LONDON, Feb. 20, 2020 /PRNewswire/ -- Valaris plc (NYSE:
VAL) ("Valaris" or the "Company") today reported a net loss
attributable to the Company of $216
million, or $1.09 per share,
for fourth quarter 2019 compared to a net loss of $197 million, or $1.00 per share, in third quarter 2019. The
Company reported adjusted EBITDA of $22
million in fourth quarter 2019 compared to $35 million in third quarter 2019, and an
adjusted loss of $1.55 per share in
fourth quarter 2019 versus an adjusted loss of $1.27 per share in the prior quarter.
Chief Executive Officer and President Tom Burke said, "Last year was pivotal in the
company's evolution as an industry-leading offshore services
provider. In April, we merged two leading offshore drillers to form
Valaris and committed to delivering meaningful ongoing synergies
from the combination. We made great strides to integrate the
company in the months that followed, including completing the
majority of our planned integration activities that have resulted
in the company reaching approximately $135
million of annual run rate synergies by year-end 2019. Most
importantly, we continued to deliver safe, efficient and reliable
services to customers in 2019 – with 98% operational utilization
across the fleet and safety performance significantly better than
the industry – while achieving these integration and synergy
milestones, which is a testament to the hard work and
professionalism of our dedicated employees around the world."
Burke concluded, "We also enjoyed commercial success, signing
new contracts that added $1.8 billion
to our contracted revenue backlog during the year, reflecting the
success of our team's efforts to win new work for our rigs in
improving, albeit still challenging, market conditions. We have
carried this contracting momentum into 2020 with the addition of
incremental backlog and we are in advanced discussions with
customers for several new contracts. While our diverse,
high-quality modern rig fleet and technical expertise position us
well to continue adding future backlog, we expect to report losses
and have negative cash flows during 2020 despite gradual
improvement in utilization and average day rates for Valaris'
fleet."
Fourth Quarter Results
Revenues declined to $512 million
in fourth quarter 2019 from $551
million in the prior quarter primarily due to the sale of
VALARIS 5006, which operated during third quarter 2019. Fewer rig
operating days across the broader fleet also contributed to lower
revenues and a three percentage point decline in utilization to 61%
from 64% in the prior quarter.
Contract drilling expense declined to $477 million in fourth quarter 2019 from
$497 million in the prior quarter
primarily due to the sale of VALARIS 5006 and lower costs for
uncontracted floaters. This was partially offset by $11 million of merger transaction costs and
$6 million of non-recurring charges
for certain local employee benefits included in fourth quarter 2019
contract drilling expense, as compared to $8
million of merger transaction costs in third quarter
2019.
Fourth quarter 2019 results included a non-cash asset impairment
charge of $13 million related to
VALARIS JU-70, which has been classified as held-for-sale and is
expected to be retired from the global drilling fleet, and lease
impairment charges for legacy company facilities. Third quarter
2019 results included an $88 million
impairment charge related to VALARIS 5006.
Depreciation expense of $164
million in fourth quarter 2019 was in line with the prior
quarter. General and administrative expense increased to
$42 million from $36 million in the prior quarter mostly due to
$4 million of professional fees
associated with the Company's discussions with a significant
shareholder on a matter that was resolved in first quarter 2020.
Fourth quarter 2019 general and administrative expense also
included $8 million of merger
transaction costs, in line with the prior quarter.
Other income was $42 million in
fourth quarter 2019 compared to $40
million in the third quarter. The sequential quarter
comparison was influenced by $200
million of other income related to a payment received from
Samsung Heavy Industries ("SHI") and $20
million of other expense associated with a dispute with a
legacy company partner in the Middle
East that were included in fourth quarter 2019 results.
