Include significant upfront payments from customers VALARIS Significant earnings potential and cash flow from Valaris fleet | --- | --- | --- | --- | --- | --- | |-------|----------------------|-------------------------------------------|----------|----------|----------| | | with Future Contract | Illustrative Scenario | A | B | C | | 13 | 10 | Drillship Day Rates | $400K | $450K | $500K | | 5 | 3 | Benign Semisubmersible Day Rates | $300K | $350K | $400K | | 12 | 9 | HD Harsh Environment Jackup Day Rates 2 ...

PART I FINANCIAL INFORMATION [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20FINANCIAL%20STATEMENTS) Valaris reported Q1 2024 operating revenues of $525.0 million and net income of $25.5 million, with total assets of $4.35 billion and liabilities of $2.32 billion Condensed Consolidated Statements of Operations (Q1 2024 vs Q1 2023) | Metric | Three Months Ended March 31, 2024 ($M) | Three Months Ended March 31, 2023 ($M) | | :--- | :--- | :--- | | **Operating Revenues** | 525.0 | 430.1 | | **Operating Income** | 29.3 | 8.5 | | **Net Income** | 25.5 | 48.6 | | **Net Income Attributable to Valaris** | 25.5 | 46.7 | | **Diluted EPS** | $0.35 | $0.61 | Condensed Consolidated Balance Sheets | Metric | March 31, 2024 ($M) | December 31, 2023 ($M) | | :--- | :--- | :--- | | Cash and cash equivalents | 494.1 | 620.5 | | Total Assets | 4,354.4 | 4,322.2 | | Long-Term Debt | 1,080.1 | 1,079.3 | | Total Liabilities | 2,324.1 | 2,325.2 | | Total Valaris shareholders' equity | 2,020.9 | 1,987.6 | Condensed Consolidated Statements of Cash Flows | Metric | Three Months Ended March 31, 2024 ($M) | Three Months Ended March 31, 2023 ($M) | | :--- | :--- | :--- | | Net cash provided by operating activities | 26.3 | 151.7 | | Net cash used in investing activities | (151.3) | (56.2) | | Net cash used in financing activities | (1.6) | — | | **Decrease in Cash & Restricted Cash** | **(126.6)** | **95.5** | [Note 2 - Revenue from Contracts with Customers](index=13&type=section&id=Note%202%20-%20Revenue%20from%20Contracts%20with%20Customers) Revenue is recognized over time for drilling services, with contract liabilities of $158.5 million and deferred costs of $85.3 million as of March 31, 2024 Contract Assets and Liabilities (as of March 31, 2024) | Item | Amount ($ millions) | | :--- | :--- | | Current contract assets | 2.3 | | Noncurrent contract assets | 5.8 | | Current contract liabilities (deferred revenue) | 122.3 | | Noncurrent contract liabilities (deferred revenue) | 36.2 | [Note 3 - Equity Method Investment in ARO](index=15&type=section&id=Note%203%20-%20Equity%20Method%20Investment%20in%20ARO) Valaris holds a 50% interest in ARO, recognizing $2.4 million in equity earnings for Q1 2024, and holds $289.3 million in notes receivable ARO Summarized Financial Information (Q1 2024 vs Q1 2023) | Metric | Three Months Ended March 31, 2024 ($M) | Three Months Ended March 31, 2023 ($M) | | :--- | :--- | :--- | | Revenues | 138.3 | 123.6 | | Operating income | 15.2 | 13.1 | | Net income (loss) | (1.6) | 0.8 | - Valaris's share of ARO's Q1 2024 net loss was **$0.8 million**, but after a **$3.2 million** positive adjustment for amortization of basis differences, the company recognized **$2.4 million** in earnings from ARO[51](index=51&type=chunk) - The carrying value of Notes Receivable from ARO was **$289.3 million** as of March 31, 2024, against a principal amount of **$402.7 million**. Valaris recognized **$14.0 million** in total interest income from these notes in Q1 2024[56](index=56&type=chunk)[58](index=58&type=chunk) [Note 8 - Debt](index=20&type=section&id=Note%208%20-%20Debt) Long-term debt primarily consists of $1.1 billion in 8.375% Senior Secured Second Lien Notes due 2030, with an undrawn $375.0 million revolving credit facility - The company has **$1.1 billion** in Second Lien Notes due 2030 and an undrawn **$375.0 million** revolving credit facility[66](index=66&type=chunk)[69](index=69&type=chunk) [Note 9 - Shareholders' Equity](index=21&type=section&id=Note%209%20-%20Shareholders'%20Equity) The