Hello, and welcome to Seadrill's first quarter 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.

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 US 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.

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.

Thanks, Kevin. Welcome, everyone, and thank you for joining us.

I'll begin with Seadrill's key priorities, followed by first quarter highlights, including recent contract awards and a brief market update. Grant will then review our financial results and speak to our improved full-year 2026 guidance before I close with final remarks.

Seadrill's priorities continue to be driven by our motto: a focus on the drill bit. It reflects the fundamentals of our business and the standards we hold ourselves to every day.

First and foremost, operational discipline underpins everything we do. Our goal is to deliver safe, efficient, and reliable operations across our fleet with a focus on zero incidents while maximizing uptime.

This is supported by an adherence to our procedures, disciplined risk management, and systematically learning from our experiences. By identifying issues early, closing gaps quickly, and applying lessons learned across our fleet, we seek to strengthen Seadrill's performance quarter-over-quarter.

Next, we are sharpening our focus on free cash flow. This means winning the right contracts and then effectively converting that backlog into cash.

It also means delivering projects on time and on budget while continuing to simplify our onshore organization so every dollar spent supports value creation. Third, we are committed to capturing the upside ahead of us.

Three legacy dayrate contracts roll off in 2026, and we have already recontracted two of the associated rigs, an important milestone that strengthens our earnings and cash flow profiles this year. As we look ahead, we believe the opportunity to reprice the West Carina at current market rates, combined with our contracting leverage in an improving market, positions us for meaningful earnings and free cash flow growth in 2027.

Executing against these priorities is reflected in our first quarter performance. Both the West Tellus re-acceptance and the West Capella reactivation projects were completed ahead of schedule and on budget, enabling early startup and revenue generation.

We delivered a solid quarter, both financially and operationally, with EBITDA of $97 million and strong economic utilization. As a result of this performance, we are raising full-year revenue and EBITDA guidance, which Grant will cover in more detail.

Importantly, we remain on track for meaningful free cash flow generation starting in the second half of 2026. I want to extend a special thank you to our offshore crews for the tremendous work delivered this quarter.

Our performance is driven by your collaboration and operational discipline, and your continued efforts strengthen Seadrill's position as a leader in deepwater drilling. Turning to our contract awards since our last call, we have added approximately $860 million to our backlog.

In the US Gulf, industry-leading performance continues to translate into follow-on work. In April, the West Neptune and West Vela each secured new contracts with LLOG, adding approximately $260 million to our backlog.

We are pleased to expand our relationship with LLOG, now a subsidiary of Harbour Energy, and look forward to supporting their ambitions to establish a leading position in the US Gulf, with a second drillship now unlocking valuable resources. Last quarter, we noted that seven drillships were expected to roll off contract in the US Gulf before year-end.

Removing white space for both of our drillships in the region significantly improves revenue visibility and reduces idle time in 2026 for Seadrill. Both rigs are now positioned to capitalize on improving supply-demand fundamentals in 2027 as other assets find work or leave the region.

Ultimately, we believe improving market utilization will drive the potential for upward dayrate momentum. In Angola, the Sonangol Quenguela had a seven-well priced option exercised, committing the rig into mid-2028.

Lastly, in Brazil, the West Polaris was awarded a three-year extension with Petrobras in direct continuation of the current program, extending a sixth-generation drillship into the next decade. Consistent with our focus on free cash flow, this extension has no additional CapEx requirements and does not require lengthy acceptance testing normally found in Petrobras contracts.

In addition, we now anticipate the West Carina will remain on contract until mid-June. We continue to see a strong demand pipeline driven by growing deepwater exploration as operators intensify efforts to secure future growth.

There is a clear shift amongst majors and large independents towards allocating incremental capital to deepwater, addressing the exploration underinvestment of the past decade and offsetting production declines. At an industry conference in March, the largest operators in the world highlighted the reality of production declines and the maturation of onshore plays.

Chevron's CEO noted that the natural decline of existing fields is a growing supply challenge. He described the loss as equivalent to five Saudi Arabias over the next decade.

Similarly, ConocoPhillips' CEO noted that the peak in shale output has helped shape their strategy of targeting major new conventional discoveries. This decline, coupled with recent exploration successes from Eni in Indonesia, Egypt, and Libya; Petrobras in Brazil and Colombia; and Oxy in the US Gulf, to name just a few, further strengthens our thesis that a new exploration cycle is emerging.

