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 March 31, 2022 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) Indicate by check mark whether th ...

Valaris Limited (NYSE:VAL) Q4 2021 Earnings Conference Call February 22, 2022 10:00 AM ET Company Participants Tim Richardson - Director, Investor Relations Anton Dibowitz - President and Chief Executive Officer Darin Gibbins - Interim Chief Financial Officer and Vice President, Investor Relations and Treasurer Conference Call Participants Greg Lewis - BTIG Fredrik Stene - Clarksons Operator Good day, everyone and welcome to Valaris’ Fourth Quarter 2021 Results Conference Call. As a reminder, this call is b ...

PART I [Business](index=8&type=section&id=Item%201.%20Business) Valaris is a global offshore drilling contractor operating a large rig fleet after emerging from bankruptcy in 2021 - Valaris is a leading global provider of offshore contract drilling services, owning a fleet of **56 rigs** and holding a 50% equity interest in ARO, which owns an additional seven rigs[18](index=18&type=chunk) - The company provides drilling services on a day rate contract basis, where it supplies the rig and crew, while customers bear the costs and risks of well construction[20](index=20&type=chunk) - On April 30, 2021, Valaris successfully completed its financial restructuring and emerged from Chapter 11 bankruptcy, eliminating **$7.1 billion of debt** and securing a **$520 million capital injection** through new First Lien Notes[27](index=27&type=chunk) - The business consists of four operating segments: Floaters (drillships and semisubmersibles), Jackups, ARO (50/50 joint venture with Saudi Aramco), and Other (management services)[29](index=29&type=chunk) Major Customer Revenue Concentration (2021) | Period | Top 5 Customers' Revenue Share | BP's Revenue Share | | :--- | :--- | :--- | | **Successor (8 mos ended 12/31/21)** | 42% | 11% | | **Predecessor (4 mos ended 4/30/21)** | 45% | 14% | - The offshore drilling industry is highly competitive, with contracts typically awarded based on competitive bids where price, quality of service, safety performance, and equipment suitability are key factors[48](index=48&type=chunk) - Operations are subject to extensive governmental regulation and environmental laws, including those from the Bureau of Safety and Environmental Enforcement (BSEE) and emerging rules related to climate change and greenhouse gas emissions[49](index=49&type=chunk)[54](index=54&type=chunk)[58](index=58&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks from market volatility, contract uncertainties, post-bankruptcy challenges, and extensive international regulations - **Business & Market Risks:** The company's financial condition is adversely impacted by the COVID-19 pandemic, high dependence on volatile oil and gas prices, and the highly competitive and cyclical nature of the offshore drilling industry[71](index=71&type=chunk)[76](index=76&type=chunk)[82](index=82&type=chunk)[86](index=86&type=chunk) - **Contractual Risks:** The current contract backlog may not be fully realized due to potential rig downtime, early terminations, or customer renegotiations[89](index=89&type=chunk)[90](index=90&type=chunk)[98](index=98&type=chunk) - **Financial & Post-Bankruptcy Risks:** Having emerged from bankruptcy may affect business relationships and access to financing, and historical financial information is not indicative of future performance due to fresh start accounting[140](index=140&type=chunk)[141](index=141&type=chunk)[145](index=145&type=chunk) - **ESG Risks:** Increasing regulation of greenhouse gases and heightened stakeholder scrutiny of ESG practices could negatively impact demand for services and increase operational costs[147](index=147&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - **Regulatory & Legal Risks:** The company must comply with complex anti-bribery statutes, environmental laws, and tax regulations across numerous jurisdictions, with non-compliance potentially leading to significant fines[154](index=154&type=chunk)[157](index=157&type=chunk)[160](index=160&type=chunk) - **International Operations Risks:** Non-U.S. operations, which constitute the majority of revenues (**87% in the Successor period**), are subject to geopolitical instability, currency fluctuations, and complex local laws[174](index=174&type=chunk)[176](index=176&type=chunk) [Unresolved Staff Comments](index=46&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved comments from the staff of the Securities and Exchange Commission - None[192](index=192&type=chunk) [Properties](index=47&type=section&id=Item%202.