positive on the West Carina, maybe from the H1 of next year. Maybe if you leave those aside and think about the rigs that are rolling off in the H2 of next year, have you started progression on new contracts for those rigs? I guess in the context of your market view, expecting mid-90s utilization for drillships, how would you also think about locking in short versus long-term work as you work on extending those rigs, weighing visibility versus upside capture? Any color would be very helpful. Thanks.

Speaker #5: But I wanted to be a bit more rig-specific, maybe. Obviously, like the West Carina, the Gemini—I'm pretty sure those are very high on your list in terms of getting recontracted.

Speaker #5: So, you seemed relatively positive on the Carina—maybe from the first half of next year. But if you leave those aside and think about the rigs that are rolling off in the second half of next year, have you started progression on new contracts for those rigs?

Speaker #5: And I guess, in the context of your market view—expecting mid-90s utilization for drillships—how would you also kind of think about locking in short- versus long-term work as you work on extending those rigs?

Speaker #5: Weighing visibility versus upside capture? Any color would be very helpful. Thanks.

Speaker #1: Hi, Frederick. Jacob here. I'll go ahead and take that one. For us, I mean, going back to what Samir said, we are heavily focused on our capital discipline and cash management.

Jacob Taylor: Hi, Fredrik. Jacob here. I'll go ahead and take that one. For us, going back to what Samir said, we are heavily focused on our capital discipline, cash management, and swift payback period is the highest priority. Rates will increase as utilization tightens. The way we look at it right now is if we are successful in securing work for, say, the West Carina, then we have assets like the West Gemini, potentially even the West Auriga, to play for the upside. We'll continue to monitor opportunities as they come, but if we start seeing the utilization tighten or squeeze to above 95%, I think it's just inherent that we're going to see rates pushing up to the higher $400s.

Speaker #1: And swift payback period is the highest priority. Rates will increase as utilization tightens. The way we look at it right now is, if we are successful in securing work for, say, the Carina, then we have assets like the Gemini, and potentially even the Arriga, to play for the upside.

Speaker #1: So, we'll continue just to monitor the opportunities as they come. But if we start seeing the utilization tighten or squeeze to above 95%, I think it's just inherent that we're going to see rates pushing up to the higher $400,000s.

Speaker #4: And Frederick, the only thing I'd add to that is, look, you saw it with the Vela—we got direct continuation work. Our team's focus is minimizing as many gaps as humanly possible, right, for us.

Samir Ali: And Fredrik, the only thing I would add to that is, you saw it with the West Vela, we got direct continuation work. Our team's focus is minimizing as many gaps as humanly possible. For us, gaps are wasted money and wasted time. So what we can do to close those will be very important to us.

Speaker #4: Gaps are wasted money and wasted time, so whatever we can do to close those will be very important to us.

Speaker #5: All right, very helpful. And then just maybe one quick one to Grant as well. You gave some commentary about the working capital, and there were overarching comments that the second half would be better on free cash flow.

Fredrik Stene: All right. Very helpful. Then just maybe one quick to Grant as well. You gave some commentary about the working capital and there were overarching comments that the H2 would be better on free cash flow. I was hoping that, given the working capital builds in Q2, in particular as new contracts start up, are you able to help us quantify a bit how you think maybe that the working capital element in particular is going to be reversed in the H2 as things normalize and as you start or you get some mobilization fees from Petrobras, et cetera?

Speaker #5: I was hoping that, given the working capital builds in the second quarter in particular, as new contracts start up, are you able to kind of help us quantify a bit how you think maybe the working capital element in particular is going to be reversed in the second half as things normalize and as you start or you get some mobilization fee from Petrobras, etc.?

Speaker #1: Yeah.

Grant Creed: Yeah, sure. I think now you can think of the build in accounts receivable this quarter was primarily West Jupiter and West Capella. Remember they started contracts late March, and so they start collecting revenue then in Q2, in Q3 rather. So I would think about them then on a normalized working capital rate. So do not expect any sort of reversal or inflow, but I would consider them at a normal level, so no outflow beyond that. Then on the West Tellus, I guess, is going to be the interesting rig to look at from a working capital perspective in Q3, because she will then have a working capital build on accounts receivable, just as we experienced on West Jupiter and West Capella. But we will also enjoy the mobilization receipt from Petrobras of $40 million in Q3.

