Core Viewpoint - Valaris Limited and Jadestone Energy are advancing the Montara field offshore Australia, with the Valaris 247 jack-up rig set to commence drilling operations, which are crucial for Jadestone's capital program for 2025 [1][2]. Drilling Operation Details - The drilling operation will involve a side-track well at the Skua-11 formation, including the decommissioning of the existing SK-11 well, which will be plugged and abandoned [2]. - The side-track well will be drilled at a higher level to enhance the recovery of hydrocarbon reserves [2]. Expected Production - The Skua-11ST drilling program is projected to last 60 days, with an expected initial production rate of 3,500 barrels of oil per day [3]. - This operation is anticipated to extend the economic lifespan of the Montara field by one year [3]. Financial Impact - The drilling costs are estimated at approximately $62 million, with a payback period of 16 months, indicating a strong return on investment [4]. - The internal rate of return for this project is projected at 65%, reflecting robust financial returns [4]. Production Levels - Jadestone Energy expects that bringing the Skua-11 well back into production will increase its overall production levels to about 21,000 barrels of oil equivalent per day year-to-date, slightly exceeding expectations despite earlier downtime due to cyclones [5].

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2024 was $142 million, down from $150 million in Q3 2024 [14] - Total revenues decreased to $584 million from $643 million in the prior quarter [52] - Free cash flow generated was $13 million in Q4, following $111 million in Q3 [15] Business Line Data and Key Metrics Changes - Fleet-wide revenue efficiency was 96% in Q4 and 97% for the full year, marking an improvement over the previous year [10] - The jackup segment saw a contract backlog growth of over 75% in the past two years [29] - Average day rates for key markets remained firm, with a multiyear contract for Valaris Stavanger adding $75 million to contract backlog [32] Market Data and Key Metrics Changes - Global demand for hydrocarbons is increasing, with offshore production expected to play a significant role [16] - Deepwater project approvals are anticipated to double in 2026 and 2027 compared to 2024 and 2025 [18] - The contracting environment for high specification assets is strong, with over twenty floater opportunities tracked for 2026 and beyond [25] Company Strategy and Development Direction - The company is focused on securing long-term contracts for its active fleet and is willing to idle rigs until the right jobs are available [9] - Plans to retire three semisubmersibles to reduce costs and focus on high specification assets [20] - The strategy includes minimizing costs for idle rigs while seeking attractive long-term opportunities [101] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the contracting outlook for 2026 and beyond, citing strong customer demand and CapEx plans [84] - The company is managing its fleet prudently in response to market conditions, with plans to retire rigs that do not justify their costs [19] - Management emphasized the importance of offshore oil and gas production in meeting global energy needs [64] Other Important Information - The company ended Q4 2024 with cash and cash equivalents of $381 million, providing total liquidity of approximately $750 million [54] - Capital expenditures for Q4 were $112 million, below the guidance range [53] - The company repurchased $125 million of shares during 2024, following $200 million in 2023 [54] Q&A Session Summary Question: How much of the 2025 EBITDA guidance is booked versus expected new awards? - Management indicated that approximately 94% of the revenue guidance is contracted for the year, with the remaining 6% expected to be secured later [69] Question: What is the likelihood of reactivating cold stacked drillships? - Management stated that while they are patient in reactivating rigs, they see good long-term opportunities for high specification assets currently sidelined [75] Question: What is the outlook for demand pipeline going forward? - Management expressed confidence in the demand pipeline for 2026 and 2027 based on customer discussions and CapEx plans [85] Question: Insights on Aramco's rig contracting plans? - Management noted that there are no discussions about additional rig suspensions in Saudi Arabia and that discussions for extensions are constructive [90] Question: How are operating costs managed for idle rigs? - Management explained that costs for warm stacked rigs can be reduced significantly, with a ramp-down and ramp-up period of about three months [111]

Also Read: Tesla Stock Is Stuck In Reverse – Can Model Y Refresh Shift Gears? There's also a potential for more rig suspensions in Saudi Arabia, though some rigs leased to ARO continue to operate under short-term extensions while longer-term lease agreements are negotiated. J.P. Morgan analyst Arun Jayaram reiterated the Underweight rating on Valaris Limited VAL on Monday, lowering the price forecast from $40 to $38. The analyst suggests that while the company has made significant fleet rationalization effo ...

VAL's Zacks Rank and Key Picks VAL currently carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks from the energy sector are Archrock Inc. (AROC) , Nine Energy Service (NINE) and NextDecade Corporation (NEXT) . While Archrock currently sports a Zacks Rank #1 (Strong Buy), Nine Energy Service and NextDecade carry a Zacks Rank #2 (Buy) each. You can see the complete list of today's Zacks #1 Rank stocks here. Archrock is an energy infrastructure company based in the United States with a focus on mi ...

