SDRL 10-Q Quarterly Report Sept. 30, 2025 | Alphaminr
ALPHAMINR

SDRL 10-Q Quarter ended Sept. 30, 2025

Balance Sheet
Cash Flow
Income Statement
Debt
sdrl-20250930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __ to __

Commission file number: 001-39327

SEADRILL LIMITED
(Exact name of Registrant as specified in its charter)
Bermuda 98-1834031
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
11025 Equity Dr. , Suite 150, Houston , Texas , United States of America
77041
(Address of principal executive offices) (Zip Code)
+1 (713) 329-1150
(Registrant's telephone number, including area code)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Common Shares, par value $0.01 per share SDRL New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒ Yes
☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒ Yes
☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer  ☐
Non-accelerated filer   ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
☐ Yes
☒  No
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

☒ Yes
☐ No

As of November 3, 2025, 62,374,171 common shares of the registrant were outstanding.



SEADRILL LIMITED
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2025



PART I - FINANCIAL INFORMATION
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
PART II - OTHER INFORMATION
ITEM 1.
ITEM 1A.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
1



FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the " Securities Act "), and Section 21E of the Securities Exchange Act of 1934, as amended (the " Exchange Act "). All statements other than statements of historical facts included in this Quarterly Report on Form 10-Q, including, without limitation, those regarding the Company's outlook, plans, strategies, business prospects, financial performance, operations, litigation, rig activity and changes and trends in its business and the markets in which it operates, are forward-looking statements. These forward-looking statements can often, but not necessarily, be identified by the use of forward-looking terminology, including the terms "assumes", "projects", "forecasts", "estimates", "expects", "anticipates", "believes", "plans", "intends", "may", "might", "will", "would", "can", "could", "should" or, in each case, their negative, or other variations or comparable terminology. These statements are based on management's current plans, expectations, assumptions and beliefs concerning future events impacting the Company and therefore involve a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: those described under Part I, Item 1A. "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the United States (" U.S. ") Securities and Exchange Commission (the " SEC ") on February 27, 2025 (the " 2024 10-K "), offshore drilling market conditions including supply and demand, dayrates, customer drilling programs and effects of new or reactivated rigs on the market, contract awards and rig mobilizations, contract backlog, dry-docking and other costs of maintenance, special periodic surveys, upgrades and regulatory work for the drilling units in the Company's fleet, the performance of the drilling units in the Company's fleet, delay in payment or disputes with customers, the Company's ability to successfully employ its drilling units, procure or have access to financing, ability to comply with loan covenants, fluctuations in the international price of oil, international financial market conditions, U.S. trade policy and tariffs and worldwide reactions thereto, inflation, changes in governmental regulations that affect the Company or the operations of the Company's fleet, increased competition in the offshore drilling industry, the review of competition authorities, the impact of global economic conditions and global health threats, pandemics and epidemics, our ability to maintain relationships with suppliers, customers, employees and other third parties, our ability to maintain adequate financing to support our business plans, our ability to successfully complete and realize the intended benefits of any mergers, acquisitions and divestitures, and the impact of other strategic transactions, our liquidity and the adequacy of cash flows to satisfy our obligations, future activity under and in respect of the Company's share repurchase program, our ability to satisfy (or timely cure any noncompliance with) the continued listing requirements of the New York Stock Exchange, the cancellation of drilling contracts currently included in reported contract backlog, losses on impairment of long-lived fixed assets, shipyard, construction and other delays, the results of meetings of our shareholders, political and other uncertainties, including those related to the conflicts in Ukraine and the Middle East, and any related sanctions, the effect and results of litigation, regulatory matters, settlements, audits, assessments and contingencies, including any litigation related to acquisitions or dispositions, the concentration of our revenues in certain geographical jurisdictions, limitations on insurance coverage, our ability to attract and retain skilled personnel on commercially reasonable terms, the level of expected capital expenditures, our expected financing of such capital expenditures and the timing and cost of completion of capital projects, fluctuations in interest rates or exchange rates and currency devaluations relating to foreign or U.S. monetary policy, tax matters, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, legal and regulatory matters in the jurisdictions in which we operate, customs and environmental matters, the potential impacts on our business resulting from decarbonization and emissions legislation and regulations, the impact on our business from climate change generally, the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems, including our rig operating systems, and other important factors described from time to time in the reports filed or furnished by us with the SEC. The foregoing risks and uncertainties are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond our control. In many cases, we cannot predict the risks and uncertainties that could cause our actual results to differ materially from those indicated by the forward-looking statements. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to us or to any person(s) acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties. You should not place undue reliance on forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. We expressly disclaim any obligations or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations or beliefs with regard to the statement or any change in events, conditions or circumstances on which any forward-looking statement is based, except as required by securities laws.

Investors should note that we announce material financial information in SEC filings, press releases and public conference calls. Based on guidance from the SEC, we may use the Investors section of our website (www.seadrill.com) to communicate with investors and we intend to post presentations and fleet status reports there, among other things. It is possible that the financial and other information posted there could be deemed to be material information. The information on our website is not part of, and is not incorporated into, this Quarterly Report on Form 10-Q. Furthermore, references to our website URLs are intended to be inactive textual references only.

2




PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
SEADRILL LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

Three months ended September 30, Nine months ended September 30,
(In $ millions, except per share data) 2025 2024 2025 2024
Operating revenues
Contract revenues 280 263 816 805
Reimbursable revenues (1)
11 20 42 55
Management contract revenues (1)
63 62 189 185
Leasing revenues (1)
9 9 25 46
Other revenues (1)
— — 3 5
Total operating revenues 363 354 1,075 1,096
Operating expenses
Vessel and rig operating expenses ( 191 ) ( 172 ) ( 550 ) ( 517 )
Reimbursable expenses ( 11 ) ( 19 ) ( 42 ) ( 53 )
Depreciation and amortization ( 58 ) ( 42 ) ( 169 ) ( 123 )
Management contract expenses ( 49 ) ( 45 ) ( 187 ) ( 124 )
Selling, general and administrative expenses ( 27 ) ( 27 ) ( 76 ) ( 76 )
Merger and integration related expenses ( 1 ) ( 2 ) ( 1 ) ( 7 )
Total operating expenses ( 337 ) ( 307 ) ( 1,025 ) ( 900 )
Other operating items
Gain on disposals — — — 203
Other operating income — — — 16
Total other operating items — — — 219
Operating profit 26 47 50 415
Financial and other non-operating items
Interest income 4 6 11 20
Interest expense ( 15 ) ( 15 ) ( 45 ) ( 46 )
Equity in (losses)/earnings of equity method investments (net of tax) ( 11 ) ( 2 ) 3 ( 13 )
Other financial and non-operating items ( 4 ) 3 ( 31 ) ( 11 )
Total financial and other non-operating items, net ( 26 ) ( 8 ) ( 62 ) ( 50 )
Profit/(loss) before income taxes — 39 ( 12 ) 365
Income tax expense ( 11 ) ( 7 ) ( 55 ) ( 20 )
Net (loss)/income ( 11 ) 32 ( 67 ) 345
Basic (LPS)/EPS ($) ( 0.17 ) 0.49 ( 1.08 ) 4.97
Diluted (LPS)/EPS ($) ( 0.17 ) 0.49 ( 1.08 ) 4.82
(1) Includes revenue from related parties of $ 77 million and $ 235 million, for the three and nine months ended September 30, 2025, respectively, and $ 74 million and $ 246 million for the three and nine months ended September 30, 2024, respectively. Refer to Note 10 - "Related party transactions" for further details.

The accompanying notes form an integral part of these unaudited Condensed Consolidated Financial Statements.
3



SEADRILL LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(In $ millions, except share data) September 30,
2025 		December 31,
2024
ASSETS
Current assets
Cash and cash equivalents 402 478
Restricted cash 26 27
Accounts receivables, net 179 193
Other current assets 223 230
Total current assets 830 928
Non-current assets
Equity method investment 71 68
Drilling units, net of accumulated depreciation of 615 as of September 30, 2025 (December 31, 2024: 430 )
2,992 2,946
Deferred tax assets 47 63
Equipment 4 5
Other non-current assets 123 146
Total non-current assets 3,237 3,228
Total assets 4,067 4,156
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade accounts payable 72 118
Other current liabilities 367 383
Total current liabilities 439 501
Non-current liabilities
Long-term debt 612 610
Deferred tax liabilities 14 11
Other non-current liabilities 137 116
Total non-current liabilities 763 737
Commitments and contingencies (see Note 13)
Shareholders' equity
Common shares of par value $ 0.01 per share: 375,000,000 shares authorized as of September 30, 2025 (December 31, 2024: 375,000,000 ) and 62,374,171 issued as of September 30, 2025 (December 31, 2024: 62,154,422 )
1 1
Additional paid-in capital 1,983 1,969
Accumulated other comprehensive income 1 1
Retained earnings 880 947
Total shareholders' equity 2,865 2,918
Total liabilities and shareholders' equity 4,067 4,156

The accompanying notes form an integral part of these unaudited Condensed Consolidated Financial Statements.
4



