Valaris Limited (NYSE: VAL) ("Valaris" or the "Company") today
reported fourth quarter 2023 results.
President and Chief Executive Officer Anton Dibowitz said, “We
continue to execute on our operating leverage by repricing rigs
from legacy day rates to meaningfully higher market rates and
successfully delivering reactivated rigs with attractive contracts.
At the same time, we remain laser focused on delivering high levels
of operational performance to our customers, as evidenced by
another strong year of revenue efficiency.”
Dibowitz added, “During the fourth quarter, we were awarded new
contracts and extensions with associated contract backlog of more
than $1.4 billion. These awards include two multi-year drillship
contracts at leading-edge day rates and several jackup contracts
across the North Sea, Australia and Trinidad, demonstrating the
depth of our customer relationships, track record of operational
delivery and broad-based strength of the market.”
Dibowitz concluded, “We remain confident in the strength and
duration of this upcycle and the outlook for Valaris is positive.
We expect to deliver significant earnings and cash flow growth over
the next few years and we intend to return all future free cash
flow to shareholders unless there is a better or more value
accretive use for it.”
Financial and Operational Highlights
- Net income of $829 million (including tax benefit of $790
million), Adjusted EBITDA of $58 million and Adjusted EBITDAR of
$96 million;
- Delivered revenue efficiency of 93% during the quarter and 96%
for the year;
- VALARIS DS-8 commenced a contract offshore Brazil late in the
quarter, following its reactivation;
- VALARIS 110 received TotalEnergies' and North Oil Company's
global jackup Rig of the Year award;
- Awarded new contracts and extensions with associated contract
backlog of more than $1.4 billion during the fourth quarter;
- Increased total contract backlog to more than $3.9 billion as
of February 15, 2024, representing a nearly 60% increase from
twelve months ago;
- Took delivery of newbuild drillships VALARIS DS-13 and
DS-14;
- Repurchased $50 million of shares during the fourth quarter and
$200 million during the year;
- Valaris Board of Directors authorized an increase in the
Company's share repurchase program to $600 million from $300
million in February 2024;
- ARO Drilling took delivery of newbuild jackup Kingdom 1, and
the rig started its maiden contract, during the fourth
quarter.
Fourth Quarter Review
Net income increased to $829 million from $17 million in the
third quarter 2023. Net income for the fourth quarter 2023 included
a tax benefit of $790 million discussed below. Adjusted EBITDA
increased to $58 million from $40 million in the third quarter
primarily due to more operating days across the fleet and lower
reactivation expense. Adjusted EBITDAR increased to $96 million
from $91 million in the third quarter.
Revenues increased to $484 million from $455 million in the
third quarter 2023. Excluding reimbursable items, revenues
increased to $453 million from $427 million in the third quarter.
The increase was primarily due to more operating days across the
fleet, including for drillship VALARIS DS-17 that commenced a
contract in early September, following its reactivation, and jackup
VALARIS 107, which started a contract early in the fourth quarter
after being idle for most of the third quarter.
Contract drilling expense increased to $402 million from $391
million in the third quarter 2023. Excluding reimbursable items,
contract drilling expense increased to $374 million from $369
million in the third quarter primarily due to the increase in
operating days mentioned above. This was partially offset by lower
reactivation expense and lower repair and maintenance expense for
the jackup fleet.
Depreciation expense increased to $28 million from $26 million
in the third quarter 2023. General and administrative expense of
$24 million was in line with the third quarter 2023.
Other income decreased to $0 million from $11 million in the
third quarter 2023. This was primarily due to foreign currency
exchange losses during the quarter compared to gains in the third
quarter and an increase in interest expense associated with a $400
million debt issuance that was completed in the third quarter.
Tax benefit was $790 million compared to tax expense of $11
million in the third quarter 2023. The fourth quarter tax provision
included $800 million of tax benefit due to changes in deferred tax
asset valuation allowances.
Cash and cash equivalents and restricted cash decreased to $636
million as of December 31, 2023, from $1.1 billion as of September
30, 2023. The decrease was primarily due to capital expenditures
and share repurchases, partially offset by positive operating cash
flow.
Capital expenditures increased to $463 million from $106 million
in the third quarter 2023 primarily due to the Company exercising
options to take delivery of newbuild drillships VALARIS DS-13 and
DS-14 for an aggregate purchase price of $337 million during the
quarter.
Fourth Quarter Segment Review
Floaters
Floater revenues increased to $263 million from $243 million in
the third quarter 2023. Excluding reimbursable items, revenues
increased to $247 million from $232 million in the third quarter.
The increase was primarily due to more operating days for VALARIS
DS-17, which commenced its contract with Equinor offshore Brazil in
early September, following its reactivation. This was partially
offset by fewer operating days for VALARIS DS-12 due to
mobilization and a brief shipyard visit between contracts.