board authorized a $600.0 million share repurchase program, with $400.0 million remaining available as of March 31, 2024, and no Q1 2024 repurchases - The share repurchase program was increased to **$600.0 million** in February 2024, with **$400.0 million** available for repurchases as of March 31, 2024. No repurchases were made in Q1 2024[74](index=74&type=chunk) [Note 10 - Income Taxes](index=22&type=section&id=Note%2010%20-%20Income%20Taxes) A favorable Luxembourg tax decision in April 2024 will result in a $63.0 million tax benefit reversal in Q2 2024 - In April 2024, Valaris received a favorable decision from Luxembourg tax authorities, which will lead to the reversal of a previously recorded liability and recognition of a tax benefit of approximately **$63.0 million** in Q2 2024[77](index=77&type=chunk) [Note 11 - Contingencies](index=23&type=section&id=Note%2011%20-%20Contingencies) Valaris has a potential $1.25 billion funding obligation to ARO for its newbuild program and faces ongoing patent litigation and Brazilian administrative proceedings - Valaris may be required to make capital contributions to ARO, up to a maximum of **$1.25 billion**, to fund ARO's 20-rig newbuild program if other financing is unavailable[80](index=80&type=chunk) [Note 12 - Segment Information](index=24&type=section&id=Note%2012%20-%20Segment%20Information) Floaters segment led Q1 2024 profitability with $57.8 million operating income on $324.4 million revenue, followed by Jackups and ARO Segment Performance - Three Months Ended March 31, 2024 | Segment | Revenues ($M) | Operating Income ($M) | | :--- | :--- | :--- | | Floaters | 324.4 | 57.8 | | Jackups | 152.3 | 8.0 | | ARO | 138.3 | 15.2 | | Other | 48.3 | 24.8 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management projects a positive offshore drilling market, with a $4.0 billion contract backlog and strong liquidity, planning $420-460 million in 2024 capital expenditures - The offshore drilling market outlook is positive, with increasing global utilization and day rates for rigs. Floater utilization for 6th and 7th generation drillships is at **90%**[101](index=101&type=chunk)[108](index=108&type=chunk) Contract Backlog Summary | Segment | April 30, 2024 ($M) | February 15, 2024 ($M) | | :--- | :--- | :--- | | Floaters | 2,404.6 | 2,531.7 | | Jackups | 1,184.9 | 1,167.4 | | Other | 427.7 | 222.3 | | **Total Valaris** | **4,017.2** | **3,921.4** | | ARO (100%) | 1,982.2 | 2,138.1 | - The company expects capital expenditures for 2024 to be between **$420.0 million** and **$460.0 million**, primarily for maintenance, upgrades, and rig reactivations[162](index=162&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q1 2024 revenues increased 9% sequentially to $525.0 million and 22% year-over-year, driven by the Floaters segment, despite a sequential operating income decrease Q1 2024 vs Q4 2023 Performance | Metric | Q1 2024 ($M) | Q4 2023 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | 525.0 | 483.8 | 9% | | Operating Income | 29.3 | 38.3 | (23)% | | Net Income | 25.5 | 828.5 | (97)% | Q1 2024 vs Q1 2023 Performance | Metric | Q1 2024 ($M) | Q1 2023 ($M) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | 525.0 | 430.1 | 22% | | Operating Income | 29.3 | 8.5 | 245% | | Net Income | 25.5 | 48.6 | (48)% | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with $494.1 million cash and an undrawn $375.0 million credit facility, with no debt principal due until 2030 - As of March 31, 2024, cash and cash equivalents were **$494.1 million**, with an additional **$375.0 million** available under the undrawn Credit Agreement[154](index=154&type=chunk) - Net cash provided by operating activities was **$26.3 million** in Q1 2024, while capital expenditures totaled **$151.3 million**[157](index=157&type=chunk) - The Notes Receivable from ARO, totaling **$402.7 million** in principal, are scheduled to mature in 2027 and 2028[165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section