Prospectus Filed Pursuant to Rule 424(b)(3) (424b3)

Date : 02/27/2019 @ 11:12AM
Source : Edgar (US Regulatory)
Stock : Seadrill Ltd (SDRL)
Quote : 1.87  0.02 (1.08%) @ 1:00AM
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Prospectus Filed Pursuant to Rule 424(b)(3) (424b3)

Filed pursuant to Rule 424(b)(3)

File No. 333-224459

Prospectus Supplement No. 2

(to Prospectus dated October 9, 2018)

76,359,119 Common Shares

SEADRILL LIMITED

 

 

This prospectus supplement updates and supplements the prospectus dated October 9, 2018 (the “Prospectus”), which forms a part of our Registration Statement on Form F-1, as amended (Registration No. 333-224459). This prospectus supplement is being filed to update and supplement the information in the Prospectus with the information contained in our Report on Form 6-K, filed with the Securities and Exchange Commission on February 26, 2019 (the “Form 6-K”). Accordingly, we have attached the Form 6-K to this prospectus supplement.

The Prospectus relates to the resale, from time to time, of up to 76,359,119 common shares of Seadrill Limited being offered by the selling shareholders identified therein.

This prospectus supplement should be read in conjunction with the Prospectus. This prospectus supplement updates and supplements the information in the Prospectus. If there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

Our common shares are listed on the New York Stock Exchange under the symbol “SDRL”. Our common shares are also listed on the Oslo Stock Exchange under the symbol “SDRL”.

 

 

Investing in our common shares involves risks. See “Risk Factors” beginning on page 8 of the Prospectus and other risk factors contained in the documents incorporated by reference therein.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if the Prospectus or this prospectus supplement is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

The permission of the Bermuda Monetary Authority (“BMA”) is required, under the provisions of the Exchange Control Act 1972 of Bermuda (the “Exchange Control Act”) and related regulations, for all issuances and transfers of shares (which includes the common shares) of Bermuda companies to and/or from a non-resident of Bermuda for exchange control purposes, other than in the case where the BMA has granted a general permission. Consent under the Exchange Control Act has been obtained from the BMA for the issue and transfer of the Company’s common shares to persons resident and non-resident of Bermuda for exchange control purposes for so long as the shares of the Company (which would include the common shares) are listed on an “appointed stock exchange” (which would include the New York Stock Exchange and the Oslo Stock Exchange). In granting such consent, the BMA accepts no responsibility for the financial soundness or the correctness of any of the statements made or opinions expressed herein.

 

 

The date of this prospectus supplement is February 26, 2019.


 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of February 2019

Commission File Number 333-224459

 

 

Seadrill Limited

(Exact name of Registrant as specified in its Charter)

 

 

Par-la-Ville Place, 4th Floor

14 Par-la-Ville Road

Hamilton HM 08 Bermuda

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-For Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-TRule 101 (b)(1).

Yes  ☐            No  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-TRule 101 (b)(7).

Yes  ☐            No  ☒

 

 

 


ITEM 1.

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Attached hereto as Exhibit 99.1 is a copy of a press release of Seadrill Limited (the “Company”), dated February 26, 2019, reporting fourth quarter 2018 results.

 

ITEM 2.

EXHIBITS

 

Exhibit

Number

  

Description

99.1    Press release dated February 26, 2019.

 

2


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: February 26, 2019     By:  

/s/ Anton Dibowitz

    Name:   Anton Dibowitz
    Title:   Chief Executive Officer of Seadrill Management Ltd. (Principal Executive Officer of Seadrill Limited)

 

3


Exhibit 99.1

 

LOGO

Seadrill Limited (SDRL) – Fourth quarter 2018 results

February  26, 2019 - Seadrill Limited (“Seadrill” or “the Company”), a world leader in offshore drilling, announces its fourth quarter results for the period ended December 31, 2018.

Highlights

 

   

Revenue of $292 million

 

   

Operating loss of $69 million

 

   

Adjusted EBITDA 1 of $73 million

 

   

96% economic utilization 2

 

   

Reported net loss of $360 million and net loss per share of $3.62

 

   

Total cash of $2 billion

 

   

Seadrill Limited order backlog of approximately $2 billion

 

   

Added $89 million in backlog since our last earnings report in November

 

     Seadrill Limited    

 

 

Figures in USD million, unless otherwise indicated

   Q4 2018     Q3 2018     % Change  

Total Operating Revenue

     292       249       17

Adjusted EBITDA 1

     73       46       59

Margin (%)

     25     18  

Operating Loss

     (69     (106     35

Anton Dibowitz, CEO, commented:

“The offshore drilling market continues to show signs of improvement with increased tendering activity and better contract economics. We expect more activity in 2019 to lead to a tighter supply demand balance and improved pricing in 2020 as the recovery progresses.

