# SEADRILL Ltd (SDRL) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from SEADRILL Ltd's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1737706/000162828025008662/sdrl-20241231.htm
Accession: 0001628280-25-008662
Filing date: 2025-02-27
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/SDRL/
All MD&A years: /company/SDRL/mda/
Next year: /company/SDRL/mda/fy2025/ (FY 2025)

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

In this section, we present management’s discussion and analysis of results of operations and financial condition. It should be read in conjunction with our Consolidated Financial Statements and accompanying notes thereto included in this annual report for the year ended December 31, 2024. You should also carefully read the following sections of this annual report entitled "Forward-Looking Statements," Part I, Item 1, "Business" and Part I, Item 1A, "Risk Factors".

The discussion of our results of operations and liquidity in this section includes comparisons for the years ended December 31, 2024 and December 31, 2023. For a similar discussion, including comparisons for the year ended December 31, 2023, the periods from February 23, 2022 through December 31, 2022 (Successor) and from January 1, 2022 through February 22, 2022 (Predecessor), see Part I, Item 5, "Operating and Financial Review and Prospects” of our annual report on Form 20-F for the year ended December 31, 2023, filed with the SEC on March 27, 2024.

Introduction

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 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 December 31, 2024, we owned a total of 15 drilling units, of which 11 were operating (inclusive of one leased to the Sonadrill joint venture), one 6th generation drillship was undergoing contract preparations for a contract that commenced during February 2025, and three were cold stacked. The 11 operating units include 10 benign floaters (comprising seven 7th generation drillships, two 6th generation drillships and one benign environment semi-submersible) and one harsh environment unit (comprising of one jackup). In addition to our owned assets, as of December 31, 2024, we managed two drilling units owned by Sonangol.

For a detailed description of our business, please read Part I, Item 1, "Business".

Significant Developments

Share Repurchase Program

On June 25, 2024, the Company announced it had completed the additional $250 million of share repurchases initiated in December 2023, having repurchased an aggregate of 5,250,707 common shares, with a weighted average share price of $47.61, amounting to $250 million.

During the second quarter of 2024, as announced on May 16, 2024, the Company's Board of Directors authorized a new $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. Under the Current Repurchase Program, the Company repurchased an aggregate of 6,714,252 Shares, with a weighted average share price of $43.52, amounting to $292 million. As of December 31, 2024, $208 million of the $500 million authorized amount remained available.

Refer to “Liquidity and Capital Resources - 2) Capital allocation framework and share repurchase program” and Note 22 - "Common shares" for additional information about the Company's share repurchases.

Disposal of Jackup Rigs and Equity Interest in Gulfdrill Joint Venture

On May 16, 2024, Seadrill entered into a definitive agreement to sell three jackup rigs, the West Castor, West Telesto, and West Tucana, and its 50% equity interest in the joint venture that operated these rigs offshore Qatar, to Seadrill's joint venture partner, Gulf Drilling International, for cash proceeds of $338 million. The closing of the sale occurred in June 2024, and a gain of $203 million, net of transaction costs, was recognized in the second quarter of 2024 associated with the disposal of these assets.

On November 23, 2024, Seadrill executed a Sale and Purchase Agreement with Petrovietnam Drilling & Well Service Corporation to divest the West Prospero for cash proceeds of $45 million. The closing of the sale occurred in December 2024, and a gain of $31 million, net of transaction costs, was recognized in the fourth quarter of 2024 associated with the disposal of the jackup rig.

OSE Delisting

As contemplated by our proxy statement, dated March 21, 2024, we submitted an application to delist our common shares on the OSE, on April 30, 2024. Oslo Bors approved the Company’s delisting from the OSE, following an affirmative shareholder vote at the Company’s Annual General Meeting in April 2024. The last day of trading our common shares on the OSE was September 9, 2024, with our common shares being delisted from the OSE on September 10, 2024.

Loss of Foreign Private Issuer Status

We determined the Company ceased to qualify as a foreign private issuer effective as of January 1, 2025 and commenced reporting as a domestic issuer under the Exchange Act from that date. As a result, among other consequences, we are no longer permitted to follow certain home country practices in relation to our corporate governance instead of NYSE rules. See Part I, Item 1A, “Risk Factors - Regulatory and Legal Risks - The loss of our status as a “foreign private issuer” could result in additional cost.”

35

Market Overview and Trends

The below table shows the average annual oil price over the period from 2020 to 2024. The Brent oil price on February 20, 2025 was $76.48.

[[GREPCENT_TABLE]]
[["","","2024","","2023","","","2022","","2021","","2020"],["Average Brent oil price ($/bbl)","","80","","","82","","","101","","","71","","","42"]]
[[/GREPCENT_TABLE]]

Source: Bloomberg

In 2020, the oil and gas industry faced significant uncertainty due to a substantial reduction in oil and gas prices caused by the pandemic, despite Brent prices stabilizing in previous years. However, production cuts by OPEC and non-OPEC members, along with effective vaccination campaigns, had positive impacts on the industry, leading to a recovery in oil demand throughout 2021 and 2022.

