Latest news with #AntonDibowitz
Business Wire
05-05-2025
- Business
- Business Wire
Valaris Announces Sale of Jackup VALARIS 247 to BW Energy for $108 Million
HAMILTON, Bermuda--(BUSINESS WIRE)--Valaris Limited (NYSE: VAL) ('Valaris' or the 'Company') announced today that it has agreed to sell jackup VALARIS 247 to BW Energy ('BWE') for cash proceeds of approximately $108 million. This sale is expected to close in the second half of 2025, subject to customary closing conditions. As part of the sales agreement, BWE will be restricted from using the rig outside of BWE-owned or affiliated properties for the rig's expected remaining useful life. President and Chief Executive Officer Anton Dibowitz said, 'We are pleased to announce this highly accretive, opportunistic transaction to sell VALARIS 247, a 27-year-old jackup currently working offshore Australia. Upon closing, the sale proceeds will provide us with additional financial flexibility, including the return of capital to shareholders.' About Valaris Limited Valaris Limited (NYSE: VAL) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles and modern shallow-water jackups, Valaris has experience operating in nearly every major offshore basin. Valaris maintains an unwavering commitment to safety, operational excellence, and customer satisfaction, with a focus on technology and innovation. Valaris Limited is a Bermuda exempted company (Bermuda No. 56245). To learn more, visit our website at Cautionary Statements Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "outlook," "plan," "project," "could," "may," "might," "should," "will" and similar words and specifically include statements regarding expected accretion and financial flexibility; expected financial performance, utilization, day rates, revenues, operating expenses, cash flows, contract status, terms and duration, contract backlog, capital expenditures, insurance, financing and funding; the offshore drilling market, including supply and demand, customer drilling programs and the attainment of requisite permits for such programs, stacking of rigs, effects of new rigs on the market and effect of the volatility of commodity prices; expected work commitments, awards, contracts and letters of intent; scheduled delivery dates for rigs; performance and expected benefits of our joint ventures, including our joint venture with Saudi Aramco; timing of the delivery of the Saudi Aramco Rowan Offshore Drilling Company ("ARO") newbuild rigs and the timing of additional ARO newbuild orders; the availability, delivery, mobilization, contract commencement, availability, relocation or other movement of rigs and the timing thereof; rig reactivations; suitability of rigs for future contracts; divestitures of assets; general economic, market, business and industry conditions, including changing tariff policies, trade disputes, inflation and recessions, trends and outlook; general political conditions, including political tensions, conflicts and war; cybersecurity attacks and threats; uncertainty around the use and impacts of artificial intelligence applications; impacts and effects of public health crises, pandemics and epidemics; future operations; ability to renew expiring contracts or obtain new contracts; increasing regulatory complexity; targets, progress, plans and goals related to sustainability matters; the outcome of tax disputes; assessments and settlements; and expense management. The forward-looking statements contained in this press release are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including cancellation, suspension, renegotiation or termination of drilling contracts and programs; our ability to obtain financing, service our debt, fund capital expenditures and pursue other business opportunities; adequacy of sources of liquidity for us and our customers; future share repurchases; actions by regulatory authorities, or other third parties; actions by our security holders; internal control risk; commodity price fluctuations and volatility, customer demand, loss of a significant customer or customer contract, downtime and other risks associated with offshore rig operations; adverse weather, including hurricanes; changes in worldwide rig supply; and demand, competition and technology; supply chain and logistics challenges; consumer preferences for alternative fuels and forecasts or expectations regarding the global energy transition; increased scrutiny of our sustainability targets, initiatives and reporting and our ability to achieve such targets or initiatives; changes in customer strategy; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties, including recessions, volatility affecting financial markets and the banking system, changing tariff policies, trade disputes, and adverse changes in the level of international trade activity; terrorism, piracy and military action; risks inherent to shipyard upgrade, repair, maintenance, enhancement or rig reactivation; our ability to enter into, and the terms of, future drilling contracts; suitability of rigs for future contracts; the cancellation of letters of intent or letters of award or any failure to execute definitive contracts following announcements of letters of intent, letters of award or other expected work commitments; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; the use of artificial intelligence by us, third-party service providers or our competitors; environmental or other liabilities, risks or losses; compliance with our debt agreements and debt restrictions that may limit our liquidity and flexibility, including in any return of capital plans; cybersecurity risks and threats; and changes in foreign currency exchange rates. In addition to the numerous factors described above, you should also carefully read and consider "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our most recent annual report on Form 10-K, which is available on the Securities and Exchange Commission's website at or on the Investor Relations section of our website at Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements, except as required by law.
Yahoo
05-05-2025
- Business
- Yahoo
Valaris Announces Sale of Jackup VALARIS 247 to BW Energy for $108 Million
HAMILTON, Bermuda, May 05, 2025--(BUSINESS WIRE)--Valaris Limited (NYSE: VAL) ("Valaris" or the "Company") announced today that it has agreed to sell jackup VALARIS 247 to BW Energy ("BWE") for cash proceeds of approximately $108 million. This sale is expected to close in the second half of 2025, subject to customary closing conditions. As part of the sales agreement, BWE will be restricted from using the rig outside of BWE-owned or affiliated properties for the rig's expected remaining useful life. President and Chief Executive Officer Anton Dibowitz said, "We are pleased to announce this highly accretive, opportunistic transaction to sell VALARIS 247, a 27-year-old jackup currently working offshore Australia. Upon closing, the sale proceeds will provide us with additional financial flexibility, including the return of capital to shareholders." About Valaris Limited Valaris Limited (NYSE: VAL) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles and modern shallow-water jackups, Valaris has experience operating in nearly every major offshore basin. Valaris maintains an unwavering commitment to safety, operational excellence, and customer satisfaction, with a focus on technology and innovation. Valaris Limited is a Bermuda exempted company (Bermuda No. 56245). To learn more, visit our website at Cautionary Statements Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "outlook," "plan," "project," "could," "may," "might," "should," "will" and similar words and specifically include statements regarding expected accretion and financial flexibility; expected financial performance, utilization, day rates, revenues, operating expenses, cash flows, contract status, terms and duration, contract backlog, capital expenditures, insurance, financing and funding; the offshore drilling market, including supply and demand, customer drilling programs and the attainment of requisite permits for such programs, stacking of rigs, effects of new rigs on the market and effect of the volatility of commodity prices; expected work commitments, awards, contracts and letters of intent; scheduled delivery dates for rigs; performance and expected benefits of our joint ventures, including our joint venture with Saudi Aramco; timing of the delivery of the Saudi Aramco Rowan Offshore Drilling Company ("ARO") newbuild rigs and the timing of additional ARO newbuild orders; the availability, delivery, mobilization, contract commencement, availability, relocation or other movement of rigs and the timing thereof; rig reactivations; suitability of rigs for future contracts; divestitures of assets; general economic, market, business and industry conditions, including changing tariff policies, trade disputes, inflation and recessions, trends and outlook; general political conditions, including political tensions, conflicts and war; cybersecurity attacks and threats; uncertainty around the use and impacts of artificial intelligence applications; impacts and effects of public health crises, pandemics and epidemics; future operations; ability to renew expiring contracts or obtain new contracts; increasing regulatory complexity; targets, progress, plans