We are delighted to have entered into a Joint Venture with Sonangol to manage and operate four rigs focused on the Angolan market. This relationship provides us with access to a market that is expected to show significant growth over the next five years as well as an opportunity to continue expanding our fleet of premium ultra-deepwater rigs.

We remain focused on continued cost reduction and disciplined use of capital including the terms on which we will contract our premium fleet.”

 

 

1  

Adjusted EBITDA represents operating income before depreciation, amortization and similar non-cash charges. Additionally, in any given period we may have significant, unusual or non-recurring items which we may exclude from Adjusted EBITDA for that period. When applicable, these items would be fully disclosed and incorporated into the required reconciliations from US GAAP to non-GAAP measures. Refer to the Appendix for the reconciliation of operating income to Adjusted EBITDA, as operating income is the most directly comparable US GAAP measure.

 

2  

Economic utilization is calculated as total revenue, excluding bonuses, for the period as a proportion of the full operating dayrate multiplied by the number of days on contract in the period.

 

1


Fourth Quarter Financial Results

Income Statement

 

Figures in USD million, unless otherwise indicated

   Q4 2018      Q3 2018      % Change  

Total operating revenues

     292        249        17

Total operating expenses

     (382      (355      (8 )% 

Other operating income

     21        —          100
  

 

 

    

 

 

    

 

 

 

Operating loss

     (69      (106      35
  

 

 

    

 

 

    

 

 

 

Total financial items and other expense, net

     (285      (137      (108 )% 

Income tax expense

     (6      (2      (200 )% 
  

 

 

    

 

 

    

 

 

 

Net loss

     (360      (245      (47 )% 
  

 

 

    

 

 

    

 

 

 

Revenues of $292 million for the fourth quarter (3Q18: $249 million) increased by 17% primarily due to the West Hercules and West Phoenix working at higher dayrates and for more days during the quarter, the West Elara moving to a higher contractual dayrate and the Sevan Louisiana returning to service. This was partially offset by lower floater economic utilization of 93% for the quarter (3Q18: 98%).

Total operating expenses of $382 million for the fourth quarter (3Q18: $355 million) increased by 8%. The main contributors to these movements were vessel and rig operating expenses and depreciation. Vessel and rig operating expenses of $195 million (3Q18: $162 million) increased mainly due to more days in operation for the West Hercules, West Phoenix and Sevan Louisiana than in the prior quarter. Depreciation of $111 million (3Q18: $125 million) was $14 million lower reflecting the write off of certain long term maintenance projects cancelled during the third quarter, not repeated in the fourth quarter.

Other operating income relates to a $21 million overdue receivable that was collected in the quarter which was not recognized as an asset as part of fresh start accounting.

Operating loss was $69 million (3Q18: loss of $106 million) as a result of the movements referred to above.

Adjusted EBITDA for the fourth quarter was $73 million which was higher than our guidance of $35 million primarily due to the overdue receivable mentioned above, our actual repair and maintenance costs, which are expensed, being lower than forecast and the release of certain accruals.

Total financial and other items resulted in an expense of $285 million in the quarter (3Q18: $137 million). The increase in the expense was primarily due to changes in the market value of Seadrill Partners common units and Archer, movements in the market value of our interest rate cap derivatives and results from associated companies after taking into account the unwind of basis differences (See Appendix II).

Income tax expense for the quarter was $6 million (3Q18: $2 million). During the quarter there have been movements on uncertain tax positions and a number of updates to provisions following the filing of returns along with reductions in deferred tax liabilities with respect to unremitted earnings of subsidiaries.

Net loss was $360 million (3Q18: $245 million) resulting in loss per share of $3.62.

Balance sheet

 

Figures in USD million, unless otherwise indicated

   Q4 2018      Q3 2018      % Change  

Current assets

     2,767        3,036        (9 )% 

Non-current assets

     8,081        8,282        (2 )% 
  

 

 

    

 

 

    

 

 

 

Total assets

     10,848        11,318        (4 )% 
  

 

 

    

 

 

    

 

 

 

Current liabilities

     464        597        (22 )% 

Non-current liabilities

     7,311        7,282        —  

Equity and redeemable non-controlling interest

     3,073        3,439        (11 )% 
  

 

 

    

 

 

    

 

 

 

Total liabilities, redeemable non-controlling interest and equity

     10,848        11,318        (4 )% 
  

 

 

    

 

 

    

 

 

 

 

2


Total current assets were $2.8 billion (3Q18: $3.0 billion). The movement mainly reflects a reduction in restricted cash as the West Rigel sales proceeds were used to purchase Senior Secured Notes due in 2025, mark to market decreases in the carrying value of Seadrill Partners common units and interest rate cap derivatives, partially offset by a loan repayment received from Seabras Sapura which increased restricted cash.

