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SDRL Jumps 14.8% in One Month as Deepwater Market Outlook Improves
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Key Takeaways
Seadrill shares jumped 14.8% in a month, supported by improved execution and a firmer deepwater outlook.
SDRL's Q2 revenues rose 19.1% to $449M, with 96% economic utilization and dayrates climbing to $360,000.
Seadrill's $2.9B backlog boosts visibility into 2027, but its 1.96 forward P/S exceeds its five-year median.
Seadrill Limited (SDRL - Free Report) has gained 14.8% in the past month as stronger execution, contract repricing and a firmer deepwater outlook improve the earnings setup.
The rally is backed by better utilization and greater backlog visibility, but the stock now trades above its own historical sales valuation. That makes further upside increasingly dependent on sustained execution and cash-flow delivery.
SDRL’s Rally Meets a Stronger Operating Backdrop
The latest advance is supported by a stronger operating backdrop rather than price momentum alone. In the second quarter of 2026, total operating revenues rose 19.1% year over year to $449 million as higher operating activity and improved average dayrates lifted results.
Image Source: Seadrill Limited
Economic utilization reached 96% in the second quarter of 2026, while technical utilization improved to 98% from 94% in the third quarter of 2025. That reliability matters because sustained uptime improves Seadrill’s ability to convert contracted work into revenues and cash flow.
Higher SDRL Dayrates Improve Earnings Power
Contract repricing is adding another layer to the operating improvement. Average contractual dayrates increased to $360,000 in the second quarter from $331,000 a year earlier, reflecting higher rates across several rigs.
West Jupiter and West Tellus began higher-rate contracts during the quarter. Together, the two rigs are generating roughly $400,000 of additional daily revenue versus their prior contracts. With major project-related spending on West Capella, West Jupiter and West Tellus largely behind the company, the higher-rate work supports a better cash-generation setup.
SDRL Backlog Adds Visibility Into 2027
Seadrill’s contract backlog stood at approximately $2.9 billion as of Aug. 10, 2026, after roughly $200 million of additions since the May fleet status update. The West Vela secured a 12-month U.S. Gulf contract beginning in June 2027 that added about $161 million to backlog.
A priced option for West Capella added about $26 million and extended work in Malaysia into August 2027. Management expects the broader drillship market to tighten in 2027, with utilization potentially reaching the mid-90% range if anticipated tenders convert into awards.
Valuation Could Cap SDRL's Near-Term Upside
The rally has made valuation more demanding relative to Seadrill’s own history. Its forward 12-month price-to-sales ratio is 1.96, above the five-year median of 1.66, though still below the drilling subindustry’s 3.29.
Sector peers provide useful context for the same deepwater theme. Transocean Ltd. (RIG - Free Report) specializes in ultra-deepwater and harsh-environment drilling, making its fleet another read-through on floater demand. Noble Corporation plc (NE - Free Report) operates an offshore fleet focused largely on ultra-deepwater and high-specification jackup opportunities, offering another benchmark for offshore contracting conditions.
SDRL’s Momentum Signal Meets a Cautious Rank
Seadrill’s operating trajectory is improving, but the recent advance leaves less room for execution misses. U.S. Gulf softness, limited visibility for Sevan Louisiana, higher maintenance spending and labor and materials inflation could still dilute the benefit from stronger dayrates.
Its Momentum Score of A fits the recent price strength, but the Value Score of D, Growth Score of F and VGM Score of D argue for selectivity. The combination supports a balanced view rather than chasing the rally solely on momentum.
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Image: Bigstock
SDRL Jumps 14.8% in One Month as Deepwater Market Outlook Improves
Key Takeaways
Seadrill Limited (SDRL - Free Report) has gained 14.8% in the past month as stronger execution, contract repricing and a firmer deepwater outlook improve the earnings setup.
The rally is backed by better utilization and greater backlog visibility, but the stock now trades above its own historical sales valuation. That makes further upside increasingly dependent on sustained execution and cash-flow delivery.
SDRL’s Rally Meets a Stronger Operating Backdrop
The latest advance is supported by a stronger operating backdrop rather than price momentum alone. In the second quarter of 2026, total operating revenues rose 19.1% year over year to $449 million as higher operating activity and improved average dayrates lifted results.
Economic utilization reached 96% in the second quarter of 2026, while technical utilization improved to 98% from 94% in the third quarter of 2025. That reliability matters because sustained uptime improves Seadrill’s ability to convert contracted work into revenues and cash flow.
Higher SDRL Dayrates Improve Earnings Power
Contract repricing is adding another layer to the operating improvement. Average contractual dayrates increased to $360,000 in the second quarter from $331,000 a year earlier, reflecting higher rates across several rigs.
West Jupiter and West Tellus began higher-rate contracts during the quarter. Together, the two rigs are generating roughly $400,000 of additional daily revenue versus their prior contracts. With major project-related spending on West Capella, West Jupiter and West Tellus largely behind the company, the higher-rate work supports a better cash-generation setup.
SDRL Backlog Adds Visibility Into 2027
Seadrill’s contract backlog stood at approximately $2.9 billion as of Aug. 10, 2026, after roughly $200 million of additions since the May fleet status update. The West Vela secured a 12-month U.S. Gulf contract beginning in June 2027 that added about $161 million to backlog.
A priced option for West Capella added about $26 million and extended work in Malaysia into August 2027. Management expects the broader drillship market to tighten in 2027, with utilization potentially reaching the mid-90% range if anticipated tenders convert into awards.
Valuation Could Cap SDRL's Near-Term Upside
The rally has made valuation more demanding relative to Seadrill’s own history. Its forward 12-month price-to-sales ratio is 1.96, above the five-year median of 1.66, though still below the drilling subindustry’s 3.29.
Sector peers provide useful context for the same deepwater theme. Transocean Ltd. (RIG - Free Report) specializes in ultra-deepwater and harsh-environment drilling, making its fleet another read-through on floater demand. Noble Corporation plc (NE - Free Report) operates an offshore fleet focused largely on ultra-deepwater and high-specification jackup opportunities, offering another benchmark for offshore contracting conditions.
SDRL’s Momentum Signal Meets a Cautious Rank
Seadrill’s operating trajectory is improving, but the recent advance leaves less room for execution misses. U.S. Gulf softness, limited visibility for Sevan Louisiana, higher maintenance spending and labor and materials inflation could still dilute the benefit from stronger dayrates.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Its Momentum Score of A fits the recent price strength, but the Value Score of D, Growth Score of F and VGM Score of D argue for selectivity. The combination supports a balanced view rather than chasing the rally solely on momentum.