Speaker #4: Yeah, sure. I think now you can think of the build in accounts receivable this quarter was primarily Jupiter and Capella. Remember, they started contracts late March.

Speaker #4: And so they start collecting revenue then in Q3, rather. So I'd think about them then on a normalized working capital rate. So don't expect any sort of reversal or inflow, but I'd consider them at a normal level.

Speaker #4: So, no outflow. Beyond that, on the Telus, I guess it is going to be the interesting rig to look at from a working capital perspective in Q3, because she will then have a working capital build on accounts receivable, just as we experienced on Jupiter and Capella.

Speaker #4: But we will also enjoy the mobilization receipt from Petrobras of $40 million in Q3. I think, as far as working capital is concerned, that's the one to watch in Q3, really, Frederick.

Grant Creed: I think as far as working capital is concerned, that is the one to watch in Q3, really, Fredrik. And once that is behind us, we really then should be on a normal basis.

Speaker #4: And once that's behind us, we really then should be on a sort of a normal basis.

Speaker #5: All right. I appreciate all the answers. Thank you so much. That's all from me. I'll hand it back.

Fredrik Stene: All right. Appreciate all the answers. Thank you so much. That is all from me. I will hand it back.

Speaker #3: Your next question comes from the line of Gregory Lewis with BTIG. Please go ahead. Your line is open.

Operator 3: Your next question comes from the line of Gregory Lewis with BTIG. Please go ahead. Your line is open.

Operator: Your next question comes from the line of Gregory Lewis with BTIG. Please go ahead. Your line is open.

Speaker #2: Yeah. Hey, thank you, and good morning. Thanks for taking my question. Samir, I'm kind of curious about your views, I guess, to dovetail with Frederick's question.

Gregory Lewis: Yeah. Hey, thank you and good morning, and thanks for taking my question. Samir, kind of curious on your views, I guess kind of dovetails on Fredrik's question. Clearly, there are opportunities in Asia for rigs, obviously all over the world, right? West Africa, as well, the Golden Triangle. But as we think about Asia and we think about India, I know the last rig you guys had in India was the Polaris. That was a 6th-gen rig. The Capella operating in Asia is 6th-gen. How do you think about the opportunity set for 7th-gen rigs in Asia, just given that historically, maybe that part of the world has been maybe a lower on average pricing market for, I guess we will call them leading edge, the high-quality drillships?

Speaker #2: Clearly, there are opportunities in Asia for rigs—obviously, all over the world, right? West Africa as well, Golden Triangle. But as we think about Asia, we think about India.

Speaker #2: I know the last rig you guys had in India was the Polaris. That was a sixth-gen rig. The Capella operated in Asia is sixth-gen.

Speaker #2: How do you think about the opportunity set for seventh-gen rigs in Asia just given that historically, maybe that part of the world has been maybe a lower on average pricing market for I guess we'll call them leading-edge the high-quality drill ships?

Speaker #1: Yeah. So, yeah, I'd start with...

Jacob Taylor: Yeah. I would start with our 6th-generation rigs. Yes, they are sixes, but they are dual activity. The Capella has MPD on it. The Polaris has MPD on it. So I would say they are better than your average 6th-gen rig, again, working in those markets. So yes, there is a bit of a difference, but not as much as you would think. If we look at the Carina, we positioned her, she is currently in Walvis Bay, so she has got access to both Africa and Asia as a potential. As we look at the Asian market, it is back to look at the whole contract value. Your OpEx is a little lower out there, so can you get still good return. But let Jacob kind of speak to the opportunity specifically.

Grant Creed: Yeah. I would start with our 6th-generation rigs. Yes, they are sixes, but they are dual activity. The Capella has MPD on it. The Polaris has MPD on it. So I would say they are better than your average 6th-gen rig, again, working in those markets. So yes, there is a bit of a difference, but not as much as you would think. If we look at the Carina, we positioned her, she is currently in Walvis Bay, so she has got access to both Africa and Asia as a potential. As we look at the Asian market, it is back to look at the whole contract value. Your OpEx is a little lower out there, so can you get still good return. But let Jacob kind of speak to the opportunity specifically.