Total non-current assets were $8.1 billion (3Q18: $8.3 billion). The movement was mainly due to the normal depreciation of our drilling units and capital expenditures in the quarter, a reduction in related party receivables from the loan repayment received from Seabras Sapura mentioned above, the amortization of favorable contracts and a decrease in investments in associated companies primarily related to the net loss at Seadrill Partners after factoring in the basis difference and distributions received (see Appendix II).

Total current liabilities were $0.5 billion (3Q18: $0.6 billion). The decrease was primarily due to the redemption of the Senior Secured Notes due in 2025 with the West Rigel sales proceeds.

Total non-current liabilities were $7.3 billion (3Q18: $7.3 billion). The increase was primarily due to movements in uncertain tax positions which were partially offset by debt becoming current related to three consolidated variable interest entities managed and financed by Ship Finance International Limited from whom we lease rigs under sale and leaseback arrangements.

Total equity and redeemable non-controlling interest was $3.1 billion as at December 31, 2018 (3Q18: $3.4 billion), primarily reflecting the net loss for the quarter.

Cash Flow & Liquidity

As at December 31, 2018, total cash was $2.0 billion (3Q18:$2.1 billion) which includes $461 million (3Q18: $560 million) in restricted cash.

 

   

Net cash provided by operating activities for the three month period ended December 31, 2018 was $33 million (3Q18: $59 million cash used).

 

   

Net cash provided by investing activities was $13 million (3Q18: $48 million) reflecting the receipt of a loan receivable from the Seabras Sapura JV and the portion of the West Vela dayrate received from Seadrill Partners, partially offset by capex.

 

   

Net cash used in financing activities was $179 million (3Q18: $29 million) reflecting the redemption of the Senior Secured Notes due in 2025 with the West Rigel sales proceeds and repayments of debt made by the three Ship Finance variable interest entities mentioned above.

Costs

In addition to our own fleet of 35 rigs, we manage 11 rigs for Seadrill Partners, 5 rigs for Seamex and two rigs for Northern Drilling. Reported G&A for the quarter of $31 million (3Q18: $31 million) includes $11 million related to rigs we manage, which is charged out on a cost plus basis and recognised in Other Revenues. Excluding G&A costs related to rigs we manage, G&A for Seadrill Limited’s 35 owned rigs was $20 million (3Q18: $17 million).

Similarly, reported rig operating cost for the quarter of $195 million (3Q18: $162 million) includes approximately $11 million related to rigs we manage, which is charged out on a cost plus basis and also recognised in Other Revenues. Excluding rig operating costs related to rigs we manage, rig operating costs for Seadrill Limited’s 35 owned rigs was approximately $184 million (3Q18: $154 million)

 

3


Fleet Status & Utilization

Seadrill owns and operates 19 floaters and 16 jackups and manages Seadrill Partners, SeaMex and Northern Drilling 1 units. The fourth quarter status and performance of the group’s delivered rig fleet is as follows:

 

As at December 31, 2018

   SDRL     SDLP     Seamex     Seadrill Group  

Operating floaters

     9       4       n/a       13  

Operating floaters economic utilization

     93     99     n/a       95

Idle floaters

     10       4       n/a       14  

Operating jack-ups

     8       n/a       5       13  

Operating jack-up economic utilization

     99     n/a       99     99

Idle jack-ups

     8       n/a       —         8  

Operating tender rigs

     n/a       2       n/a       2  

Operating tender rigs economic utilization

     n/a       99     n/a       99

Idle tender rigs

     n/a       1       n/a       1  

Total operating rigs

     17       6       5       28  

Total operating rigs economic utilization

     96     99     99     97

Total idle rigs

     18       5       —         23  

Total rigs

     35       11       5       51  

 

1  

Northern Drilling units are not in operation and therefore excluded from the table

New Contracts & Backlog

Our contract backlog, as of February 26, 2019, totaled approximately $2 billion. Since our last earnings report in November we have added $89 million of additional backlog as described below:

 

   

The West Phoenix was awarded a two well contract and six options with Equinor in the UK and Norway expected to commence in direct continuation with its current contract. Three of the options have been exercised resulting in total backlog of approximately $51 million.

 

   

The West Castor was awarded a contract with Staatsolie in Suriname commencing in March 2019. The total backlog including mobilization is approximately $25 million.

 

   

The West Callisto was awarded a 6-month extension with Saudi Aramco keeping the unit employed until July 2019 adding approximately $13 million in backlog.

Newbuild Purchase Commitments

We have eight newbuild jack-up commitments with the Dalian shipyard which are non-recourse to Seadrill Limited. In January 2019, Dalian appointed an administrator to restructure its liabilities. We continue to monitor the situation and expect to file the relevant claims in due course.

