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Investment in associated companies (Tables)

12 Months Ended

Dec. 31, 2020

Equity Method Investments and Joint Ventures [Abstract]

Schedule of ownership percentages and book values in associated companies

The cash flows were estimated over the remaining useful economic lives of the underlying assets but no longer than 30 years in total, and discounted using an estimated market participant WACC as follows:

Investment			WACC
Seadrill Capricorn Holdings LLC			11.4		%
Seadrill Operating LP			12.0		%
Seadrill Deepwater Drillship Ltd			12.0		%
Seabras Sapura Holding			14.3		%
Seabras Sapura Participacoes			13.7		%
SeaMex			12.7		%

We have the following investments in associated companies:

Ownership percentage			Joint venture partner						December 31, 2020						December 31, 2019
Seadrill Partners and Seadrill Partner subsidiaries ("SDLP investments") (a) (b)			(a)						(a)						(a)
Seabras Sapura (b)			Sapura Energy						50.0		%				50.0		%
SeaMex Ltd. ("SeaMex") (b)			Fintech						50.0		%				50.0		%
Sonadrill (b)			Sonangol E.P.						50.0		%				50.0		%
Gulfdrill (b)			Gulf Drilling International						50.0		%				50.0		%

(a)    Refer to the Seadrill Partners subsidiaries paragraph below for additional information. For transactions with related parties refer to Note 32 - "Related party transactions".

(b)    We own 50% equity interests in the above entities. The remaining 50% equity interest is owned by the above joint venture partners. We account for our 50% investments in the joint ventures under the equity method. For transactions with related parties refer to Note 32 - "Related party transactions".

At the year end, the book values of our investments in our associated companies were as follows:

(In $ millions)			December 31, 2020						December 31, 2019
Seadrill Partners - Direct ownership interest			—						122
Seabras Sapura			103						98
Seabras Sapura Holding GmbH - shareholder loans held as equity			121						123
SeaMex Ltd			—						22
Sonadrill			22						24
Gulfdrill			2						—
Total			248						389

Share in results from associated companies

We have recognized the following impairment of our investments in associated companies in the Consolidated Statements of Operations within "Loss on impairment of investments".

			Successor																					Predecessor
(In $ millions)			Year ended December 31, 2020						Year ended December 31, 2019						Period from July 2, 2018 through December 31, 2018									Period from January 1, 2018 through July 1, 2018
Impairments of Investment in associated companies and joint ventures
Seadrill Partners - Direct ownership investments			47						248						—									—
Seadrill Partners - Seadrill member interest and IDRs			—						54						—									—
Total impairment of investments in associated companies and joint ventures			47						302						—									—

Our share in results of our associated companies (net of tax) were as follows:

			Successor																					Predecessor
(In $ millions)			Year ended December 31, 2020						Year ended December 31, 2019						Period from July 2, 2018 through December 31, 2018									Period from January 1, 2018 through July 1, 2018
Seadrill Partners - Direct ownership interests			(75)						(107)						(82)									77
Seadrill Partners - Subordinated units			—						(17)						(20)									22
Seabras Sapura			20						29						24									46
SeaMex			(22)						(19)						(12)									4
Sonadrill			(2)						(1)						—									—
Gulfdrill			2						—						—									—
Total share in results from associated companies (net of tax)			(77)						(115)						(90)									149

Summary of Consolidated Statements of Operations for our equity method investees

The results of the Direct ownership interests in Seadrill Partners and its subsidiaries and our share in those results (net of tax) were as follows:

Seadrill Partners						Successor															Predecessor
(In $ millions)						Year ended December 31, 2019						Period from July 2, 2018 through December 31, 2018									Period from January 1, 2018 through July 1, 2018
Operating revenues (1)						750						426									612
Net operating (loss)/income (1)						51						100									257
Net (loss)/income (1)						(187)						(127)									201
Net (loss)/income allocated to subsidiaries of Seadrill Partners (1)						(92)						(59)									77
Losses not recognized						—						—									—
Amortization of basis differences						(15)						(23)									—
Share in results of Seadrill Partners (net of tax)						(107)						(82)									77
Net (loss)/income allocated to SDLP subordinated units						(17)						(15)									22
Amortization of basis differences						—						(5)									—
Share in results of the subordinated units of Seadrill Partners (net of tax)						(17)						(20)									22

(1) The 'Summary of Consolidated Statements of Operations' has not been included for Seadrill Partners for the period ending December 1, 2020. Seadrill Partners on the date of issuance of these consolidated financial statements have yet to issue consolidated statements for the year ending December 31, 2020 that comply with U.S. GAAP and would be impractical to obtain the results for the year ended December 31, 2020. Furthermore, our associated investment was substantially written down through impairment in the year ending December 31, 2019 and was fully impaired to nil carrying value in the first quarter of 2020 and thus our share in results of Seadrill Partners did not incorporate results for the period from April 1, 2020 to December 1, 2020. The share in results of a loss of $75 million represents Seadrill's share for the period before the investment was reduced to nil.