SEADRILL LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Nine months ended September 30,
(In $ millions) 2025 2024
Cash flows from operating activities
Net (loss)/income ( 67 ) 345
Adjustments to reconcile net (loss)/income to net cash provided by operating activities:
Depreciation and amortization 169 123
Gain on disposal of assets — ( 203 )
Equity in (earnings)/losses of equity method investments (net of tax) ( 3 ) 13
Deferred tax expense/(benefit) 19 ( 7 )
Unrealized (gain)/loss on foreign exchange ( 2 ) 5
Amortization of bond issuance costs 2 3
Share based compensation expense 14 12
Other 27 —
Other cash movements in operating activities
Additions to long-term maintenance ( 167 ) ( 167 )
Changes in operating assets and liabilities
Trade accounts receivable 6 41
Trade accounts payable ( 36 ) 55
Prepaid expenses/accrued revenue 1 ( 27 )
Deferred revenue ( 1 ) 19
Deferred mobilization costs 41 ( 62 )
Other assets ( 3 ) ( 19 )
Other liabilities 12 ( 50 )
Net cash provided by operating activities 12 81
Cash flows from investing activities
Additions to drilling units and equipment ( 87 ) ( 119 )
Other ( 4 ) —
Proceeds from disposal of assets — 338
Net cash (used in)/provided by investing activities ( 91 ) 219
Cash flows from financing activities
Shares repurchased — ( 431 )
Net cash used in financing activities — ( 431 )
Effect of exchange rate changes on cash 2 ( 5 )
Net decrease in cash and cash equivalents, including restricted cash ( 77 ) ( 136 )
Cash and cash equivalents, including restricted cash, at beginning of the period 505 728
Cash and cash equivalents, including restricted cash, at the end of period 428 592

The accompanying notes form an integral part of these unaudited Condensed Consolidated Financial Statements.
5



SEADRILL LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In $ millions) Common shares Additional paid-in capital Accumulated
other comprehensive income 		Retained earnings Total shareholders' equity
Balance as of January 1, 2025 1 1,969 1 947 2,918
Share based compensation — 4 — — 4
Net loss — — — ( 14 ) ( 14 )
Balance as of March 31, 2025 1 1,973 1 933 2,908
Share based compensation — 5 — — 5
Net loss — — — ( 42 ) ( 42 )
Balance as of June 30, 2025 1 1,978 1 891 2,871
Share based compensation — 5 — — 5
Net loss — — — ( 11 ) ( 11 )
Balance as of September 30, 2025 1 1,983 1 880 2,865

(In $ millions) Common shares Additional paid-in capital Accumulated
other comprehensive income 		Retained earnings Total shareholders' equity
Balance as of January 1, 2024 1 2,480 1 501 2,983
Share based compensation — 3 — — 3
Shares repurchased — ( 119 ) — — ( 119 )
Net income — — — 60 60
Balance as of March 31, 2024 1 2,364 1 561 2,927
Share based compensation — 4 — — 4
Shares repurchased — ( 125 ) — — ( 125 )
Net income — — — 253 253
Balance as of June 30, 2024 1 2,243 1 814 3,059
Share based compensation — 5 — — 5
Shares repurchased — ( 183 ) — — ( 183 )
Net income — — — 32 32
Balance as of September 30, 2024 1 2,065 1 846 2,913

The accompanying notes form an integral part of these unaudited Condensed Consolidated Financial Statements.
6


SEADRILL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – General information
Seadrill Limited (along with any one or more of its consolidated subsidiaries, or to all such entities, referred to as "Seadrill", "we", "us", "our", and "the Company") is incorporated in Bermuda. We are an offshore drilling contractor providing worldwide offshore drilling services to the oil and gas industry. Our primary business is the ownership and operation of drillships and semi-submersible rigs for operations in shallow to ultra-deepwater areas in both benign and harsh environments. We contract our drilling units to drill wells for our customers on a dayrate basis. Our customers include oil super-majors, state-owned national oil companies and independent oil and gas companies. In addition, we provide management services to certain affiliated entities.
Basis of presentation
The accompanying unaudited Condensed Consolidated Financial Statements of Seadrill Limited have been prepared in accordance with accounting principles generally accepted in the U.S. (" U.S. GAAP ") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, pursuant to such rules and regulations, they do not include all disclosures required by U.S. GAAP for annual financial statements. In the opinion of management, the unaudited Condensed Consolidated Financial Statements includes all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of financial position, results of operations and cash flows for the interim periods.
Results of operations for interim periods are not necessarily indicative of results of operations for the respective full years, or any future period. The accompanying unaudited Condensed Consolidated Financial Statements and related notes should be read in conjunction with our 2024 10-K.
Certain reclassifications have been made to previously reported amounts to conform to the current period presentation. These reclassifications did not have a material effect on our unaudited Condensed Consolidated Financial Statements.
Significant accounting policies
Refer to Note 2 - "Accounting policies" of our Consolidated Financial Statements from our 2024 10-K for additional information related to our significant accounting policies.
Note 2 - Revenue from contracts with customers
The following table provides information about receivables and contract liabilities from our contracts with customers, as of the dates presented:
(In $ millions) September 30,
2025 		December 31,
2024
Accounts receivable, net 179 193
Current contract liabilities (classified within other current liabilities) ( 67 ) ( 63 )
Non-current contract liabilities (classified within other non-current liabilities) ( 44 ) ( 48 )
Changes in the contract liabilities balances during the three and nine months ended September 30, 2025 are as follows:
(In $ millions) Contract Liabilities
Contract liabilities as of January 1, 2025 ( 111 )
Amortization of revenue included in the January 1, 2025 contract liability balance 23
Additional contract liabilities recognized, excluding amounts recognized as revenue ( 39 )
Contract liabilities as of March 31, 2025 ( 127 )
Amortization of revenue included in the March 31, 2025 contract liability balance 19
Additional contract liabilities recognized, excluding amounts recognized as revenue ( 15 )
Contract liabilities as of June 30, 2025 ( 123 )
Amortization of revenue included in the June 30, 2025 contract liability balance 17
Additional contract liabilities recognized, excluding amounts recognized as revenue ( 5 )
Contract liabilities as of September 30, 2025 ( 111 )
7
SEADRILL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Revenues are attributed to geographical locations based on the country of operations for drilling activities, i.e., the country where the revenues are generated. The following table presents our revenues by geographic area:
Three months ended September 30, Nine months ended September 30,
(In $ millions) 2025 2024 2025 2024
Brazil 160 83 445 254
United States 98 109 284 290
Angola 79 86 245 255
Norway 26 48 71 162
Other (1)
— 28 30 135
Total operating revenues 363 354 1,075 1,096
(1) "Other" represents countries in which we operate that individually had revenues representing less than 10% of total operating revenues earned for any of the periods presented.
We had the following customers with revenues greater than 10% of total operating revenues in any of the periods presented:
Three months ended September 30, Nine months ended September 30,
2025 2024 2025 2024
Petrobras 38 % 17 % 35 % 17 %
Sonadrill 21 % 21 % 22 % 20 %
LLOG 12 % 12 % 10 % 10 %
Talos 11 % — % 12 % — %
Beacon — % 10 % — % 9 %
Other 18 % 40 % 21 % 44 %
Note 3 – Taxation
For the three and nine months ended September 30, 2025, income tax expense was $ 11 million and $ 55 million, respectively, compared to income tax expense of $ 7 million and $ 20 million for the three and nine months ended September 30, 2024, respectively.
The increase in tax expense for the three months ended September 30, 2025, relative to the three months ended September 30, 2024, primarily reflects changes in the Company's mix of pre-tax income and loss among tax jurisdictions.
The increase in tax expense for the nine months ended September 30, 2025, relative to the nine months ended September 30, 2024, primarily reflects changes in the Company's mix of pre-tax income and loss among tax jurisdictions and changes in valuation allowances established for Switzerland and Brazil.
On July 4, 2025, the U.S. enacted the One Big Beautiful Bill Act ("OBBBA"). The OBBBA includes many tax provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and provisions allowing accelerated tax deduction for qualified property. The legislation does not have a material impact to our unaudited Condensed Consolidated Financial Statements.
Note 4 – Loss/Earnings per share
The computation of basic loss/earnings per share (" (LPS) / EPS ") is based on the weighted average number of common shares of the Company, par value $ 0.01 per share (the " Shares "), outstanding during the period. Diluted (LPS)/EPS includes the effect of the assumed conversion of potentially dilutive instruments related to the effect of the unsecured senior convertible bond and share based compensation. Refer to Note 9 – "Debt" for further details on the unsecured senior convertible bond.
The components of the numerator for the calculation of basic and diluted (LPS)/EPS were as follows:
Three months ended September 30, Nine months ended September 30,
(In $ millions) 2025 2024 2025 2024
Net (loss)/income available stockholders ( 11 ) 32 ( 67 ) 345
Effect of dilution (interest on unsecured senior convertible bond) 1 1 4 4
Diluted (loss)/income available to stockholders ( 10 ) 33 ( 63 ) 349
8
SEADRILL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The components of the denominator for the calculation of basic and diluted (LPS)/EPS were as follows:
Three months ended September 30, Nine months ended September 30,
(In millions) 2025 2024 2025 2024
Basic (loss)/earnings per share:
Weighted average number of common shares outstanding (1)
62 67 62 70
Diluted (loss)/earnings per share:
Effect of dilution 3 3 3 3
Weighted average number of common shares outstanding adjusted for the effects of dilution 65 70 65 73
(1) Weighted average number of Shares outstanding in the three and nine months ended September 30, 2024 excludes shares repurchased during the period.
The basic and diluted (LPS)/EPS were as follows:
Three months ended September 30, Nine months ended September 30,
(In $) 2025 2024 2025 2024
Basic (loss)/earnings per share ( 0.17 ) 0.49 ( 1.08 ) 4.97
Diluted (loss)/earnings per share (1)
( 0.17 ) 0.49 ( 1.08 ) 4.82
(1) For the three and nine months ended September 30, 2025, the effect of including all potentially dilutive instruments in the calculation resulted in decreased loss per share, which is anti-dilutive. As a result, the basic and diluted loss per share are equal.
Note 5 – Restricted cash
Restricted cash as of September 30, 2025 and December 31, 2024 was as follows:
(In $ millions) September 30,
2025 		December 31,
2024
Cash held in escrow 23 23
Other 3 4
Total restricted cash 26 27
Note 6 - Other current assets
As of September 30, 2025 and December 31, 2024, other current assets included the following:
(In $ millions) September 30,
2025 		December 31,
2024
Prepaid expenses 64 57
Deferred contracts costs 71 83
Taxes receivable 53 55
Other 35 35
Total other current assets 223 230
Note 7 – Equity method investment
As of September 30, 2025 and December 31, 2024, the carrying value of our equity method investment was as follows:
(In $ millions) September 30,
2025 		December 31,
2024
Sonadrill 71 68
Total equity method investment 71 68

