Seadrill Limited (NYSE:SDRL) Q4 2022 Earnings Call Transcript

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Matt Polyak: Hey, good afternoon, guys. Thanks so much for taking the time. Just wanted to kind of go down the linear logic path here. If you wouldn’t mind, obviously, some of your peers have come to the debt market and seems like there’s a window open here. Could you just talk about the puts and takes of shareholder returns versus allocating capital to potentially stranded assets and weigh that against sort of the perceived secondary risk that there is post deal close here?

Simon Johnson: Yes. Okay. I can start off, Matt, and then maybe Grant let some color. Look, I think the key thing to understand is that we’re fully contracted at present, and we don’t have a lot of on the sidelines that is going to massively distract us from delivering operating days. So really what we’re trying to do is, if you take the view as we do that there’s not going to be any new building in the sector for the foreseeable future, at some point it makes sense to — if you can obtain access to them or on some kind of optional or committed or stage basis, at some stage, it makes sense to look at those new assets. And I think the way that the market has developed in the last 12 months, looking forward the next 12 months, I think that there’s a case to say that there’s no room for a little bit more aggressive behavior if you’re at the fully contracted end of the spectrum, which we clearly are in terms of not having too much residual stack capacity waiting to come back to work.

So that’s how we kind of think about it is on what might look a little bit sporty today, in the very near future looking backwards might look like it was a much more interesting approach. Does that answer your question, Matt?

Matt Polyak: I guess I was really kind of asking about the puts and takes of utilizing capital to spend on stranded assets versus shareholder returns and thoughts around buybacks or dividends and whether or not there’s room for both because you guys obviously alluded to shareholder returns as well pretty heavily.

Simon Johnson: Yes. Well, look, we think there’s room for both. I think the casing understands we’re not going to grow capital around on a wholesale basis, we’re going to be looking on a selective opportunistic basis where we think there’s good value. In so far as it relates to capital return, I think we’ve communicated pretty loudly that that is going to be an essential part of our proposition to the market, but we really need to get this Aquadrill integration out of the way first. And you’ll see us promulgating some firm positions on what we might do there in conjunction with the Board as we get towards the end of this year. We’re not able to do that just now.

Matt Polyak : Got it. Thank you.

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