refers to Item 2 for disclosures on interest rate and foreign currency market risks - The report directs readers to the Market Risk section within Item 2 (MD&A) for disclosures on interest rate and foreign currency risk[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were effective as of March 31, 2024, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of the end of the quarter[185](index=185&type=chunk) - No material changes to internal control over financial reporting occurred during the first quarter of 2024[186](index=186&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) Valaris faces pending environmental assessments in Brazil with a $0.4 million liability, while other legal matters are not expected to be material - Valaris is contesting notices of assessment for environmental matters in Brazil and has recorded a **$0.4 million** liability related to these matters as of March 31, 2024[189](index=189&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20RISK%20FACTORS) No material changes to risk factors were reported from the prior Annual Report on Form 10-K, to which readers are referred for comprehensive details - The report refers readers to the risk factors section of the Annual Report on Form 10-K for the year ended December 31, 2023, for a full description of significant risks[191](index=191&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Approximately $400.0 million remains available under the $600.0 million share repurchase program, with no repurchases made in Q1 2024 - Approximately **$400.0 million** remained available for share repurchases under the company's **$600.0 million** program as of March 31, 2024. No repurchases were made in Q1 2024[192](index=192&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20OTHER%20INFORMATION) No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the first quarter of 2024 - No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during Q1 2024[193](index=193&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20EXHIBITS) Filed exhibits include management certifications, a new PSU award agreement form, and Inline XBRL documents - Filed exhibits include management certifications (302 and 906), a new PSU award agreement form, and Inline XBRL documents[197](index=197&type=chunk)

www.valaris.com Press Release Valaris Reports First Quarter 2024 Results Hamilton, Bermuda, May 1, 2024… Valaris Limited (NYSE: VAL) ("Valaris" or the "Company") today reported first quarter 2024 results. President and Chief Executive Officer Anton Dibowitz said, "I am very pleased with our start to 2024 as we delivered strong safety and operational performance during the first quarter as evidenced by fleetwide revenue efficiency of 97%. Our financial results also benefited from more operating days for our ...

Financial Data and Key Metrics Changes - Revenue for the fourth quarter was $484 million, an increase from $455 million in the prior quarter, while adjusted EBITDA rose to $58 million from $40 million [139] - Adjusted EBITDAR, which adds back reactivation expenses, was $96 million, up from $91 million in the previous quarter [139] - The company maintained its full-year adjusted EBITDA guidance of $500 million to $600 million for 2024, which is approximately four times higher than 2023 EBITDA [140] Business Line Data and Key Metrics Changes - The company secured approximately $1.5 billion in new contract backlog since the beginning of the fourth quarter, increasing total backlog to over $3.9 billion, a nearly 60% increase year-over-year [33] - The contracted jackup count is at its highest level in almost nine years, with active utilization for jackups approaching 95% [35][137] - The company expects revenues from floaters to increase due to contract startups for VALARIS DS-8 and DS-12, while jackup revenues are anticipated to decrease due to idle time for several rigs [63] Market Data and Key Metrics Changes - The floater market is showing positive development, with a contracted benign environment floater count reaching 