8-K: Seadrill Changes Auditors Following Transition to U.S. Domestic Reporting Status

Seadrill Limited has dismissed PricewaterhouseCoopers LLP (UK) and, pending shareholder approval, will appoint PricewaterhouseCoopers LLP (US) as its independent registered public accounting firm after transitioning to U.S. domestic reporting status.

Summary

• Seadrill Limited's Audit and Risk Committee (ARC) approved the dismissal of PricewaterhouseCoopers LLP (PwC UK) as the company's independent registered public accounting firm on March 4, 2025, following the completion of the audit for the fiscal year ended December 31, 2024.
• Subject to shareholder approval at the 2025 Annual General Meeting of Shareholders (AGM), the ARC also approved the appointment of PricewaterhouseCoopers LLP, United States (PwC US), as its independent registered public accounting firm for the fiscal year ending December 31, 2025.
• PwC US will also perform reviews of interim periods commencing from the period ending March 31, 2025.
• The change in auditors is a result of Seadrill's transition from foreign private issuer status to U.S. domestic reporting status, effective January 1, 2025, which involved closing the London office and consolidating corporate offices in Houston, Texas.
• The audit report of PwC UK for the fiscal years ended December 31, 2024 and 2023 did not contain any adverse opinions, disclaimers, qualifications, or modifications regarding uncertainty, audit scope, or accounting principles.
• There were no disagreements or reportable events between Seadrill and PwC UK during the fiscal years ended December 31, 2024 and 2023, and the subsequent interim period through March 4, 2025, that would have required PwC UK to reference them in their audit report.
• Seadrill has provided PwC UK with a copy of the disclosures in the Form 8-K and received a letter from PwC UK agreeing with the statements made by the company.
• Seadrill did not consult PwC US on any accounting principles, audit opinions, or financial reporting issues during the fiscal years ended December 31, 2024 and 2023, and the subsequent interim period through March 4, 2025.

Sentiment

Score: 7

Explanation: The announcement is largely procedural and reflects a necessary adjustment following a strategic shift. The absence of any reported disagreements with the previous auditor is reassuring.

Positives

• The transition to a U.S.-based auditor aligns with Seadrill's move to U.S. domestic reporting status.
• PwC UK provided clean audit opinions for the past two fiscal years.
• The change in auditors appears to be a procedural matter related to the company's restructuring and not due to any accounting or auditing concerns.

Risks

• Shareholder approval of PwC US's appointment is required, although it is likely to be a formality.
• The transition to a new auditor could present unforeseen challenges, although PwC US is already familiar with the company.

Future Outlook

The company anticipates shareholder approval of PwC US as the new auditor at the 2025 AGM, ensuring continuity in financial oversight as it operates under U.S. domestic reporting standards.

Industry Context

Changes in auditors are not uncommon, especially following significant corporate restructuring or changes in reporting status. Companies often align their auditor selection with their primary jurisdiction and reporting requirements.

Comparison to Industry Standards

• Many companies listed on the NYSE use the large global accounting firms such as PwC, Deloitte, EY, and KPMG.
• The transition from a UK-based PwC to a US-based PwC is a logical step given Seadrill's move to US domestic reporting status, mirroring similar transitions seen in other companies undergoing jurisdictional shifts.
• Companies like Transocean and Valaris, which also operate in the offshore drilling industry, use similar large accounting firms for their audit needs.

Stakeholder Impact

• Shareholders will need to approve the appointment of the new auditor at the AGM.
• The change in auditors is unlikely to have a significant impact on employees or other stakeholders.

Next Steps

• Obtain shareholder approval for the appointment of PwC US at the 2025 AGM.
• Complete the transition of audit responsibilities from PwC UK to PwC US.
• PwC US to perform review of interim periods commencing from the period ending March 31, 2025.

Key Dates

Keywords

auditor, PricewaterhouseCoopers, Seadrill, accounting, audit, reporting, transition, Form 8-K