and goals related to sustainability matters; the outcome of tax disputes; assessments and settlements; and expense management. The forward-looking statements contained in this press release are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including cancellation, suspension, renegotiation or termination of drilling contracts and programs; our ability to obtain financing, service our debt, fund capital expenditures and pursue other business opportunities; adequacy of sources of liquidity for us and our customers; future share repurchases; actions by regulatory authorities, or other third parties; actions by our security holders; internal control risk; commodity price fluctuations and volatility, customer demand, loss of a significant customer or customer contract, downtime and other risks associated with offshore rig operations; adverse weather, including hurricanes; changes in worldwide rig supply; and demand, competition and technology; supply chain and logistics challenges; consumer preferences for alternative fuels and forecasts or expectations regarding the global energy transition; increased scrutiny of our sustainability targets, initiatives and reporting and our ability to achieve such targets or initiatives; changes in customer strategy; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties, including recessions, volatility affecting financial markets and the banking system, changing tariff policies, trade disputes, and adverse changes in the level of international trade activity; terrorism, piracy and military action; risks inherent to shipyard upgrade, repair, maintenance, enhancement or rig reactivation; our ability to enter into, and the terms of, future drilling contracts; suitability of rigs for future contracts; the cancellation of letters of intent or letters of award or any failure to execute definitive contracts following announcements of letters of intent, letters of award or other expected work commitments; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; the use of artificial intelligence by us, third-party service providers or our competitors; environmental or other liabilities, risks or losses; compliance with our debt agreements and debt restrictions that may limit our liquidity and flexibility, including in any return of capital plans; cybersecurity risks and threats; and changes in foreign currency exchange rates. In addition to the numerous factors described above, you should also carefully read and consider "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our most recent annual report on Form 10-K, which is available on the Securities and Exchange Commission's website at or on the Investor Relations section of our website at Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements, except as required by law. View source version on Contacts Investor & Media Contacts:Nick GeorgasVice President – Treasurer and Investor Relations+1-713-979-4632 Tim RichardsonDirector – Investor Relations+1-713-979-4619
Business Wire
05-05-2025
- Business
- Business Wire
Valaris Announces Contract Award for Drillship VALARIS DS-15
HAMILTON, Bermuda--(BUSINESS WIRE)--Valaris Limited (NYSE: VAL) ('Valaris' or the 'Company') announced today that it has been awarded a five-well contract offshore West Africa for drillship VALARIS DS-15. The contract is expected to commence in the third quarter 2026. The total contract value, based on an estimated duration of 250 days, is approximately $135 million, including upfront payments for rig upgrades and mobilization. The total contract value does not include the provision of additional services. The contract includes priced options for up to five wells with an estimated total duration of 80 to 100 days. President and Chief Executive Officer Anton Dibowitz said, 'We are excited to have secured another contract for one of our high-specification drillships. As part of this contract, the rig will be upgraded with an enhanced managed pressure drilling system. We believe this contract reflects the market's preference for contractors that can deliver complex drilling solutions with high-specification, seventh generation drillships. In addition, this contract adds to our presence offshore West Africa, where we are well positioned for future contracting opportunities.' About Valaris Limited Valaris Limited (NYSE: VAL) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles and modern shallow-water jackups, Valaris has experience operating in nearly every major offshore basin. Valaris maintains an unwavering commitment to safety, operational excellence, and customer satisfaction, with a focus on technology and innovation. Valaris Limited is a Bermuda exempted company (Bermuda No. 56245). To learn more, visit our website at Cautionary Statements Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "outlook," "plan," "project," "could," "may," "might," "should," "will" and similar words and specifically include statements regarding expected financial performance; expected utilization, day rates, revenues, operating expenses, cash flows, contract status, terms and duration, contract backlog, capital expenditures, insurance, financing and funding; the offshore drilling market, including supply and demand, customer drilling programs and the attainment of requisite permits for such programs, stacking of rigs, effects of new rigs on the market and effect of the volatility of commodity prices; expected work commitments, awards, contracts and letters of intent; scheduled delivery dates for rigs; performance and expected benefits of our joint ventures, including our joint venture with Saudi Aramco; timing of the delivery of the Saudi Aramco Rowan Offshore Drilling Company ("ARO") newbuild rigs and the timing of additional ARO newbuild orders; the availability, delivery, mobilization, contract commencement, availability, relocation or other movement of rigs and the timing thereof; rig reactivations; suitability of rigs for future contracts; divestitures of assets; general economic, market, business and industry conditions, including changing tariff policies, trade disputes, inflation and recessions, trends and outlook; general political conditions, including political tensions, conflicts and war; cybersecurity attacks and threats; uncertainty around the use and impacts of artificial intelligence applications; impacts and effects of public health crises, pandemics and epidemics; future operations; ability to renew expiring contracts or obtain new contracts; increasing regulatory complexity; targets, progress, plans and goals related to sustainability matters; the outcome of tax disputes; assessments and settlements; and expense management. The forward-looking statements contained in this press release are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including cancellation, suspension, renegotiation or termination of drilling contracts and programs; our ability to obtain financing, service our debt, fund capital expenditures and pursue other business opportunities; adequacy of sources of liquidity for us and our customers; future share repurchases; actions by regulatory authorities, or other third parties; actions by our security holders; internal control risk; commodity price fluctuations and volatility, customer demand, loss of a significant customer or customer contract, downtime and other risks associated with offshore rig operations; adverse weather, including hurricanes; changes in worldwide rig supply; and demand, competition and technology; supply chain and logistics challenges; consumer preferences for alternative fuels and forecasts or expectations regarding the global energy transition; increased scrutiny of our sustainability targets, initiatives and reporting and our ability to achieve such targets or initiatives; changes in customer strategy; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties, including recessions, volatility affecting financial markets and the banking system, changing tariff policies, trade disputes, and adverse changes in the level of international trade activity; terrorism, piracy and military action; risks inherent to shipyard upgrade, repair, maintenance, enhancement or rig reactivation; our ability to enter into, and the terms of, future drilling contracts; suitability of rigs for future contracts; the cancellation of letters of intent or letters of award or any failure to execute definitive contracts following announcements of letters of intent, letters of award or other expected work commitments; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; the use of artificial intelligence by us, third-party service providers or our competitors; environmental or other liabilities, risks or losses; compliance with our debt agreements and debt restrictions that may limit our liquidity and flexibility, including in any return of capital plans; cybersecurity risks and threats; and changes in foreign currency exchange rates. In addition to the numerous factors described above, you should also carefully read and consider "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our most recent annual report on Form 10-K, which is available on the Securities and Exchange Commission's website at or on the Investor Relations section of our website at Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements, except as required by law.
