Valaris(VAL)2025-02-20 16:39Company Overview - Valaris Limited owns 52 rigs, including 13 drillships and 34 jackup rigs, and has a 50% equity interest in ARO, which owns an additional nine rigs[18]. - As of December 31, 2024, Valaris had a global workforce of approximately 5,642 persons, with 4,130 excluding contractors, representing 74 nationalities across 22 locations[49]. - The company has a diverse drilling fleet, including 12 drillships capable of drilling in water depths of up to 12,000 feet, with several rigs currently under contract[185]. - The company owns a fleet of 52 rigs, including 13 drillships, 4 dynamically positioned semisubmersible rigs, 1 moored semisubmersible rig, and 34 jackup rigs as of February 20, 2025[211]. - The company has a 50% equity interest in ARO, a joint venture with Saudi Aramco, which owns an additional 9 rigs[211]. Financial Performance - The company’s five largest customers accounted for 49% of consolidated revenues in 2024, with BP plc alone contributing 17%[28]. - Revenues from non-U.S. operations represented 84% of total consolidated revenues in 2024, up from 78% in 2022[30]. - As of February 15, 2024, the company's contract backlog was approximately 600 million for its outstanding common shares[202]. Market Conditions - Brent crude oil prices have been stable between 90 per barrel since late 2022, supporting investment in long-cycle offshore projects[21]. - Global demand for hydrocarbons continues to increase, with offshore production expected to play a crucial role in meeting energy needs[22]. - The five-year forward price of Brent crude oil remains above $65 per barrel, indicating profitability for nearly 90% of undeveloped offshore reserves[215]. - The outlook for the offshore drilling business remains positive despite a modest decline in demand since early 2024[22]. Operational Risks - Valaris' business is significantly affected by volatile oil and natural gas prices, impacting the level of offshore drilling activity[71]. - The company faces risks related to securing contracts on favorable terms, with potential declines in backlog revenue[67]. - A decline in oil and natural gas prices may lead customers to consider early termination of contracts, impacting future revenues[82]. - The company may face challenges in maintaining service and pricing levels due to customer consolidation and a shift towards renewable energy projects[87]. - The company may incur significant expenditures to maintain competitiveness in offshore drilling technology and compliance with regulations[96]. Sustainability and Compliance - The company is focused on sustainability, publishing an annual sustainability report aligned with TCFD and SASB standards[44]. - Increased scrutiny regarding sustainability practices may lead to additional costs or risks for the company[72]. - The company has adopted policies against corruption, bribery, and modern slavery, ensuring compliance and ethical operations[48]. - Compliance with environmental laws can be costly, and any violations could lead to significant liabilities, although no material adverse effects have been reported to date[141]. - The SEC has adopted a final rule for mandatory climate change reporting, which may increase monitoring and reporting costs[165]. Workforce and Training - Women comprised 32% of onshore employees and 1% of offshore employees as of December 31, 2024[49]. - In 2024, approximately 338 personnel attended the Building Organizational Leadership (BOLD) training program aimed at enhancing leadership skills among offshore supervisors[52]. - All employees were assigned "Workplace Harassment" training in 2024 to support a more inclusive workforce[53]. - The company emphasizes a safety-first approach, with policies designed to prevent harm during operations and effective safeguards in place[54]. Cybersecurity - The company has implemented a comprehensive cybersecurity program that includes administrative, technical, and physical safeguards to manage risks from cybersecurity threats[173]. - All employees are required to complete an annual cybersecurity training program, supplemented by additional training and simulations throughout the year[175]. - The company's cybersecurity risks are integrated into the enterprise risk management process, with a risk register reviewed quarterly by the Executive Management Committee and the board of directors[177]. - The Audit Committee oversees the IT and cybersecurity program, receiving quarterly reports on incidents, risks, and organizational readiness[178]. - No material cybersecurity incidents have been reported as of the date of the annual report, but future risks remain a concern[183]. Legal and Regulatory Matters - The company is involved in various litigation matters that could materially affect its financial position and operating results[149]. - The company may face increased climate-related litigation risks, which could adversely impact demand for its services in the oil and natural gas industry[150]. - The company is subject to increasing regulatory complexity that could adversely impact costs and reduce demand for offshore drilling services[138]. - The IRS may challenge the company's classification as a foreign corporation, which could result in significant adverse tax consequences[142]. - The OECD's Pillar Two initiative could increase the company's future tax obligations due to a proposed 15% global minimum tax[143].