Additionally, there was a $23 million
loss in fourth quarter 2019 from an adjustment to bargain purchase
gain related to the merger compared to a $53
million loss in third quarter 2019 from an adjustment to
bargain purchase gain. The adjustment to bargain purchase gain
reflects changes in the estimated fair values of certain assets and
liabilities, primarily related to long-lived assets, deferred
income taxes and uncertain tax positions. Third quarter 2019 other
income also included a $194 million
gain resulting from the repurchase of senior notes. Interest
expense in fourth quarter 2019 was $115
million, net of $1 million of
interest that was capitalized, compared to interest expense of
$114 million in third quarter 2019,
net of $6 million of interest that
was capitalized.
Tax expense increased to $63
million in fourth quarter 2019 from $2 million in the prior quarter. The fourth
quarter 2019 tax provision included $21
million of discrete tax expense due to the resolution of
prior year tax matters, rig sales and the SHI settlement, compared
to $18 million of discrete tax
benefit in third quarter 2019 mostly due to the impairment charge
noted above. Adjusted for discrete items, tax expense increased
$22 million on a sequential-quarter
basis mostly due to changes in the estimate of taxable income
across operating jurisdictions during the year in addition to
valuation allowances on certain deferred tax assets recorded during
fourth quarter 2019.
Segment Highlights
Floaters
Floater revenues declined to $216
million in fourth quarter 2019 from $270 million in the prior quarter. The sequential
quarter decline was primarily due to VALARIS 5006, VALARIS DPS-1,
VALARIS DS-15 and VALARIS DS-4 completing contracts during the
third and fourth quarters. Average day rates declined to
$205,000 from $215,000 in the third quarter and utilization
declined by six percentage points to 42%. Adjusted for uncontracted
rigs and planned downtime, operational utilization was 97% compared
to 94% in the prior quarter.
Contract drilling expense declined to $217 million from $250
million in third quarter 2019 primarily due to the sale of
VALARIS 5006, lower mobilization costs and disciplined cost
management for rigs during uncontracted periods.
Jackups
Jackup revenues increased to $231
million in fourth quarter 2019 from $218 million in the prior quarter primarily due
to contract startups for three rigs offshore Norway during the fourth quarter as well as a
full quarter of revenue for VALARIS JU-107 and VALARIS JU-123,
which commenced new contracts during the third quarter. This was
partially offset by fewer operating days in fourth quarter 2019 for
several rigs that recently completed contracts. Average day rates
increased to $83,000 from
$78,000 in the prior quarter, while
utilization declined by two percentage points to 63%. Adjusted for
uncontracted rigs and planned downtime, operational utilization was
99%, equal to the third quarter.
Contract drilling expense increased to $228 million in fourth quarter 2019 from
$214 million in the third quarter
mostly due to higher operating costs for the rigs that started new
contracts along with the benefits adjustment noted above, partially
offset by lower costs resulting from a decline in operating days
and lower mobilization expenses in the fourth quarter.
ARO Drilling
ARO Drilling is a non-consolidated joint venture between Valaris
and Saudi Aramco to own, manage and operate drilling rigs. Revenues
increased to $148 million in fourth
quarter 2019 from $138 million in the
prior quarter and contract drilling expense increased to
$108 million from $93 million primarily due to the addition of
VALARIS JU-147 and VALARIS JU-148 to the active leased fleet.
General and administrative expense increased to $13 million in fourth quarter 2019 from
$9 million in the prior quarter due
to the transition of processes and personnel previously provided by
Valaris. Valaris accounts for its 50% interest in ARO Drilling
using the equity method of accounting and only recognizes its
portion of ARO Drilling's net income, which is included in equity
earnings of ARO Drilling in our consolidated statements of
operations. Valaris recognized a loss of $9.5 million in fourth quarter 2019 compared to a
loss of $3.7 million in third quarter
2019 inclusive of the effect of acquisition accounting and the
resulting amortization of basis differences that arose from the
fair value adjustment of our investment in ARO Drilling.
