What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-02-26 compared with 2025-02-27 · 487 added, 1114 removed, 901 unchanged (64% of the section changed)

2 unchanged sentences

Management's Report on Internal Control over Financial Reporting

Reports of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, Watford, UK, PCAOB ID:

Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, Houston, Texas, PCAOB ID:

Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, Watford, UK, PCAOB ID:

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive (Loss)/Income

Consolidated Balance Sheets

4 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company's principal executive and principal financial officers and effected by the Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

• Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

1 unchanged sentence

• Provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer assessed the effectiveness of the design and operation of our internal control over financial reporting pursuant to Rule 13a-15 of the Exchange Act as of December 31, 2024.

In making our assessment, our management used the criteria established in the Internal Control- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Management reviewed the results of its assessment with the Audit Committee of our Board of Directors.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting pursuant to Rules 13a-15 and 15d-15 of the Exchange Act as of December 31, 2025.

In making our assessment, our management used the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

On the basis of this evaluation, management concluded that, as of December 31, 2025, the Company’s internal control over financial reporting was effective.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on page 50 of our consolidated financial statements.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

February 26, 2026

2 unchanged sentences

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Seadrill Limited and its subsidiaries (the “Company”) as of December 31, 2024 and 2023 and the related consolidated statements of operations, comprehensive income, cash flows and changes in shareholders’ equity for each of the two years ended December 31, 2024 and 2023, and the period from February 23, 2022 to December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheet of Seadrill Limited and its subsidiaries (the "Company") as of December 31, 2025, and the related consolidated statements of operations, of comprehensive loss, of changes in shareholders' equity and of cash flows for the year then ended, including the related notes (collectively referred to as the "consolidated financial statements").

We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years ended December 31, 2024 and 2023, and the period from February 23, 2022 to December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 8.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

8 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Uncertain tax positions

As described in Notes 2 and 11 to the consolidated financial statements, the Company had an unrecognized tax benefit of $55 million as of December 31, 2024.

The determination and evaluation of the Company’s income tax provision involves the interpretation of tax laws in the various jurisdictions in which they operate and requires significant judgment by management.

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.

As disclosed, management recognizes tax liabilities based on its assessment of whether the tax positions are more likely than not sustainable, based solely on the technical merits and considerations of the relevant taxing authorities widely understood administrative practices and precedence.

Liabilities for Certain Uncertain Tax Positions

As described in Notes 2 and 9 to the consolidated financial statements, the Company has recorded net liabilities for uncertain tax positions of $ 22 million as of December 31, 2025.

Liabilities for certain uncertain tax positions represent a portion of the consolidated balance.

The Company’s income tax expense is based on the interpretation of tax laws in the various jurisdictions in which the Company operates.

There are certain transactions for which the ultimate tax consequence is unclear due to uncertainty in relation to the interpretation of tax law that arises in the ordinary course of business.

Management recognizes 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 than 50% likely of being realized upon settlement.

Management regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of the provision for income taxes.

The principal considerations for our determination that performing procedures relating to uncertain tax positions is a critical audit matter are (i) the significant judgment and estimation by management in interpreting tax laws to identify uncertain tax positions, assessing the technical merits of those positions, and recognizing and measuring liabilities for those positions, (ii) a high degree of auditor judgment, subjectivity and complexity in evaluating evidence related to management’s identification, recognition and measurement of uncertain tax positions, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

The second step is to measure the tax benefit as the largest amount that is more likely than not of being realized upon settlement.

Management considers the developments in tax law, regulations, administrative practices and relevant case law, and the progress and findings of ongoing tax audits in assessing the adequacy of the provision for income taxes.

The principal considerations for our determination that performing procedures relating to liabilities for certain uncertain tax positions is a critical audit matter are (i) the significant judgment by management when determining and measuring liabilities for certain uncertain tax positions and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s determination and measurement of liabilities for certain uncertain tax positions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the recognition and measurement of uncertain tax positions.

These procedures also included, among others, evaluating the appropriateness of the uncertain tax positions recognized and the measurement amounts determined by management.

Testing the recognition and measurement of uncertain tax positions involved:

(i) testing management’s two-step process by evaluating the appropriateness of management’s assessment of the technical merits of tax positions and estimates of the amount of tax benefit expected to be sustained;

(ii) evaluating the status and results of income tax audits with the relevant tax authorities;

(iii) evaluating new information that may affect the measurement of existing provisions for uncertain tax positions;

and (iv) testing the information used in the calculation of the unrecognized tax benefit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the completeness of uncertain tax positions and measurement of the Company’s uncertain tax positions.

These procedures included testing the effectiveness of controls relating to the determination and measurement of liabilities for uncertain tax positions.

These procedures also included, among others (i) testing the information used in the determination of liabilities for certain uncertain tax positions;

(ii) testing the calculation of liabilities for certain uncertain tax positions, by jurisdiction;

(iii) evaluating management’s assessment of the technical merits of the tax positions and estimates of the amount of tax benefits expected to be sustained, as well as the likelihood of the possible estimated outcome, for certain uncertain tax positions;

and (iv) evaluating the status and results of income tax audits with the relevant tax authorities.

/s/ PricewaterhouseCoopers LLP

Watford, United Kingdom

Houston, Texas

February 26, 2026

We have served as the Company's or its predecessors' auditor since 2013.

We have served as the Company’s auditor since 2025.

Report of Independent Registered Public Accounting Firm

1 unchanged sentence

Opinion on the Financial Statements

We have audited the consolidated statements of operations, comprehensive income, cash flows and changes in shareholders’ equity of Seadrill Limited and its subsidiaries (Predecessor) (the “Company”) for the period from January 1, 2022 through February 22, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the period from January 1, 2022 through February 22, 2022 in conformity with accounting principles generally accepted in the United States of America.

Basis of Accounting

As discussed in Note 4 to the consolidated financial statements, the Company filed petitions on February 7, 2021 and February 10, 2021 with the United States Bankruptcy Court for the Southern District of Texas for reorganization under the provisions of Chapter 11 of the Bankruptcy Code.

The Company’s Plan of Reorganization was substantially consummated on February 22, 2022 and the Company emerged from bankruptcy.

In connection with its emergence from bankruptcy, the Company adopted fresh start accounting.

We have audited the consolidated balance sheet of Seadrill Limited and its subsidiaries (the "Company") as of December 31, 2024, and the related consolidated statements of operations, comprehensive income, cash flows and changes in shareholders’ equity for each of the two years in the period ended December 31, 2024, including the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

11 unchanged sentences

Watford, United Kingdom

April 19, 2023

We have served as the Company's or its predecessors' auditor since 2013.

February 27, 2025

We served as the Company's or its predecessors’ auditor from 2013 to 2025.

Seadrill Limited

1 unchanged sentence

(In $ millions, except per share data)

Successor Predecessor

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Operating revenues

2 unchanged sentences

Management contract revenues (1)

247 245 178 16

Leasing revenues (1)

3 unchanged sentences

Vessel and rig operating expenses ( 736 ) ( 681 ) ( 705 )

( 681 ) ( 705 ) ( 445 ) ( 76 )

Reimbursable expenses ( 58 ) ( 68 ) ( 55 )

5 unchanged sentences

Other operating items

Loss on impairment of long-lived assets ( 22 ) — —

Gain on disposals 1 234 14

5 unchanged sentences

Interest expense ( 61 ) ( 61 ) ( 59 )

Share in results from associated companies (net of tax) ( 9 ) 37 ( 2 ) ( 2 )

Reorganization items, net — — ( 15 ) 3,683

Equity in (losses)/earnings of equity method investment (net of tax) ( 10 ) ( 9 ) 37

Other financial and non-operating items ( 41 ) ( 34 ) ( 25 )

Total financial and other non-operating items, net ( 98 ) ( 79 ) ( 12 )

Profit/(loss) before income taxes 333 317 ( 63 ) 3,741

Income tax benefit/(expense) 113 ( 17 ) ( 10 ) ( 2 )

Net income/(loss) from continuing operations 446 300 ( 73 ) 3,739

Net income/(loss) after tax from discontinued operations — — 274 ( 33 )

Net income 446 300 201 3,706

Basic EPS/(LPS):

continuing operations ($) 6.56 4.23 ( 1.46 ) 37.25

Diluted EPS/(LPS):

continuing operations ($) 6.37 4.12 ( 1.46 ) 37.25

Basic EPS ($) 6.56 4.23 4.02 36.92

Diluted EPS ($) 6.37 4.12 3.88 36.92

(1) Includes revenue received from related parties of $ 319 million, $ 298 million, $ 216 million and $ 19 million, and costs paid to related parties of nil , nil , nil and $ 3 million, for the year ended December 31, 2024, December 31, 2023, period from February 23, 2022 through December 31, 2022 (Successor), and period from January 1, 2022 through February 22, 2022, (Predecessor), respectively.

(Loss)/profit before income taxes ( 51 ) 333 317

Income tax (expense)/benefit ( 26 ) 113 ( 17 )

Net (loss)/income ( 77 ) 446 300

Basic (LPS)/EPS ($) ( 1.24 ) 6.56 4.23

Diluted (LPS)/EPS ($) ( 1.24 ) 6.37 4.12

(1) Includes revenue received from related parties of $ 317 million, $ 319 million, and $ 298 million for the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively.

Refer to Note 21 – "Related party transactions" for further details.

1 unchanged sentence

Seadrill Limited

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME

(In $ millions)

Successor Predecessor

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Net income 446 300 201 3,706

Other comprehensive (loss)/income, net of tax, relating to continuing operations:

Actuarial (loss)/gain relating to pensions — ( 1 ) 2 1

Other comprehensive income/(loss), net of tax, relating to discontinued operations:

Recycling of accumulated other comprehensive loss on sale of Paratus Energy Services — — — 16

Change in fair value of debt component of Archer convertible bond — — ( 1 )

Share of other comprehensive loss from associated

companies — — — ( 2 )

Total other comprehensive (loss)/income — ( 1 ) 2 14

Total comprehensive income for the period 446 299 203 3,720

Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Net (loss)/income ( 77 ) 446 300

Other comprehensive loss, net of tax

Actuarial loss relating to pensions — — ( 1 )

Total other comprehensive loss — — ( 1 )

Total comprehensive (loss)/income for the period ( 77 ) 446 299

See accompanying notes that are an integral part of these Consolidated Financial Statements.

7 unchanged sentences

Accounts receivable, net 162 193

Amount due from related parties, net — 9

Other current assets 231 230

1 unchanged sentence

Non-current assets

Investments in associated companies 68 90

Equity method investment 58 68

Drilling units 2,969 2,946

16 unchanged sentences

SHAREHOLDERS' EQUITY

Common shares of par value US$ 0.01 per share:

Common shares of par value $ 0.01 per share:

375,000,000 shares authorized at December 31, 2025 (December 31, 2024:

9 unchanged sentences

(In $ millions)

Successor Predecessor

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Cash Flows from Operating Activities

Net income 446 300 201 3,706

Net income/(loss) from continuing operations 446 300 ( 73 ) 3,739

Net income/(loss) from discontinued operations — — 274 ( 33 )

Adjustments related to discontinued operations (1)

— — ( 262 ) 38

Adjustments to reconcile net loss to net cash used in operating activities:

Change in allowance for credit losses — ( 1 ) 1 ( 1 )

Net (loss)/income ( 77 ) 446 300

Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:

Depreciation and amortization 238 168 155

Gain on disposals ( 234 ) ( 14 ) ( 1 ) ( 2 )

Amortization of debt issuance costs and discount on debt 4 2 — 7

Payment in kind interest — — 30 —

Share in results from associated companies (net of tax) 9 ( 37 ) 2 2

Non-cash reorganization items, net — — — ( 3,487 )

Fresh Start valuation adjustments — — — ( 266 )

Deferred tax benefit ( 13 ) ( 13 ) ( 3 ) ( 4 )

Gain on disposals of assets ( 1 ) ( 234 ) ( 14 )

Equity in losses/(earnings) of equity investments (net of tax) 10 9 ( 37 )

Loss on impairment of long-lived assets 22 — —

Deferred tax expense/(benefit) 22 ( 13 ) ( 13 )

Amortization of debt bond issuance costs 3 4 2

Share based compensation expense 20 17 8

Other 5 1 ( 7 ) ( 7 )

Change in allowance for credit losses — — ( 1 )

Other cash movements in operating activities:

Payments for long-term maintenance ( 261 ) ( 108 ) ( 83 ) ( 2 )

Repayments made under lease arrangements — — — ( 11 )

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

Trade accounts receivable 29 ( 25 ) 32 ( 11 )

Additions to long-term maintenance ( 213 ) ( 261 ) ( 108 )

Changes in operating assets and liabilities, net of effect of acquisition:

Accounts receivable, net 23 29 ( 25 )

Trade accounts payable ( 47 ) 65 ( 34 )

Prepaid expenses/accrued revenue ( 24 ) ( 1 ) 9 —

Prepaid expenses 7 ( 24 ) ( 1 )

Deferred revenue ( 8 ) 22 1

Deferred mobilization costs ( 92 ) 25 ( 111 ) ( 4 )

Deferred contract costs 45 ( 92 ) 25

Related party receivables — 9 19

1 unchanged sentence

Other liabilities ( 86 ) ( 64 ) 31

Net cash provided by/(used in) operating activities 88 287 65 ( 56 )

(1) Relates to adjustments made to the net income/loss from discontinued operations to reconcile to net cash flows in operating activities from discontinued operations.

The adjustments reconcile net income/(loss) from discontinued operations to net cash provided by/(used in) operating activities, other cash movements in operating activities, and changes in operating assets and liabilities, net of effect of acquisitions and disposals.

The net cash provided by operating activities for the year ended December 31, 2024 and December 31, 2023 was nil , for the successor period from February 23, 2022 through December 31, 2022 was $ 12 million and for the predecessor period from January 1, 2022 through February 22, 2022 was $ 5 million.

Seadrill Limited

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In $ millions)

Successor Predecessor

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Net cash (used in)/provided by operating activities ( 28 ) 88 287

Cash Flows from Investing Activities

Additions to drilling units and equipment ( 110 ) ( 157 ) ( 101 )

Proceeds from sales of tender-assist units — 84 — —

Proceeds from disposal of assets 1 383 14

Proceeds from sales of tender-assist units — — 84

Net proceeds on disposal of business and cash impact from deconsolidation — — 21

Acquisition of Subsidiary — 24 — —

Funds advanced to discontinued operations — — ( 16 ) ( 20 )

Net cash used in investing activities - discontinued operations — — ( 40 ) —

Net cash provided by/(used in) investing activities 226 42 473 ( 130 )

Other ( 4 ) — 24

Net cash (used in)/provided by investing activities ( 113 ) 226 42

Cash Flows from Financing Activities

Taxes withheld on employee stock transactions ( 3 ) — —

Shares repurchased — ( 532 ) ( 263 )

Proceeds from debt — — 576

Proceeds from convertible bond issuance — — — 50

Repayments of secured credit facilities — — ( 478 )

1 unchanged sentence

Debt issuance costs — — ( 31 )

Shares repurchased ( 532 ) ( 263 ) — —

Net cash provided by financing activities - discontinued operations — — 16 20

Net cash (used in)/provided by financing activities ( 532 ) ( 200 ) ( 448 ) 85

Net cash used in financing activities ( 3 ) ( 532 ) ( 200 )

Effect of exchange rate changes on cash and cash equivalents 4 ( 5 ) 1

1 unchanged sentence

Cash and cash equivalents, including restricted cash, at beginning of the year 505 728 598

Cash and cash equivalents, including restricted cash, at the beginning of year - continuing operations 728 598 490 516

Cash and cash equivalents, including restricted cash, at the beginning of year - discontinued operations — — 19 88

Cash and cash equivalents, including restricted cash, at the end of year 365 505 728

Cash and cash equivalents, including restricted cash, at the end of year - continuing operations (2)

505 728 598 490

Cash and cash equivalents, including restricted cash, at the end of year - discontinued operations — — — 19

Supplementary disclosure of cash flow information

1 unchanged sentence

Net taxes paid ( 12 ) ( 17 ) ( 24 )

Reorganization items, net paid — — ( 13 ) ( 56 )

(2) Comprised of cash and cash equivalents as of December 31, 2024 of $ 478 million (2023:

$ 697 million , 2022:

$ 480 million ), restricted cash of $ 27 million (2023:

$ 31 million , 2022:

$ 44 million ), and restricted cash included in non-current assets of nil (2023:

$ 74 million ).

See accompanying notes that are an integral part of these Consolidated Financial Statements.

S ee accompanying notes that are an integral part of these Consolidated Financial Statements.

Seadrill Limited

1 unchanged sentence

(In $ millions)

Predecessor Common Shares Predecessor Additional paid-in capital Successor Common Shares Successor Additional paid-in capital Accumulated

other comprehensive (loss)/ income Retained (loss)/earnings Total shareholders'

equity/(deficit)

Balance as of January 1, 2022 (Predecessor) 10 3,504 — — ( 15 ) ( 7,215 ) ( 3,716 )

Other comprehensive income from continued operations — — — — 1 — 1

Other comprehensive loss from discontinued operations — — — — ( 3 ) — ( 3 )

Recycling of PES AOCI on deconsolidation — — — — 16 — 16

Net profit from continuing operations — — — — — 3,739 3,739

Net loss from discontinued operations — — — — — ( 33 ) ( 33 )

Issuance of Successor common stock — — — 1,499 — ( 4 ) 1,495

Cancellation of Predecessor equity ( 10 ) ( 3,504 ) — — 1 3,513 —

Balance as of February 22, 2022 (Predecessor) — — — 1,499 — — 1,499

Balance as of February 23, 2022 (Successor) — — — 1,499 — — 1,499

Net loss from continuing operations — — — — — ( 73 ) ( 73 )

Net income from discontinued operations — — — — — 274 274

Other comprehensive income from continued operations — — — — 2 — 2

Balance as of December 31, 2022 (Successor) — — — 1,499 2 201 1,702

Common shares Additional paid-in capital Accumulated other comprehensive income Retained earnings Total shareholders'

Balance as of January 1, 2023 — 1,499 2 201 1,702

Net income — — — 300 300

Shares issued on closing of Aquadrill acquisition 1 1,243 — 1,244

Share issuance costs — — — ( 4 ) — — ( 4 )

Share issuance cost — ( 4 ) — — ( 4 )

Shares repurchased and cancelled — ( 267 ) — — ( 267 )

Other comprehensive loss — — ( 1 ) — ( 1 )

Share based compensation — — — 9 — — 9

Balance as of December 31, 2023 (Successor) — — 1 2,480 1 501 2,983

Share base compensation — 9 — — 9

Balance as of December 31, 2023 1 2,480 1 501 2,983

Net income — — — 446 446

1 unchanged sentence

Share based compensation — 17 — — 17

Balance as of December 31, 2024 (Successor) — — 1 1,969 1 947 2,918

Balance as of December 31, 2024 1 1,969 1 947 2,918

Net loss — — — ( 77 ) ( 77 )

Share based compensation — 20 — — 20

Shares withheld for taxes on equity transactions — ( 3 ) — — ( 3 )

Balance as of December 31, 2025 1 1,986 1 870 2,858

See accompanying notes that are an integral part of these Consolidated Financial Statements.