123, the highest since late 2016, and utilization for active sixth and seventh generation drillships at 93% [56] - The global jackup market is extremely tight, with active utilization nearing 95% and the total rig count at its highest level in nearly nine years [137] - Offshore upstream CapEx is expected to increase by 10% in 2024, with a compound annual growth rate of 6% over the next three years [29] Company Strategy and Development Direction - The company remains confident in the strength and duration of the current upcycle, focusing on maximizing fleet profitability by keeping active rigs highly utilized and securing the best contract economics [30][100] - The company is committed to returning capital to shareholders, having repurchased $200 million of shares in 2023 and increasing the share repurchase authorization from $300 million to $600 million [101][73] - The company is pursuing opportunities for long-term contracts while remaining opportunistic with its assets, particularly in light of increasing demand and constrained supply [19][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market, noting that commodity prices support continued investment in long-cycle offshore projects, with a five-year Brent forward price around $70 per barrel [51] - The company anticipates significant earnings and cash flow growth over the next few years as rigs are repriced to market day rates and reactivated rigs return to work [54][144] - Management acknowledged potential gaps in schedules across the industry during 2024 due to lengthening contract lead times and the need for rig repositioning [52] Other Important Information - The company generated cash flow from operations of $97 million in the fourth quarter, with capital expenditures totaling $463 million, primarily related to the purchase of newbuild drillships VALARIS DS-13 and DS-14 [92] - The company expects maintenance and upgrade CapEx to be approximately $290 million, with about $55 million being reimbursable [67] Q&A Session Summary Question: What is the outlook for Saudi's jackup rig count? - Management believes that the recent announcement from Saudi Arabia will have minimal impact on their business, as the Kingdom remains committed to its ARO joint venture and the newbuild program [80][81] Question: How does the company view the trend in day rates? - Management indicated that leading-edge day rates are expected to continue moving higher over time, supported by tightening market fundamentals [143] Question: What is the company's strategy regarding shareholder returns? - The company intends to return all future free cash flow to shareholders unless there is a better or more value-accretive use for it, with a focus on opportunistic share repurchases [141][126]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 1-8097 Valaris Limited (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organizati ...

Financial Performance - Net income for Q4 2023 increased to $829 million from $17 million in Q3 2023, including a tax benefit of $790 million[6] - Adjusted EBITDA rose to $58 million from $40 million in Q3 2023, driven by more operating days and lower reactivation expenses[6] - Revenues for Q4 2023 increased to $484 million from $455 million in Q3 2023, with operating days contributing to the growth[7] - Net income for Q4 2023 was $828.5 million, compared to a net income of $17.0 million in Q3 2023, reflecting a significant increase[24] - Net income for the year ended December 31, 2023, increased to $866.8 million, up from $181.8 million in 2022, representing a growth of 376%[28] - Net cash provided by operating activities for the year was $267.5 million, compared to $127.0 million in 2022, reflecting a 110% increase[28] - Operating income for the same period was $19.9 million, significantly higher than $8.1 million in the prior quarter[72] - EBITDA for Q4 2023 was reported at $39.4 million, up from $23.9 million in Q3 2023[72] Revenue and Contract Backlog - Revenue efficiency was reported at 93% for the quarter