9
SEADRILL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Other current and non-current liabilities
Other current liabilities
As of September 30, 2025 and December 31, 2024, other current liabilities included the following:
(In $ millions) September 30,
2025 		December 31,
2024
Accrued expenses 190 183
Contract liabilities 67 63
Employee withheld taxes, social security and vacation payments 55 64
Taxes payable 28 20
Accrued interest expense 8 21
Unfavorable drilling contracts 5 19
Other liabilities 14 13
Total other current liabilities 367 383
Other non-current liabilities
As of September 30, 2025 and December 31, 2024, other non-current liabilities included the following:
(In $ millions) September 30,
2025 		December 31,
2024
Uncertain tax positions 61 55
Contract liabilities 44 48
Lease liabilities 17 8
Unfavorable drilling contracts — 3
Other liabilities 15 2
Total other non-current liabilities 137 116
Unfavorable drilling contracts
The following table summarizes the movement in unfavorable drilling contracts for the nine months ended September 30, 2025:
(In $ millions)
Carrying amount
As of January 1, 2025 22
Amortization ( 6 )
As of March 31, 2025 16
Amortization ( 6 )
As of June 30, 2025 10
Amortization ( 5 )
As of September 30, 2025 5
The amortization is recognized in the unaudited Condensed Consolidated Statement of Operations as "Depreciation and amortization". The weighted average remaining amortization for unfavorable contracts is nine months .
The table below shows the amounts relating to unfavorable contracts that is expected to be amortized over the following periods:
Period ended December 31,
(In $ millions) Remainder of 2025 2026 Total
Amortization of unfavorable contracts 2 3 5

10
SEADRILL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 9 – Debt
The table below sets out our debt agreements as of September 30, 2025 and December 31, 2024:
(In $ millions) September 30,
2025 		December 31,
2024
Secured debt:
$ 575 million secured bond
575 575
Total secured debt 575 575
Unsecured bond:
Unsecured senior convertible bond 50 50
Total unsecured bond 50 50
Total principal debt 625 625
Debt premium:
Premium on bond issuance 1 1
Total debt premium 1 1
Less: bond issuance costs ( 14 ) ( 16 )
Total debt 612 610
$ 575 million secured bond
In July 2023, Seadrill issued $ 500 million in aggregate principal amount of 8.375 % Senior Secured Second Lien Notes due 2030 in an offering conducted pursuant to Rule 144A and Regulation S under the Securities Act. In August 2023, Seadrill issued an additional $ 75 million in aggregate principal amount of 8.375 % Senior Secured Second Lien Notes due 2030 (the " Incremental Notes "), maturing on August 1, 2030 (together the " Notes "). The Incremental Notes were issued at 100.75 % of par.

Revolving credit facility
On July 27, 2023, Seadrill Limited, along with its subsidiary, Seadrill Finance Limited (" Seadrill Finance" ), established a Senior Secured Revolving Credit Facility (the " Revolving Credit Facility "). The commitments under the Revolving Credit Facility, which carries a five-year term, became available for drawdown on July 27, 2023. The Revolving Credit Facility permits borrowings of up to $ 225 million in revolving credit for working capital and other corporate purposes and includes an "accordion feature" allowing Seadrill to increase this limit by up to an additional $ 100 million, subject to agreement from the lenders. It also includes a provision for issuing letters of credit up to $ 50 million. The Revolving Credit Facility incurs interest at a rate equal to a specified margin plus the Secured Overnight Financing Rate (" SOFR " ) . Seadrill is required to pay a quarterly commitment fee on any unused portion of the revolving credit.
During the third quarter of 2025, the Company issued a NOK 403 million guarantee ($ 40 million as of September 30, 2025) under the Revolving Credit Facility related to SFL Hercules Ltd. claim, which reduced the available borrowings under the Revolving Credit Facility to $ 185 million.
For further details, please refer to Note 13 – "Commitments and contingencies".
Unsecured senior convertible bond
The $ 50 million unsecured senior convertible bond (the " unsecured senior convertible bond "), issued on emergence from Chapter 11, has a maturity of August 2028 and bears interest, payable quarterly in cash, at the Term SOFR (as defined in the Note Purchase Agreement dated as of February 22, 2022, as amended (the " Note Purchase Agreement "), plus 6 % on the aggregate principal amount of $ 50 million. The bond is convertible (in full and not in part) into Shares at a conversion rate of 52.6316 Shares per $1,000 principal amount of the bond, subject to certain adjustments set forth in the Note Purchase Agreement relating to the unsecured senior convertible bond. If not converted, a bullet repayment will become due on the maturity date.
Note 10 – Related party transactions
As of September 30, 2025 , our major related party is the Sonadrill joint venture, over which we hold significant influence.
Related party revenues
Our related party revenues include the following:
Three months ended September 30, Nine months ended September 30,
(In $ millions)
2025 2024 2025 2024
Management fees revenues (a)
61 59 181 176
Add-on services 2 3 8 9
Reimbursable revenues (b)
5 3 21 10
Leasing revenues (c)
9 9 25 46
Other — — — 5
Total related party operating revenues 77 74 235 246
11
SEADRILL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(a) Seadrill provides management and administrative services an d operational and technical support services to Sonadrill. These services are charged on a dayrate basis.
(b) Reimbursable revenues primarily relate to Sonadrill project work on the Libongos , Quenguela and West Gemini rigs.
(c) During 2025, we earned leasing revenues on the charter of the West Gemini to Sonadrill. During 2024, we also earned leasing revenues from the West Castor , West Telesto , and West Tucana , which were leased to Gulfdrill, up to their disposal in June 2024.
R elated party balance s
Sonadrill prepaid management fees a s of September 30, 2025 and December 31, 2024 of $ 5 million and $ 7 million, respectively, to Seadrill. These balances were recorded in "Other current liabilities" within our unaudited Condensed Consolidated Balance Sheets.
Note 11 – Fair value of financial instruments
The carrying values and estimated fair values of certain of our financial instruments as of the dates specified were as follows:

September 30, 2025 December 31, 2024
(In $ millions) Fair
value 		Carrying
value 		Fair
value 		Carrying
value
Liabilities
$ 575 million secured bond (Level 1)
597 562 587 560
Unsecured senior convertible bond - debt component (Level 3)
56 50 56 50
Financial instruments categorized as level 1
The fair value of the $ 575 million secured bond is based on market traded value.
Financial instruments categorized as level 3
The fair value attributed to the unsecured senior convertible bond was bifurcated into two elements: the straight debt component was derived through a discounted cash flow approach, and the conversion option was derived through an option pricing model. The conversion option was recorded in equity at the point the bond was issued and, therefore, has not been included in the table above.
Our cash and cash equivalents, restricted cash, accounts receivable and accounts payable are by their nature short-term. As a result, the carrying values included in our unaudited Condensed Consolidated Balance Sheets approximate fair value.
Note 12 – Common shares
Share capital as of September 30, 2025 and December 31, 2024 was as follows:
Issued and fully paid share capital
Shares Par value per share ($) $ thousands
As of December 31, 2024 62,154,422 0.01 622
Vesting of restricted stock units 8,606 0.01 —
As of March 31, 2025 62,163,028 0.01 622
Vesting of restricted stock units 62,273 0.01 1
As of June 30, 2025 62,225,301 0.01 622
Vesting of restricted stock units 148,870 0.01 1
As of September 30, 2025 62,374,171 0.01 623
Note 13 – Commitments and contingencies
We recognize loss contingencies in the unaudited Condensed Consolidated Financial Statements where it is probable that an outflow of economic benefits will be required to settle an obligation and the amount is reasonably estimable. An adverse outcome in a matter described below could have an adverse effect on Seadrill's operating results, cash flows and financial position. Accruals for contingencies and uncertain tax positions related to matters described below, if any, are recorded in "Accrued expenses" within "Other current liabilities" and "Uncertain tax positions" within "Other non-current liabilities", respectively, in the unaudited Condensed Consolidated Balance Sheets.

