Seadrill Limited 20-F 2021

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

PART II

ITEM 13.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

ITEM 14.

ITEM 15

CONTROLS AND PROCEDURES

ITEM 16.

RESERVED

AUDIT COMMITTEE FINANCIAL EXPERT

ITEM 16A.

ITEM 16B.

CODE OF ETHICS

PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 16C.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

ITEM 16D.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

ITEM 16E.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

ITEM 16F.

ITEM 16G.

CORPORATE GOVERNANCE

ITEM 16H.

MINE SAFETY DISCLOSURE

ITEM 16I.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

PART III

ITEM 17.

ITEM 18.

ITEM 19.

EXPLANATORY NOTE

Throughout this annual report, unless the context otherwise requires, references to “Seadrill Limited”, “Seadrill”, the “Company”, “we”, “us”,

“Group”, “our” and words of similar import refer to Seadrill Limited, its subsidiaries and its other consolidated entities.

As previously announced on February 22 and February 28, 2017, we concluded that, because of misstatements identified in our previously

issued financial statements for the year ended December 31, 2015, we are restating our financial statements for the year ended December 31,

2015. We are also presenting the impact of the correction of the misstatements on the unaudited consolidated statements of operations,

consolidated statements of comprehensive income, consolidated balance sheets and consolidated statements of cash flows for the quarters

ended March 31, June 30 and September 30, 2016. As a result, our previously issued financial statements for the year ended December 31,

2015 and the related report of our independent registered public accounting firm thereon, and the previously issued unaudited financial

statements in relation to each quarter in the year ended December 31, 2015 and the quarters ended March 31, June 30 and September 30,

2016, should no longer be relied upon.

The misstatements relate to the fair value accounting principles applied under generally accepted in the United States, or U.S. GAAP, to our

interest rate and cross currency swap portfolio, referred to hereafter as the “Derivative valuation adjustments”. In addition to these errors, the

restated financial statements also include adjustments to correct certain other immaterial errors. The effect of the Derivative valuation

adjustments was a reduction in the book value of the liabilities related to derivative financial instruments.

The adjustments made have no impact on our financial covenant compliance for the current or previously reported periods. A summary of the

impact to total equity as of December 31, 2015 and the quarters ended March 31, June 30 and September 30, 2016 is given below:

(In US$ millions)

December 31,

2015

March 31, 2016

June 30, 2016

September 30,

2016

Total equity as previously reported

9,975

10,036

10,321

9,769

Derivative valuation adjustments

136

186

177

179

Other adjustments

(43)

(10)

Total equity as restated

10,068

10,212

10,488

9,938

Please refer to "Note 39 – Restatement of Previously Issued Financial Statements" of our Consolidated Financial Statements included in this

annual report on Form 20-F for line item adjustments and other information as a result of the restatement.

Our management has also determined that there was a deficiency in internal control relating to the accounting for the Derivative valuation

adjustments, which gave rise to this restatement and constituted a material weakness in our internal control over financial reporting. The

material weakness, and our process for remediation thereof, are further described in "Item 15. Controls and Procedures" of this annual report

on Form 20-F.

To further review the effects of the misstatements identified and the restatement adjustments, please see Items 3, 5, 11, 15 and 18 in this

annual report on Form 20-F.

The previously filed annual report on Form 20-F and quarterly reports on Form 6-K for the periods affected by the restatement have not been

amended. Accordingly, investors should no longer rely upon our previously released financial statements for these periods and any earnings

releases or other communications relating to these periods. You should instead only rely upon the restated consolidated financial statements,

report of our independent registered public accounting firm, and related financial information for 2015 contained in this annual report on

Form 20-F or in future filings with the Commission (as applicable). All amounts in this annual report on Form 20-F affected by the

restatement adjustments reflect such amounts as restated.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

We desire to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, or the PSLRA, and are

including this cautionary statement in connection therewith. The PSLRA provides safe harbor protections for forward-looking statements to

encourage companies to provide prospective information about their business.

This annual report and any other written or oral statements that reflect the Company's current views with respect to future events and financial

and operational performance. All statements other than statements of historical facts included in the annual report, including, but not limited

to, statements relating to the Company's financial position, the risks specific to the Company's business, the strengths of the Company,

business strategy and the implementation of strategic initiatives, as well as other statements relating to the Company's future business

development and financial performance, are forward-looking statements.

These forward-looking statements can often, but not necessarily, be identified by the use of forward-looking terminology, including the terms

"assumes", "projects", "forecasts", "estimates", "expects", "anticipates", "believes", "plans", "intends", "may", "might", "will", "would", "can",

"could", "should" or, in each case, their negative, or other variations or comparable terminology.

The forward-looking statements in this document are based upon various assumptions, many of which are based, in turn, upon further

assumptions, including, without limitation, management’s examination of historical operating trends, data contained in our records and other

data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are

inherently subject to significant uncertainties and contingencies that are difficult or impossible to predict and are beyond our control, we

cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors and matters discussed elsewhere in this annual report, and in the documents incorporated by reference to

this report, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking

statements include:

•our ability to maintain relationships with suppliers, customers, employees and other third parties following emergence from the

Chapter 11 Proceedings;

•our ability to maintain and obtain adequate financing to support our business plans following emergence from the Chapter 11

Proceedings;

•factors related to the offshore drilling market, including volatility and changes in oil and gas prices and the state of the global

economy on market outlook for our various geographical operating sectors and classes of rigs;

•the impact of global economic conditions, including potential trade wars;

•supply and demand for drilling units, changes in new technology and competitive pressure on utilization rates and dayrates;

•customer contracts, including contract backlog, contract commencements, contract terminations, contract option exercises, contract

revenues, contract awards and rig mobilizations;

•the repudiation, nullification, modification or renegotiation of drilling contracts;

•delays in payments by, or disputes with, our customers under our drilling contracts or the outcome of litigation, legal proceedings,

investigations or other claims or contract disputes;

•fluctuations in the market value of our drilling units and the amount of debt we can incur under certain covenants in our debt

financing agreements;

•potential additional asset impairments;

•our liquidity and the adequacy of cash flows for our obligations;

•downtime and other risks associated with offshore rig operations and ability to successfully employ our drilling units;

•our expected debt levels;

•the impact of the operating and financial restrictions imposed by covenants in our debt agreements;

•the ability of our affiliated or related companies to service their debt requirements and comply with the provisions contained in their

loan agreements;

•credit risks of our key customers;

•political and other uncertainties, including political unrest, risks of terrorist acts, war and civil disturbances, public health threats,

piracy, corruption, significant governmental influence over many aspects of local economies, or the seizure, nationalization or

expropriation of property or equipment;

•the concentration of our revenues in certain geographical jurisdictions;

•limitations on insurance coverage, such as war risk coverage, in certain regions;

•any inability to repatriate income or capital;

•the operation and maintenance of our drilling units, including complications associated with repairing and replacing equipment in

remote locations and maintenance costs incurred while idle;

•newbuildings, upgrades, shipyard and other capital projects, including the completion, delivery and commencement of operation

dates;

•import-export quotas;

•wage and price controls and the imposition of trade barriers;

•our ability to attract and retain skilled personnel on commercially reasonable terms, whether due to labor regulations, unionization,

or otherwise;

•internal control risk due to significant employee reductions;

•regulatory or financial requirements to comply with foreign bureaucratic actions, including potential limitations on drilling activity,

changing taxation policies, the impact of global climate change or air emissions and other forms of government regulation and

economic conditions that are beyond our control;

•the level of expected capital expenditures, our expected financing of such capital expenditures, and the timing and cost of

completion of capital projects;

•fluctuations in interest rates or exchange rates and currency devaluations relating to foreign or U.S. monetary policy;

•future losses generated from investments in associated companies or receivable balances held with associated companies;

•tax matters, changes in tax laws, treaties and regulations, tax assessments and liabilities for tax issues, including those associated

with our activities in Bermuda, Brazil, Norway, the United Kingdom, the United Arab Emirates, Nigeria, Mexico, and the United

States;

•legal and regulatory matters, including the results and effects of legal proceedings, and the outcome and effects of internal and

governmental investigations;

•hazards inherent in the drilling industry and marine operations causing personal injury or loss of life, severe damage to or

destruction of property and equipment, pollution or environmental damage, claims by governmental authorities, third parties or

customers and the suspension of operations;

•customs and environmental matters and potential impacts on our business resulting from climate-change or greenhouse gas

legislation or regulations, and the impact on our business from climate-change related physical changes or changes in weather

pattern;

•the occurrence of cybersecurity incidents, attacks or other breaches to our information technology systems, including our rig

operating systems;

•other important factors described from time to time in the reports filed or furnished by us with the SEC.

We caution readers of this report on Form 20-F not to place undue reliance on these forward-looking statements, which speak to

circumstances only as at their dates. We undertake no obligation to update any forward-looking statement or statements to reflect events or

circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from

time to time, and it is not possible for us to predict all of these factors. Further, we cannot assess the impact of each such factor on our

business or the extent to which any factor, or combination of factors, may cause actual results to be materially different from those contained

in any forward-looking statement.

We qualify all of our forward-looking statements by these cautionary statements. See Item 3.D - "Risk Factors". You should read this report

and the documents that we have filed as exhibits to this report completely and with the understanding that our actual future results may be

materially different from our expectations.

PART I.

ITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

Except where the context otherwise requires or where otherwise indicated, the terms “Seadrill”, “the Group”, “we”, “us”, “our”, “the

Company” and “our Business” refer to either Seadrill Limited, any one or more of its consolidated subsidiaries, or to all such entities.

References to the term “Successor” refers to the financial position and results of operations of Seadrill after February 22, 2022. This is also

applicable to terms “Seadrill”, “the Group”, “we”, “us”, “our”, “the Company” or “our Business” in context of events after emergence from

Chapter 11 Proceedings on February 22, 2022.

References to the term “Predecessor” refers to the financial position and results of operations of Seadrill prior to, and including, February 22,

2022. This is also applicable to terms “Seadrill”, “the Group”, “we”, “us”, “our”, “the Company” or “our Business” in context of events

before emergence from our Chapter 11 Proceedings on February 22, 2022.

Unless otherwise indicated or the context otherwise requires, references in this report to the terms below have the following meanings:

•“AOD” means Asia Offshore Drilling Limited, an exempted company limited by shares incorporated under the laws of Bermuda

with registration number 44712.

•"Archer" means Archer Limited, a global oilfield service company that specializes in drilling and well services. Our held for sale

subsidiary, NSNCo, has a 15.7% ownership interest in the company.

•“Bankruptcy Court” means the United States Bankruptcy Court for the District of South Texas Division;

•“Chapter 11 Proceedings” means reorganization proceedings under Chapter 11 of Title 11 of the United States Code.

•“Companies Act” means the Companies Act 1981 of Bermuda, as amended from time to time;

•“Debtors” means Seadrill Limited and certain of its subsidiaries which filed voluntary petitions for reorganization under Chapter 11

of the United States Bankruptcy Code in the Bankruptcy Court;

•“Effective Date” means the date of the Debtors’ emergence from bankruptcy proceedings in accordance with the terms and

conditions of the Plan on February 22, 2022;

•“Euronext Expand” means the Norwegian Euronext Expand market of the Oslo Stock Exchange;

•“Exchange Act” means the Securities Exchange Act of 1934, as amended;

•"Fintech" means Fintech Investment Limited, our joint venture partner for SeaMex;

•"Gulf Drilling International" or "GDI" refers to our joint venture partner for Gulfdrill;

•"Gulfdrill" means Gulfdrill LLC, a limited liability company formed under the companies regulations of Qatar with QFC number

00770;

•“Hemen” means Hemen Holding Limited, a Cyprus holding company with registration number HE87804 and Hemen Investments

Limited, a Cyprus holding company with registration number HE371665;

•"Mermaid" means Mermaid International Ventures, who used to have a 33.76% ownership interest in AOD;

•"NODL" means: Northern Drilling Ltd, listed on the Oslo Stock Exchange under the trading symbol "NODL";

•"NOL" means Northern Ocean Ltd, listed on the Norwegian Over The Counter under the trading symbol "NOL";

•"Northern Drilling" means both NODL and NOL;

•“NSNCo” means Seadrill New Finance Limited, an exempted company limited by shares incorporated under the laws of Bermuda

with registration number 53541, formed in connection with the Previous Chapter 11 Proceedings and the issuer of the Senior

Secured Notes;

•“NSNCo Plan” means the Chapter 11 Plan of Reorganization filed with the Bankruptcy Court on January 11, 2022, and confirmed

by the Bankruptcy Court on January 12, 2022;

•“NYSE” means the New York Stock Exchange;

•“Old Seadrill Limited” or the “Predecessor Company” means Seadrill Limited, an exempted company limited by shares

incorporated under the laws of Bermuda with registration number 36832. Old Seadrill Limited was the parent company of Seadrill

prior to its emergence from bankruptcy in 2018;

1

•“OSE” means the Oslo Stock Exchange;

•“Plan” means the Plan of Reorganization, what was filed with the Bankruptcy Court on July 18, 2021 and confirmed by the

Bankruptcy Court on October 26, 2021;

•“Previous Chapter 11 Proceedings” mean the Chapter 11 cases commenced on September 12, 2017 in the United States Bankruptcy

Court of the Southern District of Texas;

•“Reorganization” means the transactions described under the heading “Chapter 11 Reorganization” in Item 4A and those

transactions contemplated by the Plan;

•“Sapura Energy” means Sapura Energy Berhad. We previously held an investment in Sapura Energy. Sapura Energy is also our

joint venture partner for Seabras Sapura;

•“Seabras Sapura” refers to our joint venture with Sapura Energy. We refer to our investments in Seabras Sapura Participacoes SA

and Seabras Sapura Holding GmbH together as “Seabras Sapura”.

•“Seadrill Partners” means Seadrill Partners, LLC, a limited liability company formed under the Laws of the Republic of The

Marshall Islands with registration number 962166;

•“SeaMex” means SeaMex Limited, a limited liability company formed under the Laws of Bermuda with registration number 48115;

•“Senior Secured Notes” means the Senior Secured Notes issued by NSNCo in connection with the Previous Chapter 11

Proceedings, as amended by the NSNCo Plan;

•"Shares" means common shares, par value $0.01 per share, of Seadrill Limited;

•"SFL" means SFL Corporation Ltd, formerly Ship Finance International Limited;

•"SFL SPVs" refer to the legal subsidiaries of SFL Corporation Ltd that own the semi-submersible rigs West Taurus and West

Hercules and the jack-up rig West Linus. These companies were consolidated by Seadrill until December 15, 2020;

•"Sonadrill" refers to Sonadrill Holding Ltd, a limited liability company registered in England with registration number 11922814;

and

Throughout the report we refer to customers, suppliers and other key partners by the names they are commonly known by instead of their full

legal names.