Contract drilling expense increased to $226 million from $215
million in the third quarter 2023. Excluding reimbursable items,
contract drilling expense increased to $211 million from $206
million in the third quarter. The increase was primarily due to
more operating days for VALARIS DS-17, partially offset by lower
reactivation expense.
Jackups
Jackup revenues increased to $179 million from $166 million in
the third quarter 2023. Excluding reimbursable items, revenues
increased to $170 million from $155 million in the third quarter
primarily due to more operating days for VALARIS 107, 249 and
Norway, all of which incurred some idle time during the third
quarter. This was partially offset by fewer operating days for
VALARIS 76 and 123, both of which completed contracts during the
fourth quarter and are undergoing contract preparation and planned
maintenance work prior to the start of their next contracts in
2024.
Contract drilling expense increased to $123 million from $122
million in the third quarter 2023. Excluding reimbursable items,
contract drilling expense increased to $115 million from $114
million in the third quarter. Contract drilling expense was largely
flat on higher revenues primarily due to lower repair and
maintenance expense.
ARO Drilling
Revenues increased to $134 million from $122 million in the
third quarter 2023 primarily due to newbuild jackup Kingdom 1
commencing its maiden contract in November and more operating days
for ARO 4001 following some out of service days for planned
maintenance during the third quarter. Contract drilling expense
decreased to $88 million from $92 million in the third quarter
primarily due to lower bareboat charter expense, partially offset
by more operating days for the owned fleet.
Other
Revenues decreased to $41 million from $46 million in the third
quarter 2023 primarily due to lower revenues earned from bareboat
charter agreements with ARO. Contract drilling expense decreased to
$18 million from $19 million in the third quarter.
Fourth Quarter
Floaters
Jackups
ARO (1)
Other
Reconciling Items (1) (2)
Consolidated Total
(in millions, except %)
Q4 2023
Q3 2023
Chg
Q4 2023
Q3 2023
Chg
Q4 2023
Q3 2023
Chg
Q4 2023
Q3 2023
Chg
Q4 2023
Q3 2023
Q4 2023
Q3 2023
Chg
Revenues
$
263.2
$
243.3
8
%
$
179.3
$
165.9
8
%
$
133.7
$
121.5
10
%
$
41.3
$
45.9
(10
)%
$
(133.7
)
$
(121.5
)
$
483.8
$
455.1
6
%
Operating expenses
Contract drilling
226.0
215.2
(5
)%
123.3
121.7
(1
)%
88.0
92.0
4
%
18.0
18.8
4
%
(53.3
)
(56.8
)
402.0
390.9
(3
)%
Depreciation
15.0
14.2
(6
)%
11.2
10.2
(10
)%
19.5
15.8
(23
)%
1.2
1.3
8
%
(19.4
)
(15.7
)
27.5
25.8
(7
)%
General and admin.
—
—
—
%
—
—
—
%
6.3
5.6
(13
)%
—
—
—
%
18.0
18.6
24.3
24.2
—
%
Equity in earnings of ARO
—
—
—
%
—
—
—
%
—
—
—
%
—
—
—
%
8.3
2.4
8.3
2.4
246
%
Operating income
$
22.2
$
13.9
60
%
$
44.8
$
34.0
32
%
$
19.9
$
8.1
146
%
$
22.1
$
25.8
(14
)%
$
(70.7
)
$
(65.2
)
$
38.3
$
16.6
131
%
Net income (loss)
$
24.3
$
14.5
68
%
$
46.1
$
34.4
34
%
$
10.3
$
(1.3
)
nm
$
22.1
$
25.8
(14
)%
$
725.7
$
(56.4
)
$
828.5
$
17.0
nm
Adjusted EBITDA
$
37.2
$
28.2
32
%
$
56.0
$
44.2
27
%
$
39.4
$
23.9
65
%
$
23.2
$
27.2
(15
)%
$
(98.3
)
$
(83.5
)
$
57.5
$
40.0
44
%
Adjusted EBITDAR
$
75.7
$
79.1
(4
)%
$
56.0
$
44.2
27
%
$
39.4
$
23.9
65
%
$
23.2
$
27.2
(15
)%
$
(98.3
)
$
(83.5
)
$
96.0
$
90.9
6
%
(1)
The full operating results included above
for ARO are not included within our consolidated results and thus
deducted under "Reconciling Items" and replaced with our equity in
earnings of ARO.
(2)
Our onshore support costs included within
contract drilling expenses are not allocated to our operating
segments for purposes of measuring segment operating income (loss)
and as such, those costs are included in “reconciling items.”
Further, general and administrative expense and depreciation
expense incurred by our corporate office are not allocated to our
operating segments for purposes of measuring segment operating
income (loss) and are included in "reconciling items"
As previously announced, Valaris will hold its fourth quarter
2023 earnings conference call at 9:00 a.m. CST (10:00 a.m. ET) on
Thursday, February 22, 2024. An updated investor presentation will
be available on the Valaris website after the call.