To start the year, geopolitical tensions pushed import-dependent economies to prioritize energy security, with examples such as India's initiative to drill approximately 150 wells over seven years amid sanctions on Russian crude. The Iran conflict has further intensified this focus, reinforcing the need for domestically anchored supply, where deepwater will be the beneficiary.

With production shortfalls already in the hundreds of millions of barrels and pressure to rebuild strategic reserves, deepwater resources are becoming increasingly attractive and even better positioned for development. Energy security is back in vogue.

In summary, sentiment has improved since our last call. Demand in Brazil has crystallized, with several multi-year extensions recently awarded.

Despite a softer '26 in the US Gulf, we contracted both of our drillships in a highly competitive environment. Going forward, we expect available capacity to be redeployed across the Atlantic Basin towards the Eastern Hemisphere, where demand continues to strengthen.

Taken together, rising demand from deepwater exploration and a renewed focus on energy security increases our confidence in an improving 2027, and a firmer commodity backdrop provides an additional tailwind for offshore project economics. With that, I'll turn the call over to Grant.

Thanks, Samir. I'll now walk through our first quarter 2026 financial results before providing an update on our outlook for the balance of the year.

First quarter results surpassed expectations due to early contract commencements, solid economic utilization, and the timing of operating expenditures. During the quarter, the West Jupiter underwent re-acceptance testing and began its new contract with Petrobras in late March.

The West Capella was successfully reactivated and commenced operations late in the quarter, and the West Tellus entered re-acceptance testing following the completion of its contract in mid-March. Contract drilling revenues were $277 million, up $4 million quarter-on-quarter.

The key drivers were more operating days and higher dayrates for the West Vela and higher economic utilization across the fleet, with increased uptime driven by strong operational execution. This offset the impact of fewer operating days for the West Jupiter and fewer operating days for the Sevan Louisiana, which had a short gap between programs.

Reimbursable revenues decreased, offset by a corresponding movement in reimbursable expenses. Management contract revenues decreased by $2 million to $63 million due to the timing of add-on services, which can fluctuate quarter-on-quarter.

Leasing revenues were consistent with the prior quarter at $8 million. Now moving to operating expenses, which were $334 million in the first quarter, down $10 million from the prior quarter.

The movement was attributable to a reduction in vessel and rig operating expenses related to the capitalization of mobilization costs for the West Jupiter, with the cost to be amortized over the three-year contract term, and that was partially offset by higher costs related to the preparation and commencement of the West Capella contract. Resulting EBITDA was $97 million, a sequential increase of $9 million compared to the prior quarter.

Turning to the balance sheet and cash flow statements, we ended the quarter with total cash of $329 million. The $35 million use of cash in the first quarter included $13 million of capital expenditures captured in investing activities and $38 million of long-term maintenance recorded in operating activities.

As anticipated, our cash position was largely impacted by the reactivation and contract preparations for West Capella, the re-acceptance testing for West Jupiter, as well as timing of working capital. We are increasing the confidence in a return to strong cash flow generation in the middle of 2026.

We expect cash receipts totaling approximately $70 million over the next two quarters relating to lump-sum mobilization revenues from Petrobras as reimbursement for re-acceptance projects for both the West Jupiter and West Tellus. These receipts, as well as benefiting from incremental dayrate revenues from the West Jupiter, West Capella, and West Tellus contracts, will mark the inflection point in our cash profile this year.

Overall, our capital structure remains robust. Gross principal debt was $625 million at quarter-end, with maturities extending through 2030, and we have access to $482 million of total liquidity when including available borrowing capacity on our revolving credit facility.

Now turning to our outlook for the remainder of the year. First quarter EBITDA was stronger than anticipated, with a portion of the outperformance attributable to the timing of repair and maintenance expenses that are expected to occur later in the year.

We are updating our revenue and EBITDA guidance ranges to reflect project execution, as demonstrated by the early commencements of the West Jupiter and West Capella contracts in the first quarter, and additional operating days for the West Carina, which is now expected to work through mid-June. For the full-year 2026, we are updating our guidance for operating revenues to $1.43 to $1.48 billion, and that excludes $50 million of reimbursable revenues, and our EBITDA range to $370 to $420 million.