Core Viewpoint - Valaris Limited is streamlining its drilling fleet by permanently retiring three semi-submersible rigs and selling a jack-up rig for $24 million, aiming to optimize its operations and improve cash flow [1][4][5]. Group 1: Fleet Optimization - The company will retire three semi-submersible rigs: VALARIS DPS-5, VALARIS DPS-3, and VALARIS DPS-6, with the first being inactive since Q3 2024 and the latter two cold-stacked for several years [2]. - The retired rigs may be upcycled for alternative uses or scrapped entirely, reflecting the company's strategy to focus on high-specification vessels [2][4]. - By divesting idle assets, Valaris aims to cut costs associated with maintaining cold-stacked rigs and enhance its fleet's overall performance [4][5]. Group 2: Recent Transactions - Valaris announced the sale of the Valaris 75 jack-up rig for $24 million, which has been out of service for five years, to an undisclosed operator, with future operations limited to the U.S. Gulf of Mexico [3][1]. - The sale is part of the company's broader strategy to divest rigs that do not provide adequate returns, thereby benefiting cash flow and upgrading the rig fleet [4][5].

Company Overview - Valaris Limited owns 52 rigs, including 13 drillships and 34 jackup rigs, and has a 50% equity interest in ARO, which owns an additional nine rigs[18]. - As of December 31, 2024, Valaris had a global workforce of approximately 5,642 persons, with 4,130 excluding contractors, representing 74 nationalities across 22 locations[49]. - The company has a diverse drilling fleet, including 12 drillships capable of drilling in water depths of up to 12,000 feet, with several rigs currently under contract[185]. - The company owns a fleet of 52 rigs, including 13 drillships, 4 dynamically positioned semisubmersible rigs, 1 moored semisubmersible rig, and 34 jackup rigs as of February 20, 2025[211]. - The company has a 50% equity interest in ARO, a joint venture with Saudi Aramco, which owns an additional 9 rigs[211]. Financial Performance - The company’s five largest customers accounted for 49% of consolidated revenues in 2024, with BP plc alone contributing 17%[28]. - Revenues from non-U.S. operations represented 84% of total consolidated revenues in 2024, up from 78% in 2022[30]. - As of February 15, 2024, the company's contract backlog was approximately $3.9 billion, reflecting the remaining contractual terms multiplied by the applicable contractual day rate[79]. - The company has not paid or declared any dividends on its common shares due to limitations in its Indenture and Credit Agreement[199]. - The company has authorized a share repurchase program of up to $600 million for its outstanding common shares[202]. Market Conditions - Brent crude oil prices have been stable between $70 and $90 per barrel since late 2022, supporting investment in long-cycle offshore projects[21]. - Global demand for hydrocarbons continues to increase, with offshore production expected to play a crucial role in meeting energy needs[22]. - The five-year forward price of Brent crude oil remains above $65 per barrel, indicating profitability for nearly 90% of undeveloped offshore reserves[215]. - The outlook for the offshore drilling business remains positive despite a modest decline in demand since early 2024[22]. Operational Risks - Valaris' business is significantly affected by volatile oil and natural gas prices, impacting the level of offshore drilling activity[71]. - The company faces risks related to securing contracts on favorable terms, with potential declines in backlog revenue[67]. - A decline in oil and natural gas prices may lead customers to consider early termination of contracts, impacting future revenues[82]. - The company may face challenges in maintaining service and pricing levels due to customer consolidation and a shift towards renewable energy projects[87]. - The company may incur significant expenditures to maintain competitiveness in offshore drilling technology and compliance with regulations[96]. Sustainability and Compliance - The company is focused on sustainability, publishing an annual sustainability report aligned with TCFD and SASB standards[44]. - Increased scrutiny regarding sustainability practices may lead to additional costs or risks for the company[72]. - The company has adopted policies against corruption, bribery, and modern slavery, ensuring compliance and ethical operations[48]. - Compliance with environmental laws can be costly, and any violations could lead to significant liabilities, although no material adverse effects have been reported to date[141]. - The SEC has adopted a final rule for mandatory climate change reporting, which may increase monitoring and reporting costs[165]. Workforce and Training - Women comprised 32% of onshore employees and 1% of offshore employees as of December 31, 2024[49]. - In 2024, approximately 338 personnel attended the Building Organizational Leadership (BOLD) training program aimed at enhancing leadership skills among offshore supervisors[52]. - All employees were assigned "Workplace Harassment" training in 2024 to support a more inclusive workforce[53]. - The company emphasizes a safety-first approach, with policies designed to prevent harm during operations and effective safeguards in place[54]. Cybersecurity - The company has implemented a comprehensive cybersecurity program that includes administrative, technical, and physical safeguards to manage risks from cybersecurity threats[173]. - All employees are required to complete an annual cybersecurity training program, supplemented by additional training and simulations throughout the year[175]. - The company's cybersecurity risks are integrated into the enterprise risk management process, with a risk register reviewed quarterly by the Executive Management Committee and the board of directors[177]. - The Audit Committee oversees the IT and cybersecurity program, receiving quarterly reports on incidents, risks, and organizational readiness[178]. - No material cybersecurity incidents have been reported as of the date of the annual report, but future risks remain a concern[183]. Legal and Regulatory Matters - The company is involved in various litigation matters that could materially affect its financial position and operating results[149]. - The company may face increased climate-related litigation risks, which could adversely impact demand for its services in the oil and natural gas industry[150]. - The company is subject to increasing regulatory complexity that could adversely impact costs and reduce demand for offshore drilling services[138]. - The IRS may challenge the company's classification as a foreign corporation, which could result in significant adverse tax consequences[142]. - The OECD's Pillar Two initiative could increase the company's future tax obligations due to a proposed 15% global minimum tax[143].