Speaker #4: With our sixth-generation rigs—yes, they're sixes—but they're dual activity. The Capella has MPD on it. The Polaris has MPD on it. So, I'd say they're better than your average sixth-gen rig, working in those markets.

Speaker #4: So yes, there's a bit of a difference, but not as much as you would think. And if we look at the Carina, the way we've positioned her—she's currently in Walvis Bay.

Speaker #4: So she's got access to both Africa and Asia as a potential. And as we look at the Asian market, it's back to look at the whole contract value.

Speaker #4: Your OpEx is a little lower out there, so you can still get a good return, but let Jacob kind of speak to the opportunity specifically.

Speaker #1: Well, I think one thing I would add to that is, in 2024, we saw one of our sixth-gen units in more of a niche position.

Jacob Taylor: Well, I think one thing I would add to that is in 2024, we saw one of our 6th-gen units in a niche position, and we were opportunistic about that, and we got a rate of $545,000 a day. There could be a scenario where the 7th gens get scooped up early on in this cycle, and what is left are the 6th gens to play for the upside. So, we look at both parts of our fleet as opportunity. We are not just focused on the higher-end rates for the 7th gen units.

Speaker #1: And we were opportunistic about that, and we got a rate of $545,000 a day. And so, there could be a scenario where the seventh-gens get scooped up early on in this cycle.

Speaker #1: And what's left are the sixth-gens to play for the upside. So, we look at both parts of our fleet as opportunity. We're not just focused on the higher-end rates for the seventh-gen units.

Speaker #2: Okay, that's super helpful. And I realize it's still the middle of 2026, but since we did kick the buyback back on, I'll ask it this way.

Gregory Lewis: Okay. Super helpful. Realize it is still the middle of 2026. Just since we did kick the buyback back on, I guess I will just ask it this way. Are there any, as we look out in 2027, are there any special surveys that are coming? Are there any rig upgrades we are thinking about out on, I guess you would say, out of the normal operations that we should be thinking about just as we think about, as we start to try to pencil in what a CapEx could look like in 2027? Not asking for guidance, just asking any special surveys, any rig upgrade type things.

Speaker #2: Are there any kind of as we look out in 2027, are there any special surveys that are coming? Are there any kind of rig upgrades we're thinking about to kind of add on, I guess you'd say, out of the normal operations that we should be thinking about just as we think about as we start to try to kind of pencil in what a CapEx could look like in 2027?

Speaker #2: Not asking for guidance, just asking about special surveys or any kind of rig upgrade type things.

Speaker #4: Yeah. Hey, Greg, the short answer is: no significant SBS projects or re-acceptance projects. I think, of course, you look at the rig activity schedule and any rigs that are coming up for new contracts—to the extent the contract is signed that has specific requirements, we would have to take that.

Grant Creed: Yeah, Greg. The short answer is no significant SBS projects or reacceptance projects. I think of course, you look at the rig activity schedule and any rigs that are coming up for new contracts. To the extent a contract is signed that has specific requirements, we would have to take that. But like Samir said, we assess our opportunities on all-in cash basis and would look to be compensated through the terms of that contract.

Speaker #4: But like Samir said, we assess our opportunities on an all-in cash basis, and would look to be compensated through the terms of that contract.

Speaker #1: Yeah, Greg, I would just add that — sorry — I would just add that, commercially, our strategy is to ensure that if there are any major mobilizations or sizable upgrades to the rigs, then there would be a meaningful mobilization upfront fee from our customers in order to help cover the cost of that.

Samir Ali: Yeah, Greg, I would just add that.

Jacob Taylor: Yeah, Greg, I would just add that.

Gregory Lewis: Super helpful.

Jacob Taylor: Sorry, but I would just add that commercially, our strategy is to ensure that if there are any major mobilizations or sizable upgrades to the rigs, then there would be a meaningful mobilization upfront fee from our customers in order to help cover the cost of that.

