This article first appeared on GuruFocus .
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Total Operating Revenues:$449 million in Q2 2026, up sequentially due to more operating days and an improved average day rate.
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Adjusted EBITDA:$144 million, a sequential increase of $47 million, with an EBITDA margin excluding reimbursables of 33.5%.
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Operating Expenses:$377 million in Q2, up $43 million from the prior quarter, primarily due to the West Capella and West Jupiter returning to operations for the full quarter.
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Economic Utilization:96% for the quarter.
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Total Cash:$360 million at quarter-end, a $31 million increase from the prior quarter.
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Capital Expenditures:$57 million in Q2.
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Share Repurchases:$20 million of shares repurchased during the last week of June.
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Backlog Additions:Approximately $200 million added since the May call, including a 12-month contract with Talos for the Westfellas (adding ~$161 million) and a priced option for ~75 days on the West Capella.
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Full-Year 2026 Revenue Guidance:Raised to $1.5 billion to $1.55 billion, excluding $50 million of reimbursable revenues.
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Full-Year 2026 EBITDA Guidance:Raised to $420 million to $450 million, including a non-cash net expense of $30 million related to amortization and mobilization costs and revenues.
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Full-Year 2026 Capital Expenditure Guidance:Maintained at $200 million to $240 million.
Release Date: August 10, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Seadrill Ltd ( NYSE:SDRL ) delivered strong Q2 2026 results with EBITDA of $144 million, exceeding expectations and prompting a second guidance raise this year.
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The company achieved high operational performance with 96% economic utilization and completed the West Telus reacceptance on schedule and on budget.
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Seadrill Ltd ( NYSE:SDRL ) secured approximately $200 million in new backlog, including a 12-month contract with Talos for the West Vela at leading-edge day rates.
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The refinancing in June strengthened the balance sheet by extending debt maturities to 2034 and increasing the revolving credit facility to $300 million.
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Management resumed shareholder returns with $20 million in share repurchases and extended the buyback program through year-end, reflecting confidence in future cash flow.
Negative Points
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Seadrill Ltd ( NYSE:SDRL ) faces limited visibility for the Savannah, Louisiana rig for the remainder of 2026, which is reflected in conservative guidance.
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The company expects higher repair and maintenance expenses in the second half of 2026, which could pressure margins.
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The West Gemini is due to roll off contract later this year, and its follow-on work is not yet secured, creating potential idle time.
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The West Carina is currently stacked in Walvis Bay with no contract, and securing work is expected only in the first half of 2027, leading to a gap in revenue.
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The U.S. Gulf market is in transition with several drillships becoming available before year-end, potentially creating near-term oversupply and pricing pressure.
Q & A Highlights
Q: Could you expand on the commentary regarding the West Carina, which has been mobilized to West Africa, and what the expectations are for contract activity and timing? A: Jacob Taylor (VP, Commercial) explained that the rig was repositioned to West Africa due to its proximity to near-term work opportunities, providing flexibility to pursue prospects in both West Africa and Southeast Asia, where demand is currently highest. The company benefits from its existing regional presence and can maintain the rig ready for its next campaign. Most campaigns currently in the market are expected to commence in the first half of 2027, with contract awards anticipated within the next one to two quarters.
Q: This is the second consecutive quarter with a full-year guidance raise. What has surprised you to the upside compared to your initial expectations at the beginning of the year? A: Jacob Taylor (VP, Commercial) attributed the guidance increases primarily to strong operational execution, particularly on the key projects for the West Jupiter, West Capella, and West Telus. Additionally, the West Carina worked longer than initially anticipated, and the Savannah, Louisiana (the "show me" rig) exceeded expectations for utilization in the first half of the year. On the expense side, costs were in line with expectations, though repair and maintenance expenses are skewed more heavily to the second half of the year.