%20Properties) The company details its drilling fleet of 56 rigs and its owned and leased global office facilities Drilling Fleet Composition (as of Feb 21, 2022) | Rig Type | Count | | :--- | :--- | | **Floaters** | | | Drillship | 11 (plus 2 under construction option) | | Semisubmersible | 5 | | **Jackups** | 40 | | **Total Owned** | **56** | - The report provides a detailed table listing each rig's specifications, including name, type, year built, design, water/drilling depth, location, and current operational status[193](index=193&type=chunk)[194](index=194&type=chunk) - The company owns all rigs in its fleet and also manages drilling operations for two platform rigs owned by a third party[200](index=200&type=chunk) - Valaris leases office space globally and owns office and other facilities in Louisiana, Angola, and Brazil[200](index=200&type=chunk) [Legal Proceedings](index=50&type=section&id=Item%203.%20Legal%20Proceedings) The company is contesting notices in Brazil for past drilling fluid spills and has accrued a minor liability - The company is contesting notices of assessment in Brazil for spills from drilling rigs between 2008 and 2019[201](index=201&type=chunk) - A liability of **$0.4 million** related to the Brazilian environmental matters was recorded on the Consolidated Balance Sheet as of December 31, 2021[201](index=201&type=chunk) - Other legal proceedings are considered incidental to the business and are not expected to have a material adverse effect on financial results[202](index=202&type=chunk) [Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[203](index=203&type=chunk) PART II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Post-bankruptcy, new shares and warrants trade on the NYSE, while dividends are restricted by debt covenants - As a result of the Chapter 11 cases, the Class A ordinary shares of Legacy Valaris were cancelled on the Effective Date, April 30, 2021[206](index=206&type=chunk) - The new Common Shares and Warrants of the successor company, Valaris Limited, are listed on the New York Stock Exchange under the ticker symbols **"VAL"** and **"VAL WS"**, respectively[207](index=207&type=chunk) - The company has not paid or declared any dividends on its Common Shares, and the Indenture governing its debt includes provisions that limit its ability to pay dividends[208](index=208&type=chunk) - Valaris has obtained an assurance from the Minister of Finance of Bermuda that certain taxes on profits, income, or capital gains will not be applicable to the company or its shares until March 31, 2035[210](index=210&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Financial results are not comparable year-over-year due to fresh start accounting post-bankruptcy emergence [Introduction](index=52&type=section&id=Introduction) The company emerged from bankruptcy with a new accounting basis, making post-emergence financials incomparable to prior periods - Upon emergence from Chapter 11, the company adopted fresh start accounting, resulting in a new basis of accounting, making financial statements after April 30, 2021 (Successor) not comparable to those prior (Predecessor)[219](index=219&type=chunk) - The industry environment improved in 2021, with Brent crude oil prices rising from **~$50 to nearly $80 per barrel**, leading to increased contracting and tendering activity[225](index=225&type=chunk) Contract Backlog Comparison (in millions) | Category | Feb 21, 2022 | Dec 31, 2020 | | :--- | :--- | :--- | | **Valaris Total** | **$2,443.9** | **$1,041.4** | | Floaters | $1,665.3 | $163.7 | | Jackups | $643.0 | $737.6 | | Other | $135.6 | $140.1 | | **ARO** | **$1,501.1** | **$347.5** | - The increase in Valaris's backlog by **$1.4 billion** is attributed to new contract awards and extensions, partially offset by revenue realization[231](index=231&type=chunk) [Business Environment](index=56&type=section&id=Business%20Environment) The offshore drilling market improved in 2021, with a significant recovery in the floater segment but a more modest recovery for jackups - **Floaters:** The floater segment backlog increased significantly from **$163.7 million** at YE 2020 to **$1.7 billion** as of Feb 21, 2022, with stable utilization and day rates[236](index=236&type=chunk)[237](index=237&type=chunk) - **Jackups:** The jackup segment backlog decreased from **$737.6 million** to **$643.0 million**, though utilization was stable and average day rates increased to approximately **$95,000** in 2021[242](index=242&type=chunk)[243](index=243&type=chunk) - The market continues to be oversupplied with rigs, but rig retirements are ongoing, with **134 benign environment floaters** and **161 jackups** retired since 2014[239](index=239&type=chunk)[245](index=245&type=chunk) [Results of Operations](index=57&type=section&id=Results%20of%20Operations) A non-GAAP combined 2021 analysis shows lower revenue but a significantly smaller operating loss compared to 2020 due to reduced expenses and impairments