Seadrill Limited (SDRL): A Bull Case Theory

We came across a bullish thesis on Seadrill Limited on Value Degen’s Substack’s Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on SDRL. Seadrill Limited 's share was trading at $32.67 as of September 8th. SDRL’s trailing and forward P/E were 27.45 and 19.23 respectively according to Yahoo Finance.

Seadrill (SDRL) has emerged as a prime acquisition candidate in the consolidating offshore drilling industry, with its CEO signaling openness to a deal. The company owns 16 deepwater drillships, a scale that could shift industry leadership depending on who acquires it. Transocean (RIG) is viewed as the natural acquirer, with management suggesting they could absorb SDRL’s assets at minimal incremental cost, creating at least $150 million in annual synergies. However, RIG’s heavy debt load complicates any bid.

Valaris (VAL) is another likely contender, having halted buybacks to preserve cash—an unpopular move with shareholders, especially those holding long-dated warrants. If VAL pursues Seadrill, warrant holders risk significant dilution, with prices already collapsing from $15 to under $3. Noble, meanwhile, remains an unlikely buyer after its Diamond Offshore acquisition.From a valuation standpoint, Seadrill trades at just 17% of replacement cost, with an EV of $2.23 billion, leaving enormous upside if rigs are properly utilized. Noble trades at 30% of replacement cost, Valaris at 21%, and Transocean at 40%, though RIG’s premium reflects higher-spec assets such as 8th-gen drillships and harsh-environment semisubmersibles.

Revenue multiples show a similar gap, with Transocean at a 30% premium to peers. While RIG’s leverage and pending management transition pose risks, it remains best positioned to benefit from rising day rates and industry scarcity, with EBITDA upside if $600,000+ rates materialize. Investors face a complex trade-off: Seadrill offers takeout optionality, Valaris warrants the highest torque but also dilution risk, Noble reliable dividends, and Transocean market-leader leverage. With oil supply tight and rig newbuilds years away, offshore drillers stand at the cusp of outsized cash flows, making a diversified “all of the above” approach attractive.

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, high-spec rig utilization, and strong free cash flow generation despite U.S. margin weakness. The company’s stock price has appreciated approximately by 33.61% since our coverage. Unemployed Value Degen shares a similar outlook on the oilfield services space but emphasizes the offshore drilling consolidation story through Seadrill (SDRL).

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.