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Seadrill sells rigs and boosts buyback program

EditorAhmed Abdulazez Abdulkadir
Published 05/16/2024, 07:50 AM
SDRL
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HAMILTON, Bermuda - Seadrill Limited (NYSE & OSE: SDRL), an offshore drilling contractor, has entered into a definitive agreement to sell three jack-up rigs and its 50% stake in a Qatar-based joint venture to Gulf Drilling International (GDI) for $338 million. The sale includes the West Castor, West Telesto, and West Tucana rigs, collectively known as the Qatar Jack-Up Fleet.

The transaction is contingent upon regulatory approvals, including the Qatar Financial Centre Authority and the shareholders of GDI's parent company. The deal is expected to close early in the third quarter of 2024.

Simon Johnson, President and CEO of Seadrill, stated that this move aligns with the company's strategy to focus on its core deepwater operations. He expressed confidence in the deepwater market and Seadrill's competitive position, which the sale will further strengthen.

Concurrently with the rig sale announcement, Seadrill's Board of Directors has expanded the company's share repurchase authorization by an additional $500 million over a two-year period, following the completion of the current program. Unlike previous repurchase plans, Seadrill may opt for a non-discretionary approach to the new authorization, which can be modified, suspended, or discontinued at any time. The company is not obligated to execute any share repurchases.

Repurchases may occur through various methods, including open market purchases, privately negotiated transactions, block trades, and tender offers. The timing, pricing, and quantity of repurchases will be at Seadrill's discretion, influenced by market conditions, financial position, capital requirements, and other strategic considerations.

InvestingPro Insights

As Seadrill Limited (NYSE & OSE: SDRL) embarks on a strategic shift towards deepwater operations with the sale of its Qatar Jack-Up Fleet, the company's financial metrics reflect a noteworthy performance. With a market capitalization adjusted to $3.6 billion and a Price/Earnings (P/E) ratio of 12.15, Seadrill shows a solid valuation in its sector. The adjusted P/E ratio for the last twelve months as of Q1 2024 further strengthens this perspective, standing at 10.81, indicating potential for continued investor interest.

Investors looking at growth prospects will find Seadrill's recent revenue growth figures compelling. The company has reported a significant year-over-year revenue growth of 58.45% for the last twelve months as of Q1 2024. This is supported by a strong quarterly revenue growth of 32.81% for Q1 2024, showcasing the company's ability to increase its earnings effectively.

Seadrill's operational efficiency is also evident in its gross profit margin, which is at a healthy 37.92% for the same period. This suggests that the company is not only increasing its revenue but is also managing its cost of goods sold effectively, contributing to its overall profitability.

For those considering investing in Seadrill, the InvestingPro Tips highlight the company's strong EBITDA growth of 115.51% for the last twelve months as of Q1 2024, which could be a sign of robust operational performance and potential for future growth. Additionally, the company's share price is currently at 95.17% of its 52-week high, reflecting positive market sentiment and investor confidence in Seadrill's strategic direction and execution.

With additional insights available on InvestingPro, including more InvestingPro Tips that can guide investment decisions, users can take advantage of the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. As of now, there are 10 additional tips listed in InvestingPro that could offer further clarity and investment guidance for those interested in Seadrill's evolving business landscape.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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