Company Overview - Valaris Limited (NYSE:VAL) is an offshore drilling company that leases rigs and drillships to major energy companies like Shell and Exxon, currently trading at a significant discount to its intrinsic value due to the industry's downturn during COVID, which led to bankruptcies and asset transfers to creditors [1] - Valaris has a stronger balance sheet and one of the youngest, most advanced fleets, positioning the company to benefit as deepwater drilling gains momentum with stable oil demand and rising cost competitiveness [2] Industry Insights - Deepwater offshore drilling is becoming increasingly important due to its cost competitiveness compared to other oil extraction methods, with breakeven prices falling to $30–$43 per barrel, making it cheaper than U.S. shale [4] - Offshore drilling accounts for approximately 30% of the world's total oil production, with deepwater drilling contributing 6-7% of the total supply [4] Market Position and Potential - Currently, 8.6% of Valaris's public float is sold short, and only one out of eight analysts covering the stock has a "Buy" rating, indicating a low market sentiment despite the company's potential [3] - Valaris trades at a steep discount to both replacement value and future free cash flow potential, with expectations of delivering a 3-7x return over the next 3-5 years due to low valuation, a new capital structure, rising demand, and constrained supply [3]