Speaker #2: Okay, super helpful. Thank you for taking my questions.

Gregory Lewis: Okay. Super helpful. Thank you for taking my questions.

Speaker #3: Your next question comes from the line of Keith Beckman with Pickering Energy Partners. Please go ahead. Your line is now open.

Operator 3: Your next question comes to the line of Keith Beckman with Pickering Energy Partners. Please go ahead. Your line is now open.

Operator: Your next question comes to the line of Keith Beckman with Pickering Energy Partners. Please go ahead. Your line is now open.

Speaker #5: Hey, good morning. Thanks for taking my question. I'm just wondering if you guys are seeing good morning. I'm just wondering if you guys are seeing any change in customer behavior at all here as the market starts to look like it's going to tighten here into 2027.

Keith Beckman: Good morning, and thanks for taking my question. Good morning. I am just wondering if you guys are seeing any change in customer behavior at all here as the market starts to look like it is going to tighten here into 2027. Are you seeing any customers look to lock in rates further out for longer term? Sort of maybe what we saw with the West Vela here for kind of a year in the Gulf into mid 2028. Just any thoughts around that and operator behavior changing?

Keith Beckmann: Good morning, and thanks for taking my question. Good morning. I am just wondering if you guys are seeing any change in customer behavior at all here as the market starts to look like it is going to tighten here into 2027. Are you seeing any customers look to lock in rates further out for longer term? Sort of maybe what we saw with the West Vela here for kind of a year in the Gulf into mid 2028. Just any thoughts around that and operator behavior changing?

Speaker #5: I mean, are you seeing any customers looking to lock in rates further out for the longer term? Sort of maybe what we saw with the Vela here for about a year in the Gulf and into mid-2028.

Speaker #5: Just any thoughts around that and operator behavior changing?

Speaker #4: Not really, to be honest. You're seeing maybe, on the margins, a bit here and there. You saw a client secure a rig in Southeast Asia for a 2028 start, which is a bit further out there.

Jacob Taylor: Not really, to be honest. Maybe on the margins, you are seeing a bit here and there. You saw a client secure a rig in Southeast Asia for a 2028 start, which is a bit further out there. There are some tenders that are for 2028, 2029 starts. So, maybe on the margins you are seeing it, but would I say it is a wholesale change yet? No. I would say, look, our clients probably have some more free cash flow coming into their doors given the higher commodity price. So as they enter budgeting season, that maybe puts a wind at their backs of, "Hey, maybe we want to go spend a bit more and kind of develop a few more fields." But I wouldn't say we have seen a wholesale change just yet, but hopefully it will come.

Speaker #4: There are some tenders that are for 2028 and 2029 starts. So maybe on the margins you're seeing it, but would I say it's a wholesale change yet?

Speaker #4: No. I would say, look, our clients probably have some more free cash flow coming in their doors, given the higher commodity price. So, as they enter budgeting season, that maybe puts a wind at their backs of, "Hey, maybe we want to go spend a bit more and kind of develop a few more fields."

Speaker #4: But I wouldn't say we've seen a wholesale change just yet, but hopefully it will come.

Speaker #5: Okay, perfect. That's very helpful. And then my second question, maybe just thinking a little bit longer-term here—not in the near term—but you guys still kind of have the two stacked harsh environment rigs.

Keith Beckman: Okay, perfect. That is very helpful. My second question, maybe just thinking a little bit longer term here. Probably not in the near term, but you guys still kind of have the two stacked harsh environment semis, I believe the West Aquarius and the West Phoenix. That market has gotten a little bit tighter here. If we continue to see tightness, my question is really just around what could the potential reactivation costs be on those? Do you have any sense of that? Then what would the contract terms need to look like to make that make sense for you guys maybe longer term?

Keith Beckmann: Okay, perfect. That is very helpful. My second question, maybe just thinking a little bit longer term here. Probably not in the near term, but you guys still kind of have the two stacked harsh environment semis, I believe the West Aquarius and the West Phoenix. That market has gotten a little bit tighter here. If we continue to see tightness, my question is really just around what could the potential reactivation costs be on those? Do you have any sense of that? Then what would the contract terms need to look like to make that make sense for you guys maybe longer term?