References in this annual report to “Total”, “Petrobras”, “ExxonMobil”, “LLOG”, “Saudi Aramco”, “ConocoPhillips” and “Equinor” refer to

our key customers Total S.A., Petroleo Brasileiro S.A., Exxon Mobil Corporation, LLOG Exploration Company LLC, Saudi Arabian Oil

Company, ConocoPhillips and Equinor ASA, respectively.

Unless otherwise indicated, all references to “US$” and “$” in this annual report are to, and amounts are presented in, US dollars. All

references to “€” are to euros, all references to “£” or “GBP” are to pounds sterling, all references to “NOK” are to Norwegian krone and all

references to “SEK” are to Swedish krona.

A.SELECTED FINANCIAL DATA

Our selected Statement of Operations and other financial data with respect to the fiscal years ended December 31, 2021, 2020 and 2019 and

our selected balance sheet data as at December 31, 2021 and 2020 have been derived from our Consolidated Financial Statements included in

Item 18 of this annual report, or the Consolidated Financial Statements, which have been prepared in accordance U.S. GAAP.

The following table should be read in conjunction with Item 5 - “Operating and Financial Review and Prospects” and the Consolidated

Financial Statements and notes thereto, which are included herein. Our Consolidated Financial Statements are maintained in U.S. dollars. We

refer you to the notes to the Consolidated Financial Statements for a discussion of the basis on which the Consolidated Financial Statements

are prepared, and we draw your attention to the statement regarding the application of fresh start accounting as described in Note 1 - "General

information" to the Consolidated Financial Statements included herein.

2

The below table summarizes certain line items from the Consolidated Statements of Operations for the last three fiscal years.

(In $ millions except common share and per share data)

Year ended

December

31, 2021

Year ended

December

31, 2020

Year ended

December

31, 2019

Statement of Operations Data:

Total operating revenues

1,008

1,059

1,388

Net operating loss

(157)

(4,482)

(295)

Loss from continuing operations

(592)

(4,448)

(720)

Income/(loss) from discontinued operations

5

(215)

(502)

Net loss

(587)

(4,663)

(1,222)

Basic/diluted loss per share from continuing operations

(5.90)

(44.29)

(7.16)

Basic/diluted loss per share

(5.85)

(46.43)

(12.18)

The below table summarizes certain line items from the consolidated balance sheets for the last three fiscal years.

(In $ millions except common share and per share data)

December 31,

2021

2020

2019

Balance Sheet Data (at end of period):

Cash and cash equivalents, including restricted cash

535

659

1,305

Drilling units

1,777

2,120

6,401

Investment in associated companies

27

24

Assets held for sale

1,103

685

1,001

Total assets

3,879

3,961

9,279

Long-term debt (including current portion)

—

5,662

6,147

Liabilities associated with assets held for sale

948

546

503

Common share capital

10

Total (deficit)/equity

(3,716)

(3,140)

1,793

Common shares outstanding (in millions)

100

Weighted average common shares outstanding (in millions)

100

The below table summarizes certain line items from the consolidated cashflow statements for the last three fiscal years.

(In $ millions)

Year ended

December

31, 2021

Year ended

December

31, 2020

Year ended

December

31, 2019

Statement of Cash Flows data:

Operating cash flows

(154)

(420)

(256)

Investing cash flows

37

(32)

(26)

Financing cash flows

—

(163)

(367)

B.CAPITALIZATION AND INDEBTEDNESS

Not applicable.

C.REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

3

D.RISK FACTORS

Our assets are primarily engaged in offshore contract drilling for the oil and gas industry in benign and harsh environments worldwide,

including ultra-deepwater environments. The following risks principally relate to the industry in which we operate and our business in

general. Other risks relate principally to the market for and ownership of our securities and our emergence from bankruptcy. The occurrence

of any of the events described in this section could materially and negatively affect our business, financial condition, operating results, cash

available for the payment of dividends or the trading price of our Shares. Unless otherwise indicated, all information concerning our business

and our assets is as of December 31, 2021. The risks and uncertainties described below are not the only ones we face. Additional risks and

uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

SUMMARY OF RISK FACTORS

Risks Relating to Our Emergence from Bankruptcy

• We recently emerged from bankruptcy, which may adversely affect our business and relationships.

• Our actual financial results after emergence from bankruptcy may not be comparable to our historical financial information as a

result of the implementation of the Plan and the transactions contemplated thereby.

•Because our Consolidated Financial Statements will reflect fresh start accounting adjustments made upon emergence from

bankruptcy, financial information in our future financial statements will not be comparable to Seadrill’s financial information from

prior periods.

• We may be subject to claims that were not discharged in the bankruptcy proceedings, which could have a material adverse effect on

our operating results and profitability.

• Upon emergence from bankruptcy, the composition of our board of directors changed significantly.

Risks Relating to Our Company and Industry

•The success and growth of our business depend on the level of activity in the offshore oil and gas industry generally, and the

drilling industry specifically, which are both highly competitive and cyclical, with intense price competition and volatility.

•Historical downturns in activity in the oil and gas drilling industry has had an adverse impact on our business and operating results,

and any future downturn or volatile market conditions is likely to adversely impact our business and operating results.

• Our customers may seek to cancel or renegotiate their contracts to include unfavorable terms such as unprofitable rates, particularly

in the circumstance that operations are suspended or interrupted.

• Our contract backlog for our fleet of drilling units may not be realized.

• We may not be able to renew or obtain new and favorable contracts for our drilling units whose contracts have expired or have been

terminated.

• The market value of our drilling units may decrease.

• Our business and operations involve numerous operating hazards, and in the current market we are increasingly required to take

additional contractual risk in our customer contracts and we may not be able to procure insurance to adequately cover potential

losses.

• We rely on a small number of customers and our operating results could be materially adversely affected if any of our major

customers fail to compensate us for our services or if we lose a significant customer contract.

• Some of our drilling contracts contain fixed terms and day-rates, and consequently we may not fully recoup our costs in the event of

a rise in expenses, including reactivation, operating and maintenance costs.

• We may be unable to obtain, maintain, and/or renew permits necessary for our operations or experience delays in obtaining such

permits including the class certifications of rigs.

• The international nature of our operations involves additional risks including foreign government intervention in relevant markets,

for example in Brazil.

• Compliance with, and breach of, the complex laws and regulations governing international trade could be costly, expose us to

liability and adversely affect our operations.

• We are subject to complex environmental laws and regulations that can adversely affect the cost, manner or feasibility of doing

business.

• Failure to comply with international anti-corruption legislation, including the U.S. Foreign Corrupt Practices Act 1977 or the U.K.

Bribery Act 2010, could result in fines, criminal penalties, damage to our reputation and drilling contract terminations.

• If our drilling units are located in or connected to countries that are subject to, or targeted by, economic sanctions, export

restrictions, or other operating restrictions imposed by the United States, the United Kingdom, European Union or other

governments, our reputation and the market for our debt and Shares could be adversely affected.

• We have suffered, and may continue to suffer, losses through our investments in other companies in the offshore drilling and

oilfield services industry, which could have a material adverse effect on our business, financial condition, operating results and cash

flows.

• Our ability to operate our drilling units in the U.S. Gulf of Mexico could be impaired by governmental regulation, particularly in the

aftermath of the moratorium on offshore drilling in the U.S. Gulf of Mexico, and regulations adopted as a result of the investigation

into the Macondo well blowout.

• Failure to obtain or retain highly skilled personnel, and to ensure they have the correct visas and permits to work in the locations in

which they are required, could adversely affect our operations.

4

• Labor costs and our operating restrictions that apply could increase following collective bargaining negotiations and changes in

labor laws and regulations.

• Climate change and the regulation of greenhouse gases could have a negative impact on our business.

• Our drilling contracts with national oil companies may expose us to greater risks than we normally assume in drilling contracts with

non-governmental customers.

• The coronavirus, or COVID-19, pandemic has affected and may materially adversely affect, and any future outbreak of any other

highly infectious or contagious diseases may materially adversely affect, our operations and our financial performance and

condition, operating results and cash flows.

Risks Relating to Our Shareholders

•The price of the Shares may be volatile or may decline regardless of our operating performance, and investors may not be able to

resell the Shares at or above their initial purchase price.

• The market price of our Shares has fluctuated widely and may fluctuate widely in the future.

• Substantial sales of or trading in the Shares could occur, which could cause the share price to be adversely affected.

• We may pay little or no dividends on the Shares.

• U.S. tax authorities may treat us as a “passive foreign investment company” for U.S. federal income tax purposes, which may have

adverse tax consequences for U.S. shareholders.

• Because we are a foreign corporation, you may not have the same rights that a shareholder in a U.S. corporation may have.

• We are not listed on any U.S. national securities exchange, which could affect the ability of U.S. shareholders to resell their Shares

or affect liquidity or price.

• Our Bye-Laws limit shareholders’ ability to bring legal action against its officers and directors.

• Investors with Shares registered in a nominee account will need to exercise voting rights through their nominee.

General Risk Factors

•The economic effects of “Brexit” may affect relationships with existing and future customers and could have an adverse impact on

our business and operating results.

• We may recognize impairments on long-lived assets, including goodwill and other intangible assets, or recognize impairments on

our equity method investments.

• Interest rate fluctuations could affect our earnings and cash flows.

• The transition away from LIBOR may adversely affect our cost to obtain financing and cause our debt service obligations to

increase significantly.

• Fluctuations in exchange rates and the non-convertibility of currencies could result in losses to us.

• A change in tax laws in any country in which we operate could result in higher tax expense.

• A loss of a major tax dispute or a successful tax challenge to our operating structure, intercompany pricing policies or the taxable

presence of our subsidiaries in certain countries could result in higher taxes on our worldwide earnings, which could result in a

significant negative impact on our earnings and cash flows from operations.

• Legislation enacted in Bermuda as to Economic Substance many affect our operations.

• We may be subject to litigation, arbitration, other proceedings and regulatory investigations that could have an adverse effect on us.

• If we fail to comply with requirements relating to internal control over financial reporting our business could be harmed and our

Share price could decline.

• Data protection and regulations related to privacy, data protection and information security could increase our costs, and our failure

to comply could result in fines, sanctions or other penalties, which could materially and adversely affect our operating results, as

well as have an impact on our reputation.

Risks related to Our Emergence from Bankruptcy

We recently emerged from bankruptcy, which may adversely affect our business and relationships. We cannot be certain that the

bankruptcy proceeding will not adversely affect our operations going forward.

We operated in bankruptcy from February 7, 2021 (with respect to certain of our subsidiaries) or February 10, 2021 to February 22, 2022. It is

possible that our having filed for bankruptcy and our recent emergence from bankruptcy may adversely affect our business and relationships

with customers, vendors, contractors or employees. Due to uncertainties, many risks exist, including the following:

• key customers may terminate their relationships with us or require additional financial assurances or enhanced performance from us;

• our ability to renew existing contracts and compete for new business may be adversely affected;

• our ability to attract, motivate and/or retain key executives may be adversely affected; and

• competitors may take business away from us, and our ability to attract and retain customers may be negatively impacted.

The occurrence of one or more of these events could have a material and adverse effect on our operations, financial condition and reputation.

We cannot assure you that having been subject to bankruptcy protection will not adversely affect our operations in the future.

5

Our actual financial results may differ substantially from the projected financial information prepared for the bankruptcy proceedings.

In connection with the disclosure statement we filed with the Bankruptcy Court, and the hearing to consider confirmation of the Plan, we

prepared projected financial information to demonstrate to the Bankruptcy Court the feasibility of the Plan and our ability to continue

operations upon our emergence from bankruptcy. Those projections were prepared solely for the purpose of bankruptcy proceedings and have

not been, and will not be, updated on an ongoing basis and should not be relied upon by investors. At the time they were prepared, the

projections reflected numerous assumptions concerning our anticipated future performance with respect to prevailing and anticipated market

and economic conditions that were and remain beyond our control and that may not materialize. Projections are inherently subject to

substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks and the assumptions

underlying the projections and/or valuation estimates may prove to be wrong in material respects. Actual results may vary significantly from

those contemplated by the projections. As a result, investors should not rely on these projections.

Because our Consolidated Financial Statements will reflect fresh start accounting adjustments made upon emergence from bankruptcy,

financial information in our future financial statements will not be comparable to Seadrill’s financial information from prior periods.

Upon emergence from Chapter 11 Proceedings, on February 22, 2022, we adopted fresh start accounting in accordance with the provisions set

forth in ASC 852, Reorganizations. Adopting fresh start accounting results in a new financial reporting entity with no retained earnings or

deficits brought forward. Upon the adoption of fresh start accounting, our assets and liabilities were recorded at their fair values which differ

materially from the recorded values of our assets and liabilities as reflected in the Predecessor historical Consolidated Balance Sheets. Thus,

our future Consolidated Balance Sheets and Statements of Operations will not be comparable in many respects to Consolidated Balance

Sheets and Statements of Operations data for periods prior to adoption of fresh start accounting. You will not be able to compare information

reflecting our post-emergence Consolidated Financial Statements to information for periods prior to emergence from bankruptcy, without

adjusting for fresh start accounting. The lack of comparable historical information may discourage investors from purchasing our Shares.

Additionally, the financial information contained in this annual report on Form 20-F may not be indicative of future financial information.

We may be subject to claims that were not discharged in the bankruptcy proceedings, which could have a material adverse effect on our

operating results and profitability.

Substantially all the material claims against the Debtors that arose prior to the date of the bankruptcy filing were addressed during the Chapter

11 Proceedings or were resolved in connection with the Plan and the order of the Bankruptcy Court confirming the Plan. However, we may be

subject to claims that were not discharged in the Chapter 11 Proceedings. Circumstances in which claims and other obligations that arose

prior to the bankruptcy filing that were not discharged primarily relate to certain actions by governmental units under police power authority,

where we have agreed to preserve a claimant’s claims, as well as, potentially, instances where a claimant had inadequate notice of the

bankruptcy filing. In addition, except in limited circumstances, claims against non-debtor subsidiaries, are generally not subject to discharge

under the Bankruptcy Code. To the extent any pre-filing liability remains, the ultimate resolution of such claims and other obligations may

have a material adverse effect on our operating results, profitability and financial condition.