Business Wire
30-04-2025
- Business
- Business Wire
Valaris Reports First Quarter 2025 Results
HAMILTON, Bermuda--(BUSINESS WIRE)--Valaris Limited (NYSE: VAL) ("Valaris" or the "Company") today reported first quarter 2025 results. President and Chief Executive Officer Anton Dibowitz said, 'I'd like to thank the entire Valaris team for delivering another quarter of strong operational and financial performance. We continued our track record of providing safe and efficient operations for our customers, delivering revenue efficiency of 96% as well as meaningful EBITDA and free cash flow during the quarter.' Dibowitz added, 'We are also successfully executing our commercial strategy by securing attractive, long-term contracts for our high-specification fleet. The recent award for drillship VALARIS DS-10 offshore West Africa enhances our presence in a key deepwater region. Additionally, since the beginning of the year, we've had meaningful contracting success across our shallow-water fleet, including contracts for jackups in the Middle East, the North Sea, Australia and Trinidad. We remain actively engaged with customers for additional contracting opportunities in 2026 and beyond.' Dibowitz concluded, 'While macroeconomic uncertainty has increased recently, we expect offshore production will continue to play a vital role in meeting the world's energy needs and will be an important part of our customers' portfolios going forward. Given our high-quality fleet and operational performance, we believe Valaris is well positioned to secure additional contracts which, paired with our prudent fleet management, will further support our earnings and cash flow.' Financial and Operational Highlights Total operating revenues of $621 million, with revenue efficiency of 96%; Net loss of $39 million, inclusive of $167 million of discrete tax expense; Adjusted EBITDA of $181 million; Generated $156 million of cash from operating activities and $74 million of Adjusted Free Cash Flow; Secured approximately $1.0 billion of new contract backlog since February's fleet status report, increasing total backlog by nearly 20% to more than $4.2 billion; Recognized by the International Association of Drilling Contractors ("IADC") North Sea Chapter with its 2024 Best Safety Performance Award for Jackup Rigs; and Sold semisubmersibles VALARIS DPS-3, DPS-5 and DPS-6 for recycling in April. First Quarter Review Net loss of $39 million compared to net income of $131 million in the fourth quarter 2024. Net loss included tax expense of $194 million, which is further described below, compared to a tax benefit of $7 million in the fourth quarter. Adjusted EBITDA increased to $181 million from $142 million in the fourth quarter primarily due to higher revenues for the floater fleet. Revenues exclusive of reimbursable items increased to $578 million from $548 million in the fourth quarter 2024 primarily due to more operating days and higher average daily revenue for the floater fleet. Exclusive of reimbursable items, contract drilling expense decreased to $374 million from $381 million in the fourth quarter 2024 primarily due to a non-cash accrual associated with a legal matter in the fourth quarter, partially offset by higher costs for the floater fleet associated with more operating days. First quarter 2025 included an $8 million loss on impairment related to our decision to retire semisubmersibles VALARIS DPS-3, DPS-5 and DPS-6 during the quarter. General and administrative expense decreased to $24 million from $27 million in the fourth quarter 2024 primarily due to lower professional fees. Other income increased to $11 million from $5 million in the fourth quarter 2024 primarily due to a gain on the sale of assets, including jackup VALARIS 75, partially offset by foreign currency exchange losses compared to gains in the fourth quarter. Tax expense was $194 million compared to tax benefit of $7 million in the fourth quarter 2024. The first quarter 2025 tax provision included $167 million of discrete tax expense, which was primarily attributable to the establishment of a valuation allowance on deferred tax assets in a certain operating jurisdiction in connection with our decision to retire three semisubmersibles during the quarter. The fourth quarter tax provision included $16 million of discrete tax benefit, which was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years. Adjusted for discrete tax items, tax expense increased to $27 million from $9 million in the fourth quarter. Capital expenditures decreased to $100 million from $112 million in the fourth quarter 2024 primarily due to VALARIS DS-4 undergoing a shipyard upgrade project during the fourth quarter as well as lower maintenance capital expenditures in the first quarter. Cash and cash equivalents and restricted cash increased to $454 million as of March 31, 2025, from $381 million as of December 31, 2024. The increase was primarily due to cash flow from operations and asset sales, partially offset by capital expenditures. First Quarter Segment Review Floaters Revenues exclusive of reimbursable items increased to $356 million from $328 million in the fourth quarter 2024 due to more operating days and higher average daily revenue. The increase in operating days was primarily due to VALARIS DS-4 commencing a new contract offshore Brazil late in the fourth quarter, partially offset by VALARIS DS-12 completing a contract offshore Egypt in the first quarter. The increase in average daily revenue was primarily driven by VALARIS DS-15 commencing a new higher day rate contract offshore Brazil late in the fourth quarter. Exclusive of reimbursable items, contract drilling expense decreased to $204 million from $211 million in the fourth quarter 2024. The decrease was primarily due to a non-cash accrual associated with a legal matter in the fourth quarter, partially offset by higher expense for VALARIS DS-4 following the rig's return to work as costs were capitalized during its shipyard upgrade project during the fourth quarter. Jackups Revenues exclusive of reimbursable items decreased to $186 million from $188 million in the fourth quarter 2024 primarily due to fewer operating days, including for planned repairs on VALARIS 249, partially offset by higher average daily revenues. Exclusive of reimbursable items, contract drilling expense increased to $117 million from $114 million in the fourth quarter 2024 primarily due to an increase in repair costs associated with VALARIS 249. ARO Drilling Revenues decreased to $135 million from $136 million in the fourth quarter 2024. Contract drilling expense increased to $86 million from $82 million in the fourth quarter primarily due to higher bareboat charter expense. Other Revenues exclusive of reimbursable items increased to $36 million from $33 million in the fourth quarter 2024 primarily due to