Consolidated Results of Operations (in millions) | | Combined 2021 (Non-GAAP) | 2020 (Predecessor) | | :--- | :--- | :--- | | **Revenues** | **$1,232.4** | **$1,427.2** | | Contract drilling expense | $1,072.5 | $1,470.4 | | Loss on impairment | $756.5 | $3,646.2 | | Depreciation | $225.7 | $540.8 | | General and administrative | $88.9 | $214.6 | | **Operating loss** | **($902.0)** | **($4,334.5)** | | **Net loss attributable to Valaris** | **($4,500.0)** | **($4,855.5)** | - Combined 2021 revenues declined by **$194.8 million (13.6%)** compared to 2020, primarily due to fewer operating days and prior-year contract termination fees[250](index=250&type=chunk) - Combined 2021 contract drilling expense decreased by **$397.9 million (27.1%)** compared to 2020, driven by lower costs for idle rigs, rigs sold, and cost control efforts[251](index=251&type=chunk) - A non-cash impairment loss of **$756.5 million** was recorded in the four-month 2021 Predecessor period, compared to a **$3.6 billion** impairment in 2020[252](index=252&type=chunk) - Other expense, net, for the combined 2021 period includes **$3.6 billion in reorganization items**, primarily related to the effects of emerging from bankruptcy and applying fresh start accounting[256](index=256&type=chunk)[318](index=318&type=chunk) [Liquidity and Capital Resources](index=74&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds $608.7 million in cash with $550 million in debt and projects significant capital expenditures for rig upgrades in 2022 Liquidity Position (in millions) | | Dec 31, 2021 (Successor) | Dec 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Cash and cash equivalents | $608.7 | $325.8 | | Available credit/DIP facility | $0.0 | $500.0 | | **Total liquidity** | **$608.7** | **$825.8** | - Capital expenditures for 2022 are expected to be approximately **$225 million to $250 million** for rig enhancement, reactivation, and upgrade projects[350](index=350&type=chunk) - The company's primary debt consists of **$550 million in First Lien Notes** due April 30, 2028, issued upon emergence from bankruptcy[354](index=354&type=chunk)[357](index=357&type=chunk) Contractual Obligations as of Dec 31, 2021 (in millions) | Category | Total | | :--- | :--- | | Principal payments on long-term debt | $550.0 | | Interest payments on long-term debt | $294.9 | | Operating leases | $27.4 | | **Total contractual obligations** | **$872.3** | - The company has a potential obligation to make capital contributions to its ARO joint venture to fund a 20-rig newbuild program, up to a maximum aggregate of **$1.25 billion**[371](index=371&type=chunk)[772](index=772&type=chunk) [Critical Accounting Policies and Estimates](index=85&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting judgments involve property depreciation, impairment assessments, income taxes, and pension benefit assumptions - Upon emergence from bankruptcy, the company changed its accounting policy for property and equipment, moving from a single asset approach to identifying and depreciating significant components of its drilling rigs separately[398](index=398&type=chunk)[400](index=400&type=chunk) - Impairment of Property and Equipment was a critical policy for the Predecessor, leading to non-cash impairment charges of **$756.5 million** in the first four months of 2021 and **$3.6 billion** in 2020[404](index=404&type=chunk)[405](index=405&type=chunk) - Accounting for income taxes is complex due to operations in numerous jurisdictions; as of December 31, 2021, the company had a **$320.2 million liability** for unrecognized tax benefits[412](index=412&type=chunk) - Pension and other postretirement benefit liabilities are based on significant actuarial assumptions; a one-percentage-point decrease in the assumed discount rate would increase liabilities by approximately **$109.1 million**[420](index=420&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=89&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - Not applicable[422](index=422&type=chunk) [Financial Statements and Supplementary Data](index=90&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited financial statements reflecting the post-bankruptcy new basis of accounting and an unqualified audit opinion - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2021[425](index=425&type=chunk) - The independent auditor, KPMG LLP, issued an **unqualified opinion** on both the consolidated financial statements and the effectiveness of internal control over financial reporting[428](index=428&type=chunk)[429](index=429&type=chunk) - The financial statements are presented for two distinct periods: the Successor (post-bankruptcy) and the Predecessor (pre-bankruptcy), which are not comparable due to fresh start accounting[430](index=430&type=chunk)[465](index=465&type=chunk) Key