www.valaris.com Press Release Valaris Reports Fourth Quarter 2024 Results Hamilton, Bermuda, February 19, 2025… Valaris Limited (NYSE: VAL) ("Valaris" or the "Company") today reported fourth quarter 2024 results. President and Chief Executive Officer Anton Dibowitz said, "We continued to deliver solid operating and financial performance, achieving fleetwide revenue efficiency of 96% in the fourth quarter and 97% for the full year. We also had outstanding safety performance in 2024 and are proud to have been ...

Core Insights - ExxonMobil Egypt has made a significant gas discovery in the western Mediterranean Sea, specifically through the Nefertari-1 well in the North Marakia Block [1][2] - The well was drilled at a water depth of 1,720 meters and reached a final depth of 2,700 meters, indicating a relatively shallow depth that facilitates rapid production [2] - The discovery is expected to enhance Egypt's energy sector and attract further investments in the region [5] Exploration and Technology - The exploration was conducted in partnership with QatarEnergy, utilizing advanced seismic data processing and modern drilling technologies [3] - The Valaris DS-9 drillship, capable of operating in water depths up to 12,000 feet, was instrumental in the discovery and has also been used for recent oil discoveries in Angola [3] Egypt's Energy Strategy - Egypt is actively expanding its hydrocarbon exploration activities, with plans to sign 15 new exploration agreements by the end of 2025 and commitments to drill at least 46 wells [4] - ExxonMobil has secured a six-month extension for the Valaris DS-9 drillship starting January 2025, indicating a long-term commitment to Mediterranean exploration [4]

Industry Overview - The Zacks Oil and Gas - Drilling industry includes companies that provide rigs and services for oil and gas exploration and development, with operations both onshore and offshore [2] - Drilling for hydrocarbons is capital-intensive and technically challenging, with future performance largely dependent on contracting activity rather than oil or gas prices [2] - Offshore drilling companies exhibit higher volatility compared to onshore firms, with their share prices more closely correlated to oil prices [2] Current Challenges - The U.S. rig count has decreased by approximately 18% over the past year, reversing post-pandemic recovery gains and raising concerns about future contracts and operational performance [3][4] - Excess capacity and intense pricing competition are squeezing profit margins, limiting revenue growth and challenging companies' profitability [4] - The industry's earnings estimates for 2025 have declined by 57.1% over the past year, indicating a negative outlook for earnings growth [9] Global Opportunities - International demand for drilling services is experiencing a significant increase, with the highest levels of activity in over a decade, driven by rising tendering and rig awards [5] - This growth in international operations is expected to enhance revenues and contribute to long-term sector stability [5] Regional Dynamics - Saudi Arabia's decision to freeze its Maximum Sustainable Capacity at 12 million barrels per day and halt expansion plans has raised concerns about future revenue opportunities from Middle Eastern projects [6] Industry Performance - The Zacks Oil and Gas - Drilling industry has underperformed compared to the broader Zacks Oil - Energy sector and the S&P 500, with a decline of 29% over the past year [11] - The industry's current Zacks Industry Rank is 225, placing it in the bottom 9% of 248 Zacks industries, indicating challenging near-term prospects [7][8] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 7.52X, significantly lower than the S&P 500's 18.36X but above the sector's 3.47X [14] - Over the past five years, the industry's EV/EBITDA has ranged from a low of 7.16X to a high of 24.81X, with a median of 14.66X [14] Notable Companies - **Valaris Limited**: Holds a diverse fleet of rigs and has a market capitalization of $3.2 billion, with a projected earnings growth of 16.7% for 2025 [17] - **Transocean**: Known for its modern fleet and focus on ultra-deepwater drilling, with a market capitalization of $3.3 billion [20] - **Patterson-UTI Energy**: Benefits from advanced rig technology and strategic acquisitions, with a market capitalization of $3.2 billion [23]

Valaris Limited (NYSE: VAL ) is the largest offshore drilling company . Valaris originated from the former Ensco, which merged with Rowan Companies in 2019 and changed its name to Valaris. The company was heavily Oriol Madaula is an experienced actuary with a strong interest in value investing and a practical approach to the financial world. He holds a Master's degree in Actuarial and Financial Sciences from the University of Barcelona. With a background in the insurance and financial sectors, he has also v ...