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. To learn more, visit the Valaris 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," "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 and the attainment of
requisite permits for such 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; scheduled delivery dates for rigs; performance of our joint
ventures, including our joint venture with Saudi Aramco; timing of
the delivery of the Saudi Aramco Rowan Offshore Drilling Company
("ARO") newbuild rigs and the timing of additional ARO newbuild
orders; 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; cybersecurity
attacks and threats; impacts and effects of public health crises,
pandemics and epidemics; future operations; ability to renew
expiring contracts or obtain new contracts, including for VALARIS
DS-13 and VALARIS DS-14; increasing regulatory complexity; targets,
progress, plans and goals related to sustainability matters; 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; future share repurchases;
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 and forecasts or expectations
regarding the global energy transition; increased scrutiny of our
sustainability targets, initiatives and reporting and our ability
to achieve such targets or initiatives; changes in customer
strategy; future levels of offshore drilling activity; governmental
action, civil unrest and political and economic uncertainties,
including recessions, volatility affecting the banking system and
financial markets, inflation and adverse changes in the level of
international trade activity; terrorism, piracy and military
action; risks inherent to shipyard rig reactivation, upgrade,
repair, maintenance or enhancement; our ability to enter into, and
the terms of, future drilling contracts; suitability of rigs for
future contracts; the cancellation of letters of intent or letters
of award or 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; compliance with our debt
agreements and debt restrictions that may limit our liquidity and
flexibility; cybersecurity risks and threats; 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 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.
VALARIS LIMITED AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(In millions, except per share
amounts)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
OPERATING REVENUES
$
483.8
$
455.1
$
415.2
$
430.1
$
433.6
OPERATING EXPENSES
Contract drilling (exclusive of
depreciation)
402.0
390.9
373.5
377.2
353.4
Depreciation
27.5
25.8
24.5
23.3
23.8
General and administrative
24.3
24.2
26.4
24.4
23.9
Total operating expenses
453.8
440.9
424.4
424.9
401.1
EQUITY IN EARNINGS (LOSSES) OF ARO
8.3
2.4
(0.7
)
3.3
8.6
OPERATING INCOME (LOSS)
38.3
16.6
(9.9
)
8.5
41.1
OTHER INCOME (EXPENSE)
Interest income
27.2
26.6
24.6
23.0
15.5
Interest expense, net
(21.7
)
(19.4
)
(16.7
)
(11.1
)
(10.5
)
Other, net
(5.5
)
3.9
(0.8
)
0.6
(5.2
)
—
11.1
7.1
12.5
(0.2
)
INCOME (LOSS) BEFORE INCOME TAXES
38.3
27.7
(2.8
)
21.0
40.9
PROVISION (BENEFIT) FOR INCOME TAXES
(790.2
)
10.7
24.5
(27.6
)
9.8
NET INCOME (LOSS)
828.5
17.0
(27.3
)
48.6
31.1
NET (INCOME) LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
6.7
(4.1
)
(2.1
)
(1.9
)
(1.9
)
NET INCOME (LOSS) ATTRIBUTABLE TO
VALARIS
$
835.2
$
12.9
$
(29.4
)
$
46.7
$
29.2
EARNINGS (LOSS) PER SHARE
Basic
$
11.47
$
0.18
$
(0.39
)
$
0.62
$
0.39
Diluted
$
11.30
$
0.17
$
(0.39
)
$
0.61
$
0.38
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic
72.8
73.7
74.8
75.2
75.2
Diluted
73.9
74.8
74.8
76.4
76.0
VALARIS LIMITED AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In millions)
As of
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
620.5
$
1,041.1
$
787.3
$
822.5
$
724.1
Restricted cash
15.2
16.2
18.0
21.5
24.4
Accounts receivable, net
459.3
492.4
473.4
393.4
449.1
Other current assets
177.2
178.7
168.7
158.1
148.6
Total current assets
$
1,272.2
$
1,728.4
$