Non-Consolidated Entities:

In addition to owning and operating our offshore drilling units, we have four other material investments that are not consolidated and which are recognized as either Marketable Securities or Investments in Associated Companies:

Seadrill Partners

We own 35% of Seadrill Partners common units, 16 million of the subordinated units and have direct ownership stakes in two operating companies that are Seadrill Partners subsidiaries: a 49% stake in Seadrill Capricorn Holdings and a 42% stake in Seadrill Operating LP. The combined effect of this is that we have an economic interest in Seadrill Partners of around 65%.

Seadrill Partners owns and operates 8 ultra deepwater drilling units and 3 tender rigs. Revenues for the fourth quarter were $220 million and adjusted EBITDA was $130 million. As at December 31, 2018 it had backlog of $1.0 billion, cash and cash equivalents of $842 million and total debt of $3 billion.

 

4


SeaMex Limited

We own 50% of Seamex Limited, a joint venture with FinTech. It owns and operates five jack-up drilling units located in Mexico which are all on contract with Pemex and conclude between 2021 and 2023. Revenues for the fourth quarter were $58 million and EBITDA was $37 million. As at December 31, 2018, it had backlog of $1.1 billion, total cash of $99 million, bank debt of $333 million and two loans from Seadrill totaling approximately $398 million.

Seabras Sapura

We own 50% of Seabras Sapura, a joint venture with Sapura Energy, that owns and operates 6 pipe-laying service vessels in Brazil that are all on contract with Petrobras and conclude between 2019 to 2024. Revenues for the fourth quarter were $124 million and EBITDA was $85 million. As at December 31, 2018 and adjusted for the recently closed amendments to its credit facilities it had backlog of $1.7 billion, total cash of $193 million and total debt of $833 million.

Archer Limited

We own a 15.7% stake in Archer, a global oilfield service company that specializes in drilling and well services. As per Archer’s trading update for Q4 2018 it expects to report revenues of approximately $233 million, EBITDA of approximately $24 million and net interest bearing debt of $586 million. In addition, we have a subordinated convertible loan which matures in December 2021 and have a conversion right into equity of Archer Limited in 2021 based on a strike price of US$2.083 per share.

Subsequent Events

Since the end of the fourth quarter:

 

   

We established a 50:50 joint venture with Sonangol called Sonadrill, to operate four drillships, focusing on opportunities in Angolan waters. Each of the joint venture parties will bareboat two drillships into Sonadrill and we will manage and operate all the units.

 

   

We launched a consent solicitation for proposed amendments to our Senior Secured Notes due in 2025 and plan to launch a c.$340 million tender offer at a price of 107 shortly after the successful completion of the consent solicitation. The required majority of Note holders representing greater than 50% of the principal amount outstanding have agreed to consent to the proposed amendments and participate in the tender offer. Following the completion of the tender offer, we expect the outstanding Senior Secured Notes being held by third parties to be reduced from $769 million to $461 million.

 

   

We received an additional $26 million in January 2019, relating to the overdue receivable that was received in Q4 2018, which will be recognized as other operating income in our first quarter results.

First Quarter Guidance

Adjusted EBITDA for the first quarter of 2019 is expected to be lower than the fourth quarter Adjusted EBITDA at around $60 million primarily reflecting:

 

   

Downtime on the Sevan Louisiana and West Hercules

 

   

Receipt of a $26 million overdue receivable that was collected in the quarter

 

5


Forward-Looking Statements

This news release includes forward looking statements. Such statements are generally not historical in nature, and specifically include statements about the Company’s plans, strategies, business prospects, changes and trends in its business and the markets in which it operates. These statements are made based upon 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, which speak only as of the date of this news release. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to offshore drilling market conditions including supply and demand, day rates, customer drilling programs and effects of new rigs on the market, contract awards and rig mobilizations, contract backlog, dry-docking and other costs of maintenance of the drilling rigs in the Company’s fleet, the cost and timing of shipyard and other capital projects, the performance of the drilling rigs in the Company’s fleet, delay in payment or disputes with customers, our ability to successfully employ our drilling units, procure or have access to financing, ability to comply with loan covenants, liquidity and adequacy of cash flow from operations, fluctuations in the international price of oil, international financial market conditions changes in governmental regulations that affect the Company or the operations of the Company’s fleet, increased competition in the offshore drilling industry, and general economic, political and business conditions globally and any impacts to our business from our recent restructuring. Consequently, no forward-looking statement can be guaranteed. When considering these forward-looking statements, you should keep in mind the risks described from time to time in the Company’s filings with the SEC, including its 2017 Annual Report on Form 20-F (File No. 001-34667) and its Registration Statement on Form F-1 (Registration No. 333-224459).

