Shelf Drilling (SHLF) Q4 2024 earnings summary

Executive summary

• Achieved strong operational performance in 2024, with fleet-wide uptime of 99.3%, TRIR of 0.18 (well below industry average), and 28 rigs operating incident-free, despite rig suspensions in Saudi Arabia.

• Revenues increased 9% year-over-year to $985.2 million, driven by new contracts and higher dayrates in Nigeria, Norway, and other key regions.

• Net income attributable to controlling interest was $81.4 million for 2024, a turnaround from a prior year loss.

• Entered a strategic alliance with Arabian Drilling Company to deploy premium rigs internationally, and completed the acquisition of the remaining 40% of Shelf Drilling North Sea.

• Overcame challenges including Saudi Aramco rig suspensions and regulatory delays by redeploying rigs to West Africa and securing insurance recoveries.

Financial highlights

• Q4 2024 adjusted revenue was $225.4 million, with adjusted EBITDA of $85 million (38% margin), and full year adjusted EBITDA reached $351 million (36% margin), exceeding guidance.

• Full year 2024 adjusted revenues totaled $972.4 million; operating income increased 31% to $241 million.

• Cash and cash equivalents at year-end were $152.3 million, with total liquidity of $277 million including undrawn credit facilities.

• Capital expenditures and deferred costs for 2024 were $152.4 million, at the lower end of guidance.

• Total debt stood at $1.4 billion, with refinancing and new issuances completed during the year.

Outlook and guidance

• 2025 adjusted EBITDA guidance is $330–$380 million, with SDNS expected to contribute $85–$100 million.

• Revenues and utilization are expected to improve in H2 2025 as redeployed rigs return to service in West Africa.

• Capital spending for 2025 is projected at $110–$140 million, including $25–$30 million at SDNS.

• Management expects shallow water activity to remain critical, with long-term demand supported by global energy needs and energy security priorities.

• Near-term jack-up market utilization is expected to dip below 90% in 2025 due to Middle East contract suspensions, but to stabilize and improve thereafter.