The price of Brent crude oil averaged $80 per barrel in 2024, down from $82 per barrel in 2023. Global growth in the production of oil and slower demand growth has put downward pressure on prices, while heightened geopolitical risks and voluntary production restrictions among OPEC and non-OPEC members has supported prices.

Overall, in recent years, oil prices have generally remained at levels that are supportive of offshore exploration and development activity, and global rig demand has been steady. This level of demand has been sustained by the combination of growing confidence in commodity prices, heightened focus on energy security, and relative attractiveness of offshore plays with respect to both cost and carbon emissions.

During the first quarter of 2024, Brent oil prices generally rose due to heightened geopolitical risks largely associated with the growing Middle East conflict. Brent crude oil prices were highest in 2024 during April, closing at $91 per barrel. Prices generally declined through the remainder of 2024, with smaller price rallies driven by OPEC and non-OPEC announcements in June and September regarding delayed production increases. Economic weakness and concerns about oil consumption, particularly regarding trends in consumption of diesel and gasoline in China weighed on prices during the second half of 2024.

As a result, uncertainty persists in the market, which is primarily driven by concerns over the global economic conditions. Such concerns have led to continued deferral of offshore capital expenditures and contracting of offshore drilling services, and could have a negative impact on future demand for offshore drilling services, as the industry faces volatility in oil prices and growth trajectory for oil demand. 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.

The below table shows the global number of rigs on contract and marketed utilization for the year ended December 31, 2024, and for each of the four preceding years.

[[GREPCENT_TABLE]]
[["","","","","2024","","2023","","2022","","2021","","2020"],["Contracted rigs"],["Benign environment floater","","","","124","","","119","","","111","","","106","","","107"],["Harsh environment floater","","","","22","","","26","","","26","","","25","","","25"],["Harsh environment jackup","","","","28","","","28","","","31","","","28","","","26"],["Marketed utilization"],["Benign environment floater","","","","84","%","","85","%","","81","%","","80","%","","77","%"],["Harsh environment floater","","","","93","%","","93","%","","82","%","","77","%","","77","%"],["Harsh environment jackup","","","","90","%","","83","%","","92","%","","80","%","","75","%"]]
[[/GREPCENT_TABLE]]

Source: S&P Global.

Global benign-environment floaters

In 2024, marketed utilization declined slightly mainly due to an increase in supply and a larger number of units rolling off contract. As of December 31, 2024, the drillship utilization performed better at around 88 % compared to 78% for semi-submersibles. While the utilization for drillships declined year on year, the benign-environment semi-submersibles utilization saw a slight improvement compared to 2023.

Global harsh environment units

Marketed utilization remained steady year on year in the harsh environment floater segment due to the supply and demand balance. Harsh environment jackup utilization improved at a faster rate through 2024 closing the year at 90%. The decrease in harsh environment floater contracted rigs is mainly attributable to the reduction in supply, as a number of harsh environment units were contracted in the benign environment segment.

36

Changes to our fleet

The below table shows the number of owned drilling units included in our fleet for each of the periods covered by this report.

[[GREPCENT_TABLE]]
[["Drilling units owned","December 31, 2024","","December 31, 2023","","December 31, 2022"],["Benign environment drillships","10","","10","","6"],["Benign environment semi-submersible rigs","2","","2","","2"],["Benign environment jackup rigs","\u2014","","4","","4"],["Harsh environment semi-submersible rig","2","","2","","1"],["Harsh environment jackup rig","1","","1","","1"],["Total drilling units","15","","19","","14"]]
[[/GREPCENT_TABLE]]

The decrease in benign environment jackup rigs during 2024 was due to the disposal of the West Castor, West Tucana, West Telesto and West Prospero. The increase in our owned fleet in 2023 was due to the acquisition of Aquadrill.

The below table shows the number of managed drilling units included in our fleet for each of the periods covered by this report:

[[GREPCENT_TABLE]]
[["Drilling units managed","December 31, 2024","","December 31, 2023","","December 31, 2022"],["Managed rigs"],["Floater","2","","2","","2"],["Jackup rigs","\u2014","","\u2014","","5"],["Total managed rigs","2","","2","","7"]]
[[/GREPCENT_TABLE]]

The decrease in managed jackup rigs during 2023 was due to the termination of the SeaMex MSA on November 17, 2023.

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:

[[GREPCENT_TABLE]]
[["(In $ millions)"],["Contract backlog","","December 31, 2024","","December 31, 2023","","December 31, 2022"],["Drilling contracts","","3,034","","","2,612","","","1,925"],["Other (1)","","146","","","408","","","390"],["Total","","3,180","","","3,020","","","2,315"]]
[[/GREPCENT_TABLE]]

(1) Decrease is primarily due to divestment of three Qatar jackup rigs, partially offset by increased bareboat charter rate on West Gemini.

Our contract backlog includes only firm commitments represented by signed drilling contracts. The full contractual operating dayrate may differ to 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 to the actual dayrate we ultimately receive because of several other factors, including rig downtime or suspension of operations. In certain contracts, the dayrate may be reduced to zero if, for example, repairs extend beyond a stated period.