12
SEADRILL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Legal Proceedings
SFL Hercules Ltd.
On March 5, 2023, Seadrill was served with a claim from SFL Hercules Ltd., filed in the Oslo District Court in Norway, relating to our redelivery of the rig West Hercules to SFL Corporation Ltd. (" SFL ") in December 2022. On February 6, 2025, the Oslo District Court delivered a judgment in favor of SFL Hercules Ltd. ordering Seadrill to pay SFL approximately $ 37 million plus interest and legal costs of approximately $ 11 million. Seadrill intends to vigorously contest the judgment and filed an appeal on March 5, 2025. The appeal proceedings are scheduled to commence on April 7, 2026. The ultimate amount due, if any, cannot be predicted at this time.
As is customary in Norway, Seadrill issued a guarantee in the amount of NOK 574 million in August 2025 (approximately $ 57 million as of September 30, 2025) to the Norwegian Enforcement Authorities as security for the judgment. The issued guarantee consists of NOK 403 million ($ 40 million as of September 30, 2025) from our Revolving Credit Facility and NOK 171 million ($ 17 million as of September 30, 2025) from our bilateral facility.
Sonadrill fees claim
In March 2023, Seadrill was served with a claim from an individual (the " Claimant ") filed in the High Court of Justice, Business and Property Courts of England and Wales, King's Bench Division, Commercial Court (the " High Court "). The Claimant alleged breach of contract and unjust enrichment damages of approximately $ 72 million related to an alleged failure by the Company to pay the Claimant a fee for services in arranging the Sonadrill joint venture dating back to 2018. The case concluded on March 18, 2025.
On July 11, 2025, the High Court rendered judgment in favor of the Claimant. In October 2025, the High Court ruled on the first tranche of damages for the period prior to October 2024, including interest and legal fees. The parties are continuing to make submissions to the High Court on the issue of the quantum of damages to be paid for the second tranche of damages incurred subsequent to October 2024; however, Seadrill presently estimates that its aggregate liability following the High Court's judgment, including all interest and legal fees, is unlikely to exceed $ 61 million, subject to finalization of calculations relating to second tranche interest. Seadrill has requested permission for an appeal to the Court of Appeal, but there can be no guarantee that will be granted. In October 2025, Seadrill paid the first tranche of damages of approximately $ 43 million.
Nigerian Cabotage Act litigation
In November 2015, the Nigerian Maritime Administration and Safety Agency (" NMASA ") issued a detention in respect of the rig West Capella for failure to comply with requirements of the Coastal and Inland Shipping (Cabotage) Act 2003 (the " Cabotage Act "), specifically, failure to pay a Cabotage fee of 2 % on contract revenue. While the named party is Seadrill Mobile Units Nigeria Ltd (previously an Aquadrill entity, acquired by Seadrill upon the merger of Seadrill and Aquadrill) (" SMUNL "), the matter relates to three rigs: the West Capella , West Saturn and West Jupiter . SMUNL commenced proceedings in May 2016 against the Honourable Minister for Transportation, the Attorney General of the Federation and NMASA with respect to interpretation of the Cabotage Act. On June 14, 2019, the Federal High Court of Nigeria delivered a judgment (1) finding that: (a) Drilling operations fall within the definition of "Coastal Trade" or "Cabotage" under the Cabotage Act and (b) Drilling Rigs fall within the definition of "Vessels" under the Cabotage Act, and (2) directing SMUNL to deduct 2 %, or approximately $ 69 million, of their contract value and remit the same to NMASA. On June 24, 2019, the Court of Appeals sitting in Lagos (" COA ") issued a conflicting judgment in Transocean Support Services Nigeria & Ors v NIMASA & Anor , finding drilling rigs cannot be deemed vessels under the Cabotage Act pending appeal. SMUNL filed an appeal to the COA on July 22, 2019, and applied to the Federal High Court for an injunction pending appeal to prevent enforcement. Due to the volume of cases currently being handled by the COA, the Registry of the COA is yet to schedule the hearing date for the appeal. Although we intend to strongly pursue this appeal, we cannot predict the outcome of this case.
Sete Brazil claim
In or around 2010, Petroleo Brasileiro S.A. (" Petrobras ") initiated a project in Brazil to construct a fleet of 28 offshore drilling rigs to support Petrobras (the " Sete Brazil Project "). A Brazilian company (" Sete Brazil ") was formed in Brazil as a vehicle for the Sete Brazil Project. The Sete Brazil Project was unable to obtain financing and none of the 28 offshore drilling rigs was ever constructed. Sete Brazil was eventually declared bankrupt by the Brazilian courts in December 2024 although that bankruptcy is presently suspended.

On January 6, 2025, Seadrill Brazil received notices from Petrobras asserting "delay penalties" against Seadrill Brazil relating to three drillships to be constructed under the Sete Brazil Project and operated in Brazil by Seadrill Brazil under contracts awarded in 2012. The aggregate amount of the delay penalties claimed by Petrobras as of the date of receipt of the notices was approximately $ 213 million, with the potential for further delay penalties, which could be significant, to be assessed ratably over the remaining term of the drilling contracts for the three drillships. Petrobras indicated it may exercise set-off rights against certain amounts payable to Seadrill Brazil under its contracts with Petrobras for our five drillships (unrelated to the Sete Brazil Project) that are currently operating in Brazil, revenues related to which are included in our backlog as of September 30, 2025. No set-off right has been exercised to date. The contracts limit aggregate delay penalties to 10 % of the total "estimated contract value", as defined in the contracts.

The Sete Brazil Project contracts also provide an alternative remedy to Petrobras of "compensatory damages" based upon termination of the contracts for which we would have joint and several liability if such damages were awarded to Petrobras. Petrobras could seek delay penalties or compensatory damages but could not seek both under the contracts. We were copied on correspondence between Petrobras and Sete Brazil (and certain of its related companies) in which Petrobras alleged that it is entitled to collect compensatory damages of approximately $ 825 million from these companies. Petrobras has not indicated to us that they intend to pursue these claims against us or set off these claims against our current drilling contracts. We dispute liability and do not believe any damages are due to Petrobras from us, Sete Brazil or any of its related companies in connection with the Sete Brazil Project as either delay penalties or compensatory damages.


13
SEADRILL LIMITED
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Petrobras and Seadrill have agreed to participate in voluntary mediation, and Petrobras has committed to not exercise any set-off rights pending the outcome of the mediation. While Petrobras initially indicated that the mediation could commence in the third quarter of 2025, no date has been set and mediation is unlikely to begin before year-end. We cannot predict when the mediation will be completed, or what the outcome may be. Dialogue between the parties is ongoing. We are evaluating our legal options, which may include, among other things, seeking injunctive relief, seeking remedies against Petrobras under Seadrill’s prior U.S. Chapter 11 bankruptcy proceedings, and asserting counterclaims for substantial damages against Petrobras in Brazilian courts. This matter is in its early stages, and we are not able to predict its timing or outcome. In addition, the nature, timing, calculation and ultimate amount of the purported penalties are subject to principles of contract interpretation before Brazilian courts. Seadrill intends to vigorously defend its position and pursue available remedies.

Because we do not believe that it is probable that a loss with respect to the claims alleged by Petrobras has been incurred, and we cannot reasonably estimate the amount of any such loss, were it to be incurred, we have not accrued any amounts in respect thereof in our financial statements.
Brazil tax audit
Seadrill Serviços de Petróleo Ltda (" Seadrill Brazil ") has a long-standing tax audit relating to years 2009 and 2010, which is being litigated through the Brazilian courts. The initial court ruled in favor of Seadrill Brazil, but the appellate court reversed the lower court decision in September 2023 and ruled in favor of the tax authorities, assessing a tax and interest thereon of approximately $ 79 million. We will vigorously defend our position and, in the first quarter of 2024, our appeal was admitted by the higher courts, but the ultimate timing and outcome of this litigation cannot be determined.
There are additional open cases relating to years 2012, 2016, and 2017, where a similar principle is being contested but they are not as far advanced through the courts, for an aggregate assessed amount, including tax and interest, of approximately $ 84 million.