Upon emergence from bankruptcy, the composition of our board of directors changed significantly.

The composition of our board of directors changed significantly upon emergence from bankruptcy. Our new board is comprised of the

following members: Julie Johnson Robertson, Mark McCollum, Karen Dyrskjot Boesen, Jean Cahuzac, Jan Kjaervik, Andrew Schultz and

Paul Smith. While we expect to engage in an orderly transition process as we integrate newly appointed board members, our new board of

directors may change views on strategic initiatives and a range of issues that will determine the future of the Company. As a result, the future

strategy and plans of the Company may differ materially from those of the past.

Risks Relating to Our Company and Industry

The success and growth of our business depend on the level of activity in the offshore oil and gas industry generally, and the drilling

industry specifically, which are both highly competitive and cyclical, with intense price competition and volatility.

Our business depends on the level of oil and gas exploration, development and production in offshore areas worldwide that is influenced by

oil and gas prices and market expectations of potential changes in these prices.

Oil and gas prices are extremely volatile and are affected by numerous factors beyond our control, including, but not limited to, the following:

• worldwide production of, and demand for, oil and gas and geographical dislocations in supply and demand;

• the cost of exploring for, developing, producing and delivering oil and gas;

• expectations regarding future energy prices and production;

• advances in exploration, development and production technology;

• the ability or willingness of the Organization of the Petroleum Exporting Countries, or OPEC, and other non-member nations, including

Russia, to set and maintain levels of production and pricing;

• the decision of OPEC or other non-member nations to abandon production quotas and/or member-country quota compliance within

OPEC agreements;

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• the level of production in non-OPEC countries;

• international sanctions on oil-producing countries, or the lifting of such sanctions;

• export licensing requirements impacting the ability to export equipment to or from certain countries;

• government regulations, including restrictions on offshore transportation of oil and natural gas;

• local and international political, economic and weather conditions;

• domestic and foreign tax policies;

• the development and exploitation of alternative fuels and unconventional hydrocarbon production, including shale;

• worldwide economic and financial problems and the corresponding decline in the demand for oil and gas and, consequently, our

services;

• the policies of various governments regarding exploration and development of their oil and gas reserves, accidents, severe weather,

natural disasters and other similar incidents relating to the oil and gas industry; and

• the worldwide political and military environment, including uncertainty or instability resulting from an escalation or additional

outbreak of armed hostilities or other crises in the Middle East, Eastern Europe or other geographic areas or further acts of terrorism in

the United States, Europe or elsewhere.

Decreases in oil and gas prices for an extended period of time, or market expectations of potential decreases in these prices, have in the past

been shown to negatively affect us and could negatively affect our future performance.

As an example of the volatility in oil prices, Brent fell to $9 a barrel in April 2020 before a recovery in oil and gas prices toward the end of

2020 and through 2021, with Brent reaching $78 a barrel on December 31, 2021, and increasing to over $100 in 2022. However, there is no

guarantee that the oil and gas price recovery will be sustained. Prices can continue to fluctuate and there may be longer periods of lower

prices. The supply of rigs in the market has, as a result of longer periods of significant fluctuations in oil and gas prices, continued to

outweigh the demand. This trend may continue, and therefore have a damping effect on utilization levels and dayrates.

Continued periods of low demand can cause excess rig supply and intensify competition in our industry, which often results in drilling rigs,

particularly older and less technologically-advanced drilling rigs, being idle for long periods of time. We cannot predict the future level of

demand for drilling rigs or future condition of the oil and gas industry with any degree of certainty. Any future decrease in exploration,

development or production expenditures by oil and gas companies could further reduce our revenues and materially harm our business.

In addition to oil and gas prices, the offshore drilling industry is influenced by additional factors, which could reduce demand for our services

and adversely affect our business, including, but not limited to, the following:

• the availability and quality of competing offshore drilling units;

• the availability of debt financing on reasonable terms;

• the level of costs for associated offshore oilfield and construction services;

• oil and gas transportation costs;

• the level of rig operating costs, including crew and maintenance;

• the discovery of new oil and gas reserves;

• the political and military environment of oil and gas reserve jurisdictions; and

• regulatory restrictions on offshore drilling.

The offshore drilling industry is highly competitive and fragmented and includes several large companies that compete in many of the

markets we serve, as well as numerous small companies that compete with us on a local basis. Offshore drilling contracts are generally

awarded on a competitive bid basis or through privately negotiated transactions. In determining which qualified drilling contractor is awarded

a contract, the key factors are pricing, rig availability, rig location, the condition and integrity of equipment, the rig’s and/or the drilling

contractor’s record of operating efficiency, including high operating uptime, technical specifications, safety performance record, crew

experience, reputation, industry standing and customer relations. Our operations may be adversely affected if our current competitors or new

market entrants introduce new drilling rigs with better features, performance, prices or other characteristics compared to our drilling rigs, or

expand into service areas where we operate.

Competitive pressures and other factors may result in significant price competition, particularly during industry downturns, which could have

a material adverse effect on our operating results and financial condition.

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Historical downturns in activity in the oil and gas drilling industry has had an adverse impact on our business and operating results, and

any future downturn or volatile market conditions is likely to adversely impact our business and operating results.

The oil and gas drilling industry is cyclical but has been in a prolonged down cycle since 2014 and uncertainty remains around the timing and

speed of any increase in oil demand, although various industry forecasts anticipate oil demand to recover to pre-pandemic levels in 2022.

If we are unable to secure contracts for our drilling units upon the expiration of our existing contracts, we may stack our units. When idled or

stacked, drilling units do not earn revenues, but continue to require cash expenditures for crews, fuel, insurance, berthing and associated

items. As of December 31, 2021, we had 0 “warm stacked”, which means the rig is kept operational and ready for redeployment, and

maintains most of its crew, 10 “cold stacked” units (2 of which are future contracted), which means the rig is stored in a harbor, shipyard or a

designated offshore area, and the crew is reassigned to an active rig or dismissed. Without new drilling contracts or additional financing being

available when needed or available only on unfavorable terms, we may be unable to meet our obligations as they come due or we may be

unable to enhance our existing business, complete additional drilling unit acquisitions or otherwise take advantage of business opportunities

as they arise.

During volatile market conditions or expected downturns, our customers may also seek to cancel or renegotiate our contracts for various

reasons, including adverse conditions, resulting in lower revenue. Our inability, or the inability of our customers to perform, under our or their

contractual obligations may have a material adverse effect on our financial position, operating results and cash flows.

From time to time, we are approached by potential buyers for the outright purchase of some of our drilling units, businesses, or other fixed

assets. We may determine that such a sale would be in our best interests and agree to sell certain drilling units or other assets. Such a sale

could have an impact on short-term liquidity and net income. We may recognize a gain or loss on disposal depending on whether the fair

value of the consideration received is higher or lower than the carrying value of the asset.

We do not know when the market for offshore drilling units may recover, or the nature or extent of any future recovery. There can be no

assurance that the current demand for drilling rigs will not further decline in future periods. A future decline in demand for drilling rigs would

adversely affect our financial position, operating results and cash flows.

A continuing economic downturn could have a material adverse effect on our revenue, profitability and financial position.

We depend on our customers’ willingness and ability to fund operating and capital expenditures to explore, develop and produce oil and gas,

and to purchase drilling and related equipment. There has historically been a strong link between the development of the world economy and

the demand for energy, including oil and gas. The world economy is currently facing a number of challenges. Concerns persist regarding the

debt burden of certain European countries and their ability to meet future financial obligations and the overall stability of the euro. Further,

the COVID-19 outbreak has had numerous effects on the global economy and has caused a global economic downturn. While effective

vaccination campaigns have supported economic recovery, existing outbreaks and associated restrictions still have an impact on the world

economy. A renewed period of adverse development in the outlook for the financial stability of European countries, or market perceptions

concerning these and related issues, could reduce the overall demand for oil and natural gas and for our services and thereby could affect our

financial position, operating results and cash available for distribution. In addition, turmoil and hostilities in the Ukraine, Korea, the Middle

East, North Africa and other geographic areas and countries are adding to the overall risk picture.

Negative developments in worldwide financial and economic conditions could further cause our ability to access the capital markets to be

severely restricted at a time when we would like, or need, to access such markets, which could impact our ability to react to changing

economic and business conditions. Worldwide economic conditions have in the past impacted, and could in the future impact, lenders

willingness to provide credit facilities to our customers, causing them to fail to meet their obligations to us.

A portion of the credit under our secured credit facilities is provided by European banking institutions. If economic conditions in Europe

preclude or limit financing from these banking institutions, we may not be able to obtain financing from other institutions on terms that are

acceptable to us, or at all, even if conditions outside Europe remain favorable for lending.

An extended period of adverse development in the outlook for the world economy could also reduce the overall demand for oil and gas and

for our services. Such changes could adversely affect our operating results and cash flows beyond what might be offset by the simultaneous

impact of possibly higher oil and gas prices.

Our business is capital intensive and, to the extent we do not generate sufficient cash from operations, we may need to raise additional funds

through public or private debt or equity offerings to fund our capital expenditures. Our ability to access the capital markets may be limited by

the terms of our secured credit facilities, our financial condition at the time, by changes in laws and regulations or interpretations thereof and

by adverse market conditions resulting from, among other things, general economic conditions and contingencies and uncertainties that are

beyond our control. An extended period of deterioration in outlook for the world economy could reduce the overall demand for our services

and could also adversely affect our ability to obtain financing on terms acceptable to us or at all.

Any reductions in drilling activity by our customers may not be uniform across different geographic regions. Locations where costs of drilling

and production are relatively higher, such as Arctic or deepwater locations, may be subject to greater reductions in activity. Such reductions in

high cost regions may lead to the relocation of drilling units, concentrating drilling units in regions with relatively fewer reductions in activity

leading to greater competition.

If our lenders and other debt holders are not confident that we are able to employ our assets, we may be unable to secure replacement or

additional financing, or amendments to our existing secured credit facilities, on terms acceptable to us or at all.

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We may not have sufficient liquidity to meet our obligations as they fall due or have the ability to raise new capital or refinance existing

indebtedness on acceptable terms, all of which could adversely affect our business and financial condition.

Our substantial indebtedness could have significant adverse consequences for an investment in us and on our business, financial condition and

future prospects, including the following:

• we may not be able to satisfy our financial obligations under our indebtedness and our contractual and commercial commitments;

• we may not be able to obtain financing in the future for working capital, capital expenditures, acquisitions, debt service requirements

or other purposes;

• less leveraged competitors could have a competitive advantage because they have lower debt service requirements and, as a result, we

may not be better positioned to withstand economic downturns;

• we may be less able to take advantage of significant business opportunities and to react to changes in market or industry conditions

than our competitors and our management’s discretion in operating our business may be limited; and

• other factors described below.

If for any reason we are unable to meet our debt service and repayment obligations under our secured credit facilities, we would be in default

under the terms of the agreements governing such facilities, which may allow our lenders at that time to declare all such indebtedness then

outstanding to be immediately due and payable. This may in turn trigger cross-acceleration or cross-default rights under certain of our other

agreements. Under these circumstances, if the amounts outstanding under our existing and future credit facilities or other debt agreements

were to be accelerated, or were the subject of foreclosure actions, we cannot assure you that our assets would be sufficient to repay in full the

money owed to our lenders or to our other creditors. Furthermore, if our assets are foreclosed upon, we will not have any income-producing

assets left, and, as such, we may not be able to generate any cash flow in the future.

The covenants under our secured credit facilities impose operating and financial restrictions on us that could significantly impact our

ability to operate our business and a breach of which could result in a default under the terms of these agreements, which could accelerate

our repayment of funds that we have borrowed.

The terms of our secured credit facilities impose, and future financial obligations may impose, operating and financial restrictions on us.

These restrictions may prohibit or otherwise limit our ability to fund our operations or capital needs or to undertake certain other business

activities or transactions without consent of the requisite debt holders, which in turn may adversely affect our financial condition. These

restrictions include but are not limited to:

• executing other financing arrangements or incurring other indebtedness;

• incurring or guaranteeing additional indebtedness;

• creating or permitting liens on our assets;

• selling our drilling units or the shares of our subsidiaries;

• making investments or acquisitions;

• changing the general nature of our business;

• a prohibition on paying dividends to our shareholders and restrictions on making other types of restricted payments;

• changing the management and/or ownership of the drilling units; and

• making certain capital expenditures.

These restrictions may affect our ability to compete effectively with our competitors to the extent that they are subject to less onerous

restrictions. The interests of our lenders and other debt holders may be different from the Company’s and we may not be able to obtain their

consent when beneficial for our business, which may impact our performance or our ability to obtain replacement or additional financing and/

or make certain investments or acquisitions in the future. In addition, the profile of our lenders has changed since emergence from the Chapter

11 Proceedings, with the replacement of certain relationship banks by lenders whose focus may be different in nature. The new profile of our

lenders may make it more difficult for us to obtain lender consents when beneficial to our business or otherwise obtain waivers or other

consents or approvals which may be required from time to time.

While our lenders under our secured credit facilities benefit from and share in the same security, their interests may not necessarily be

aligned, and they may therefore have different views on some or all matters. This may make it more difficult for us to obtain lender consents

when beneficial to our business or otherwise obtain waivers or other consents or approvals which may be necessary from time to time.

Following emergence from Chapter 11 Proceedings on the Effective Date, with exception of minimum liquidity requirements, we are exempt

from financial covenants until September 30, 2023. Thereafter, in addition to minimum liquidity requirements, we are required to maintain

and satisfy certain financial ratios and covenants relating to gross and net leverage. Breach of financial covenants may result in a default

under the terms of these agreements, which could accelerate our repayment of funds that we have borrowed.

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The time that we spent subject to Chapter 11 Proceedings has utilized some of the period for which we were able to negotiate financial

covenant flexibility and reduced the period outside of Chapter 11 Proceedings during which the financial covenants are disapplied.

Certain of our affiliated or related companies may be unable to service their debt requirements and comply with the provisions contained

in their debt agreements.

The failure of certain of the Company’s affiliated or related companies to service their debt requirements and comply with the provisions

contained in their debt agreements may lead to an event of default under such agreements, which may have a material adverse effect on

Seadrill.

If a default occurs under the debt agreements of our affiliated or related companies, the lenders and other debt holders could accelerate the

outstanding borrowings and declare all amounts outstanding due and payable. In this case, if such entities are unable to obtain a waiver or an

amendment to the applicable provisions of the debt agreements, or do not have enough cash on hand to repay the outstanding borrowings, the

lenders and other secured debt holders may, among other things, foreclose their liens on the drilling units and other assets securing the loans

and other secured debt, if applicable, or seek repayment of such debt from such entities.

