Seadrill Limited (SDRL): A Bull Case Theory 

We came across a bullish thesis on Seadrill Limited on Undervalued and undercovered’s Substack by Hugo Navarro and Mihail Stoyanov. In this article, we will summarize the bulls’ thesis on SDRL. Seadrill Limited’s share was trading at $38.67 as of January 29th. SDRL’s trailing and forward P/E were 79.28 and 27.32 respectively according to Yahoo Finance.

Seadrill Limited provides offshore drilling services to the oil and gas industry worldwide. SDRL stands out as a smaller but strategically important player in the offshore drillship market, and investor interest has surged because management has repeatedly indicated a willingness to sell the company at a premium. This creates an exciting potential IRR opportunity in a tightening offshore cycle.

The backbone of Seadrill’s portfolio is its modern fleet of eight owned ultra-deepwater drillships, most built within the last fifteen years and competitive with seventh-generation units, though not top-spec. These rigs operate mainly in Brazil and the U.S. Gulf, with several still tied to legacy sub-market Petrobras contracts, while others such as West Jupiter and West Tellus have already been repriced into multi-year contracts in the mid-$400,000/day range.

Additional upside comes from one managed drillship in Angola through Sonadrill and one cold-stacked unit that could be reactivated if day rates tighten further. Complementing the drillships is a smaller semisubmersible fleet spanning working and stacked benign- and harsh-environment units, though contract visibility remains mixed and many rigs still need firm employment. Low-rate legacy Petrobras contracts keep average day rates in the mid-300Ks, but steady repricing offers strong EBITDA leverage as rates rise.

What truly elevates the story is the M&A optionality: at a roughly $2.1 billion EV, Seadrill’s implied per-rig valuation is extremely low, making it an attractive acquisition target as industry consolidation accelerates. Potential bidders like Transocean or Valaris could gain scale and synergies, though deal probability remains uncertain.

Even without a sale, Seadrill’s asset value is compelling—replacement cost analysis suggests roughly $10.85 billion of fleet value, implying nearly 4x upside in a bullish scenario. Despite litigation risks, regulatory complexities, and muted near-term cash conversion, Seadrill trades at just ~6x EV/EBITDA and offers one of the most asymmetrical risk-reward profiles in offshore drilling.

Previously we covered a bullish thesis on Precision Drilling Corporation by Nugget Capital Partners in April 2025, which highlighted the company’s dominant position in key Canadian basins, strong rig utilization, and resilient earnings base. The company’s stock price has appreciated approximately by 93.63% since our coverage. This is because the thesis played out. The thesis still stands as Canadian momentum remains strong. Hugo Navarro and Mihail Stoyanov share a similar view but emphasize offshore upside through Seadrill’s M&A optionality.

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Disclosure: None.