In order to litigate the tax audit relating to years 2009 and 2010, Seadrill Brazil has entered into an agreement for an insurance bond of BRL 436 million ($ 82 million as of September 30, 2025).
Other matters
In addition to the foregoing, from time to time we are a named defendant or party in certain other lawsuits, claims or proceedings arising in the ordinary course of business or in connection with our acquisition and disposal activities. Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty, and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, we currently do not expect these other matters to have a material adverse effect on our financial position, operating results and cash flows.
Guarantees
We have issued performance guarantees for potential liabilities that may result from drilling activities under current or previously managed rig arrangements with Sonadrill. As of September 30, 2025, we have not recognized any liabilities for these guarantees as we do not consider it probable that the guarantees will be called. The guarantees provided on behalf of Sonadrill have been capped at $ 1.1 billion (December 31, 2024: $ 1.1 billion), in the aggregate, across the three rigs we manage for the joint venture on two active and two historic contracts.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, as well as the Consolidated Financial Statements and related notes included in our 2024 10-K.
The following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under "Risk Factors" in Part I, Item 1A. of our 2024 10-K and "Forward-Looking Statements" in this Quarterly Report on Form 10-Q.
Our Business
Seadrill Limited is an offshore drilling contractor providing worldwide offshore drilling services to the oil and gas industry. Our primary business is the ownership and operation of drillships and semi-submersible rigs for operations in shallow to ultra-deepwater in both benign and harsh environments. We contract our drilling units to drill wells for our customers on a dayrate basis. Our customers include oil super-majors, state-owned national oil companies and independent oil and gas companies. In addition, we provide management services to certain affiliated entities.
As of September 30, 2025, we owned a total of 15 drilling rigs, of which nine were operating, two were undergoing capital upgrade projects, one was preparing for contract commencement in late 2025 or early 2026, following completion of its special periodic survey, and three were stacked. The operating units include eight floaters (comprising six 7th generation drillships, one 6th generation drillship and one benign environment semi-submersible) and one harsh environment jackup. In addition to our owned assets, as of September 30, 2025, we managed two 7th generation drillships owned by Sonangol EP.
Significant Developments
U.S. global trade policy changes
Ongoing and recently proposed changes to U.S. global trade policy, along with potential international retaliatory measures, have continued to cause high volatility in global markets and uncertainty around short- and long-term economic impacts in the U.S., including concerns over inflation, recession and slowing growth. We continue to evaluate and monitor the potential impacts of these changes and measures, including the imposition of tariffs and ongoing legal challenges to such tariffs, on our business and operations; however, it is not possible to predict the impact, if any, of any changes or proposed changes to the U.S. global trade policy, or any international retaliatory measures, on our business and operations.
Contract Backlog
Contract backlog includes all firm contracts at the contractual operating dayrate multiplied by the number of days remaining in the firm contract period. For contracts which include a market indexed rate mechanism, we utilize the current applicable dayrate multiplied by the number of days remaining in the firm contract period. Contract backlog includes management contract revenues and leasing revenues from bareboat charter arrangements, denoted as "other" in the tables below. Contract backlog excludes revenues for mobilization, demobilization and contract preparation or other incentive provisions and excludes backlog relating to non-consolidated entities.
The contract backlog for our fleet was as follows as of the dates specified:
(In $ millions) September 30, 2025 December 31, 2024
Drilling contracts 2,277 3,034
Other 234 146
Total contract backlog 2,511 3,180
Our contract backlog includes only firm commitments represented by signed drilling contracts. The full contractual operating dayrate may differ from the actual dayrate we ultimately receive. For example, an alternative contractual dayrate, such as a waiting‑on‑weather rate, repair rate, standby rate or force majeure rate, may apply under certain circumstances. The contractual operating dayrate may also differ from the actual dayrate we ultimately receive because of several other factors, including rig downtime or suspension of operations. In certain contracts, the d ayrate may be reduced to zero if, for example, repairs extend beyond a stated period.
We estimate the September 30, 2025 contract backlog to be realized over the following periods:
(In $ millions) Year ending December 31,
Contract backlog Total
2025 (1)
2026 2027 Thereafter
Drilling contracts 2,277 272 857 692 456
Other 234 63 156 15 —
Total 2,511 335 1,013 707 456

(1) Remainder of 2025.
The actual amount of revenues earned and the actual periods during which revenues are earned will differ from the amounts and periods shown in the tables above due to various factors, including shipyard and maintenance, surveys, upgrades and regulatory projects, unplanned downtime and other factors that result in a lower applicable dayrate than the full contractual operating dayrate. Additional factors that could affect the amount and timing of actual revenue to be recognized include customer liquidity issues and contract terminations, which are available to our customers under certain circumstances.
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Business Environment
The table below shows the average oil price for the nine months ended September 30, 2025 and year ended December 31, 2024 . The Brent oil price as o f November 3, 2025 was $65/bbl.
September 30, 2025 December 31, 2024
Average Brent oil price ($/bbl)
70
80
Source: Bloomberg
In recent years, oil prices have generally remained at levels that support offshore exploration and development activity, where global rig demand has been steady. This level of demand was sustained by the combination of commodity prices, heightened focus on energy security, and relative attractiveness of offshore plays with respect to both cost and carbon emissions.
The price of Brent oil averaged $70 per barrel during the nine months ended September 30, 2025 down from $80 per barrel in 2024. Global growth in the production of oil and slower growth in demand have put downward pressure on prices.
Uncertainty persists in the market in light of concerns over global economic conditions, government trade policies and output increases by the Organization of Petroleum Exporting Countries and other major international producers. This has led to the continued deferral of offshore capital expenditures and contracting of offshore drilling services, and could have a negative impact on near-term future demand for offshore drilling services. In addition, inflationary pressures may impact the cost base in our industry, including personnel costs and the prices of goods and services required to reactivate or operate rigs. As anticipated, 2025 is shaping up to be a year marked by softer utilization and a corresponding increase in competition, placing downward pressure on near term dayrates; however, as global tendering activity accelerates, we see signs that point towards a market recovery in 2027. In addition, we believe oil majors are calling for renewed focus on large-scale exploration and investment, and there is also growing consensus that U.S. shale production is plateauing.
The table below shows the global number of rigs on contract and marketed utilization for the nine months ended September 30, 2025 and year ended December 31, 2024:
September 30, 2025 December 31, 2024
Contracted rigs
Benign environment floater 110 111
Harsh environment floater 22 23
Harsh environment jackup 26 28
Marketed utilization
Benign environment floater 87 % 88 %
Harsh environment floater 92 % 95 %
Harsh environment jackup 93 % 96 %
Source: RigLogix

Global benign-environment floaters
Marketed utilization decreased in the first nine months of 2025 compared to the prior year, mainly due to fewer contracted floaters, which were primarily benign environment semi-submersibles.
Global harsh environment units
Marketed utilization for harsh environment floaters and jackups declined in the first nine months of 2025 compared to the prior year, primarily reflecting reduced capital spending on drilling activities.
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Results of operations
Results for the three months ended September 30, 2025 and September 30, 2024
The tables included below set out financial information for the three months ended September 30, 2025 and September 30, 2024:
Three months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Operating revenues 363 354 9 3 %
Operating expenses (337) (307) (30) 10 %
Operating profit 26 47 (21) (45) %
Interest expense (15) (15) — — %
Financial and non-operating items (11) 7 (18) (257) %
Profit before income taxes — 39 (39) (100) %
Income tax expense (11) (7) (4) 57 %
Net (loss)/income (11) 32 (43) (134) %
1) Operating revenues
Operating revenues consist of contract revenues, reimbursable revenues, management contract revenues, leasing revenues and other revenues.
Three months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Contract revenues (a)
280 263 17 6 %
Reimbursable revenues (b)
11 20 (9) (45) %
Management contract revenues 63 62 1 2 %
Leasing revenues 9 9 — — %
Total operating revenues 363 354 9 3 %
a) Contract revenues
Contract revenues represent the revenues we earn from contracting our drilling units to customers, primarily on a dayrate basis, and are predominately driven by the average number of rigs under contract during a period, the average dayrates earned and economic utilization achieved by those rigs under contract. We have set out movements in these key indicators of performance in the sections below.
i. Average number of rigs on contract
We calculate the average number of rigs on contract by dividing the aggregate days our rigs (excluding managed rigs) were on contract during the reporting period by the number of days in that reporting period.
The average number of rigs on contract remained consistent at 10 in each of the three months ended September 30, 2025 and 2024. However, there was a minor increase in the total days on contract resulting in higher contract revenues of $2 million in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
The increase was primarily driven by the West Auriga and West Polaris commencing work in Brazil in December 2024 and February 2025, respectively, and therefore, operating during the three months ended September 30, 2025, in contrast to the three months ended September 30, 2024, during which contract preparation activities were performed. The increase was partially offset by the West Phoenix and West Capella , which did not operate during the three months ended September 30, 2025, compared to being partially contracted during the three months ended September 30, 2024, along with the Sevan Louisiana and West Vela operating for fewer days in the third quarter of 2025 compared to the same period in 2024.
ii. Average contractual dayrates
We calculate the average contractual dayrate by dividing the aggregate contractual dayrates during a reporting period by the aggregate number of days for the reporting period.
The average contractual dayrate earned during the three months ended September 30, 2025 was $330 thousand compared to $304 thousand during the three months ended September 30, 2024, resulting in a $22 million increase in contract revenues in the three months ended September 30, 2025 compared to the three months ended September 30, 2024.
The increase was driven by higher-than-average dayrates for the West Auriga and West Polaris operating in Brazil and the West Neptune and West Vela operating in the U.S. Gulf of America during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. These impacts were partially offset by higher-than-average dayrates for the West Phoenix and West Capella during the three months ended September 30, 2024, in contrast to the third quarter of 2025, during which the rigs were not on contract, along with a decreased operating dayrate for the Sevan Louisiana operating in the U.S. Gulf of America during the three months ended September 30, 2025, compared to the three months ended September 30, 2024.
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iii. Economic utilization for rigs on contract
We define economic utilization as dayrate revenue earned during the period, excluding bonuses, divided by the contractual operating dayrate multiplied by the number of days on contract in the period. If a drilling unit earns its full operating dayrate throughout a reporting period, its economic utilization would be 100%. However, there are many situations that give rise to a dayrate being earned that is less than the contractual operating rate, such as planned downtime for maintenance. In such situations, economic utilization reduces below 100%.
The economic utilization for the three months ended September 30, 2025 was 91%, compared to 95% for the three months ended September 30, 2024, resulting in an $11 million decrease in contract revenues in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. The decrease during the third quarter of 2025 was primarily due to downtime on the West Carina and West Polaris, offset by improved economic utilization on the West Tellus compared to the third quarter of 2024.
iv. Deferred mobilization revenues
We receive fees for the mobilization of our rigs, where the associated revenue is recognized ratably over the expected term of the related drilling contract. As a result, we record a contract liability for mobilization fees received, which is amortized ratably to contract revenues as services are rendered over the initial term of the related drilling contract.
The amortization of deferred mobilization revenues increased by $9 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024. The increase was primarily attributable to mobilization fees received on the West Polaris and West Auriga, which commenced operations within the last 12 months.
v. Other items
Contract revenues include add-on services and performance bonuses.
There was a decrease in contract revenues of $5 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily attributable to the West Phoenix earning revenues from add-on services and a performance bonus during the three months ended September 30, 2024, which did not recur during the three months ended September 30, 2025.
b) Reimbursable revenues
We generally receive reimbursements from our customers for the purchase of supplies, equipment, personnel and other services provided at their request in accordance with a drilling contract. We classify such revenues as reimbursable revenues.
For the three months ended September 30, 2025 and the three months ended September 30, 2024, reimbursable revenues primarily related to rigs managed for the Sonadrill joint venture for long-term maintenance projects on the Libongos and Quenguela , along with some reimbursable revenues related to services provided across various customers.
The $9 million decrease in the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to reduced reimbursable services provided to the Libongos and Quenguela for long-term maintenance during the third quarter of 2025, compared to the third quarter of 2024.
2) Operating expenses
Total operating expenses include vessel and rig operating expenses, reimbursable expenses, depreciation of drilling units and equipment, amortization of intangibles, management contract expenses, selling, general and administrative expenses, and merger and integration related expenses.
Three months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Vessel and rig operating expenses (a)
(191) (172) (19) 11 %
Reimbursable expenses (11) (19) 8 (42) %
Depreciation and amortization (b)
(58) (42) (16) 38 %
Management contract expenses (c)
(49) (45) (4) 9 %
Selling, general and administrative expenses (27) (27) — — %
Merger and integration related expenses (1) (2) 1 (50) %
Total operating expenses (337) (307) (30) 10 %
a) Vessel and rig operating expenses
Vessel and rig operating expenses represent the costs we incur to operate a drilling unit that is either in operation or stacked. This includes the remuneration of offshore crews, rig supplies, expenses for repair and maintenance, onshore support costs, and the amortization of deferred mobilization costs. Vessel and rig operating expenses are mainly driven by rig activity. On average, we incur higher vessel and rig operating expenses when a rig is operating compared to when it is stacked. For stacked rigs, we incur higher vessel and rig expenses for warm stacked rigs compared to cold stacked rigs. We incur one-time costs for activities such as preservation and severance when we cold stack a rig. We also incur significant costs when re-activating a rig from cold stack, a proportion of which is expensed as incurred. Where a rig is leased to another operator, the majority of vessel and rig expenses are incurred by the operator.