Speaker #5: Semi's, I believe the Aquarius and the Phoenix, and that market has gotten a little bit tighter here. If we continue to see tightness, my question is really just around what could the potential reactivation costs be on those?

Speaker #5: Do you have any sense of that? And then, what would the contract terms need to look like to make that make sense for you guys, maybe longer term?

Speaker #4: Yeah, sure. So, yeah, I'd say, look, the harsh environment floater space is almost 100% utilized right now, and it's something that we would love to grow our fleet into.

Jacob Taylor: Yeah, sure. So I would say, look, the harsher environment floater space is almost 100% utilized right now, and it is something that we would love to grow our fleet into. We have got a presence in Norway. We have got one asset working there. We have been very deliberate and vocal about our strategy to cluster rigs. So we would love to add a few more rigs into that market. In terms of reactivations for the West Phoenix or the West Aquarius, look, it is a meaningful number. It is probably over $100 million to reactivate those. In terms of what we are looking for, is a contract that justifies that investment. Right? For us, and this is a bit hyperbole, would I take a short contract to $2 million a day that covers that cost? Absolutely. Right? So it does not need to be a long contract. It really comes down to the economics of the whole contract.

Speaker #4: We've got a presence in Norway. We've got one asset working there. We've been very deliberate and vocal about our strategy to cluster rigs, so we would love to add a few more rigs into that market.

Speaker #4: In terms of reactivations for the Phoenix or the Aquarius, look, it's a meaningful number. It's probably over $100 million to reactivate those. In terms of what we're looking for, is a contract that justifies that investment.

Jacob Taylor: It is probably over $100 million to reactivate those. In terms of what we are looking for, is a contract that justifies that investment. Right? For us, and this is a bit hyperbole, would I take a short contract to $2 million a day that covers that cost? Absolutely. Right? So it does not need to be a long contract. It really comes down to the economics of the whole contract.

Speaker #4: Right? For us—and this is a bit of hyperbole—would I take a short contract at $2 million a day that covers that cost? Absolutely.

Speaker #4: Right? So it doesn't need to be a long contract. It really comes down to the economics of the whole contract. And is it a mobilization fee?

Jacob Taylor: Is it a mobilization fee? Is it longer term? What is the day rate? We throw all of that into the pot and kind of say, "Look, does this make economic sense for Seadrill or not?

Speaker #4: Is it longer term? What's the day rate? We throw all of that into the pot and kind of say, look, does this make economic sense for Seadrill or not?

Speaker #5: Awesome. That's a really helpful guess. I'll turn it back.

Keith Beckman: Awesome. That is really helpful, guys. I will turn it back.

Keith Beckmann: Awesome. That is really helpful, guys. I will turn it back.

Speaker #3: Your next question comes from the line of Ahmed Korsent with BWS Financial. Please go ahead, your line is open.

Operator 3: Your next question comes from the line of Ahmed Korsant with BWS Financial. Please go ahead. Your line is open.

Operator: Your next question comes from the line of Ahmed Korsant with BWS Financial. Please go ahead. Your line is open.

Speaker #5: Good morning. Could you just expand on your commentary on the Karina? It looks like you've shifted it to West Africa already. What are your expectations now that you've already completed that mobilization?

Ahmed Korsant: Good morning. Could you just expand on your commentary on the West Carina? It looks like you have shifted it to West Africa already. What your expectations are that you have already completed that mobilization?

Hamed Khorsand: Good morning. Could you just expand on your commentary on the West Carina? It looks like you have shifted it to West Africa already. What your expectations are that you have already completed that mobilization?

Speaker #1: Yeah. Hi, Ahmed. I think for the Karina, the reason we shifted it over to West Africa is because we feel, based on our outlook, that that gives us the closest proximity to near-term work in the region.

