Shelf Drilling, Ltd.

Reported Q1 2025 revenue was $246 million, including $3 million of amortization of an intangible liability; adjusted revenue was $243 million. Adjusted revenue rose $17 million, or 8%, sequentially, while adjusted EBITDA increased to $96 million from $85 million in Q4 and margin improved to 40% from 38%. Net income was $14 million; effective utilization was 79% versus 80% in Q4, and average day rate rose to $94,000 per day from $88,000. Quarter-end cash was $207 million, up from $152 million at year-end 2024, and total liquidity was $332 million. Full-year 2025 guidance was reduced: consolidated adjusted EBITDA is now $310 million-$360 million versus $330 million-$380 million previously; Shelf Drilling North Sea EBITDA is now $65 million-$80 million; total CapEx and deferred costs are now $85 million-$115 million versus $110 million-$140 million previously.

Greg O'Brien emphasized operational execution, safety, and fleet flexibility. He said the company posted fleet-wide uptime of 99.4% and that the HSE turnaround plan was taking hold after three recordable incidents in Q1, with no recordables in March or April. Strategically, he highlighted redeployments to West Africa, contract extensions and tenders across multiple regions, and the ongoing plan to divest one to three additional non-drilling units to generate cash and support market balance.

Douglas Stewart focused on the quarter’s financial bridge and the updated outlook. He broke down adjusted revenue of $243 million into $221 million of day rate revenue, $12 million of mobilization and bonus revenue, and $10 million of recharges and other revenue, and said adjusted EBITDA was $96 million with $129 million of O&M and $17 million of G&A. He also noted CapEx and deferred costs of $16 million in Q1, cash of $207 million, parent cash of $172 million, North Sea cash of $35 million, and total liquidity of $332 million. On guidance, he said the Winner assumption drove the EBITDA cut, but lower CapEx should result in higher free cash flow than originally estimated.

Analysts pressed management on liquidity, cash upstreaming from Shelf Drilling North Sea, and whether the company could avoid drawing the revolver. Management said there are no financial covenants at SDNS, but there is limited dividend flexibility and they do not expect to pull much cash out of that group in 2025. They also said they do not expect to need the RCF anytime soon and highlighted six rigs they are focused on contracting in the coming months. On asset sales, management said the $11 million Main Pass I sale is a reasonable proxy, with a rough range of $5 million-$15 million for similar units.