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Vessel and rig operating expenses increased by $19 million during the three months ended September 30, 2025 compared to the three months ended September 30, 2024. During the three months ended September 30, 2025, there was a $46 million increase in vessel and rig operating expenses compared to the three months ended September 30, 2024, primarily related to the West Auriga and West Polaris commencing operations in Brazil, of which $13 million related to increased amortization of deferred mobilization costs, along with higher repair and maintenance costs across the fleet. This was partially offset by a $21 million decrease in vessel and rig operating expenses during the three months ended September 30, 2025 related to the West Phoenix and West Capella, which were stacked during the third quarter of 2025, and lower managed service agreement fees of $6 million, as the rigs acquired through the Aquadrill transaction are now managed by Seadrill, rather than by third parties.

b) Depreciation and amortization
The $16 million increase in depreciation and amortization for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 is mainly attributable to the capital projects on the West Auriga and West Polaris related to their respective contracts in Brazil.
c) Management contract expenses
Management contract expenses include costs related to Sonadrill's rigs, Quenguela and Libongos , and the Seadrill rig leased to Sonadrill, the West Gemini .
Management contract expenses increased by $4 million during the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily attributable to estimated damages following the unfavorable court judgment related to fees for arranging the Sonadrill joint venture.
Refer to Note 13 - "Commitments and contingencies - Legal Proceedings - Sonadrill fees claim" of our unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, for additional details.
3) Interest expense
Three months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Interest on debt facilities (a)
(13) (14) 1 (7) %
Other (2) (1) (1) 100 %
Total interest expense (15) (15) — — %
a) Interest on debt facilities
We incur interest on our debt facilities as summarized below:
Three months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
$575 million secured bond (12) (12) — — %
Unsecured senior convertible bond (1) (2) 1 (50) %
Total interest on debt facilities (13) (14) 1 (7) %
4) Financial and non-operating items
Three months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Interest income (a)
4 6 (2) (33) %
Equity in losses of equity method investment (net of tax) (b)
(11) (2) (9) 450 %
Other financial and non-operating items (c)
(4) 3 (7) (233) %
Total financial and non-operating items (11) 7 (18) (257) %
a) Interest income
Interest income relates to interest earned on bank deposits. The $2 million decrease in interest income for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily attributable to lower cash balances.
b) Equity in losses of equity method investment (net of tax)
The losses during the three months ended September 30, 2025 and the three months ended September 30, 2024 related to Seadrill's proportion of losses from Sonadrill.
The increase in losses of $9 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily driven by the West Gemini not operating during the third quarter of 2025, compared to operating during the third quarter of 2024 .
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c) Other financial and non-operating items
Other financial and non-operating items decreased by $7 million during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due foreign exchange movements of the USD against the Indonesian Rupiah.
5) Income tax expense
Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities related to our ownership and operation of drilling units and may vary significantly depending on jurisdictions and contractual arrangements. In most cases, the calculation of taxes is based on net income or deemed income, the latter generally being a function of gross revenue.
The $4 million increase in tax expense during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 primarily reflects changes in the Company's mix of pre-tax income and loss among tax jurisdictions .
Results for the nine months ended September 30, 2025 and September 30, 2024
The tables included below set out financial information for the nine months ended September 30, 2025 and September 30, 2024:
Nine months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Operating revenues 1,075 1,096 (21) (2) %
Operating expenses (1,025) (900) (125) 14 %
Other operating items — 219 (219) (100) %
Operating profit 50 415 (365) (88) %
Interest expense (45) (46) 1 (2) %
Financial and non-operating items (17) (4) (13) 325 %
(Loss)/profit before income taxes (12) 365 (377) (103) %
Income tax expense (55) (20) (35) 175 %
Net (loss)/income (67) 345 (412) (119) %
1) Operating revenues
Nine months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Contract revenues (a)
816 805 11 1 %
Reimbursable revenues (b)
42 55 (13) (24) %
Management contract revenues (c)
189 185 4 2 %
Leasing revenues (d)
25 46 (21) (46) %
Other revenues 3 5 (2) (40) %
Total operating revenues 1,075 1,096 (21) (2) %
a) Contract revenues
i. Average number of rigs on contract
The average number of rigs on contract remained consistent at 10 in each of the nine months ended September 30, 2025 and 2024. However, there was a decrease in total days on contract resulting in lower contract revenues of $43 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
The decrease was primarily driven by the West Phoenix being stacked through the nine months ended September 30, 2025, West Capella being stacked for the majority of the nine months ended September 30, 2025, and West Neptune operating for fewer days, compared to the nine months ended September 30, 2024.
These impacts were partially offset by the Sevan Louisiana operating for more days during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 due to its special periodic survey in the first quarter of 2024. The West Auriga and West Polaris also commenced work in Brazil in December 2024 and February 2025, respectively, and therefore, were operating for more days during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.
ii. Average contractual dayrates
The average contractual dayrate earned during the nine months ended September 30, 2025 was $328 thousand compared to $297 thousand during the nine months ended September 30, 2024, resulting in a $76 million increase in contract revenues in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