higher bareboat charter revenue from rigs leased to ARO, reflecting fewer out of service days for planned maintenance. Exclusive of reimbursable items, contract drilling expense decreased to $16 million from $18 million in the fourth quarter primarily due to lower survey costs associated with rigs leased to ARO. Expand As previously announced, Valaris will hold its first quarter 2025 earnings conference call at 9:00 a.m. CT (10:00 a.m. ET) on Thursday, May 1, 2025. About Valaris Limited Valaris Limited (NYSE: VAL) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles, and modern shallow-water jackups, Valaris has experience operating in nearly every major offshore basin. Valaris maintains an unwavering commitment to safety, operational excellence, and customer satisfaction, with a focus on technology and innovation. Valaris Limited is a Bermuda exempted company. To learn more, visit the Valaris website at Forward-Looking Statements Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "outlook," "plan," "project," "could," "may," "might," "should," "will" and similar words and specifically include statements regarding expected financial performance; expected utilization, day rates, revenues, operating expenses, cash flows, contract status, terms and duration, contract backlog, capital expenditures, insurance, financing and funding; the offshore drilling market, including supply and demand, customer drilling programs and the attainment of requisite permits for such programs, stacking of rigs, effects of new rigs on the market and effect of the volatility of commodity prices; expected work commitments, awards, contracts and letters of intent; scheduled delivery dates for rigs; performance and expected benefits of our joint ventures, including our joint venture with Saudi Aramco; timing of the delivery of the Saudi Aramco Rowan Offshore Drilling Company ("ARO") newbuild rigs and the timing of additional ARO newbuild orders; the availability, delivery, mobilization, contract commencement, availability, relocation or other movement of rigs and the timing thereof; rig reactivations; suitability of rigs for future contracts; divestitures of assets; general economic, market, business and industry conditions, including changing tariff policies, trade disputes, inflation and recessions, trends and outlook; general political conditions, including political tensions, conflicts and war; cybersecurity attacks and threats; uncertainty around the use and impacts of artificial intelligence applications; impacts and effects of public health crises, pandemics and epidemics; future operations; ability to renew expiring contracts or obtain new contracts; increasing regulatory complexity; targets, progress, plans and goals related to sustainability matters; the outcome of tax disputes; assessments and settlements; and expense management. The forward-looking statements contained in this press release are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including cancellation, suspension, renegotiation or termination of drilling contracts and programs; our ability to obtain financing, service our debt, fund capital expenditures and pursue other business opportunities; adequacy of sources of liquidity for us and our customers; future share repurchases; actions by regulatory authorities, or other third parties; actions by our security holders; internal control risk; commodity price fluctuations and volatility, customer demand, loss of a significant customer or customer contract, downtime and other risks associated with offshore rig operations; adverse weather, including hurricanes; changes in worldwide rig supply; and demand, competition and technology; supply chain and logistics challenges; consumer preferences for alternative fuels and forecasts or expectations regarding the global energy transition; increased scrutiny of our sustainability targets, initiatives and reporting and our ability to achieve such targets or initiatives; changes in customer strategy; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties, including recessions, volatility affecting financial markets and the banking system, changing tariff policies, trade disputes, and adverse changes in the level of international trade activity; terrorism, piracy and military action; risks inherent to shipyard upgrade, repair, maintenance, enhancement or rig reactivation; our ability to enter into, and the terms of, future drilling contracts; suitability of rigs for future contracts; the cancellation of letters of intent or letters of award or any failure to execute definitive contracts following announcements of letters of intent, letters of award or other expected work commitments; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; the use of artificial intelligence by us, third-party service providers or our competitors; environmental or other liabilities, risks or losses; compliance with our debt agreements and debt restrictions that may limit our liquidity and flexibility, including in any return of capital plans; cybersecurity risks and threats; and changes in foreign currency exchange rates. In addition to the numerous factors described above, you should also carefully read and consider "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our most recent annual report on Form 10-K, which is available on the Securities and Exchange Commission's website at or on the Investor Relations section of our website at Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements, except as required by law. Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 OPERATING REVENUES Revenues (exclusive of reimbursable revenues) $ 577.8 $ 548.0 $ 599.9 $ 572.8 $ 491.2 Reimbursable revenues 42.9 36.4 43.2 37.3 33.8 Total operating revenues 620.7 584.4 643.1 610.1 525.0 OPERATING EXPENSES Contract drilling expenses (exclusive of depreciation and reimbursable expenses) 374.0 380.5 422.6 402.9 412.5 Reimbursable expenses 41.0 34.8 39.5 35.8 32.3 Total contract drilling expenses (exclusive of depreciation) 415.0 415.3 462.1 438.7 444.8 Loss on impairment 7.8 — — — — Depreciation 33.1 33.9 31.7 29.7 26.8 General and administrative 24.4 26.7 30.6 32.5 26.5 Total operating expenses 480.3 475.9 524.4 500.9 498.1 EQUITY IN EARNINGS (LOSSES) OF ARO 2.6 10.7 (23.8 ) (0.3 ) 2.4 OPERATING INCOME 143.0 119.2 94.9 108.9 29.3 OTHER INCOME (EXPENSE) Interest income 14.4 16.6 17.5 31.0 21.0 Interest expense, net (24.3 ) (22.1 ) (22.4 ) (22.6 ) (17.7 ) Other, net 21.2 10.1 (2.8 ) 3.5 5.8 Total other income (expense) 11.3 4.6 (7.7 ) 11.9 9.1 INCOME BEFORE INCOME TAXES 154.3 123.8 87.2 120.8 38.4 PROVISION (BENEFIT) FOR INCOME TAXES 193.5 (6.8 ) 24.3 (30.0 ) 12.9 NET INCOME (LOSS) (39.2 ) 130.6 62.9 150.8 25.5 NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1.3 3.1 1.7 (1.2 ) — EARNINGS (LOSS) PER SHARE Basic $ (0.53 ) $ 1.88 $ 0.89 $ 2.07 $ 0.35 Diluted $ (0.53 ) $ 1.88 $ 0.88 $ 2.03 $ 0.35 WEIGHTED-AVERAGE SHARES OUTSTANDING Basic 71.0 71.1 72.4 72.4 72.4 Diluted 71.0 71.2 73.2 73.7 73.6 Expand VALARIS LIMITED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions) (Unaudited) Expand As of Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 ASSETS CURRENT ASSETS Cash and cash equivalents $ 441.4 $ 368.2 $ 379.3 $ 398.3 $ 494.1 Restricted cash 12.3 12.3 12.9 12.0 15.0 Accounts receivable, net 557.7 571.2 555.8 631.7 510.9 Assets held for sale 7.0 — — — — Other current assets 139.4 127.0 163.5 182.6 177.6 Total current assets $ 1,157.8 $ 1,078.7 $ 1,111.5 $ 1,224.6 $ 1,197.6 DEFERRED TAX ASSETS 679.0 849.5 837.0 841.1 854.8 OTHER ASSETS 154.6 149.1 174.1 154.8 153.6 Total assets $ 4,386.8 $ 4,419.8 $ 4,333.4 $ 4,415.6 $ 4,354.4 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable - trade $ 329.3 $ 328.5 $ 303.7 $ 347.0 $ 394.2 Accrued liabilities and other 365.3 351.0 388.6 360.6 366.5 Total current liabilities $ 694.6 $ 679.5 $ 692.3 $ 707.6 $ 760.7 LONG-TERM DEBT 1,083.5 1,082.7 1,081.8 1,081.0 1,080.1 DEFERRED TAX LIABILITIES 29.4 30.1 31.1 31.2 31.6 OTHER LIABILITIES 367.8 383.2 404.4 408.4 451.7 TOTAL LIABILITIES 2,175.3 2,175.5 2,209.6 2,228.2 2,324.1 TOTAL EQUITY 2,211.5 2,244.3 2,123.8 2,187.4 2,030.3 Total liabilities and shareholders' equity $ 4,386.8 $ 4,419.8 $ 4,333.4 $ 4,415.6 $ 4,354.4 Expand VALARIS LIMITED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Expand Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 OPERATING ACTIVITIES Net income (loss) $ (39.2 ) $ 130.6 $ 62.9 $ 150.8 $ 25.5 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Deferred income tax expense (benefit) 169.8 (13.5 ) 3.8 13.5 2.0 Depreciation expense 33.1 33.9 31.7 29.7 26.8 Net (gain) loss on sale of property (27.1 ) (0.1 ) 0.2 — 0.1 Loss on impairment 7.8 — — — — Accretion of discount on notes receivable from ARO (6.1 ) (6.2 ) (6.2 ) (20.6 ) (7.0 ) Share-based compensation expense 5.6 5.3 7.0 7.4 8.0 Equity in losses (earnings) of ARO (2.6 ) (10.7 ) 23.8 0.3 (2.4 ) Changes in contract liabilities (17.8 ) (18.2 ) 11.3 (17.8 ) (7.0 ) Changes in deferred costs (0.2 ) 6.7 33.4 (3.0 ) 2.2 Other 2.3 1.9 0.8 2.4 1.8 Changes in other operating assets and liabilities 35.3 (3.2 ) 37.8 (147.5 ) (21.3 ) Contributions to pension plans and other post-retirement benefits (5.0 ) (1.9 ) (13.5 ) (3.7 ) (2.4 ) Net cash provided by operating activities $ 155.9 $ 124.6 $ 193.0 $ 11.5 $ 26.3 INVESTING ACTIVITIES Additions to property and equipment $ (100.2 ) $ (111.7 ) $ (81.9 ) $ (110.2 ) $ (151.3 ) Proceeds from disposition of assets 17.8 2.6 0.1 0.1 — Net cash used in investing activities $ (82.4 ) $ (109.1 ) $ (81.8 ) $ (110.1 ) $ (151.3 ) FINANCING ACTIVITIES Payments for tax withholdings for share-based awards $ (0.3 ) $ (0.2 ) $ (29.3 ) $ (0.2 ) $ (0.2 ) Payments for share repurchases — (25.0 ) (100.0 ) — (1.4 ) Other — (2.0 ) — — — Net cash used in financing activities $ (0.3 ) $ (27.2 ) $ (129.3 ) $ (0.2 ) $ (1.6 ) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH $ 73.2 $ (11.7 ) $ (18.1 ) $ (98.8 ) $ (126.6 ) CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD 380.5 392.2 410.3 509.1 635.7 CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD $ 453.7 $ 380.5 $ 392.2 $ 410.3 $ 509.1 Expand VALARIS LIMITED AND SUBSIDIARIES OPERATING STATISTICS (In millions) (Unaudited) Expand Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 REVENUES Floaters Drillships $ 317.3 $ 285.5 $ 323.9 $ 291.6 $ 249.8 Semisubmersibles 38.7 42.2 51.0 78.8 60.0 $ 356.0 $ 327.7 $ 374.9 $ 370.4 $ 309.8 Reimbursable Revenues (1) 8.9 15.7 14.1 13.5 14.6 Total Floaters $ 364.9 $ 343.4 $ 389.0 $ 383.9 $ 324.4 Jackups Harsh Environment $ 106.3 $ 113.5 $ 118.7 $ 87.4 $ 67.5 Benign Environment 64.8 59.5 58.4 63.8 57.0 Legacy 14.8 14.8 15.5 15.6 14.8 $ 185.9 $ 187.8 $ 192.6 $ 166.8 $ 139.3 Reimbursable Revenues (1) 27.7 15.3 21.1 19.0 13.0 Total Jackups $ 213.6 $ 203.1 $ 213.7 $ 185.8 $ 152.3 Other Leased and Managed Rigs $ 35.9 $ 32.5 $ 32.4 $ 35.6 $ 42.1 Reimbursable Revenues (1) 6.3 5.4 8.0 4.8 6.2 Total Other $ 42.2 $ 37.9 $ 40.4 $ 40.4 $ 48.3 Total Operating Revenues $ 620.7 $ 584.4 $ 643.1 $ 610.1 $ 525.0 Revenues Exclusive of Reimbursable Revenues $ 577.8 $ 548.0 $ 599.9 $ 572.8 $ 491.2 Expand (1) Reimbursable revenues represent reimbursements from our customers for purchases of supplies, equipment and incremental services provided at their request. Expand VALARIS LIMITED AND SUBSIDIARIES OPERATING STATISTICS (In millions) (Unaudited) Expand Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 ADJUSTED EBITDA (1) Floaters Drillships $ 145.9 $ 108.4 $ 130.9 $ 91.2 $ 55.6 Semisubmersibles 6.7 8.3 10.4 35.2 15.4 $ 152.6 $ 116.7 $ 141.3 $ 126.4 $ 71.0 Jackups Harsh Environment $ 38.6 $ 50.0 $ 31.4 $ 36.3 $ 5.4 Benign Environment 26.6 19.5 20.0 21.3 8.6 Legacy 5.3 6.0 5.6 5.0 4.4 $ 70.5 $ 75.5 $ 57.0 $ 62.6 $ 18.4 Total $ 223.1 $ 192.2 $ 198.3 $ 189.0 $ 89.4 Other Leased and Managed Rigs $ 19.9 $ 15.0 $ 18.3 $ 20.8 $ 26.1 Total $ 243.0 $ 207.2 $ 216.6 $ 209.8 $ 115.5 Support costs General and administrative expense $ 24.4 $ 26.7 $ 30.6 $ 32.5 $ 26.5 Onshore support costs 37.3 38.1 35.6 38.4 35.3 $ 61.7 $ 64.8 $ 66.2 $ 70.9 $ 61.8 Valaris Total $ 181.3 $ 142.4 $ 150.4 $ 138.9 $ 53.7 Expand (1) Adjusted EBITDA is earnings before interest, tax, depreciation, amortization and loss on impairment. Adjusted EBITDA for asset category also excludes onshore support costs and general and administrative expense. Expand VALARIS LIMITED AND SUBSIDIARIES OPERATING STATISTICS (In millions) (Unaudited) Expand As of Apr 30, 2025 Feb 18, 2025 Oct 30, 2024 Jul 29, 2024 Apr 30, 2024 CONTRACT BACKLOG (1) Floaters Drillships $ 2,114.7 $ 1,944.6 $ 2,289.7 $ 2,508.3 $ 2,223.9 Semisubmersibles 56.2 79.4 106.0 122.1 180.7 $ 2,170.9 $ 2,024.0 $ 2,395.7 $ 2,630.4 $ 2,404.6 Jackups Harsh Environment $ 640.5 $ 614.6 $ 635.1 $ 665.0 $ 607.0 Benign Environment 609.0 527.4 585.2 438.9 449.1 Legacy 160.4 171.0 178.4 189.0 128.8 $ 1,409.9 $ 1,313.0 $ 1,398.7 $ 1,292.9 $ 1,184.9 Other Leased and Managed Rigs $ 656.8 $ 271.5 $ 310.4 $ 384.2 $ 427.7 Expand (1) Our contract drilling backlog reflects commitments, represented by signed drilling contracts, and is calculated by multiplying the contracted day rate by the contract period. Contract drilling backlog may include drilling contracts subject to final investment decision ("FID") and drilling contracts which grant the customer termination rights if FID is not received with respect to projects for which the drilling rig is contracted. The contracted day rate excludes certain types of lump sum fees for rig mobilization, demobilization, contract preparation, as well as customer reimbursables and bonus opportunities. Expand VALARIS LIMITED AND SUBSIDIARIES OPERATING STATISTICS (Unaudited) Expand (1) Average