Financial Statement Data (in millions) | | **Successor (8 mos ended 12/31/21)** | **Predecessor (4 mos ended 4/30/21)** | **Predecessor (Year ended 12/31/20)** | | :--- | :--- | :--- | :--- | | **Operating Revenues** | $835.0 | $397.4 | $1,427.2 | | **Operating Loss** | ($11.9) | ($890.1) | ($4,334.5) | | **Net Loss Attributable to Valaris** | ($33.0) | ($4,467.0) | ($4,855.5) | | **Total Assets (at period end)** | $2,609.2 | N/A | $12,873.2 | | **Total Liabilities (at period end)** | $1,548.4 | N/A | $8,502.9 (incl. subject to compromise) | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=179&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable to the company - Not applicable[811](index=811&type=chunk) [Controls and Procedures](index=179&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures are effective as of year-end 2021 - Management concluded that the company's disclosure controls and procedures were **effective** as of the end of the period covered by the report[812](index=812&type=chunk) - There were **no material changes** in internal control over financial reporting during the quarter ended December 31, 2021[814](index=814&type=chunk) [Other Information](index=179&type=section&id=Item%209B.%20Other%20Information) This item is not applicable to the company - Not applicable[815](index=815&type=chunk) PART III This section incorporates by reference information from the company's forthcoming definitive Proxy Statement [Directors, Executive Officers and Corporate Governance](index=180&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors and governance is incorporated by reference from the Proxy Statement, while officer information is in Part I - Information required by this item is incorporated by reference from the company's Proxy Statement to be filed within 120 days of the fiscal year-end[817](index=817&type=chunk) - Information regarding executive officers is located in Part I of this Annual Report[818](index=818&type=chunk) [Executive Compensation](index=180&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from the company's Proxy Statement - Information required by this item is incorporated by reference from the company's Proxy Statement[821](index=821&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=181&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) This section provides details on equity compensation plans not approved by security holders Equity Compensation Plan Information (as of Dec 31, 2021) | Plan Category | Securities to be Issued Upon Exercise (a) | Securities Remaining Available for Future Issuance (c) | | :--- | :--- | :--- | | Equity compensation plans not approved by security holders | 1,467,438 | 7,493,135 | - Additional information required by this item is incorporated by reference from the company's Proxy Statement[823](index=823&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=181&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the Proxy Statement - Information required by this item is incorporated by reference from the company's Proxy Statement[824](index=824&type=chunk) [Principal Accounting Fees and Services](index=181&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information concerning principal accounting fees and services is incorporated by reference from the Proxy Statement - Information required by this item is incorporated by reference from the company's Proxy Statement[825](index=825&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=182&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K - This item lists all financial statements and exhibits filed with the Form 10-K[828](index=828&type=chunk) - Key exhibits filed include the Fourth Amended Joint Chapter 11 Plan of Reorganization (2.1), Bye-laws of Valaris Limited (3.2), Indenture for the First Lien Notes (4.1), and the Warrant Agreement (4.5)[829](index=829&type=chunk) [Form 10-K Summary](index=186&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for its Form 10-K - None[834](index=834&type=chunk)

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2021 was $30 million, up from $17 million in the combined prior quarter, while adjusted EBITDAR increased to $49 million from $41 million [63] - Revenues for Q3 2021 reached $327 million compared to $293 million in the combined prior quarter, with revenues excluding reimbursable items increasing to $293 million from $261 million [63][64] - Contract drilling expense for Q3 2021 was $274 million, up from $254 million in the combined prior quarter [65] Business Line Data and Key Metrics Changes - The average day rate within the floater backlog increased by 25% year-to-date to $235,000 per day, with approximately 75% of the backlog added year-to-date coming from major and large international oil companies [28] - Valaris secured long-term contracts