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The increase was driven by higher-than-average dayrates for the West Neptune and West Vela operating in the U.S. Gulf of America, West Auriga and West Polaris operating in Brazil, and the West Elara operating in Norway during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. These impacts were partially offset by higher-than-average dayrates for the West Phoenix and West Capella during the nine months ended September 30, 2024, in contrast to the nine months ended September 30, 2025, during which the rigs were not on contract during the period.
iii. Economic utilization for rigs on contract
The economic utilization for the nine months ended September 30, 2025 was 90%, compared to 95% for the nine months ended September 30, 2024, resulting in a $36 million decrease in contract revenues in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease during the nine months ended September 30, 2025 was primarily due to unplanned downtime related to regulatory matters impacting the West Tellus and downtime on the West Polaris, West Auriga, West Elara, West Carina and Sevan Louisiana, partially offset by improved economic utilization on the West Neptune and West Jupiter compared to the nine months ended September 30, 2024.
iv. Deferred mobilization revenues
The amortization of deferred mobilization revenues increased by $26 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024. The increase was primarily attributable to mobilization fees received on the West Capella , West Polaris and West Auriga, which commenced operations within the last 12 months.
v. Other items
There was a decrease in contract revenues of $12 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily attributable to the West Phoenix earning revenues from add-on services and a performance bonus during the nine months ended September 30, 2024, which did not recur during the nine months ended September 30, 2025.
b) Reimbursable revenues
The decrease of $13 million during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily due to additional reimbursable services provided to the Libongos and Quenguela for long-term maintenance during the nine months ended September 30, 2024, which did not recur during the nine months ended September 30, 2025.
c) Management contract revenues
Management contract revenues include revenues related to contracts where we provide management, operational and technical support services and are comprised of revenues from our joint venture, Sonadrill, relating to the Libongos , Quenguela and West Gemini.
Management contract revenues increased by $4 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily driven by higher management fees on the Libongos , Quenguela and the West Gemini .
Refer to Note 10 - "Related party transactions" of our unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, for additional details.
d) Leasing revenues
Leasing revenues decreased by $21 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily attributable to the disposal of the Gulfdrill rigs in June 2024.
Refer to Note 10 - "Related party transactions" of our unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, for additional details.
2) Operating expenses
Nine months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Vessel and rig operating expenses (a)
(550) (517) (33) 6 %
Reimbursable expenses (42) (53) 11 (21) %
Depreciation and amortization (b)
(169) (123) (46) 37 %
Management contract expenses (c)
(187) (124) (63) 51 %
Selling, general and administrative expenses (76) (76) — — %
Merger and integration related expenses (1) (7) 6 (86) %
Total operating expenses (1,025) (900) (125) 14 %
a) Vessel and rig operating expenses
Vessel and rig operating expenses increased by $33 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. During the nine months ended September 30, 2025 there was a $117 million increase in vessel and rig operating expenses compared to the nine months ended September 30, 2024, primarily related to the West Auriga and West Polaris commencing operations in Brazil, of which $35 million related to increased amortization of deferred mobilization costs, along with higher repair and maintenance costs across the fleet. This was partially offset by a $57 million decrease in vessel and rig operating expenses during the nine months ended September 30, 2025 related to the West Phoenix and West Capella, which were stacked for the majority of the nine months ended September 30, 2025, and lower managed service agreement fees of $27 million, as the rigs acquired through the Aquadrill transaction are now managed by Seadrill, rather than by third parties.
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b) Depreciation and amortization
The $46 million increase in depreciation and amortization for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 is mainly attributable to the capital projects on the West Auriga and West Polaris and unfavorable contracts being fully amortized during 2024.
Depreciation of drilling units and equipment
Depreciation increased by $40 million in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, mainly attributable to the capital projects on the West Auriga and West Polaris related to their respective contracts in Brazil.
Amortization of intangibles
Amortization expense increased by $6 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, mainly attributable to unfavorable contracts being fully amortized during 2024 related to the West Auriga and West Vela.
c) Management contract expenses
Management contract expenses increased by $63 million during the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily attributable to estimated damages following the unfavorable court judgment related to fees for arranging the Sonadrill joint venture, along with higher repairs and maintenance costs.
Refer to Note 13 - "Commitments and contingencies - Legal Proceedings - Sonadrill fees claim" of our unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, for additional details.
3) Other operating items
Nine months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Gain on disposals (a)
— 203 (203) (100) %
Other operating income (b)
— 16 (16) (100) %
Total other operating items — 219 (219) (100) %
a) Gain on disposals
Gain on disposals of $203 million for the nine months ended September 30, 2024 relates to the disposal of the West Castor , West Telesto and West Tucana jackup units, along with our 50% equity interest in the Gulfdrill joint venture.
b) Other operating income
Other operating income of $16 million for the nine months ended September 30, 2024 relates to the recovery of historical import duties in the form of tax credits following the approval by the applicable tax authorities, which did not recur in the nine months ended September 30, 2025.
4) Interest expense
Nine months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Interest on debt facilities (a)
(40) (43) 3 (7) %
Other (5) (3) (2) 67 %
Total interest expense (45) (46) 1 (2) %
a) Interest on debt facilities
We incur interest on our debt facilities as summarized below:
Nine months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
$575 million secured bond (36) (37) 1 (3) %
Unsecured senior convertible bond (4) (6) 2 (33) %
Total interest on debt facilities (40) (43) 3 (7) %

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5) Financial and non-operating items
Nine months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Interest income (a)
11 20 (9) (45) %
Equity in earnings/(losses) of equity method investments (net of tax) (b)
3 (13) 16 (123) %
Other financial and non-operating items (c)
(31) (11) (20) 182 %
Total financial and non-operating items (17) (4) (13) 325 %
a) Interest income
The $9 million decrease in interest income for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily attributable to lower cash balances.
b) Equity in earnings/(losses) of equity method investments (net of tax)
The increase in earnings of $16 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily attributable to higher operating dayrates on the West Gemini and Quenguela, offset by the impact of West Gemini not operating during the third quarter of 2025, compared to operating during the third quarter of 2024, and increased management fees.
c) Other financial and non-operating items
Other financial and non-operating items increased by $20 million during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily related to the recognition of VAT liabilities and a provision related to assets sold in 2023. This was partially offset by favorable foreign exchange movements due to the depreciation of the USD against the Brazilian Real and Norwegian Krone.
6) Income tax expense
The $35 million increase in tax expense during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily reflects changes in the Company's mix of pre-tax income and loss among tax jurisdictions and changes in valuation allowances established for Switzerland and Brazil.
Liquidity and Capital Resources
1) Capital allocation framework and Share repurchase program
In July 2023, in connection with the issuance of the Notes, Seadrill announced capital allocation principles designed to prioritize a conservative capital structure and liquidity position, focused capital investment in its fleet, and returns to shareholders. Within this framework, Seadrill intends to maintain a net leverage target of less than 1.0x under current market conditions, with a maximum through-cycle net leverage target of less than 2.0x. Seadrill also intends to maintain a strong liquidity position to provide resilience even in a downturn scenario by establishing a target minimum cash-on-hand of $250 million. Further, Seadrill intends to evaluate the potential for accretive additions in core asset categories.
So long as Seadrill is able to meet its net leverage and liquidity targets on a forward-looking basis, as well as comply with its Revolving Credit Facility covenant requirements, Seadrill would seek to provide a return to our shareholders of at least 50% of Free Cash Flow (defined as cash flows from operating activities minus additions to drilling units and equipment) in the form of Share repurchases or dividends. Seadrill will consider additional returns to shareholders from the proceeds of any asset sales in the absence of identified, accretive opportunities. Dividends and Share repurchases will be authorized and determined by the Board of Directors in its sole discretion and depend upon a number of factors, including those described above, its future prospects, market trend evaluation and such other factors as the Board of Directors may deem relevant. Please see Item 1A. "Risk Factors - Financial and Tax Risks - We may be unable to meet our capital allocation framework goal of returning at least 50% of Free Cash Flow to shareholders through dividends and share repurchases, which could decrease expected returns on an investment in our Shares " in Part I of our 2024 10-K.
During the second quarter of 2024, the Company's Board of Directors authorized a $500 million Share repurchase program that will run for a period of two years from June 25, 2024, the date of completion for the programs initiated in 2023 (" Current Repurchase Program "). Under the Current Repurchase Program, the Board authorized the Company to purchase up to $300 million of the Company's Shares in 2024. Since the Current Repurchase Program commenced, the Company has repurchased an aggregate of 6,714,252 Shares with a weighted average Share price of $43.52, amounting to $292 million. On September 30, 2024 and December 16, 2024, the Company canceled 4,213,349 and 2,500,903 treasury Shares, respectively, repurchased under this program.

During the three and nine months ended September 30, 2025, the Company did not repurchase Shares, and therefore, as of September 30, 2025, $208 million of the $500 million authorized amount remained available under the Current Repurchase Program.

During the three months ended September 30, 2024, the Company repurchased approximately 4 million Shares amounting to $183 million, with a weighted average Share price of $45.37. During the nine months ended September 30, 2024, the Company repurchased approximately 9.1 million Shares amounting to $427 million, with a weighted average Share price of $46.77.

23

While the Current Repurchase Program has a fixed expiration, it may be modified, suspended or discontinued at any time. Shares may be repurchased at any time and from time to time under the program in open market purchases, privately negotiated purchases, block trades, tender offers, accelerated Share repurchase transactions or other derivative transactions, through the purchase of call options or the sale of put options, or otherwise, or by any combination of the foregoing. The Company is under no obligation to purchase any Shares in respect of the repurchase program. The manner, timing, pricing and amount of any repurchases may be based upon a number of factors, including market conditions, the Company's financial position and capital requirements, financial conditions, competing uses for cash, statutory solvency requirements, the restrictions in the Company's debt agreements and other factors.