1,447.4
$
1,395.5
$
1,346.2
PROPERTY AND EQUIPMENT, NET
1,633.8
1,159.9
1,073.7
1,015.5
977.2
LONG-TERM NOTES RECEIVABLE FROM ARO
282.3
275.2
268.0
261.0
254.0
INVESTMENT IN ARO
124.4
116.1
113.7
114.4
111.1
DEFERRED TAX ASSETS
855.1
53.8
48.5
50.5
55.1
OTHER ASSETS
154.4
151.5
137.1
114.3
116.7
$
4,322.2
$
3,484.9
$
3,088.4
$
2,951.2
$
2,860.3
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable - trade
$
400.1
$
376.4
$
364.2
$
324.1
$
256.5
Accrued liabilities and other
344.2
346.6
294.7
267.7
247.9
Total current liabilities
$
744.3
$
723.0
$
658.9
$
591.8
$
504.4
LONG-TERM DEBT
1,079.3
1,079.4
681.9
542.8
542.4
DEFERRED TAX LIABILITIES
29.9
17.1
16.7
16.1
16.1
OTHER LIABILITIES
471.7
465.4
464.8
448.5
499.5
TOTAL LIABILITIES
2,325.2
2,284.9
1,822.3
1,599.2
1,562.4
TOTAL EQUITY
1,997.0
1,200.0
1,266.1
1,352.0
1,297.9
$
4,322.2
$
3,484.9
$
3,088.4
$
2,951.2
$
2,860.3
VALARIS LIMITED AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
Year Ended December 31,
2023
2022
OPERATING ACTIVITIES
Net income
$
866.8
$
181.8
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income tax expense (benefit)
(786.4
)
7.9
Depreciation expense
101.1
91.2
Loss on extinguishment of debt
29.2
—
Net gain on sale of property
(28.6
)
(141.2
)
Accretion of discount on notes receivable
from ARO
(28.3
)
(44.9
)
Share-based compensation expense
27.3
17.4
Equity in earnings of ARO
(13.3
)
(24.5
)
Net periodic pension and retiree medical
income
(0.9
)
(16.4
)
Loss on impairment
—
34.5
Changes in deferred costs
(26.1
)
(38.8
)
Changes in contract liabilities
4.9
62.4
Other
6.7
8.3
Changes in operating assets and
liabilities
121.8
(6.6
)
Contributions to pension plans and other
post-retirement benefits
(6.7
)
(4.1
)
Net cash provided by operating
activities
$
267.5
$
127.0
INVESTING ACTIVITIES
Additions to property and equipment
$
(696.1
)
$
(207.0
)
Net proceeds from disposition of
assets
30.3
150.3
Purchases of short-term investments
—
(220.0
)
Maturities of short-term investments
—
220.0
Repayment of note receivable from ARO
—
40.0
Net cash used in investing activities
$
(665.8
)
$
(16.7
)
FINANCING ACTIVITIES
Issuance of Second Lien Notes
$
1,103.0
$
—
Redemption of First Lien Notes
(571.8
)
—
Payments for share repurchases
(198.6
)
—
Debt issuance costs
(38.6
)
—
Payments for tax withholdings for
share-based awards
(5.4
)
(2.5
)
Consent solicitation fees
—
(3.9
)
Other
(3.1
)
—
Net cash provided by (used in) financing
activities
$
285.5
$
(6.4
)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS AND RESTRICTED CASH
$
(112.8
)
$
103.9
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
748.5
644.6
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
635.7
$
748.5
VALARIS LIMITED AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
OPERATING ACTIVITIES
Net income (loss)
$
828.5
$
17.0
$
(27.3
)
$
48.6
$
31.1
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Deferred income tax expense (benefit)
(788.7
)
(4.8
)
2.5
4.6
0.8
Depreciation expense
27.5
25.8
24.5
23.3
23.8
Equity in losses (earnings) of ARO
(8.3
)
(2.4
)
0.7
(3.3
)
(8.6
)
Share-based compensation expense
7.8
6.8
7.0
5.7
5.9
Accretion of discount on notes
receivable
(7.1
)
(7.2
)
(7.0
)
(7.0
)
(7.1
)
Net gain on sale of property
(0.7
)
—
(27.8
)
(0.1
)
(3.5
)
Net periodic pension and retiree medical
income
(0.6
)
(0.1
)
(0.1
)
(0.1
)
(4.3
)
Loss on extinguishment of debt
—
—
29.2
—
—
Changes in contract liabilities
8.8
3.6
13.3
(20.8
)
3.6
Changes in deferred costs
3.2
(22.4
)
(7.4
)
0.5
8.8
Other
1.2
2.8
2.2
0.5
0.4
Changes in operating assets and
liabilities
27.3
31.0
(37.3
)
100.8
103.0
Contributions to pension plans and other
post-retirement benefits
(2.2
)
(1.9
)
(1.6
)
(1.0
)
0.8
Net cash provided by (used in) operating
activities
$
96.7
$
48.2
$
(29.1
)
$
151.7
$
154.7
INVESTING ACTIVITIES
Additions to property and equipment
$
(463.0
)
$
(105.8
)
$
(71.0
)
$
(56.3
)
$
(53.9
)
Net proceeds from disposition of