Other
Revenues increased to $65 million
from $64 million in the prior quarter
due to higher reimbursable revenue from managed rigs. Fourth
quarter 2019 revenues included $21
million of ARO Drilling leased revenue, $24 million of ARO Drilling reimbursables and
$20 million for managed rigs.
Contract drilling expense declined to $32
million from $33 million in
third quarter 2019 due to a decline in ARO Drilling reimbursable
costs.
|
|
Fourth
Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions of
$,
|
Floaters
|
|
Jackups
|
|
ARO
|
|
Other
|
|
Reconciling
Items
|
|
Consolidated
Total
|
except
%)
|
Q4
|
Q3
|
Chg
|
|
Q4
|
Q3
|
Chg
|
|
Q4
|
Q3
|
Chg
|
|
Q4
|
Q3
|
Chg
|
|
Q4
|
Q3
|
|
Q4
|
Q3
|
Chg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
216.3
|
|
269.8
|
|
(20)
|
%
|
|
230.6
|
|
217.8
|
|
6
|
%
|
|
148.3
|
|
138.4
|
|
7
|
%
|
|
65.2
|
|
63.7
|
|
2
|
%
|
|
(148.3)
|
|
(138.4)
|
|
|
512.1
|
|
551.3
|
|
(7)
|
%
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
drilling
|
217.3
|
|
250.3
|
|
(13)
|
%
|
|
227.8
|
|
213.5
|
|
7
|
%
|
|
108.5
|
|
92.7
|
|
17
|
%
|
|
31.5
|
|
32.7
|
|
(4)
|
%
|
|
(108.5)
|
|
(92.7)
|
|
|
476.6
|
|
496.5
|
|
(4)
|
%
|
|
Impairment
|
—
|
|
88.2
|
|
—
|
|
|
10.2
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
3.1
|
|
—
|
|
|
13.3
|
|
88.2
|
|
nm
|
|
Depreciation
|
97.3
|
|
98.1
|
|
(1)
|
%
|
|
61
|
|
59.0
|
|
3
|
%
|
|
13.4
|
|
14.6
|
|
(8)
|
%
|
|
—
|
|
—
|
|
—
|
|
|
(7.9)
|
|
(8.7)
|
|
|
163.8
|
|
163.0
|
|
—
|
|
|
General and
admin.
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
13.2
|
|
8.8
|
|
50
|
%
|
|
—
|
|
—
|
|
—
|
|
|
28.8
|
|
27.3
|
|
|
42.0
|
|
36.1
|
|
16
|
%
|
|
Equity in earnings of
ARO
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
|
(9.5)
|
|
(3.7)
|
|
|
(9.5)
|
|
(3.7)
|
|
nm
|
Operating income
(loss)
|
(98.3)
|
|
(166.8)
|
|
(41)
|
%
|
|
(68.4)
|
|
(54.7)
|
|
25
|
%
|
|
13.2
|
|
22.3
|
|
(41)
|
%
|
|
33.7
|
|
31.0
|
|
9
|
%
|
|
(73.3)
|
|
(68.0)
|
|
|
(193.1)
|
|
(236.2)
|
|
(18)
|
%
|
Financial Position — December 31,
2019
- $2.5 billion of contracted
revenue backlog excluding bonus opportunities
- $1.7 billion of liquidity
-
- $0.1 billion of cash
- $1.6 billion fully available
revolving credit facility
- $6.5 billion of total
debt(1)
- $9.3 billion of Valaris
shareholders' equity
(1)
|
Reflects principal
value of debt outstanding
|
The Company's capital structure provides significant flexibility
to address its near, medium and long term liabilities. The Company
is actively evaluating opportunities to enhance its capital
structure and address maturities of existing debt, including by
capturing debt discount and extending maturities. Given the
significant flexibility under its existing debt agreements, the
Company has access to a range of potential transactions, including
exchange offers and other debt repurchases, to address its capital
structure.