Jacob Taylor: Yeah. Hi, Ahmed. I think for the West Carina, the reason we shifted it over to West Africa is because we feel, based off of our outlook, that that gives us the closest proximity to near-term work in the regions. So it gives us the flexibility to pursue prospects both in West Africa and in Southeast Asia because that's where we're seeing the largest amount of demand at the moment. Also, we get synergies from our presence out there in the region already. So we're able to continue to maintain that rig and have it ready for the next campaign.

Speaker #1: So it gives us the flexibility to pursue prospects both in West Africa and in Southeast Asia, because that's where we're seeing the largest amount of demand at the moment.

Speaker #1: And we also get synergies from our presence out there in the region already. We're able to continue to maintain that rig and have it ready for the next campaign.

Ahmed Korsant: Is there a timing of when we should expect some sort of contract activity there?

Hamed Khorsand: Is there a timing of when we should expect some sort of contract activity there?

Speaker #5: Is there a timeline for when we should expect some sort of contract activity there?

Speaker #1: Most of the campaigns we're seeing right now in the market are commencing probably in the first half of '27. So there is a bit of time, there is a bit of a lead time before commencement would happen.

Jacob Taylor: Most of the campaigns we're seeing right now in the market are commencing probably in the H1 2027. So there is a bit of a lead time before a commencement would happen. Awards, I would say within the next quarter or two.

Speaker #1: Awards, I would say, within the next quarter or two.

Speaker #5: Okay. Great. Thank you.

Ahmed Korsant: Okay, great. Thank you.

Hamed Khorsand: Okay, great. Thank you.

Speaker #3: Your next question comes from Noel Parks with Toy Brothers. Please go ahead, your line is open.

Operator 3: Your next question comes from Noel Parks with Tuohy Brothers. Please go ahead. Your line is open.

Operator: Your next question comes from Noel Parks with Tuohy Brothers. Please go ahead. Your line is open.

Speaker #6: Hi, good morning. I was also on the topic of sort of customer behavior. I just was wondering, sort of maybe what negotiations might be like right now when, say, I don't know, you have a customer that wants a rig for, say, mid-year next year.

Noel Parks: Hi. Good morning. Also on the topic of customer behavior, I just was wondering what negotiations might be like right now when, say, I do not know, you have a customer that wants a rig for, say, mid-year next year. You have got something coming available six months earlier, say beginning of the year. I am just kind of wondering what that back and forth looks like. Is that something that you would get reflected in price for the time difference, or are situations like that kind of not so common still yet?

Speaker #6: You've got something coming available six months earlier, say, beginning of the year. I'm just kind of wondering what that back-and-forth looks like. I mean, is that something that you would see reflected in price for the time difference?

Speaker #6: Or are situations like that still not so common yet?

Speaker #1: Yeah, I can go ahead and take that one. So, I think for us—going back to what we've said in earlier statements—we're not going to invest in a major mobilization, reactivation, or upgrade without a meaningful contribution from the customer.

Jacob Taylor: Yeah, I can go ahead and take that one. I think for us, going back to what we have said in earlier statements, we are not going to invest in a major mobilization, reactivation, or upgrade without a meaningful contribution from the customer. We also look at the cost of having that rig idle, waiting for that opportunity. But it just depends on whether or not it is competing against an alternative prospect. For us, we are not solely focused on day rate. I think the Ts and Cs drive a lot of value for our business. Economic uptime is another lever that is really important for us that we like to play with. I think that with the market tightening, all of those factors are becoming more and more favorable.

Speaker #1: We also look at the cost of having that rig idle, waiting for that opportunity. But it just depends on whether or not it's competing against an alternative prospect.

Speaker #1: For us, we're not solely focused on day rate. I think the terms and conditions drive a lot of value for our business, and so economic uptime is another lever that is really important for us, that we like to play with.

Speaker #1: And I think that with the market tightening, all of those factors are becoming more and more favorable.

Speaker #6: Terrific. I was also wondering, does what you see ahead for the next few years— is it in any way reminiscent of where we were at any particular prior cycle?

Noel Parks: Terrific. I was also wondering, does what you see ahead for the next few years, is it in any way reminiscent of where we were at any particular prior cycle? I am just thinking about seeing tightening ahead after a bit of a slowdown. But then I am also mindful that this time around, we do have that gradual bounce back in exploration that maybe was not there in past cycles. Any thoughts there would be great.