8 unchanged sentences

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 was undergoing contract preparations for a contract that commenced during February 2025, and three were cold stacked.

In addition to our owned assets, as of December 31, 2024, we managed two rigs owned by Sonangol.

As used herein, the term "Predecessor" refers to the financial position and results of operations of Seadrill Limited prior to, and including, February 22, 2022.

This is also applicable to terms "we", "our", "Group" or "Company" in the context of events on and prior to February 22, 2022.

As used herein, the term " Successor " refers to the financial position and results of operations of Seadrill Limited (previously Seadrill 2021 Limited) after February 22, 2022 (the "Effective Date").

This is also applicable to terms, "we", "our", "Group" or "Company" in the context of events after February 22, 2022 (Successor).

The use herein of such terms as "Group", "organization", "we", "us", "our" and "its", or references to specific entities, is not intended to be a precise description of corporate relationships.

As of December 31, 2025, we owned a total of 15 drilling units, of which 10 were operating, one was undergoing capital upgrade projects for a contract commencing in the second quarter of 2026, one was undergoing repairs and maintenance projects and three were cold stacked.

The 10 operating units include nine benign floaters (comprising six 7th generation drillships, two 6th generation drillships and one benign environment semi-submersible) and one harsh environment jackup.

In addition to our owned assets, as of December 31, 2025, we managed two drilling units owned by Sonangol EP ("Sonangol").

The use herein of such terms as "Group", "Company", "organization", "we", "us", "our" and "its", or references to specific entities, is not intended to be a precise description of corporate relationships.

Basis of presentation

2 unchanged sentences

They include the financial statements of Seadrill Limited and its consolidated subsidiaries.

In January 2022, we disposed of 65 % of our equity interest in Paratus Energy Services Ltd ("PES") and in October 2022, we disposed of seven jackup units contracted in the Kingdom of Saudi Arabia (the "KSA Business").

Both transactions represented strategic shifts in Seadrill's operations, which were deemed to have a major effect on its operations and financial results in 2022 and going forward, and therefore, both were reclassified as discontinued operations, including the comparative periods.

Following the sale of the KSA Business, our organizational structure was simplified, consolidating our operations into a single segment.

In light of this change, the information provided to the Chief Operating Decision Maker ("CODM") was adapted to reflect the updated operational structure during the year ended December 31, 2023.

As a result, we updated the reportable segments disclosed externally from Harsh Environment, Floaters, and Jackup Rigs to a single operating segment in 2023.

This has been reflected for all periods covered by the report.

The financial information in this report has been prepared on the basis we will continue as a going concern, which presumes we will be able to realize our assets and discharge liabilities in the normal course of business as they come due.

Certain reclassifications have been made to previously reported amounts to conform to the current period presentation.

These reclassifications did not have a material effect on our Consolidated Financial Statements.

Use of estimates

4 unchanged sentences

Basis of consolidation

We consolidate companies where we control over 50% of voting rights, and entities where we hold a variable interest and are the primary beneficiary.

We consolidate companies where we have a controlling financial interest, and entities where we hold a variable interest and are the primary beneficiary.

A variable interest entity ("VIE") is a legal entity where equity at risk is not enough to finance its activities, or equity interest holders lack power to direct activities or receive expected returns.

2 unchanged sentences

All intercompany balances and transactions have been eliminated.

Reclassifications

Effective in the first quarter of 2024, we have classified reimbursable revenues and expenses associated with joint ventures as "Reimbursable revenues" and "Reimbursable expenses", respectively, in order to enhance the presentation of the arrangements and to reflect the underlying nature of these transactions.

To conform to current period presentation, $ 26 million, $ 25 million and $ 20 million of "Management contract revenues" and "Management contract expenses" for the year ended December 31, 2023 (Successor), Period from February 23, 2022 through December 31, 2022 (Successor), and Period from January 1, 2022 through February 22, 2022 (Predecessor) have been reclassified to "Reimbursable revenues" and "Reimbursable expenses", respectively.

Effective in the second quarter of 2024, we have classified revenues from our bareboat charter agreements as "Leasing revenues", in order to enhance the presentation of the arrangements.

To conform to current period presentations, $ 33 million, $ 24 million and $ 4 million of "Other revenues" for the year ended December 31, 2023 (Successor), Period from February 23, 2022 through December 31, 2022 (Successor), and Period from January 1, 2022 through February 22, 2022 (Predecessor), respectively, have been reclassified to "Leasing revenues".

Acquisition of Aquadrill LLC

6 unchanged sentences

Emergence from Chapter 11 proceedings

On February 22, 2022, Seadrill Limited and certain of its subsidiaries which filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court ("Debtors"), completed its comprehensive restructuring and emerged from Chapter 11 proceedings.

Please refer to Note 4 – "Chapter 11" for further details.

Fresh start accounting

Seadrill qualified for fresh start accounting following its emergence from bankruptcy on the Effective Date, in accordance with the provisions set forth in ASC 852.

This resulted in a new entity, the Successor, for financial reporting purposes, with no beginning retained earnings or loss as of the Effective Date.

Under fresh start accounting, Seadrill allocated the court approved reorganization value to its individual assets based on their estimated fair values on the Effective Date.

Reorganization value represents the value of the reconstituted entity before considering liabilities and it approximates the amount a willing buyer would pay for the assets of the entity immediately after the restructuring.

Seadrill will continue to present financial information for the period before the adoption of fresh start accounting for the Predecessor.

The Predecessor and Successor companies lack comparability, as required by ASC Topic 205, Presentation of Financial Statements.

Therefore, "black-line" financial statements are presented to distinguish between the Predecessor and Successor companies.

Refer to Note 5 – "Fresh Start Accounting" for further details.

On February 22, 2022, Seadrill Limited and certain of its subsidiaries which filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court, completed its comprehensive restructuring and emerged from Chapter 11 proceedings.

Note 2 – Accounting policies

25 unchanged sentences

We generally receive reimbursements from our customers for the purchase of supplies, equipment, personnel services and other services provided at their request in accordance with a drilling contract or other agreement.

Such reimbursable revenue is variable and subject to

uncertainty, as the amounts received and timing thereof are highly dependent on factors outside of our influence.

Such reimbursable revenue is variable and subject to uncertainty, as the amounts received and timing thereof are highly dependent on factors outside of our influence.

Accordingly, reimbursable revenue is fully constrained and not included in the total transaction price until the uncertainty is resolved, which typically occurs when the related costs are incurred on behalf of a customer.

3 unchanged sentences

We generally record tax-assessed revenue transactions on a net basis.

Certain direct and incremental costs incurred for upfront preparation, initial mobilization and modifications of contracted rigs represent costs of fulfilling a contract as they relate directly to a contract, enhance resources that will be used in satisfying our performance obligations in the future and are expected to be recovered.

Such costs are deferred and amortized ratably to contract drilling expense as services are rendered over the initial term of the related drilling contract.

Any costs incurred for delays in commencement of drilling contracts are treated as variable consideration that is allocated to the firm term of the drilling contract.

Arrangements with MSA managers

2 unchanged sentences

(collectively, the "MSA Managers"), governed by master service or similar agreements ("MSAs").

During 2024, all remaining MSAs expired, and therefore, Seadrill currently manages all its rigs.

Under the MSAs, certain former Aquadrill rigs were chartered to an MSA Manager who then contracted with a third-party customer to provide drilling services, providing all necessary crew and other required services and supplies needed to provide those services.

2 unchanged sentences

While this fee was variable to align contract objectives between us and the Manager, the majority of economic risk and reward over the arrangement resided with Seadrill.

For accounting purposes, we consider each arrangement as a single unified contract between Seadrill and the end customer with the MSA Manager acting as both a lease broker and subcontractor in providing services to the end customer.

Similar to arrangements where Seadrill provides drilling services directly to an end-customer using its owned rigs, the arrangement has both lease and non-lease components.

We apply the practical expedient per ASC 842-10-15-42 which permits us to account for the arrangement based on the predominant component in the arrangement, which we consider to be the non-lease component.

Accordingly, we account for these arrangements under the guidance of ASC 606 – Revenue from Contracts with Customers.

We recognize all revenues from the end-customers and all operating expenditures incurred by the MSA Manager and passed back to us, together with all MSA Manager fees, as operating expenses.

In addition, where the MSA Manager incurs capital or long-term-maintenance expenditures on the units, these costs are also passed to us and accounted for as drilling unit additions.

More generally, the accounting for revenue and expenses related to these arrangements follows our accounting policies.

For accounting purposes, we considered each arrangement as a single unified contract between Seadrill and the end customer with the MSA Manager acting as both a lease broker and subcontractor in providing services to the end customer.

Similar to arrangements where Seadrill provides drilling services directly to an end-customer using its owned rigs, the arrangement had both lease and non-lease components.

We applied the practical expedient per Accounting Standards Codification ("ASC") 842-10-15-42 which permitted us to account for the arrangement based on the predominant component in the arrangement, which we considered to be the non-lease component.

Accordingly, we accounted for these arrangements under the guidance of ASC 606 – Revenue from Contracts with Customers.

We recognized all revenues from the end-customers and all operating expenditures incurred by the MSA Manager and passed back to us, together with all MSA Manager fees, as operating expenses.

In addition, where the MSA Manager incurred capital or long-term-maintenance expenditures on the units, these costs were also passed to us and accounted for as drilling unit additions.

More generally, the accounting for revenue and expenses related to these arrangements followed our accounting policies.

Management contract revenues

Seadrill has provided management and operational support services to Sonadrill, SeaMex, and in the Predecessor period, Aquadrill.

Seadrill has provided management and operational support services to Sonadrill and during the year ended December 31, 2023, SeaMex Holdings Ltd ("SeaMex").

These services are typically charged on either a cost-plus or dayrate basis.

1 unchanged sentence

Other revenues

Other revenues comprise the sale of inventories and termination fees earned when drilling contracts are terminated before the contract end date.

Termination fees are recognized daily as any contingencies or uncertainties are resolved.

Other revenues comprise the sale of supplies and termination fees earned when drilling contracts are terminated before the contract end date.

Termination fees are recognized as any contingencies or uncertainties are resolved.

Vessel and Rig Operating Expenses

15 unchanged sentences

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.

For taxable years beginning on or after January 1, 2025, Seadrill and our Bermudan subsidiaries are subject to Bermuda’s corporate income tax on ordinary income or capital gains.

Certain subsidiaries operate or realize income from sources within other jurisdictions that impose income tax or withholding taxes.

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.

Our income tax expense is based on our income and statutory tax rates in relevant jurisdictions.

Refer to Note 9 – "Taxation".

4 unchanged sentences

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 the required support for the positions 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.

While we believe we have the required support for the positions taken on our tax returns, in assessing the adequacy of our provision for income taxes we consider developments in tax laws, regulations, administrative practices and relevant case law;

the progress and findings of ongoing tax audits;

and our experience with relevant taxation principles.

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 attributes.

Current income tax expense reflects an estimate of our income tax liability for the current year, withholding taxes, and changes in prior year tax estimates as tax returns are filed or adjusted upon tax audits.

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

13 unchanged sentences

Gains and losses on foreign currency transactions are included within "Other financial and non-operating items, net" in the Consolidated Statements of Operations.

Earnings/(loss) per share

Basic earnings/(loss) per share ("EPS/LPS") is calculated based on the income or loss for the period available to common shareholders divided by the weighted average number of Shares outstanding.

Diluted income or loss per share includes the effect of the assumed conversion of potentially dilutive instruments such as our restricted stock units, performance stock units and convertible bond.

The determination of dilutive income or loss per share may require us to make adjustments to net income or loss and the weighted average Shares outstanding.

Refer to Note 12 – "Earnings/(loss) per share".

(Loss)/earnings per share

Basic (loss)/earnings per share ("(LPS)/EPS") is calculated based on the loss or income for the period available to common shareholders divided by the weighted average number of Shares outstanding.

Diluted loss or income per share includes the effect of the assumed conversion of potentially dilutive instruments such as our restricted stock units, performance-based stock units and convertible bond.

The determination of dilutive loss or income per share may require us to make adjustments to net loss or income and the weighted average Shares outstanding.

Refer to Note 10– "(Loss)/earnings per share".

Fair value measurements

14 unchanged sentences

Interest income on receivables is recognized as earned.

Allowance for credit losses

The current expected credit loss ("CECL") model requires recognition of expected credit losses over the life of a financial asset upon its initial recognition.

The CECL model contemplates a broader range of information to estimate expected credit losses over the contractual lifetime of an asset.

It also requires consideration of the risk of loss even if it is remote.

We estimate expected credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts of events, which may affect the collectability.

The allowance for credit losses reflects the net amount expected to be collected on the financial asset.

Any change in credit allowance is reflected in the Consolidated Statement of Operations based on the nature of the financial asset receivable.

Amounts are written off against the allowance in the period when efforts to collect a balance have been exhausted.

Any write-offs in excess of credit allowance by category of financial asset reduces the asset's carrying amount and is reflected in the Consolidated Statement of Operations.

Expected recoveries will not exceed the amounts previously written-off or current credit loss allowance by financial asset category and are recognized in the Consolidated Statement of Operations in the period of receipt.

Contract assets and liabilities

3 unchanged sentences

Contract liabilities include payments received for mobilization, rig preparation and upgrade activities which are allocated to the overall performance obligation and recognized ratably over the initial term of the contract.

Equity investments

Equity method investments

Investments in common stock are accounted for using the equity method if we have the ability to significantly influence, but not control, the investee.

1 unchanged sentence

We also consider other factors such as representation on the investee’s board of directors and the nature of commercial arrangements.

We classify our equity investees as "Investments in Associated Companies" on the Consolidated Balance Sheets.

We recognize our share of earnings or losses from our equity method investments in the Consolidated Statements of Operations as "Share in results from associated companies".

Refer to Note 15 – "Investment in associated companies".

We assess our equity method investments for impairment at each reporting period when events or circumstances suggest that the carrying amount of the investments may be impaired.

We classify our equity investee as "Equity method investment" on the Consolidated Balance Sheets.

We recognize our share of earnings or losses from our equity method investments in the Consolidated Statements of Operations as "Equity in (losses)/earnings of equity method investments (net of tax)".

Refer to Note 13 – "Equity method investment".

We assess our equity method investment for impairment at each reporting period when events or circumstances suggest that the carrying amount of the investments may be impaired.

We record an impairment charge for other-than-temporary declines in value when the value is not anticipated to recover above the cost within a reasonable period after the measurement date.

1 unchanged sentence

If an impairment loss is recognized, subsequent recoveries in value are not reflected in earnings until sale of the equity method investee occurs.

Held for sale and discontinued operations

Assets are classified as held for sale when all of the following criteria are met:

management commits to a plan to sell the asset (disposal group), the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets, an active program to locate a buyer and other actions required to complete the plan to sell the asset (disposal group) have been initiated, the sale of the asset is probable, and transfer of the asset is expected to qualify for recognition as a completed sale, within one year.

The term probable refers to a future sale that is likely to occur, the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

Assets held for sale are measured at the lower of carrying value or fair value less costs to sell.

Management assesses whether an operation should be reported as discontinued operations under the three criteria set out in ASC 205:1) a discontinued operation may include a component of the business or group of components of the business, 2) the component of the business (or group of components) meets the held for sale criteria, is disposed of by sale, or is disposed of other than by sale (i.e.

abandonment), and 3) the component of the business (or group of components) represents a strategic shift that has (or will have) a major effect on an the business' operations and financial results.

When an operation meets these criteria, the results of that operation are reported as "discontinued operations" in the Statement of Operations and all comparative periods of the consolidated financial statements and associated notes are recast for this classification.

Refer to Note 28 – "Discontinued Operations".

Drilling units

8 unchanged sentences

Equipment is recorded at historical cost less accumulated depreciation and impairment and is depreciated over its estimated remaining useful life.

The estimated economic useful life of equipment, when new, is between three and five years depending on the type of asset.

The estimated economic useful life of equipment, when new, is generally between three and five years depending on the type of asset.

Refer to Note 15 – "Equipment".

Rig reactivation project costs

Rig reactivation and mobilization project costs

Most reactivation costs are capitalized.

3 unchanged sentences

Costs incurred as part of reactivation projects to install equipment or modify to current rig specifications that will not increase the marketability of the rig beyond the current contract and rig mobilization costs are deferred and amortized over the contract period.

The cost of reactivation project related long-term maintenance activities such as major classification surveys and other major certifications are capitalized and depreciated over a period of between two and five years (depending on the period covered by the re-certification).

The cost of reactivation project related long-term maintenance activities such as major classification surveys and other major certifications are capitalized and depreciated over a period of generally between two and five years (depending on the period covered by the re-certification).

Such costs are deferred and amortized ratably to contract drilling expense as services are rendered over the initial term of the related drilling contract.

Lessee - When we enter into a new contract, or modify an existing contract, we identify whether that contract has a finance or operating lease component.

4 unchanged sentences

The ROU asset is measured at the initial measurement of the lease liability, plus any lease payments made to the lessor at or before the commencement date, minus any lease incentives received, plus any initial direct costs incurred by us.

ROU assets are recorded within "Other non-current assets", and lease liabilities are recorded within "Other current liabilities" and "Other non-current liabilities" in our Consolidated Balance Sheets.

After the commencement date, we adjust the carrying amount of the lease liability by the amount of payments made in the period as well as the unwinding of the discount over the lease term using the effective interest method.

1 unchanged sentence

Seadrill assesses ROU assets for impairment and recognizes any impairment loss in accordance with the accounting policy on impairment of long-lived assets.

We applied the following significant assumptions and judgments in accounting for our leases.

• We apply judgment in determining whether a contract contains a lease or a lease component as defined by Topic 842.

• We have elected to combine leases and non-lease components.