daily revenue is derived by dividing Revenues (exclusive of reimbursable revenues), excluding contract termination fees, by the aggregate number of operating days. Expand VALARIS LIMITED AND SUBSIDIARIES OPERATING STATISTICS (Unaudited) Expand Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 UTILIZATION - TOTAL FLEET (1) Floaters Drillships 65 % 59 % 70 % 69 % 64 % Semisubmersibles 37 % 40 % 45 % 60 % 51 % 57 % 54 % 63 % 66 % 61 % Jackups Harsh Environment 71 % 81 % 72 % 65 % 55 % Benign Environment 40 % 40 % 44 % 45 % 44 % Legacy 100 % 100 % 100 % 100 % 100 % 57 % 60 % 60 % 58 % 53 % Total 57 % 58 % 61 % 61 % 56 % Other Leased and Managed Rigs 100 % 100 % 100 % 100 % 100 % Expand (1) Rig utilization is derived by dividing the number of operating days by the number of available days in the period for the total fleet. Available days is defined as the maximum number of days available in the period for the total fleet, calculated by multiplying the number of rigs in each asset category by the number of days in the period, irrespective of asset status. (2) Includes all Valaris jackups including those leased to ARO Drilling. Expand VALARIS LIMITED AND SUBSIDIARIES OPERATING STATISTICS (Unaudited) Expand Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 UTILIZATION - ACTIVE FLEET (1) (2) Floaters Drillships 84 % 77 % 91 % 90 % 84 % Semisubmersibles 70 % 66 % 75 % 100 % 85 % 81 % 74 % 87 % 92 % 84 % Jackups Harsh Environment 87 % 99 % 88 % 80 % 67 % Benign Environment 83 % 85 % 82 % 81 % 69 % Legacy 100 % 100 % 100 % 100 % 100 % 87 % 93 % 87 % 82 % 71 % Total 85 % 85 % 87 % 86 % 76 % Other Leased and Managed Rigs 100 % 100 % 100 % 100 % 100 % Valaris Total 88 % 89 % 90 % 90 % 82 % Pro Forma Jackups (3) 90 % 95 % 91 % 88 % 80 % Expand (1) Rig utilization is derived by dividing the number of operating days by the number of available days in the period for the active fleet. Available days is defined as the maximum number of days available in the period for the active fleet, calculated by multiplying the number of rigs in each asset category by the number of days in the period, for active rigs only. Active rigs are defined as rigs that are not preservation stacked. (2) Active fleet represents rigs that are not preservation stacked or held for sale and includes rigs that are in the process of being reactivated. (3) Includes all Valaris jackups including those leased to ARO Drilling. Expand VALARIS LIMITED AND SUBSIDIARIES OPERATING STATISTICS (Unaudited) Expand (1) Represents the total number of days under contract in the period. Days under contract equals the total number of days that rigs have earned and recognized day rate revenue, including days associated with compensated downtime and mobilizations. When revenue is deferred and amortized over a future period, for example when we receive fees while mobilizing to commence a new contract or while being upgraded in a shipyard, the related days are excluded from days under contract. Expand VALARIS LIMITED AND SUBSIDIARIES OPERATING STATISTICS (Unaudited) Expand Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 REVENUE EFFICIENCY (1) Floaters Drillships 96 % 94 % 98 % 99 % 94 % Semisubmersibles 95 % 100 % 100 % 100 % 99 % 96 % 95 % 98 % 99 % 95 % Jackups Harsh Environment 94 % 99 % 93 % 99 % 100 % Benign Environment 100 % 99 % 100 % 100 % 99 % Legacy 100 % 100 % 100 % 100 % 100 % 96 % 99 % 96 % 99 % 99 % Expand Expand VALARIS LIMITED AND SUBSIDIARIES OPERATING STATISTICS (Unaudited) Expand (1) Active fleet represents rigs that are not preservation stacked or held for sale and includes rigs that are in the process of being reactivated. (2) Represents VALARIS DPS-5, VALARIS DPS-3 and VALARIS DPS-6, which were classified as held for sale as of March 31, 2025. (3) Leased rigs and managed rigs included in Other reporting segment. Expand Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Revenues $ 134.7 $ 136.3 $ 113.7 $ 124.2 $ 138.3 Operating expenses Contract drilling (exclusive of depreciation) 85.6 81.5 93.8 94.1 98.3 Loss on impairment — — 28.4 — — Depreciation 29.5 29.4 21.1 19.7 19.0 General and administrative 6.3 7.5 4.9 5.5 5.8 Operating income (loss) 13.3 17.9 (34.5 ) 4.9 15.2 Other expense, net 15.2 13.7 15.3 13.4 13.1 Provision (benefit) for income taxes (0.9 ) (10.9 ) 4.2 (1.8 ) 3.7 Net income (loss) $ (1.0 ) $ 15.1 $ (54.0 ) $ (6.7 ) $ (1.6 ) ARO Adjusted EBITDA $ 42.8 $ 47.3 $ 15.0 $ 24.6 $ 34.2 ARO Drilling condensed income statement information presented above represents 100% of ARO. Valaris has a 50% ownership interest in ARO. Expand ARO DRILLING OPERATING STATISTICS (Unaudited) Expand As of (In millions) Apr 30, 2025 Feb 18, 2025 Oct 30, 2024 Jul 29, 2024 Apr 30, 2024 CONTRACT BACKLOG (1) Owned Rigs $ 1,054.4 $ 1,124.9 $ 1,236.9 $ 1,322.9 $ 1,398.9 Leased Rigs 1,440.9 298.0 344.4 510.4 583.3 Total $ 2,495.3 $ 1,422.9 $ 1,581.3 $ 1,833.3 $ 1,982.2 Expand (1) Contract drilling backlog reflects commitments, represented by signed drilling contracts, and is calculated by multiplying the contracted day rate by the contract period. The contracted day rate excludes certain types of lump sum fees for rig mobilization, demobilization, contract preparation, as well as customer reimbursables and bonus opportunities. Expand (1) Average daily revenue is derived by dividing Revenues (exclusive of reimbursable revenues), excluding contract termination fees, by the aggregate number of operating days. (2) All ARO leased rigs are leased from Valaris. (3) Rig utilization is derived by dividing the number of operating days by the number of available days in the period for the rig fleet. (4) Revenue efficiency is day rate revenue earned as a percentage of maximum potential day rate revenue. (5) Represents the total number of days under contract in the period. Days under contract equals the total number of days that rigs have earned and recognized day rate revenue, including days associated with compensated downtime and mobilizations. When revenue is deferred and amortized over a future period, for example when we receive fees while mobilizing to commence a new contract or while being upgraded in a shipyard, the related days are excluded from days under contract. Expand Non-GAAP Financial Measures (Unaudited) To supplement Valaris' condensed consolidated financial statements presented on a GAAP basis, this press release provides investors with Adjusted EBITDA and Adjusted Free Cash Flow, which are non-GAAP measures. Valaris defines "Adjusted EBITDA" as net income (loss) before income tax expense, interest expense, other (income) expense, depreciation expense, amortization, loss on impairment and equity in (earnings) losses of ARO. Adjusted EBITDA is a non-GAAP measure that our management uses to facilitate period-to-period comparisons of our core operating performance and to evaluate our long-term financial