We estimate the December 31, 2024 contract backlog to be realized over the following periods:

[[GREPCENT_TABLE]]
[["(In $ millions)"],["Contract backlog","","Total","","2025","","2026","","2027","","Thereafter"],["Drilling units","","3,034","","","1,059","","","852","","","737","","","386"],["Other","","146","","","146","","","\u2014","","","\u2014","","","\u2014"],["Total","","3,180","","","1,205","","","852","","","737","","","386"]]
[[/GREPCENT_TABLE]]

The actual amounts 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, survey, upgrade and regulatory projects, unplanned downtime and other factors that result in lower applicable dayrates 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.

37

RESULTS OF OPERATIONS

The tables included below set out financial information for the years ended December 31, 2024 and December 31, 2023 (Successor).

[[GREPCENT_TABLE]]
[["(In $ millions, except percentages)","Year ended December 31, 2024","","Year ended December 31, 2023","","Change","","Change %"],["Operating revenues","1,385","","","1,502","","","(117)","","","(8)","%"],["Operating expenses","(1,223)","","","(1,187)","","","(36)","","","3","%"],["Other operating items","250","","","14","","","236","","","1686","%"],["Operating profit","412","","","329","","","83","","","25","%"],["Interest expense","(61)","","","(59)","","","(2)","","","3","%"],["Other financial and non-operating items","(18)","","","47","","","(65)","","","(138)","%"],["Profit before income taxes","333","","","317","","","16","","","5","%"],["Income tax benefit/(expense)","113","","","(17)","","","130","","","(765)","%"],["Net income","446","","","300","","","146","","","49","%"]]
[[/GREPCENT_TABLE]]

1) Operating revenues

Operating revenues consist of contract revenues, reimbursable revenues, management contract revenues, leasing revenues and other revenues.

[[GREPCENT_TABLE]]
[["(In $ millions, except percentages)","Year ended December 31, 2024","","Year ended December 31, 2023","","Change","","Change %"],["Contract revenues (a)","1,009","","","1,154","","","(145)","","","(13)","%"],["Reimbursable revenues (b)","70","","","58","","","12","","","21","%"],["Management contract revenues (c)","247","","","245","","","2","","","1","%"],["Leasing revenues (d)","54","","","33","","","21","","","64","%"],["Other revenues (e)","5","","","12","","","(7)","","","(58)","%"],["Operating revenues","1,385","","","1,502","","","(117)","","","(8)","%"]]
[[/GREPCENT_TABLE]]

a) Contract revenues

Contract revenues represent the revenues we earn from contracting drilling units to customers, primarily on a dayrate basis, and are primarily 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.

i.Average number of rigs on contract

We calculate the average number of rigs on contract by dividing the aggregate days our rigs were on contract during the reporting period by the number of days in that reporting period.

The average number of rigs on contract decreased from 11 in the year ended December 31, 2023 to 9 in the year ended December 31, 2024, resulting in a $170 million decrease in contract revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023. The decrease is primarily related to the West Auriga and West Polaris operating for fewer days during the year ended December 31, 2024, as the rigs underwent preparation work for contracts with Petrobras in Brazil, with the West Auriga commencing work in late December 2024, and the West Polaris commencing work in the first quarter of 2025. In addition, the Sevan Louisiana was not operating during the first quarter of 2024 due to its special periodic survey, and the West Phoenix was cold stacked in the fourth quarter of 2024. Therefore, each had fewer days on contract during the year ended December 31, 2024 compared to the year ended December 31, 2023.

These decreases were partially offset by the West Capella and West Vela operating for more days during the year ended December 31, 2024, compared to the year ended December 31, 2023, as the rigs were acquired in April 2023 as a part of the Aquadrill acquisition.

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 for the year ended December 31, 2024 was $296 thousand compared to $284 thousand for the year ended December 31, 2023, resulting in a $22 million increase in contract revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023. Improvements during the year ended December 31, 2024 included higher dayrates for the West Neptune, the West Capella operating at higher dayrates in Indonesia and South Korea, along with a lower contractual rate for the T-15, which was disposed of in July 2023. These improvements were partially offset by the Sevan Louisiana operating at a below average dayrate for a well intervention contract during the year ended December 31, 2024, and the West Auriga earning an above average contractual rate for more days during the year ended December 31, 2023, which ended February 2024.

38

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 a contractual operating rate, such as planned downtime for maintenance. In such situations, economic utilization reduces below 100%.

Economic utilization increased to 95% for the year ended December 31, 2024, compared to 93% for the year ended December 31, 2023, resulting in a $24 million increase in contract revenues in the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to planned downtime and operational events related to blowout preventer reliability and weather-related impacts on certain rigs within the fleet in 2023.

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 drilling revenue as services are rendered over the initial term of the related drilling contract.

Amortization of deferred mobilization revenues decreased by $19 million during the year ended December 31, 2024, compared to the year ended December 31, 2023. This was primarily related to the West Capella, West Polaris and West Phoenix, as their respective contracts ended in 2024.