Valaris will conduct a conference call to discuss fourth quarter
and full-year 2019 results at 9:00 a.m.
CST (10:00 a.m. EST and
2:00 p.m. London) on Friday,
February 21, 2020. The call will be webcast live at
www.valaris.com. Alternatively, callers may dial 1-855-239-3215
within the United States or
+1-412-542-4130 from outside the U.S. Please ask for the Valaris
conference call. It is recommended that participants call
approximately 10 minutes prior to the scheduled start time.
A webcast replay and transcript of the call will be available at
www.valaris.com. A replay will also be available through
March 23, 2020 by dialing
1-877-344-7529 within the United
States or +1-412-317-0088 from outside the U.S. (conference
ID 10138649).
Valaris plc (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. With an unwavering commitment to safety and operational
excellence, and a focus on technology and innovation, Valaris was
rated first in total customer satisfaction in the latest
independent survey by EnergyPoint Research - the ninth consecutive
year that the Company has earned this distinction. Valaris plc is
an English limited company (England No. 7023598) with its corporate
headquarters located at 110 Cannon Street, London EC4N 6EU. To learn more, visit our
website at www.valaris.com.
Forward-Looking 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," "plan,"
"project," "could," "may," "might," "should," "will" and similar
words and specifically include statements involving expected
financial performance; effective tax rates, day rates and backlog;
estimated rig availability; rig commitments and contracts; contract
duration, status, terms and other contract commitments; letters of
intent; scheduled delivery dates for rigs; the timing of delivery,
mobilization, contract commencement, relocation or other movement
of rigs; our intent to sell or scrap rigs; and general market,
business and industry conditions, trends and outlook. In addition,
statements included in this press release regarding the anticipated
benefits, opportunities, synergies and effects of the merger
between Ensco and Rowan are forward-looking statements. 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 actions by regulatory authorities, rating agencies or
other third parties; actions by our security holders; costs and
difficulties related to the integration of Ensco and Rowan and the
related impact on our financial results and performance; our
ability to repay debt and the timing thereof; availability and
terms of any financing; commodity price fluctuations, customer
demand, new rig supply, downtime and other risks associated with
offshore rig operations, relocations, severe weather or hurricanes;
changes in worldwide rig supply and demand, competition and
technology; 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 construction, repair, maintenance or
enhancement; possible cancellation, suspension or termination of
drilling contracts as a result of mechanical difficulties,
performance, customer finances, the decline or the perceived risk
of a further decline in oil and/or natural gas prices, or other
reasons, including terminations for convenience (without cause);
our ability to enter into, and the terms of, future drilling
contracts; any failure to execute definitive contracts following
announcements of letters of intent, letters of award or other
expected work commitments; 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 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, as updated in our
subsequent quarterly reports on Form 10-Q, which are 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 publicly
update or revise any forward-looking statements, except as required
by law.