and 96% for the year[6] - The company secured new contracts and extensions, resulting in a contract backlog exceeding $1.4 billion during Q4 2023[4] - Total contract backlog increased to over $3.9 billion as of February 15, 2024, representing a nearly 60% increase year-over-year[6] - The contract backlog reached $3,921.4 million as of February 15, 2024, up from $3,158.1 million on November 1, 2023, indicating a 24.1% increase[45] - Total contract backlog as of February 15, 2024, was $2,138.1 million, a decrease from $2,290.7 million in the previous quarter[74] Cash Flow and Expenditures - Capital expenditures surged to $463 million from $106 million in Q3 2023, primarily due to newbuild drillships delivery[11] - Cash and cash equivalents decreased to $620.5 million as of December 31, 2023, from $1,041.1 million as of September 30, 2023[26] - Net cash used in investing activities for the year was $(665.8) million, compared to $(16.7) million in 2022, indicating a substantial increase in cash outflow[28] - The company reported a net cash provided by financing activities of $285.5 million for the year, compared to $(6.4) million in 2022, showing a significant turnaround[28] Shareholder Returns - Share repurchases totaled $50 million in Q4 2023 and $200 million for the year, with an increase in the share repurchase program authorized to $600 million[6] - Payments for share repurchases in the three months ended December 31, 2023, totaled $51.2 million, compared to $83.0 million in the previous quarter, a decrease of 38%[30] Operational Efficiency - The company anticipates continued growth in offshore drilling activity and is focused on enhancing operational efficiency and sustainability initiatives[21] - The total revenue for the company was $93.2 million in Q4 2023, compared to $72.4 million in Q3 2023, reflecting a 28.5% increase[36] - General and administrative expenses were $24.3 million in Q4 2023, slightly up from $24.2 million in Q3 2023[39] - Reactivation costs amounted to $38.5 million in Q4 2023, down from $50.9 million in Q3 2023, showing a decrease of 24.7%[41] Fleet Performance - Total fleet utilization improved to 60% in Q4 2023, compared to 57% in Q3 2023, marking a 5.3% increase[51] - Active fleet utilization reached 79% in Q4 2023, up from 75% in Q3 2023, indicating a 5.3% improvement[53] - Average daily revenue for drillships increased to $307,000 in Q4 2023, up from $288,000 in Q3 2023, representing a 6.6% increase[48] - Average daily revenue for owned rigs increased to $100,000 in Q4 2023, up from $91,000 in Q3 2023[75] - The average daily revenue for jackups was $111,000 in Q4 2023, a slight decrease from $116,000 in Q3 2023[48] Segment Performance - ARO Drilling's revenues increased to $134 million from $122 million in Q3 2023, attributed to the newbuild jackup Kingdom 1 commencing its maiden contract[16] - Adjusted EBITDA for Valaris in Q4 2023 was $57.5 million, up from $40.0 million in Q3 2023, reflecting a growth of 43.75%[86] - JACKUPS segment net income rose to $46.1 million in Q4 2023 from $34.4 million in Q3 2023[88] - Adjusted EBITDA for the FLOATERS segment was $37.2 million in Q4 2023, an increase from $28.2 million in Q3 2023[88] - Adjusted EBITDA for HD & SD Modern Jackups rose to $30.1 million in Q4 2023, compared to $13.0 million in Q4 2022, marking an increase of 131.5% year-over-year[94]

Valaris Limited (NYSE:VAL) Q3 2023 Earnings Conference Call November 7, 2023 10:00 AM ET Company Participants Darin Gibbins - Vice President, Investor Relations & Treasurer Anton Dibowitz - President & Chief Executive Officer Matt Lyne - Senior Vice President, CCO Chris Weber - Senior Vice President & Chief Financial Officer Conference Call Participants Eddie Kim - Barclays Kurt Hallead - Benchmark David Smith - Pickering Energy Partners Operator Good day, and welcome to the Valaris Third Quarter 2023 Resul ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: +44 (0) 20 7659 4660 Securities registered pursuant to Section 12(b) of the Act: ...