The Company may continue Share repurchases pursuant to the Current Repurchase Program at the Board's discretion. While we intend to announce the initiation of any Board approved repurchase programs in the future, as well as periodic information required under U.S. securities laws and regulations, we do not intend to announce any sub-authorizations for Share repurchases made pursuant to the Current Repurchase Program or any successor program given that we are no longer required to comply with European regulations requiring onerous disclosure in connection with repurchase programs.
2) Liquidity
Our level of liquidity fluctuates depending on a number of factors. These include, among others, our drilling units being on contract, economic utilization achieved, average contract dayrates, timing of accounts receivable collection, capital expenditures for rig upgrades and reactivation projects and timing of payments for operating costs and other obligations.
As of September 30, 2025, Seadrill had available liquidity of $587 million, which consisted of unrestricted cash of $402 million and available borrowings under our Revolving Credit Facility of $185 million. Our cash on hand, available borrowings under the Revolving Credit Facility, and contract and other revenues are expected to generate sufficient cash flow to fund our anticipated debt service and working capital requirements for the next 12 months.
The table below shows unrestricted cash balances and total available liquidity as of each date presented.
(In $ millions) September 30,
2025 		December 31,
2024
Unrestricted cash 402 478
Undrawn Revolving Credit Facility 185 225
Total available liquidity 587 703
We have shown our sources and uses of cash by category of cash flows in the table below:
Nine months ended September 30,
(In $ millions, except percentages) 2025 2024 Change Change %
Net cash provided by operating activities (a)
12 81 (69) (85) %
Net cash (used in)/provided by investing activities (b)
(91) 219 (310) (142) %
Net cash used in financing activities (c)
— (431) 431 (100) %
Effect of exchange rate changes in cash 2 (5) 7 (140) %
Change in period (77) (136) 59 (43) %
a) Net cash provided by operating activities
Cash flows from operating activities includes cash receipts from customers, cash paid to employees and suppliers (except for additions to drilling units and equipment), interest and dividends received (except for returns of capital), interest paid, income taxes paid and other operating cash payments and receipts.
Net cash provided by operating activities during the nine months ended September 30, 2025 was $12 million compared to $81 million for the nine months ended September 30, 2024. The $69 million decrease was primarily related to decreased operating results, the timing of receipts from customers, and increased disbursements to suppliers, partially offset by reduced mobilization costs incurred in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, which primarily related to contract preparation costs incurred for the West Polaris and West Auriga .
b) Net cash (used in)/provided by investing activities
The $91 million cash used in investing activities during the nine months ended September 30, 2025 was primarily related to capital expenditures on the West Neptune, West Elara and West Auriga and the acquisition of capital spares.
The $219 million cash provided by investing activities during the nine months ended September 30, 2024 was primarily related to the proceeds received on the disposal of our three jackup rigs, West Castor , West Telesto and West Tucana , along with our 50% equity interest in the Gulfdrill joint venture of $338 million. This was partially offset by capital expenditures of $119 million primarily related to capital upgrades on the West Auriga and West Polaris during their preparations for Petrobras contracts.
c) Net cash used in financing activities
The $431 million cash used in financing activities during the nine months ended September 30, 2024 was related to Share repurchases.
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3) Borrowing Activities
An overview of our debt as of September 30, 2025, divided into (i) secured bond and (ii) unsecured senior convertible bond, is presented in the table below:
(In $ millions) Principal Value as of September 30, 2025 Debt Premium Bond Issuance Costs Carrying Value as of September 30, 2025 Maturity Date
Bonds
$575 million secured bond 575 1 (14) 562 August 2030
Unsecured
$50 million senior convertible bond 50 — — 50 August 2028
Total debt 625 1 (14) 612
Collateral package
Revolving Credit Facility
In July 2023, the Company entered into a $225 million, 5-year Senior Secured Revolving Credit Agreement in respect of the Revolving Credit Facility (the " Credit Agreement "). Seadrill Finance is the borrower under the Credit Agreement, and the facility is secured by first priority liens on substantially all of the Company's rigs and related assets, other than non-core assets. The Company, and certain of its subsidiaries that own collateral or are otherwise material, guarantee the obligations under the Credit Agreement. The loans outstanding under the Credit Agreement bear interest at a rate per annum equal to the applicable margin plus, at Seadrill Finance's option, either: (i) the Term SOFR (as defined in the Credit Agreement) plus 0.10%; or (ii) the Daily Simple SOFR (as defined in the Credit Agreement) plus 0.10%. For both the Term SOFR loans and Daily Simple SOFR loans, the applicable margin is initially 2.75% per annum and may vary based on Seadrill's Credit Ratings (as defined in the Credit Agreement), from 2.50% to 3.50% per annum. A commitment fee is incurred under the Revolving Credit Facility on undrawn amounts, at a rate of 0.5% per annum to and including July 27, 2026, 0.75% per annum from and including July 28, 2026 to and including July 27, 2027, and 1.00% per annum thereafter.
In August 2025, the Company issued a NOK403 million guarantee ($40 million as of September 30, 2025) under the Revolving Credit Facility related to the SFL Hercules Ltd. claim, which reduced the available borrowings under the Revolving Credit Facility to $185 million.
For further details, please refer to Note 13 – "Commitments and contingencies" of our unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, which are incorporated herein by reference.
$575 million Notes Offerings
In July 2023, Seadrill Finance issued the Notes in a private offering. The Notes mature on August 1, 2030. The Notes are guaranteed by the Company and the same subsidiaries of the Company that guarantee the Credit Agreement. The Notes are secured by a second priority lien on the same assets that secure the Credit Agreement.
For further details on these facilities, please refer to Note 9 – "Debt" of our unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, which are incorporated herein by reference.
Financial covenants
The Credit Agreement obligates Seadrill and its restricted subsidiaries to comply with the following financial covenants:
• as of the last day of each fiscal quarter, the Interest Coverage Ratio (as defined in the Credit Agreement) is not permitted to be less than 2.50 to 1.00; and
• as of the last day of each fiscal quarter, the Consolidated Total Net Leverage Ratio (as defined in the Credit Agreement) is not permitted to be greater than 3.00 to 1.00.
As of September 30, 2025, Seadrill was in compliance with these financial covenants.
Critical Accounting Estimates
The preparation of our unaudited Condensed Consolidated Financial Statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures about contingent assets and liabilities. We base these estimates and assumptions on historical experience and on various other information and assumptions that we believe to be reasonable. Critical accounting estimates are important to the portrayal of both our financial position and results of operations and require us to make subjective or complex assumptions or estimates about matters that are uncertain. Actual results may differ from these estimates.
For a discussion of our critical accounting estimates, see Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates" in our 2024 10-K. As of September 30, 2025, there have been no material changes to the judgments, assumptions and estimates upon which our critical accounting policies and estimates are based.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks, including foreign exchange risk and interest rate risk. Our policy is to reduce our exposure to these risks, where possible, within boundaries deemed appropriate by our management team. This may include the use of derivative instruments. There have been no material changes to our market risks as compared to the information previously reported under Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk" in our 2024 10-K.
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Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our management, with participation from the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of September 30, 2025. Based on that evaluation and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded the Company's disclosure controls and procedures were effective, providing effective means to ensure the information the Company is required to disclose under applicable laws and regulations is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and accumulated and communicated to the Company's management to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Except as set forth in Note 13 – "Commitments and contingencies" to our unaudited Condensed Consolidated Financial Statements included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q, we were involved in a number of lawsuits, regulatory matters, disputes, and claims, asserted and unasserted, all of which have arisen in the ordinary course of our business and for which we do not expect the liability, if any, to have a material adverse effect on our consolidated financial position, results of operations, or cash flows. We cannot predict with certainty the outcome or effect of any of the matters referred to above or of any such other pending or threatened litigation or legal proceedings. We can provide no assurance that our beliefs or expectations as to the outcome or effect of any lawsuit or claim or dispute will prove correct and the eventual outcome of these matters could materially differ from management’s current estimates.

Additional information regarding legal proceedings is presented in Note 13 – "Commitments and contingencies" to our unaudited Condensed Consolidated Financial Statements, included in Part I, Item 1. "Financial Statements" of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A. "Risk Factors" in our 2024 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the third quarter of 2025, the Company did not repurchase Shares, and therefore, as of September 30, 2025, $208 million of the $500 million authorized amount remained available under the Current Repurchase Program.

Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the three months ended September 30, 2025 , no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company adopted , modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.




27

Item 6. Exhibits
Exhibit
Number 		Description
3.1
3.2
3.3
3.4
3.5
31.1*
31.2*
32.1**
32.2**
101.INS Inline XBRL Instance Document
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Schema Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104* Cover Page Interactive Data File (embedded within the Inline XBRL document and contained in Exhibit 101)
*
Filed herewith.
**
Furnished herewith.
28

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SEADRILL LIMITED
Date: November 6, 2025
By:
/s/ Grant Creed
Grant Creed
Executive Vice President and Chief Financial Officer
(duly authorized officer, principal financial officer, principal accounting officer)


TABLE OF CONTENTS
Part I - Financial InformationItem 1. Financial StatementsNote 1 General InformationNote 2 - Revenue From Contracts with CustomersNote 3 TaxationNote 4 Loss/earnings Per ShareNote 5 Restricted CashNote 6 - Other Current AssetsNote 7 Equity Method InvestmentNote 8 - Other Current and Non-current LiabilitiesNote 9 DebtNote 10 Related Party TransactionsNote 11 Fair Value Of Financial InstrumentsNote 12 Common SharesNote 13 Commitments and ContingenciesItem 2. Management's Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II - Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits

Exhibits

3.1 Certificate of Incorporation of Seadrill 2021 Limited delivered October 21, 2021 (incorporated by reference to Exhibit 1.1 to Seadrill Limited's Annual Report on Form 20-F filed with the SEC on April 29, 2022). 3.2 Memorandum of Association of Seadrill 2021 Limited (incorporated by reference to Exhibit 1.2 to Seadrill Limited's Annual Report on Form 20-F filed with the SEC on April 29, 2022). 3.3 Certificate of Deposit of Memorandum of Increase of Share Capital of Seadrill Limited (incorporated by reference to Exhibit 1.3 to Seadrill Limited's Annual Report on Form 20-F filed with the SEC on April 29, 2022). 3.4 Certificate of Change of Name from Seadrill 2021 Limited to Seadrill Limited delivered February 22, 2022 (incorporated by reference to Exhibit 1.5 to Seadrill Limited's Annual Report on Form 20-F filed with the SEC on April 29, 2022). 3.5 Bye-Laws of Seadrill Limited (incorporated by reference to Exhibit 1.4 to Seadrill Limited's Annual Report on Form 20-F filed with the SEC on April 29, 2022). 31.1* Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. 31.2* Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended. 32.1** Certification of the Principal Executive Officer pursuant to 18 USC Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of the Principal Financial Officer pursuant to 18 USC Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.