performance against that of our peers. We believe that this measure is useful to investors and analysts in allowing for greater transparency of our core operating performance and makes it easier to compare our results with those of other companies within our industry. Adjusted EBITDA should not be considered (a) in isolation of, or as a substitute for, net income (loss), (b) as an indication of cash flows from operating activities, or (c) as a measure of liquidity. Adjusted EBITDA may not be comparable to other similarly titled measures reported by other companies. Valaris defines "ARO Adjusted EBITDA" as ARO's net income (loss) before income tax expense, other expense, net, depreciation expense and loss on impairment. ARO Adjusted EBITDA is a non-GAAP measure that our management uses to facilitate period-to-period comparisons of ARO's core operating performance and to evaluate ARO's long-term financial performance against that of ARO's peers. We believe that this measure is useful to investors and analysts in allowing for greater transparency of ARO's core operating performance and makes it easier to compare ARO's results with those of other companies within ARO's industry. ARO Adjusted EBITDA should not be considered (a) in isolation of, or as a substitute for, net income (loss), (b) as an indication of cash flows from operating activities, or (c) as a measure of liquidity. ARO Adjusted EBITDA may not be comparable to other similarly titled measures reported by other companies. The Company is not able to provide a reconciliation of the Company's forward-looking Adjusted EBITDA, as discussed on its first quarter 2025 earnings conference call, to the most directly comparable GAAP measure without unreasonable effort because of the inherent difficulty in forecasting and quantifying certain amounts necessary for such a reconciliation, including forward-looking tax expense and other income (expense). Valaris defines "Adjusted Free Cash Flow" as net cash provided by operating activities less capital expenditures plus proceeds from the disposition of assets. Adjusted Free Cash Flow is a non-GAAP measure that our management uses to assess the cash generation of our fleet, including proceeds from the sale of assets, and deducting operating expenses and capital expenditures to maintain and upgrade our assets. We believe that this measure is useful to investors and analysts in allowing for greater transparency of the cash generation of our business. Non-GAAP financial measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures prepared in accordance with GAAP. A reconciliation of net income (loss) as reported to Adjusted EBITDA is included in the tables below (in millions): Three Months Ended Mar 31, 2025 Dec 31, 2024 VALARIS Net income (loss) $ (39.2 ) $ 130.6 Add (subtract): Income tax expense (benefit) 193.5 (6.8 ) Gain on sale of property (27.1 ) (0.1 ) Interest expense, net 24.3 22.1 Other income (8.5 ) (26.6 ) Operating income $ 143.0 $ 119.2 Add (subtract): Depreciation 33.1 33.9 Loss on impairment 7.8 — Equity in earnings of ARO (2.6 ) (10.7 ) Adjusted EBITDA $ 181.3 $ 142.4 Expand A reconciliation of net income (loss) as reported to ARO Adjusted EBITDA is included in the tables below (in millions): Three Months Ended Mar 31, 2025 Dec 31, 2024 ARO Net income (loss) $ (1.0 ) $ 15.1 Add (subtract): Income tax benefit (0.9 ) (10.9 ) Other expense, net 15.2 13.7 Operating income $ 13.3 $ 17.9 Add: Depreciation expense 29.5 29.4 ARO Adjusted EBITDA $ 42.8 $ 47.3 Expand Reconciliation of Net Income to Adjusted EBITDA (In millions) Three Months Ended Mar 31, 2025 Dec 31, 2024 FLOATERS Net income $ 129.9 $ 102.4 Add (subtract): Other (income) expense 0.7 (1.7 ) Operating income $ 130.6 $ 100.7 Add: Depreciation 14.2 16.0 Loss on Impairment 7.8 — Adjusted EBITDA $ 152.6 $ 116.7 JACKUPS Net income $ 81.7 $ 64.0 Subtract: Gain on sale of property (23.0 ) — Other income (0.9 ) (0.8 ) Operating income $ 57.8 $ 63.2 Add: Depreciation 12.7 12.3 Adjusted EBITDA $ 70.5 $ 75.5 OTHER Net income $ 17.1 $ 13.2 Subtract: Other income — (1.0 ) Operating income $ 17.1 $ 12.2 Add: Depreciation 2.8 2.8 Adjusted EBITDA $ 19.9 $ 15.0 Expand Reconciliation of Net Income (Loss) to Adjusted EBITDA (In millions) Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 DRILLSHIPS Net income $ 132.2 $ 95.4 $ 117.3 $ 79.6 $ 49.4 Add (subtract): Other (income) expense 0.7 (1.7 ) (0.3 ) (1.5 ) (6.2 ) Operating income $ 132.9 $ 93.7 $ 117.0 $ 78.1 $ 43.2 Add (subtract): Depreciation 13.0 14.7 13.9 13.2 12.4 Other — — — (0.1 ) — Adjusted EBITDA (1) $ 145.9 $ 108.4 $ 130.9 $ 91.2 $ 55.6 SEMISUBMERSIBLES Net income (loss) $ (2.3 ) $ 7.0 $ 9.5 $ 34.5 $ 14.7 Subtract: Other income — — — (0.2 ) (0.1 ) Operating income (loss) $ (2.3 ) $ 7.0 $ 9.5 $ 34.3 $ 14.6 Add: Depreciation 1.2 1.3 0.9 0.9 0.8 Loss on impairment 7.8 — — — — Adjusted EBITDA (1) $ 6.7 $ 8.3 $ 10.4 $ 35.2 $ 15.4 Expand (1) Adjusted EBITDA for asset category excludes onshore support costs and general and administrative expense. Expand Reconciliation of Net Income to Adjusted EBITDA (In millions) Three Months Ended Mar 31, 2025 Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 HARSH ENVIRONMENT JACKUPS Net income $ 31.6 $ 43.5 $ 24.8 $ 31.0 $ 0.4 Add (subtract): Other (income) expense (0.1 ) (0.3 ) 0.2 (0.3 ) (0.3 ) Operating income $ 31.5 $ 43.2 $ 25.0 $ 30.7 $ 0.1 Add: Depreciation 7.1 6.8 6.4 5.6 5.3 Adjusted EBITDA (1) $ 38.6 $ 50.0 $ 31.4 $ 36.3 $ 5.4 BENIGN ENVIRONMENT JACKUPS Net income $ 47.3 $ 16.9 $ 17.6 $ 19.2 $ 6.4 Subtract: Gain on sale of property (23.0 ) — — — — Other income (0.8 ) (0.5 ) (0.2 ) (0.8 ) (0.6 ) Operating income $ 23.5 $ 16.4 $ 17.4 $ 18.4 $ 5.8 Add: Depreciation 3.1 3.1 2.6 2.9 2.8 Adjusted EBITDA (1) $ 26.6 $ 19.5 $ 20.0 $ 21.3 $ 8.6 LEGACY JACKUPS Net income $ 2.8 $ 3.6 $ 3.3 $ 2.6 $ 2.0 Add (subtract): Other (income) expense — — (0.1 ) — 0.1 Operating income $ 2.8 $ 3.6 $ 3.2 $ 2.6 $ 2.1 Add: Depreciation 2.5 2.4 2.4 2.4 2.3 Adjusted EBITDA (1) $ 5.3 $ 6.0 $ 5.6 $ 5.0 $ 4.4 Expand (1) Adjusted EBITDA for asset category excludes onshore support costs and general and administrative expense. Expand Reconciliation of Cash from Operating Activities to Adjusted Free Cash Flow (In millions) Three Months Ended Mar 31, 2025 Dec 31, 2024 Net cash provided by operating activities $ 155.9 $ 124.6 Additions to property and equipment (100.2 ) (111.7 ) Proceeds from disposition of assets 17.8 2.6 Adjusted Free Cash Flow $ 73.5 $ 15.5 Expand
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23-02-2025
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Deepwater Drilling's Delayed Rebound and the Future of Offshore Energy