That EBITDA guidance includes a non-cash net expense of $26 million related to the amortization of mobilization costs and revenues, of which $7 million has been recognized at the end of the first quarter. Full-year capital expenditure guidance range is maintained at $200 to $240 million.

I'll now hand the call back to Samir for his closing remarks.

Thanks, Grant. In closing, I'd like to reiterate our priorities: safe, reliable operations, free cash flow generation, and capturing the upside.

We're proud of our performance to start 2026, executing key projects ahead of schedule, adding meaningful backlog, delivering first quarter EBITDA that exceeds expectations, and raising our full-year revenue and EBITDA guidance. Collectively, these achievements enhance our line of sight to higher earnings and free cash flow in the second half of 2026 and in 2027.

With that, I will now hand the call over for questions.

Hi, Samir and team. Hope you are well, and congratulations on a very solid first quarter performance.

I wanted to kick it off here with maybe a high-level question. You paint a relatively, I think, supportive demand story, which I definitely agree with myself.

The start of 2026 has been quite eventful from a geopolitical perspective. My take on this is that the pivot towards more exploration, more conventional oil and gas activity, rather than just M&A to replace reserves, is something that was on the way of happening anyway.

I guess my question is: would you agree with that, and any kind of additional commentary you might have around it? Also, with the war in the Middle East now adding some aspects around energy security, etc., on top of that, how has that changed, if anything, and are we starting to see any impacts of that war into tenders, etc., at the moment, or is that too early?

Thanks.

Absolutely. Afternoon, Fredrik.

I'd say we saw it coming before, if you kind of roll the clock back and January 1st just to pick a date. When we look in and did our forecasts and looked out and kind of demand in the world, we saw clients already starting to talk about investing in new regions and going back and finding hydrocarbons through the drill bit.

To your point, historically, they've bought a lot of their hydrocarbons via M&A. I think there was that pivot that came of, look, we have to go invest in places like Namibia or Angola or even Mozambique, just to pick a few places.

We saw that coming early this year, and then on top of that, you've now had what's going on in Iran. Which has helped commodity prices obviously, which has added some cash to their balance sheets and allowed them to spend.

On top of all of that is you have energy security. Long way of saying, yes, we saw that demand coming already, and then what you've seen with what happened in Iran has just added fuel to that fire of energy security and a higher commodity price for them to go explore even more.

All right. Thank you.

As a follow-up to that, if—and I'm sure there are some stats on this, but if you think about call it the share of exploration drilling versus development drilling over the last, let's say, five years, given this new exploration cycle, if you will, are you able to in some way quantify how much additional demand that can come from exploration versus what you've seen historically, again, over maybe the last five years?

It's hard to quantify right now, but historically, if you look at exploration, by definition, is a little less efficient than development because you're not doing exploration wells within eyeshot of each other with a development program. You kind of rinse and repeat on the same field.

Exploration, you have one well here, one well there. By definition, that will take a bit more time and add more incremental demand for our assets and our peers' assets.

Hard to quantify exactly how much more demand comes from exploration, but we definitely see more exploration coming, and that will drive more demand going forward.

All right. I appreciate all the comments, and I'll leave it at that for now.

Thank you very much.

Thanks, Fredrik.

Hi. Good morning.

Obviously, the world has changed since your last earnings call three months ago. Just wanted to ask if you could remind us on how you see the trajectory or the progression of leading-edge pricing, which I assume is probably improved since three months ago.

We're kind of still in the low 400s today for leading-edge drillships. Do you suspect we'll see contract announcements maybe by the end of this year in the mid-400s or even the high 400s?

Just any thoughts there based on the customer conversations you're having today would be great.

Sure. I'll start, and then I'll hand it over to Jacob to provide some more color.

When we look at dayrates, Eddie, for us, it's about free cash flow generation, right? When we look at internally on bidding stuff, yeah, obviously dayrate matters, but it's how much free cash flow can you generate off that contract.

I would just frame it that way of how we think about dayrates, at least at Seadrill. As we look forward, demand continues to improve, and utilization is kind of picking up across the world, so that should lead to dayrate progression as we move into 2026 and into 2027.

I'll let Jacob speak a little more on that.

Hi, Eddie. I think if we look back over the last three to four months, we've had this strongest backlog cycle we've had since 2012.