for four of its seven preservation stacked drillships, enhancing earnings visibility with 8 of 11 drillships currently or future contracted [23][27] Market Data and Key Metrics Changes - Spot Brent crude prices have recovered strongly in 2021, with two-year forward Brent crude prices currently around $70 per barrel, which is viewed as constructive for offshore project demand [13][14] - Demand for floaters is expected to increase at a compound annual growth rate of approximately 6% between 2021 and 2025, driven by exploration and development drilling [14] Company Strategy and Development Direction - The company focuses on maximizing earnings and driving meaningful free cash flow as the market recovers, with a disciplined approach to fleet management and contracting [48][49] - Valaris views ARO Drilling as an important strategic asset, with plans to build 20 jackups over the next decade, backed by long-term contracts with Saudi Aramco [36][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in the offshore drilling market, citing increased contract awards and backlog, particularly for the floater fleet [51] - The company anticipates total revenues for Q4 2021 to be in the range of $310 million to $320 million, with a sequential decline primarily driven by the jackup fleet [74] Other Important Information - The company has a strong balance sheet with cash and cash equivalents of $621 million as of September 30, 2021, and only one tranche of debt due in 2028 [94][95] - Valaris has retired 18 rigs since the beginning of last year, representing more than 50% of its fleet since the downturn began [25] Q&A Session Summary Question: Recent reactivations and rate levels - Management highlighted that reactivation costs need to be justified and reimbursed by customers, with the average stacked period for their rigs being less than two years, making reactivations easier [104][105] Question: Future of ARO fleet - Management indicated that ARO is in discussions for lease extensions and expects the fleet to grow as Saudi Aramco increases its rig requirements [112][114] Question: Upgrades needed for idle rigs - It was noted that rigs entering Saudi Arabia typically require significant CapEx upgrades to meet Saudi Aramco's high operational standards [118]

FORM 10-Q Valaris Limited UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (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, 2021 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 (Exact name of registrant as specified in its charter) (State or other jurisdiction ...

Valaris Ltd (NYSE:VAL) Q2 2021 Earnings Conference Call August 3, 2021 10:00 AM ET Company Participants Darin Gibbins - VP, IR & Treasurer Thomas Burke - President, CEO & Director Jonathan Baksht - EVP & CFO Tim Richardson - Director, IR Conference Call Participants Connor Lynagh - Morgan Stanley Gregory Lewis - BTIG Fredrik Stene - Clarksons Platou Operator Good day, everyone, and welcome to Valaris' Second Quarter 2021 Financial Results Conference Call. [Operator Instructions]. Please note, this event is ...

PART I FINANCIAL INFORMATION [Financial Statements](index=7&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Valaris Limited's unaudited condensed consolidated financial statements reflect fresh start accounting post-Chapter 11 emergence on April 30, 2021, presenting non-comparable Predecessor and Successor data [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements report a net loss of **$6.2 million** for the Successor period and significant Predecessor losses, including **$3.56 billion** primarily due to reorganization items Condensed Consolidated Statements of Operations (In millions) | | Successor | Predecessor | Predecessor | | :--- | :--- | :--- | :--- | | | **Two Months Ended June 30, 2021** | **One Month Ended April 30, 2021** | **Three Months Ended June 30, 2020** | | **OPERATING REVENUES** | $202.8 | $90.3 | $388.8 | | **OPERATING INCOME (LOSS)** | $9.6 | $(38.0) | $(1,019.2) | | Reorganization items, net | $(4.1) | $(3,532.4) | — | | **NET LOSS** | $(4.1) | $(3,556.2) | $(1,108.8) | | **NET LOSS ATTRIBUTABLE TO VALARIS** | $(6.2) | $(3,557.0) | $(1,107.4) | | **LOSS PER SHARE - BASIC AND DILUTED** | $(0.08) | $(17.81) | $(5.58) | [Condensed Consolidated Balance Sheet](index=12&type=section&id=Condensed%20Consolidated%20Balance%20Sheet) The Successor balance sheet as of June 30, 2021, reflects total assets of **$2.6 billion**, significantly reduced from the Predecessor's **$12.9 billion** due to fresh start accounting and a new capital structure Condensed Consolidated Balance Sheets (In millions) | | Successor (June 30, 2021) | Predecessor (December 31, 2020) | | :--- | :--- | :--- | | **Total current assets** | $1,217.7 | $1,172.9 | | **Property and equipment, net** | $897.8 | $10,960.5 | | **Total