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 year ended December 31, 2024, reimbursable revenues primarily related to rigs managed for the Sonadrill joint venture for long term maintenance projects on the Libongos and Quenguela, and for the year ended December 31, 2023, reimbursable revenues related to services provided across various customers.

The increase for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to additional reimbursable services provided to the Libongos and Quenguela for long-term maintenance.

Please refer to Note 1 - "General information" for reclassifications of reimbursable revenues and reimbursable expenses related to our joint ventures, including $26 million of management contract revenues and management contract expenses for the year ended December 31, 2023, reclassified to reimbursable revenues and reimbursable expenses, respectively.

c) Management contract revenues

Management contract revenues include revenues related to contracts where we provide management, operational and technical support services and comprise revenue from our joint venture, Sonadrill, relating to the Libongos, Quenguela and the West Gemini.

Management contract revenues for the year ended December 31, 2024 were relatively consistent with the year ended December 31, 2023. An increase in management fees on the three Sonadrill rigs during the year ended December 31, 2024 of $16 million, was offset by a $14 million decrease in management services provided to SeaMex during the year ended December 31, 2023, which ended in November 2023.

Refer to Note 24 - "Related party transactions" for further details on these related parties.

d) Leasing revenues

Leasing revenues relate to the charter of the West Castor, West Telesto and West Tucana to Gulfdrill prior to disposal in June 2024, and West Gemini to Sonadrill.

The increase to leasing revenues of $21 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, is primarily due to an amended bareboat charter rate for West Gemini, retroactively effective from January 1, 2024, as well as a higher bareboat charter rate for the West Castor, which was effective in September 2023, partially offset by a decrease of leasing revenues attributable to the Gulfdrill rigs, disposed in June 2024.

Refer to Note 24 - "Related party transactions" for further details and to Note 1 - "General information" for reclassifications of leasing revenues, including $33 million of other revenues for the year ended December 31, 2023, reclassified to leasing revenues.

2) Operating expenses

Total operating expenses include vessel and rig operating expenses, depreciation of drilling units and equipment, amortization of intangibles, reimbursable expenses, management contract expenses, selling, general and administrative expenses and merger and integration related expenses.

39

[[GREPCENT_TABLE]]
[["(In $ millions, except percentages)","Year ended December 31, 2024","","Year ended December 31, 2023","","Change","","Change %"],["Vessel and rig operating expenses (i)","(681)","","","(705)","","","24","","","(3)","%"],["Reimbursable expenses","(68)","","","(55)","","","(13)","","","24","%"],["Depreciation and amortization (ii)","(168)","","","(155)","","","(13)","","","8","%"],["Management contract expenses (iii)","(175)","","","(174)","","","(1)","","","1","%"],["Merger and integration related expenses","(24)","","","(24)","","","\u2014","","","\u2014","%"],["Selling, general and administrative expenses (iv)","(107)","","","(74)","","","(33)","","","45","%"],["Operating expenses","(1,223)","","","(1,187)","","","(36)","","","3","%"]]
[[/GREPCENT_TABLE]]

i.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 and onshore support 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.

The average number of rigs on contract decreased for the year ended December 31, 2024 compared to the year ended December 31, 2023, driven primarily by the West Auriga and West Polaris undergoing preparations for contracts with Petrobras in Brazil during the year ended December 31, 2024, with certain operating expenses being capitalized. In addition, there has also been a decrease in costs associated with MSA (as defined below) fees, as the majority of rigs acquired through the Aquadrill transaction are now managed by Seadrill, rather than by third parties. As a result, our vessel and rig operating expenses was $57 million lower for the year ended December 31, 2024 compared to the year ended December 31, 2023. This was partially offset by a $36 million increase in vessel and rig operating expenses attributable to the West Vela and West Capella operating for more days during the year ended December 31, 2024, compared to the year ended December 31, 2023, as the rigs were acquired in April 2023 as a part of the Aquadrill acquisition.

ii.Depreciation and amortization

The $13 million increase in depreciation and amortization for the year ended December 31, 2024 compared to the year ended December 31, 2023, was primarily due to a $10 million increase in the depreciation of drilling units and equipment as a result of the additional rigs from the Aquadrill acquisition completed in April 2023, partially offset by the disposal of the Gulfdrill rigs in June 2024.

Depreciation of drilling units and equipment

We record depreciation expense to reduce the carrying value of drilling unit and equipment balances to their residual value over their expected remaining useful economic lives.

Depreciation increased by $10 million in the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the additional rigs from the Aquadrill acquisition completed in April 2023, partially offset by the disposal of the Gulfdrill rigs in June 2024.

Amortization of intangibles

Amortization increased by $3 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to unfavorable contracts being fully amortized related to the West Polaris, which was fully amortized in 2023, and the West Auriga and West Vela, which were fully amortized in February 2024. These were partially offset by lower amortization related to favorable contracts for the West Phoenix, Quenguela, West Capella and SeaMex, which were fully amortized during 2023.

iii. Management contract expenses

Management contract expenses include costs related to Sonadrill's rigs, Quenguela and Libongos, and the Seadrill rig novated to Sonadrill, the West Gemini. For the year ended December 31, 2023, management contract expenses also included SeaMex's five jackup units.

