Valaris Announces Contract Awards and Updated Guidance

Rhea-AI Summary

Valaris Limited (NYSE: VAL) has secured multiple new contracts following its fleet status report on February 21, 2023. Key highlights include:

• A three-year contract with Petrobras for drillship VALARIS DS-8, valued at approximately $500 million.
• A 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12.
• A 70-day contract for jackup VALARIS 107 with Beach Energy in New Zealand, worth around $26 million.

In updated guidance, contract drilling expenses are projected to rise, with first-quarter adjusted EBITDA expected to decrease. The full-year revenue forecast remains between $1.8 billion and $1.9 billion, unchanged from previous estimates.

Positive

• Secured a three-year contract with Petrobras for VALARIS DS-8, with a total value of approximately $500 million.
• Increased operational activity with multiple new contracts, indicating strong demand.
• Maintaining revenue guidance for 2023 between $1.8 billion and $1.9 billion, signaling stability.

Negative

• Increased contract drilling expenses by approximately $60 million for full-year 2023, raising total to $1.49 billion to $1.59 billion.
• Adjusted EBITDA expected to decrease by approximately $60 million, with a revised estimate of $180 million to $220 million for 2023.

HAMILTON, Bermuda--(BUSINESS WIRE)-- Valaris Limited (NYSE: VAL) (“Valaris” or the “Company”) announced today new contracts awarded subsequent to issuing the Company’s most recent fleet status report on February 21, 2023.

• Three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee.
• 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in second quarter 2023.
• 70-day contract with Beach Energy offshore New Zealand for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million.

President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.”

Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.”

Updated Guidance

As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, we are updating our first quarter 2023 and full-year 2023 guidance provided on our fourth quarter 2022 conference call on February 21, 2023.

First Quarter 2023

• Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million.
• Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call.

Full-Year 2023

• Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on our fourth quarter 2022 conference call.
• Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion.
• Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call.
• Capital expenditures are expected to increase by $60 million to $320 million to $360 million.

About Valaris Limited

Valaris Limited (NYSE: VAL) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles and modern shallow-water jackups, Valaris has experience operating in nearly every major offshore basin. Valaris maintains an unwavering commitment to safety, operational excellence, and customer satisfaction, with a focus on technology and innovation. Valaris Limited is a Bermuda exempted company (Bermuda No. 56245). To learn more, visit our website at www.valaris.com.

Cautionary Statements

Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "plan," "project," "could," "may," "might," "should," "will" and similar words and specifically include statements regarding expected financial performance; expected utilization, day rates, revenues, operating expenses, cash flows, contract status, terms and duration, contract backlog, capital expenditures, insurance, financing and funding; the offshore drilling market, including supply and demand, customer drilling programs, stacking of rigs, effects of new rigs on the market and effect of the volatility of commodity prices; expected work commitments, awards, contracts and letters of intent; performance of our joint ventures, including our joint venture with Saudi Aramco; the availability, delivery, mobilization, contract commencement, availability, relocation or other movement of rigs and the timing thereof; rig reactivations; suitability of rigs for future contracts; divestitures of assets; general economic, market, business and industry conditions, including inflation and recessions, trends and outlook; general political conditions, including political tensions, conflicts and war (such as the ongoing conflict in Ukraine); cybersecurity attacks and threats; the effect, impact, potential duration and other implications of COVID-19; future operations; increasing regulatory complexity; the outcome of tax disputes; assessments and settlements; and expense management. The forward-looking statements contained in this press release are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including cancellation, suspension, renegotiation or termination of drilling contracts and programs; our ability to obtain financing, service our debt, fund capital expenditures and pursue other business opportunities; adequacy of sources of liquidity for us and our customers; actions by regulatory authorities, or other third parties; actions by our security holders; internal control risk; commodity price fluctuations and volatility, customer demand, loss of a significant customer or customer contract; downtime and other risks associated with offshore rig operations; adverse weather, including hurricanes; changes in worldwide rig supply, including as a result of reactivations and newbuilds, and demand, competition and technology; supply chain and logistics challenges; consumer preferences for alternative fuels; increased scrutiny of our Environmental, Social and Governance practices, initiatives and reporting responsibilities; changes in customer strategy, including increased focus on renewable energy projects; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties; terrorism, piracy and military action; risks inherent to shipyard rig reactivation, construction, upgrade, repair, maintenance or enhancement; our ability to enter into, and the terms of, future drilling contracts; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; environmental or other liabilities, risks or losses; debt restrictions that may limit our liquidity and flexibility; and changes in foreign currency exchange rates. In addition to the numerous factors described above, you should also carefully read and consider "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our most recent annual report on Form 10-K, which is available on the SEC's website at www.sec.gov or on the Investor Relations section of our website at www.valaris.com. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements, except as required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230305005110/en/

Darin Gibbins

Vice President - Investor Relations and Treasurer

+1-713-979-4623

Tim Richardson

Director - Investor Relations

+1-713-979-4619

Source: Valaris Limited

FAQ

What new contracts did Valaris Limited secure in March 2023?

Valaris Limited announced a three-year contract with Petrobras for VALARIS DS-8, a 100-day contract with TotalEnergies for VALARIS DS-12, and a 70-day contract with Beach Energy for VALARIS 107.

What is the total value of the Petrobras contract for VALARIS DS-8?

The total value of the Petrobras contract for VALARIS DS-8 is approximately $500 million.

How much is Valaris expecting to increase its contract drilling expenses in 2023?

Valaris expects a $60 million increase in contract drilling expenses for 2023, totaling between $1.49 billion and $1.59 billion.

What is the updated guidance for Valaris Limited's revenue in 2023?

Valaris Limited maintains its revenue guidance for 2023 at between $1.8 billion and $1.9 billion.

What impact will the new contracts have on Valaris's operational activity?

The new contracts are expected to increase operational activity and enhance Valaris's revenue potential.