The Company undertakes no obligation to update any forward looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict all of these factors. Further, the Company cannot assess the impact of each such factors on its business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained in any forward looking statement.”

February 26, 2019

The Board of Directors

Seadrill Limited

Hamilton, Bermuda

Questions should be directed to Seadrill Management Ltd. represented by:

 

Anton Dibowitz:   Chief Executive Officer
Mark Morris:   Chief Financial Officer
John Roche:   Vice President Investor Relations

Media contacts:

Iain Cracknell

Director of Communications

Seadrill Management Ltd.

+44 (0)208 8114702

 

6


Appendix I - Reconciliation of Operating Income to Adjusted EBITDA

Adjusted EBITDA represents operating income before depreciation, amortization and similar non-cash charges. Additionally, in any given period we may have significant, unusual or non-recurring items which we may exclude from Adjusted EBITDA for that period. When applicable, these items are fully disclosed and incorporated into the reconciliation provided below.

Adjusted EBITDA is a non-GAAP financial measure used by investors to measure our ongoing financial and operating strength. We believe that Adjusted EBITDA assists investors by excluding the potentially disparate effects between periods of interest, other financial items, taxes and depreciation and amortization, which are affected by various and possibly changing financing methods, capital structure and historical cost basis and which may significantly affect operating income between periods.

Adjusted EBITDA should not be considered as an alternative to operating income or any other indicator of Seadrill Partners’ performance calculated in accordance with the US GAAP.

The table below reconciles operating income to Adjusted EBITDA.

 

( In $ million)

   Q1 2019 Guidance      Q4 2018      Q3 2018  

Operating loss

     (86      (69      (106

Depreciation

     111        111        125  

Amortization of favorable and unfavorable contracts

     35        31        27  
  

 

 

    

 

 

    

 

 

 

Adjusted EBITDA

     60        73        46  
  

 

 

    

 

 

    

 

 

 

Appendix II - Amortization profile as at Q4 2018

 

(In $ million)

   4Q18     1Q19     2Q19     3Q19     4Q19     1Q20  

Amortization of intangible contracts

     (31     (35     (39     (38     (23     —    

Unwinding of basis differences

     (28     (28     (28     (18     (13     (11

Amortization of debt fair value discount

     (12     (12     (12     (12     (12     (12

 

(In $ million)

   2019     2020     2021     2022     Thereafter     Total  

Amortization of intangible contracts

     (135     (1     (1     (1     (23     (161

Unwinding of basis differences

     (87     (38     (1     12       1,282       1,168  

Amortization of debt fair value discount

     (47     (47     (47     (47     (71     (259

 

7


Seadrill Limited

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

for the Three Months Ended December 31, 2018 (Successor), and Three Months Ended December 31, 2017 (Predecessor)

 

     Successor     Predecessor  
(In $ millions)    Three Months Ended
December 31, 2018
    Three Months Ended
December 31, 2017
 

Operating revenues

      

Contract revenues

     252       380  

Reimbursable revenues

     15       11  

Other revenues

     25       40  
  

 

 

   

 

 

 

Total operating revenues

     292       431  
  

 

 

   

 

 

 

Operating expenses

      

Vessel and rig operating expenses

     195       155  

Reimbursable expense

     14       10  

Depreciation

     111       197  

Amortization of intangibles

     31       —    

General and administrative expenses

     31       59  
  

 

 

   

 

 

 

Total operating expenses

     382       421  
  

 

 

   

 

 

 

Other operating items

      

Impairment of long-lived assets

     —         (696

Loss on disposals

     —         (4

Other operating income

     21       9  
  

 

 

   

 

 

 

Total other operating items

     21       (691
  

 

 

   

 

 

 

Operating loss

     (69     (681

Financial items and other expense

      

Interest income

     18       10  

Interest expense

     (130     (20

Loss on impairment of investments

     —         (841

Share in results from associated companies (net of tax)

     (73     22  

Loss on derivative financial instruments

     (34     (2

Foreign exchange loss

     (1     (11

Unrealized loss on marketable securities

     (61     —    

Reorganization items

     (4     (1,107

Other financial items

     —         (2
  

 

 

   

 

 

 

Total financial items and other expense, net

     (285     (1,951
  

 

 

   

 

 

 

Loss before income taxes

     (354     (2,632

Income tax expense

     (6     (57
  

 

 

   

 

 

 

Net loss

     (360     (2,689
  

 

 

   

 

 

 

Net loss attributable to the parent

     (362     (2,666

Net gain attributable to the non-controlling interest

     1       (23

Net gain attributable to the redeemable non-controlling interest

     1       —    

Basic loss per share (US dollar)

     (3.62     (5.29

Diluted loss per share (US dollar)