Management contract expenses remained consistent during the year ended December 31, 2024, compared to the year ended December 31, 2023. During the year ended December 31, 2024, there was an increase of $11 million in the managed contract expenses, primarily related to higher repair and maintenance costs pertaining to the Sonadrill managed rigs. This was offset by a decrease of $10 million in the managed contract expenses related to managing the SeaMex jackup units in the first quarter of 2023, and therefore, no longer managed by Seadrill during the year ended December 31, 2024.

iv. Selling, general and administrative expenses

Selling, general and administrative expenses include the cost of our corporate and regional offices, certain legal and professional fees as well as the remuneration and other compensation of our officers, directors and employees engaged in central management and administration activities. Selling, general and administrative expense increased by $33 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, due to increased onshore employee costs, additional costs attributable to the closure of our London office and increased professional service fees.

40

3) Other operating items

Other operating items include gains on the sale of assets and other operating income.

[[GREPCENT_TABLE]]
[["(In $ millions, except percentages)","Year ended December 31, 2024","","Year ended December 31, 2023","","Change","","Change %"],["Gain on disposals (i)","234","","","14","","","220","","","1571","%"],["Other operating income (ii)","16","","","\u2014","","","16","","","100","%"],["Other operating items","250","","","14","","","236","","","1686","%"]]
[[/GREPCENT_TABLE]]

i.Gain on disposals

Gain on disposals of $234 million for the year ended December 31, 2024 relates to the disposal of the West Castor, West Telesto and West Tucana jackup rigs, along with our 50% equity interest in the Gulfdrill joint venture during the second quarter of 2024, and the disposal of the West Prospero during the fourth quarter of 2024, compared to the gain on disposal of $14 million during the year ended December 31, 2023 of capital spares relating to jackup rigs and to the West Hercules, and spare parts on previously recycled rigs.

ii. Other operating income

Other operating income for the year ended December 31, 2024 relates to the recovery of historical import duties in the form of tax credits following the approval by the applicable tax authorities.

4) Interest expense

[[GREPCENT_TABLE]]
[["(In $ millions, except percentages)","Year ended December 31, 2024","","Year ended December 31, 2023","","Change","","Change %"],["Interest on debt facilities (i)","(54)","","","(54)","","","\u2014","","","\u2014","%"],["Other","(7)","","","(5)","","","(2)","","","40","%"],["Interest expense","(61)","","","(59)","","","(2)","","","3","%"]]
[[/GREPCENT_TABLE]]

i.Interest on debt facilities

We incur interest on our debt facilities as summarized below.

[[GREPCENT_TABLE]]
[["(In $ millions, except percentages)","Year ended December 31, 2024","","Year ended December 31, 2023","","Change","","Change %"],["$575 million secured bond in issue","(48)","","","(21)","","","(27)","","","129","%"],["Post-emergence first lien senior secured","\u2014","","","(12)","","","12","","","(100)","%"],["Post-emergence second lien senior secured","\u2014","","","(16)","","","16","","","(100)","%"],["Post-emergence unsecured senior convertible bond","(6)","","","(5)","","","(1)","","","20","%"],["Interest on debt facilities","(54)","","","(54)","","","\u2014","","","\u2014","%"]]
[[/GREPCENT_TABLE]]

5) Other financial and non-operating items

[[GREPCENT_TABLE]]
[["(In $ millions, except percentages)","Year ended December 31, 2024","","Year ended December 31, 2023","","Change","","Change %"],["Interest income (i)","25","","","35","","","(10)","","","(29)","%"],["Share in results from associated companies (net of tax) (ii)","(9)","","","37","","","(46)","","","(124)","%"],["Other financial items (iii)","(34)","","","(25)","","","(9)","","","36","%"],["Other financial and non-operating items","(18)","","","47","","","(65)","","","(138)","%"]]
[[/GREPCENT_TABLE]]

i.Interest income

Interest income relates to interest earned on bank deposits. The decrease in interest income for the year ended December 31, 2024 compared to the year ended December 31, 2023, is primarily attributable to the decrease in cash and cash equivalents.

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ii.Share in results in associated companies (net of tax)

Share in results in associated companies represents our share of profits or losses in our Sonadrill and Gulfdrill investments accounted under the equity method.

The decrease of $46 million in the share in results from associated companies for the year ended December 31, 2024, compared to the year ended December 31, 2023 is due to a loss from Sonadrill, which primarily resulted from the amended bareboat charter rates and increased management fees for the Libongos, Quenguela and West Gemini, effective from January 1, 2024.

iii.Other financial items

Other financial items remained relatively consistent for the year ended December 31, 2024 compared to the year ended December 31, 2023. Movements to other financial items included increased foreign exchange losses of $19 million during the year ended December 31, 2024, primarily related to the strengthening of the U.S. Dollar against Brazilian Real, Indonesian Rupiah, Norwegian Krone and Angolan Kwanza denominated cash, accounts receivable and prefunding balances. This was partially offset by other financial items during the year ended December 31, 2023, including a make-whole fee of $10 million related to the prepayment of the first lien debt.