A couple of years ago the offshore drilling-OSD, industry appeared to be on the cusp of a significant rebound. Shares of the big drilling contractors reached post-Covid highs as day rates for high spec, 7th Generation drill ships crested $450K. Positive cash flow began to accrue, and EPS forecasts rose, pushing share prices for these companies higher. It was as if the industry had turned a corner, and the prospect of a long-delayed offshore investment cycle was just ahead. The radius of the corner turned out to be a bit more obtuse than initially anticipated, and shares of the OSDs have cratered as the investment cycle has been deferred. I discussed the thesis behind the need to replace reserves that faced the big, International Oil Companies, or IOCs, that would propel this cycle in an OilPrice article in July of last year. It focused on Noble's (NYSE:NE) acquisition of Diamond Offshore, (old symbol DO), but laid out in detail a rationale for capex returning to deep water drilling. You might give that a read for a deeper treatment of this scenario. In this article, we are going to discuss the factors that have pushed the onslaught of anticipated capital outlay for deep water development to the right. According to most industry players, this move to the right could take us into 2026 or later, before we finally round the corner. Anton Dibowitz, CEO of Valaris Corp, (NYSE:VAL) commented bullishly in their Q-3, 2024 call on their view toward the industry's much-anticipated increase in activity- 'We maintain our conviction in the strength and duration of this upcycle, and we believe Valaris is well positioned to drive long-term value creation. While we have seen some customer demand deferred, the pipeline of future opportunities in 2026 and beyond remains robust.' It would probably help to understand that deepwater projects are done in stages. The subsea infrastructure that usually follows project sanctioning to support production is all long-lead-time hardware with sophisticated manufacturing specifications and attendant supply chain implications. There are only a few providers of this equipment and choke-points can result as the order books fill up. One of the big impediments to a big drilling ramp up is the lead time for new FPSO's-the principal method of offtake for subsea wells. A flurry of new orders has led to the shipyards that built them being backlogged for several years. FPSOs usually enter the field when enough of the wells are completed to start production efficiently. That being the case the drillships that are used to build the wells are timed to achieve cost optimization. This last point was discussed in Valaris Ltd's third-quarter call. Anton Dibowitz, CEO commented in response to an analyst's question- 'This year, we have seen a year-over-year decline in the pace of contracting and a meaningful amount of customer demand being deferred into 2026. The primary drivers of these deferrals are availability of production equipment, delayed FPSOs, protracted regulatory approvals and customers' capital discipline.' The case for a rebound in deep water activity commencing in the near future rests not only on the timing of developmental project start-ups but a return to exploration. The graph below from a forecast by Wood MacKenzie, a leading energy consulting firm highlights the companies and countries where capital is likely to be deployed in a search for new reserves of oil and gas in the coming years. Wood Mac noted in their report that some previously held geological concepts about the 'heat kitchens' for the conversion of oil precursor, kerogen to useful oil and gas, being lacking in far-offshore, deep waters had been revised following recent discoveries in Guyana and West Africa. We think as a final point in support of a rebound in drilling activity in deep water basins the lack of reserve replacement over the last decade by the surviving Super Major IOC's will show up in that time frame as well. Rystad noted in a blog post that in 2024 the total recoverable global reserves of 1.5 trillion barrels declined by 52 bn barrels from 2023. Drilling onshore and offshore has been challenged over the past decade. With shale activity technology improvements that have been discussed previously, the drilling rigs required to sustain production have been reduced by about 30% over the last several years. It is arguable if a substantial recovery in the sector is likely to happen in a foreseeable time frame. Offshore, and in particular, deep water projects were deferred for a number of reasons. Among the reasons, are the capital cost required to bring them online, and the fear of reserves being stranded in the event of a true energy transition that would render them unneeded. Rystad noted this in their blog post- 'Our estimates of total recoverable oil resources have fallen by 700 billion barrels since 2019 due to reduced exploration activities. Exploration has fallen as investors fear new discoveries will remain stranded due to the ongoing electrification of vehicles and the expected slump in both oil demand and crude prices.' What we are learning now is the energy transition was a narrative that was adopted as a fact, and is now beginning to completely unravel. Oil companies are recommitting to increased exploration to replace diminishing reserves that are now viewed as being absolutely critical to global energy security. But the question of timing still remains for the drillers. Your takeaway I think now we understand that choke points have caused part of the delay in the pickup in deep water drilling that was anticipated for 2024/5. Capital restraint in an uncertain investing environment also played a role and could continue into 2025. With the trends we are seeing now, and recent commentary in Noble Corporations, NYSE:NE) fourth-quarter report, that the rebound thesis for 2026 may be stretched further out and investors should probably take note of this when considering entry points into the OSDs for the eventual rebound. Robert Eifler, CEO of Noble commented in their Q-4 report on their medium-term outlook for the industry- 'Fundamental drivers for our business are durable in nature, and therefore this recent contracting lull that has pushed things out to the right by a year or two is very likely to be self-correcting before long. And just to state it, nothing has changed in our medium and long-term view about that demand for our services.' Hopefully the case we have made for a recovery in deep water drilling plays out sooner than later. In that scenario, we think the entry points that now present themselves will stand the test of time. In particular we like the present case for Noble Corp, the leading provider of 7th Generation Drillships to the industry. Day rates for these rigs are over $500K per day, contributing to positive cash flow that sustains an attractive 7.2% yielding quarterly dividend and an ongoing stock buyback program that will increase the intrinsic value of Noble shares. 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