Our customers may seek to cancel or renegotiate their contracts to include unfavorable terms such as unprofitable rates, particularly in

the circumstance that operations are suspended or interrupted.

During current or worsened market conditions, some of our customers may seek to terminate their agreements with us. Some of our customers

have the right to terminate their drilling contracts without cause upon the payment of an early termination fee. The general principle is that

such early termination fee shall compensate us for lost revenues less operating expenses for the remaining contract period; however, in some

cases, such payments may not fully compensate us for the loss of the drilling contract.

Under certain circumstances our contracts may permit customers to terminate contracts early without the payment of any termination fees, as

a result of non-performance, periods of downtime or impaired performance caused by equipment or operational issues, or sustained periods of

downtime due to force majeure events beyond our control. In addition, national oil company customers may have special termination rights

by law. During periods of challenging market conditions, we may be subject to an increased risk of our customers seeking to repudiate their

contracts, including through claims of non-performance. Our customers may seek to renegotiate their contracts with us using various

techniques, including threatening breaches of contract and applying commercial pressure, resulting in lower revenue or the cancellation of

contracts with or without any applicable early termination payments.

Reduced dayrates in our customer contracts and cancellation of drilling contracts (with or without early termination payments) may adversely

affect our financial performance and lead to reduced revenues from operations.

Our contract backlog for our fleet of drilling units may not be realized.

As at December 31, 2021, our contract backlog was approximately $2.2 billion, excluding the backlog attributable to the West Linus which

was returned to SFL in early 2022. The contract backlog presented in this annual report on Form 20-F and our other public disclosures is only

an estimate. The actual amount of revenues earned and the actual periods during which revenues are earned will be different from the contract

backlog projections due to various factors, including shipyard and maintenance projects, downtime and other events within or beyond our

control. In addition, we or our customers may seek to cancel or renegotiate our contracts for various reasons, including adverse conditions,

such as the current environment, resulting in lower revenue. In some instances, contracts provide for a customer to terminate a drilling

contract prematurely for convenience on payment of an early termination fee. However, this fee may not adequately compensate us for the

loss of this drilling contract. Our inability, or the inability of our customers, to meet contractual obligations may have a material adverse effect

on our financial position, operating results and cash flows.

We may not be able to renew or obtain new and favorable contracts for our drilling units whose contracts have expired or have been

terminated.

During the previous period of high utilization and high dayrates, which we now believe ended in early 2014, industry participants ordered the

construction of new drilling units, which resulted in an over-supply and caused, in conjunction with deteriorating industry conditions, a

subsequent decline in utilization and dayrates when the new drilling units entered the market. A relatively large number of the drilling units

currently under construction have not been contracted for future work, and a number of units in the existing worldwide fleet are currently off-

contract.

As at December 31, 2021, we had 14 owned operating units, zero warm-stacked units and 10 cold-stacked units. The five SeaMex rigs are

included within our discontinued operations held for sale and have been classified as managed rigs. Of the 14 operating and two future

contracted units we expect seven to become available in 2022 and nine thereafter. Our ability to renew contracts or obtain new contracts will

depend on our customers and prevailing market conditions, which may vary among different geographic regions and types of drilling units.

The over-supply of drilling units will be exacerbated by the entry of newbuild rigs into the market, many of which are without firm drilling

contracts. The supply of available uncontracted units may intensify price competition as scheduled delivery dates occur and contracts

terminate without renewal, reducing dayrates as the active fleet grows.

In addition, as our fleet of drilling units becomes older, any competitive advantage of having a modern fleet may be reduced to the extent that

we are unable to acquire newer units or enter into newbuilding contracts as a result of financial constraints. For as long as there is an

oversupply of drilling rigs, it may be more difficult for older rigs to secure extensions or new contract awards.

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If we are unable to secure contracts for our drilling units upon the expiration of our existing contracts, we may continue to idle or stack our

units. When idled or stacked, drilling units do not earn revenues, but continue to require cash expenditures for crews, fuel, insurance, berthing

and associated items. As at December 31, 2021 we had 0 units “warm stacked,” which means the rig is kept operational and ready for

redeployment, and maintains most of its crew, and 10 units “cold stacked,” which means the rig is stored in a harbor, shipyard or a designated

offshore area, and the crew is reassigned to an active rig or dismissed. Please see “Some of our drilling contracts contain fixed terms and day-

rates, and consequently we may not fully recoup our costs in the event of a rise in expenses, including operating and maintenance costs” for

more information.

The market value of our drilling units may decrease.

The market values of drilling units have been trending lower as a result of the continued decline in the price of oil, which has impacted the

spending plans of our customers and utilization of the global fleet. If the offshore drilling industry suffers further adverse developments in the

future, the fair market value of our drilling units may decrease further. The fair market value of the drilling units that we currently own, or

may acquire in the future, may increase or decrease depending on a number of factors, including:

• the general economic and market conditions affecting the offshore contract drilling industry, including competition from other offshore

contract drilling companies;

• the types, sizes and ages of drilling units;

• the supply and demand for drilling units;

• the costs of newbuild drilling units;

• the prevailing level of drilling services contract dayrates;

• governmental or other regulations; and

• technological advances.

If drilling unit values fall significantly, we may have to record an impairment adjustment in our Consolidated Financial Statements, which

could adversely affect our financial results and condition. For more information, see “Historical downturns in activity in the oil and gas

drilling industry has had an adverse impact on our business and operating results, and any future downturn or volatile market conditions is

likely to adversely impact our business and operating results”.

Our business and operations involve numerous operating hazards, and in the current market we are increasingly required to take

additional contractual risk in our customer contracts and we may not be able to procure insurance to adequately cover potential losses.

Our operations are subject to hazards inherent in the drilling industry, such as blowouts, reservoir damage, loss of production, loss of well

control, lost or stuck drill strings, equipment defects, punch-throughs, cratering, fires, explosions and pollution. Contract drilling and well

servicing requires the use of heavy equipment and exposure to hazardous conditions, which may subject us to liability claims by employees,

customers and/or third parties. These hazards can cause personal injury or loss of life, severe damage to or destruction of property and

equipment, pollution or environmental or natural resource damage, claims by third parties and/or customers, investigations and other

proceedings by regulatory authorities which may involve fines and other sanctions, and suspension of operations. Our offshore fleet is also

subject to hazards inherent in marine operations, either while on-site or during mobilization, such as capsizing, sinking, grounding, collision,

damage from severe weather (which may be more acute in certain areas where we operate) and marine life infestations. Operations may also

be suspended because of machinery breakdowns, abnormal drilling conditions, failure of subcontractors to perform or supply goods or

services or personnel shortages. We customarily provide contract indemnification to our customers for claims relating to damage to or loss of

our equipment, including rigs and claims relating to personal injury or loss of life.

Damage to the environment or natural resources could also result from our operations, particularly through spillage of fuel, lubricants or other

chemicals and substances used in drilling operations or uncontrolled fires. We may also be subject to property, environmental, natural

resource, personal injury, and other legal claims and/or injunctions by private parties, including oil and gas companies, as well as

administrative, civil, and/or criminal penalties or injunctions by government authorities.

Our insurance policies and contractual rights to indemnification may not adequately cover losses, and we do not have insurance coverage or

rights to indemnity for all risks. Consistent with standard industry practice, our customers generally assume, and indemnify us against certain

risks, for example, well control and subsurface risks, and we generally assume, and indemnify against, above surface risks (including spills

and other events occurring on our rigs). Subsurface risks indemnified by our customers generally include risks associated with the loss of

control of a well, such as blowout or cratering or uncontrolled well-flow, the cost to regain control of or re-drill the well and associated

pollution. However, there can be no assurances that these customers will tome third indemnification obligations to us regardless of the agreed

contractual position. The terms of our drilling contracts vary based on negotiation, applicable local laws and regulations and other factors, and

in some cases, customers may seek to cap indemnities or narrow the scope of their coverage, reducing our level of contractual protection and

in turn exposing us to additional risks against which it may not be adequately insured.

In addition, a court, arbitrator, or other dispute resolution body may determine that certain indemnities or other terms in our current or future

contracts are not enforceable. For example, in a decision in a case related to the fire and explosion that took place on the unaffiliated

Deepwater Horizon Mobile Offshore Drilling Unit in the Gulf of Mexico in April 2010, or the Deepwater Horizon Incident (to which we were

not a party), a U.S. District Court invalidated certain contractual indemnities under a drilling contract governed by U.S. law. Further, pollution

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and environmental risks generally are not totally insurable. If a significant accident or other event occurs that is not fully covered by our

insurance or an enforceable or recoverable indemnity from a customer, the occurrence could adversely affect our performance.

The amount recoverable under insurance, if any, may also be less than the related impact on enterprise value after a loss or not cover all

potential consequences of an incident and include annual aggregate policy limits. As a result, we retain the risk through self-insurance for any

losses in excess of these limits. Any such lack of reimbursement or suffering of loss in excess of such limits may cause us to incur substantial

costs.

We may decide to retain more risk through self-insurance in the future. This self-insurance results in a higher risk of losses, which could be

material, which are not covered by third-party insurance contracts. Specifically, we have at times in the past and have currently elected to self-

insure for physical damage to rigs and equipment caused by named windstorms in the U.S. Gulf of Mexico due to the excessive cost

associated with such coverage and the mobility of the relevant rigs to avoid these windstorms. If we continue to elect to self-insure such risks

again in the future and such windstorms cause significant damage to any rig and equipment we have in the U.S. Gulf of Mexico, it could have

a material adverse effect on our financial position, operating results and cash flows.

No assurance can be made that we will be able to maintain adequate insurance in the future at rates that we consider reasonable, or that we

will be able to obtain insurance against certain risks.

We rely on a small number of customers and our operating results could be materially adversely affected if any of our major customers

fail to compensate us for our services or if we lose a significant customer contract.

Our contract drilling business is subject to the risks associated with having a limited number of customers for our services. For the year ended

December 31, 2021, our five largest customers, ConocoPhillips, Equinor, Saudi Aramco, Lundin and Sonadrill accounted for approximately

60% of our revenues. In addition, mergers and acquisitions, or other forms of consolidation among oil and gas exploration and production

companies will further reduce the number of available customers, which would increase the ability of potential customers to achieve pricing

terms favorable to them. Our operating results could be materially adversely affected if any of our major customers fail to compensate us for

our services or take actions outlined above. Please see “Our customers may seek to cancel or renegotiate their contracts to include

unfavorable terms such as unprofitable rates, particularly in the circumstance that operations are suspended or interrupted” above for more

information.

We are subject to risks of loss resulting from non-payment or non-performance by our customers and certain other third parties. Some of these

customers and other parties may be highly leveraged and subject to their own operating and regulatory risks. If any key customers or other

parties default on their obligations to us, our financial results and condition could be adversely affected. Any material non-payment or non-

performance by these entities, other key customers or certain other third parties could adversely affect our financial position, operating results

and cash flows.

Some of our drilling contracts contain fixed terms and dayrates, and consequently we may not fully recoup our costs in the event of a rise

in expenses, including reactivation, operating and maintenance costs.

Our operating costs are generally related to the number of units in operation and the cost level in each country or region where the units are

located. A significant portion of our operating costs may be fixed over the short term.

Some of our contracts have dayrates that are fixed over the contract term. To mitigate the effects of inflation on revenues from term contracts,

most of our long-term contracts include escalation provisions. These provisions allow us to adjust the dayrates based on stipulated external

cost indices. However, actual cost increases may result from events or conditions that do not cause correlative changes to the applicable

indices, or relate to the indices at all. Furthermore, certain indices are updated annually, and therefore may be outdated at the time of

adjustment. The adjustments are typically performed on an annual basis. For these reasons, the timing and amount awarded as a result of such

adjustments may differ from our actual cost increases, which could adversely affect our financial performance. Some of our long-term

contracts contain rate adjustment provisions based on market dayrate fluctuations rather than cost increases. In such contracts, the dayrate

could be adjusted downward during a period when operating or other costs are rising, which could adversely affect our financial performance.

In addition, our contracts typically contain provisions for either fixed or dayrate compensation during mobilization. These rates may not fully

cover our costs of mobilization, and mobilization may be delayed, increasing our costs, without additional compensation from the customer,

for reasons beyond or within our control.

We may incur varying levels of expenses relating to preparation for operations in connection with new assignments, including, but not limited

to, the scope and length of the required preparations, whether the relevant unit is idle or stacked and reactivation is required, and the duration

of the contractual period over which such expenditures are amortized.

Equipment maintenance costs fluctuate depending upon the type of activity that the unit is performing and the age and condition of the

equipment, as well as the applicable environmental, safety and maritime regulations and standards. Our operating expenses and maintenance

costs depend on a variety of factors, including crew costs, provisions, equipment, insurance, maintenance and repairs, and shipyard costs,

many of which are beyond our control.

In situations where our drilling units incur idle time between assignments, any ability to reduce the size of our crews on those drilling units is

limited, as the crews will be engaged in preparing the unit for its next contract. When a unit faces longer idle periods, reductions in costs may

not be immediate as some of the crew may be required to prepare drilling units for stacking and maintenance in the stacking period. Should

units be idle for a longer period, we will seek to redeploy crew members who are not required to maintain the drilling unit to active rigs, to the

fullest extent possible. However, there can be no assurance that we will be successful in reducing our costs in such cases.

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Operating and maintenance costs will not necessarily fluctuate in proportion to changes in operating revenues. Operating revenues may

fluctuate as a function of changes in supply of offshore drilling units and demand for contract drilling services. This could adversely affect our

revenue from operations. For more information please see “The success and growth of our business depend on the level of activity in the

offshore oil and gas industry generally, and the drilling industry specifically, which are both highly competitive and cyclical, with intense

price competition and volatility”, “Our customers may seek to cancel or renegotiate their contracts to include unfavorable terms such as

unprofitable rates, particularly in the circumstance that operations are suspended or interrupted” and “Our contract backlog for our fleet of

drilling units may not be realized”.

Consolidation of suppliers and governmental regulation of suppliers may increase the cost of obtaining supplies or restrict our ability to

obtain needed supplies.