I think we've had over 71 years of contracted term being awarded throughout the industry. That was predicated on a market that was materializing before the war broke out.

I think that this is just going to bring momentum with a windfall of cash to some of our customers who are going to continue to invest going forward. What we have going forward is we have opportunities within Indonesia, Namibia, Nigeria, Suriname, US Gulf, with long-term contracts anywhere from two to three years that we expect to be awarded here before the end of '26.

I think that that definitely creates an opportunity for rates to be pushed up further than they are today.

Great. Thanks for that.

My follow-up is just on potential M&A and perhaps increasing the size of your fleet. It would seem that having more rigs and rig availability in this rising pricing environment would be a good thing.

Are there sort of obvious acquisitions of one-off drillships out there or even larger corporate M&A? Just curious on your willingness to increase the size of your fleet or if you're comfortable with the size of your fleet at this stage.

I'd say we're at minimum efficient scale. Our focus is on, if we're going to do M&A, making sure it's an accretive deal.

For us, we're not jonesing to do a deal just for the sake of it. If it makes financial sense, absolutely we'd look at it.

We'd look at it on the other side as well, right? We are a public company.

Our job is to make sure we maximize shareholder return, and that is going to be the focus.

Understood. Thanks for the call, and I'll turn it back.

Hey, thanks for taking my question. Congrats on the quarter, guys.

Thanks, Keith.

I just wanted to hit a little bit more on free cash flow. I think thinking about working capital, you kind of talked about the $70 million that you guys expect to be paid back through the rest of the year.

Then 2027 should also, we're thinking, be really strong free cash flow year for you. Can you maybe talk about how you're thinking about free cash flow conversion through the balance of that?

Then maybe also hit on whenever you get all this free cash flow, how do you plan to deploy it? Is that the buyback or potentially M&A, similar to what Eddie was just talking about?

Thanks, Keith. You're dead right.

We've been looking to this inflection point for some time and looking to it with great enthusiasm, and it's now upon us. Of course, cash flow wasn't the strongest Q1, and that was entirely as anticipated given the fact that we were going through reactivation of Capella and the re-acceptance of Jupiter.

Of course, Q2, we have the re-acceptance of Tellus as well as a headwind. Then on the tail side, we have lump-sum mobilizations, which I mentioned in my prepared remarks, of $70 million due to us from Petrobras in respect of Jupiter and Tellus.

Then importantly, the Jupiter and Tellus move off of legacy contracts and legacy dayrates, lower rates, on to market rates in Brazil. That's going to be really instrumental to that free cash flow generation starting in the middle of the year.

Then moving forward, your question around what we do with that cash. Look, as a management team, to be honest, we're focused on generating the cash, and that's our number one priority.

How we distribute that, we'll take a decision at that point in time. I don't want to get ahead of ourselves there.

We've demonstrated in the past that returning capital to shareholders is extremely important to us, and so that's a data point to look at. Don't want to get ahead of it on how and what we do.

We just want to focus on generating it for now.

Keith, just to put a pin on that, our job as the management team is to maximize free cash flow generation. That's what this team is going to be focused on.

Perfect. That's awesome.

Then my second question, you guys have done a really good job contracting several like the two Gulf rigs in particular. Just thinking about the Carina, maybe what's the outlook on it after the extension it received in June from Petrobras?

For the Carina, we are finishing up the well currently with Petrobras. We've said that it's probably mid-June.

After that, we are chasing opportunities both inside of Brazil, in South America, and other markets. These are mobile rigs, and we will chase opportunities around the world for that asset.

Nothing to announce at this point, but we've got till mid-June, and we are pursuing opportunities actively.

I think one thing I would add to that is we have been successful in recently contracting some of our 7G rigs and covering that white space in '26 and '27. We like the idea of having the Carina available to us for playing the upside going into '27, which we feel is going to be a strong year.

Cool. I really appreciate it.

I'll turn it back.

Hey. Thank you and good morning, good afternoon.

Thanks for taking my question. Samir, I'd like to talk a little bit about, excuse me for my soft voice today, the outlook in Brazil and kind of some of the things that we're starting to hear was, if you go back in time, Petrobras has clearly been very opportunistic in how it's contracted rigs, and they've fixed at the bottom more recently.