As a result, we do not allocate our consideration between leases and non-lease components.

• The discount rate applied to our operating leases is our incremental borrowing rate.

We estimated our incremental borrowing rate based on the rate for our traded debt.

• Within the terms and conditions of some of our operating leases we have options to extend or terminate the lease.

In instances where we are reasonably certai n to exercise available options to extend or terminate, then the option is included in determining the appropriate lease term to apply.

• Where a leasing arrangement is a failed sale and leaseback transaction as no transfer of control has occurred as defined by Topic 606, any monies received will be treated as a financing transaction.

Lessor - When we enter into a new contract, or modify an existing contract, we identify whether that contract has a sales-type, direct financing or operating lease.

We do not have any leases classified as sales-type or direct financing.

For our operating leases, the underlying asset remains on the balance sheet and we record periodic depreciation expense and lease revenue.

For our operating leases, the underlying asset remains on the balance sheet and we record periodic depreciation expense and lease revenues.

Impairment of long-lived assets

24 unchanged sentences

We recognize a loss contingency in the Consolidated Balance Sheets where we have a present obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount is reasonably estimable.

Refer to Note 27 – "Commitments and contingencies".

We review developments in our contingencies that could affect the amount of liabilities recorded and disclosures of loss contingencies.

We adjust our liabilities and disclosures to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information.

Significant judgment is required to determine both the probability and the estimated amount.

Refer to Note 24 – "Commitments and contingencies" for further information.

Share repurchases

3 unchanged sentences

Share-based compensation

After emerging from Chapter 11 in February 2022, we made awards of restricted stock units ("RSUs") and performance stock units ("PSUs") under the Management Incentive Plan (as defined herein) (see Note 23 – "Share based compensation").

We made awards of restricted stock units ("RSUs") and performance stock units ("PSUs") under the Management Incentive Plan (as defined herein) (see Note 20 – "Share based compensation").

We account for our share based compensation in accordance with ASC 718, which utilizes a "modified grant-date" approach, where the fair value of an equity award is estimated on the grant date without regard to service or performance conditions.

3 unchanged sentences

The fair value of liability settled awards is remeasured at the end of each reporting period until settlement.

The fair value is recorded as operating expense over the service period for all awards that vest.

The change in fair value is recorded as operating expense or capitalized based on the nature of the employee's activities over the service period of the award.

No cost is recorded for awards that do not vest because service conditions are not satisfied.

We account for forfeitures on an actual basis.

Guarantees issued by us, excluding those that are guaranteeing our own performance, are recognized at fair value at the time that the guarantees are issued and reported in "Other current liabilities" and "Other non-current liabilities".

If it becomes probable that we will have to perform under a guarantee, we remeasure the liability if the amount of the loss can be reasonably estimated.

6 unchanged sentences

If the fair value of the net assets acquired and liabilities assumed is greater than the purchase price, a bargain purchase gain is recognized in the Consolidated Statement of Operations at the acquisition date.

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.

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.

Note 3 - Recent accounting standards

Recently adopted accounting standards

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Disclosures (Topic 280):

Improvements to Reportable Segment Disclosures to improve reportable segment disclosures by requiring more detailed information about a reportable segment’s expenses and how the chief operating decision maker uses reported segment profit or loss information to assess segment performance and allocate resources.

ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

The adoption of ASU 2023-07 had no material impact on the Company's disclosures.

Recent accounting pronouncements

In December 2023, the Financial Accounting Standards Board issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation and information on income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

The guidance has been applied on a prospective basis with the required income tax disclosures included in Note 9 – "Taxation".

This standard update did not affect the recognition or measurement of income taxes within our Consolidated Financial Statements.

New accounting standards to be adopted

In November 2024, the FASB issued ASU 2024-03, "Disaggregation of Income Statement Expenses", which requires additional disclosure of the nature of expenses included in the income statement.

2 unchanged sentences

Early adoption is permitted.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

The standard requires disaggregated information about a reporting entity’s effective tax rate reconciliation and information on income taxes paid.

The new requirement is effective for annual periods beginning after December 15, 2024.

The guidance will be applied on a prospective basis with the option to apply the standard retrospectively, with early adoption permitted.

Upon adoption, this standard will require additional disclosures to be included in our financial statements.

The C ompany is currently evaluating the impact this standard will have on its consolidated financial statements.

Note 4 – Chapter 11

Seadrill Chapter 11 Process

Chapter 11 filing

The Debtors filed voluntary petitions for reorganization under the Chapter 11 proceedings in the Bankruptcy Court on February 7, 2021 and February 10, 2021 (the "Petition Date").

These filings triggered a stay on enforcement of remedies with respect to our debt obligations.

These filings excluded the Seadrill New Finance Limited group ("NSNCo"), as Seadrill and the NSNCo noteholders negotiated a refinancing outside of this bankruptcy.

Plan of Reorganization

On July 23, 2021, the Company entered into a Plan Support and Lock-Up Agreement (the "Plan Support Agreement") with certain holders of claims under the Company’s 12 prepetition credit facilities (the "Prepetition Credit Agreements"), and Hemen Holdings Ltd ("Hemen").

On July 24, 2021, the Company filed the first versions of the Joint Chapter 11 Plan of Reorganization and Disclosure Statement.

On August 31, 2021, the Company filed the First Amended Plan of Reorganization and the First Amended Disclosure Statement (the "Disclosure Statement") and on September 2, 2021, the Court approved the First Amended Disclosure Statement (as Modified) and the solicitation of the Plan of Reorganization.

On October 11, 2021, the Company’s creditor classes voted to accept the plan of reorganization.

On October 26, 2021, Seadrill’s Plan of Reorganization (the "Plan") was confirmed by the U.S.

Bankruptcy Court for the Southern District of Texas.

Amendment to terms of existing facilities

The Plan, among other things, provided that holders of allowed Prepetition Credit Agreement claims (a) received $ 683 million (adjusted for the Asia Offshore Drilling Limited ("AOD") cash out option) of take-back debt (the "Second Lien Facility") and (b) were entitled to participate in a $ 300 million new-money raise under a first lien facility (the "First Lien Facility"), and (c) received 83.00 % of pre-diluted equity in successor Seadrill on account of their allowed Prepetition Credit Agreement claims, and 16.75 % of equity in successor Seadrill for such holders participation in a rights offering (the "Rights Offering").

Rights Offering and backstop of new $ 300 million facility

Holders of the subscription rights, which included the backstop parties (the "Backstop Parties" and together, the "Rights Offering Participants"), received the right to lend up to $ 300 million under the First Lien Facility.

The Rights Offering Participants also received, in consideration for their participation in the Rights Offering, 12.50 % of the issued and outstanding pre-diluted Shares as of the Effective Date.

The First Lien Facility was structured as (i) a $ 175 million term loan (the "Term Loan Facility") and (ii) a $ 125 million revolving credit facility.

As consideration for the backstop commitment of each Backstop Party, the Backstop Parties were (a) issued 4.25 % of the issued and outstanding pre-diluted Shares as of the Effective Date (the "Equity Commitment Premium");

and (b) paid in cash a premium (the " Commitment Premium ") equal to 7.50 % of the $ 300 million in total commitments under the First Lien Facility.

The Commitment Premium was revised to $ 20 million and paid within one business day following the backstop approval order on October 27, 2021.

Hemen $ 50 million convertible bond

$ 50 million aggregate principal amount of convertible bond (the "Convertible Bond") was issued to Hemen at par upon emergence.

The Convertible Bond is convertible into Shares (the "Conversion Shares") at an initial conversion rate of 52.6316 Shares per $ 1,000 principal amount of the Convertible Bond, subject to certain adjustments.

The Convertible Bond is convertible (in full and not in part) into the Conversion Shares at the option of the lender on any business day that is ten business days prior to the maturity of the Convertible Bond.

Management considered the accounting treatment for the Conversion using the embedded derivative model, substantial premium model, and the no proceeds allocated model.

The Company determined that on the Effective Date that the substantial premium model was applicable, and the recognition of the Convertible Bond should follow the treatment prescribed under this model.

Pursuant to the substantial premium model, the principal was recorded as a liability at par and the excess premium was recorded to additional paid-in-capital.

Emergence and New Seadrill equity allocation table

Seadrill met the requirements of the Plan and emerged from Chapter 11 proceedings on the Effective Date.

Under the Plan and prior to any equity dilution on conversion of the convertible bond, the Company issued 83.00 % of the Company’s equity to Prepetition Credit Agreement claimants, 12.50 % to the Rights Offering Participants, 4.25 % to the Backstop Parties through the Equity Commitment Premium, and the remaining 0.25 % to Class 9 Predecessor shareholders.

The table below shows the equity allocation before and after the conversion of the Convertible Bond.

Recipient of Shares Number of shares % Allocation Equity dilution on conversion of convertible bond

Allocation to predecessor senior secured lenders 41,499,999 83.00 % 78.85 %

Allocation to new money lenders - holders of subscription rights 6,250,001 12.50 % 11.87 %

Allocation to new money lenders - backstop parties 2,125,000 4.25 % 4.04 %

Allocation to predecessor shareholders 124,998 0.25 % 0.24 %

Allocation to convertible bondholder — — % 5.00 %

Total shares issued on emergence 49,999,998 100.00 % 100.00 %

NSNCo Restructuring

As part of Seadrill’s wider process, NSNCo, the holding company for investments in SeaMex, Seabras Sapura, and Archer, concluded a separate restructuring process on January 20, 2022.

The restructuring was achieved using a pre-packaged Chapter 11 process and had the following major impacts:

Holders of the senior secured notes issued by NSNCo released Seadrill from all guarantees and securities previously provided by Seadrill in respect of the notes;

Seadrill disposed of 65 % of its equity interest in NSNCo to the holders of NSNCo senior secured notes.

Seadrill's equity interest thereby decreased to 35 %, which was recognized as an equity method investment;

Reinstatement of the notes in full on amended terms.

Related to the NSNCo restructuring, the noteholders also financed a restructuring of the bank debt of the SeaMex joint venture.

This enabled NSNCo to subsequently acquire a 100 % equity interest in the SeaMex joint venture by way of a credit bid, which was executed on November 2, 2021.

Upon effectiveness of NSNCo's bankruptcy on January 20, 2022, Seadrill sold 65 % of its equity interest in NSNCo, recognizing its 35 % retained interest as an equity method investment.

The ceding of control occurred 9 days prior on January 11, 2022, the petition date when the Bankruptcy Court first assumed the power to approve all significant actions in the entity.

Separately, the determination of held-for-sale and discontinued operations was made at year end and described in the Company's 2021 Form 20-F.

Subsequent to its emergence from its pre-packaged bankruptcy, NSNCo was renamed Paratus Energy Services Ltd.

Renegotiation of leases with SFL

Under the sale and leaseback arrangements with certain subsidiaries of SFL Corporation Ltd ("SFL"), the semi-submersible rigs West Taurus and West Hercules and the jackup rig West Linus were leased to certain wholly owned Seadrill entities under long term charter agreements.

The Chapter 11 proceedings afforded Seadrill the option to reject or amend the leases.

On March 9, 2021, the West Taurus lease rejection motion was approved by the Bankruptcy Court, and the rig was redelivered to SFL on May 6, 2021, in accordance with the West Taurus settlement agreement.

The lease termination led to a remeasurement of the outstanding amounts due to SFL held within liabilities subject to compromise to the claim value which was settled at emergence.

On August 27, 2021, the Bankruptcy Court of the Southern District of Texas entered an approval order for an amendment to the original SFL Hercules charter.

The amended charter was accounted for as an operating lease, resulting in the recognition of a ROU asset and an associated lease liability.

The removal of the call options and purchase obligations meant that sale recognition was no longer precluded.

In February 2022, Seadrill signed a transition agreement with SFL pursuant to which the West Linus rig would be redelivered to SFL upon assignment of the ConocoPhillips drilling contract to SFL.

The interim transition bareboat agreement with SFL provided that Seadrill would continue to operate the West Linus until the rig was delivered back to SFL for a period of time that was estimated to last approximately 6 to 9

months from Seadrill’s emergence.

The amended charter no longer contained a purchase obligation and resulted in the derecognition of the rig asset of $ 175 million and a liability of $ 161 million at emergence from Chapter 11 proceedings on February 22, 2022.

Additionally, $ 7 million of cash held as collateral was returned to SFL.

The interim transition bareboat agreement was accounted for as a short-term operating lease.

Other matters

Liabilities subject to compromise

Liabilities subject to compromise distinguish prepetition liabilities which may be affected by the Chapter 11 proceedings from those that will not.

The liabilities held as subject to compromise prior to the Company's emergence from Chapter 11 proceedings are disclosed on a separate line on the Consolidated Balance Sheet.

Liabilities subject to compromise prior to emergence from Chapter 11 proceedings, as presented on the Consolidated Balance Sheet at February 22, 2022 immediately prior to emergence, included the following:

(In $ millions) February 22, 2022 (Predecessor)

Senior under-secured external debt 5,662

Accounts payable and other liabilities 35

Accrued interest on external debt 34

Amount due to SFL Corporation Ltd under leases for the West Taurus and West Linus

Liabilities subject to compromise 6,237

Attributable to:

Continuing operations 6,119

Discontinued operations 118

Interest expense

The Debtors discontinued recording interest on the under-secured debt facilities from the Petition Date, in line with the guidance of ASC 852-10.

Contractual interest on liabilities subject to compromise not reflected in the Consolidated Statements of Operations was $ 48 million for the period from January 1, 2022 through February 22, 2022 (Predecessor).

Reorganization items, net

Incremental costs incurred directly as a result of the bankruptcy filing and any gains or losses on adjustment to the expected allowed claim value under the plan of reorganization are classified as "Reorganization items, net" in the Consolidated Statements of Operations.

The following table summarizes the reorganization items recognized in the year ended December 31, 2024, December 31, 2023, period from February 23, 2022 through December 31, 2022 (Successor) and period from January 1, 2022 through February 22, 2022 (Predecessor).

Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Gain on settlement of liabilities subject to compromise (a)

Fresh Start valuation adjustments (b)

Loss on deconsolidation of Paratus Energy Services (c)

— — — ( 112 )

Advisory and professional fees (d)

— — ( 15 ) ( 44 )

Expense of predecessor Directors & Officers insurance policy — — — ( 17 )

Interest income on surplus cash

Total reorganization items, net

— — ( 15 ) 3,651

Attributable to:

Continuing operations — — ( 15 ) 3,683

Discontinued operations — — — ( 32 )

Gain on liabilities subject to compromise

On emergence from Chapter 11 proceedings, we settled liabilities subject to compromise in accordance with the Plan.

This includes extinguishment of our secured external debt and amounts due under our sale and leaseback agreements with SFL Corporation Ltd.

Refer to Note 5 – "Fresh Start accounting" for further information.

Fresh Start valuation adjustments

On emergence from Chapter 11 proceedings and under the application of Fresh Start accounting, we allocated the reorganization value to our assets and liabilities based on their estimated fair values.

The effects of the application of Fresh Start accounting applied as of February 22, 2022.

The new basis of our assets and liabilities are reflected in the Consolidated Balance Sheet at December 31, 2024 and 2023 (Successor) and the related adjustments were recorded in the Consolidated Statements of Operations in the Predecessor.

Refer to Note 5 – "Fresh Start accounting" for further information.

Loss on deconsolidation of Paratus Energy Services Ltd

The loss on deconsolidation reflects the impact of the sale of 65 % of Seadrill's interest in Paratus Energy Services Ltd (formerly NSNCo), as we deconsolidated the carrying value of the net assets of Paratus and recorded the 35 % retained interest at fair value.

The difference between the net assets deconsolidated and retained 35 % interest represents a loss on deconsolidation.

(In $ millions) January 20, 2022

Carrying value of Paratus Energy Services Ltd equity at January 20, 2022 ( 152 )

Fair value of retained 35 % interest in Paratus Energy Services Ltd

Reclassification of NSNCo accumulated other comprehensive losses to income on disposal ( 16 )

Loss on deconsolidation of Paratus Energy Services Ltd ( 112 )

Advisory and professional fees

Professional and advisory fees incurred for post-petition Chapter 11 expenses.

Professional and advisory expenses have been incurred post-emergence but relate to our Chapter 11 proceedings.

Note 5 – Fresh Start Accounting

Fresh Start accounting

Upon emergence from bankruptcy, Seadrill qualified for and adopted Fresh Start accounting in accordance with the provisions set forth in ASC 852, which resulted in a new entity, the Successor, for financial reporting purposes, with no beginning retained earnings or loss as of the Effective Date.

The criteria requiring Fresh Start accounting are:

(i) the reorganization value of Seadrill’s assets immediately prior to confirmation of the Plan was less than the total of all post-petition liabilities and allowed claims and (ii) the holders of the then-existing voting shares of the Predecessor (or legacy entity prior to the Effective Date) received less than 50% of the voting Shares of the Successor outstanding upon emergence from bankruptcy.

Fresh Start accounting requires a reporting entity to present its assets, liabilities, and equity at their reorganization value amounts as of the date of emergence from bankruptcy on February 22, 2022.

However, the Company will continue to present financial information for any periods before the adoption of Fresh Start accounting for the Predecessor.

The Predecessor and Successor Companies lack comparability, as is required in ASC Topic 205, Presentation of Financial Statements ( "ASC 205" ).

ASC 205 states that financial statements are required to be presented comparably from year to year, with any exceptions to comparability clearly disclosed.

Therefore, "black-line" financial statements are presented to distinguish between the Predecessor and Successor Companies.

Reorganization Value

Under Fresh Start accounting, we allocated the reorganization value to Seadrill's individual assets based on their estimated fair values in conformity with ASC Topic 805, Business Combinations (''ASC 805'') , and ASC Topic 820, Fair Value Measurement .

Deferred income taxes were calculated in conformity with ASC Topic 740, Income Taxes (''ASC 740'') .

Reorganization value is viewed as the value of the reconstituted entity before considering liabilities and it approximates the amount a willing buyer would pay for the assets of the entity immediately after the restructuring.

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.

As set forth in the Disclosure Statement approved by the Bankruptcy Court, the valuation analysis resulted in an enterprise value between $ 1,795 million and $ 2,396 million, with a mid-point of $ 2,095 million.

For US GAAP purposes, we valued our individual assets, liabilities, and equity instruments using valuation models and determined the value of the enterprise was $ 2,095 million as of the Effective Date, which fell in line within the forecasted enterprise value ranges approved by the Bankruptcy Court.

