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Seadrill raised 2026 revenue guidance to $1.50-$1.55B and adjusted EBITDA outlook to $420-$450M.
SDRL's Q2 revenues rose 19.1% to $449M, while 96% economic utilization and higher dayrates boosted results.
SDRL's $2.9B backlog and lower project spending support cash flow, but maintenance and inflation pose risks.
Seadrill Limited (SDRL - Free Report) raised its full-year 2026 revenue and adjusted EBITDA guidance after stronger second-quarter execution and utilization.
The higher outlook improves the case for a second-half cash-flow inflection, especially as major project spending winds down. Still, maintenance costs and uneven regional demand leave execution as the key test for turning the guidance increase into durable free cash flow.
SDRL’s Q2 Beat Reset 2026 Expectations
Second-quarter operating revenues reached $449 million, up 19.1% year over year and above the Zacks Consensus Estimate of $386 million. Earnings of 47 cents per share also topped the consensus estimate of 29 cents.
Adjusted EBITDA increased to $144 million from $97 million in the first quarter of 2026, a sequential increase of $47 million. Economic utilization reached 96%, and technical utilization improved to 98%, reflecting stronger fleet performance as additional operating days and higher average dayrates lifted results.
Image Source: Seadrill Limited
Raised SDRL Guidance Points to Better Cash Flow
Seadrill increased full-year 2026 operating revenue guidance to $1.50-$1.55 billion from $1.43-$1.48 billion, excluding approximately $50 million of reimbursable revenues. Adjusted EBITDA guidance rose to $420-$450 million from $370-$420 million. The revised ranges were driven by strong project execution and better-than-anticipated utilization.
Capital expenditure and long-term maintenance guidance remained at $200-$240 million. Seadrill ended the second quarter with $360 million in cash, cash equivalents and restricted cash. With major project-related outflows largely behind the company and mobilization receipts expected in the second half, the raised outlook supports management’s expectation for meaningful free cash flow over the remainder of 2026.
Contract Repricing Lifts SDRL’s Earnings Base
West Jupiter and West Tellus have moved onto materially higher-rate contracts. The two rigs are generating roughly $400,000 of combined additional daily revenue compared with their prior contracts, improving the earnings base heading into 2027.
Average contractual dayrates rose to $360,000 in the second quarter from $331,000 a year earlier. The benefit should be more visible now that West Capella, West Jupiter and West Tellus have completed major projects on time and within budget.
Image Source: Seadrill Limited
SDRL’s Backlog Extends the 2027 Opportunity
Contract backlog was approximately $2.9 billion as of Aug. 10, 2026, after about $200 million of additions since the May fleet status update. West Vela’s 12-month U.S. Gulf contract added about $161 million, while West Capella’s Malaysia option added about $26 million and extended work into August 2027.
The broader offshore market also matters. Transocean Ltd. (RIG - Free Report) focuses on ultra-deepwater and harsh-environment drilling, making it a relevant indicator of floater demand. Noble Corporation plc (NE - Free Report) operates a fleet concentrated largely on ultra-deepwater and high-specification jackup opportunities, providing another reference point for the contracting cycle Seadrill expects to tighten.
SDRL’s Ratings Temper the Guidance Upside
The guidance increase strengthens Seadrill’s near-term earnings and cash-flow setup, but risks remain. Limited visibility for Sevan Louisiana, expected higher repairs and maintenance spending and labor and materials inflation could reduce operating leverage in the second half.
Its Momentum Score of A reflects favorable price momentum, while the Value Score of D, Growth Score of F and VGM Score of D are weaker. That mix supports a balanced reading of the raised outlook rather than treating better guidance as a stand-alone buy signal.
View the Zacks #1 Rank List
Image: Bigstock
Can SDRL's Raised 2026 Guidance Drive Stronger Free Cash Flow Ahead?
Key Takeaways
Seadrill Limited (SDRL - Free Report) raised its full-year 2026 revenue and adjusted EBITDA guidance after stronger second-quarter execution and utilization.
The higher outlook improves the case for a second-half cash-flow inflection, especially as major project spending winds down. Still, maintenance costs and uneven regional demand leave execution as the key test for turning the guidance increase into durable free cash flow.
SDRL’s Q2 Beat Reset 2026 Expectations
Second-quarter operating revenues reached $449 million, up 19.1% year over year and above the Zacks Consensus Estimate of $386 million. Earnings of 47 cents per share also topped the consensus estimate of 29 cents.
Adjusted EBITDA increased to $144 million from $97 million in the first quarter of 2026, a sequential increase of $47 million. Economic utilization reached 96%, and technical utilization improved to 98%, reflecting stronger fleet performance as additional operating days and higher average dayrates lifted results.
Raised SDRL Guidance Points to Better Cash Flow
Seadrill increased full-year 2026 operating revenue guidance to $1.50-$1.55 billion from $1.43-$1.48 billion, excluding approximately $50 million of reimbursable revenues. Adjusted EBITDA guidance rose to $420-$450 million from $370-$420 million. The revised ranges were driven by strong project execution and better-than-anticipated utilization.
Capital expenditure and long-term maintenance guidance remained at $200-$240 million. Seadrill ended the second quarter with $360 million in cash, cash equivalents and restricted cash. With major project-related outflows largely behind the company and mobilization receipts expected in the second half, the raised outlook supports management’s expectation for meaningful free cash flow over the remainder of 2026.
Contract Repricing Lifts SDRL’s Earnings Base
West Jupiter and West Tellus have moved onto materially higher-rate contracts. The two rigs are generating roughly $400,000 of combined additional daily revenue compared with their prior contracts, improving the earnings base heading into 2027.
Average contractual dayrates rose to $360,000 in the second quarter from $331,000 a year earlier. The benefit should be more visible now that West Capella, West Jupiter and West Tellus have completed major projects on time and within budget.
Image Source: Seadrill Limited
SDRL’s Backlog Extends the 2027 Opportunity
Contract backlog was approximately $2.9 billion as of Aug. 10, 2026, after about $200 million of additions since the May fleet status update. West Vela’s 12-month U.S. Gulf contract added about $161 million, while West Capella’s Malaysia option added about $26 million and extended work into August 2027.
The broader offshore market also matters. Transocean Ltd. (RIG - Free Report) focuses on ultra-deepwater and harsh-environment drilling, making it a relevant indicator of floater demand. Noble Corporation plc (NE - Free Report) operates a fleet concentrated largely on ultra-deepwater and high-specification jackup opportunities, providing another reference point for the contracting cycle Seadrill expects to tighten.
SDRL’s Ratings Temper the Guidance Upside
The guidance increase strengthens Seadrill’s near-term earnings and cash-flow setup, but risks remain. Limited visibility for Sevan Louisiana, expected higher repairs and maintenance spending and labor and materials inflation could reduce operating leverage in the second half.
SDRL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Its Momentum Score of A reflects favorable price momentum, while the Value Score of D, Growth Score of F and VGM Score of D are weaker. That mix supports a balanced reading of the raised outlook rather than treating better guidance as a stand-alone buy signal.