assets** | **$2,601.7** | **$12,873.2** | | **Total current liabilities** | $396.6 | $426.8 | | **Long-term debt** | $544.8 | — | | **Liabilities subject to compromise** | — | $7,313.7 | | **Total liabilities** | $1,511.2 | $8,502.9 | | **Total equity** | $1,090.5 | $4,370.3 | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The statements show net cash used in operating activities for both Successor (**$25.9 million**) and Predecessor (**$39.8 million**) periods, with the Predecessor period also reflecting a **$388.7 million** financing cash inflow Condensed Consolidated Statements of Cash Flows (In millions) | | **Successor**<br>Two Months Ended<br>June 30, 2021 | **Predecessor**<br>Four Months Ended<br>April 30, 2021 | **Predecessor**<br>Six Months Ended<br>June 30, 2020 | | :--- | :--- | :--- | :--- | | **Net cash used in operating activities** | $(25.9) | $(39.8) | $(381.1) | | **Net cash provided by (used in) investing activities** | $(7.9) | $21.4 | $(53.3) | | **Net cash provided by financing activities** | — | $388.7 | $539.4 | [Note 2 - Chapter 11 Proceedings](index=16&type=section&id=Note%202%20-%20Chapter%2011%20Proceedings) Valaris emerged from Chapter 11 on April 30, 2021, eliminating **$7.1 billion** in debt, injecting **$520 million** in new capital, and recording a **$3.58 billion** net reorganization expense - Emerged from Chapter 11 on April 30, 2021, eliminating **$7.1 billion** in debt and securing a **$520 million** capital injection through new First Lien Notes[45](index=45&type=chunk) - Legacy Valaris Class A ordinary shares were cancelled, and former holders received warrants to purchase new Common Shares[45](index=45&type=chunk)[47](index=47&type=chunk) Reorganization Items, Net (Four Months Ended April 30, 2021 - Predecessor, in millions) | Item | Amount | | :--- | :--- | | Professional fees | $93.4 | | Gain on settlement of liabilities subject to compromise | $(6,139.0) | | Loss on fresh start adjustments | $9,194.6 | | **Total reorganization items, net** | **$3,584.6** | [Note 3 - Fresh Start Accounting](index=19&type=section&id=Note%203%20-%20Fresh%20Start%20Accounting) Valaris adopted fresh start accounting upon emergence, revaluing assets and liabilities at fair value, resulting in a significant write-down of Property and Equipment and making financial statements non-comparable - The company adopted fresh start accounting upon emergence, as existing shareholders received less than **50%** of the new shares and the reorganization value was less than post-petition liabilities and claims[52](index=52&type=chunk) Reorganization & Enterprise Value (April 30, 2021, in millions) | Metric | Value | | :--- | :--- | | Enterprise Value | $1,860.0 | | Plus: Cash and cash equivalents | $607.6 | | Reorganization value of Successor assets | $2,595.6 | - Fresh start adjustments included a significant write-down of Property and Equipment by approximately **$8.7 billion** to reflect its fair value[68](index=68&type=chunk)[90](index=90&type=chunk) [Note 5 - Equity Method Investment in ARO](index=33&type=section&id=Note%205%20-%20Equity%20Method%20Investment%20in%20ARO) Valaris holds a **50%** equity method investment in ARO, a joint venture with Saudi Aramco, with a maximum exposure to loss of **$302.1 million** and potential capital contributions up to **$1.25 billion** for newbuild rigs - Valaris is a **50%** partner in the ARO joint venture with Saudi Aramco, which owns **7** jackup rigs and leases **9** rigs from Valaris[126](index=126&type=chunk) - ARO plans to purchase **20** newbuild jackup rigs over **10** years; if ARO cannot self-finance, Valaris may be required to contribute up to an aggregate of **$1.25 billion**[128](index=128&type=chunk)[206](index=206&type=chunk) Valaris's Maximum Exposure to Loss from ARO (in millions) | | June 30, 2021 (Successor) | December 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Total assets related to ARO | $340.7 | $585.2 | | Less: total liabilities related to ARO | $38.6 | $30.9 | | **Maximum exposure to loss** | **$302.1** | **$554.3** | [Note 7 - Property and Equipment](index=39&type=section&id=Note%207%20-%20Property%20and%20Equipment) Property and equipment, net, significantly decreased to **$897.8 million** for the Successor due to fresh start accounting, following Predecessor impairment losses of **$756.5 million** in 2021 and **$3.6 billion** in 2020 - The Predecessor recorded a pre-tax, non-cash impairment loss of **$756.5 million** for certain floaters during the four months ended April 30, 2021[152](index=152&type=chunk)[155](index=155&type=chunk) - In 2020, the Predecessor recorded impairment losses totaling **$3.6 billion** for the six months ended June 30, 2020, due to the decline in oil prices and the COVID-19 pandemic's impact on