We rely on certain third parties to provide supplies and services necessary to operate our offshore and onshore operations, including, but not

limited to, drilling equipment suppliers, satellite and other electronic data and telecommunications providers, catering suppliers and

machinery suppliers. There has been a reduction in the number of available suppliers in certain sectors, resulting in fewer alternatives for

sourcing key supplies. With respect to certain items, such as blow-out preventers or "BOPs" and drilling packages, we are dependent on the

original equipment manufacturer for repair and replacement of the item or its spare parts. Such consolidation may result in a shortage of

supplies and services, thereby increasing the cost of supplies and/or potentially inhibiting the ability of suppliers to deliver on time. These cost

increases or delays could have a material adverse effect on our operating results and result in rig downtime, and delays in the repair and

maintenance of our drilling rigs.

The COVID-19 pandemic has had an impact on most of our Supply Chain including challenges sourcing materials due to limited supply /

restrictions in countries various areas leading to escalating costs and delivery times going out. Logistics is still challenging due to continued

country restrictions, port congestion, and new regulatory country and client requirements.

Due to an increasing number of companies in the oil and gas drilling industry entering into Chapter 11 proceedings, or similar bankruptcy

proceedings, there have been continued challenges with suppliers. Some suppliers have refused to support drilling companies due to the

financial impact that multiple drilling companies have encountered with the Chapter 11 process. Drilling companies have faced suppliers

reluctant to enter into agreements, more upfront demand for payment, increased costs as suppliers look to recover losses that they have

incurred during past few years and their sub-tier suppliers seeing raw material cost escalations that are being passed up through the supply

chain. There has been lower stocking and inventory levels with our core suppliers due to market uncertainty over the past 18 months, and

many companies, having made lay-offs during the pandemic, are now short staffed and struggling to fill those positions with experienced

workers.

We may be unable to obtain, maintain, and/or renew permits necessary for our operations or experience delays in obtaining such permits

including the class certifications of rigs.

The operation of our drilling units will require certain governmental approvals, the number and prerequisites of which cannot be determined

until we identify the jurisdictions in which we will operate on securing contracts for the drilling units. Depending on the jurisdiction, these

governmental approvals may involve public hearings and costly undertakings on our part. We may not obtain such approvals or such

approvals may not be obtained in a timely manner. If we fail to secure the necessary approvals or permits in a timely manner, our customers

may have the right to terminate or seek to renegotiate their drilling contracts to our detriment.

Every offshore drilling unit is a registered marine vessel and must be “classed” by a classification society to fly a flag. The classification

society certifies that the drilling unit is “in-class,” signifying that such drilling unit has been built and maintained in accordance with the rules

of the classification society and complies with applicable rules and regulations of the drilling unit’s country of registry and the international

conventions of which that country is a member. In addition, where surveys are required by international conventions and corresponding laws

and ordinances of a flag state, the classification society will undertake them on application or by official order, acting on behalf of the

authorities concerned. Our drilling units are certified as being “in class” by the American Bureau of Shipping, or ABS, Det Norske Veritas

and Germanisher Lloyd, or DNV GL, and the relevant national authorities in the countries in which our drilling units operate. If any drilling

unit loses its flag status, does not maintain its class, fails any periodical survey or special survey and/or fails to satisfy any laws of the country

of operation, the drilling unit will be unable to carry on operations and will be unemployable and uninsurable, which could cause us to be in

violation of certain covenants in our secured credit facilities. Any such inability to carry on operations or be employed could have a material

adverse impact on the operating results.

Certain jurisdictions in which we operate may impose flagging requirements for vessels operating in that jurisdiction. We received

notification from the Transport General Authority of Saudi Arabia in October 2020 requiring all rigs operating in Saudi Arabian territorial

waters to be registered under the Saudi Arabian flag by March 2021. Registration under the Saudi flag requires the rig owning entity to be at

least 51% owned by a local entity, which may have significant adverse implications on the cost of operating the rigs in the Kingdom. In

February 2021, the Transport General Authority granted a three-year grace period to comply with this requirement to all affected shipping

companies in the Kingdom. Whilst we will be able to rely on the extension for the time being and continue to operate in the Kingdom

provided current operating licenses are renewed in the normal course, we are assessing the impact of any future requirement to register under

the flag of Saudi Arabia (including the local ownership requirements) on our ability to win future contracts in the Kingdom, and intend to

continue to contest the requirement to register our rigs in the Kingdom. The situation in Saudi Arabia is difficult to predict and any inability to

carry out operations in Saudi Arabia or any other jurisdiction as a result of our inability to comply with applicable laws and regulations might

have an adverse effect on our operating results.

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The international nature of our operations involves additional risks including foreign government intervention in relevant markets, for

example in Brazil or Angola.

We operate in various regions throughout the world. As a result of our international operations, we may be exposed to political and other

uncertainties, particularly in less developed jurisdictions, including risks of:

• terrorist acts, armed hostilities, war and civil disturbances;

• acts of piracy, which have historically affected ocean-going vessels;

• abduction, kidnapping and hostage situations;

• significant governmental influence over many aspects of local economies;

• the seizure, nationalization or expropriation of property or equipment;

• uncertainty of outcome in foreign court proceedings;

• the repudiation, nullification, modification or renegotiation of contracts;

• limitations on insurance coverage, such as war risk coverage, in certain areas;

• political unrest;

• foreign and U.S. monetary policy and foreign currency fluctuations and devaluations;

• the inability to repatriate income or capital;

• complications associated with repairing and replacing equipment in remote locations;

• import-export quotas, wage and price controls, and the imposition of trade barriers;

• U.S., U.K., European Union and foreign sanctions or trade embargoes;

• receiving a request to participate in an unsanctioned foreign boycott under U.S. law;

• compliance with various jurisdictional regulatory or financial requirements;

• compliance with and changes to taxation;

• interacting and contracting with government-controlled organizations;

• other forms of government regulation and economic conditions that are beyond our control;

• legal and economic systems that are not as mature or predictable as those in more developed countries, which may lead to greater

uncertainty in legal and economic matters; and

• government corruption.

In addition, international contract drilling operations are subject to various laws and regulations of the countries in which we operate,

including laws and regulations relating to:

• the equipping and operation of drilling units;

• exchange rates or exchange controls;

• the repatriation of foreign earnings;

• oil and gas exploration and development;

• the taxation of offshore earnings and the earnings of expatriate personnel; and

• the use and compensation of local employees and suppliers by foreign contractors.

Some foreign governments favor or effectively require (i) the awarding of drilling contracts to local contractors or to drilling rigs owned by

their own citizens, (ii) the use of a local agent or (iii) foreign contractors to employ citizens of, or purchase supplies from, a particular

jurisdiction. These practices may adversely affect our ability to compete in those regions. It is difficult to predict what government regulations

may be enacted in the future that could adversely affect the international drilling industry. The actions of foreign governments, including

initiatives by OPEC, may adversely affect our ability to compete. Failure to comply with applicable laws and regulations, including those

relating to sanctions and export restrictions, may subject us to criminal sanctions or civil remedies, including fines, the denial of export

privileges, injunctions or seizures of assets.

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In the years ended December 31, 2021, 2020 and 2019, 12%, 5%, and 10%, respectively, of our revenues were derived from our Brazilian

operations. The Brazilian government frequently intervenes in the Brazilian economy and occasionally makes significant changes in policy

and regulations. The Brazilian government’s actions to control inflation and other policies and regulations have often involved, among other

measures, changes in interest rates, changes in tax policies, changes in legislation, wage controls, price controls, currency devaluations,

capital controls and limits on imports of goods and services. Changes to fiscal and monetary policy, the regulatory environment of our

industry, and legislation could impact our performance.

The Brazilian markets have experienced heightened volatility in recent years due to the uncertainties derived from the ongoing investigations

being conducted by the Office of the Brazilian Federal Prosecutor, the Brazilian Federal Police, the Brazilian Securities Commission

(Comissão de Valores Mobiliários), the U.S. Department of Justice, and other Brazilian and foreign public authorities, including the largest

such investigation known as Lava Jato, and the impact that such investigations have on the Brazilian economy and political environment.

Numerous elected officials, public servants and executives and other personnel of large and state-owned companies have been subject to

investigation, arrest, criminal charges and other proceedings in connection with allegations of political corruption, including the acceptance of

bribes by means of kickbacks on contracts granted by the government to several infrastructure, oil and gas and construction companies,

among others. The profits of these kickbacks allegedly financed the political campaigns of political parties that were unaccounted for or not

publicly disclosed and served to personally enrich the recipients of the bribery scheme. Individuals who have had commercial arrangements

with us have been identified in the Lava Jato investigations and the investigations by the Brazilian authorities are ongoing. On September 23,

2020, Seadrill’s subsidiary Seadrill Serviços de Petroleo, Ltda was served with a search and seizure warrant from the Federal Police in Rio de

Janeiro, Brazil as part of the phase of Operation Lava Jato relating to individuals formally associated with Seadrill Serviços. The outcome of

certain of these investigations is uncertain, but they have already had an adverse impact on the business, image and reputation of the

implicated companies, and on the general market perception of the Brazilian economy. We cannot predict whether such allegations will lead

to further political and economic instability or whether new allegations against government officials or executives will arise in the future. We

also cannot predict the outcome of any such allegations on the Brazilian economy, and the Lava Jato investigation including its recent phases,

could adversely affect our business and operations.

These and other developments in Brazil’s political conditions, economy and government policies may, directly or indirectly, adversely affect

our business, financial condition and operating results.

Compliance with, and breach of, the complex laws and regulations governing international trade could be costly, expose us to liability and

adversely affect our operations.

Our business in the offshore drilling industry is affected by laws and regulations relating to the energy industry and the environment in the

geographic areas where we operate.

Accordingly, we are directly affected by the adoption of laws and regulations that, for economic, environmental or other policy reasons,

curtail exploration and development drilling for oil and gas. For example, offshore drilling in certain areas, including arctic areas, has been

curtailed and, in certain cases, prohibited because of concerns over protecting the environment. In 2015 and 2016, the United States President

issued three Presidential Memoranda and an Executive Order withdrawing certain areas of the Outer Continental Shelf in the Atlantic Coast,

Alaska, and Arctic from mineral leasing under Section 12(a) of the Outer Continental Shelf Land Act. Canada issued a similar ban on new

drilling in Canadian Arctic waters in December 2016. President Trump issued Executive Order 13795 on April 28, 2017, directing the

Department of the Interior to reconsider prior actions to limit or regulate offshore oil and gas development and revoking the 2015 and 2016

withdrawals. On January 20, 2021, President Biden issued an Executive Order revoking Executive Order 13795 and reinstating the 2015 and

2016 withdrawals. In addition, environmental groups have challenged numerous lease sales offered by the Department of the Interior under

the 2017-2022 five-year lease program and that litigation remains pending. As a result, it is difficult to predict if and when such areas may be

made available for future exploration activities. Given the long-term trend towards increasing regulation, we may be required to make

significant capital expenditures or operational changes to comply with governmental laws and regulations. It is also possible that these laws

and regulations may, in the future, add significantly to our operating costs or significantly limit drilling activity.

Import activities are governed by unique customs laws and regulations in each of the countries of operation. Moreover, many countries,

including the United States, control the export and re-export of certain goods, services and technology and impose related export

recordkeeping and reporting obligations.

The laws and regulations concerning import activity, export recordkeeping and reporting, export control and economic sanctions are complex

and constantly changing. These laws and regulations may be enacted, amended, enforced or interpreted in a manner materially impacting our

operations. Shipments can be delayed and denied export or entry for a variety of reasons, some of which are outside our control and some of

which may result from the failure to comply with existing legal and regulatory regimes. Shipping delays or denials could cause unscheduled

operational downtime. Any failure to comply with applicable legal and regulatory trading obligations could also result in criminal and civil

penalties and sanctions, such as fines, imprisonment, debarment from government contracts, the seizure of shipments, and the loss of import

and export privileges.

New laws or other governmental actions that prohibit or restrict offshore drilling or impose additional environmental protection requirements

that result in increased costs to the oil and gas industry, in general, or to the offshore drilling industry, in particular, could adversely affect our

performance.

The amendment or modification of existing laws and regulations or the adoption of new laws and regulations curtailing or further regulating

exploratory or development drilling and production of oil and gas could have a material adverse effect on our business, operating results or

financial condition. Future earnings may be negatively affected by compliance with any such new legislation or regulations.

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We are subject to complex environmental laws and regulations that can adversely affect the cost, manner or feasibility of doing business.

Our operations are subject to numerous international, national, state and local laws and regulations, treaties and conventions in force in

international waters and the jurisdictions in which our drilling units operate or are registered, which can significantly affect the ownership and

operation of our drilling units. These requirements include, but are not limited to:

• conventions under the auspices of the United Nation’s International Maritime Organization (“IMO”);

• the International Convention for the Prevention of Pollution from Ships of 1973, as from time to time amended (“MARPOL”);

• the International Convention on Civil Liability for Oil Pollution Damage of 1969, as from time to time amended (“CLC”);

• the International Convention on Civil Liability for Bunker Oil Pollution Damage (the “Bunker Convention”), the International

Convention for the Safety of Life at Sea of 1974, as from time to time amended (“SOLAS”);

• the International Safety Management Code for the Safe Operation of Ships and for Pollution Prevention (the “ISM Code”);

• the IMO International Convention on Load Lines of 1966, as from time to time amended, the International Convention for the Control

and Management of Ships’ Ballast Water and Sediments in February 2004 (the “BWM Convention”);

• EU Directive 2013/30 on the Safety of Offshore Oil and Gas Operations;

• the U.S. Oil Pollution Act of 1990 (“OPA”);

• requirements of the U.S. Coast Guard (“USCG”);

• requirements of the U.S. Environment Protection Agency (“EPA”);

• the U.S. Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”);

• the U.S. Maritime Transportation Security Act of 2002 (“MTSA”);

• the U.S. Outer Continental Shelf Lands Act (“OCSLA”); and

• certain regulations of the EU.

Compliance with such laws, regulations and standards, where applicable, may require installation of costly equipment or implementation of

operational changes and may affect the resale value or useful lifetime of our drilling units. These costs could have a material adverse effect on

our business, operating results, cash flows and financial condition. A failure to comply with applicable laws and regulations may result in

administrative and civil penalties, criminal sanctions or the suspension or termination of our operations. Because such conventions, laws, and

regulations are often revised, we cannot predict the ultimate cost of complying with them or the impact thereof on the resale prices or useful

lives of our rigs. Additional conventions, laws and regulations may be adopted which could limit our ability to do business or increase the cost

of our doing business and which may materially adversely affect our operations.