6) Income tax benefit/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 change from an income tax expense of $17 million for the year December 31, 2023, compared to an income tax benefit of $113 million for the year ended December 31, 2024, is primarily related settlements reached with tax authorities, along with the recognition of deferred tax benefits related to the partial release of the valuation allowance in Switzerland and Brazil during the year ended December 31, 2024.

Refer to Note 11 –" Taxation" to the Consolidated Financial Statements included herein for further details.

LIQUIDITY AND CAPITAL RESOURCES

1) Emergence from Chapter 11 Proceedings

Seadrill successfully completed its comprehensive restructuring and emerged from Chapter 11 proceedings on February 22, 2022 (refer to Note 4 – "Chapter 11" of the accompanying financial statements). Since our emergence from Chapter 11, we successfully refinanced the First Lien Facility (as defined below) and the secured second lien debt facility ("Second Lien Facility") in July 2023 (refer to Note 19 – "Debt" of the accompanying financial statements). 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 twelve months.

Financial information in this report has been prepared on a going concern basis of accounting, which presumes we will be able to realize our assets and discharge our liabilities in the normal course of business as they come due. Financial information in this report does not reflect the adjustments to the carrying values of assets, liabilities and the reported expenses and balance sheet classifications that would be necessary if we were unable to realize our assets and settle our liabilities as a going concern in the normal course of operations. Such adjustments could be material.

2) Capital allocation framework and share repurchase program

In July 2023, in connection with the issuance of the Notes (as defined herein), 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 capital expenditures) 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 Part I, 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".

On August 14, 2023, the Board of Directors authorized a share repurchase program, which was announced on August 15, 2023, under which the Company completed its repurchase of $250 million of its outstanding common shares on December 5, 2023. On November 27, 2023, the Board of Directors authorized, and the Company announced, an increase in the Company’s aggregate share repurchase authorization, allowing the Company to repurchase an additional $250 million of its outstanding common shares, taking the aggregate authorization to $500 million. On June 25, 2024, the Company announced it had completed the additional $250 million of repurchases, with the cancellation of 5,250,707 treasury shares acquired under the program on June 28, 2024.

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During the second quarter of 2024, the Company's Board of Directors authorized a new $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. In furtherance of the Current Repurchase Program, the Board authorized the Company to purchase up to $200 million of the Company's common shares (the "First Tranche") by September 30, 2024. The Company repurchased an aggregate of 4,213,349 common shares, with a weighted average share price of $46.77, amounting to $192 million of the First Tranche. On September 30, 2024, the Company cancelled the 4,213,349 treasury shares repurchased under the First Tranche.

During the fourth quarter of 2024, in furtherance of the Current Repurchase Program, the Board authorized the Company to purchase up to $100 million of the Company’s common shares (the "Second Tranche") by December 31, 2024. The Company repurchased an aggregate of 2,500,903 common shares, with a weighted average share price of $39.99, amounting to $100 million. On December 16, 2024, the Company cancelled 2,500,903 treasury shares acquired under the Second Tranche.

In aggregate, during the year ended December 31, 2024, the Company repurchased approximately 11.6 million common shares amounting to $527 million with a weighted average share price of $45.31, compared to 6.2 million common shares amounting to $266 million, with a weighted average share price of $43.12, during the year ended December 31, 2023. As of December 31, 2024, $208 million of the $500 million authorized amount remained available under the Current Repurchase Program.

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.

3) 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 December 31, 2024, Seadrill had available liquidity of $703 million, which consisted of unrestricted cash of $478 million, and available borrowings under our Revolving Credit Facility of $225 million. The below table shows unrestricted cash balances, and total available liquidity, as of each date presented.

[[GREPCENT_TABLE]]
[["(In $ millions)","","December 31, 2024","","December 31, 2023"],["Unrestricted cash","","478","","","697"],["Undrawn revolving credit facility","","225","","","225"],["Total available liquidity","","703","","","922"]]
[[/GREPCENT_TABLE]]

We have shown our sources and uses of cash by category of cash flows in the table below:

[[GREPCENT_TABLE]]
[["(In $ millions, except percentages)","Year ended December 31, 2024","","Year ended December 31, 2023","","Change","","Change %"],["Net cash provided by operating activities (a)","88","","","287","","","(199)","","","(69)","%"],["Net cash provided by investing activities (b)","226","","","42","","","184","","","438","%"],["Net cash used in financing activities (c)","(532)","","","(200)","","","(332)","","","166","%"],["Effect of exchange rate changes in cash and cash equivalents","(5)","","","1","","","(6)","","","(600)","%"],["Change in period","(223)","","","130","","","(353)","","","(272)","%"]]
[[/GREPCENT_TABLE]]

a) Net cash provided by operating activities

Cash flows from operating activities include 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.