Investor & Media
Contact:
|
Nick
Georgas
|
|
Vice President -
Investor Relations and Corporate Communications
|
|
713-430-4607
|
VALARIS PLC AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In millions,
except per share amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
December 31,
2019
|
|
September 30,
2019
|
|
|
|
|
OPERATING
REVENUES
|
$
|
512.1
|
|
|
$
|
551.3
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
Contract drilling
(exclusive of depreciation)
|
476.6
|
|
|
496.5
|
|
Loss on
impairment
|
13.3
|
|
|
88.2
|
|
Depreciation
|
163.8
|
|
|
163.0
|
|
General and
administrative
|
42.0
|
|
|
36.1
|
|
Total operating
expenses
|
695.7
|
|
|
783.8
|
|
EQUITY IN EARNINGS OF
ARO
|
(9.5)
|
|
|
(3.7)
|
|
OPERATING
LOSS
|
(193.1)
|
|
|
(236.2)
|
|
|
|
|
|
OTHER INCOME
(EXPENSE)
|
|
|
|
Interest
income
|
6.0
|
|
|
6.7
|
|
Interest expense,
net
|
(115.1)
|
|
|
(113.9)
|
|
Other, net
|
151.0
|
|
|
147.4
|
|
|
41.9
|
|
|
40.2
|
|
|
|
|
|
LOSS FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES
|
(151.2)
|
|
|
(196.0)
|
|
|
|
|
|
PROVISION FOR INCOME
TAXES
|
62.8
|
|
|
1.5
|
|
|
|
|
|
NET LOSS
|
(214.0)
|
|
|
(197.5)
|
|
|
|
|
|
NET INCOME (LOSS)
ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
(2.0)
|
|
|
0.4
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE
TO VALARIS
|
$
|
(216.0)
|
|
|
$
|
(197.1)
|
|
|
|
|
|
EARNINGS (LOSS) PER
SHARE - BASIC AND DILUTED
|
|
|
|
Continuing
operations
|
$
|
(1.09)
|
|
|
$
|
(1.00)
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
$
|
(1.09)
|
|
|
$
|
(1.00)
|
|
WEIGHTED-AVERAGE
SHARES OUTSTANDING - BASIC AND DILUTED
|
197.6
|
|
|
197.6
|
|
VALARIS PLC AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
|
|
December
31,
|
|
December
31,
|
|
2019
|
|
2018
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
97.2
|
|
|
$
|
275.1
|
|
Short-term
investments
|
—
|
|
|
329.0
|
|
Accounts receivable,
net
|
520.7
|
|
|
344.7
|
|
Other current
assets
|
446.5
|
|
|
360.9
|
|
Total current
assets
|
$
|
1,064.4
|
|
|
$
|
1,309.7
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT, NET
|
15,096.9
|
|
|
12,616.2
|
|
|
|
|
|
LONG-TERM NOTES
RECEIVABLE FROM ARO
|
452.9
|
|
|
—
|
|
|
|
|
|
INVESTMENT IN
ARO
|
128.7
|
|
|
—
|
|
|
|
|
|
OTHER
ASSETS
|
188.3
|
|
|
97.8
|
|
|
$
|
16,931.2
|
|
|
$
|
14,023.7
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Current maturities of
long - term debt
|
$
|
124.8
|
|
|
$
|
—
|
|
Accounts payable and
accrued liabilities
|
705.9
|
|
|
528.5
|
|
Total current
liabilities
|
$
|
830.7
|
|
|
$
|
528.5
|
|
|
|
|
|
LONG-TERM
DEBT
|
5,923.5
|
|
|
5,010.4
|
|
|
|
|
|
OTHER
LIABILITIES
|
867.4
|
|
|
396.0
|
|
|
|
|
|
TOTAL
EQUITY
|
9,309.6
|
|
|
8,088.8
|
|
|
$
|
16,931.2
|
|
|
$
|
14,023.7
|
|
VALARIS PLC AND
SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In
millions)
|
(Unaudited)
|
|
|
Twelve Months
Ended
|
|
December
31
|
|
2019
|
|
2018
|
|
|
|
|
OPERATING
ACTIVITIES
|
|
|
|
Net loss
|
$
|
(192.2)
|
|
|
$
|
(636.6)
|
|
Adjustments to
reconcile net loss to net cash used in operating activities of
continuing operations:
|
|
|
|
Gain on bargain
purchase
|
(637.0)
|
|
|
(1.8)
|
|
Depreciation
expense
|
609.7
|
|
|
478.9
|
|
(Gain) loss on debt
extinguishment
|
(194.1)
|
|
|
19.0
|
|
Loss on
impairment
|
104.0
|
|
|
40.3