Specific valuation approaches and key assumptions used to arrive at reorganization value, and the value of discrete assets and liabilities resulting from the application of Fresh Start accounting, are described in greater detail within the valuation process below.

The following table reconciles the enterprise value to the estimated fair value of the Successor’s common shares as of the Effective Date:

(In $ millions, except per share amount) As of February 23, 2022

Enterprise value 2,095

Cash and cash equivalents at emergence 355

Fair value of long-term debt ( 951 )

Implied value of Successor equity

Shares issued upon emergence

Per share value (US$)

The following table reconciles enterprise value to the reorganization value of the Successor (i.e., value of the total assets of the Successor) as of the Effective Date:

(In $ millions) As of February 23, 2022

Enterprise value 2,095

Cash and cash equivalents at emergence 355

Non-interest-bearing current liabilities 350

Non-interest-bearing non-current liabilities

Total value of Successor Entity's assets on Emergence

The enterprise value and corresponding equity value are derived from expected 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.

Valuation Process

To apply Fresh Start accounting, we conducted an analysis of the Consolidated Balance Sheet to determine if any of our net assets would require a fair value adjustment as of the Effective Date.

The results of our analysis indicated that our drilling units, equipment, drilling and management services contracts, leases, investments in associated companies, certain working capital balances and long-term debt would require a fair value adjustment on the Effective Date.

Any deferred tax on the fair value adjustments have been made in accordance with ASC 740.

The rest of our net assets were determined to have carrying values that approximated fair value on the Effective Date.

Further details regarding the valuation process are described below.

Drilling units

Seadrill's principal assets comprise its fleet of drilling units.

For the working fleet, we determined the fair value of drilling units based primarily on an income approach utilizing a discounted cash flow analysis.

For long-term cold stacked units, we have applied a market approach methodology.

Assumptions used in our assessment of the discounted free cash flows included, but were not limited to, the contracted and market dayrates, operating costs, overheads, economic utilization, effective tax rates, capital expenditures, working capital requirements, and estimated useful economic lives.

The cash flows were discounted at a market participant weighted average cost of capital ("WACC"), which was derived from a blend of market participant after-tax cost of debt and market participant cost of equity and computed using public share price information for similar offshore drilling market participants, certain U.S.

Treasury rates, and certain risk premiums specific to the assets of the Company.

For rigs expected to be long-term stacked, the market approach was used to estimate the fair value of the assets which involved gathering and analyzing recent market data of comparable assets.

Capital Spares and Equipment

The valuation of our capital spares and equipment, including spare parts and capitalized IT software, was determined utilizing the cost approach, in which the estimated replacement cost of the assets was adjusted for physical depreciation and economic obsolescence.

Drilling and management services contracts

We recognized both favorable and unfavorable contracts based on the income approach utilizing a discounted cash flow analysis, comparing the signed contractual dayrate against the global contract assumptions applied in our drilling unit fair value assessment.

The cash flows were discounted at an adjusted market participant WACC.

The management services contracts were fair valued based on an excess earnings methodology, adjusted for the incremental cost of services, working capital, tax, and contributory asset charges, with future cash flows discounted at an adjusted market participant WACC.

For the management incentive fee payable to Seadrill as part of the management service agreement with PES, an option pricing model was used to estimate the fair value of the fee.

The fair value of the West Linus and West Hercules leases were estimated by comparing against assumed global market contract assumptions over the same time period.

Investments in associated companies

The fair value of the equity investments in associated companies was based primarily on the income approach, using projected discounted cash flows of the underlying assets, a risk-adjusted discount rate, and an estimated tax rate.

Long-term debt

The fair values of the Term Loan Facility and Second Lien Facility were determined using relevant market data as of the Effective Date and the terms of each of the respective instruments.

Given the interest rates for both facilities were outside of the range of assumed market rates, we selected discount rates based on the data and used a yield to worst case analysis to estimate the fair values of the respective instruments.

The fair value of the Convertible Bond was split in two components:

(i) straight debt and (ii) conversion option.

The straight debt component was derived through a discounted cash flow analysis.

The conversion option component was based on an option pricing model, which forecasts equity volatility and compares the potential conversion redemption against equity movements in industry peers.

Consolidated Balance Sheet

The adjustments included in the following Consolidated Balance Sheet reflect the consummation of the transactions contemplated by the Plan and carried out by the Company ("Reorganization Adjustments") and the fair value adjustments as a result of the application of Fresh Start accounting ("Fresh Start Adjustments").

The explanatory notes provide additional information with regard to the adjustments recorded, the methods used to determine fair value and significant assumptions or inputs.

February 22, 2022

February 23, 2022

(In $ millions)

Predecessor Reorganization Adjustments Fresh Start Adjustments Successor

Current assets

Cash and cash equivalents 262 74 (a) — 336

Restricted cash 135 ( 50 ) (b) — 85

Accounts receivable, net 169 — — 169

Amount due from related parties, net 42 — — 42

Asset held for sale - current 63 — 11 (k) 74

Other current assets 194 ( 17 ) (c) 20 (k) 197

Total current assets 865 7 31 903

Non-current assets

Investment in associated companies 81 — ( 17 ) (l) 64

Drilling units 1,434 ( 175 ) (d) 316 (m) 1,575

Restricted cash 69 — — 69

Deferred tax assets 8 — 1 (n) 9

Equipment 11 — ( 2 ) (o) 9

Asset held for sale - non-current 345 — ( 34 ) (m,p) 311

Other non-current assets 13 — 26 (p) 39

Total non-current assets 1,961 ( 175 ) 290 2,076

Total assets 2,826 ( 168 ) 321 2,979

LIABILITIES AND SHAREHOLDERS'S EQUITY

Current liabilities

Trade accounts payable 53 — — 53

Liabilities associated with asset held for sale - current 64 — — 64

Other current liabilities 164 52 (e) 17 (q) 233

Total current liabilities 281 52 17 350

Liabilities subject to compromise 6,119 ( 6,119 ) (f) — —

Liabilities subject to compromise associated with asset held for sale 118 ( 118 ) (f) — —

Non-current liabilities

Long-term debt — 951 (g) — 951

Deferred tax liabilities 7 — ( 1 ) (r) 6

Liabilities associated with asset held for sale - non-current 2 — — 2

Other non-current liabilities 108 — 63 (s) 171

Total non-current liabilities 117 951 62 1,130

SHAREHOLDERS' EQUITY

Predecessor common shares of par value 10 ( 10 ) (h) — —

Predecessor additional paid-in capital 3,504 ( 3,504 ) (h) — —

Accumulated other comprehensive loss ( 1 ) 1 (h) — —

Retained (deficit)/earnings ( 7,322 ) 7,080 (i) 242 (t) —

Successor common shares of par value — — — —

Successor additional paid-in capital — 1,499 (j) — 1,499

Total shareholders’ (deficit)/equity ( 3,809 ) 5,066 242 1,499

Total liabilities and shareholders' equity 2,826 ( 168 ) 321 2,979

* The total valuation of drilling units amounted to $ 1,882 million, of which $ 1,575 million related to continuing operations and $ 307 million related to discontinued operations.

Reorganization Adjustments

(a) Reflects the net cash receipts that occurred on the Effective Date as follows:

(In $ millions) February 22, 2022

(Predecessor)

Receipt of cash from the issuance of the Term Loan Facility 175

Receipt of cash from the issuance of the Convertible Bond 50

Proceeds from the issuance of the Second Lien Facility 683

Settlement of the Prepetition Credit Agreement ( 683 )

Payment of the AOD cash out option ( 116 )

Payment of success-based advisor fees ( 28 )

Payment of the arrangement & financing fee for the Term Loan Facility ( 5 )

Transfer of cash to restricted cash for the professional fee escrow account funding ( 2 )

Change in cash and cash equivalents 74

(b) Reflects the net restricted cash payments that occurred on the Effective Date as follows:

(In $ millions) February 22, 2022

(Predecessor)

Payment of net scrap rig proceeds to holders of Prepetition Credit Agreement claims ( 45 )

Return of cash collateral to SFL for the amended West Linus lease agreement

Cash transferred from unrestricted cash for the professional fee escrow account funding 2

Change in restricted cash ( 50 )

(In $ millions) February 22, 2022

(Predecessor)

Expense of Predecessor Directors & Officers insurance policy ( 17 )

Expense of the Commitment Premium and other capitalized debt issuance costs ( 24 )

Recognition of the right-of-use asset associated with the modified West Linus bareboat lease

Change in other current assets ( 17 )

(d) Reflects the change in drilling units for the derecognition of the West Linus of $ 175 million associated with modification of lease.

(e) Reflects the change in other current liabilities:

(In $ millions) February 22, 2022

(Predecessor)

Accrued liability due to holders of Prepetition Credit Agreement claims for sold rig proceeds 27

Recognition of lease liability and other accrued liability associated with the amended West Linus lease

Change in other current liabilities 52

(f) Liabilities subject to compromise were settled as follows in accordance with the Plan:

(In $ millions) February 22, 2022

(Predecessor)

Senior under-secured external debt 5,662

Accounts payable and other liabilities 35

Accrued interest on external debt 34

Amounts due to SFL Corporation Ltd under leases for the West Taurus and West Linus

Total liabilities subject to compromise 6,237

Attributable to:

Continuing operations 6,119

Discontinued operations 118

Payment of the AOD cash out option ( 116 )

Issuance of the Second Lien Facility ( 717 )

Premium associated with the Term Loan Facility ( 9 )

Debt issuance costs ( 30 )

Payment of the rig sale proceeds ( 45 )

Amounts due to Prepetition Credit Agreement claims for sold rig proceeds not yet paid ( 27 )

Issuance of Shares to holders of Prepetition Credit Agreement claims ( 1,244 )

Issuance of Shares to the Rights Offering Participants ( 187 )

Issuance of Shares associated with the Equity Commitment Premium ( 64 )

Derecognition of West Linus rig and return of cash collateral

Reversal of the release of certain general unsecured operating accruals ( 35 )

Pre-tax gain on settlement of liabilities subject to compromise 3,581

(g) Reflects the changes in long-term debt for the following activities:

(In $ millions) February 22, 2022

(Predecessor)

Issuance of the Term Loan Facility 175

Issuance of the Second Lien Facility 683

Issuance of the Convertible Bond 50

Record the premium on the Term Loan Facility and Second Lien Facility 43

Change in long-term debt

(h) Reflects the cancellation of the Predecessor’s common shares, additional paid in capital, and accumulated other comprehensive income.

(i) Reflects the cumulative net impact on retained loss as follows:

(In $ millions) February 22, 2022

(Predecessor)

Pre-tax gain on settlement of liabilities subject to compromise 3,581

Release of general unsecured operating accruals 35

Payment of success fees recognized on the Effective Date ( 28 )

Expense of Predecessor Directors & Officers insurance policy ( 17 )

Impact to net income 3,571

Cancellation of Predecessor common shares and additional paid in capital 3,513

Issuance of Shares to Predecessor equity holders ( 4 )

Net impact to retained loss 7,080

(j) Reflects the reorganization adjustments made to the Successor additional paid-in capital:

(In $ millions) February 22, 2022

(Predecessor)

Fair value of Shares issued to holders of Prepetition Credit Agreement claims 1,456

Fair value of Shares issued to Predecessor equity holders 4

Fair value of the conversion option on the Convertible Bond 39

Successor additional paid-in capital

Fresh Start Adjustments

(k) Reflects the fair value adjustment to other current assets for the following:

(In $ millions) February 22, 2022

(Predecessor)

Record fair value adjustment for favorable drilling and management service contracts 68

Write-off of current portion of deferred mobilization costs held at amortized cost ( 15 )

Off-market right-of-use asset adjustment for the West Hercules and West Linus

Change in other current assets 31

Attributable to:

Continuing operations 20

Discontinued operations 11

(l) Reflects the fair value adjustment to the investments in PES of $ 14 million and in Sonadrill of $ 3 million.

(m) Reflects the fair value adjustment to drilling units and the elimination of accumulated depreciation.

(In $ millions) February 22, 2022

(Predecessor)

Total Fresh start adjustments 279

Attributable to:

Continuing operations 316

Discontinued operations ( 37 )

(n) Reflects the fair value adjustment to deferred tax assets of $ 1 million for favorable management contracts.

(o) Reflects the fair value adjustment to equipment and the elimination of accumulated depreciation.

(p) Reflects fair value adjustment to other non-current assets for the following:

(In $ millions) February 22, 2022

(Predecessor)

Record fair value adjustment for favorable drilling and management service contracts 42

Write-off of non-current portion of historical favorable contracts held at amortized cost ( 9 )

Write-off of non-current portion of deferred mobilization costs held at amortized cost ( 4 )

Change in other non-current assets 29

Attributable to:

Continuing operations 26

Discontinued operations 3

(q) Reflects the fair value adjustment to other current liabilities for the following:

(In $ millions) February 22, 2022

(Predecessor)

Record fair value adjustment for unfavorable drilling contracts 18

Write-off of current portion of historical unfavorable contracts held at amortized cost ( 1 )

Change in other current liabilities 17

(r) Reflects the fair value adjustment to deferred tax liabilities of $ 1 million to write-off previously recognized Fresh Start balances.

(s) Reflects the fair value adjustment to other non-current liabilities for the following:

(In $ millions) February 22, 2022

(Predecessor)

Record fair value adjustment for unfavorable drilling contracts 67

Write-off of non-current portion of historical unfavorable contracts held at amortized cost ( 4 )

Change in other non-current liabilities 63

(t) Reflects the cumulative impact of the Fresh Start accounting adjustments discussed above.

(In $ millions) February 22, 2022

(Predecessor)

Total Fresh start adjustments 242

Attributable to:

Continuing operations 266

Discontinued operations ( 24 )

The Company continues to evaluate the potential impact of this pronouncement.

Note 4 - Segment information

Operating segments

Following the sale of the KSA Business in October 2022, our organizational structure was simplified, consolidating our operations into a single organization.

In light of these changes, the information provided to our CODM, the Board of Directors, was adapted to reflect the updated operational structure.

As a result, we view our operations and manage our business as one operating segment, using Operating Profit as presented in our Consolidated Statements of Operations .

The information provided to our Chief Operating Decision Maker ("CODM"), which is the Board of Directors, to assess performance and allocate resources is on a consolidated basis, reflecting our operational structure.

We view our operations and manage our business as one operating segment, using Operating Profit as presented in our Consolidated Statements of Operations.

Geographic data

Revenues are attributed to geographical areas based on the country where the revenues are generated.

The following presents our revenues and fixed assets by geographic area:

Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

United States 366 446 146 20

Revenues are attributed to geographical locations based on the country of operations for drilling activities, i.e., the country where the revenues are generated.

The following table presents our revenues by geographic area:

(In $ millions) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Brazil 611 343 343

United States 368 366 446

Angola 331 335 271

Norway 97 188 213

Canada — — 98 —

Total operating revenues 1,437 1,385 1,502

(1) Others represent countries each with less than 10% of total revenues earned for any of the periods presented.

(1) "Other" represents countries in which we operate that individually had revenues representing less than 10% of total operating revenues earned for any of the periods presented.

Fixed assets – drilling units (1)

6 unchanged sentences

(1) Asset locations at the end of the period are not necessarily indicative of the geographic distribution of the revenues or operating profits generated by such assets during such period.

(2) Others represent countries in which we operate that individually had fixed assets representing less than 10% of total fixed assets for any of the periods presented.

(2) Others represent countries in which we operate that individually had drilling unit fixed assets representing less than 10% of total drilling unit fixed assets for any of the periods presented.

Major customers

During the years e nded December 31, 2024 , December 31, 2023, period from February 23, 2022 through December 31, 2022 (Successor) and period from J anuary 1, 2022 through February 22, 2022 (Predecessor), we had the following customers with total revenues greater than 10% in any of the periods presented :

Successor Predecessor

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Sonadrill 22 % 17 % 21 % 9 %

During the years e nded December 31, 2025 , December 31, 2024, and December 31, 2023, we had the following customers with total revenues greater than 10% of total operating revenues in any of the periods presented :

Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Petrobras 36 % 18 % 16 %

Var Energi 7 % 9 % 14 % 11 %

Equinor 7 % 6 % 14 % 10 %

ConocoPhillips 7 % 5 % 13 % 13 %

Lundin — % — % 1 % 12 %

Other 39 % 47 % 37 % 45 %

100 % 100 % 100 % 100 %

Sonadrill 22 % 22 % 17 %

Talos 11 % 2 % 7 %

LLOG 10 % 9 % 9 %

Others 21 % 49 % 51 %

Total 100 % 100 % 100 %

Significant expenses

1 unchanged sentence

Note 5 – Revenue from contracts with customers

The following table provides information about receivables, contract assets and contract liabilities from our contracts with customers:

The following table provides information about receivables and contract liabilities from our contracts with customers, as of the dates presented:

(In $ millions) December 31, 2025 December 31, 2024

2 unchanged sentences

Non-current contract liabilities (classified within other non-current liabilities) ( 36 ) ( 48 )

Changes to contract liabilities balances during the year ended December 31, 2024 were as follows:

Changes to contract liabilities balances during the years ended December 31, 2024 and December 31, 2025 were as follows:

(In $ millions) Contract Liabilities

Net contract liability at January 1, 2024 ( 64 )

Net contract liability as of January 1, 2024 ( 64 )

Amortization of revenue that was included in the beginning contract liability balance 29

Additional contract liabilities recognized, excluding amounts recognized as revenue ( 76 )

Net contract liability at December 31, 2024 ( 111 )

Changes to contract liabilities balances during the year ended December 31, 2023 were as follows:

(In $ millions) Contract Liabilities

Net contract liability at January 1, 2023 ( 61 )

Aquadrill Acquisition ( 1 )

Net contract liability as of December 31, 2024 ( 111 )

Amortization of revenue that was included in the beginning contract liability balance 65

Additional contract liabilities recognized, excluding amounts recognized as revenue ( 48 )

Net contract liability at December 31, 2023 ( 64 )

The deferred revenue consists primarily of mobilization and upgrade revenue for both wholly and partially unsatisfied performance obligations as well as expected variable mobilization and upgrade revenue for partially unsatisfied performance obligations, which has been estimated for purpose s of allocating across the entire corresponding performance obligations.

Net contract liability as of December 31, 2025 ( 94 )

Note 6 – Other revenues

Other revenues consist of the following:

Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Inventory sales (i)

Total other revenues 5 12 15 1

Inventory sales

Sales of spare parts inventory from the West Tucana, West Castor and West Telesto to Gulf Drilling International.