assets
1.1
0.1
29.0
0.1
3.5
Maturities of short-term investments
—
—
—
—
220.0
Net cash provided by (used in) investing
activities
$
(461.9
)
$
(105.7
)
$
(42.0
)
$
(56.2
)
$
169.6
FINANCING ACTIVITIES
Payments for share repurchases
$
(51.2
)
$
(83.0
)
$
(64.4
)
$
—
$
—
Debt issuance costs
(1.9
)
(5.7
)
(31.0
)
—
—
Payments for tax withholdings for
share-based awards
(0.2
)
(4.8
)
(0.4
)
—
—
Issuance of Second Lien Notes
—
403.0
700.0
—
—
Redemption of First Lien Notes
—
—
(571.8
)
—
—
Other
(3.1
)
—
—
—
—
Net cash provided by (used in) financing
activities
$
(56.4
)
$
309.5
$
32.4
$
—
$
—
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS AND RESTRICTED CASH
$
(421.6
)
$
252.0
$
(38.7
)
$
95.5
$
324.3
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
1,057.3
805.3
844.0
748.5
424.2
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
635.7
$
1,057.3
$
805.3
$
844.0
$
748.5
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
REVENUES
Floaters
Drillships
$
190.7
$
168.2
$
147.2
$
138.9
$
144.5
Semisubmersibles
56.3
64.1
68.5
67.1
58.2
$
247.0
$
232.3
$
215.7
$
206.0
$
202.7
Reimbursable and Other Revenues (1)
16.2
11.0
11.7
8.8
8.3
Total Floaters
$
263.2
$
243.3
$
227.4
$
214.8
$
211.0
Jackups (2)
HD Ultra-Harsh & Harsh Environment
$
76.6
$
75.5
$
54.1
$
70.9
$
92.9
HD & SD Modern
79.0
68.8
67.9
70.4
62.4
SD Legacy
14.2
10.5
12.5
20.4
20.2
$
169.8
$
154.8
$
134.5
$
161.7
$
175.5
Reimbursable and Other Revenues (1)
9.5
11.1
10.1
8.1
6.3
Total Jackups
$
179.3
$
165.9
$
144.6
$
169.8
$
181.8
Other
Leased and Managed Rigs
$
36.0
$
40.1
$
37.4
$
39.1
$
33.5
Reimbursable and Other Revenues (1)
5.3
5.8
5.8
6.4
7.3
Total Other
$
41.3
$
45.9
$
43.2
$
45.5
$
40.8
Total Operating Revenues
$
483.8
$
455.1
$
415.2
$
430.1
$
433.6
Total Reimbursable and Other Revenues
(1)
$
31.0
$
27.9
$
27.6
$
23.3
$
21.9
Revenues Excluding Reimbursable and Other
Revenues
$
452.8
$
427.2
$
387.6
$
406.8
$
411.7
(1)
Reimbursable and other revenues include
certain types of non-recurring reimbursable revenues, revenues
earned during suspension periods and revenues attributable to
amortization of contract intangibles.
(2)
HD = Heavy Duty; SD = Standard Duty. Heavy
duty jackups are well-suited for operations in tropical revolving
storm areas.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
ADJUSTED EBITDA (1)
Floaters
Drillships (1)
$
16.7
$
2.8
$
0.3
$
12.2
$
18.5
Semisubmersibles (1)
20.5
25.4
30.8
28.0
20.0
$
37.2
$
28.2
$
31.1
$
40.2
$
38.5
Jackups
HD Ultra-Harsh & Harsh (1)
$
21.1
$
20.9
$
6.1
$
3.0
$
31.4
HD & SD - Modern (1)
30.1
20.4
11.6
9.4
13.0
SD - Legacy (1)
4.8
2.9
3.4
8.4
9.8
$
56.0
$
44.2
$
21.1
$
20.8
$
54.2
Total
$
93.2
$
72.4
$
52.2
$
61.0
$
92.7
Other
Leased and Managed Rigs (1)
$
23.2
$
27.2
$
24.9
$
25.4
$
22.3
Total
$
116.4
$
99.6
$
77.1
$
86.4
$
115.0
Support
costs
General and administrative expense
$
24.3
$
24.2
$
26.4
$
24.4
$
23.9
Onshore support costs
34.6
35.4
35.4
33.5
32.8
$
58.9
$
59.6
$
61.8
$
57.9
$
56.7
Valaris Total
$
57.5
$
40.0
$
15.3
$
28.5
$
58.3
(1)
Adjusted EBITDA is earnings before
interest, tax, depreciation and amortization. Adjusted EBITDA for
asset category also excludes onshore support costs and general and
administrative expense.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
ADJUSTED EBITDAR (1)
Active Fleet (1) (2)
$
137.5
$
129.3
$
104.5
$
100.4
$
121.5
Leased and Managed Rigs (1)
23.2
27.2
24.9
25.4
22.3
$
160.7
$
156.5
$
129.4
$
125.8
$
143.8
Stacked Fleet (1) (3)
(5.8
)
(6.0
)
(8.2
)
(13.1
)
(8.1
)
$
154.9
$
150.5
$
121.2
$
112.7
$
135.7
Support
costs
General and administrative expense
$
24.3
$
24.2
$
26.4
$
24.4
$
23.9
Onshore support costs
34.6
35.4
35.4
33.5
32.8
$
58.9
$
59.6
$
61.8
$
57.9
$
56.7
Valaris Total
$
96.0
$
90.9
$
59.4
$
54.8
$
79.0
Reactivation costs (4)
$
38.5
$
50.9
$
44.1
$
26.3
$
20.7
(1)
Adjusted EBITDAR is earnings before
interest, tax, depreciation, amortization and reactivation costs.