|
|
Amortization,
net
|
(16.8)
|
|
|
(40.2)
|
|
Share-based
compensation expense
|
37.3
|
|
|
29.9
|
|
Deferred income tax
expense
|
23.9
|
|
|
56.6
|
|
Equity in earnings of
ARO
|
12.6
|
|
|
—
|
|
Other
|
16.8
|
|
|
4.5
|
|
Contributions to
pension plans and other post retirement benefits
|
(13.2)
|
|
|
—
|
|
Changes in operating
assets and liabilities
|
(27.9)
|
|
|
(6.3)
|
|
Net cash used in
operating activities of continuing operations
|
(276.9)
|
|
|
(55.7)
|
|
INVESTING
ACTIVITIES
|
|
|
|
Rowan cash
acquired
|
931.9
|
|
|
—
|
|
Maturities of
short-term investments
|
474.0
|
|
|
1,030.0
|
|
Purchases of
short-term investments
|
(145.0)
|
|
|
(919.0)
|
|
Additions to property
and equipment
|
(227.0)
|
|
|
(426.7)
|
|
Net proceeds from
disposition of assets
|
17.7
|
|
|
11.0
|
|
Net cash provided by
(used in) investing activities of continuing operations
|
1,051.6
|
|
|
(304.7)
|
|
FINANCING
ACTIVITIES
|
|
|
|
Reduction of
long-term borrowings
|
(928.1)
|
|
|
(771.2)
|
|
Borrowings on credit
facility
|
215.0
|
|
|
—
|
|
Repayments of credit
facility borrowings
|
(215.0)
|
|
|
—
|
|
Debt solicitation
costs
|
(9.5)
|
|
|
—
|
|
Cash dividends
paid
|
(4.5)
|
|
|
(17.9)
|
|
Proceeds from
issuance of senior notes
|
—
|
|
|
1,000.0
|
|
Debt issuance
costs
|
—
|
|
|
(17.0)
|
|
Other
|
(10.2)
|
|
|
(5.7)
|
|
Net cash provided by
(used in) financing activities
|
(952.3)
|
|
|
188.2
|
|
Net cash provided by
discontinued operations
|
—
|
|
|
2.5
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(.3)
|
|
|
(.6)
|
|
INCREASE IN CASH AND
CASH EQUIVALENTS
|
(177.9)
|
|
|
(170.3)
|
|
CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD
|
275.1
|
|
|
445.4
|
|
CASH AND CASH
EQUIVALENTS, END OF PERIOD
|
$
|
97.2
|
|
|
$
|
275.1
|
|
VALARIS PLC AND
SUBSIDIARIES
|
OPERATING
STATISTICS
|
(Unaudited)
|
|
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
|
2019
|
|
2018
|
|
2019
|
|
|
|
|
|
|
|
Rig
Utilization(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floaters
|
|
42
|
%
|
|
40
|
%
|
|
48
|
%
|
Jackups
|
|
63
|
%
|
|
62
|
%
|
|
65
|
%
|
Other(2)
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
|
|
|
|
|
Total
|
|
61
|
%
|
|
55
|
%
|
|
64
|
%
|
|
|
|
|
|
|
|
ARO
|
|
93
|
%
|
|
—
|
|
|
89
|
%
|
|
|
|
|
|
|
|
Average Day
Rates(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Floaters
|
|
$
|
205,084
|
|
|
$
|
258,759
|
|
|
$
|
215,157
|
|
Jackups
|
|
83,222
|
|
|
76,222
|
|
|
77,888
|
|
Other(2)
|
|
43,644
|
|
|
83,690
|
|
|
47,553
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
101,472
|
|
|
$
|
125,642
|
|
|
$
|
106,157
|
|
|
|
|
|
|
|
|
ARO
|
|
$
|
107,921
|
|
|
$
|
—
|
|
|
$
|
109,862
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Rig utilization is
derived by dividing the number of days under contract by the number
of days in the period. Days under contract equals the total number
of days that rigs have earned and recognized day rate revenue,
including days associated with early contract terminations,
compensated downtime and mobilizations. When revenue is earned but
is deferred and amortized over a future period, for example when a
rig earns revenue while mobilizing to commence a new contract or
while being upgraded in a shipyard, the related days are excluded
from days under contract.