Certain environmental laws impose strict, joint and several liability for the remediation of spills and releases of oil and hazardous substances,

which could subject us to liability without regard to whether we were negligent or at fault. Under OPA, for example, owners, operators and

bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-mile exclusive economic zone around the

United States. An oil or chemical spill, for which we are deemed a responsible party, could result in us incurring significant liability,

including fines, penalties, criminal liability and remediation or cleanup costs and natural resource damages under other federal, state and local

laws, as well as third-party damages, which could have a material adverse effect on our business, financial condition, operating results and

cash flows. Future increased regulation of the shipping industry, or modifications to statutory liability schemes could, expose us to further

potential financial risk in the event of any such oil or chemical spill.

We and, in certain circumstances, our customers are required by various governmental and quasi-governmental agencies to obtain certain

permits, licenses and certificates with respect to our operations, and satisfy insurance and financial responsibility requirements for potential

oil (including marine fuel) spills and other pollution incidents. Although we have arranged insurance to cover certain environmental risks,

such insurance is subject to exclusions and other limits, and there can be no assurance that such insurance will be sufficient to cover all such

risks or that any claims will not have a material adverse effect on our business, operating results, cash flows and financial condition.

Although our drilling units are separately owned by our subsidiaries, under certain circumstances a parent company and all of the unit-owning

affiliates in a group under common control engaged in a joint venture could be held liable for damages or debts owed by one of the affiliates,

including liabilities for oil spills under OPA or other environmental laws. Therefore, it is possible that we could be subject to liability upon a

judgment against us or any one of our subsidiaries.

Our drilling units could cause the release of oil or hazardous substances. Any releases may be large in quantity, above our permitted limits or

occur in protected or sensitive areas where the public, environmental groups or governmental authorities have special interests. Any releases

of oil or hazardous substances could result in fines and other costs to us, such as costs to upgrade our drilling rigs, clean up the releases and

comply with more stringent requirements in our discharge permits, as well as subject us to third party claims for damages, including natural

resource damages. Moreover, these releases may result in our customers or governmental authorities suspending or terminating our operations

in the affected area, which could have a material adverse effect on our business, operating results and financial condition.

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If we are able to obtain from our customers some degree of contractual indemnification against pollution and environmental damages in our

contracts, such indemnification may not be enforceable in all instances or the customer may not be financially able to comply with its

indemnity obligations in all cases, and we may not be able to obtain such indemnification agreements in the future. In addition, a court may

decide that certain indemnities in our current or future contracts are not enforceable.

The insurance coverage we currently hold may not be available in the future, or we may not obtain certain insurance coverage. Even if

insurance is available and we have obtained the coverage, it may not be adequate to cover our liabilities, may not be available on satisfactory

terms and/or subject to high premiums, or our insurance underwriters may be unable to pay compensation if a significant claim should occur.

Any of these scenarios could have a material adverse effect on our business, operating results and financial condition.

Failure to comply with international anti-corruption legislation, including the U.S. Foreign Corrupt Practices Act 1977 or the U.K.

Bribery Act 2010, could result in fines, criminal penalties, damage to our reputation and drilling contract terminations.

We currently operate, and historically have operated, our drilling units in a number of countries throughout the world, including some with

developing economies. We interact with government regulators, licensors, port authorities and other government entities and officials. Also,

our business interaction with national oil companies as well as state or government-owned shipbuilding enterprises and financing agencies

puts us in contact with persons who may be considered to be “foreign officials” under the U.S. Foreign Corrupt Practices Act of 1977 or the

FCPA and the Bribery Act 2010 of the United Kingdom or the U.K. Bribery Act.

In order to effectively compete in some foreign jurisdictions, we utilize local agents and/or establish entities with local operators or strategic

partners. All of these activities may involve interaction by our agents with government officials. Even though some of our agents and partners

may not themselves be subject to the FCPA, the U.K. Bribery Act or other anti-bribery laws to which we may be subject, if our agents or

partners make improper payments to government officials or other persons in connection with engagements or partnerships with us, we could

be investigated and potentially found liable for violations of such anti-bribery laws and could incur civil and criminal penalties and other

sanctions, which could have a material adverse effect on our business and results of operation.

We are subject to the risk that we or our affiliated companies or their respective officers, directors, employees and agents may take actions

determined to be in violation of anti-corruption laws, including the FCPA and the U.K. Bribery Act. Any such violation could result in

substantial fines, disgorgement, sanctions, civil and/or criminal penalties, curtailment of operations in certain jurisdictions, and might

adversely affect our business, operating results or financial condition. In addition, actual or alleged violations could damage our reputation

and ability to do business. Furthermore, detecting, investigating and resolving actual or alleged violations is expensive and can consume

significant time and attention of our senior management.

If our drilling units are located in or connected to countries that are subject to, or targeted by, economic sanctions, export restrictions, or

other operating restrictions imposed by the United States, the United Kingdom, European Union or other governments, our reputation and

the market for our debt and Shares could be adversely affected.

The U.S., the U.K., European Union or and other governments may impose economic sanctions against certain countries, persons and other

entities that restrict or prohibit transactions involving such countries, persons and entities. U.S. sanctions in particular are targeted against

countries (such as Russia, Venezuela, Iran and others) that are heavily involved in the petroleum and petrochemical industries, which includes

drilling activities. U.S., U.K., European Union and other economic sanctions change frequently and enforcement of economic sanctions

worldwide is increasing.

In 2010, the United States enacted the Comprehensive Iran Sanctions Accountability and Divestment Act, or CISADA, which expanded the

scope of the former Iran Sanctions Act. Among other things, CISADA expands the application of sanctions to non-U.S. companies such as

ours and introduced limits on such companies and persons that do business or trade with Iran when such activities relate to the investment,

supply or export of refined petroleum or petroleum products. On August 10, 2012, the U.S. signed into law the Iran Threat Reduction and

Syria Human Rights Act of 2012, or the Iran Threat Reduction Act, which places further restrictions on the ability of non-U.S. companies to

do business or trade with Iran and Syria. Perhaps the most significant provision in the Iran Threat Reduction Act is that prohibitions in the

existing Iran sanctions applicable to U.S. persons will now apply to any foreign entity owned or controlled by a U.S. person. Another major

provision in the Iran Threat Reduction Act is that issuers of securities must disclose in their annual and quarterly reports filed with the

Commission after February 6, 2013 if the issuer or “any affiliate” has “knowingly” engaged in certain activities involving Iran during the

timeframe covered by the report. At this time, we are not aware of any activities conducted by us or by any affiliate, which is likely to trigger

such a disclosure requirement. On January 2, 2013, the U.S. signed into law the Iran Freedom and Counter-Proliferation Act of 2012

(“IFCA”), as a part of the National Defense Authorization Act for Fiscal Year 2013. Among other measures, IFCA authorizes broad sanctions

on certain activities related to Iran’s energy, shipping, and shipbuilding sectors.

On July 14, 2015, the P5+1 and the European Union (“E.U.”), at that time including the U.K., announced that they reached a landmark

agreement with Iran titled the Joint Comprehensive Plan of Action Regarding the Islamic Republic of Iran’s Nuclear Program, or the JCPOA,

to significantly restrict Iran’s ability to develop and produce nuclear weapons for 10 years while simultaneously easing sanctions directed

toward non-U.S. persons for conduct involving Iran, but taking place outside of U.S. jurisdiction and not involving U.S. persons. On January

16, 2016, or the Implementation Day, the United States joined the E.U. and the U.N. in lifting a significant number of their nuclear-related

sanctions on Iran following an announcement by the International Atomic Energy Agency, or the IAEA, that Iran had satisfied its respective

obligations under the JCPOA.

On May 8, 2018, the U.S. announced that it would be withdrawing from the JCPOA. On August 6, 2018, the U.S. issued Executive Order

13846 which reimposed certain sanctions on Iran effective as of that date and set the reimposition of additional sanctions on Iran effective

November 5, 2018. On November 5, 2018, following a wind-down period, the U.S. completed the reimposition of nuclear-related sanctions

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against Iran that it had previously lifted in connection with the JCPOA. Since that time the U.S. has issued additional Executive Orders

imposing sanctions with respect to Iran.

The Office of Foreign Assets Control (“OFAC”) acted several times over 2019 and 2018 to add Iranian individuals and entities to its list of

Specially Designated Nationals whose assets are blocked and with whom U.S. persons are generally prohibited from dealing, including re-

adding on November 5, 2018, hundreds of individuals and entities that had previously been delisted in connection with the JCPOA. Further,

OFAC issued sanctions on specific sectors of the Iranian economy, including the iron, steel, aluminum, and copper sectors (May 8, 2019), the

construction, mining, manufacturing, or textiles sectors (January 10, 2020), and the financial sector (October 8, 2020). These sector-wide

sanctions also authorize the imposition of secondary sanctions on non-U.S. persons and non-U.S. financial institutions who engage in certain

dealings in those sectors, including the potential designation of such persons or financial institutions themselves.

In August 2017, the U.S. passed the “Countering America’s Adversaries Through Sanctions Act” (Public Law 115-44) (“CAATSA”), which

authorizes imposition of new sanctions on Iran, Russia, and North Korea. The CAATSA sanctions with respect to Russia create heightened

sanctions risks for companies operating in the oil and gas sector, including companies that are based outside of the United States. OFAC

sanctions targeting Venezuela have likewise increased in the past year, and any new sanctions targeting Venezuela could further restrict our

ability to do business in such country. On January 28, 2019, OFAC added the Venezuelan state-owned oil company, Petróleos de Venezuela,

S.A., to its List of Specially Designated Nationals and Blocked Persons, increasing the sanctions risk for companies operating in the oil

sector. Subsequently, on August 5, 2019, the U.S. issued Executive Order 13884 which further increased sanctions on Venezuela and blocked

the entire Government of Venezuela. OFAC has also imposed sanctions on non-Venezuelan firms for operating in Venezuela. On February

18, 2020, OFAC imposed sanctions on Switzerland-based firm Rosneft Trading S.A., due to its operations in the oil sector of Venezuela. On

November 30, 2020, OFAC imposed sanctions on the Chinese state owned entity China National Electronics Imports and Export Corporation

for providing support to Venezuela government entities. OFAC has since imposed sanctions on additional individuals and entities in a variety

of countries involved in the petroleum and petrochemical industries.

In addition to the sanctions against Iran, Russia, and Venezuela, subject to certain limited exceptions, U.S. law continues to restrict U.S.

owned or controlled entities from doing business with Cuba and various U.S. sanctions have certain other extraterritorial effects that need to

be considered by non-U.S. companies. Moreover, any U.S. persons who serve as officers, directors or employees of our subsidiaries would be

fully subject to U.S. sanctions. It should also be noted that other governments are more frequently implementing and enforcing sanctions

regimes.

On December 14, 2020, the United States Department of State rescinded its designation of Sudan as a state sponsor of terror. Though U.S.

comprehensive sanctions on Sudan had previously been lifted in 2017, certain sanctions and export requirements on Sudan remained. The

removal of Sudan’s status as a state sponsor of terror has not immediately resulted in a change in sanctions or export restrictions, though

OFAC and the U.S. Department of Commerce may engage in a rule making process that will result in certain export license exceptions being

applicable for exports to Sudan.

On December 18, 2020, the U.S. Department of Commerce Bureau of Industry and Security (“BIS”) designated a number of Chinese parties

on the Entity List, including parties involved in the offshore drilling and maritime industries such as China Communications Construction

Company Ltd. Most items subject to the Export Administration Regulations (“EAR”) now require a license to export or reexport to such

parties. On January 14, 2021, BIS added Chinese National Offshore Oil Corporation to the Entity List. On December 23, 2020, BIS also

established a Military End User List (“MEUL”) and designated over 100 parties from China and Russia on the MEUL, including those in the

offshore drilling and maritime industries. BIS has since designated additional persons in China and Russia on the MEUL. Certain items

subject to the EAR require a license from BIS to export or reexport to such parties.

Due to the conflict between Russia and Ukraine, starting in February 2022, the United States, European Union, United Kingdom, and other

governments (i) designated multiple individuals and entities in Russia and Belarus with ties to those governments and/or financial sectors on

their respective sanctions- and export-restricted party lists, (ii) imposed comprehensive sanctions on the so-called Donetsk and Luhansk

regions of Ukraine, and (iii) imposed export controls on the export, reexport, and transfer to Russia and Belarus of certain items in the

maritime and other sectors.

From time to time, we may enter into drilling contracts with countries or government-controlled entities that are subject to sanctions, export

restrictions and embargoes imposed by the U.S. government and/or identified by the U.S. government as state sponsors of terrorism where

entering into such contracts would not violate U.S. law, or may enter into drilling contracts involving operations in countries or with

government-controlled entities that are subject to sanctions and embargoes imposed by the U.S. government and/or identified by the U.S.

government as state sponsors of terrorism. However, this could negatively affect our ability to obtain investors. In some cases, U.S. investors

would be prohibited from investing in an arrangement in which the proceeds could directly or indirectly be transferred to or may benefit a

sanctioned entity. Moreover, even in cases where the investment would not violate U.S. law, potential investors could view such drilling

contracts negatively, which could adversely affect our reputation and the market for our Shares. We do not currently have any drilling

contracts or plans to initiate any drilling contracts involving operations in countries or with government-controlled entities that are subject to

sanctions and embargoes imposed by the U.S. government and/or identified by the U.S. government as state sponsors of terrorism.

Certain parties with whom we have entered into contracts may be or may be affiliated with persons or entities that are, the subject of sanctions

imposed by the United States, the U.K., the E.U. or other international bodies as a result of the annexation of Crimea by Russia in March 2014

and the subsequent conflict between Russia and Ukraine from 2014 through 2022, or malicious cyber-enabled activities. If we determine that

such sanctions require us to terminate existing contracts or if we are found to be in violation of such applicable sanctions, our operating

results may be adversely affected, or we may suffer reputational harm. Such sanctions may prevent us from performing some or all of our

obligations under any potential drilling contracts with Rosneft, which could impact our future revenue, contract backlog and operating results,

and adversely affect our business reputation. We may also lose business opportunities to companies that are not required to comply with these

sanctions.