     (3.62     (5.29

 

F-1


Seadrill Limited

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

for the period from July 2, 2018 through December 31, 2018 (Successor), period from January 1, 2018 through July 1, 2018 (Predecessor) and twelve months ended December 31, 2017 (Predecessor)

 

    Successor     Predecessor     Predecessor  
(In $ millions)   Period from July
2, 2018 through
December 31, 2018
    Period from
January 1, 2018
through July 1, 2018
    Twelve Months Ended
December

31, 2017
 

Operating revenues

       

Contract revenues

    469       619       1,888  

Reimbursable revenues

    26       21       38  

Other revenues

    46       72       162  
 

 

 

   

 

 

   

 

 

 

Total operating revenues

    541       712       2,088  
 

 

 

   

 

 

   

 

 

 

Operating expenses

       

Vessel and rig operating expenses

    357       407       792  

Reimbursable expenses

    24       20       35  

Depreciation

    236       391       798  

Amortization of intangibles

    58       —         —    

General and administrative expenses

    62       100       277  
 

 

 

   

 

 

   

 

 

 

Total operating expenses

    737       918       1,902  
 

 

 

   

 

 

   

 

 

 

Other operating items

       

Impairment of long-lived assets

    —         (414     (696

Loss on disposals

    —         —         (245

Other operating income

    21       7       27  
 

 

 

   

 

 

   

 

 

 

Total other operating items

    21       (407     (914
 

 

 

   

 

 

   

 

 

 

Operating loss

    (175     (613     (728

Financial items and other income and expense

       

Interest income

    40       19       60  

Interest expense

    (261     (38     (285

Loss on impairment of investments

    —         —         (841

Share in results from associated companies (net of tax)

    (90     149       174  

(Loss)/gain on derivative financial instruments

    (31     (4     11  

Gain on debt extinguishment

    —         —         19  

Foreign exchange loss

    (4     —         (65

Unrealized loss on marketable securities

    (64     (3     —    

Reorganization items

    (9     (3,365     (1,337

Other financial items

    (3     —         (44
 

 

 

   

 

 

   

 

 

 

Total financial items and other expense, net

    (422     (3,242     (2,308
 

 

 

   

 

 

   

 

 

 

Loss before income taxes

    (597     (3,855     (3,036

Income tax expense

    (8     (30     (66
 

 

 

   

 

 

   

 

 

 

Net loss

    (605     (3,885     (3,102
 

 

 

   

 

 

   

 

 

 

Net loss attributable to the parent

    (602     (3,881     (2,973

Net loss attributable to the non-controlling interest

    (2     (6     (129

Net (loss)/gain attributable to the redeemable non-controlling interest

    (1     2       —    

Basic loss per share (US dollar)

    (6.02     (7.71     (5.89

Diluted loss per share (US dollar)

    (6.02     (7.71     (5.89

 

F-2


Seadrill Limited

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

for the period from July 2, 2018 through December 31, 2018 (Successor), period from January 1, 2018 through July 1, 2018 (Predecessor) and twelve months ended December 31, 2017 (Predecessor)

 

     Successor     Predecessor     Predecessor  
(In $ millions)    Period from
July 2, 2018
through
December 31, 2018
    Period from
January 1, 2018
through
July 1, 2018
    Twelve months
ended

December 31, 2017
 

Net loss

     (605     (3,885     (3,102

Other comprehensive income/(loss), net of tax:

        

Unrealized gain on marketable securities

     —         —         14  

Change in fair value of debt component of Archer convertible bond

     (3     —         —    

Actuarial gain relating to pension

     1       —         (3

Unrealized gain on interest rate swaps in VIEs and subsidiaries

     —         —         2  

Share of other comprehensive loss from associated companies

     (5     —         (8
  

 

 

   

 

 

   

 

 

 

Other comprehensive income:

     (7     —         5  
  

 

 

   

 

 

   

 

 

 

Total comprehensive loss for the period

     (612     (3,885     (3,097
  

 

 

   

 

 

   

 

 

 

Comprehensive loss attributable to the parent

     (609     (3,881     (2,976

Comprehensive loss attributable to the non-controlling interest

     (2     (6     (121

Comprehensive (loss)/gain attributable to the redeemable non-controlling interest

     (1     2       —    

 

F-3


Seadrill Limited

UNAUDITED CONSOLIDATED BALANCE SHEETS

as at December 31, 2018 and December 31, 2017

 

    Successor     Predecessor  
(In $ millions)   December 31, 2018     December 31, 2017  

ASSETS

     

Current assets

     

Cash and cash equivalents

    1,542       1,255  

Restricted cash

    461       104  

Marketable securities

    57       124  

Accounts receivable, net

    208       295  

Amounts due from related parties - current

    177       217  

Other current assets

    322       257  
 

 