|
|
|
|
For newly-constructed
or acquired rigs, the number of days in the period begins upon
commencement of drilling operations for rigs with a contract or
when the rig becomes available for drilling operations for rigs
without a
contract.
|
|
|
(2)
|
Includes our two
management services contracts and our nine rigs leased to ARO.
|
|
|
(3)
|
Average day rates are
derived by dividing contract drilling revenues, adjusted to exclude
certain types of non-recurring reimbursable revenues, lump-sum
revenues and revenues attributable to amortization of drilling
contract intangibles, by the aggregate number of contract days,
adjusted to exclude contract days associated with certain
mobilizations, demobilizations, shipyard contracts and standby
contracts.
|
ARO
DRILLING
|
CONDENSED BALANCE
SHEET INFORMATION
|
(In
millions)
|
(Unaudited)
|
|
|
December 31,
2019
|
Current
assets
|
$
|
407.2
|
|
Non-current
assets
|
874.8
|
|
Total
assets
|
$
|
1,282.0
|
|
|
|
Current
liabilities
|
$
|
183.2
|
|
Non-current
liabilities
|
1,015.5
|
|
Total
liabilities
|
$
|
1,198.7
|
|
Non-GAAP Financial Measures (Unaudited)
To supplement Valaris' condensed consolidated financial
statements presented on a GAAP basis, this press release provides
investors with adjusted loss per share from continuing operations
and adjusted EBITDA, which are non-GAAP measures.
We believe that adjusted loss per share from continuing
operations provides meaningful supplemental information regarding
the company's performance by excluding certain charges that may not
be indicative of Valaris's ongoing operating results. This allows
investors and others to better compare financial results across
accounting periods and to those of peer companies, and to better
understand the long-term performance of our business.
Valaris defines "Adjusted EBITDA" as net loss from continuing
operations, other income (expense), income tax expense (benefit),
interest expense, depreciation, amortization, loss on impairment,
equity in earnings of ARO, (gain) loss on asset disposals,
transaction costs and significant non-recurring items. Adjusted
EBITDA is a non-GAAP measure that our management uses to facilitate
period-to-period comparisons of our core operating performance and
to evaluate our long-term financial performance against that of our
peers. We believe that this measure is useful to investors and
analysts in allowing for greater transparency of our core operating
performance and makes it easier to compare our results with those
of other companies within our industry. Adjusted EBITDA should not
be considered (a) in isolation of, or as a substitute for, net
income (loss), (b) as an indication of cash flows from operating
activities or (c) as a measure of liquidity. Adjusted EBITDA may
not be comparable to other similarly titled measures reported by
other companies.
Non-GAAP financial measures should be considered as a supplement
to, and not as a substitute for, or superior to, financial measures
prepared in accordance with GAAP.
Adjusted Loss Per Share
The table below reconciles loss per share, as calculated in
accordance with GAAP, to adjusted loss per share for the quarters
ended December 31, 2019 and September
30, 2019. Adjusted loss per share excludes the SHI
settlement, a legal dispute, transaction costs related to the
Valaris merger, bargain purchase gain adjustments, impairment
expense, a non-recurring employee benefit adjustment, legal fees
associated with a shareholder matter, gain on debt repurchases and
discrete tax items. Immediately following the completion of the
Valaris merger, every four existing Class A ordinary shares were
consolidated into one Class A ordinary share (the "Reverse Stock
Split"). All per share data below has been retroactively adjusted
to reflect the Reverse Stock Split.
