Valaris(US:VAL)2023-02-21 19:17Financial Data and Key Metrics Changes - Adjusted EBITDA for Q4 2022 was $54 million, down from $76 million in the prior quarter, while adjusted EBITDAR was $75 million compared to $94 million in the previous quarter [26] - Revenues decreased slightly to $434 million from $437 million in the prior quarter, with a notable drop in revenues excluding reimbursable items from $416 million to $413 million [26] - Contract drilling expenses increased to $353 million from $337 million in the prior quarter, primarily due to higher operating days for the floater fleet and increased reactivation costs [27] Business Line Data and Key Metrics Changes - The jackup segment saw a decrease in revenues primarily due to the completion of contracts and idle time between contracts, while floater revenues increased due to higher revenue efficiency and a full quarter of revenues from reactivated rigs [26] - Active utilization for drillships is currently above 90%, with day rates improving significantly, now pushing into the low to mid $400,000s [12][15] Market Data and Key Metrics Changes - The number of contracted jackups has increased by more than 15% from lows in early 2021, with active utilization above 90% [15] - The IEA forecasts oil and gas demand to increase by 1.9 million barrels per day in 2023, with supply growth expected to slow, contributing to a tight supply picture [10][11] Company Strategy and Development Direction - The company aims to maximize shareholder value during the industry upcycle by maintaining high operational performance and focusing on disciplined fleet management [4][18] - The strategy includes reactivating high-specification stacked drillships and pursuing contracting opportunities in priority basins to benefit from economies of scale [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the offshore drilling market, citing increased demand for hydrocarbons and a constructive macro environment [10][11] - The company anticipates 2024 to be an inflection point for earnings as legacy contracts roll to market rates and new contracts commence [48] Other Important Information - The company has a strong focus on ESG initiatives, achieving high ratings from MSCI and Sustainalytics, and is committed to reducing emissions from operations [7][8] - Capital expenditures for 2023 are anticipated to be between $260 million and $300 million, with a significant portion allocated for maintenance and reactivation projects [37][38] Q&A Session Summary Question: Can you provide more details on rig reactivations and capital allocation? - Management highlighted the company's strong track record in reactivating rigs and emphasized a disciplined approach to finding the right opportunities for reactivation [50][51] Question: Are there opportunities for jackups in the near term? - Management acknowledged improvements in the jackup market but indicated that the economics of reactivating drillships are currently more favorable [52] Question: Will the CARES Act refund be considered a catalyst for opportunistic returns? - Management confirmed that while the CARES Act refunds are part of their planning, the focus remains on capital allocation for attractive reactivation opportunities [54][56]