Adjusted EBITDAR for active fleet, leased and managed rigs and
stacked fleet also excludes onshore support costs and general and
administrative expense.
(2)
Active fleet represents rigs that are not
preservation stacked, including rigs that are in the process of
being reactivated.
(3)
Stacked fleet represents the combined
total of all preservation and stacking costs.
(4)
Reactivation costs, all of which are
attributed to Valaris' active fleet, are excluded from adjusted
EBITDAR.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
ADJUSTED EBITDAR (1)
Floaters
Drillships (1)
$
55.2
$
53.7
$
44.4
$
38.2
$
38.8
Semisubmersibles (1)
20.5
25.4
30.9
28.2
20.4
$
75.7
$
79.1
$
75.3
$
66.4
$
59.2
Jackups
HD Ultra-Harsh & Harsh (1)
$
21.1
$
20.9
$
6.1
$
3.1
$
31.4
HD & SD - Modern (1)
30.1
20.4
11.5
9.4
13.0
SD - Legacy (1)
4.8
2.9
3.4
8.4
9.8
$
56.0
$
44.2
$
21.0
$
20.9
$
54.2
Total
$
131.7
$
123.3
$
96.3
$
87.3
$
113.4
Other
Leased and Managed Rigs (1)
$
23.2
$
27.2
$
24.9
$
25.4
$
22.3
Total
$
154.9
$
150.5
$
121.2
$
112.7
$
135.7
Support
costs
General and administrative expense
$
24.3
$
24.2
$
26.4
$
24.4
$
23.9
Onshore support costs
34.6
35.4
35.4
33.5
32.8
$
58.9
$
59.6
$
61.8
$
57.9
$
56.7
Valaris Total
$
96.0
$
90.9
$
59.4
$
54.8
$
79.0
(1)
Adjusted EBITDAR is earnings before
interest, tax, depreciation, amortization and reactivation costs.
Adjusted EBITDAR for asset category also excludes onshore support
costs and general and administrative expense.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
(In millions)
As of
Feb 15, 2024
Nov 1, 2023
Aug 1, 2023
May 1, 2023
Feb 21, 2023
CONTRACT BACKLOG (1)
Floaters
Drillships
$
2,307.6
$
1,726.5
$
1,684.9
$
1,499.0
$
1,062.3
Semisubmersibles
224.1
259.5
272.4
270.2
314.6
$
2,531.7
$
1,986.0
$
1,957.3
$
1,769.2
$
1,376.9
Jackups
HD Ultra-Harsh & Harsh
646.8
327.9
307.4
277.7
348.3
HD & SD - Modern
347.1
406.8
366.8
317.7
341.1
SD - Legacy
173.5
186.9
118.4
119.7
52.9
$
1,167.4
$
921.6
$
792.6
$
715.1
$
742.3
Total
$
3,699.1
$
2,907.6
$
2,749.9
$
2,484.3
$
2,119.2
Other
Leased and Managed Rigs
$
222.3
$
250.5
$
291.4
$
318.9
$
344.0
Valaris Total
$
3,921.4
$
3,158.1
$
3,041.3
$
2,803.2
$
2,463.2
(1)
Our contract drilling backlog reflects
commitments, represented by signed drilling contracts, and is
calculated by multiplying the contracted day rate by the contract
period. Contract drilling backlog includes drilling contracts
subject to FID and drilling contracts which grant the customer
termination rights if FID is not received with respect to projects
for which the drilling rig is contracted. The contracted day rate
excludes certain types of lump sum fees for rig mobilization,
demobilization, contract preparation, as well as customer
reimbursables and bonus opportunities.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
AVERAGE DAILY REVENUE (1)
Floaters
Drillships
$
307,000
$
288,000
$
253,000
$
239,000
$
232,000
Semisubmersibles
229,000
257,000
252,000
259,000
220,000
$
285,000
$
279,000
$
252,000
$
245,000
$
229,000
Jackups
HD Ultra-Harsh & Harsh
$
111,000
$
116,000
$
100,000
$
126,000
$
119,000
HD & SD Modern
119,000
105,000
102,000
98,000
87,000
SD Legacy
79,000
83,000
81,000
76,000
74,000
$
111,000
$
108,000
$
99,000
$
104,000
$
99,000
Total
$
174,000
$
171,000
$
158,000
$
154,000
$
143,000
Other
Leased and Managed Rigs
$
39,000
$
44,000
$
41,000
$
44,000
$
36,000
Valaris Total
$
136,000
$
134,000
$
124,000
$
124,000
$
115,000
(1)
Average daily revenue is derived by
dividing contract drilling revenues, adjusted to exclude certain
types of non-recurring reimbursable revenues, revenues earned
during suspension periods and revenues attributable to amortization
of drilling contract intangibles, by the aggregate number of