 

   

 

 

 

Total current assets

    2,767       2,252  
 

 

 

   

 

 

 

Non-current assets

     

Investment in associated companies

    800       1,473  

Newbuildings

    —         248  

Drilling units

    6,659       13,216  

Deferred tax assets

    18       10  

Equipment

    29       29  

Amounts due from related parties - non-current

    539       547  

Assets held for sale

    —         126  

Other non-current assets

    36       81  
 

 

 

   

 

 

 

Total non-current assets

    8,081       15,730  
 

 

 

   

 

 

 

Total assets

    10,848       17,982  
 

 

 

   

 

 

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND EQUITY

     

Current liabilities

     

Debt due within one year

    33       509  

Trade accounts payable

    82       72  

Amounts due to related parties - current

    39       10  

Other current liabilities

    310       268  

Total current liabilities

    464       859  
 

 

 

   

 

 

 

Liabilities subject to compromise

    —         9,191  

Non-current liabilities

     

Long-term debt

    6,881       485  

Long-term debt due to related parties

    222       314  

Deferred tax liabilities

    87       107  

Other non-current liabilities

    121       67  
 

 

 

   

 

 

 

Total non-current liabilities

    7,311       973  
 

 

 

   

 

 

 

Redeemable non-controlling interest

    38       —    
 

 

 

   

 

 

 

Equity

     

Common shares of par value US$0.10 per share: 111,000,000 shares authorized and 100,000,000 issued at December 31, 2018 (Common shares of par value US$2.00 per share: 800,000,000 shares authorized 504,518,940 issued at December 31, 2017)

    10       1,008  

Additional paid in capital

    3,491       3,313  

Contributed surplus

    —         1,956  

Accumulated other comprehensive (loss)/income

    (7     58  

Retained (loss)/earnings

    (611     225  
 

 

 

   

 

 

 

Total shareholders’ equity

    2,883       6,560  
 

 

 

   

 

 

 

Non-controlling interest

    152       399  
 

 

 

   

 

 

 

Total equity

    3,035       6,959  
 

 

 

   

 

 

 

Total liabilities, redeemable non-controlling interest and equity

    10,848       17,982  
 

 

 

   

 

 

 

 

F-4


Seadrill Limited

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

for the period from July 2, 2018 through December 31, 2018 (Successor), period from January 1, 2018 through July 1, 2018 (Predecessor) and twelve months ended December 31, 2017 (Predecessor)

 

    Successor     Predecessor     Predecessor  
(In $ millions)   Period from
July 2, 2018
through
December 31, 2018
    Period from
January 1, 2018
through
July 1, 2018
    Twelve months
ended
December 31, 2017
 

Cash Flows from Operating Activities

       

Net loss

    (605     (3,885     (3,102

Adjustments to reconcile net income to net cash provided by operating activities:

       

Depreciation

    236       391       798  

Amortization of deferred loan charges

    —         —         27  

Amortization of favorable and unfavorable contracts

    58       (21     (43

Share of results from associated companies

    89       (149     (174

Share-based compensation expense

    1       3       7  

Loss on disposals

    —         —         245  

Contingent consideration realized

    —         (7     (27

Interest unwind on contingent consideration assets

    (1     —         —    

Unrealized loss/(gain) on derivative financial instruments

    31       4       (76

Loss on impairment of long lived assets

    —         414       696  

Loss on impairment of investments

    —         —         841  

Dividends received from associated companies

    32       17       39  

Deferred tax (benefit)/expense

    (22     —         7  

Unrealized foreign exchange gain on debt

    —         —         59  

Payments for long-term maintenance

    (71     (78     (58

Amortization of discount on debt

    23       —         —    

Newbuilding settlement claim

    —         —         1,064  

Gain on derecognition of investment in associated company

    —         —         (10

Gain on debt extinguishment

    —         —         (19

Loss on unrealized marketable securities

    64       3       —    

Non- cash gain on liabilities subject to compromise

    —         (2,977     210  

Fresh start valuation adjustments

    —         6,142       —    

Other re-organization items

    —         6       —    

Other, net

    (2     (1     (2

Changes in operating assets and liabilities, net of effect of acquisitions and disposals

       

Trade accounts receivable

    64       29       167  

Trade accounts payable

    (31     4       (9

Prepaid expenses/accrued revenue

    12       42       (66

Deferred revenue

    21       (23     (107

Related party receivables

    7       (13     (42

Related party payables

    54       (42     (44

Other assets

    (20     (62     93  

Other liabilities

    34       (10     (75
 

 

 

   

 

 

   

 

 

 

Net cash (used in)/provided by operating activities

    (26     (213     399  
 

 

 

   

 

 

   