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Cash flows provided by operating activities during the year ended December 31, 2024 were $88 million compared to $287 million for the year ended December 31, 2023. The decrease is primarily related to outflows for long-term maintenance projects and contract preparation costs incurred related to the West Auriga and West Polaris, along with long-term maintenance related to West Neptune and long-lead items related to SPS activities across the fleet. These were partially offset by increased receipts from customers and decreased disbursements to other suppliers.

b) Net cash provided by investing activities

The $226 million cash provided by investing activities during the year ended December 31, 2024 is primarily related to the proceeds received on disposal of our three jackup rigs, West Castor, West Telesto and West Tucana, together with our 50% equity interest in the Gulfdrill joint venture of $338 million during the second quarter, and the proceeds related to the disposal of the West Prospero jackup rig of $45 million during the fourth quarter. This was partially offset by capital expenditures of $157 million primarily related to capital upgrades on the West Auriga and West Polaris during their preparations for Petrobras contracts, with the West Auriga having started in December 2024 and West Polaris starting during the first quarter of 2025.

The $42 million cash provided by investing activities during the year ended December 31, 2023 was due to net proceeds of $43 million received on disposal of PES in February 2023, $24 million net cash received as a result of the Aquadrill acquisition, $84 million cash received on disposal of the tender-assist units, and $14 million from the disposal of equipment. This was offset by $101 million of capital expenditures across the fleet and $22 million paid out to settle indemnity costs associated with the disposal of the entities that own and operate seven jackup units in the Kingdom of Saudi Arabia.

c) Net cash used in financing activities

The $532 million cash used in financing activities during the year ended December 31, 2024 is related to share repurchases.

The $200 million cash used in financing activities during the year ended December 31, 2023 related to prepayments of debt principal of $446 million and exit fees of $22 million, a make-whole fee of $10 million on the repayment of the First Lien Facility, Revolving Credit Facility costs of $13 million, $263 million of share repurchases, and share issuance costs of $4 million. These were partially offset by proceeds of $576 million from the issuance of the Notes, excluding issuance costs of $18 million.

4) Borrowing Activities

An overview of our debt as of December 31, 2024, divided into (i) secured debt and (ii) unsecured senior convertible notes, is presented in the table below:

[[GREPCENT_TABLE]]
[["(In $ millions)","Principal value as of December 31, 2024","Debt Premium","Debt Issuance Costs","Carrying value as of December 31, 2024","","Maturity date"],["Bonds"],["$575 million secured bond","575","1","(16)","","560","","August 2030"],["Unsecured"],["Senior convertible bond","50","\u2014","","\u2014","","50","","August 2028"],["Total debt","625","1","(16)","","610"]]
[[/GREPCENT_TABLE]]

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 (as defined herein) is the borrower under the Credit Agreement, and the facility is secured by first priority liens on substantially all of the Company’s drilling units 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 was 2.75% per annum as of December 31, 2024, 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.

$575 million Notes Offerings

Also 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.

Refer to Note 19 – Debt for further details of these facilities.

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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 December 31, 2024, Seadrill was in compliance with these financial covenants.

5) Contractual Obligations

The following table summarizes our significant contractual obligations as of December 31, 2024 and the periods in which such obligations are due:

[[GREPCENT_TABLE]]
[["","Payments due by period"],["(In $ millions)","2025","","2026 and 2027","","2028 and 2029","","Thereafter","","Total"],["Principal payments on long-term debt","\u2014","","","\u2014","","","50","","575","","625"],["Interest payments on long-term debt","54","","108","","100","","28","","290"],["Operating leases","4","","5","","3","","\u2014","","","12"],["Total (1)","58","","113","","153","","603","","927"]]
[[/GREPCENT_TABLE]]

(1) Contractual obligations exclude $55 million of uncertain tax position, inclusive of interest and penalties, included on our Consolidated Balance Sheet as of December 31, 2024. We are unable to specify with certainty whether we would be required to and in which periods we may be obligated to settle such amounts.

Additional information regarding legal proceedings is presented in “Note 27 — Commitments and Contingencies” to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this annual report.

CRITICAL ACCOUNTING ESTIMATES

The preparation of the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States ("US 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.

Critical accounting estimates that are significant for the year ended December 31, 2024 are as follows:

Impairment considerations (drilling units)

The carrying values of our long-lived assets are reviewed for impairment when certain triggering events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. Asset impairment evaluations are, by nature, highly subjective. They involve expectations about future cash flows generated by our assets and reflect management’s assumptions and judgments regarding future industry conditions and their effect on future utilization levels, dayrates and costs. The use of different estimates and assumptions could result in significantly different carrying values of our assets and could materially affect our results of operations. An impairment loss is recorded in the period in which it is determined that the aggregate carrying amount is not recoverable.

Income taxes

Seadrill is a Bermuda company that has subsidiaries and affiliates in various jurisdictions. As of December 31, 2024, Seadrill and our Bermudan subsidiaries and affiliates were not required to pay taxes in Bermuda on ordinary income or capital gains as they qualify as exempted companies. Certain subsidiaries operate in other jurisdictions where taxes are imposed. Consequently, income taxes have been recorded in these jurisdictions when applicable. Our income tax expense is based on our income and statutory tax rates in the jurisdictions we operate. Refer to "Note 11 – "Taxation".