LOSS PER SHARE
RECONCILIATION(1):
|
Three Months
Ended
|
|
|
December
2019
|
|
September
2019
|
|
Income (loss)
from
continuing
operations
attributable to
Valaris
shares(2)
|
|
Earnings
(loss) per
share from
continuing
operations
|
|
Income
(loss) from
continuing
operations
attributable
to Valaris
shares(2)
|
|
Earnings
(loss) per
share from
continuing
operations
|
Net loss attributable
to Valaris
|
$
|
(216.0)
|
|
|
$
|
(1.09)
|
|
|
$
|
(197.1)
|
|
|
$
|
(1.00)
|
|
Adjustments:
|
|
|
|
|
|
|
|
SHI
settlement
|
(200.0)
|
|
|
(1.01)
|
|
|
—
|
|
|
—
|
|
Legal
dispute
|
20.3
|
|
|
0.10
|
|
|
—
|
|
|
—
|
|
Transaction
costs
|
19.6
|
|
|
0.10
|
|
|
16.0
|
|
|
0.08
|
|
Bargain purchase
adjustment
|
22.8
|
|
|
0.12
|
|
|
53.0
|
|
|
0.27
|
|
Impairment
expense
|
13.3
|
|
|
0.07
|
|
|
88.2
|
|
|
0.45
|
|
Employee benefit
adjustment
|
6.2
|
|
|
0.03
|
|
|
—
|
|
|
—
|
|
Shareholder
matter
|
4.2
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
Gain on debt
repurchases
|
—
|
|
|
—
|
|
|
(194.1)
|
|
|
(0.98)
|
|
Discrete tax
items
|
21.3
|
|
|
0.11
|
|
|
(18.4)
|
|
|
(0.09)
|
|
Adjusted
|
$
|
(308.3)
|
|
|
$
|
(1.55)
|
|
|
$
|
(252.4)
|
|
|
$
|
(1.27)
|
|
|
|
(1)
|
No income was
allocated to participating securities under the two-class method
for the three-month period ended December 31, 2019 and September
30, 2019. Net loss attributable to Valaris shares excludes income
attributable to noncontrolling interest of $2.0 million and loss
attributable to noncontrolling interest of $0.4 million for the
three-month periods ended December 31, 2019 and
September 30, 2019, respectively.
|
|
|
(2)
|
The bargain purchase
adjustments are comprised of measurement period adjustments related
to purchase accounting for the Valaris merger.
|
Reconciliation of Net Loss to Adjusted EBITDA
A reconciliation of net loss as reported to Adjusted EBITDA for
the quarters ended December 31, 2019 and September 30, 2019 is included in the tables
below (in millions):
|
Three Months
Ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
|
|
|
Net loss
|
$
|
(214.0)
|
|
|
$
|
(197.5)
|
|
Add
(subtract):
|
|
|
|
Income tax
expense
|
62.8
|
|
|
1.5
|
|
Interest
expense
|
115.1
|
|
|
113.9
|
|
Other (income)
expense
|
(157.0)
|
|
|
(154.1)
|
|
Operating
loss
|
(193.1)
|
|
|
(236.2)
|
|
Add
(subtract):
|
|
|
|
Depreciation
expense
|
163.8
|
|
|
163.0
|
|
Amortization, net
(1)
|
1.3
|
|
|
(0.8)
|
|
Loss on
impairment
|
13.3
|
|
|
88.2
|
|
Equity in earnings of
ARO
|
9.5
|
|
|
3.7
|
|
(Gain) loss on asset
disposals
|
(3.1)
|
|
|
1.2
|
|
Transaction
costs
|
19.6
|
|
|
16.0
|
|
Employee benefit
adjustment
|
6.2
|
|
|
—
|
|
Shareholder
matter
|
4.2
|
|
|
—
|
|
Adjusted
EBITDA
|
$
|
21.7
|
|
|
$
|
35.1
|
|
|
|
(1)
|
Amortization, net,
includes amortization during the indicated period for deferred
mobilization revenues and costs, deferred capital upgrade revenues,
deferred certification costs, intangible amortization and other
amortization.
|
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SOURCE Valaris plc