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As stated above, we believe that we are in compliance with all applicable economic sanctions and embargo laws and regulations and intend to

maintain such compliance. However, there can be no assurance that we will be in compliance in the future, particularly as the scope of certain

laws may be unclear and may be subject to changing interpretations. Rapid changes in the scope of global sanctions may also make it more

difficult for us to remain in compliance. Any violation of applicable economic sanctions could result in civil or criminal penalties, fines,

enforcement actions, legal costs, reputational damage, or other penalties and could result in some investors deciding, or being required, to

divest their interest, or not to invest, in our Shares. Additionally, some investors may decide to divest their interest, or not to invest, in our

Shares simply because we may do business with companies that do business in sanctioned countries. Moreover, our drilling contracts may

indirectly involve persons subject to sanctions and embargo laws and regulations as a result of actions that do not involve us, or our drilling

rigs, and even if those dealings are lawful, it could in turn negatively affect our reputation. Investor perception of the value of our Shares may

also be adversely affected by the consequences of war, the effects of terrorism, civil unrest and governmental actions in these and surrounding

countries.

We have suffered, and may continue to suffer, losses through our investments in other companies in the offshore drilling and oilfield

services industry, which could have a material adverse effect on our business, financial condition, operating results and cash flows.

We currently hold investments in several other companies in our industry that own/operate offshore drilling rigs with similar characteristics to

our fleet of rigs or deliver various other oilfield services. These investments include equity interests in Sonadrill, Gulfdrill and Paratus Energy

Services Limited, which owns SeaMex and holds equity interests in Archer and Seabras Sapura. In addition, we have provided subordinated

loans to SeaMex and have various intercompany arrangements with SeaMex, Sonadrill and Gulfdrill. These arrangements include

management and administrative services agreements pursuant to which we provide SeaMex and Sonadrill with certain management and

administrative services charged primarily on a cost-plus mark-up basis.

As at December 31, 2021, the carrying value of our equity investments held by continuing operations in these companies was $27 million. In

addition, we had loan and trade receivables due from related parties with a carrying value of $28 million. Please see Note 17 - “Investment in

associated companies”, and Note 27 – “Related party transactions” to the Consolidated Financial Statements included herein.

The market value of our equity interest in these companies has been, and may continue to be, volatile and has fluctuated, and may continue to

fluctuate, in response to changes in oil and gas prices and activity levels in the offshore oil and gas industry. If we sell our equity interest in an

investment at a time when the value of such investment has fallen, we may incur a loss on the sale or an impairment loss being recognized,

ultimately leading to a reduction in earnings.

Following an acquisition of 50% of the remaining equity interest in SeaMex on November 2, 2021, SeaMex was consolidated and no longer

an associate of Seadrill. From this date the NSNCo group was classified as a discontinued operation and the results from SeaMex were

included in this grouping.

We no longer hold any equity interests in Aquadrill, formerly Seadrill Partners or SDLP. On May 24, 2021, Aquadrill emerged from Chapter

11 after successfully completing their reorganization. Existing equity interests in SDLP were canceled, released, and extinguished. As a result,

SDLP is no longer an associate or related party of Seadrill.

In current market conditions, we may consider entering into joint venture arrangements where each joint venture partner bareboat charters

their rigs into the joint venture entity. Through such a structure, we would seek to manage and operate all joint venture rigs and enable the

Group to access additional markets, increase presence in a particular market or secure drilling contracts from counterparties who may only be

willing to grant those drilling contracts pursuant to or as part of implementing a joint venture with us. However, any financial return from

drilling contracts entered into in respect of our rig will be diluted to the shareholding percentage we hold in the joint venture entity and

financial success of the joint venture will depend on the management fee rates we are able to agree with our joint venture partner.

During the years ended December 31, 2021, 2020 and 2019 we recognized impairment charges of nil for 2021 and 2020 and $6 million in

2019 respectively relating to certain of our investments due to declining dayrates and future market expectations for dayrates in the sector.

Our ability to operate our drilling units in the U.S. Gulf of Mexico could be impaired by governmental regulation, particularly in the

aftermath of the moratorium on offshore drilling in the U.S. Gulf of Mexico, and regulations adopted as a result of the investigation into

the Macondo well blowout.

In the aftermath of the Deepwater Horizon Incident (in which we were not involved), various governmental agencies, including the U.S.

Bureau of Safety and Environmental Enforcement (“BSEE”), the U.S. Bureau of Ocean Energy Management (“BOEM”), and the U.S.

Occupational Safety and Health Administration (“OSHA”), issued new and revised regulations and guidelines governing environmental

protection, public and worker health and safety, financial assurance requirements, inspection programs and other well control measures

relating to our drilling rigs.

In order to obtain drilling permits, operators must submit applications that demonstrate compliance with the enhanced regulations, which

require independent third-party inspections, certification of well design and well control equipment and emergency response plans in the

event of a blowout, among other requirements. Operators have previously had, and may in the future have, difficulties obtaining drilling

permits in the U.S. Gulf of Mexico.

In addition, the oil and gas industry has adopted new equipment and operating standards, such as the American Petroleum Institute Standard

53 relating to the design, maintenance, installation and testing of well control equipment. Current and pending regulations, guidelines and

standards for safety, environmental and financial assurance such as the above and any other new guidelines or standards the U.S. government

or industry may issue (including relating to catastrophic events involving pollution from oil exploration and development activities) or any

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other steps the U.S. government or industry may take relating to our business activities, could disrupt or delay operations, increase the cost of

operations, increase out-of-service time or reduce the area of operations for drilling rigs in U.S. and non-U.S. offshore areas.

As new standards and procedures are being integrated into the existing framework of offshore regulatory programs, there may be increased

costs associated with regulatory compliance and delays in obtaining permits for other operations such as re-completions, workovers and

abandonment activities.

We are not able to predict the likelihood, nature or extent of additional rulemaking or when the interim rules, or any future rules, could

become final. The current and future regulatory environment in the U.S. Gulf of Mexico could impact the demand for drilling units in the U.S.

Gulf of Mexico in terms of overall number of rigs in operations and the technical specification required for offshore rigs to operate in the U.S.

Gulf of Mexico. Additional governmental regulations concerning licensing, taxation, equipment specifications, training requirements or other

matters could increase the costs of our operations, and escalating costs borne by our customers, along with permitting delays, could reduce

exploration and development activity in the U.S. Gulf of Mexico and, therefore, reduce demand for our services. In addition, insurance costs

across the industry have increased as a result of the Deepwater Horizon Incident and, in the future, certain insurance coverage is likely to

become more costly, and may become less available or not available at all. We cannot predict the potential impact of new regulations that

may be forthcoming, nor can we predict if implementation of additional regulations might subject us to increased costs of operating and/or a

reduction in the area of operation in the U.S. Gulf of Mexico. As such, our cash flows and financial position could be adversely affected if our

ultra-deepwater semi-submersible drilling rigs and ultra-deepwater drillships operating in the U.S. Gulf of Mexico were subject to the risks

mentioned above.

In addition, hurricanes, which may increase in frequency and severity as a result of climate change, have from time to time caused damage to

a number of drilling units and production facilities unaffiliated to us in the Gulf of Mexico. BOEM and BSEE, have in recent years issued

more stringent guidelines for tie-downs on drilling units and permanent equipment and facilities attached to outer continental shelf production

platforms, moored drilling unit fitness, as well as other guidelines and regulations in an attempt to increase the likelihood of the survival of

offshore drilling units during a hurricane. Implementation of new guidelines or regulations that may apply to our drilling units may subject us

to increased costs and limit the operational capabilities of our drilling units.

Failure to obtain or retain highly skilled personnel, and to ensure they have the correct visas and permits to work in the locations in which

they are required, could adversely affect our operations.

We require highly skilled personnel in the right locations to operate and provide technical services and support for our business.

Competition for skilled and other labor required for our drilling operations has increased in recent years as the number of rigs activated or

added to worldwide fleets has increased, and this may continue to rise. Notwithstanding the general downturn in the drilling industry, in some

regions, such as Brazil and Western Africa, the limited availability of qualified personnel in combination with local regulations focusing on

crew composition, are expected to further increase the demand for qualified offshore drilling crews, which may increase our costs. These

factors could further create and intensify upward pressure on wages and make it more difficult for us to staff and service our rigs. Such

developments could adversely affect our financial results and cash flows. Furthermore, as a result of any increased competition for qualified

personnel, we may experience a reduction in the experience level of our personnel, which could lead to higher downtime and more operating

incidents.

Our ability to operate worldwide, depends on our ability to obtain the necessary visas and work permits for our personnel to travel in and out

of, and to work in, the jurisdictions in which we operate. Governmental actions in some of the jurisdictions in which we operate may make it

difficult for us to move our personnel in and out of these jurisdictions by delaying or withholding the approval of these permits. If we are not

able to obtain visas and work permits for the employees we need for operating our rigs on a timely basis, or for third-party technicians needed

for maintenance or repairs, we might not be able to perform our obligations under our drilling contracts, which could allow our customers to

cancel the contracts. Please see “Our customers may seek to cancel or renegotiate their contracts to include unfavorable terms such as

unprofitable rates, particularly in the circumstance that operations are suspended or interrupted” for more information.

Labor costs and our operating restrictions that apply could increase following collective bargaining negotiations and changes in labor

laws and regulations.

Some of our employees are represented by collective bargaining agreements. The majority of these employees work in Brazil and Norway. In

addition, some of our contracted labor works under collective bargaining agreements. As part of the legal obligations in some of these

agreements, we are required to contribute certain amounts to retirement funds and pension plans and are restricted in our ability to dismiss

employees. In addition, many of these represented individuals are working under agreements that are subject to salary negotiation. These

negotiations could result in higher personnel costs, other increased costs or increased operating restrictions that could adversely affect our

financial performance.

Climate change and the regulation of greenhouse gases could have a negative impact on our business.

Due to concern over the risk of climate change, a number of countries, the E.U. and the IMO have adopted, or are considering the adoption of,

regulatory frameworks to reduce greenhouse gas emissions in the shipping industry. For example, ships (including rigs and drillships) must

comply with IMO and E.U. regulations relating to the collection and reporting of data relating to greenhouse gas emissions. In April 2018, the

IMO adopted a strategy to, among other things, reduce the 2008 level of greenhouse gas emissions from the shipping industry by 50% by the

year 2050. Other governmental bodies may begin regulating greenhouse gas emissions from shipping sources in the future, but the future of

such regulations is difficult to predict.

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Compliance with existing regulations and changes in laws, regulations and obligations relating to climate change could increase our costs to

operate and maintain our assets, and might also require us to install new emission controls, acquire allowances or pay taxes related to our

greenhouse gas emissions, or administer and manage a greenhouse gas emissions program. Any passage of climate control legislation or other

regulatory initiatives by the IMO, the E.U., the United States or other jurisdictions in which we operate, or any treaty or agreement adopted at

the international level, such as the Kyoto Protocol or Glasgow Climate Pact, which restricts emissions of greenhouse gases could require us to

make significant financial expenditures which we cannot predict with certainty at this time.

Additionally, adverse effects upon the oil and gas industry relating to climate change, including growing public concern about the

environmental impact of climate change, may also adversely affect demand for our services. For example, increased regulation of greenhouse

gases or other concerns relating to climate change may reduce the demand for oil and gas in the future or create greater incentives for the use

of alternative energy sources. In addition, parties concerned about the potential effects of climate change have directed their attention at

sources of funding for energy companies, which has resulted in certain financial institutions, funds and other sources of capital, restricting or

eliminating their investment in or lending to oil and gas activities. Any material adverse effect on the oil and gas industry relating to climate

change concerns could have a significant adverse financial and operational impact on our business and operations.

Finally, the impacts of severe weather, such as hurricanes, monsoons and other catastrophic storms, resulting from climate change could cause

damage to our equipment and disruption to our operations and cause other financial and operational impacts, including impacts on our major

customers.

Acts of terrorism, piracy, cyber-attack, political and social unrest could affect the markets for drilling services, which may have a material

and adverse effect on our operating results.

Acts of terrorism, piracy, and political and social unrest, brought about by world political events or otherwise, have caused instability in the

world’s financial and insurance markets in the past and may occur in the future. Such acts could be directed against companies such as ours.

Our drilling operations could also be targeted by acts of sabotage carried out by environmental activist groups.

We rely on information technology systems and networks in our operations and administration of our business. Our drilling operations or

other business operations could be targeted by individuals or groups seeking to sabotage or disrupt our information technology systems and

networks, or to steal data. A successful cyber-attack could materially disrupt our operations, including the safety of our operations, or lead to

an unauthorized release of information or alteration of information on our systems. Any such attack or other breach of our information

technology systems could have a material adverse effect on our business and operating results.

In addition, acts of terrorism and social unrest could lead to increased volatility in prices for crude oil and natural gas and could affect the

markets for drilling services and result in lower dayrates. Insurance premiums could also increase and coverage may be unavailable in the

future. Increased insurance costs or increased costs of compliance with applicable regulations may have a material adverse effect on our

operating results.

Our drilling contracts with national oil companies may expose us to greater risks than we normally assume in drilling contracts with non-

governmental customers.

We currently own and operate rigs that are contracted with national oil companies. The terms of these contracts are often non-negotiable and

may expose us to greater commercial, political and operational risks than we assume in other contracts, such as exposure to materially greater

environmental liability, personal injury and other claims for damages (including consequential damages), or the risk that the contract may be

terminated by our customer without cause on short-term notice, contractually or by governmental action, under certain conditions that may

not provide us with an early termination payment. We can provide no assurance that the increased risk exposure will not have an adverse

impact on our future operations or that we will not increase the number of rigs contracted to national oil companies with commensurate

additional contractual risks.

We cannot guarantee that the use of our drilling units will not infringe the intellectual property rights of others.

The majority of the intellectual property rights relating to our drilling units and related equipment are owned by our suppliers. In the event

that one of our suppliers becomes involved in a dispute over an infringement of intellectual property rights relating to equipment owned by us,

we may lose access to repair services or replacement parts or could be required to cease using some equipment. In addition, our competitors

may assert claims for infringement of intellectual property rights related to certain equipment on our drilling units and we may be required to

stop using such equipment and/or pay damages and royalties for the use of such equipment. The consequences of these technology disputes

involving our suppliers or competitors could adversely affect our financial results and operations. We have indemnity provisions in some of

our supply contracts to give us some protection from the supplier against intellectual property lawsuits. However, we cannot make any

assurances that these suppliers will have sufficient financial standing to honor their indemnity obligations or guarantee that the indemnities

will fully protect us from the adverse consequences of such technology disputes. We also have provisions in some of our client contracts to

require the client to share some of these risks on a limited basis, but we cannot provide assurance that these provisions will fully protect us

from the adverse consequences of such technology disputes. For information on certain intellectual property litigation that we are currently

involved in, please see Note 30 – Commitments and contingencies to the Consolidated Financial Statements included herein.