operating days. Beginning with the third quarter of 2023, we began
presenting average daily revenue instead of the previously reported
average day rate metric, which further excluded lump-sum revenues
and amortization thereof. Average daily revenue is a more
comprehensive measurement of our revenue-earning performance and
more closely aligns with the calculation methodology used by our
closest offshore drilling peers. The prior period has been adjusted
to conform with the current period presentation.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
UTILIZATION - TOTAL FLEET (1)
Floaters
Drillships
60
%
58
%
58
%
59
%
62
%
Semisubmersibles
53
%
54
%
60
%
57
%
57
%
58
%
57
%
59
%
58
%
60
%
Jackups
HD Ultra-Harsh & Harsh
68
%
64
%
55
%
57
%
77
%
HD & SD Modern
52
%
51
%
52
%
57
%
55
%
SD Legacy
97
%
69
%
78
%
99
%
99
%
62
%
58
%
55
%
62
%
68
%
Total
60
%
57
%
56
%
60
%
65
%
Other
Leased and Managed Rigs
100
%
100
%
100
%
100
%
100
%
Valaris Total
68
%
65
%
65
%
68
%
72
%
Pro Forma Jackups (2)
69
%
66
%
65
%
69
%
74
%
(1)
Rig utilization is derived by dividing the
number of operating days by the number of available days in the
period for the total fleet.
(2)
Includes all Valaris jackups including
those leased to ARO Drilling.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
UTILIZATION - ACTIVE FLEET (1)
(2)
Floaters
Drillships
68
%
63
%
71
%
77
%
85
%
Semisubmersibles
89
%
90
%
100
%
96
%
96
%
72
%
70
%
78
%
82
%
88
%
Jackups
HD Ultra-Harsh & Harsh
83
%
79
%
67
%
67
%
85
%
HD & SD Modern
80
%
79
%
81
%
89
%
86
%
SD Legacy
97
%
68
%
78
%
99
%
99
%
83
%
78
%
74
%
81
%
87
%
Total
79
%
75
%
76
%
81
%
87
%
Other
Leased and Managed Rigs
100
%
100
%
100
%
100
%
100
%
Valaris Total
84
%
81
%
82
%
86
%
90
%
Pro Forma Jackups (3)
86
%
83
%
81
%
85
%
88
%
(1)
Rig utilization is derived by dividing the
number of operating days by the number of available days in the
period for the active fleet.
(2)
Active fleet represents rigs that are not
preservation stacked, including rigs that are in the process of
being reactivated.
(3)
Includes all Valaris jackups including
those leased to ARO Drilling.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
AVAILABLE DAYS - TOTAL FLEET
(1)
Floaters
Drillships
1,032
1,012
1,001
990
1,012
Semisubmersibles
460
460
455
450
460
1,492
1,472
1,456
1,440
1,472
Jackups
HD Ultra-Harsh & Harsh
1,012
1,012
990
990
1,012
HD & SD Modern
1,288
1,288
1,274
1,260
1,288
SD Legacy
184
184
199
270
276
2,484
2,484
2,463
2,520
2,576
Total
3,976
3,956
3,919
3,960
4,048
Other
Leased and Managed Rigs
920
920
910
900
920
Valaris Total
4,896
4,876
4,829
4,860
4,968
(1)
Represents the maximum number of days
available in the period for the total fleet, calculated by
multiplying the number of rigs in each asset category by the number
of days in the period, irrespective of asset status.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
AVAILABLE DAYS - ACTIVE FLEET
(1)
Floaters
Drillships
920
920
819
751
736
Semisubmersibles
276
276
273
270
276
1,196
1,196
1,092
1,021
1,012
Jackups
HD Ultra-Harsh & Harsh
828
828
808
841
920
HD & SD Modern
828
828
819
810
828
SD Legacy
184
184
199
270
276
1,840
1,840
1,826
1,921
2,024
Total
3,036
3,036
2,918
2,942
3,036
Other
Leased and Managed Rigs
920
920
910
900
920
Valaris Total
3,956
3,956
3,828
3,842
3,956
(1)
Represents the maximum number of days
available in the period for the active fleet, calculated by
multiplying the number of rigs in each asset category by the number
of days in the period, for active rigs only. Active rigs are
defined as rigs that are not preservation stacked.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
OPERATING DAYS (1)
Floaters
Drillships
622
584
583
581
623
