Seadrill Ltd (NYSE:SDRL), which last month issued a bankruptcy warning, today reported Q1 results that exceeded analysts expectations. SDRL stock spiked more than 13% this morning in pre-market trading.
The offshore drilling company reported net income of $57 million and earnings per share of 13 cents compared to the analysts forecast of a loss of 1 cent, according to a company announcement. Revenue was $569 million compared to expectations of $546.2 million.
Along with the Q1 results, SDRL said Anton Dibowitz, currently chief commercial officer and executive vice president, has been named CEO, July 1.
In its warning in April, Seadrill cautioned SDRL stock would lose almost all of their value and its bonds would be affected as it was preparing for potential bankruptcy proceedings. Management repeated the warning today, while adding the focus was on securing the company’s future. “Our priority continues to be to implement our restructuring plan with the right structure and terms for our stakeholders,” Per Wullf, CEO and president said in a statement.
Wulff said SDRL’s talks to restructure $14 billion of debt and liabilities had reached an advanced stage.
SDRL’s cost reduction effort since year end 2015 has cut 1,799 jobs, with 5,196 employees at the end of the first quarter. Of the firings, 1,380 have been offshore and 419 onshore. Seadrill said it has an order backlog of approximately $3.4 billion.
Management warned that with a number of the company’s units coming off contract and the impact of lower day rates, EBITDA will be lower for the second quarter, at around $240 million. This is based on Q2 expected operating income of $40 million.
SDRL stock has lost more than 71% of its value in the past three months. Sector rivals Transocean LTD (NYSE:RIG) and Pacific Drilling SA (NYSE:PACD) have declined 26% and 31%, respectively, in the same period.