Seadrill Limited (SDRL): A Bull Case Theory

We came across a bullish thesis on Seadrill Limited on Investment theses in Small Caps & Macroeconomic analysis’s Substack. In this article, we will summarize the bulls’ thesis on SDRL. Seadrill Limited's share was trading at $28.77 as of July 15^th. SDRL’s trailing and forward P/E were 5.40 and 34.84, respectively according to Yahoo Finance.

Seadrill, a prominent offshore driller, is emerging as a compelling player in a structurally improving sector that was in deep distress just a few years ago. Following a 2021 Chapter 11 restructuring, Seadrill eliminated nearly all of its debt and now operates with a net cash balance sheet and no maturities until 2030. Its fleet—comprising 9 drillships (+3 managed), 4 semisubmersibles, and one jack-up—positions it well in a tightening global rig market with limited new supply.

Since relisting in 2022, Seadrill has maintained financial discipline, opting for share buybacks over newbuilds, aligning with an industry-wide trend of capital restraint amid elevated day rates in 2023–2024. Industry consolidation is another key dynamic, with Seadrill actively participating through its $1 billion all-stock acquisition of Aquadrill in 2023.

It remains both a potential acquirer and target, amid speculation around Transocean’s interest and public statements from its CEO advocating for continued industry consolidation. With several smaller drillers expected to face financial pressure in 2025 due to lower utilization and insufficient cash reserves, Seadrill's clean balance sheet gives it strategic flexibility.

The broader offshore drilling industry is poised to benefit from a significant CapEx upcycle by oil and gas companies, anticipated to begin in 2H 2026 through 2027. Seadrill’s blend of long-term Brazilian contracts and medium-term contracts ending in 2025/2026 positions it to capitalize on this cycle, though timing remains a key risk. Overall, Seadrill combines operational leverage, financial strength, and M&A optionality, offering an asymmetric opportunity in a capital-constrained, structurally improving sector.

Previously, we covered a bullish thesis on Precision Drilling Corporation (PDS) by Nugget Capital Partners in April 2025, which highlighted the company’s dominant Canadian market share, resilient rig demand, and undervaluation. The company’s stock price has appreciated by approximately 18.12% since our coverage. The thesis still stands as long-term fundamentals remain intact. Investment Theses in Small Caps & Macroeconomic Analysis shares a similar view on Seadrill, but emphasizes offshore market tightening, financial discipline, and M&A positioning.

Seadrill Limited is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 33 hedge fund portfolios held SDRL at the end of the first quarter which was 42 in the previous quarter. While we acknowledge the potential of SDRL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.