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The novel coronavirus, or COVID-19, pandemic has affected and may materially adversely affect, and any future outbreak of any other

highly infectious or contagious diseases may materially adversely affect, our operations and our financial performance and condition,

operating results and cash flows.

The COVID-19 pandemic has affected, and may materially adversely affect, our business and financial and operating results. The severity,

magnitude and duration of the COVID-19 pandemic is uncertain, rapidly changing and hard to predict. In the future, COVID-19 or another

similar pandemic could negatively impact our business in numerous ways, including, but not limited to, the following:

•our revenue may be reduced if the pandemic results in an economic downturn or recession that leads to a prolonged decrease in the

demand for natural gas, NGLs and oil;

•our operations may be disrupted or impaired, if a significant portion of our employees or contractors are unable to work due to illness

or if field operations are suspended or temporarily shut-down or restricted due to control measures designed to contain the pandemic;

and

•the disruption and instability in the financial markets and the uncertainty in the general business environment may affect our ability to

raise capital.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of

the other risks set forth herein, such as those relating to our financial performance, our ability to access capital and credit markets, our credit

ratings and debt obligations. The rapid development and fluidity of this situation precludes any prediction as to the ultimate adverse impact of

COVID-19 on our business, which will depend on numerous evolving factors and future developments that we are not able to predict,

including the length of time that the pandemic continues, its effect on the demand for natural gas, NGLs and oil, the response of the overall

economy and the financial markets as well as the effect of governmental actions taken in response to the pandemic.

Risks related to Seadrill's financing

We may not have sufficient liquidity to meet our obligations as they fall due or have the ability to raise new capital or refinance existing

facilities on acceptable terms.

As at February 22, 2022, the date of the Debtors' emergence from bankruptcy proceedings in accordance with the terms and conditions of the

Plan (the "Effective Date"), Seadrill had $908 million in committed interest-bearing debt. Our debt is secured by, among other things, liens on

its drilling units. The Company may not be able to satisfy its financial obligations under our indebtedness and contractual and commercial

commitments, which may result in possible defaults on and acceleration of such indebtedness.

A portion of our cash flows from operations will continue to be dedicated to the payment of interest and principal amounts. Further, Seadrill's

debt is secured by our assets which means that the Company is restricted in our ability to use such assets or proceeds for debt service, or other

corporate purposes. As a result of our indebtedness, it may be challenging to obtain new financing for working capital, capital expenditures,

acquisitions, debt service requirements or other purposes. This could in turn impact our ability to take advantage of business opportunities and

react to changes in the market. Less leveraged competitors with lower debt service requirements could be positioned to gain competitive

advantages and be better positioned to withstand future economic downturns.

Our ability to meet debt service obligations and to fund planned expenditures will be dependent upon, among other things, our future

performance, and indebtedness may therefore make Seadrill more vulnerable to, prevailing economic conditions, including increases in

interest rates, industry cycles, other industry conditions, and financial, business, regulatory and other factors affecting our operations, many of

which are beyond our control. See risk relating to our company and industry for information about factors affecting our operations. We have

in the past, and may also in the future, experience challenges with debt repayment. To the extent that Seadrill is unable to repay any

indebtedness as it becomes due or at maturity, including as a result of any acceleration thereof, we may need to refinance or restructure our

debt, raise new debt, reduce or delay capital expenditures, sell assets, repay the debt with the proceeds from equity offerings, or take other

actions. Such actions may not be effected on satisfactory terms, if at all, nor may such actions yield sufficient funds to make required

payments on our outstanding indebtedness and to fund other liquidity needs. Also, the terms of existing or future debt agreements may restrict

us from pursuing any of these actions. Reducing or delaying capital expenditures or selling assets could impair future cash flows and the

company's ability to service its debt in the future.

Seadrill's financing agreements include cross-default provisions, allowing creditors to declare all financing agreements with such cross-

default provisions to be due and payable if we are unable to service our obligations on any of our other loan facilities. Under these

circumstances, if the amounts outstanding under the company's existing and future debt agreements were to be accelerated, or were the

subject of foreclosure actions, our assets may not be sufficient to repay in full the money owed to our lenders or to other debt holders. If the

company's assets are foreclosed, we will not have any income-producing assets left, and as such, we may not be able to generate any cash

flow in the future.

Covenants in the company's debt agreements impose operating and financial restrictions on the Company that could significantly impact

the Company's ability to operate its business.

Our debt arrangements, pursuant to which the credit facility agreements impose, and future obligations may also impose, operating and

financial restrictions on the Company's operations. These restrictions may prohibit or otherwise limit our ability to fund its operations or

capital needs or to undertake certain business activities without consent of the requisite debt holders, which in turn may adversely affect

Seadrill's financial condition. The restrictions include, but are not limited to, obtaining additional financing or otherwise incur or guarantee

additional indebtedness, creating or permitting liens on the company's assets, selling the company's assets (including drilling units or shares in

subsidiaries), changing the management and/or ownership of drilling units, making certain investments and capital expenditures, paying

dividends, etc.

To the extent Seadrill's competitors are subject to less onerous restrictions, the restrictions imposed under our financing arrangements may

affect its ability to compete effectively. The lenders' and other debt holders interests may be different from the company's and we may fail to

obtain their consent when it is deemed beneficial for its business, which may in turn impact its performance or ability to obtain replacement or

additional financing. Subsequent of the emergence from the Chapter 11 Proceedings (as defined below), certain relationship banks have been

replaced by debt holders, which may lead to increased short term focus from the company's lenders compared to bank lenders. The different

rankings in the capital structure of the company's lenders and other debt holders and the collateral arrangements which they benefit from in

relation to different assets and the consequential complex intercreditor arrangements that exist mean that the interests of the company's debt

holders will not always be aligned, which may make it more difficult for Seadrill to obtain their consents when beneficial to the company

business or to obtain replacement or additional financing.

Certain of the Company's affiliated or related companies may be unable to service their debt requirements and comply with the provisions

contained in their loan agreements.

A number of our affiliates or related companies are joint ventures, where we have certain funding obligations. Our partners in these joint

ventures may have different objectives or strategies or different financial positions to ours, which may affect how these joint ventures

perform, how they are supported, their compliance with the financing and contractual arrangements to which they are subject and our interests

in and cash flows from them. In addition, affiliates or related companies that we do not control may take actions that we would not have taken

or fail to take actions which we would have taken in this respect. Our affiliated and related companies have incurred debt, whereas any failure

of certain of such companies to service their debt requirements and comply with the provisions contained in their debt agreements may lead to

an event of default under the relevant agreements, which in turn could have a material adverse effect on Seadrill due to inter alia provision of

financial guarantees.

If a default occurs under the debt agreements of affiliated or related companies of ours, the lenders and other debt holders could accelerate the

outstanding borrowings and declare all amounts outstanding due and payable. If such entities are unable to obtain a waiver or an amendment

to the applicable provisions of the debt agreements, or do not have enough cash on hand to repay the outstanding borrowings, the lenders and

other secured debt holders may, among other things, foreclose their liens on the drilling units and other assets securing the loans and other

secured debt, if applicable, or seek repayment of such debt from such entities. An example of how this could affect the company is a financial

guarantee provided by us to Sapura Navegacao Maritima SA over one of Seabras Sapura's senior credit facility agreements used to partially

fund the acquisition of the pipe-laying support vessel Sapura Esmeralda. A condition for the lenders making this loan available to Seabras

Sapura was that we provided a sponsor guarantee, on a joint and several basis with our joint venture partner, Sapura Energy. Should Seabras

Sapura be unable to meet its obligations under the above referenced credit facility, the lenders could look to Seadrill to meet such liabilities. If

this should occur, we may not be able to satisfy its obligations under the guarantee.

Furthermore, our own debt agreements contain cross-default and cross-acceleration provisions that may be triggered if we fail to comply with

its obligations under the Seabras Sapura guarantee. Such cross-default and cross-acceleration, as applicable, could result in the acceleration of

the maturity of the debt under the company's agreements and the company's lenders or other secured debt holders may foreclose upon any

collateral securing that debt, including our drilling units and other assets, even if such default was subsequently cured. In the event of such

acceleration and foreclosure, we will not have sufficient funds or other assets to satisfy all of our obligations.

Risks relating to Our Shareholders

Our primary listing with respect to our Shares is currently Euronext Expand, which could affect the ability of U.S. shareholders to resell

their Shares or may effect liquidity or price.

Our primary listing with respect to our Shares is currently Euronext Expand, and our Shares are not currently listed for trading on any U.S.

national securities exchange. Thus, U.S. holders of our Shares may be required to trade such Shares outside the U.S. The absence of an active

U.S. trading market could decrease the liquidity or price of the Shares held by U.S. holders.

A delisting of our Shares from Euronext Expand could negatively impact us.

A delisting of our Shares from Euronext Expand could negatively impact us because it could (i) reduce the liquidity and market price of our

Shares, (ii) reduce the number of investors willing to hold or acquire our Shares, which could negatively impact our ability to raise equity

financing, (iii) limit our ability to offer and sell freely tradable securities, including under U.S. State securities laws, thereby preventing us

from accessing the public capital markets, (iv) impair our ability to provide equity incentives to our employees, and (v) lead to a default under

one or more of our credit facilities under certain circumstances.

Certain of our new credit facilities include a covenant requiring our Shares to be listed on the OSE and/or the NYSE subject to the satisfaction

of the applicable listing requirements. If we are unable to satisfy such covenant, we could be in default under such facilities. Given the cross-

default and cross-acceleration provisions in our other debt agreements, we could be in default under those other debt agreements as well, with

the result that some or all of our indebtedness could be declared immediately due and payable (or accelerated after the expiration of any

applicable grace period), and we may not have sufficient assets available to satisfy our obligations.

The price of the Shares may be volatile or may decline regardless of our operating performance, and investors may not be able to resell the

Shares at or above their initial purchase price.

The market price for the Shares may be volatile and may fluctuate significantly in response to a number of factors, most of which we cannot

control, including, among others:

• announcements concerning the offshore drilling market, including changes in oil and gas prices and the state of the global economy and

market outlook for our various geographical operating sectors and classes of rigs;

• fluctuations in the market value of our drilling units and the amount of debt we can incur under certain covenants in its current and

future debt financing agreements;

• general and industry-specific economic conditions;

• changes in financial estimates or recommendations by securities analysts or failure to meet analysts’ performance expectations;

• additions or departures of key members of management;

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• any increased indebtedness we incur in the future;

• speculation or reports by the press or investment community with respect to Seadrill or the industry in general;

• announcements by us or our competitors of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or

capital commitments;

• changes or proposed changes in laws or regulations affecting the oil and gas industry or enforcement of these laws and regulations, or

announcements relating to these matters; and

• general market, political and economic conditions, including any such conditions and local conditions in the markets in which we

operate.

These and other factors may lower the market price of the Shares, regardless of our actual operating performance. In the event of a drop in the

market price of the Shares, investors could lose a substantial part or all of their investment in the Shares. In addition, the stock markets have

experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many

companies. Shareholders may initiate securities class action litigation following periods of market volatility. If we were to become involved in

securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from the business,

which could have a negative effect on the operating results and thus the price for the Shares.

The market price of our Shares has fluctuated widely and may fluctuate widely in the future.

The market price of our Shares has fluctuated widely and may continue to do so as a result of many factors, such as actual or anticipated

fluctuations in our operating results, the outcome of any consent or negotiations with our lenders under our secured credit facilities, changes

in financial estimates by securities analysts, economic and regulatory trends, general market conditions, rumors and other factors, many of

which are beyond our control. Further, there may be no continuing active or liquid public market for our Shares. If an active trading market

for our Shares does not continue, the price of our Shares may be more volatile and it may be more difficult and time consuming to complete a

transaction in our Shares, which could have an adverse effect on the realized price of our Shares. In addition, an adverse development in the

market price for our Shares could negatively affect our ability to issue new equity to fund our activities.

The issuance of share-based awards may dilute investors’ holding of the Shares.

An aggregate of 5.5% of the Shares are reserved for issuance for grant to our employees pursuant to awards to be made under the

Management Incentive Plan in accordance with the Plan. The exercise of equity awards, including any share options that we may grant in the

future, could have an adverse effect on the market for the Shares, including the price that an investor could obtain for their Shares. Investors

may experience dilution in the net tangible book value of their investment upon the exercise of any share options that may be granted or

issued pursuant to management or employee incentive plans in the future.

Substantial sales of or trading in the Shares could occur, which could cause the share price to be adversely affected.

A limited number of shareholders own a substantial portion of the Shares, which may be traded on the OSE if such Shares are freely tradable

or covered by an effective registration statement.

We cannot predict what effect, if any, future sales of the Shares, or the availability of Shares for future sales, will have on their market price.

Sales of substantial amounts of the Shares in the public market, or the perception that such sales could occur, may adversely affect the market

price of the Shares, making it more difficult for holders to sell their Shares at a time and price that they deem appropriate. In addition,

investment firms that are party to certain put and call agreements may hedge their positions by trading the Shares. The sale of significant

amounts of the Shares, substantial trading in the Shares, hedging activities or the perception in the market that any of these activities will

occur, may adversely affect the market price of the Shares. Sales of the Shares could also impair our ability to raise capital, should we wish to

do so, which may cause the Share price to decline.

We may pay little or no dividends on the Shares.

The payment of any future dividends to the Company’s shareholders will depend on decisions that will be made by the Board of Directors and

will depend on then existing conditions, including the Company’s operating results, financial conditions, contractual and financing

restrictions, corporate law restrictions, capital agreements, the applicable laws of Bermuda and business prospects. The Company may pay

little or no dividends for the foreseeable future.

In addition, since we are a holding company with no material assets other than the shares of our subsidiaries through which we conduct our

operations, our ability to pay dividends will depend on our subsidiaries distributing to us their earnings and cash flows. Furthermore, the

terms of our secured credit facilities prohibit or otherwise limit our and certain of our subsidiaries’ ability to pay dividends and distributions

without consent of the requisite debt holders. For more information, see “The covenants under our secured credit facilities impose operating

and financial restrictions on us that could significantly impact our ability to operate our business and a breach of which could result in a

default under the terms of these agreements, which could accelerate our repayment of funds that we have borrowed.” We suspended the

payment of dividends in November 2014, and we cannot predict when, or if, dividends will be paid in the future.

U.S. tax authorities may treat us as a “passive foreign investment company” for U.S. federal income tax purposes, which may have

adverse tax consequences for U.S. shareholders.