Shelf Drilling (SHLF) Q4 2024 earnings summary

Executive summary

• Achieved strong operational performance in 2024, with fleet-wide uptime of 99.3% and industry-leading safety (TRIR 0.18), as well as significant safety improvements and 28 rigs operating incident-free.

• Revenues increased 9% year-over-year to $985.2 million, driven by new contracts and higher dayrates in key regions, despite rig suspensions in Saudi Arabia and asset sales.

• Net income attributable to controlling interest was $81.4 million for 2024, a turnaround from a $7.6 million loss in 2023.

• Entered a strategic alliance with Arabian Drilling Company to deploy premium rigs internationally, targeting West Africa and Southeast Asia.

• Overcame challenges including Saudi Aramco rig suspensions and regulatory delays, 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), up 23% sequentially excluding Q3's one-time mobilization revenue.

• Full year 2024 adjusted revenue reached $972.4 million and adjusted EBITDA was $350.7 million (36% margin), exceeding guidance due to higher utilization and lower costs.

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

• Backlog at December 31, 2024, was $2.1 billion across 31 rigs, with $900 million in new contract awards during 2024 at an average day rate of $129,000.

• Capital expenditures and deferred costs for 2024 totaled $152.4 million, down from $225.8 million in 2023.

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 rigs mobilized from the Middle East return to service in West Africa.

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

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

• Long-term market fundamentals remain strong, with expectations for stable or improving utilization and demand in key regions.