Citi Downgrades Seadrill (SDRL) to Sell, Price Target Cut to $32
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 13 2026
0mins
Should l Buy SDRL?
Source: seekingalpha
- Rating Downgrade: Citi has downgraded Seadrill from Neutral to Sell, with a price target cut from $35 to $32, reflecting risks associated with disappointing FY 2026 EBITDA guidance primarily due to extended downtime on the Carina rig in Brazil.
- Earnings Forecast Reduction: Analyst Scott Gruber has lowered the FY 2026 EBITDA forecast by approximately 20% to $280 million, below the consensus estimate of $386 million, indicating operational challenges amid a weak macro backdrop.
- Contract Negotiation Update: Seadrill management is optimistic about concluding contract negotiations with Petrobras in Q1, which should result in at least one blend and extend, although the overall market environment remains challenging.
- Increased Risk Rating: Citi has rated Seadrill as High Risk, citing the volatility of drilling rig dayrates and ongoing risks related to contract renewals, which could impact future revenue stability.
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Analyst Views on SDRL
Wall Street analysts forecast SDRL stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for SDRL is 44.20 USD with a low forecast of 32.00 USD and a high forecast of 80.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
5 Analyst Rating
3 Buy
2 Hold
0 Sell
Moderate Buy
Current: 38.040
Low
32.00
Averages
44.20
High
80.00
Current: 38.040
Low
32.00
Averages
44.20
High
80.00
About SDRL
Seadrill Limited is an offshore drilling contractor. The Company is engaged in providing worldwide offshore drilling services to the oil and gas industry. Its primary business is the ownership and operation of drill ships, semi-submersible rigs, and jack-up rigs for operations in shallow to ultra-deepwater in both benign and harsh environments. Its fleet portfolio includes West Phoenix, West Aquarius, West Eclipse, Sevan Louisiana, West Capella, West Gemini, West Tellus, West Neptune, West Jupiter, West Saturn, West Carina, West Polaris, West Auriga, West Vela, West Castor, West Tucana, West Telesto, and West Elara. Its drill ships are self-propelled ships equipped for drilling offshore in water depths ranging from approximately 1,000 to 12,000 feet and are positioned over the well through a computer-controlled thruster system. Its customers include oil super-majors, state-owned national oil companies, and independent oil and gas companies. It also provides management services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Seadrill Extends Contract with Equinor for $114 Million
- Contract Extension: Seadrill announced that Equinor Brasil Energia Ltda has exercised a one-year priced option, adding $114 million to its contract backlog and extending the agreement through October 2027, highlighting the long-term collaboration between the two companies in Brazil.
- Business Impact: This contract extension not only enhances Seadrill's backlog but also signifies its stability and competitiveness in the deepwater drilling market, particularly in the strategically important Brazilian basin.
- Management Commentary: Seadrill's CEO Simon Johnson noted that the continuation of the contract reinforces their commitment to collaboration with Equinor, emphasizing their shared goals in delivering safe and reliable offshore operations.
- Market Outlook: With the contract extension, Seadrill is poised to benefit from a stable revenue stream over the coming years, which will help maintain its competitive edge in the evolving offshore drilling market.
See More
Seadrill Extends Contract with Equinor for West Saturn Drillship
- Contract Renewal: Seadrill announced the renewal of its contract with Equinor Brasil Energia Ltda for the West Saturn ultra-deepwater drillship, adding $114 million to its contract backlog and extending the agreement through October 2027, highlighting a long-term partnership in Brazil.
- Business Growth: This renewal not only continues the collaboration that began in 2022 but also indicates a strong business foundation for Seadrill in the Brazilian market, which is expected to further enhance the company's revenue and market share.
- Commitment to Safety: Seadrill's CEO Simon Johnson emphasized the shared commitment to safe and reliable offshore operations, reflecting the company's operational capabilities and market position in strategically important basins.
- Industry Outlook: With the increasing global demand for deepwater drilling, Seadrill's modern fleet and advanced technologies will enable it to maintain a competitive edge in the industry, further solidifying its critical role in oil and gas resource development.
See More
Seadrill (SDRL) Shares Surge 8.9% on $235M New Contracts Announcement
- Contract Signing Boost: Seadrill announced multiple offshore drilling contracts totaling approximately $235 million, significantly enhancing its revenue backlog and earnings visibility into 2026-2027, which is expected to positively impact future performance.
- Strong Stock Performance: In the latest trading session, Seadrill shares surged 8.9% to close at $38.16, with trading volume far exceeding normal levels, reflecting strong investor confidence in the company's outlook.