Our income tax expense is based on our interpretation of tax laws in various jurisdictions in which we operate and requires significant judgment and use of estimates and assumptions regarding significant future events, such as amounts, timing and character of income, deductions and tax credits. There are certain transactions for which the ultimate tax determination is unclear due to uncertainty in relation to the interpretation of tax law that arises in the ordinary course of business.

We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit by relevant tax authorities, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more likely than not of being realized upon settlement. While we believe we have appropriate support for the positions

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taken on our tax returns, we regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes.

Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities calculated according to local tax rules. We recognize the income tax effects of intercompany sales or transfers of assets, other than inventory, in the Consolidated Statement of Operations as income tax expense (or benefit) in the period of sale or transfer occurs.

Current income tax expense reflects an estimate of our income tax liability for the current year, withholding taxes, changes in prior year tax estimates as tax returns are filed, or from tax audit adjustments.

Deferred tax assets and liabilities are based on temporary differences that arise between carrying values used for financial reporting purposes and amounts used for taxation purposes of assets and liabilities and the future tax benefits of tax benefits of tax attributes.

Our deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities as reflected on the balance sheet. Valuation allowances are determined to reduce deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. To determine the amount of deferred tax assets and liabilities, as well as the valuation allowances, we must make estimates and certain assumptions regarding future taxable income, including where our drilling units are expected to be deployed, as well as other assumptions related to our future tax position. A change in such estimates and assumptions, along with any changes in tax laws, could require us to adjust the deferred tax assets, liabilities, or valuation allowances. The amount of deferred tax provided is based upon the expected manner of settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet date. The impact of tax law changes is recognized in periods when the change is enacted.

Business combinations

We apply the acquisition method of accounting for business combinations. Assets acquired and liabilities assumed are recorded at their estimated acquisition date fair value. The acquisition method of accounting requires us to make significant estimates and assumptions regarding the fair values of the elements of a business combination as of the date of acquisition, including the fair values of drilling units, identifiable intangible assets and liabilities, deferred tax asset valuation allowances, and liabilities related to uncertain tax positions, among others. Significant estimates and assumptions in determining the fair value of drilling units and intangible assets and liabilities include off-contract revenue estimates, off-contract operating expense assumptions, contract probabilities, the weighted average cost of capital ("WACC") rate used to discount free cash flow projections and drilling unit market valuations. This method also requires us to refine these estimates over a measurement period not to exceed one year to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. If we are required to retroactively adjust provisional amounts that we have recorded for the fair values of assets and liabilities in connection with acquisitions, these adjustments could have a material impact on our financial condition and results of operations.

In addition, we have estimated the economic lives of certain acquired assets and assumed liabilities and these lives are used to calculate depreciation and amortization expense. If our estimates of the economic lives change, depreciation or amortization expenses could increase or decrease. Furthermore, if the subsequent actual results and updated projections of the underlying business activity change compared with the assumptions and projections used to develop these values, we could record impairment charges.

Fresh start accounting

As set forth in the Disclosure Statement approved by the Bankruptcy Court, the Company was approved to have an enterprise valuation of between $1,795 million and $2,396 million. Using valuation models, we valued the Successor’s enterprise value to be $2.1 billion as of the Effective Date, which is equal to the mid-point of the court approved valuation range. Enterprise value represents the estimated fair value of an entity’s shareholders’ equity plus long-term debt and other interest-bearing liabilities less unrestricted cash and cash equivalents.

The enterprise value and corresponding equity value are dependent upon achieving future financial results set forth in our valuations, as well as the realization of certain other assumptions. All estimates, assumptions, valuations and financial projections, including the fair value adjustments, the enterprise value and equity value projections, are inherently subject to significant uncertainties and the resolution of contingencies beyond our control. Accordingly, the estimates, assumptions, valuations or financial projections may not be realized and actual results could vary materially.

Critical accounting estimates in relation to fresh-start valuation of our drilling units and investments included: Off-contract revenue estimates, off-contract operating expense assumptions, contract probabilities, the WACC rate used to discount free cash flow projections and drilling unit market valuations.

Sale of subsidiaries or groups of assets

We account for the sale of a subsidiary or group of assets in accordance with ASC 810 - Consolidations. When we sell a subsidiary or group of assets, we recognize a gain or loss measured as the difference between 1) the aggregate of (i) the fair value of any consideration received, (ii) the fair value of any retained noncontrolling investment in the former subsidiary or group of assets & (iii) the carrying amount of any noncontrolling interest in the former subsidiary; and 2) the carrying amount of the former subsidiary’s assets and liabilities or the carrying amount of the group of assets. Consideration transferred is the sum of the acquisition-date fair values of the assets transferred, the liabilities incurred by the acquirer to Seadrill, and the equity interests issued by the acquirer to Seadrill, but is net of any liabilities incurred by Seadrill, including warranties or indemnities made as part of the sale. The gain or loss on sale is net of any costs to sell the subsidiary or group of assets. Refer to Note 28 – "Discontinued Operations" for details of disposals during the comparative periods presented.

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