 

 

 

 

F-5


Seadrill Limited

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

for the period from July 2, 2018 through December 31, 2018 (Successor), period from January 1, 2018 through July 1, 2018 (Predecessor) and twelve months ended December 31, 2017 (Predecessor)

 

    Successor     Predecessor     Predecessor  
(In $ millions)   Period from
July 2, 2018
through
December 31, 2018
    Period from
January 1, 2018
through
July 1, 2018
    Twelve Months
Ended

December 31, 2017
 

Cash Flows from Investing Activities

       

Additions to newbuildings

    —         (1     (33

Additions to drilling units and equipment

    (27     (48     (59

Proceeds from contingent consideration

    65       48       95  

Settlement of the West Mira

    —         —         170  

Refund of yard installments

    —         —         25  

Sale of rigs and equipment

    —         126       122  

Payments received from loans granted to related parties

    23       24       66  

Buyout of guarantees

    —         —         (28
 

 

 

   

 

 

   

 

 

 

Net cash provided by investing activities

    61       149       358  
 

 

 

   

 

 

   

 

 

 

Cash Flows from Financing Activities

       

Proceeds from debt and revolving lines of credit

    —         875       —    

Repayments of debt

    (83     (153     (754

Mandatory redemption of New Secured Notes

    (121     —         —    

Debt fees paid

    (4     (35     (53

Repayments of debt to related party

    —         —         (39

Contribution from non-controlling interests, net of issuance costs

    —         200       —    
 

 

 

   

 

 

   

 

 

 

Net cash (used in)/provided by financing activities

    (208     887       (846
 

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash

    (1     (5     5  

Net (decrease)/increase in cash and cash equivalents, including restricted cash

    (174     818       (84
 

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, including restricted cash, at beginning of the period

    2,177       1,359       1,443  
 

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, including restricted cash, at the end of period

    2,003       2,177       1,359  
 

 

 

   

 

 

   

 

 

 

 

F-6


Seadrill Limited

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

for the period from July 2, 2018 through December 31, 2018 (Successor), period from January 1, 2018 through July 1, 2018 (Predecessor) and twelve months ended December 31, 2017 (Predecessor)

 

(In $ millions)

   Common
shares
    Additional
paid-in capital
    Contributed
surplus
    Accumulated
other comprehensive loss
    Retained
earnings
    Total equity
before NCI
    NCI     Total
equity
 

Balance at December 31, 2016 (Predecessor)

     1,008       3,306       1,956       53       3,198       9,521       542       10,063  

Share based compensation charge

     —         7       —         —         —         7       —         7  

Other comprehensive income

     —         —         —         5       —         5       —         5  

Dividend to non-controlling interests in VIEs

     —         —         —         —         —         —         (14     (14

Net loss

     —         —         —         —         (2,973     (2,973     (129     (3,102
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at December 31, 2017 (Predecessor)

     1,008       3,313       1,956       58       225       6,560       399       6,959  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adoption of new accounting standards:

                

ASU 2016-01 - Financial Instruments

     —         —         —         (31     31       —         —         —    

ASU 2016-16 - Income Taxes

     —         —         —         —         (59     (59     (25     (84

ASU 2014-09 - Revenue from contracts

     —         —         —         —         7       7       —         7  

Other comprehensive income

     —         —         —         —         —         —         —         —    

Share based compensation charge

     —         9       —         —         —         9       —         9  

Redeemable non-controlling interest

     —         —         —         —         127       127       (150     (23

Reclassification of non-controlling interest

     —         —         —         —         (43     (43     43       —    

Net loss

     —         —         —         —         (3,881     (3,881     (6     (3,887
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at July 1, 2018 (Predecessor)

     1,008       3,322       1,956       27       (3,593     2,720       261       2,981  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cancellation of Predecessor equity

     (1,008     (3,322     (1,956     (27     3,593       (2,720     (107     (2,827
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at July 1, 2018 (Predecessor)

     —         —         —         —         —         —         154       154  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Issuance of Successor common stock

     10       3,491       —         —         —         3,501       —         3,501  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at July 2, 2018 (Successor)

     10       3,491       —         —         —         3,501       154       3,655  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at July 2, 2018 (Successor)

     10       3,491       —         —         —         3,501       154       3,655  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other comprehensive loss

     —         —         —         (7     —         (7     —         (7

Revaluation of the AOD Redeemable NCI

     —         —         —         —         (9     (9     —         (9

Net loss

     —         —         —         —         (602     (602     (2     (604
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as at December 31, 2018 (Successor)

     10       3,491       —         (7     (611     2,883       152       3,035  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

F-7

Seadrill (NYSE:SDRL)
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1 Year : From Oct 2018 to Oct 2019

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Today : Monday 21 October 2019

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