Speaker #6: I'm just thinking about sort of seeing tightening ahead after a bit of a slowdown, but then I'm also mindful that this time around, we do have that sort of gradual bounce back in exploration that maybe wasn't there in past cycles.

Speaker #6: So any thoughts there would be great.

Speaker #1: Absolutely. So, look, it does feel kind of like the beginnings of upcycles you've seen in the past—kind of like the '08 cycle, if you will.

Jacob Taylor: Absolutely. So look, it does feel like the beginnings of up cycles you've seen in the past, the kind of the '08 cycle, if you will. I think the fundamental difference this time around is there's not a whole bunch of new builds sitting on the sideline that can come back.

Speaker #1: I think the fundamental difference this time around is there's not a whole bunch of new builds sitting on the sideline that can come back.

Speaker #1: Right? We are a relatively inelastic supply in an increasing demand environment, right? So it does have some flavors of the previous cycle. But in the last cycle, you had a bunch of drillships coming out of the shipyard, still kind of from '08 to almost 2013, 2014.

Samir Ali: Yeah.

Samir Ali: We are a relatively inelastic supply in an increasing demand environment. So it does have some flavors of the previous cycle, but the last cycle you had a bunch of drillships coming out of the shipyard still from '08 to almost 2013, 2014 rigs were being delivered to help take up some of that demand. That doesn't exist today. Yes, there's a couple rigs still out there, but the realities are inelastic supply with increasing demand. So it feels even better than the last cycle, if you will, in my opinion.

Speaker #1: Rigs were being delivered to kind of help take up some of that demand. That doesn't exist today. Yes, there are a couple of rigs still out there, but the reality is an inelastic supply with increasing demand.

Speaker #1: So it feels even better than the last cycle, if you will, in my opinion.

Speaker #6: Terrific. Thanks a lot.

Noel Parks: Terrific. Thanks a lot.

Operator 3: Your next question comes from Josh Jayne with Daniel Energy Partners. Please go ahead. Your line is now open.

Operator: Your next question comes from Josh Jayne with Daniel Energy Partners. Please go ahead. Your line is now open.

Speaker #3: Your next question comes from Josh Jane with Daniel Energy Partners. Please go ahead—your line is now open.

Speaker #7: Good morning. Thanks for taking my questions. My first one is a bit of a follow-up on Greg's question. I was hoping you could touch on the supply chain and how you're seeing the world.

Josh Jayne: Good morning. Thanks for taking my questions. First one is just a bit of a follow-up on Gregory's question. I was hoping you could touch on supply chain, how you are seeing the world. Are you seeing any issues getting equipment over the last couple of quarters? Do you see any issues moving forward? Just how are you potentially thinking about inflation in equipment cost or CapEx moving forward? Are you seeing anything material or not at all?

Speaker #7: Are you seeing any issues getting equipment over the last couple of quarters? Do you see any issues moving forward? And just how are you potentially thinking about inflation in equipment cost or capex moving forward?

Speaker #7: Are you seeing anything material, or not at all?

Speaker #1: Look, we're seeing some inflation that you would expect, both on labor and material. Obviously, fuel's gone up probably the most, but most of our contracts, we don't take fuel exposure.

Jacob Taylor: Look, we are seeing some inflation that you would expect, both on labor and material. Obviously, fuel has gone up probably the most, but most of our contracts, we do not take fuel exposure. It is provided by the client. When we think about it is when we have gaps between schedules, back to our contracting strategy of trying to minimize our gaps so we do not have that fuel cost. The rest of it, look, we are seeing your normal inflation across the board. Bringing back to what Jacob was talking about earlier in Ts and Cs, we are trying to pass that on to clients, right? Wherever we can is better. The whole contract is how we think about it is can we pass some of those inflation costs back onto the day rate or into the contract value, if you will.

Speaker #1: It's provided by the client. So when we think about it is when we have kind of gaps between schedules back to our contracting strategy of not having as trying to minimize our gaps so we don't have that fuel cost.