(In $ millions) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Other revenues 3 5 12

On July 1, 2022, Seadrill novated its drilling contract for the West Gemini in Angola to the Sonadrill joint venture and leased the West Gemini to Sonadrill for the duration of that contract and the follow-on contract, entered into directly by Sonadrill, at a nominal charter rate, based on a commitment made under the terms of the joint venture agreement.

5 unchanged sentences

Other operating items consist of the following:

Successor Predecessor

(In $ millions)

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Gain on disposals (i)

Other operating income (ii)

Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Loss on impairment of long-lived assets (i)

Gain on disposals (ii)

Other operating income (iii)

Total other operating items ( 21 ) 250 14

Loss on on impairment of long-lived assets

During the year ended December 31, 2025, indicators of impairment were present for the West Eclipse primarily related to a sustained lack of future utilization plans.

We tested the recoverability of the drilling unit and determined the asset was impaired by $ 22 million.

The remaining carrying amount of the drilling unit is not material.

Gain on disposals

The 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 during the year ended December 31, 2023 comprised of sales of capital spares relating to jackup rigs and to the West Hercules , and spare parts on previously recycled rigs.

The gain on disposals during the 2022 Successor period relates to the sale of sundry assets of the West Tucana and West Carina, the sale of capital spares on the West Hercules and the sale of parts on the West Navigator .

The gain on disposal during the 2022 Predecessor period relates to the sale of the West Venture .

The 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 during the year ended December 31, 2023 comprised of sales of capital spares.

Other operating income

The $ 16 million gain in 2024 relates to the recovery of historical imports duties in the form of tax credits following the approval by the applicable tax authorities.

The $ 16 million gain in 2024 relates to the recovery of historical import duties in the form of tax credits following the approval by the applicable tax authorities.

Note 8 – Interest expense

Interest expense consists of the following:

Successor Predecessor

(In $ millions)

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Interest on debt facilities (a)

( 53 ) ( 54 ) ( 54 )

Interest on SFL leases (b)

Other ( 8 ) ( 7 ) ( 5 )

3 unchanged sentences

Please refer to Note 16 – "Debt" for more information on these debt facilities.

Successor Predecessor

(In $ millions)

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

$ 575 million secured bond

4 unchanged sentences

Interest on debt facilities ( 53 ) ( 54 ) ( 54 )

(b) Interest on SFL leases

Interest on SFL leases reflects the cost incurred on capital lease agreements between Seadrill and SFL for the West Taurus, West Linus and West Hercules .

During the reorganization, the West Taurus lease was rejected and the West Linus and West Hercules were modified to operating leases, resulting in no further expense being recorded through this line item for the Successor.

For information on our debt facilities please refer to Note 19 – "Debt".

Note 9 – Taxation

Income taxes consist of the following:

Successor Predecessor

(In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Current tax (benefit)/expense:

(Loss)/profit before income taxes in Bermuda and foreign jurisdictions were as follows:

(In $ millions) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Bermuda ( 127 ) 123 ( 104 )

Foreign 76 210 421

Deferred tax benefit:

(Loss)/profit before income taxes ( 51 ) 333 317

Income taxes consisted of the following:

(In $ millions, except percentages) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Current tax expense/(benefit):

Bermuda — — —

Foreign 4 ( 95 ) 30

Total income tax (benefit)/expense ( 113 ) 17 10 2

Deferred tax expense/(benefit):

Bermuda — — —

Foreign 22 ( 18 ) ( 13 )

Total income tax expense/(benefit) 26 ( 113 ) 17

Effective tax rate ( 51.0 ) % ( 33.9 ) % 5.4 %

The effective tax rate for the years ended December 31, 2024, December 31, 2023, the period from February 23, 2022 through December 31, 2022 (Successor), and the period from January 1, 2022 through February 22, 2022 (Predecessor), was ( 33.9 )%, 5.4 %, 16.0 % and 0 % respectively.

The income taxes for the years ended December 31, 2024 and December 31, 2023, the period from February 23, 2022 through December 31, 2022 (Successor) and the period from January 1, 2022 through February 22, 2022 (Predecessor), differed from the amount computed by applying the Bermuda statutory income tax rate of 0% as follows:

Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Effect of change on unrecognized tax benefits ( 115 ) 4 ( 5 ) —

Effect of unremitted earnings of subsidiaries 1 1 1 ( 1 )

A reconciliation of the Bermuda statutory income tax rate of 15 % to the consolidated effective tax rate for the year ended December 31, 2025 is as follows:

(In $ millions, except percentages) Year ended December 31, 2025

Expected income tax benefit at Bermuda statutory rate ( 8 ) 15.0 %

Foreign tax effects

Statutory income tax rate differential 5 ( 9.6 ) %

Nondeductible expenses 3 ( 5.1 ) %

Changes in valuation allowance ( 4 ) 7.1 %

Adjustment to prior year deferred taxes 20 ( 38.4 ) %

Changes in valuation allowance ( 3 ) 5.9 %

Statutory income tax rate differential ( 2 ) 4.7 %

Nondeductible taxes 8 ( 15.9 ) %

Return to provision adjustments ( 11 ) 21.6 %

Adjustment to prior year deferred taxes 19 ( 37.3 ) %

Foreign exchange effects ( 3 ) 6.6 %

Statutory accounting adjustments ( 7 ) 13.2 %

Other ( 2 ) 4.4 %

Statutory income tax rate differential ( 8 ) 15.6 %

Adjustment to prior year deferred taxes ( 2 ) 4.2 %

Subnational taxes 4 ( 8.6 ) %

United Kingdom

Statutory income tax rate differential 2 ( 4.4 ) %

Adjustment to prior year deferred taxes 2 ( 4.8 ) %

Other ( 2 ) 3.2 %

United States

Nondeductible share based compensation 6 ( 11.9 ) %

Effect of foreign earnings not permanently reinvested 3 ( 6.8 ) %

Other 4 ( 8.2 ) %

Other jurisdictions 7 ( 12.5 ) %

Changes in valuation allowance 12 ( 24.1 ) %

Nontaxable or nondeductible items

Nontaxable equity in losses of equity method investment (net of tax) 2 ( 3.1 ) %

Changes in deferred taxes due to intragroup transfer 6 ( 11.0 ) %

Changes in unrecognized tax benefits ( 25 ) 49.2 %

Income tax expense 26 ( 51.0 ) %

A reconciliation of the Bermuda statutory income tax rate of 0% to the consolidated effective tax rate for the years ended December 31, 2024 and December 31, 2023 is as follows:

(In $ millions, except percentages) Year ended December 31, 2024 Year ended December 31, 2023

Effect of change in unrecognized tax benefits ( 115 ) ( 34.5 ) % 4 1.3 %

Effect of foreign earnings not permanently reinvested 1 0.3 % 1 0.3 %

Effect of taxable income in various countries 1 0.3 % 12 3.8 %

Total tax (benefit)/expense ( 113 ) 17 10 2

Income tax (benefit)/expense ( 113 ) ( 33.9 ) % 17 5.4 %

Deferred income taxes

Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes.

The net deferred tax assets are comprised of the following:

Net deferred tax assets are comprised of the following components:

Deferred tax assets:

(In $ millions) December 31, 2025 December 31, 2024

Net operating losses carried forward 1,025 1,097

Tax losses carried forward 1,083 1,025

Property, plant and equipment 199 245

10 unchanged sentences

Net deferred tax assets 30 52

In December 2023, the legislation implementing a corporate income tax in Bermuda received governor's assent.

The Bermuda income tax is effective beginning on January 1, 2025 with a statutory income tax rate of 15%.

The new law allows corporations to carry forward tax losses incurred in the five fiscal years preceding the effective date and allows for an increase in the tax basis of assets and liabilities.

As of December 31, 2024 , deferred tax assets related to net operating loss ("NOL") carryforward was $ 1,025 million ( December 31, 2023 :

$ 1,097 million), which can be used to offset future taxable income.

NOL carryforwards which were generated in various jurisdictions, include $ 627 million ( December 31, 2023 :

In December 2023, legislation implementing a corporate income tax in Bermuda received Governor's Assent.

The Bermuda income tax is effective beginning on January 1, 2025, with tax imposed at the statutory tax rate of 15 %.

The CIT Act provides an elective Economic Transition Adjustment under which a Bermuda Constituent Entity may, as of the commencement of the regime, adjust the tax basis of its assets and liabilities to fair value, and, if such election is not made, permits a carryforward of certain pre‑effective‑date tax losses into post‑effective‑date taxable years.

As of December 31, 2025 the Group's Bermuda constituent entities had tax loss carryforwards of $ 3.1 billion available to offset future taxable income.

As of December 31, 2025 , deferred tax assets related to tax loss carryforwards was $ 1,083 million ( December 31, 2024 :

$ 1,025 million).

Subject to limitations under relevant tax law, the tax loss carryforwards can be used to offset future taxable income.

Tax loss carryforwards which were generated in various jurisdictions, include $ 691 million ( December 31, 2024 :

$ 627 million) that will not expire and $ 392 million ( December 31, 2024 :

$ 422 million) that will expire between 2025 and 2044 if not utilized.

$ 398 million) that will expire between 2026 and 2045 if not utilized ( December 31, 2024 :

between 2025 and 2044).

We establish a valuation allowance for deferred tax assets when it is more likely than not that the benefit from the deferred tax asset will not be realized.

The amount of deferred tax assets considered realizable could increase or decrease in the near term if our estimates of future taxable income change.

Our v aluation allowance consists primarily of $ 968 million on NOL carryforwards as of December 31, 2024 ( December 31, 2023 :

Our v aluation allowance consists primarily of $ 1,046 million on tax loss carryforwards as of December 31, 2025 ( December 31, 2024 :

$ 968 million).

2 unchanged sentences

The changes related to unrecognized tax benefits were as follows:

Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

(In $ millions) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Balance at the beginning of the period 42 150 82

9 unchanged sentences

Gross unrecognized tax benefits excluding interest and penalties 37 42

Aquadrill interest and penalties acquired — 11

Interest and penalties 8 28

1 unchanged sentence

Total unrecognized tax benefits included as "Other non-current liabilities" 22 55

The decrease in the gross unrecognized tax benefits excluding interest and penalties compared to December 31, 2023 was primarily attributable to settlements with the Nigerian tax authorities during the year ended December 31, 2024 .

We have no open tax years in Nigeria.

Accrued interest and penalties totaled $ 28 million at December 31, 2024 ( December 31, 2023 :

The decrease in gross unrecognized tax benefits excluding interest and penalties compared to December 31, 2024 was principally attributable to resolution of uncertain tax positions in respect to Ghana, following a decision of Ghana’s Supreme Court in an unrelated taxpayer’s litigation, and Norway, partially offset by an unrecognized tax benefit recorded upon notification of an assessment decision by the Norwegian Tax Administration.

Accrued interest and penalties in respect of unrecognized tax benefits totaled $ 8 million at December 31, 2025 ( December 31, 2024 :

$ 28 million) and are included in "Other non-current liabilities" on our Consolidated Balance Sheets.

We recognized a benefit of $ 10 million and expense of $ 6 million during the years ended December 31, 2024 and December 31, 2023 , respectively, related to interest and penalties for unrecognized tax benefits on the income tax benefit/(expense) line in the Consolidated Statement of Operations.

During the year ended December 31, 2025, we recognized a benefit of $ 20 million ( December 31, 2024:

$ 10 million) related to interest and penalties for unrecognized tax benefits on the income tax (expense)/benefit line in the Consolidated Statement of Operations.

As of December 31, 2025 , $ 22 million ( December 31, 2024:

4 unchanged sentences

We are defending our tax positions in those jurisdictions.

The Brazilian tax authorities have issued a series of assessments with respect to our returns for certain years up to 2017 for an aggregate amount equivalent to $ 134 million including interest and penalties.

The assessment for the 2009 and 2010 years is being litigated through the Brazilian courts.

Brazil’s tax authorities have issued a series of income tax assessments with respect to our returns for certain years up to 2017 for an aggregate amount equivalent to $ 144 million, including interest and penalties accruing through December 31, 2025.

The assessment for the 2009 and 2010 years is being litigated in Brazil’s courts.

Please refer to Note 24 - "Commitments and contingencies" for further details.

1 unchanged sentence

We are robustly contesting these assessments including filing relevant appeals.

An adverse outcome on these proposed assessments could result in a material adverse impact on our Consolidated Balance Sheets, Statements of Operations and Cash Flows.

The following table summarizes the earliest tax years that remain subject to examination by major taxable jurisdictions in which we operate.

Jurisdiction Earliest open year

An adverse outcome in our appeals against these proposed assessments could result in a material adverse impact on our Consolidated Balance Sheets, Statements of Operations and Cash Flows.

The following table summarizes the tax years that remain subject to examination by major taxable jurisdictions in which we operate:

Jurisdiction Years open to examination

Brazil 2021-2025

Norway 2021-2025

Switzerland 2019-2025

United Kingdom 2023-2025

United States 2022-2025

On December 20, 2021, the Organization for Economic Co-operation and Development released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%, which was effective for the Company as of January 1, 2024.

For the year ended December 31, 2024, Pillar Two did not have a material impact on the Company.

Note 12 – Earnings/(loss) per share

The computation of basic earnings per share ("EPS")/loss per share ("LPS") is based on the weighted average number of Shares outstanding during the period.

Diluted EPS/LPS includes the effect of the assumed conversion of potentially dilutive instruments related to the effect of the convertible note and share based compensation.

Net taxes paid

Income taxes paid (net of refunds) by jurisdiction were as follows:

(In $ millions) Year ended December 31, 2025

United States 11

Total net taxes paid 12

On July 4, 2025, the U.S.

enacted the OBBBA.

OBBBA’s tax provisions include, among other tax law changes, the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act and provisions allowing accelerated cost recovery deductions for qualified property.

We do not expect the legislation to have a material impact on our tax liability, financial condition, or results of operations.

On December 20, 2021, the OECD released the Pillar Two Model Rules, establishing a global minimum tax regime that provides for the taxation of large multinational corporations at a minimum rate of 15%.

Following the OECD’s December 2021 agreement on Pillar Two, several countries in which the Company operates have enacted domestic legislation implementing certain aspects of the global minimum tax rules, some of which are effective or became effective in 2024 and 2025.

For the year ended December 31, 2025, Pillar Two did not have a material impact on the Company’s tax liability or results of operations.

Note 10 - (Loss)/earnings per share

The computation of basic (loss)/earnings per share ("(LPS)/EPS") is based on the weighted average number of Shares outstanding during the period.

Diluted (LPS)/EPS includes the effect of the assumed conversion of potentially dilutive instruments related to the effect of the unsecured senior convertible bond and share based compensation.

Refer to Note 16 – "Debt", for details.

The components of the numerator for the calculation of basic and diluted EPS/LPS are as follows:

Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Net income/(loss) from continuing operations 446 300 ( 73 ) 3,739

Income/(loss) after tax from discontinued operations — — 274 ( 33 )

Net income available to stockholders 446 300 201 3,706

The components of the numerator for the calculation of basic and diluted (LPS)/EPS were as follows:

(In $ millions) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Net (loss)/income ( 77 ) 446 300

Effect of dilution - interest on unsecured senior convertible bond (Note 8)

Diluted net income available to stockholders 452 305 204 3,706

The components of the denominator for the calculation of basic and diluted EPS/LPS are as follows:

Successor Predecessor

(In millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Basic earnings per share:

Diluted net (loss)/income ( 72 ) 452 305

The components of the denominator for the calculation of basic and diluted (LPS)/EPS were as follows:

(In millions) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Basic (loss)/earnings per share:

Weighted average number of common shares outstanding (1)

Diluted earnings per share:

Diluted (loss)/earnings per share:

Effect of dilution 3 3 3

2 unchanged sentences

Please refer to Note 19 – "Common shares" for details on Shares repurchased.

The basic and diluted EPS/LPS are as follows:

Successor Predecessor

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Basic EPS/(LPS):

continuing operations ($) 6.56 4.23 ( 1.46 ) 37.25

Diluted EPS/(LPS):

continuing operations ($) 6.37 4.12 ( 1.46 ) 37.25

Basic EPS ($) 6.56 4.23 4.02 36.92

Diluted EPS ($) 6.37 4.12 3.88 36.92

The basic and diluted (LPS)/EPS were as follows:

(In $ per share) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Basic (loss)/earnings per share ( 1.24 ) 6.56 4.23

Diluted (loss)/earnings per share (1)

( 1.24 ) 6.37 4.12

(1) For the year ended December 31, 2025, the effect of including all potentially dilutive instruments in the calculation resulted in a decrease to loss per share, which is anti-dilutive.

As a result, the basic and diluted loss per share were equal.

Note 11 – Restricted cash

Restricted cash consists of the following:

Restricted cash as of December 31, 2025 and December 31, 2024 consisted of the following:

(In $ millions) December 31, 2025 December 31, 2024

1 unchanged sentence

Total restricted cash 26 27

Restricted cash is presented in our Consolidated Balance Sheets as follows:

(In $ millions) December 31, 2024 December 31, 2023

Current restricted cash 27 31

Note 12 – Other current and non-current assets

5 unchanged sentences

Deferred contract costs (1)

Pre-funding of MSA manager arrangements 13 23

Total other current assets 231 230

7 unchanged sentences

Total other non-current assets 110 146

(1) During the years e nded December 31, 2024 and December 31, 2023, period from February 23, 2022 to December 31, 2022 (Successor) and period from J anuary 1, 2022 to February 22, 2022 (Predecessor), amortization of deferred contract costs amounted to $ 43 million, $ 43 million, $ 19 million and $ 2 million, respectively.

(1) During the years e nded December 31, 2025, December 31, 2024, and December 31, 2023 amortization of deferred contract costs amounted to $ 87 million, $ 43 million, and $ 43 million, respectively.

The amortization was recorded in the Consolidated Statements of Operations as "Vessel and rig operating expenses ".

Favorable drilling contracts and management services contracts

The following tables summarize the movement in favorable drilling contracts and management services contracts for the year ended December 31, 2024 and December 31, 2023:

(In $ millions)

Net carrying amount

As of January 1, 2023 42

PES disposal ( 13 )

Aquadrill acquisition 7

Amortization ( 35 )

As of December 31, 2023 1

Amortization ( 1 )

As of December 31, 2024 —

Upon emergence from Chapter 11 proceedings and the application of Fresh Start accounting in 2022, and in connection with the acquisition of Aquadrill in 2023, favorable drilling contract and management service contract intangible assets were recognized.