demand[153](index=153&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) [Note 11 - Debt](index=44&type=section&id=Note%2011%20-%20Debt) Valaris's capital structure was overhauled post-bankruptcy, cancelling all Predecessor debt and issuing **$550 million** in new First Lien Notes due 2028 with flexible interest payment options - On April 30, 2021, the company issued **$550 million** in aggregate principal of new First Lien Notes due 2028[179](index=179&type=chunk) - The First Lien Notes offer optionality for interest payments: **8.25%** in cash, **10.25%** as **50/50** cash/PIK, or **12%** entirely PIK[182](index=182&type=chunk) - All of the Predecessor's senior notes and its Revolving Credit Facility were cancelled as part of the reorganization plan[188](index=188&type=chunk) [Note 15 - Segment Information](index=51&type=section&id=Note%2015%20-%20Segment%20Information) The company operates through Floaters, Jackups, ARO, and Other segments, with Jackups contributing **$25.2 million** in operating income and Floaters reporting a **$3.4 million** operating loss for the Successor period Segment Operating Income (Loss) - Two Months Ended June 30, 2021 (Successor, in millions) | Segment | Revenues | Operating Income (Loss) | | :--- | :--- | :--- | | Floaters | $49.7 | $(3.4) | | Jackups | $128.5 | $25.2 | | ARO (Full Results) | $84.0 | $8.3 | | Other | $24.6 | $14.6 | | **Consolidated Operating Income** | **$202.8** | **$9.6** | - The company's operating segments are Floaters (drillships and semisubmersibles), Jackups, ARO (**50/50** joint venture), and Other (management services and ARO arrangements)[209](index=209&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=59&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This MD&A details the company's post-Chapter 11 emergence, fresh start accounting impact, improving offshore drilling market, increased contract backlog to **$2.2 billion**, and combined financial results reflecting decreased revenues and expenses [Executive Summary and Business Environment](index=59&type=section&id=Executive%20Summary%20and%20Business%20Environment) Valaris emerged from Chapter 11 on April 30, 2021, eliminating **$7.1 billion** in debt, with the offshore drilling market showing improvement and contract backlog increasing to **$2.2 billion** - Emerged from Chapter 11 on April 30, 2021, eliminating **$7.1 billion** of debt and obtaining a **$520.0 million** capital injection[232](index=232&type=chunk) - Contract backlog increased to **$2.2 billion** as of August 2, 2021, up from **$1.0 billion** at December 31, 2020; ARO backlog increased to **$953.2 million** from **$347.5 million** over the same period[243](index=243&type=chunk)[244](index=244&type=chunk) - The constructive oil price environment in 2021 has led to an improvement in contracting and tendering activity compared to 2020, particularly for drillships[240](index=240&type=chunk) [Results of Operations](index=63&type=section&id=Results%20of%20Operations) Combined results for Q2 2021 show revenues of **$293.1 million**, a **25%** decrease year-over-year, and contract drilling expense down **31%** to **$254.3 million**, alongside a **$3.5 billion** reorganization expense Combined Results of Operations (Non-GAAP, in millions) | | Three Months Ended June 30, 2021 (Combined) | Three Months Ended June 30, 2020 (Predecessor) | | :--- | :--- | :--- | | Revenues | $293.1 | $388.8 | | Contract drilling expense | $254.3 | $370.7 | | Loss on impairment | — | $838.0 | | Operating income (loss) | $(28.4) | $(1,019.2) | | Other income (expense), net | $(3,532.3) | $(105.4) | | **Net loss attributable to Valaris** | **$(3,563.2)** | **$(1,107.4)** | - Combined revenues for Q2 2021 decreased by **25%** year-over-year, primarily due to fewer days under contract, prior-year termination fees, and asset sales[260](index=260&type=chunk) - Combined contract drilling expense for Q2 2021 decreased by **31%** year-over-year, driven by lower costs on idle rigs and rigs sold[262](index=262&type=chunk) [Liquidity and Capital Resources](index=75&type=section&id=Liquidity%20and%20Capital%20Resources) Valaris's post-emergence liquidity is **$608.8 million** in cash and cash equivalents, with **$550 million** in First Lien Notes, and potential capital commitments including up to **$1.25 billion** for ARO's newbuild program Liquidity Position (in millions) | | June 30, 2021 (Successor) | December 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Cash and cash equivalents | $608.8 | $325.8 | | Available DIP Facility | — | $500.0 | | **Total liquidity** | **$608.8** | **$825.8** | - The company has an option to take delivery of two newbuild drillships, VALARIS DS-13 and DS-14, on or before December 31, 2023, with no further obligation if it elects not to purchase them[330](index=330&type=chunk) - Valaris