Q: Given the constructive outlook with drillship utilization potentially reaching the mid-90s next year and leading-edge day rates now firmly in the mid-$400s, is there any reason to believe day rates shouldn't continue to move higher next year? A: Jacob Taylor (VP, Commercial) stated that day rate progression is purely driven by utilization. As utilization is expected to improve and rigs continue to move from the Western Hemisphere to the Eastern Hemisphere, this should drive day rate momentum. However, he emphasized that Seadrill looks at the full contract value holisticallyincluding mobilization fees and terms and conditionsrather than focusing solely on the headline day rate, aiming to maximize the total cash generated from each contract.
Q: You extended the share repurchase program through December and restarted buybacks with $20 million in Q2. How should we frame the scale and pace of buybacks once the free cash flow inflection occurs in the second half of the year? A: Grant Creed (EVP & CFO) explained that the decision to repurchase shares is based on assessing the company's cash position, forecast cash generation, and alternative uses of capital through a disciplined lens. With the company at an inflection point due to the repricing of legacy contracts and a healthy cash position supported by the June refinancing, the buyback became an accretive use of capital when the share price traded in the $30s. The pace of future buybacks remains "to be determined" and will be evaluated on an ongoing basis.
Q: Regarding the rigs rolling off contract in the second half of next year, have you started progressing new contracts for those rigs, and how do you weigh short-term versus long-term work to balance visibility and upside capture? A: Jacob Taylor (VP, Commercial) noted that the company is heavily focused on capital discipline and cash management, with swift payback periods being a high priority. If successful in securing work for the West Carina, assets like the West Gemini and potentially the West Auriga can be positioned to capture upside. As utilization tightens above 95%, rates are expected to push into the higher $400s. Samir Ali (CEO) added that the team's focus is on minimizing gaps between contracts, as gaps represent wasted money and time.
Q: Are you seeing any change in customer behavior as the market looks set to tighten into 2027, such as customers looking to lock in rates further out for longer-term contracts? A: Jacob Taylor (VP, Commercial) indicated that there hasn't been a wholesale change in customer behavior yet, though there are marginal signs. Examples include a client securing a rig in Southeast Asia for a mid-2028 start and some tenders for 2028/2029 commencements. With higher commodity prices providing customers with more free cash flow, there may be a wind at their backs to develop more fields, but a significant shift in behavior has not yet materialized.
Q: Regarding the two stacked harsh-environment semis (Aquarius and Phoenix), what could the potential reactivation costs be, and what contract terms would make reactivation economically viable? A: Jacob Taylor (VP, Commercial) stated that the harsh-environment floater space is almost 100% utilized, and Seadrill would love to grow its fleet in that market, given its existing presence in Norway. Reactivation costs for the Phoenix or Aquarius would be meaningful, likely over $100 million. The company would require a contract that justifies the investment, evaluating the full economics of the contractincluding day rate, mobilization fees, and durationrather than mandating a specific contract length.
Q: Can you provide more detail on the working capital build in Q2 and how it will impact free cash flow in the second half of the year? A: Grant Creed (EVP & CFO) explained that the accounts receivable build in Q2 was primarily due to the West Jupiter and West Capella commencing new contracts in late March. These should normalize in Q3 with no further outflows. For the West Telus, there will be a working capital build on accounts receivable in Q3, but this will be offset by a $40 million mobilization receipt from Petrobras. Once this is behind them, the company should be on a normalized working capital basis, with cash flow strengthening through the second half of the year.
Q: How are you thinking about the opportunity set for seventh-generation rigs in Asia, given that the region has historically been a lower-priced market for high-quality drillships? A: Samir Ali (CEO) noted that while the West Capella and West Polaris are sixth-generation rigs, they are dual-activity with MPD systems, making them better than average sixth-gen rigs. The West Carina is positioned in Walvis Bay with access to both Africa and Asia. Jacob Taylor (VP, Commercial) added that in 2024, one of their sixth-gen units achieved a rate of $545,000 per day in a niche position. There is a scenario where seventh-generation rigs get scooped up early in the cycle, leaving sixth-generation rigs to capture upside, so the company views both parts of its fleet as opportunities.
Q: Are there any special surveys or rig upgrades coming in 2027 that we should be thinking about
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