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 2023 was $15 million, down from $28 million in the prior quarter, while adjusted EBITDA adding back one-time reactivation costs was $59 million, up from $55 million in the prior quarter [25] - Revenues decreased to $390 million from $408 million, primarily due to fewer operating days for the jackup fleet and lower mobilization and demobilization revenues [25][26] - Contract drilling expense decreased to $348 million from $356 million, primarily due to lower costs for idle rigs and lower repair and maintenance costs [27] Business Line Data and Key Metrics Changes - Jackup revenues decreased due to fewer operating days and lower mobilization revenues, particularly for Valaris 249, which completed its contract [26] - Floater revenues increased due to more operating days and a higher average day rate, primarily related to Valaris DS-12 [26] - Reactivation expense increased to $44 million from $26 million, driven by the commencement of a reactivation project for Valaris DS-8 [27] Market Data and Key Metrics Changes - Spot Brent crude prices moved above $80 per barrel, with five-year forward prices remaining above $65 per barrel, supporting offshore project investments [6][7] - Active utilization for sixth and seventh generation drillships has exceeded 90% for over 12 months, indicating strong demand [7] - The number of contracted jackups recently surpassed 400 for the first time since mid-2015, with active utilization above 90% [11] Company Strategy and Development Direction - The company intends to exercise purchase options for newbuild drillships VALARIS DS-13 and DS-14, viewing them as compelling investment opportunities [18][22] - The fleet strategy focuses on maintaining a critical mass of rigs in priority basins to benefit from economies of scale [16] - The company aims to return all future free cash flow to shareholders unless better investment opportunities arise [21][44] Management's Comments on Operating Environment and Future Outlook - The outlook for the offshore drilling market remains positive, with increasing demand and constrained supply tightening the market [22] - Management noted that the ultra-deepwater market is experiencing a strong upcycle, with increased contract durations and day rates [11][22] - The harsh environment jackup market in the North Sea is expected to remain challenging through 2024 [12][15] Other Important Information - The company announced an increase in its share repurchase authorization to $300 million, with a target of repurchasing $200 million by year-end 2023 [20][44] - ARO Drilling, a joint venture with Saudi Aramco, is expected to deliver newbuild rigs by the end of 2023, marking a significant growth milestone [19] Q&A Session All Questions and Answers Question: Regarding the purchase options on DS-13 and DS-14 - Management confirmed the intention to exercise the purchase options, emphasizing the need for attractive contracts before reactivating these rigs [46][47] Question: Thoughts on M&A opportunities - Management stated that while they are open to M&A opportunities, they are currently focused on organic growth and maximizing the potential of their existing high-spec fleet [48][49] Question: Characterization of leading-edge rates for jackups - Management noted that leading-edge rates for jackups are geographically diverse, with strong rates observed in regions outside the North Sea [52][53] Question: Future of leased rigs to ARO - Management expressed confidence in the long-term sustainability of the Saudi market and the potential for attractive opportunities for leased rigs [54] Question: Insights on pricing strategy for drillships - Management indicated that the pricing strategy will balance long-term contracts with opportunistic contracts at leading-edge rates, reflecting the tightening supply-demand balance [57][60]

Financial Performance - Operating revenues for Q2 2023 were $415.2 million, a slight increase of 0.5% compared to $413.3 million in Q2 2022[19]. - Net loss for Q2 2023 was $27.3 million, compared to a net income of $112.8 million in Q2 2022, representing a significant decline[20]. - The company reported an operating loss of $9.9 million for Q2 2023, an improvement from the operating loss of $15.6 million in Q2 2022[19]. - The company reported a basic loss per share of $0.39 for Q2 2023, compared to earnings per share of $1.49 in Q2 2022[19]. - Revenues for the three months ended June 30, 2023, totaled $415.2 million, with operating income (loss) reported at $(9.9) million[96]. - For the six months ended June 30, 2023, total revenues were $845.3 million, with an operating income (loss) of $(1.4) million[100]. - Revenues for the six months ended June 30, 2023, increased to $845.3 million, up 16% from $731.7 million in the same period of 2022[131]. Cash Flow and Liquidity - Cash and cash equivalents increased to $787.3 million as of June 30, 2023, up from $724.1 million at the end of 2022[23]. - The company generated $122.6 million in net cash from operating activities for the first half of 2023, a turnaround from a cash outflow of $114.0 million in the same period of 2022[24]. - The company expects to fund its short-term liquidity needs from cash and cash equivalents, cash flows from operations, and borrowings under the Credit Agreement, with $375.0 million available for borrowings as of July 26, 2023[172]. - As of June 30, 2023, letters of credit outstanding totaled $100.4 million, with collateral deposits amounting to $16.2 million[89]. Debt and Financing - Long-term debt rose to $681.9 million as of June 30, 2023, compared to $542.4 million at the end of 2022, indicating increased leverage[23]. - The company issued $700.0 million in Second Lien Notes during the first half of 2023, reflecting a strategy to strengthen its capital structure[24]. - The total principal amount of the Second Lien Notes issued was $700.0 million, with net proceeds of $681.4 million after deducting expenses[70]. - The company redeemed its First Lien Notes for an aggregate redemption price of $571.8 million on May 3, 2023, resulting in a loss of $29.2 million recognized in the financial statements[69]. - The company has a senior secured revolving credit facility with commitments allowing borrowings of up to $375.0 million, which can be increased by an additional $200.0 million under certain conditions[76]. - The Company has the option to redeem up to 40.0% of the aggregate principal amount of the Second Lien Notes prior to April 30, 2026, at a redemption price of 108.375% of the principal amount[72]. Shareholder Equity and Repurchase - Valaris shareholders' equity decreased to $1,254.1 million as of June 30, 2023, down from $1,289.9 million at the end of 2022[23]. - The board of directors authorized a share repurchase program, increasing the amount from $100.0 million to $300.0 million in April 2023, with 1.1 million shares repurchased for $65.0 million at an average price of $58.82 during the three and six months ended June 30, 2023[84]. - The total shareholders' equity increased from $1,097.9 million on December 31, 2022, to $1,110.3 million on June 30, 2023[82]. Operational Highlights - The company completed the reactivation of the VALARIS DS-17 drillship, which is expected to commence a contract in the third quarter of 2023[121]. - The total fleet consisted of 51 rigs as of June 30, 2023, with 40 rigs classified as active[137]. - The company owns a total of 51 rigs, including 11 drillships and 35 jackup rigs, while ARO owns an additional 7 rigs[111]. - The company plans to purchase 20 newbuild jackup rigs over an approximate 10-year period, with the first two expected to be delivered in 2023[44]. Revenue Sources and Trends - Consolidated revenues from the U.S. Gulf of Mexico for the three months ended June 30, 2023, were $77.3 million, a decrease from $125.8 million in the same period of 2022[108]. - The geographic concentration of revenues shows that the U.S. Gulf of Mexico contributed $153.3 million for the six months ended June 30, 2023, compared to $176.4 million in the same period of 2022[109]. - ARO's revenues for the three months ended June 30, 2023, were $117.8 million, slightly up from $116.4 million in the same period of 2022[46]. - The company recognized revenues related to Lease Agreements of $16.8 million and $35.6 million for the three and six months ended June 30, 2023, respectively, compared to $14.6 million and $28.8 million for the same periods in 2022, indicating a year-over-year increase of 15% and 23%[50]. Expenses and Cost Management - Total operating expenses decreased to $424.4 million in Q2 2023 from $437.6 million in Q2 2022, a reduction of approximately 3%[19]. - Operating expenses totaled $849.3 million, a 5% increase from $810.2 million in the prior year, driven by a $57.6 million rise in contract drilling expenses[131]. - General and administrative expenses rose by 34% to $50.8 million, primarily due to higher compensation and professional fees[134]. - Contract drilling expenses increased by $92.8 million due to rigs commencing contracts after reactivation[132]. Tax and Regulatory Matters - For the three months ended June 30, 2023, the income tax expense was $18.3 million, while for the six months it was $34.4 million, excluding discrete tax items[86]. - The company received an income tax refund of $45.9 million during the first quarter of 2023 related to the U.S. Coronavirus Aid, Relief, and Economic Security Act[106]. - The Australian tax authorities issued tax assessments totaling approximately A$101.0 million ($67.3 million) for the years 2011 through 2016, with a $17.9 million liability for unrecognized tax benefits as of June 30, 2023[191]. Risks and Challenges - The company is involved in an administrative proceeding in Brazil, facing a claim for approximately BRL 601 million (approximately $127.0 million) related to overbilling to Petrobras[91]. - The company is exposed to foreign currency exchange risk due to revenues and expenses denominated in currencies other than the U.S. dollar[198]. - A hypothetical 1% decrease in LIBOR would reduce interest income by $4.0 million for the year ended December 31, 2023, based on a principal amount of $402.7 million[197].