Company Overview - Valaris has the largest offshore drilling fleet, comprising 15 high-spec floaters and 34 jackups[4] - The company boasts a revenue efficiency of 96%+ for four consecutive years[4] - As of April 30, 2025, Valaris' contract backlog stands at $4.2 billion[4] - FY 2025 EBITDA guidance is projected to be between $500 million and $560 million[4] Fleet and Market Positioning - Approximately 70% of benign environment floater demand through 2029 is expected to come from the Golden Triangle[5] - Valaris has ~$2.2 billion of floater backlog with ultra-deepwater customers in key basins[7] - The company's jackup fleet is primarily positioned in the North Sea, Middle East, and attractive niche markets[12] - Valaris has ~$1.9 billion of jackup backlog with leading IOCs, NOCs, and independent operators[14] Operational Excellence and Safety - Valaris significantly outperformed the offshore peer group average on key safety metrics in 2024[17] - The company has maintained a revenue efficiency of at least 96% for each of the past four years[19] Market Outlook and Strategy - Deepwater production is expected to grow by ~23% from 2024 to 2030[23] - Subsea tree installations are expected to be more than 40% higher in 2026-2027 compared to 2024-2025[29] - Benign environment floater demand in 2026-2027 is expected to be ~14% higher on average compared to 2024-2025[31] Financial Strategy - The company has returned $325 million to shareholders since the start of the share repurchase program in 2023[43]

Financial Performance - Total operating revenues for Q1 2025 were $620.7 million, a 18.2% increase from $525.0 million in Q1 2024[16] - Operating income for Q1 2025 was $143.0 million, compared to $29.3 million in Q1 2024, representing a significant improvement[16] - Net loss attributable to Valaris for Q1 2025 was $37.9 million, compared to a net income of $25.5 million in Q1 2024[16] - Basic and diluted earnings per share for Q1 2025 were both $(0.53), down from $0.35 in Q1 2024[16] - Net cash provided by operating activities for Q1 2025 was $155.9 million, a significant increase from $26.3 million in Q1 2024[21] - The company reported capital expenditures of $100.2 million for the three months ended March 31, 2025, compared to $151.3 million in the same period of 2024, reflecting a decrease of 33.8%[85][86] - The net gain on the sale of property for the three months ended March 31, 2025, was $27.1 million, compared to a loss of $0.1 million in the same period of 2024[91] Assets and Liabilities - Cash and cash equivalents increased to $441.4 million as of March 31, 2025, up from $368.2 million at the end of 2024[19] - Total assets decreased slightly to $4,386.8 million as of March 31, 2025, from $4,419.8 million at the end of 2024[19] - Total liabilities remained stable at $2,175.3 million as of March 31, 2025, compared to $2,175.5 million at the end of 2024[19] - Current contract assets increased to $1.5 million as of March 31, 2025, up from $1.3 million on December 31, 2024[35] - Noncurrent contract assets rose to $5.6 million as of March 31, 2025, compared to $5.5 million at the end of 2024[35] - Current contract liabilities (deferred revenue) decreased to $78.0 million from $87.2 million[35] - Noncurrent contract liabilities (deferred revenue) declined to $61.2 million from $71.4 million[35] Tax and Deferred Income - The company reported a deferred income tax expense of $169.8 million for Q1 2025, compared to $2.0 million in Q1 2024[21] - The consolidated effective tax rate for the three months ended March 31, 2025, was 15.1%, excluding the impact of discrete tax items[70] - During the three months ended March 31, 2025, the company recognized $168.8 million of deferred tax expense due to a valuation allowance on deferred tax assets[69] - The company recorded a tax benefit of approximately $65.0 million in 2024 related to the reversal of uncertain tax position liabilities from Luxembourg tax assessments[72] Operational Highlights - The geographic distribution of drilling rigs as of March 31, 2025, included 18 floaters and 27 jackups, totaling 52 for Valaris, with an additional 9 rigs for ARO[87] - The company owns 49 rigs, including 34 jackup rigs and 13 drillships, and has a 50% equity interest in ARO, which owns an additional nine rigs[95] - Total backlog as of April 30, 2025, was $4,237.6 million, up from $3,608.5 million on February 18, 2025, with floaters contributing $2,170.9 million[102] - The global marketed jackup fleet utilization was 90% as of March 31, 2025, down from 94% in early 2024, leading to downward pressure on day rates[106] - ARO's backlog increased by approximately $1.2 billion due to five-year contract extensions for several rigs[102] Market Conditions - Inflationary pressures have increased personnel costs and prices of goods and services, with expectations of continued cost rises in the near term[99] - Brent crude oil prices have declined into the $60-$70 range per barrel, impacting demand and pricing for offshore drilling services[96] - The company anticipates contract commencements for its floater fleet in mid-2026 and beyond, despite current market uncertainties[103] Shareholder Returns and Financing - The company issued $700.0 million of Second Lien Notes in April 2023, with an additional $400.0 million issued in August 2023, maturing on April 30, 2030[59] - As of March 31, 2025, the company had approximately $275.0 million available for share repurchases under the authorized program of up to $600.0 million[66][67] - The board of directors has authorized a share repurchase program of up to $600.0 million, with approximately $275.0 million available for repurchases as of March 31, 2025[175] Legal and Compliance - The company accrued $25.0 million in 2024 related to patent litigation efforts, which is included in accrued liabilities as of March 31, 2025[79] - The arbitration hearings regarding the patent litigation concluded in March 2025, with a decision expected in the second quarter of 2025[78] - The company has filed certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002[31.1][31.2] - The report includes certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer and Chief Financial Officer[32.1][32.2]

