Seadrill Limited and Aquadrill LLC have announced that they have entered into a definitive merger agreement under which Seadrill will acquire Aquadrill in an all-stock transaction. Upon completion of the transaction Seadrill shareholders and Aquadrill unitholders will own 62% and 38%, respectively, of the outstanding common shares in the Company. The transaction values Aquadrill at an implied equity value of approximately US$958 million, based on Seadrill's 30-day volume-weighted average share price on the NYSE of US$31.25 as of 22 December 2022.

The combination creates an industry-leading offshore drilling company, with a modern and high specification fleet and a streamlined cost structure. The Company will be well-placed to realize estimated annual run rate synergies of at least US$70 million. The Company will also be well-positioned for further growth given its stronger credit and liquidity profile, and to provide attractive cash flows.

Commenting on the transaction, Simon Johnson, Seadrill's President and Chief Executive Officer, said, "At Seadrill we seek to deliver safe and effective operations as the bedrock for generating returns for our shareholders. Seadrill and Aquadrill have a long and rich strategic and operational management history. Our shared heritage will promote efficient integration of the two companies. I look forward to welcoming the Aquadrill fleet back into the Seadrill family." Steven Newman, Aquadrill's Chief Executive Officer, said, "We believe this combination will create the most value for our shareholders and will create an excellent platform for high quality service delivery to our customers."

The transaction has been approved by the Boards of Directors of both Seadrill and Aquadrill. The required approval of Aquadrill's unitholders has also been obtained. The transaction does not require Seadrill shareholder approval.

Strategic Rationale

The combination of Seadrill and Aquadrill presents a compelling strategic rationale for all stakeholders:

• Creation of a leading offshore driller with best-in-class fleet: The Company will be in a strong position to serve a broader range of customers, with one of the youngest and most technologically advanced fleets in the industry, and a combined backlog of US$2.8 billion. The Company will own 12 floaters (including seven 7^th generation drillships), three harsh environment rigs, four benign jack-ups, and three tender-assisted rigs. Additionally, seven rigs will be managed under a variety of strategic partnerships.
• Increased exposure and upside to the improving market: The Company will have a diversified portfolio of contract coverage, with additional active fleet capacity to deploy in a rising market environment across critical basins in the Golden Triangle.
• Significant synergy potential: The Company will be uniquely positioned to rapidly integrate and realize identified and achievable synergies of at least US$70 million annually on a run-rate basis. All synergies are expected to be fully realized within two years of closing the transaction. Synergies are expected to be generated through a combination of:
  1. 1. management fee optimization;
     2. G&A and overhead cost savings;
     3. logistics, supply chain and inventory efficiencies; and
     4. capital expenditure savings.
• Strong cash flow generation and further strengthened balance sheet: The Company should benefit from an enhanced cash flow profile and a strengthened balance sheet, with significant credit and liquidity improvement, and with access to a potentially lower cost of capital.

Transaction Overview

Aquadrill unitholders and equity award holders will in aggregate receive 30,645,160 common shares of Seadrill, representing 38% ownership in the Company, or approximately 36.6% on a fully-diluted basis. Following completion of the transaction, Aquadrill will become a wholly owned subsidiary of Seadrill.

Certain of Aquadrill's unitholders, which collectively own more than 75% of Aquadrill's common units, have agreed to approve the transaction. No further vote of Aquadrill unitholders is required in respect to the transaction. The transaction does not require Seadrill shareholder approval. The transaction is, however, subject to applicable regulatory approvals and other customary conditions, and is expected to close in mid 2023.

Governance and Leadership

The Company will remain named Seadrill Limited and will continue to be domiciled in Hamilton, Bermuda. Julie Robertson and Simon Johnson will continue in their respective roles as Chair of the Board of Directors, and President and Chief Executive Officer.

Company Pro Forma Financial Information

As of November 30, 2022, Seadrill and Aquadrill had a combined cash balance of approximately US$628 million, including approximately US$133 million of restricted cash, and a combined debt balance of approximately US$521 million.