The favorable drilling contracts and management services contracts were fully amortized in 2024.

The amortization was recorded in the Consolidated Statements of Operations as "Depreciation and amortization ".

For further information refer to Note 29 – "Business combinations" and Note 5 – "Fresh Start Accounting" respectively.

Note 15 – Investment in associated companies

We had the following investments in associated companies as of December 31, 2024 and December 31, 2023:

Note 13 – Equity method investment

We had the following equity method investment as of December 31, 2025 and December 31, 2024:

Ownership percentage December 31, 2025 December 31, 2024

Sonadrill (i)

Gulfdrill (ii)

We account for our investments in associates under the equity method.

Sonadrill 50 % 50 %

We account for our equity method investments under the equity method.

For transactions with related parties refer to Note 21 – "Related party transactions".

13 unchanged sentences

The remaining committed Seadrill rig will be leased to the joint venture once Sonadrill secures a drilling contract.

Seadrill owned a 50 % stake in Gulfdrill, a joint venture that operates jackup rigs in Qatar.

Equity method investment results

Our equity method investment results were as follows:

(In $ millions) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Sonadrill ( 10 ) ( 9 ) 31

Gulfdrill (i)

Total equity method investment ( 10 ) ( 9 ) 37

As of December 31, 2023, Seadrill owned a 50 % stake in Gulfdrill, a joint venture that operates jackup rigs in Qatar.

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 .

Share in results from associated companies

Our share in results of our associated companies were as follows:

Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Sonadrill ( 9 ) 31 2 1

Gulfdrill — 6 4 —

— — ( 8 ) ( 3 )

Total share in results from associated companies (net of tax) ( 9 ) 37 ( 2 ) ( 2 )

Paratus Energy Services Ltd ("PES")

PES, formerly known as Seadrill New Finance Limited or "NSNCo", holds investments in SeaMex ( 100 %), Seabras Sapura ( 50 %), and Archer ( 15.7 %).

As part of Seadrill's comprehensive restructuring process, we disposed of 65 % of our equity interest in PES in January 2022, reducing our shareholding to 35 %.

As a result, the carrying value of PES's net assets were deconsolidated from Seadrill's Consolidated Balance Sheet and were replaced with an equity method investment representing the fair value of the retained 35 % interest.

This resulted in a loss of $ 112 million that was reported through reorganization items, as set out in Note 4 – "Chapter 11".

On September 30, 2022, Seadrill entered into share purchase agreements with certain other existing shareholders of PES to dispose of the remaining 35 % shareholding in PES.

The sale closed on February 24, 2023 for total consideration of $ 44 million.

As the total consideration received approximated the book value disposed, a minor gain was recognized in the Consolidated Statement of Operations.

In connection with the sale, on March 14, 2023, we provided each of PES and SeaMex Holdings Ltd ("SeaMex Holdings") with a termination notice regarding (i) the Master Services Agreement by and between PES and Seadrill Management Ltd, dated January 20, 2022 (the "Paratus MSA"), and (ii) the Master Services Agreement by and among SeaMex Holdings, certain operating companies party thereto and SML, dated January 20, 2022 (the "SeaMex MSA"), respectively.

The Paratus MSA terminated on November 30, 2023;

and the SeaMex MSA terminated on November 17, 2023.

The termination of the Paratus MSA and SeaMex MSA did not have a material effect on the Company's financial results.

For further information on Seadrill's comprehensive restructuring, including the disposal of the 65 % interest in Paratus Energy Services Ltd, please refer to Note 4 – "Chapter 11".

Summary of Consolidated Statements of Operations for our investments in associated companies

The results of Sonadrill and our share in those results is summarized below:

Sonadrill Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Summary of Consolidated Statements of Operations for our equity method investments

Our equity method investment results in Sonadrill are summarized below:

(In $ millions) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Operating revenues 382 380 357

Net operating income 1 19 101

Net income ( 8 ) 79 10 2

Net (loss)/income ( 20 ) ( 8 ) 79

Seadrill ownership percentage 50 % 50 % 50 %

Share in results from Sonadrill (net of tax) ( 4 ) 39 5 1

Investment results from Sonadrill (net of tax) ( 10 ) ( 4 ) 39

Basis difference amortization — ( 5 ) ( 8 )

Net share in results from Sonadrill ( 9 ) 31 2 1

The results of Gulfdrill and our share in those results is summarized below:

Gulfdrill Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Net investment results from Sonadrill ( 10 ) ( 9 ) 31

Our equity method investment results in Gulfdrill are summarized below:

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023

Operating revenues 51 199

Net operating income/(loss) 2 16 14 2

Net operating income 2 16

Net income — 12

Seadrill ownership percentage 50 % 50 %

Share in results from Gulfdrill (net of tax) — 6 4 —

Book value of our investments in associated companies

The book values of our investments in our associated companies as of December 31, 2024 and December 31, 2023 were as follows:

Investment results from Gulfdrill (net of tax) — 6

Carrying value of our equity method investment

The carrying value of our equity method investment as of December 31, 2025 and December 31, 2024 was as follows:

(In $ millions) December 31, 2025 December 31, 2024

Sonadrill 58 68

Gulfdrill — 10

Summarized balance sheets for our investments in associated companies

The summarized balance sheets of the Sonadrill companies and our share of recorded equity in those companies was as follows:

Summarized balance sheets for our equity method investment

The summarized balance sheets of the Sonadrill company and our recorded equity method investment balance were as follows:

(In $ millions) December 31, 2025 December 31, 2024

Current assets 186 160

Non-current assets — —

Current liabilities ( 71 ) ( 24 )

Non-current liabilities — —

Net assets 115 136

Seadrill ownership percentage 50 % 50 %

Book value of Seadrill investment 68 72

Basis difference net of amortization (i)

Net book value of Seadrill investment 58 68

(i) On July 1, 2022, Seadrill recorded a liability of $ 21 million reflecting the fair value of the lease of the West Gemini to the Sonadrill joint venture at a nominal charter rate, with the offsetting entry being a basis difference in the joint venture.

This basis difference was amortized

over the lease term.

The Company derecognized the unamortized portion and ceased the amortization of the basis difference in May 2024 following the amendment of charter rate retroactively stated to January 1, 2024 to reflect the fair market value of the rig lease.

The summarized balance sheet of the Gulfdrill companies and our share of recorded equity in those companies, which we divested in the second quarter of 2024, was as follows:

(In $ millions) December 31, 2023

Current assets 118

Non-current assets 114

Current liabilities ( 78 )

Non-current liabilities ( 134 )

Net assets 20

Seadrill ownership percentage 50 %

Book value of Seadrill investment 10

Note 14 – Drilling units

The following table summarizes the movement for the year ended December 31, 2024:

The following table summarizes the movement for the years ended December 31, 2025 and December 31, 2024:

(In $ millions) Cost Accumulated depreciation Net book value

5 unchanged sentences

As of December 31, 2024 3,376 ( 430 ) 2,946

(1) Relates to the disposal of the West Castor, West Tucana, West Telesto and West Prospero .

The following table summarizes the movement for the year ended December 31, 2023:

(In $ millions)

Cost Accumulated depreciation Net book value

As of January 1, 2023 1,761 ( 93 ) 1,668

Aquadrill acquisition 1,252 — 1,252

Additions 300 — 300

Depreciation — ( 255 ) ( 255 )

Disposals (1)

Impairment (2)

( 22 ) — ( 22 )

Disposals ( 3 ) 3 —

As of December 31, 2025 3,651 ( 682 ) 2,969

(1) Primarily relates to the disposal of the tender-assist units acquired under the Aquadrill acquisition.

(1) Relates to the disposal of the West Castor, West Tucana, West Telesto and West Prospero .

(2) Impairment of $ 22 million reported within "Loss on impairment of long-lived assets" on our Consolidated Statement of Operations.

Refer to Note 23 – "Fair value measurements" for further details .

Note 15 – Equipment

Equipment consists of office equipment, software, furniture and fittings.

The following table summarizes the movement for the year ended December 31, 2024:

The following table summarizes the movement for the year ended December 31, 2025 and December 31, 2024:

(In $ millions)

3 unchanged sentences

As of December 31, 2024 17 ( 12 ) 5

The following table summarizes the movement for the year ended December 31, 2023:

(In $ millions)

Cost Accumulated depreciation Net book value

As of January 1, 2023 13 ( 3 ) 10

Additions 5 — 5

Aquadrill acquisition 1 — 1

Depreciation — ( 2 ) ( 2 )

As of December 31, 2025 22 ( 14 ) 8

Note 18 – Disposal of Assets

On May 15, 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.

Note 16 – Debt

The table below sets our debt agreements as of December 31, 2024 and December 31, 2023:

The table below sets forth our debt agreements as of December 31, 2025 and December 31, 2024:

(In $ millions) December 31, 2025 December 31, 2024

2 unchanged sentences

Total secured debt 575 575

Unsecured bond:

Unsecured debt:

Unsecured senior convertible bond 50 50

1 unchanged sentence

Total principal debt 625 625

Debt premium and exit fees:

Debt premium:

Premium on bond issuance 1 1

Total debt premium and exit fees 1 1

Total debt premium 1 1

bond issuance costs ( 13 ) ( 16 )

2 unchanged sentences

In July 2023, Seadrill issued $ 500 million in aggregate principal amount of 8.375 % Senior Secured Second Lien Notes due 2030 in an offering conducted pursuant to Rule 144A and Regulation S under the Securities Act.

Subsequently, in August 2023, Seadrill issued an additional $ 75 million in aggregate principal amount of 8.375 % Senior Secured Second Lien Notes due 2030 (the “Incremental Notes”), maturing on August 1, 2030 (together the "Notes").

In August 2023, Seadrill issued an additional

$ 75 million in aggregate principal amount of 8.375 % Senior Secured Second Lien Notes due 2030 (the "Incremental Notes"), maturing on August 1, 2030 (together the "Notes").

The Incremental Notes were issued at 100.75 % of par.

1 unchanged sentence

(i) prepay in full the outstanding amounts under our then-existing secured debt facilities and (ii) pay fees associated with exiting such secured debt facilities.

A total of $ 187 million was paid to satisfy the First Lien Facility, including principal, interest, and exit fees, along with an additional make-whole payment of $ 10 million.

The Second Lien Facility was completely repaid with a total payment of $ 123 million, which covered principal, interest, and exit fees.

A total of $ 187 million was paid to satisfy a first lien facility, including principal, interest, and exit fees, along with an additional make-whole payment of $ 10 million.

A second lien facility was also completely repaid with a total payment of $ 123 million, which covered principal, interest, and exit fees.

Revolving credit facility

3 unchanged sentences

It also includes a provision for issuing letters of credit up to $ 50 million.

The Revolving Credit Facility incurs interest at a rate equal to a specified margin plus SOFR.

The Revolving Credit Facility incurs interest at a rate equal to a specified margin plus, at Seadrill Finance’s option, either:

(i) the Term SOFR Rate (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 Rate loans and Daily Simple SOFR loans, the applicable margin was 2.75 % per annum as of December 31, 2025, 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.

This facility has not been drawn to date.

In addition, Seadrill is required to pay a quarterly commitment fee on any unused portion of the Revolving Credit Facility.

During the third quarter of 2025, the Company issued a NOK 403 million guarantee (approximately $ 40 million as of December 31, 2025) under the Revolving Credit Facility related to SFL Hercules Ltd.

claim, which reduced the available borrowings under the Revolving Credit Facility to approximately $ 185 million.

Refer to Note 24 – "Commitments and contingencies" for further details.

Unsecured senior convertible bond

The $ 50 million unsecured senior convertible bond, issued on emergence from Chapter 11, has a maturity of August 2028 and bears interest, payable quarterly in cash, at the Term SOFR (as defined in the Note Purchase Agreement dated as of February 22, 2022, as amended (the "Note Purchase Agreement")), plus 6 % on the aggregate principal amount of $ 50 million.

The bond is convertible (in full and not in part) into Shares at a conversion rate of 52.6316 Shares per $1,000 principal amount of the bond, subject to certain adjustments set forth in the Note Purchase Agreement relating to the convertible bond.

The $ 50 million unsecured senior convertible bond (the "unsecured senior convertible bond"), issued on emergence from Chapter 11, has a maturity of August 2028 and bears interest, payable quarterly in cash, at the Term SOFR (as defined in the Note Purchase Agreement dated as of February 22, 2022, as amended (the "Note Purchase Agreement")), plus 6 % on the aggregate principal amount of $ 50 million.

If not converted, a bullet repayment will become due on the maturity date.

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;

• 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, 2025, Seadrill was in compliance with these financial covenants.

Note 17 – Other current and non-current liabilities

3 unchanged sentences

Accrued expenses 137 183

Contract liabilities (1)

Employee withheld taxes, social security and vacation payments 47 64

Taxes payable 35 20

Contract liabilities (1)

Unfavorable drilling contracts 19 30

Accrued interest expense 21 21

Unfavorable drilling contracts 3 19

Other liabilities 12 13

Total other current liabilities 313 383

(1) Contract liabilities include $ 7 million deferred revenue associated with our related party Sonadrill.

(1) Contract liabilities include $ 3 million and $ 7 million of deferred revenue associated with our related party, Sonadrill, as of December 31, 2025 and December 31, 2024, respectively.

Other non-current liabilities

3 unchanged sentences

Contract liabilities 36 48

Unfavorable drilling contracts 3 22

Lease liabilities 18 8

Unfavorable drilling contracts — 3

Other liabilities 12 2

1 unchanged sentence

Unfavorable drilling contracts and management services contracts

The following tables summarize the movement in unfavorable drilling contracts and management services contracts for the year ended December 31, 2024, and December 31, 2023:

The following table summarizes the movement in unfavorable drilling contracts and management services contracts for the years ended December 31, 2025, and December 31, 2024:

(In $ millions)

1 unchanged sentence

As of January 1, 2024 52

Aquadrill acquisition 49

Amortization ( 30 )

2 unchanged sentences

As of December 31, 2025 3

Upon emergence from Chapter 11 proceedings and the application of Fresh Start accounting in 2022, and in connection with the acquisition of Aquadrill in 2023, unfavorable drilling contract and management service contract intangible liabilities were recognized.

Upon emergence from Chapter 11 proceedings and the application of Fresh Start accounting in 2022, and in connection with the acquisition of Aquadrill in 2023, unfavorable drilling contracts and management service contracts intangible liabilities were recognized.

The amortization is recognized in the Consolidated Statements of Operations as "Depreciation and amortization".

The weighted average remaining amortization period for unfavorable contracts is 13 months.

The table below shows the amortization related to unfavorable contracts to be recognized over the following periods:

Year ended December 31,

(In $ millions) 2025 2026 Total

Amortization of unfavorable contracts 19 3 22

The weighted average remaining amortization period for unfavorable contracts is six months .

Unfavorable drilling contracts of $ 3 million are expected to be amortized during the year ending December 31, 2026.

Note 18 – Leases

Lease arrangements

Lessee arrangements

We have operating leases relating to our premises, for which we are the lessee.

The most significant leases are for offices in Houston, Liverpool, Stavanger, and Rio de Janeiro.

The most significant leases are for offices in Houston, USA, Liverpool, United Kingdom, Stavanger, Norway and Rio de Janeiro, Brazil.

Lessor arrangements

We also leased three benign environment jackup rigs, namely the West Castor , West Telesto , and West Tucana , to Gulfdrill, a joint venture, for a contract with Gulf Drilling International in Qatar.

In June 2024, the Company sold these rigs, along with our 50 % equity interest in the Gulfdrill joint venture.

On July 1, 2022, we commenced a lease for our benign environment floater, West Gemini , to our Sonadrill joint venture at a nominal charter rate.

On July 1, 2022, we commenced a lease for our 6 th generation drillship, West Gemini , to our Sonadrill joint venture at a nominal charter rate.

In May 2024, the charter rate was amended retroactively to January 1, 2024 to reflect the fair market value of the rig.

3 unchanged sentences

2030 and thereafter 20

Reconciliation between undiscounted cashflows and operating lease liability

The following table gives a reconciliation between the undiscounted cash flows and the related operating lease liability recognized in our Consolidated Balance Sheet as of December 31, 2024:

Reconciliation between undiscounted cashflows and operating lease liabilities

The following table gives a reconciliation between the undiscounted cash flows and the related operating lease liabilities recognized within "Other current liabilities" and "Other non-current liabilities" in our Consolidated Balance Sheets:

(In $ millions) December 31, 2025 December 31, 2024

1 unchanged sentence

Less discount ( 10 ) ( 1 )

Less accrued lease incentive ( 5 ) —

Operating lease liability 20 11

1 unchanged sentence

Other supplementary information

The following table gives supplementary information regarding our lease accounting at December 31, 2024:

Successor Predecessor

(In $ million) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Operating lease cost:

(In $ millions, unless otherwise noted) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Operating lease cost 3 3 4

Short-term lease cost — — 3 1

Total lease cost 3 3 4

1 unchanged sentence

Cash paid for lease liabilities- operating cash flows 3 3 4

ROU assets obtained in exchange for lease liabilities — — — 24

Right-of-use assets obtained in exchange for lease liabilities 12 7 1

Weighted-average remaining lease term in months 100 50 47

2 unchanged sentences

For our operating lease where we are the lessor, which represents charter revenue from the West Gemini , our estimated future undiscounted cashflows as of December 31, 2025, was as follows:

(In $ millions) Year ended December 31,

(In $ millions)

Refer to Note 21 – "Related party transactions" for details of the revenues recorded related to the West Gemini.

4 unchanged sentences

As of January 1, 2024 (1)

Shares issued to Aquadrill unitholders and equity award holders 29,866,543 $ 0.01 299

Shares repurchased and cancelled ( 5,817,579 ) $ 0.01 ( 58 )

As of December 31, 2023 (1)

74,048,962 $ 0.01 741

2 unchanged sentences

As of December 31, 2024 62,154,422 $ 0.01 622

Vesting of restricted stock units (2)

219,749 $ 0.01 2

As of December 31, 2025 (2)

62,374,171 $ 0.01 624

(1) As of December 31, 2023 there were 74,048,962 total common shares issued, which included 343,619 common shares repurchased, pending cancellation.

These shares are considered retired for accounting purposes.

These shares were considered retired for accounting purposes.

(2) Excludes 67,629 common shares, vested as of December 31, 2025, pending approval before issuance.