Financial Data and Key Metrics Changes - Total revenues for Q1 2025 were $621 million, up from $584 million in the prior quarter, reflecting a strong operational performance [32] - Adjusted EBITDA increased to $181 million in Q1 2025 from $142 million in the previous quarter, primarily due to more operating days and higher average daily revenue for the floater fleet [32][33] - Adjusted free cash flow for the quarter was $74 million, with cash and cash equivalents at $454 million, providing total liquidity of approximately $830 million [34] Business Line Data and Key Metrics Changes - The company added over $1 billion in new contract backlog since the last conference call, including significant contracts for drillships offshore West Africa and shallow water markets [6][10] - The total backlog increased to more than $4.2 billion, a nearly 20% increase from the previous backlog of $3.6 billion [19] - Fleet-wide revenue efficiency was reported at 96% during Q1 2025, indicating strong operational performance [7] Market Data and Key Metrics Changes - The global jackup fleet utilization stood at 90% at the end of Q1 2025, down from 94% in early 2024, indicating some downward pressure on day rates in certain regions [26] - Offshore Africa remains the most active area for future floater opportunities, with approximately 10 long-term programs expected to start in 2026 or 2027 [22] - The company is tracking around 25 floater opportunities, primarily related to drillships, with expected start dates in 2026 and 2027 [21][51] Company Strategy and Development Direction - The company is focused on delivering outstanding operational performance, executing its commercial strategy, and prudently managing its fleet and costs [14][18] - There is an emphasis on securing long-term contracts for high specification assets, particularly seventh-generation drillships, which are expected to be favored by customers for complex drilling solutions [14][15] - The company plans to continue managing costs for rigs expected to experience idle time and is willing to retire rigs when their economic benefit no longer justifies their costs [16][17] Management's Comments on Operating Environment and Future Outlook - Management noted that while macroeconomic uncertainty has increased, offshore production is expected to remain a vital component of meeting global energy needs [12][18] - The company anticipates that most projects being evaluated by customers for near to medium-term commencement are expected to be economic well below current commodity prices [13] - Management remains optimistic about securing additional contracts due to the high quality of its fleet and operational performance [14][18] Other Important Information - The company received the 2024 Best Safety Performance Award for jackup rigs, highlighting its commitment to safe operations [7] - The company reported a net loss of $39 million in Q1 2025, adjusted for discrete expenses, net income was $128 million [34] Q&A Session Summary Question: Regarding the 25 floater opportunities tracked for 2026 and 2027, what percentage require seventh-generation drillships? - Management indicated that the overwhelming majority of the 25 opportunities are drillship-related, with customers likely preferring seventh-generation assets due to their efficiency and capabilities [51] Question: Are customers showing interest in performance bonus structures in contracts? - Management confirmed that performance incentives are part of current contracts and are generally targeted at drilling wells ahead of the customer's AFE or reducing the number of days [52] Question: Can you comment on the pricing levels for the five-year extensions on jackups in Saudi Arabia? - Management stated that while specific day rates cannot be disclosed, the rates for the extensions are above historic levels and are considered solid contracts [73] Question: Is there a Brent price level at which offshore FIDs could start to get pushed back? - Management noted that they have not seen any programs getting pushed back based on current Brent prices, as the economics for offshore projects remain compelling [78]

分组1 - Valaris Limited reported a quarterly loss of $0.53 per share, significantly missing the Zacks Consensus Estimate of $1.10, and compared to earnings of $0.35 per share a year ago, representing an earnings surprise of -148.18% [1] - The company posted revenues of $620.7 million for the quarter ended March 2025, exceeding the Zacks Consensus Estimate by 8.03%, and up from $525 million in the same quarter last year [2] - Valaris shares have declined approximately 24.4% since the beginning of the year, while the S&P 500 has decreased by -5.5% [3] 分组2 - The current consensus EPS estimate for the upcoming quarter is $1.15 on revenues of $576.44 million, and for the current fiscal year, it is $3.66 on revenues of $2.2 billion [7] - The Oil and Gas - Drilling industry, to which Valaris belongs, is currently ranked in the bottom 20% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

www.valaris.com Press Release Valaris Reports First Quarter 2025 Results • 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 t ...

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].

Core Viewpoint - J.P. Morgan analyst Arun Jayaram has reiterated an Underweight rating on Valaris Limited, lowering the price forecast from $40 to $38, indicating concerns about the company's ability to meet its EBITDA guidance for 2025 despite fleet rationalization efforts [1] Financial Projections - The analyst has revised the 2025 EBITDA estimate down to $522 million from $539 million and the 2026 estimate to $656 million from $698 million, which are 0.8% and 2.8% below Wall Street's expectations respectively [4] - Free cash flow is now projected at $28 million for 2025 and $132 million for 2026, with capital expenditures estimated at $369 million for 2025 and $277 million for 2026 [4] Operational Challenges - There are concerns regarding a potential slowdown in demand in the ultra-deepwater market, utilization gaps from expiring contracts, and reduced opportunities for certain rigs [2] - An incident causing two weeks of downtime on the DS-17 drillship in Q1 2025 may impact operations, although reduced downtime could lead to a slight EBITDA beat compared to forecasts [2][3] Market Dynamics - The potential for more rig suspensions in Saudi Arabia exists, although some rigs leased to ARO are still operating under short-term extensions while longer-term agreements are being negotiated [3] - Investors may shift focus towards companies with a higher concentration of committed floater backlog due to ongoing challenges in the market [5]

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].

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]