10-Q · May 11, 2026
Seadrill Limited reported Q1 2026 results with revenue of $358 million, a 7% increase from the prior year, significantly exceeding estimates. The company achieved an EPS loss of $0.11, outperforming consensus…
Earnings analysis · 10-Q
SDRL earnings analysis
Filed August 10, 2026 · Our reading of the company's report
The latest report
Seadrill delivered strong year-over-year improvement in Q2 2026, with revenue up 19% to $449 million, operating profit rising to $72 million and reported EPS of $0.47. Higher dayrates, utilization and backlog supported…
Read full summary
Seadrill delivered strong year-over-year improvement in Q2 2026, with revenue up 19% to $449 million, operating profit rising to $72 million and reported EPS of $0.47. Higher dayrates, utilization and backlog supported the result, while the refinancing extended major debt maturities and increased available liquidity to $585 million. However, six-month operating cash flow was negative $40 million, operating costs increased, and geopolitical and oil-price volatility remain meaningful risks. Management sees signs of a market recovery in 2027 but provided no new quantitative guidance in the 10-Q.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.47
- Operating margin
- 16.0%
What stood out
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Revenue and Operating Profit Improved
Second-quarter operating revenue increased to $449 million from $377 million, up $72 million or 19% year over year. Operating profit rose to $72 million from $6 million, lifting operating margin to approximately 16.0% from 1.6%.
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Higher Dayrates and Utilization
Contract revenue increased to $355 million from $288 million, driven by a $360 thousand average contractual dayrate versus $331 thousand and economic utilization of 96% versus 93%.
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Backlog Increased 23%
Contract backlog expanded to $2.934 billion at June 30, 2026 from $2.380 billion at December 31, 2025, an increase of $554 million or approximately 23%. Drilling backlog was $2.628 billion and other backlog was $306 million.
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Debt Maturity Profile Extended
The company issued $700 million of 6.750% senior notes due 2034 and discharged the 2030 Notes indenture. Revolving borrowing commitments increased from $225 million to $300 million and maturity was extended from 2028 to 2031.
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Returned to Quarterly Profitability
Net income was $29 million versus a $42 million net loss in the prior-year quarter, while reported EPS was $0.47 versus the $0.28 consensus estimate. The improvement included a $51 million reduction in management contract expenses because the prior-year Sonadrill damages charge did not recur.
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Liquidity and Covenants Remain Sound
Available liquidity increased to $585 million from $524 million at December 31, 2025, consisting of $337 million of unrestricted cash and $248 million of undrawn revolver capacity. The company also remained compliant with its 2.50x minimum interest coverage and 3.00x maximum net leverage covenants at June 30, 2026.
What to watch
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Negative Operating Cash Flow
Net cash used in operating activities was $40 million in the first six months of 2026 versus $16 million in the prior-year period. Management attributed the deterioration mainly to customer and Sonadrill receipt timing and increased mobilization costs for West Tellus, West Jupiter and West Capella.
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Debt and Interest Burden
Total debt was $750 million at June 30, 2026, including $700 million of senior notes and a $50 million convertible bond. Second-quarter interest expense increased to $16 million from $15 million, and the refinancing generated a loss on extinguishment of the 2030 Notes.
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Operating Cost Inflation
Second-quarter vessel and rig operating expenses increased to $215 million from $180 million, while depreciation and amortization rose to $72 million from $56 million. The company cited higher integrated services, repair and maintenance, personnel costs and fleet capital projects.
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Oil Price and Geopolitical Volatility
Brent averaged approximately $103 per barrel in the second quarter but was $82 per barrel on August 6, 2026. Management warns that the Iran conflict, Strait of Hormuz disruptions, trade policies, inflation and possible producer output increases make the long-term impact on energy markets and operations difficult to predict.
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Guarantees and Contingent Obligations
The company had approximately $52 million of outstanding letters of credit and bank guarantees under the revolver, reducing available revolver capacity to $248 million; it also had approximately $25 million outstanding under the bilateral facility. A $41 million guarantee related to the SFL Hercules claim was outstanding as of June 30, 2026.
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Backlog Conversion Risk
No material changes were reported to the risk factors in the 2025 10-K. Nevertheless, backlog realization remains exposed to downtime, maintenance, customer liquidity and contract termination provisions; June 30, 2026 backlog totaled $2.934 billion, including $763 million expected in the remainder of 2026.
Management's outlook
No new quantitative revenue or EPS guidance is provided in the 10-Q. Management states that global tendering activity is accelerating and sees signs of a market recovery in 2027; liquidity is expected to fund anticipated debt service and working capital requirements for the next 12 months.
Earlier filings 4
10-K · February 26, 2026
Seadrill positions itself as a deepwater-focused offshore drilling contractor with a modern fleet and a four‑pillar strategy (operational excellence, fleet & portfolio strength, customer partnership & growth, people &…
10-Q · November 6, 2025
Seadrill reported Q3 2025 operating revenues of $363.0M, a $9.0M (+2.5%) increase versus Q3 2024, but recorded a net loss of $11M (diluted LPS $(0.17)). Operating profit was $26M (down $21M YoY) though it improved vs Q2…
10-Q · August 7, 2025
Seadrill reported Q2 2025 operating revenues of $377.0 million (up from $375.0 million in Q2 2024) but swung to a net loss of $42 million versus net income of $253 million a year ago, driven largely by the absence of…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.