- Key Contract Details: Notable contracts include a $157 million ultra-deepwater drillship contract set to commence in Q2 2026 for 440 days, along with a $78 million accommodation contract, further strengthening the company's competitive position in the Norwegian market.
- Earnings Outlook Analysis: Although the upcoming quarterly EPS is projected at $0.07, representing a 93.5% year-over-year decline, revenues are expected to reach $332 million, up 14.9% from the previous year, indicating resilience and potential growth capacity amid challenges.
See More
Seadrill Limited Secures New Rig Contracts Worth $235 Million Across Three Continents
- Contract Expansion: Seadrill's ultra-deepwater drillship West Capella secured a contract in Malaysia expected to commence in Q2 2026, with a total contract value of approximately $157 million, including a $5 million mobilization fee, ensuring stable revenue for the company over the next two years.
- New Agreement in Norway: West Elara signed an accommodation contract with Equinor on the Norwegian Continental Shelf valued at $78 million, expected to start in Q3 2026 and run into Q4 2027, and through a mutual agreement with the previous contract holder, the total contract value increased by $23 million, enhancing the company's revenue outlook.
- Brazil Contract Extension: Seadrill extended the contract for West Carina in Brazil through April 2026, ensuring continued operations in this key offshore market, reflecting the company's stability and customer trust in important markets.
- Market Reaction: Seadrill shares rose 0.63% to $35.25 in premarket trading on Wednesday, indicating a positive market response to the new contracts, further strengthening its earnings outlook.
See More
Seadrill Secures $157M Contract for West Capella in Malaysia
- Malaysia Contract: Seadrill's ultra-deepwater drillship West Capella has secured a contract with an undisclosed operator, expected to commence in Q2 2026 for an estimated duration of 440 days, enhancing the company's operational footprint in Southeast Asia with a total contract value of approximately $157 million.
- Norway Accommodation Contract: The West Elara has secured an accommodation contract with Equinor AS on the Norwegian Continental Shelf, anticipated to start in Q3 2026 and extend into Q4 2027, with a total contract value of $78 million, further solidifying Seadrill's market position in the North Sea.
- Contract Value Increase: Following an agreement with the current contract holder, the scheduling update for West Elara results in a net increase of $23 million in total contract value, demonstrating the company's flexibility and adaptability in resource allocation.
- Brazil Contract Extension: The current contract for West Carina has been extended through April 2026, ensuring a continued revenue stream from the Brazilian market, reflecting Seadrill's commitment to maintaining strong client relationships.
See More
Citi Downgrades Seadrill (SDRL) to Sell, Price Target Cut to $32
- Rating Downgrade: Citi has downgraded Seadrill from Neutral to Sell, with a price target cut from $35 to $32, reflecting risks associated with disappointing FY 2026 EBITDA guidance primarily due to extended downtime on the Carina rig in Brazil.
- Earnings Forecast Reduction: Analyst Scott Gruber has lowered the FY 2026 EBITDA forecast by approximately 20% to $280 million, below the consensus estimate of $386 million, indicating operational challenges amid a weak macro backdrop.
- Contract Negotiation Update: Seadrill management is optimistic about concluding contract negotiations with Petrobras in Q1, which should result in at least one blend and extend, although the overall market environment remains challenging.
- Increased Risk Rating: Citi has rated Seadrill as High Risk, citing the volatility of drilling rig dayrates and ongoing risks related to contract renewals, which could impact future revenue stability.
See More
Seadrill Extends Contract with Equinor for $114 Million
- Contract Extension: Seadrill announced that Equinor Brasil Energia Ltda has exercised a one-year priced option, adding $114 million to its contract backlog and extending the agreement through October 2027, highlighting the long-term collaboration between the two companies in Brazil.
- Business Impact: This contract extension not only enhances Seadrill's backlog but also signifies its stability and competitiveness in the deepwater drilling market, particularly in the strategically important Brazilian basin.
- Management Commentary: Seadrill's CEO Simon Johnson noted that the continuation of the contract reinforces their commitment to collaboration with Equinor, emphasizing their shared goals in delivering safe and reliable offshore operations.
- Market Outlook: With the contract extension, Seadrill is poised to benefit from a stable revenue stream over the coming years, which will help maintain its competitive edge in the evolving offshore drilling market.
See More
Seadrill Extends Contract with Equinor for West Saturn Drillship
- Contract Renewal: Seadrill announced the renewal of its contract with Equinor Brasil Energia Ltda for the West Saturn ultra-deepwater drillship, adding $114 million to its contract backlog and extending the agreement through October 2027, highlighting a long-term partnership in Brazil.