Common share transactions for periods presented

Share issued to Aquadrill unitholders and equity award holders

In connection with the Aquadrill acquisition, Seadrill issued approximately 29.9 million shares to Aquadrill unitholders and equity award holders, representing approximately 37 % of the post-Merger issued and outstanding Shares.

Please refer to Note 29 – "Business combinations" for further details.

Shares repurchased and cancelled

7 unchanged sentences

On September 30, 2024 and December 16, 2024, the Company cancelled 4,213,349 and 2,500,903 treasury shares, respectively, repurchased under this program.

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.

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 .

No common shares were repurchased during the year ended December 31, 2025.

Vesting of restricted stock units

3 unchanged sentences

On August 6, 2022, the Board of Directors adopted the Seadrill Limited 2022 Management Incentive Plan, which was amended and restated on September 25, 2023 and approved by the shareholders at Seadrill's annual general meeting held on November 17, 2023 (the "Management Incentive Plan") and reserved 2,910,053 common shares of the Company for issuance thereunder.

As of the date of this filing, 2,783,814 Shares remain available for issuance with respect to awards that have been or may be granted from time to time under the Management Incentive Plan.

In accordance with the Chapter 11 Plan, the number of Shares reserved constituted 5.5 % of the Company's share capital on a fully diluted and fully distributed basis on the date the Management Incentive Plan was adopted.

As of February 20, 2026, 2,330,410 Shares remain available for issuance with respect to awards that have been or may be granted from time to time under the Management Incentive Plan.

During the year ended December 31, 2022, members of management were granted 125,553 time-based restricted stock units ("MIP 2022 RSUs") and 292,955 performance-based restricted stock units ("MIP 2022 PSUs"), and during the year ended December 31, 2023, the Company granted an additional 6,412 MIP 2022 RSUs and 14,960 MIP 2022 PSUs.

On February 1, 2023, the Company granted 65,492 restricted stock units ("LTIP 2023 RSUs") and 58,481 performance stock units ("LTIP 2023 PSUs") with similar terms to the 2022 grants.

On September 25, 2023, under the same Management Incentive Plan, the Company granted 125,841 time-based restricted stock units ("MIP 2023 TRSUs") and 293,629 performance-based restricted stock units ("MIP 2023 PRSUs") to employees, 60 % of which are subject to the achievement of a total shareholder return ("TSR") market condition and 40 % of which are subject to the achievement of a performance condition based on free cash flow metrics ("FCF").The time-based restricted stock units vest in three equal installments over a period of three years .

The time-based restricted stock units vest in three equal installments over a period of three years .

The performance-based restricted stock units cliff vest over an explicit service period of two to three years .

9 unchanged sentences

For the LTIP 2024 PRSU - TSR, the grant date fair value was $ 63.18 .

On April 25, 2025, the Company also granted 343,433 time-based restricted stock units ("LTIP 2025 TRSUs") and 431,708 performance-based restricted stock units ("LTIP 2025 PRSUs") to employees, 60 % of which are subject to the achievement of a total shareholder return ("TSR") market condition and 40 % of which are subject to the achievement of a performance condition based on free cash flow metrics ("FCF").

The time-based restricted stock units vest in three equal installments over a period of three years , and the performance-based restricted stock units cliff vest over an explicit service period of three years .

For the LTIP 2025 TRSU and LTIP 2025 PRSU – FCF, the grant date fair value was $ 20.62 .

For the LTIP 2025 PRSU - TSR, the grant date fair value was $ 14.97 .

On May 14, 2025, the Company granted 44,955 time-based restricted stock units ("Board LTIP 2025 TRSUs") to the Board of Directors, vesting over a period of one year .

For the Board LTIP 2025 TRSU, the grant date fair value was $ 25.15 .

The fair value of performance-based restricted stock units subject to the achievement of a total shareholder return is estimated using a Monte Carlo simulation to model future share prices of the Company and a peer group of companies.

3 unchanged sentences

Expected volatility Expected dividend yield Risk-free interest rate

Period from February 23, 2022 through December 2022

MIP 2022 PSU 45.0 % — % 4.9 %

Year ended December 31, 2023

3 unchanged sentences

LTIP 2024 PRSU - TSR 45.0 % — % 4.8 %

Year ended December 31, 2025

LTIP 2025 PRSU - TSR 51.0 % — % 3.7 %

A summary of the time-based restricted stock units and performance-based restricted stock units granted and vested, is presented below:

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 2022

Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Awards subject to service or external market conditions

17 unchanged sentences

A summary of share based compensation expense is presented below:

Successor Predecessor

(In $ millions) Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

(In $ millions) Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Selling, general and administration expense 18 16 11

4 unchanged sentences

As of December 31, 2025, our major related party is the Sonadrill joint venture, over which we hold significant influence.

Previously, our related parties included a 50 % interest in the Gulfdrill joint venture, which was sold in June 2024, and a 35 % interest in PES, including its wholly-owned subsidiary, SeaMex, which was sold in February 2023.

Prior to emerging from Chapter 11 proceedings on February 22, 2022, our related parties also included companies who were either controlled by or whose operating policies were significantly influenced by Hemen, who was a major shareholder of the Predecessor Company.

On emergence, Hemen's equity interest in Seadrill substantially decreased, and as a result, companies who were either controlled by or whose policies were significantly influenced by Hemen were no longer related parties.

These include SFL, Northern Ocean, Northern Drilling, Archer, Frontline, and Seatankers.

Previously, our related parties included a 50 % interest in the Gulfdrill joint venture, which was sold in June 2024, and a 35 % interest in Paratus Energy Services Ltd ("PES"), including its wholly-owned subsidiary, SeaMex, which was sold in February 2023.

In the following sections, we provide an analysis of transactions with related parties and balances outstanding with related parties.

Related party revenue

The below table provides an analysis of related party revenues for periods presented in this report.

Successor Predecessor

(In $ millions)

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Year ended December 31, 2025 Year ended December 31, 2024 Year ended December 31, 2023

Management fee revenues (a)

235 222 159 12

Add-on services 12 12 13

5 unchanged sentences

Following the disposal of our remaining 35 % equity interest in PES on February 24, 2023, PES and SeaMex are no longer related parties of Seadrill and any revenue subsequent to that date has been excluded from the above results.

(b) Reimbursable revenues primarily relate to Sonadrill project work on Libongos , Quenguela , and West Gemini rigs.

"Management fee revenues" and "Add-on services" are recognized within "Management contract revenues" in our Consolidated Statements of Operations.

(b) Reimbursable revenues primarily relate to Sonadrill project work on the Libongos , Quenguela , and West Gemini rigs.

(c) Leasing revenues earned on the charter of the West Gemini to Sonadrill , as well as the West Castor, West Telesto and West Tucana to Gulfdrill, up to the disposal of these rigs in June 2024.

2 unchanged sentences

In May 2024, the West Gemini bareboat lease was amended to reflect the fair market value of the rig lease, resulting in the derecognition of the lease commitment liability and cessation of amortization.

Related party operating expenses

The below table provides an analysis of related party operating expenses for periods presented in this report.

Successor Predecessor

(In $ millions)

Year ended December 31, 2024 Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

West Hercules lease (e)

Total related party operating expenses — — — ( 3 )

(e) Operating lease expense related to the West Hercules .

Following emergence from Chapter 11 proceedings, SFL was no longer a related party.

Related party receivable balances

The below table provides an analysis of related party receivable balances for periods presented in this report.

(In $ millions) December 31, 2024 December 31, 2023

Trading balances (f)

Total related party receivables — 9

Amounts due from related parties - current — 9

Total amounts due from related parties — 9

(f) Trading balances as of December 31, 2023, are comprised of receivables from Sonadrill.

Per our contractual terms, these balances are either settled monthly or quarterly in arrears, or in certain cases, in advance.

As of December 31, 2024 Sonadrill prepaid management fees of $ 7 million to Seadrill.

This balance has been recorded in other current liabilities within our Consolidated Balance Sheet.

Related party balances

As of December 31, 2025 and December 31, 2024, Sonadrill prepaid management fees to Seadrill of $ 3 million and $ 7 million, respectively.

These balances were recorded in "Other current liabilities" within our Consolidated Balance Sheets.

Note 22 – Financial instruments and risk management

2 unchanged sentences

This may include the use of derivative instruments.

We have financial assets, including cash and cash equivalents, trade receivables, related party receivables, and other receivables.

We have financial assets, including cash and cash equivalents, trade receivables, and other receivables.

These assets expose us to credit risk arising from possible default by the counterparty.

4 unchanged sentences

Concentration of risk

There is a concentration of credit risk with respect to cash and cash equivalents to the extent that most of the amounts are carried with Citibank, DNB, and JP Morgan.

We consider these risks to be remote, but, from time to time, we utilize instruments such as money market deposits to manage concentration of risk with respect to cash and cash equivalents.

There is a concentration of credit risk with respect to cash and cash equivalents to the extent that most of the amounts are carried with Citibank, Deutsche Bank, JP Morgan and DNB.

We consider these risks to be remote, but may utilize instruments such as money market deposits to manage concentration of risk with respect to cash and cash equivalents.

We also have a concentration of risk with respect to customers, including affiliated companies.

For details on the customers with greater than 10% of contract revenues, refer to Note 4 – "Segment information".

For details on amounts due from affiliated companies, refer to Note 24 – "Related party transactions".

Foreign exchange risk

9 unchanged sentences

Please refer to Note 16 – "Debt" for further details.

Note 26 – Fair values of financial instruments

Note 23 – Fair value measurements

Fair value of financial instruments measured at amortized cost

The carrying value and estimated fair value of our financial instruments that are measured at amortized cost as of December 31, 2024 and December 31, 2023 are as follows:

The carrying values and estimated fair values of certain of our financial instruments as of December 31, 2025 and December 31, 2024 were as follows:

December 31, 2025 December 31, 2024

2 unchanged sentences

value Carrying

$ 575 million secured bond in issue (Level 1)

$ 575 million secured bond (Level 1)

598 563 587 560

Unsecured Convertible Bond - debt component ( Level 3 )

Fair value is a market-based measurement, not an entity-specific measurement, and is determined based on the assumptions that market participants would use in pricing the asset or liability.

As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within level 3 of the hierarchy).

Unsecured senior convertible bond - debt component ( Level 3 )

Financial instruments categorized as level 1

The fair value of the $ 575 million bond is based on market traded value.

We have categorized this at level 1 on the fair value measurement hierarchy.

Financial instruments categorized as level 3

The fair value attributed to the unsecured convertible bond is bifurcated into two elements:

the straight debt component is derived through a discounted cash flow approach, and the conversion option that is derived through an option pricing model, which forecasts equity volatility and compares the potential conversion redemption against historical and implied equity movements in comparable companies in our industry.

The fair value attributed to the unsecured senior convertible bond was bifurcated into two elements:

the straight debt component was derived through a discounted cash flow approach, and the conversion option was derived through an option pricing model.

The conversion option was recorded in equity at the point the bond was issued and, therefore, has not been included in the table above.

Our accounts receivable, amounts due from related parties and accounts payable are, by their nature, short-term.

As a result, the carrying values included in our Consolidated Balance Sheets approximate fair value and have not been included in the above table.

Financial instruments measured at fair value on a recurring basis

The carrying value and estimated fair value of our financial instruments that are measured at fair value on a recurring basis as of December 31, 2024 and December 31, 2023 are as follows:

December 31, 2024 December 31, 2023

(In $ millions) Fair

value Carrying

Cash and cash equivalents ( Level 1)

478 478 697 697

Restricted cash (Level 1)

Level 1 fair value measurements

The carrying value of cash and cash equivalents and restricted cash, which are highly liquid, is a reasonable estimate of fair value and are categorized at level 1 of the fair value hierarchy.

Our cash and cash equivalents, restricted cash, accounts receivable, and accounts payable are by their nature short-term.

As a result, the carrying values included in our Consolidated Balance Sheets approximate fair value.

Fair value of non-financial instruments

We review our long-lived assets for impairment whenever events or changes in circumstances indicate indicators of impairment exist.

In these evaluations, we compare estimated undiscounted future net cash flows expected to be generated from the asset (or asset group), including eventual disposal.

If the undiscounted future net cash flows are less than the carrying value of the asset (or asset group), we estimate the fair value of the asset (or asset group) to determine the impairment.

During the year ended December 31, 2025, indicators of impairment were present for the West Eclipse primarily related to a sustained lack of future utilization plans.

We tested the recoverability of the drilling unit and determined the asset was impaired by $ 22 million.

The remaining carrying amount of the drilling unit is not material.

Note 24– Commitments and contingencies

W e recognize loss contingencies in the Consolidated Financial Statements where it is probable that an outflow of economic benefits will be required to settle an obligation and the amount is reasonably estimable.

An adverse outcome in a matter described below could have an adverse effect on Seadrill's operating results, cash flows and financial position.

Accruals for contingencies and uncertain tax positions related to matters described below, if any, are recorded in "Accrued expenses" within "Other current liabilities" and "Uncertain tax positions" within "Other non-current liabilities", respectively, in the Consolidated Balance Sheets.

Legal Proceedings

SFL Hercules Ltd.

On March 5, 2023, Seadrill was served with a claim from SFL Hercules Ltd., filed in the Oslo District Court in Norway, relating to our redelivery of the rig West Hercules to SFL in December 2022.

On February 6, 2025, the Oslo District Court delivered a judgment in favor of SFL Hercules Ltd.

ordering Seadrill to pay SFL approximately $ 37 million plus interest and legal costs of approximately $ 11 million.

Seadrill intends to vigorously contest the judgment and anticipates appealing to the Court of Appeal prior to the March 5, 2025 deadline for appeal.

The timing of resolution and ultimate amount due, if any, cannot be predicted at this time.

An adverse outcome in this matter could have an adverse effect on Seadrill’s operating results, cash flows and financial position.

On March 5, 2023, Seadrill was served with a claim from SFL Hercules Ltd., filed in the Oslo District Court in Norway, relating to our redelivery of the rig West Hercules to SFL Corporation Ltd.

("SFL") in December 2022.

In February 2025, the Oslo District Court delivered a judgment in favor of SFL Hercules Ltd.

ordering Seadrill to pay SFL approximately $ 37 million, plus interest and legal costs of approximately $ 11 million, based on foreign exchange rates at the time of the judgment.

Seadrill intends to vigorously contest the judgment and filed an appeal in March 2025.

The appeal proceedings are scheduled to commence on April 7, 2026.

The ultimate amount due, if any, cannot be predicted at this time.

As is customary in Norway, Seadrill issued a guarantee in the amount of NOK 574 million in August 2025 (approximately $ 57 million as of December 31, 2025) to the Norwegian Enforcement Authorities as security for the judgment.

The issued guarantee consists of NOK 403 million (approximately $ 40 million as of December 31, 2025) from our Revolving Credit Facility and NOK 171 million (approximately $ 17 million as of December 31, 2025) from our Bilateral Facility.

Sonadrill fees claim

In March 2023, Seadrill was served with a claim from an individual (the "Claimant") filed in the High Court of Justice, Business and Property Courts of England and Wales, King’s Bench Division, Commercial Court.

The Claimant alleges breach of contract and unjust enrichment damages of approximately $ 72 million related to an alleged failure by the Company to pay the Claimant a fee for services in arranging the Sonadrill joint venture.

We do not believe that the Claimant is entitled to the fee claimed and intend to vigorously defend our position.

In March 2023, Seadrill was served with a claim from an individual (the "Claimant") filed in the High Court of Justice, Business and Property Courts of England and Wales, King's Bench Division, Commercial Court (the "High Court").

The Claimant alleged breach of contract and unjust enrichment damages of approximately $ 72 million related to an alleged failure by the Company to pay the Claimant a fee for services in arranging the Sonadrill joint venture dating back to 2018.

The case concluded on March 18, 2025.

On July 11, 2025, the High Court rendered judgment in favor of the Claimant.

In October 2025, the High Court ruled on the first tranche of damages for the period prior to October 2024, including interest and legal fees.

The parties are continuing to make submissions to the High Court on the issue of the quantum of damages to be paid for the second tranche of damages incurred subsequent to October 2024;

however, Seadrill presently estimates that its aggregate liability following the High Court's judgment, including all interest and legal fees, is unlikely to exceed $ 61 million, subject to finalization of calculations relating to second tranche interest.

Seadrill's request for permission for an appeal to the Court of Appeal was not granted.

In October 2025, Seadrill paid the first tranche of damages of approximately $ 43 million.

Nigerian Cabotage Act litigation

4 unchanged sentences

On June 14, 2019, the Federal High Court of Nigeria delivered a judgment (1) finding that:

(1) Drilling operations fall within the definition of "Coastal Trade" or "Cabotage" under the Cabotage Act and (2) Drilling Rigs fall within the definition of "Vessels" under the Cabotage Act.

On the basis of this decision, SMUNL and Seadrill were required to deduct 2 %, or approximately $ 69 million, of their contract value and remit the same to NMASA.

(a) Drilling operations fall within the definition of "Coastal Trade" or "Cabotage" under the Cabotage Act and (b) Drilling Rigs fall within the definition of "Vessels" under the Cabotage Act, and (2) directing SMUNL to deduct 2 %, or approximately $ 69 million, of their contract value and remit the same to NMASA.

On June 24, 2019, the Court of Appeals sitting in Lagos ("COA") issued a conflicting judgment in Transocean Support Services Nigeria & Ors v NIMASA & Anor , finding drilling units cannot be deemed vessels under the Cabotage Act pending appeal.

SMUNL filed an appeal to the COA on July 22, 2019, and applied to the Federal High Court for an injunction pending appeal to prevent enforcement.

Due to the volume of cases currently being handled by the COA, the Registry of the COA is yet to schedule the hearing date for the appeal.

Although we intend to strongly pursue this appeal, we cannot predict the outcome of this case.

Brazil tax audit

Seadrill Serviços de Petróleo Ltda ("Seadrill Brazil") has a long-standing tax audit relating to years 2009 and 2010, which is being litigated through the Brazilian courts.

The initial court ruled in favor of Seadrill Brazil, but the appellate court reversed the lower court decision in September 2023 and ruled in favor of the tax authorities, assessing a tax and interest thereon of approximately $ 65 million.

We will vigorously defend our position and, in the first quarter of 2024, our appeal was admitted by the higher courts, but the ultimate timing and outcome of this litigation cannot be determined.

There are additional open cases relating to 2012, 2016, and 2017, where a similar principle is being contested but they are not as far advanced through the courts, for an aggregate assessed amount, including tax and interest, of approximately $ 69 million.