Speaker #1: But the rest of it—look, we're seeing your normal inflation across the board. And bringing it back to what Jacob was talking about earlier in T's and C's, we're trying to pass that on to clients.

Speaker #1: Right? Wherever we can is better—the whole contract is kind of how we think about it. And can we pass some of those inflation costs back onto the day rate or into the contract value, if you will?

Speaker #7: Understood. Thanks for that. And then I just wanted to follow up on our rig-specific question. So, the Louisiana has obviously continued to put together, or string together, a number of short-term opportunities.

Josh Jayne: Understood. Thanks for that. I just wanted to follow up on a rig-specific question. The Sevan Louisiana has obviously continued to string together a number of short-term opportunities. Could you speak to what is embedded in the guidance for the back half of this year surrounding that rig? As we think about it longer term, I guess into 2027, are there term opportunities for that rig in your view, or do you view this as sort of continuing to put together shorter-term programs? I am just curious how you and we should be thinking about the rig opportunities across 2027. Thanks.

Speaker #7: Could you just speak to what's embedded in the guidance for the back half of this year surrounding that rig? And then, as we think about it longer term— I guess into 2027— are there term opportunities for that rig in your view, or do you see this as continuing to put together shorter-term programs?

Speaker #7: I'm just curious how you and we should be thinking about the rig opportunities across '27. Thanks.

Speaker #1: Yeah, sure, Josh. Thanks. And yeah, so like I said in one of these answers in the Q&A, I said Louisiana ended up working more than we anticipated the first half of the year.

Grant Creed: Yeah, sure, Josh, thanks. Yeah, so like I said in one of these answers in the Q&A, I said Sevan Louisiana ended up working more than we anticipated the H1 of the year. I did also mention in my prepared remarks that the rest of this year is a little less clear. I think as we look at guidance, we still apply the same principle as we typically apply to that rig, which is "the show me rig." So when we secure the work, we will start baking it into our forward-looking projections. I guess that is a long way of saying we are not booking upside on that rig the remainder of this year. I will hand over to Jacob for commentary on 2027 and beyond.

Speaker #1: But then I did also mention in my prepared remarks that the rest of this year is a little less clear. And I think as we look at guidance, we still apply the same principle as we typically apply to that rig, which is, quote-unquote, "the show me rig." So, when we secure the work, we'll start baking it into our forward-looking projections.

Speaker #1: And so, I guess that's a long way of saying we're not really booking upside on that rig for the remainder of this year.

Speaker #1: But then I'll hand over to Jacob for commentary on '27 and beyond.

Speaker #2: Yeah, I would just add that it didn't just exceed our expectations. I mean, I think it's had 99% economic uptime so far this year.

Jacob Taylor: Yeah, I would just add that it didn't just exceed our expectations. I think it's had 99% economic uptime so far this year. A lot of that work was captured with a very short lead time. There's a diverse set of customers in the Gulf of America, even new ones such as Guardian, who we've recently worked with, that love the versatility of that asset. She has a Trendsetter Intervention System on board as well, so it enables her to go do drilling, P&A intervention, all the likes of it. We're having positive dialogue with customers who have some campaigns starting as early as towards the end of this year, then probably some longer-term prospects that are going to be maturing in Q2, Q3 of 2027. So I think we're still very optimistic about the capabilities of that rig.

Speaker #2: And a lot of that work was captured with a very short lead time. There's a diverse set of customers in the Gulf of America, and even new ones such as Guardian, who we've recently worked with.

Speaker #2: They loved the versatility of that asset. She has the Trendsetter Intervention System on board as well, and so it enables her to go do drilling, P&A, intervention, all the likes of it.

Speaker #2: And we're having positive dialogue with customers who have some campaigns starting as early as towards the end of this year, and then probably some longer-term prospects that are going to be maturing in Q2, Q3 of ‘27.

Speaker #2: So, I think we're still very optimistic about the capabilities of that rig.

Speaker #7: Thanks, Lieutenant. Bye.

Josh Jayne: Thanks. I'll turn it back.

Operator 3: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.

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