The results of the Seabras Sapura companies and our share in those results (net of tax) were as follows:

Seabras Sapura			Successor																					Predecessor
(In $ millions)			Year ended December 31, 2020						Year ended December 31, 2019						Period from July 2, 2018 through December 31, 2018									Period from January 1, 2018 through July 1, 2018
Operating revenues			360						434						232									241
Net operating income			103						198						124									125
Net income			75						113						88									92
Seadrill ownership percentage			50		%				50		%				50		%							50		%
Share of net income			38						57						44									46
Amortization of basis differences			(18)						(28)						(20)									—
Share in results from Seabras Sapura (net of tax)			20						29						24									46

The results of the SeaMex companies and our share in those results (net of tax) were as follows:

SeaMex			Successor																					Predecessor
(In $ millions)			Year ended December 31, 2020						Year ended December 31, 2019						Period from July 2, 2018 through December 31, 2018									Period from January 1, 2018 through July 1, 2018
Operating revenues			234						232						118									121
Net operating income			49						70						40									40
Net (loss)/income			(13)						18						4									7
Seadrill ownership percentage			50		%				50		%				50		%							50		%
Share of net (loss) / income			(6)						9						2									4
Amortization of basis differences			(16)						(28)						(14)									—
Share in results from SeaMex (net of tax)			(22)						(19)						(12)									4

The results of the Sonadrill companies and our share in those results (net of tax) were as follows:

Sonadrill			Successor																					Predecessor
(In $ millions)			Year ended December 31, 2020						Year ended December 31, 2019						Period from July 2, 2018 through December 31, 2018									Period from January 1, 2018 through July 1, 2018
Operating revenues			56						22						—									—
Net operating income			(2)						(1)						—									—
Net income			(5)						(2)						—									—
Seadrill ownership percentage			50		%				50		%				—		%							—		%
Share of net income			(2)						(1)						—									—
Share in results from Sonadrill (net of tax)			(2)						(1)						—									—

The results of the Gulfdrill companies and our share in those results (net of tax) were as follows:

Gulfdrill			Successor																					Predecessor
(In $ millions)			Year ended December 31, 2020						Year ended December 31, 2019						Period from July 2, 2018 through December 31, 2018									Period from January 1, 2018 through July 1, 2018
Operating revenues			44						—						—									—
Net operating income			6						—						—									—
Net income			4						—						—									—
Seadrill ownership percentage			50		%				50		%				—		%							—		%
Share of net income			2						—						—									—
Share in results from Gulfdrill (net of tax)			2						—						—									—

Summarized Consolidated Balance sheets for our equity method investees

The summarized balance sheets of the directly owned subsidiaries of Seadrill Partners and our share of equity in those companies was as follows:

Seadrill Partners
(In $ millions)						December 31, 2019
Current assets						833
Non-current assets						4,847
Current liabilities						(533)
Non-current liabilities						(2,623)
Net Assets (2)						2,524
Seadrill share of book equity						1,305
Basis difference allocated to rigs (1)						(1,220)
Basis difference allocated to contracts (1)						37
Book equity allocated to direct investments in subsidiaries of Seadrill Partners						122

(1)In 2020, an impairment of $47 million (December 31, 2019: $302 million) was recognized against the Seadrill Partners direct ownership interests and IDRs in the Consolidated Statements of Operations within "Loss on impairment of investments" reducing the balance of our investment in Seadrill Partners to nil. See Note 13 – "Impairment loss on investments in associated companies".

(2)The 'Summary Consolidated Balance sheet' has not been included for Seadrill Partners as at December 1, 2020. Seadrill Partners on the date of issuance of these consolidated financial statements have yet to issue consolidated statements for the year ending December 31, 2020

that comply with U.S. GAAP and would be impractical to obtain the results for the year ended December 31, 2020. Furthermore, our associated investment was substantially written down through impairment in the year ending December 31, 2019 and was fully impaired to nil carrying value in the first quarter of 2020.

The summarized balance sheets of the Seabras Sapura companies and our share of recorded equity in those companies was as follows:

Seabras Sapura
(In $ millions, unless otherwise stated)			December 31, 2020						December 31, 2019
Current assets			207						195
Non-current assets			1,474						1,495
Current liabilities			(541)						(510)
Non-current liabilities			(419)						(504)
Net Assets			721						676
Seadrill ownership percentage			50		%				50		%
Seadrill share of book equity			361						338
Shareholder loans held as equity (1)			121						123
Basis difference allocated to rigs			(351)						(369)
Basis difference allocated to contracts			93						129
Total adjustments			(137)						(117)
Book value of Seadrill investment			224						221

(1) In 2020, Seabras Sapura repaid $2 million (December 31, 2019: $9 million) of shareholder loans, with the cash proceeds held in escrow against a future redemption of Senior Secured Notes.

The summarized balance sheets of the SeaMex companies and our share of recorded equity in those companies was as follows:

SeaMex
(In $ millions)			December 31, 2020						December 31, 2019
Current assets			291						260
Non-current assets			898						939
Current liabilities			(174)						(141)
Non-current liabilities			(555)						(586)
Net Assets			460						472
Seadrill ownership percentage			50		%				50		%
Seadrill share of book equity			230						236
Basis difference allocated to rigs			(325)						(341)
Basis difference allocated to contracts			95						127
Total adjustments			(230)						(214)
Book value of Seadrill investment			—						22

The summarized balance sheets of the Sonadrill companies and our share of recorded equity in those companies was as follows:

Sonadrill
(In $ millions)			December 31, 2020						December 31, 2019
Current assets			54						57
Non-current assets			—						—
Current liabilities			(11)						(9)
Non-current liabilities			—						—
Net Assets			43						48
Seadrill ownership percentage			50		%				50		%
Seadrill share of book equity			22						24
Book value of Seadrill investment			22						24

The summarized balance sheets of the Gulfdrill companies and our share of recorded equity in those companies was as follows:

Gulfdrill
(In $ millions)			December 31, 2020						December 31, 2019
Current assets			67						—
Non-current assets			102						—
Current liabilities			(135)						—
Non-current liabilities			(31)						—
Net Assets			3						—
Seadrill ownership percentage			50		%				50		%
Seadrill share of book equity			2						—
Book value of Seadrill investment			2						—

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Tabular disclosure of equity method investments including, but not limited to, name of each investee or group of investments, percentage ownership, difference between recorded amount of an investment and the value of the underlying equity in the net assets, and summarized financial information.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=114001798&loc=d3e33918-111571

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