It sounds like when we listen to these calls, you included, the outlook for the industry, the floater industry whole, is pretty positive. Really my question is, you have the rig rolling off in Brazil, you mentioned the Carina, you mentioned there's potential opportunities you didn't specifically say it's with an IOC or maybe Petrobras.

Really what I'm wondering is, as we look at the outlook for Brazil rigs, I guess there's two questions. One is: what is the opportunity for IOCs, and it seems to be that there's this growing consensus that, or at least there was a growing consensus, that Petrobras was going to shed two to three rigs.

Could we be in an environment in '27 maybe where Petrobras isn't as net negative from where they are today?

Look, I think it's possible, but Petrobras, they're incredible acquirers of rigs just given their size in the market. We still believe that they're probably net down three to four rigs kind of if you roll the clock forward a year from now.

Could some of those get picked up by IOCs? Absolutely, right?

The IOCs are starting to ramp up. I wouldn't say that it's likely,

but

it's definitely possible that you could see that situation. I think overall what we are seeing in the market is that demand is continuing to increase, right?

I think Petrobras probably is back in the market later this year or next year. I think there will be other demand pulls from West Africa and from Southeast Asia.

As we look forward, as Jacob mentioned, we're quite happy that we've got the Carina to redeploy into a higher dayrate.

Super helpful. Thanks.

Good morning. Was there any update on the Gemini?

Nothing specific that we mentioned, but the rig continues to perform quite well in Angola, and we think that there's more room in that JV and kind of more demand as we look into 2027 in Angola and across West Africa. We remain cautiously optimistic about the ability to continue finding work for the Gemini.

Is it too early to talk about bringing stacked ships back online?

Look, as we look at our stacked fleet, we've got two harsh environment semis that would probably be the most likely candidates to reactivate. We would look to reactivate them for the right contract.

There is a cost of capital arb between what our cost of capital and our clients' cost of capital is. If they're willing to fund a large portion of that reactivation, would we look at it?

Absolutely. As we look back, we think that the harsh environment market continues to tighten just like the rest of the floater market, and there's probably going to be a need for those assets.

In the near term, I think it's a bit challenged. Longer term, we could absolutely look at reactivating them, but I think the key there is, given the focus on free cash flow, we are not going to fund that on our balance sheet.

That a client will have to fund that reactivation.

Okay. Thank you.

Hello. One thing I was thinking about is if we sort of look at the current really encouraging environment fundamentally now for offshore and sort of contrast it with the last big rally in the sector sort of 2023 into 2024, I just wonder is it possible to sort of contrast maybe the relative capabilities of the global fleet, just in terms of efficiency, technical upgrades, and so forth, that could sort of help make an argument for not just sort of reachieving the levels we had before, but even more robust cycle, kind of maybe even above and beyond what we're seeing with the exploratory boost?

Look, if I look at our fleet, we've continued to invest in making sure that they're at the leading edge of technological upgrades and competitive. Look, do I think there's more efficiency to be had?

Potentially, but I don't think there's a step change in efficiency that's coming with the current technology we have, right? For us, there's probably a bit more to do, but I wouldn't say that you're going to get a 40 or 50% increase in efficiency from here.

Gotcha. I just wondered if you just had any further thoughts.

You have mentioned, of course, the general trend of equipment moving out of the Atlantic Basin and moving east. I just wonder on the customer side, as they look to again what costs might look like in the cycle heading up from here, the ones that are multi-basin in their drilling, is there any degree of sort of regional arbitrage they're looking at, sort of like a project maybe a little bit less upside keeping a rig in region, or being able to hang on to a rig in anticipation of something maybe a larger program that they're looking to for next year versus just going totally on near-term economics as far as making the regional choices?

Look, I think when you speak to our clients, they view their portfolio the same way as you would rationally, and they're going to allocate capital where it makes the most sense for them. We have talked to certain clients that have said, look, we're pulling capital away from a particular market and investing in the Gulf, for example, the US Gulf.

We've talked to certain clients that are ramping up their investments in Southeast Asia. I think it really is client-specific and where their acreage sits and how ready to develop those programs are.

When we do speak to the kind of the bigger international oil companies, a lot of them do seem to be shifting capital to Southeast Asia and West Africa. It really does feel like there's a demand pull there, but by no means does that mean that that's the only place we're seeing demand improve.

Great. Thanks a lot.