Valaris Announces Contract Termination for Drillship VALARIS DS-11

Rhea-AI Summary

Valaris Limited (NYSE: VAL) announced the termination of its drilling contract for drillship VALARIS DS-11 by Equinor, effective end of June. This contract represented approximately $428 million of Valaris’ total backlog of $2.5 billion as of May 2, 2022. Despite disappointment over the termination, Valaris expects to secure other lucrative projects as day rates in the floater market have significantly improved since the contract was signed in July 2021. The company will receive an early termination fee sufficient to cover incurred expenses.

Positive

• Valaris expects to find new attractive projects in a recovering floater market.
• The company will receive an early termination fee that covers project-related expenses.

Negative

• The termination of the VALARIS DS-11 contract reduces the total backlog by $428 million.

HAMILTON, Bermuda--(BUSINESS WIRE)-- Valaris Limited (NYSE: VAL) (“Valaris” or the “Company”) announced today that Equinor has delivered a termination notice for the drilling contract awarded to drillship VALARIS DS-11. The termination will take effect at the end of June. Our total contract backlog of $2.5 billion as of May 2, 2022 included approximately $428 million related to this contract. Further details on the VALARIS DS-11 contract can be found in our latest Fleet Status Report dated May 2, 2022.

As a result of the contract termination, Valaris will receive an early termination fee that is more than sufficient to cover expenses and commitments incurred by Valaris on the project.

President and Chief Executive Officer Anton Dibowitz said, “While we are disappointed that this contract has been terminated, the floater market and day rates have improved meaningfully since this contract was entered into in July 2021, and we expect there will be other attractive projects for a high specification drillship like VALARIS DS-11 with similar or earlier commencement dates.”

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. 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 the COVID-19 outbreak and global pandemic and the related public health measures implemented by governments worldwide; the cancellation, suspension, renegotiation or termination of drilling contracts and programs, including drilling contracts which grant the customer termination rights if final investment decision (FID) is not received with respect to projects for which the drilling rig is contracted; oil and natural gas price volatility, customer demand for drilling rigs; downtime and other risks associated with offshore rig operations; severe weather or hurricanes; changes in worldwide rig supply, competition and technology; risks inherent to shipyard rig reactivation, upgrade, repair or maintenance; our ability to enter into, and the terms of, future drilling contracts; suitability of rigs for future contracts; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to obtain financing, fund capital expenditures and pursue other business opportunities; the effects of our emergence from bankruptcy on the Company's business, relationships, comparability of our financial results and ability to access financing sources; actions taken by regulatory authorities or other third parties, including related to the COVID-19 global pandemic; increased scrutiny of Environmental, Social and Governance (“ESG”) practices and reporting responsibilities; changes in customer strategy; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties; terrorism, piracy and military action; environmental or other liabilities, risks or losses; debt agreement restrictions that may limit our liquidity and flexibility; failure to satisfy our debt obligations; and cybersecurity risks and threats. 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 Securities and Exchange Commission’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/20220601005905/en/

Investor & Media Contact:

Tim Richardson

Director - Investor Relations

+1-713-979-4619

Source: Valaris Limited

FAQ

What caused the termination of the VALARIS DS-11 contract?

Equinor delivered a termination notice for the drilling contract awarded to Valaris for drillship VALARIS DS-11.

How much backlog will Valaris lose due to the contract termination?

Valaris will lose approximately $428 million from its total contract backlog of $2.5 billion.

When will the VALARIS DS-11 contract termination take effect?

The contract termination will take effect at the end of June.

What are Valaris' expectations following the termination of the VALARIS DS-11 contract?

Valaris expects to secure other attractive projects due to improved day rates in the floater market.