- Business Growth: This renewal not only continues the collaboration that began in 2022 but also indicates a strong business foundation for Seadrill in the Brazilian market, which is expected to further enhance the company's revenue and market share.
- Commitment to Safety: Seadrill's CEO Simon Johnson emphasized the shared commitment to safe and reliable offshore operations, reflecting the company's operational capabilities and market position in strategically important basins.
- Industry Outlook: With the increasing global demand for deepwater drilling, Seadrill's modern fleet and advanced technologies will enable it to maintain a competitive edge in the industry, further solidifying its critical role in oil and gas resource development.
See More
Seadrill (SDRL) Shares Surge 8.9% on $235M New Contracts Announcement
- Contract Signing Boost: Seadrill announced multiple offshore drilling contracts totaling approximately $235 million, significantly enhancing its revenue backlog and earnings visibility into 2026-2027, which is expected to positively impact future performance.
- Strong Stock Performance: In the latest trading session, Seadrill shares surged 8.9% to close at $38.16, with trading volume far exceeding normal levels, reflecting strong investor confidence in the company's outlook.
- Key Contract Details: Notable contracts include a $157 million ultra-deepwater drillship contract set to commence in Q2 2026 for 440 days, along with a $78 million accommodation contract, further strengthening the company's competitive position in the Norwegian market.
- Earnings Outlook Analysis: Although the upcoming quarterly EPS is projected at $0.07, representing a 93.5% year-over-year decline, revenues are expected to reach $332 million, up 14.9% from the previous year, indicating resilience and potential growth capacity amid challenges.
See More
Seadrill Limited Secures New Rig Contracts Worth $235 Million Across Three Continents
- Contract Expansion: Seadrill's ultra-deepwater drillship West Capella secured a contract in Malaysia expected to commence in Q2 2026, with a total contract value of approximately $157 million, including a $5 million mobilization fee, ensuring stable revenue for the company over the next two years.
- New Agreement in Norway: West Elara signed an accommodation contract with Equinor on the Norwegian Continental Shelf valued at $78 million, expected to start in Q3 2026 and run into Q4 2027, and through a mutual agreement with the previous contract holder, the total contract value increased by $23 million, enhancing the company's revenue outlook.
- Brazil Contract Extension: Seadrill extended the contract for West Carina in Brazil through April 2026, ensuring continued operations in this key offshore market, reflecting the company's stability and customer trust in important markets.
- Market Reaction: Seadrill shares rose 0.63% to $35.25 in premarket trading on Wednesday, indicating a positive market response to the new contracts, further strengthening its earnings outlook.
See More
Seadrill Secures $157M Contract for West Capella in Malaysia
- Malaysia Contract: Seadrill's ultra-deepwater drillship West Capella has secured a contract with an undisclosed operator, expected to commence in Q2 2026 for an estimated duration of 440 days, enhancing the company's operational footprint in Southeast Asia with a total contract value of approximately $157 million.
- Norway Accommodation Contract: The West Elara has secured an accommodation contract with Equinor AS on the Norwegian Continental Shelf, anticipated to start in Q3 2026 and extend into Q4 2027, with a total contract value of $78 million, further solidifying Seadrill's market position in the North Sea.
- Contract Value Increase: Following an agreement with the current contract holder, the scheduling update for West Elara results in a net increase of $23 million in total contract value, demonstrating the company's flexibility and adaptability in resource allocation.
- Brazil Contract Extension: The current contract for West Carina has been extended through April 2026, ensuring a continued revenue stream from the Brazilian market, reflecting Seadrill's commitment to maintaining strong client relationships.
See More
Citi Downgrades Seadrill (SDRL) to Sell, Price Target Cut to $32
- Rating Downgrade: Citi has downgraded Seadrill from Neutral to Sell, with a price target cut from $35 to $32, reflecting risks associated with disappointing FY 2026 EBITDA guidance primarily due to extended downtime on the Carina rig in Brazil.
- Earnings Forecast Reduction: Analyst Scott Gruber has lowered the FY 2026 EBITDA forecast by approximately 20% to $280 million, below the consensus estimate of $386 million, indicating operational challenges amid a weak macro backdrop.
- Contract Negotiation Update: Seadrill management is optimistic about concluding contract negotiations with Petrobras in Q1, which should result in at least one blend and extend, although the overall market environment remains challenging.
- Increased Risk Rating: Citi has rated Seadrill as High Risk, citing the volatility of drilling rig dayrates and ongoing risks related to contract renewals, which could impact future revenue stability.
See More
