Valaris(US:VAL)2025-10-30 14:55Financial Performance - Total operating revenues for Q3 2025 were $595.7 million, a decrease of 7.4% from $643.1 million in Q3 2024[16] - Net income attributable to Valaris for the nine months ended September 30, 2025, was $265.3 million, compared to $239.7 million for the same period in 2024, reflecting an increase of 10.5%[16] - Operating income for Q3 2025 was $130.5 million, up 37.5% from $94.9 million in Q3 2024[16] - Basic earnings per share for Q3 2025 were $2.66, compared to $0.89 in Q3 2024, reflecting a significant increase of 199.1%[16] - Comprehensive income attributable to Valaris for Q3 2025 was $189.1 million, compared to $64.7 million in Q3 2024, marking an increase of 192.5%[17] - For the nine months ended September 30, 2025, total operating revenues were $1,831.6 million, compared to $1,778.2 million for the same period in 2024, representing a growth of 3%[94] - The company reported a net loss of $37.9 million for the nine months ended September 30, 2025[69] - The company reported a net income of $188.1 million for the quarter ended June 30, 2025[69] Cash and Liquidity - Cash and cash equivalents increased to $662.7 million as of September 30, 2025, compared to $368.2 million at the end of 2024, representing an increase of 79.9%[20] - The company reported a net cash provided by operating activities of $474.0 million for the nine months ended September 30, 2025, compared to $230.8 million for the same period in 2024, an increase of 105.5%[21] - The company has $375.0 million available for borrowing under the 2028 Credit Agreement, which matures in 2028[173] - ARO had cash and cash equivalents of $116.0 million as of September 30, 2025, and has not made any cash distributions of earnings to its partners since its formation[182] Assets and Liabilities - Total assets rose to $4,638.0 million as of September 30, 2025, compared to $4,419.8 million at the end of 2024, indicating a growth of 4.9%[20] - Total liabilities stood at $2,187.4 million as of September 30, 2025, slightly up from $2,175.5 million at the end of 2024[20] - Shareholders' equity increased to $1,664.2 million as of September 30, 2025, from $1,398.9 million at the end of 2024[69] - The allowance for doubtful accounts was $16.0 million as of September 30, 2025, slightly down from $16.6 million at the end of 2024, indicating stable credit risk management[97] Capital Expenditures and Investments - Capital expenditures for Q3 2025 totaled $69.8 million, compared to $81.9 million in Q3 2024, indicating a reduction in investment spending[92][93] - The company expects capital expenditures in 2025 to approximate $380.0 million to $400.0 million, primarily for maintenance and upgrades[179] - The total property and equipment at cost increased to $2,507.7 million as of September 30, 2025, from $2,309.4 million as of December 31, 2024[50] Contractual Obligations and Backlog - The total contract backlog as of October 23, 2025, is $4,450.3 million, up from $3,608.5 million on February 18, 2025, representing an increase of approximately 23.3%[110] - The backlog for floaters increased to $2,625.1 million, primarily due to multi-year contracts executed, contributing an incremental backlog of approximately $1.4 billion[110] - ARO's backlog increased to $2,164.6 million, up from $1,422.9 million, primarily due to five-year contract extensions for leased rigs[110] Tax and Regulatory Matters - The consolidated effective tax rate for the three months ended September 30, 2025, was 14.1%, while for the nine months it was 14.8%[75] - The company recognized a deferred tax expense of $168.8 million in Q1 2025 due to a valuation allowance on deferred tax assets[74] - The Luxembourg tax assessments resulted in a revised aggregate tax assessment of approximately $65.0 million, which was contested and led to a tax benefit of the same amount in Q2 2024[77] - The Malaysian subsidiary faced a tax assessment totaling approximately $28.0 million, with all payments under a seven-month payment plan completed as of September 30, 2025[78] - The Australian tax assessments totaled approximately A$101.0 million, with a settlement reached in December 2024 resulting in a tax benefit of approximately $18.0 million[79] Joint Ventures and Partnerships - ARO, a 50/50 joint venture, owned nine jackup rigs and had ordered one newbuild jackup rig as of September 30, 2025, with plans to purchase 20 newbuild jackup rigs over approximately 10 years[41][42] - The equity method investment in ARO is recorded at fair value, with basis differences primarily related to long-lived assets and favorable drilling contract terms[44] - The company has a potential obligation to fund ARO for newbuild jackup rigs, with a maximum aggregate contribution of $1.25 billion from each partner[82] Sales and Other Income - The company recognized a pre-tax gain of $88.4 million from the sale of VALARIS 247, which generated cash proceeds of approximately $108.0 million[51] - The total cash proceeds from the sale of three retired semisubmersible rigs were $10.0 million, with an impairment loss of $7.8 million recognized[52][53] - Other income increased significantly to $78.3 million, driven by pre-tax gains from asset sales totaling $115.4 million[130] Market and Operational Insights - The global marketed jackup fleet utilization was 91% as of September 30, 2025, down from 94% in early 2024[114] - The five-year forward price of Brent crude oil remains above $65 per barrel, which is expected to make over 80% of undeveloped offshore reserves profitable[104] - Rig utilization for the total fleet was 67% as of September 30, 2025, compared to 66% in the same period of 2024[136] Shareholder Actions - The company has authorized a share repurchase program of up to $600.0 million for its outstanding Common Shares[71] - As of September 30, 2025, the company repurchased 1.5 million shares at an aggregate cost of $75.0 million, with an average price per share of $48.88[72]