In order to litigate the tax audit relating to years 2009 and 2010, Seadrill Brazil has entered into an agreement for an insurance bond of BRL 396 million ($ 64 million as of December 31, 2024), which is supported by a parent company guarantee.

Sete Brazil claim

On January 6, 2025, Seadrill Servicos de Petroleo Ltda.

(“Seadrill Brazil”) received notices from Petrobras asserting delay penalties against Seadrill Brazil relating to drillships to be operated in Brazil by Seadrill Brazil pursuant to the Sete Brazil Project, an initiative aimed at constructing a fleet of 28 offshore drilling rigs to support Petrobras.

The alleged penalties arise from contracts awarded in relation to the Sete Brazil Project in 2012 for three drillships that were to be constructed by Sete Brazil and operated by Seadrill, but were never completed.

Sete Brazil was eventually declared bankrupt in December 2024 although that bankruptcy is presently suspended.

The aggregate amount claimed by Petrobras as of the date of receipt of the notices was approximately $ 213 million in delay penalties, with the potential for further delay

penalties to be assessed ratably over the remaining term of the drilling contracts for the three Sete drillships.

The contracts limit aggregate delay penalties to 10 % of the total “estimated contract value,” as defined in the contract.

Petrobras has indicated it may exercise set-off rights against certain amounts payable to Seadrill Brazil under its contracts with Petrobras for our five drillships currently operating in Brazil, revenues related to which are included in our backlog as of December 31, 2024.

In or around 2010, Petroleo Brasileiro S.A.

("Petrobras") initiated a project in Brazil to construct a fleet of 28 offshore drilling units to support Petrobras (the "Sete Brazil Project").

A Brazilian company ("Sete Brazil") was formed in Brazil as a vehicle for the Sete Brazil Project.

The Sete Brazil Project was unable to obtain financing and none of the 28 offshore drilling units was ever constructed.

Sete Brazil was eventually declared bankrupt by the Brazilian courts in December 2024 although that bankruptcy is presently suspended.

In January 2025, Seadrill Brazil received notices from Petrobras asserting "delay penalties" against Seadrill Brazil relating to three drillships to be constructed under the Sete Brazil Project and operated in Brazil by Seadrill Brazil under contracts awarded in 2012.

The aggregate amount of the delay penalties claimed by Petrobras as of the date of receipt of the notices was approximately $ 213 million, with the potential for further delay penalties, which could be significant, to be assessed ratably over the remaining term of the drilling contracts for the three drillships.

Petrobras indicated it may exercise set-off rights against certain amounts payable to Seadrill Brazil under its contracts with Petrobras for our five drillships (unrelated to the Sete Brazil Project) that are currently operating in Brazil, revenues related to which are included in our backlog as of December 31, 2025.

No set-off right has been exercised to date.

While Seadrill Brazil is engaged in discussions with Petrobras to suspend the penalties, it is evaluating its legal options, which may include seeking injunctive relief and asserting counterclaims against Petrobras.

The contracts limit aggregate delay penalties to 10 % of the total "estimated contract value", as defined in the contracts.

The Sete Brazil Project contracts also provide an alternative remedy to Petrobras of "compensatory damages" based upon termination of the contracts for which we would have joint and several liability if such damages were awarded to Petrobras.

Petrobras could seek delay penalties or compensatory damages but could not seek both under the contracts.

We were copied on correspondence between Petrobras and Sete Brazil (and certain of its related companies) in which Petrobras alleged that it is entitled to collect compensatory damages of approximately $ 825 million from these companies.

Petrobras has not indicated to us that they intend to pursue these claims against us or set off these claims against our current drilling contracts.

We dispute liability and do not believe any damages are due to Petrobras from us, Sete Brazil or any of its related companies in connection with the Sete Brazil Project as either delay penalties or compensatory damages.

Petrobras and Seadrill have agreed to participate in voluntary mediation, and Petrobras has committed to not exercise any set-off rights pending the outcome of the mediation.

Petrobras has indicated that the mediation could commence in the third quarter of 2026.

predict when the mediation will be completed, or what the outcome may be.

Dialogue between the parties is ongoing.

We are evaluating our legal options, which may include, among other things, seeking injunctive relief, seeking remedies against Petrobras under Seadrill’s prior U.S.

Chapter 11 bankruptcy proceedings, and asserting counterclaims for substantial damages against Petrobras in Brazilian courts.

This matter is in its early stages, and we are not able to predict its timing or outcome.

In addition, the nature, timing, calculation and ultimate amount of the purported penalties are subject to principles of contract interpretation before Brazilian courts.

Seadrill intends to vigorously defend its position, but an adverse outcome in this matter could have a material adverse effect on Seadrill’s operating results, cash flows and financial position.

Seadrill intends to vigorously defend its position and pursue available remedies.

Because we do not believe that it is probable that a loss with respect to the claims alleged by Petrobras has been incurred, and we cannot reasonably estimate the amount of any such loss, were it to be incurred, we have not accrued any amounts in respect thereof in our financial statements.

Brazil tax assessments

Seadrill Serviços de Petróleo Ltda ("Seadrill Brazil") has a long-standing dispute with Brazil’s tax authority relating to assessment of income tax, penalties, and interest for years 2009 and 2010 and is litigating the matter in Brazil’s courts.

The trial court ruled in favor of Seadrill Brazil, but the Federal Regional Court reversed the lower court decision in September 2023 and upheld the tax authority’s assessment.

In the first quarter of 2024, Seadrill Brazil filed an appeal in Brazil’s Superior Court of Justice, and we continue to vigorously defend our position.

The ultimate timing and outcome of this litigation cannot be determined.

At December 31, 2025, the assessed income tax, penalties, interest accruing on the asserted tax underpayment, and other amounts the courts potentially may award Brazil’s government, together, totaled approximately $ 78 million.

In connection with its judicial appeal against the tax authority’s assessment for years 2009 and 2010, Seadrill Brazil has entered into an agreement for an insurance bond of BRL 435 million ($ 79 million as of December 31, 2025).

Additionally, Seadrill Brazil has brought administrative appeals against assessments of additional income tax, indirect taxes, penalties, and interest for years 2012, 2016, and 2017.

The assessments for these subsequent years raise issues similar to those that are the subject of the disputed assessments for 2009 and 2010, but the 2012 assessment involves other factual and legal issues as well.

The timing and outcome of these administrative appeals and of any subsequent judicial review cannot be determined.

As of December 31, 2025, the assessed taxes, penalties, and interest for 2012, 2016, and 2017 totaled, in aggregate, approximately $ 84 million.

Other tax matters

Other tax audits and disputed assessments of income and other taxes, including applicable penalties and interest, remain outstanding as of December 31, 2025 and continue to be monitored and evaluated by the Company.

These tax audit and assessment claims are attributable principally to Ghana, Mexico, Norway, and the United States.

We continue to vigorously defend our tax positions and currently consider the ultimate resolution of tax audit and assessment claims will not have a material adverse effect on our financial position, operating results and cash flows.

We operate in various countries in the world.

We recognize uncertain tax positions 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.

While we believe we have the required support for the positions taken on our tax returns, we cannot predict with certainty as to the ultimate outcome of any existing or future assessments.

Other material disputes or litigation

1 unchanged sentence

Although the outcome of such lawsuits or other proceedings cannot be predicted with certainty, and the amount of any liability that could arise with respect to such lawsuits or other proceedings cannot be predicted accurately, we currently do not expect these other matters to have a material adverse effect on our financial position, operating results and cash flows.

We have issued performance guarantees for potential liabilities that may result from drilling activities under current or previous managed rig arrangements with Sonadrill and Northern Ocean.

We have issued performance guarantees for potential liabilities that may result from drilling activities under current or previous managed rig arrangements with Sonadrill.

As of December 31, 2025, we had not recognized any liabilities for these guarantees as we do not consider it probable that the guarantees will be called.

The guarantees provided on behalf of Sonadrill have been capped at $ 1.1 billion (December 31, 2023:

$ 1.1 billion), in the aggregate, across the three rigs operating in the joint venture on three active, and one future, contract.

The guarantees provided on behalf of Northern Ocean have been capped at $ 100 million (December 31, 2023 :

$ 100 million).

Note 28 – Discontinued Operations

The table below shows net income/(loss) from discontinued operations:

Successor Predecessor

(In $ millions, except per share data) Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Net loss of Paratus Energy Services Ltd — ( 4 )

Net income/(loss) of KSA Business 8 ( 29 )

Gain on disposal of KSA Business 276 —

Exit cost associated with disposal of KSA Business ( 10 ) —

Net income/(loss) from discontinued operations 274 ( 33 )

discontinued operations ($) 5.48 ( 0.33 )

discontinued operations ($) 5.21 ( 0.33 )

The table below analyses the cash flows from discontinued operations between our two discontinued operations:

Successor Predecessor

(In $ millions) Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Paratus Energy Services Ltd — ( 69 )

KSA Business 5 ( 20 )

Net cash provided by/(used in) operating activities 5 ( 89 )

Paratus Energy Services Ltd — —

KSA Business ( 40 ) —

Net cash (used in) investing activities ( 40 ) —

Paratus Energy Services Ltd — —

KSA Business 16 20

Net cash provided by financing activities 16 20

Disposal of interest in Paratus Energy Services Ltd

PES, formerly known as Seadrill New Finance Limited or "NSNCo", holds investments in SeaMex ( 100 %), Seabras Sapura ( 50 %), and Archer ( 15.7 %).

As part of Seadrill's comprehensive restructuring process, we disposed of 65 % of our equity interest in PES in January 2022, reducing our shareholding to 35 %.

This resulted in a loss of $ 112 million that was reported through reorganization items, as set out further in Note 4 – "Chapter 11".

The sale represented a strategic shift in Seadrill's operations, which had a major effect on its operations and financial results going forward, and therefore, we reclassified PES as a discontinued operation, including comparative periods.

On September 30, 2022, Seadrill entered into share purchase agreements with certain other existing shareholders of PES to dispose of the remaining 35 % shareholding in PES.

The sale closed on February 24, 2023.

The net gain on disposal, which is reported within Other financial items in our Consolidated Statement of Operations, and the sale proceeds, which is reported in our Consolidated Statement of Cash Flows as "Net proceeds on disposal of business and cash impact from deconsolidation", are summarized further in the table below:

(In $ millions) Year ended December 31, 2023

Initial purchase price 43

Lender incentive fee 1

Total consideration 44

Book value of PES investment ( 31 )

Management incentive fee intangible ( 13 )

Gain on disposal —

In connection with the sale, on March 14, 2023, we provided each of PES and SeaMex Holdings with a termination notice regarding (i) the Paratus MSA and (ii) the SeaMex MSA, respectively.

The Paratus MSA terminated on November 30, 2023, and the SeaMex MSA terminated on November 17, 2023.

The terminations of the Paratus MSA and SeaMex MSA did not have a material impact on the Company's financial results.

For further information on Seadrill's comprehensive restructuring, including the sale of the 65 % interest in Paratus Energy Services Ltd, please refer to Note 4 – "Chapter 11".

Sale of jackup units in the Kingdom of Saudi Arabia

On September 1, 2022, Seadrill entered into a share purchase agreement with subsidiaries of ADES Arabia Holding Ltd (together, "ADES") for the sale of the entities that own and operate seven jackup units (the "Jackup Sale") in the Kingdom of Saudi Arabia (the "KSA Business").

The Jackup Sale closed on October 18, 2022, with ADES owning the rigs AOD I, AOD II, AOD III, West Callisto, West Ariel, West Cressida , and West Leda , as well as the drilling contracts related to the rigs.

The gain on sale, which is reported within discontinued operations in our Consolidated Statement of Operations, and the sale proceeds, which is reported in our Consolidated Statement of Cash Flows, are summarized further in the table below:

Gain on sale Received/(paid) to date

(In $ millions) 2022 2022 2023

Initial Purchase Price 628 628 —

Adjustment for working capital, cash, and reimbursement of reactivation costs 53 50 3

Deal costs ( 11 ) ( 11 ) —

Fair value of indemnities and warranties ( 36 ) ( 8 ) ( 25 )

Net sales price 634 659 ( 22 )

Book value of KSA Business ( 358 ) — —

Total 276 659 ( 22 )

The sale represented a strategic shift in Seadrill's operations, which had a major effect on its operations and financial results going forward, and therefore, we reclassified the KSA Business as a discontinued operation and its results have been reported separately from Seadrill’s continuing operations, including comparative periods.

Major classes of line items constituting profit/(loss) of discontinued operations:

The table below summarizes the profit and loss statement for the KSA Business for periods when it was a fully consolidated subsidiary of Seadrill.

The net income/(loss) by the KSA Business during these periods was reported through the discontinued operations line item.

Successor Predecessor

(In $ millions) Period from February 23, 2022 through December 31, 2022 Period from January 1, 2022 through February 22, 2022

Operating revenues

Contract revenues 86 18

Total operating revenues 86 18

Operating expenses

Vessel and rig operating expenses ( 45 ) ( 10 )

Depreciation and amortization ( 22 ) ( 4 )

Selling, general and administrative expenses ( 8 ) ( 1 )

Total operating expenses ( 75 ) ( 15 )

Operating profit 11 3

Financial and other non-operating items

Reorganization items, net — ( 32 )

Other financial items ( 1 ) —

Profit/(loss) before income taxes 10 ( 29 )

Income tax expense ( 2 ) —

Net income/(loss) 8 ( 29 )

The table below summarizes the profit and loss statement for PES during the period when it was a fully consolidated subsidiary of Seadrill.

The net loss by PES during this period was reported through the discontinued operations line item.

(In $ millions) Period from January 1, 2022 through February 22, 2022

Operating revenues

Contract revenues 12

Total operating revenues 12

Operating expenses

Operating expenses ( 8 )

Total operating expenses ( 8 )

Operating profit 4

Financial and other non-operating items

Interest expense ( 4 )

Share in results from associated companies (net of tax) ( 1 )

Other financial items ( 2 )

Total financial items ( 7 )

Loss before income taxes ( 3 )

Income tax expense ( 1 )

Net loss ( 4 )

The guarantees provided on behalf of Sonadrill have been capped at $ 1.1 billion, in the aggregate, across the three rigs operating in the joint venture on two active and two historic contracts.

Note 25 – Business combinations

9 unchanged sentences

The sale completed on July 28, 2023.

In connection with this acquisition, the Company incurred $ 24 million, $ 24 million and $ 3 million of acquisition and integration related expenses during the years ended December 31, 2024, December 31, 2023 and for the period from February 23, 2022 through December 31, 2022, respectively.

In connection with this acquisition, the Company incurred $ 2 million, $ 24 million, and $ 24 million of acquisition and integration related expenses during the years ended December 31, 2025, December 31, 2024, and December 31, 2023, respectively.

These expenses are included in "Merger and integration related expenses" on the Consolidated Statements of Operations.

3 unchanged sentences

Purchase price allocation

The Merger was accounted for as a business combination under the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") Topic 805, Business Combinations, with Seadrill being treated as the accounting acquirer.

The Merger was accounted for as a business combination under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations, with Seadrill being treated as the accounting acquirer.

Under this method, the purchase consideration in the Merger reflects (i) the Shares issued in connection with the Merger, (ii) tax withholding liability, and (iii) cash consideration, as described above.

2 unchanged sentences

During the first quarter of 2024, we completed the analysis to assign fair value to all tangible and intangible assets acquired and liabilities assumed.

Our estimate is that the fair value of the net assets and liabilities acquired is equal to the purchase price, and therefore, no goodwill or bargain purchase gain has been recognized in the financial statements.

We estimated the fair value of the net assets and liabilities acquired to be equal to the purchase price, and therefore, no goodwill or bargain purchase gain was recognized in the financial statements.

Determining the fair values of the assets and liabilities of Aquadrill required judgment and certain assumptions to be made, the most significant of these being related to the valuation of Aquadrill’s drilling units and other related tangible assets.

15 unchanged sentences

The table below summarizes the total consideration transferred at the Closing Date:

(In $ millions, except share data) Aquadrill Shares Final Exchange Ratio (4)

(In $ millions, except share data and ratios) Aquadrill Shares Final Exchange Ratio (4)

As of Acquisition

47 unchanged sentences

Operating revenue 383

Net income from continuing operations 145

Net income 145

Pro forma financial information

The following unaudited pro forma summary presents the results of operations as if the Merger had occurred on February 23, 2022, the date of emergence from Chapter 11 for the Successor company.

The pro forma summary uses estimates and assumptions based on information available at the time.

3 unchanged sentences

The pro forma results of operations do not reflect any cost savings or other synergies that might have been achieved from combining the operations or any estimated costs that have not yet been incurred to integrate Aquadrill assets.

(In $ millions, except per share data) Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022

Operating revenue 1,580 1,009

Net income/(loss) from continuing operations 262 ( 111 )

Basic EPS/(LPS):

continuing operations ($) 3.34 ( 1.39 )

Diluted EPS/(LPS):

continuing operations ($) 3.29 ( 1.39 )

These pro forma amounts have been calculated after adjusting the results to reflect (i) the additional depreciation and amortization that would have been charged assuming the fair value adjustments to drilling units and off-market contract liabilities had been applied from February 23, 2022, (ii) certain acquisition related expenses incurred directly in connection with the Merger as if it had occurred on February 23, 2022, and (iii) removal of any pre-acquisition revenues and expenses between Seadrill and Aquadrill.

Seadrill and Aquadrill incurred total acquisition related expenses of $ 11 million and $ 5 million, respectively, of which $ 3 million and $ 2 million, respectively, were incurred during the fourth quarter of 2022.

(In $ millions, except per share data) Year ended December 31, 2023

Operating revenue 1,580

Net income 262

Basic EPS 3.34

Diluted EPS 3.29

Seadrill and Aquadrill incurred total acquisition related expenses of $ 11 million and $ 5 million, respectively, of which $ 8 million and $ 3 million, respectively, were incurred during the year ended December 31, 2023.

Seadrill's acquisition related expenses are included in " Merger and integration related expenses " on the Consolidated Statements of Operations.

These expenses are reflected in pro forma earnings for the period from February 23, 2022 through December 31, 2022.

On July 28, 2023, the Company completed the sale of the tender-assist units.

The table below summarizes the results of operations related to the tender-assist units included in the pro forma results of operations:

(in $ millions) Year ended December 31, 2023 Period from February 23, 2022 through December 31, 2022

(in $ millions) Year ended December 31, 2023

Tender-assist units

Operating revenue 13

Loss from continuing operations ( 8 ) ( 3 )

Net loss ( 8 )

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data