has a potential obligation to make capital contributions to the ARO joint venture to fund its **20-rig** newbuild program, up to a maximum aggregate of **$1.25 billion**[341](index=341&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=83&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section is marked as not applicable for the current reporting period - The company has indicated that this section is not applicable for this reporting period[359](index=359&type=chunk) [Controls and Procedures](index=83&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with new controls established for fresh start accounting post-Chapter 11 emergence - Management concluded that disclosure controls and procedures were effective as of June 30, 2021[362](index=362&type=chunk) - New controls were established during the quarter to oversee the application of fresh start accounting following the emergence from bankruptcy[363](index=363&type=chunk) PART II OTHER INFORMATION [Legal Proceedings](index=85&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) This section details the dismissal of the UMB Bank lawsuit and a shareholder class action, while noting a **$0.5 million** accrued liability for environmental spills in Brazil - The UMB Bank lawsuit concerning fraudulent transfer allegations was dismissed with prejudice after the company's Chapter 11 plan was consummated[366](index=366&type=chunk) - A shareholder class action lawsuit was voluntarily dismissed with prejudice by the lead plaintiff in July 2021[367](index=367&type=chunk) - The company is subject to notices of assessment for environmental spills in Brazil and has a **$0.5 million** liability accrued for these matters as of June 30, 2021[368](index=368&type=chunk) [Risk Factors](index=86&type=section&id=ITEM%201A.%20RISK%20FACTORS) Key risks post-bankruptcy emergence include adverse effects on business relationships, non-comparability of financial data, potential share dilution, ability to service new debt, and challenges of enforcing judgments against a Bermuda-based company - Risk that the recent emergence from bankruptcy may adversely affect relationships with vendors, suppliers, and customers[372](index=372&type=chunk) - Historical financial information is not indicative of future performance due to the significant impact of fresh start accounting[374](index=374&type=chunk) - Shareholders face potential dilution from **5.6 million** outstanding warrants and up to **9.0 million** shares reserved for the new Management Incentive Plan[375](index=375&type=chunk) - The company's contract backlog of **$2.2 billion** is not guaranteed and may not be fully realized due to risks of early termination, rig downtime, or contract renegotiations[384](index=384&type=chunk)[385](index=385&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=90&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) During Q2 2021, the company repurchased a small number of equity securities from employees to settle tax withholding obligations related to vested share awards, prior to legacy share cancellation Issuer Repurchases of Equity Securities | Period | Total Number of Securities Repurchased | Average Price Paid per Security | | :--- | :--- | :--- | | April 1 - April 30 | 1,057 | $0.07 | | May 1 - May 31 | — | $— | | June 1 - June 30 | — | $— | | **Total** | **1,057** | **$0.07** | - Repurchases in April 2021 were from employees to cover tax withholding on vesting share awards, prior to the cancellation of all legacy shares[390](index=390&type=chunk) [Exhibits](index=90&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the Form 10-Q, including foundational documents for the reorganized company, such as new Bye-laws, First Lien Notes Indenture, Warrant Agreement, and the 2021 Management Incentive Plan - Filed exhibits include foundational documents for the reorganized company, such as the new Bye-laws (**3.2**), First Lien Notes Indenture (**4.1**), Warrant Agreement (**10.1**), and the **2021** Management Incentive Plan (**10.4**)[390](index=390&type=chunk)[391](index=391&type=chunk)

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 March 31, 2021 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 plc (Exact name of registrant as specified in its charter) England and Wales 98-0635229 (State o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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 plc (Exact name of registrant as specified in its charter) England and Wales 98-0635229 (State or other jurisdiction of incorporation ...

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, 2020 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 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Valaris plc (Exact name of registrant as specified in its charter) England and Wales 98-0635229 (Sta ...