Semisubmersibles
245
249
272
258
264
867
833
855
839
887
Jackups
HD Ultra-Harsh & Harsh
691
652
540
564
778
HD & SD Modern
665
654
663
718
713
SD Legacy
178
126
155
268
273
1,534
1,432
1,358
1,550
1,764
Total
2,401
2,265
2,213
2,389
2,651
Other
Leased and Managed Rigs
920
920
910
900
920
Valaris Total
3,321
3,185
3,123
3,289
3,571
(1)
Represents the total number of days under
contract 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 deferred
and amortized over a future period, for example when we receive
fees while mobilizing to commence a new contract or while being
upgraded in a shipyard, the related days are excluded from days
under contract.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
REVENUE EFFICIENCY (1)
Floaters
Drillships
88
%
89
%
95
%
97
%
96
%
Semisubmersibles
94
%
93
%
100
%
100
%
100
%
90
%
90
%
96
%
98
%
97
%
Jackups
HD Ultra-Harsh & Harsh
99
%
99
%
99
%
100
%
96
%
HD & SD Modern
97
%
97
%
98
%
100
%
99
%
SD Legacy
97
%
99
%
100
%
99
%
100
%
98
%
98
%
99
%
100
%
98
%
Valaris Total
93
%
94
%
97
%
99
%
98
%
(1)
Revenue efficiency is day rate revenue
earned as a percentage of maximum potential day rate revenue.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
As of
NUMBER OF RIGS
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Active Fleet (1)
Floaters
Drillships
10
10
9
9
8
Semisubmersibles
3
3
3
3
3
13
13
12
12
11
Jackups
HD Ultra-Harsh & Harsh
9
9
9
9
10
HD & SD Modern
9
9
9
9
9
SD Legacy
2
2
2
3
3
20
20
20
21
22
Total Active Fleet
33
33
32
33
33
Stacked Fleet
Floaters
Drillships
3
1
2
2
3
Semisubmersibles
2
2
2
2
2
5
3
4
4
5
Jackups
HD Ultra-Harsh & Harsh
2
2
2
2
1
HD & SD Modern
5
5
5
5
5
7
7
7
7
6
Total Stacked Fleet
12
10
11
11
11
Leased Rigs (2)
Jackups
HD Ultra-Harsh & Harsh
1
1
1
1
1
HD & SD Modern
7
7
7
7
7
Total Leased Rigs
8
8
8
8
8
Valaris Total
53
51
51
52
52
Managed Rigs (2)
2
2
2
2
2
(1)
Active fleet represents rigs that are not
preservation stacked, including rigs that are in the process of
being reactivated.
(2)
Leased rigs and managed rigs included in
Other reporting segment.
ARO DRILLING
CONDENSED BALANCE SHEET
INFORMATION
(In millions)
As of
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Cash
$
92.9
$
110.3
$
100.6
$
101.2
$
176.2
Other current assets
184.0
191.2
188.3
189.3
140.6
Non-current assets
1,081.0
915.3
879.6
830.2
818.1
Total assets
$
1,357.9
$
1,216.8
$
1,168.5
$
1,120.7
$
1,134.9
Current liabilities
$
136.0
$
173.6
$
122.6
$
68.5
$
86.3
Non-current liabilities
1,056.8
886.2
887.5
887.4
884.6
Total liabilities
$
1,192.8
$
1,059.8
$
1,010.1
$
955.9
$
970.9
Shareholders' equity
$
165.1
$
157.0
$
158.4
$
164.8
$
164.0
Total liabilities and shareholders'
equity
$
1,357.9
$
1,216.8
$
1,168.5
$
1,120.7
$
1,134.9
ARO DRILLING
CONDENSED INCOME STATEMENT
INFORMATION
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
Revenues
$
133.7
$
121.5
$
117.8
$
123.6
$
120.4
Operating expenses
Contract drilling (exclusive of
depreciation)
88.0
92.0
95.0
90.9
85.5
Depreciation
19.5
15.8
15.6
15.0
16.1
General and administrative
6.3
5.6
5.7
4.6
5.6
Operating income
$
19.9
$
8.1
$
1.5
$
13.1
$
13.2
Other expense, net
3.6
9.0
8.8
10.4
1.8
Provision for income taxes
6.0
0.4
—
1.9
0.7
Net income (loss)
$
10.3
$
(1.3
)
$
(7.3
)
$
0.8
$
10.7
EBITDA
$
39.4
$
23.9
$
17.1
$
28.1
$
29.3
ARO Drilling condensed balance sheet and income statement
information presented above represents 100% of ARO. Valaris has a
50% ownership interest in ARO.
ARO DRILLING
OPERATING STATISTICS
As of
(In millions)
Feb 15, 2024
Nov 1, 2023
Aug 1, 2023
May 1, 2023
Feb 21, 2023
CONTRACT BACKLOG (1)
Owned Rigs
$
1,475.4
$
1,547.0
$
686.3
$
747.7
$
794.3
Leased Rigs
662.7
743.7
815.0
884.7
937.5
Total
$
2,138.1
$
2,290.7
$
1,501.3
$
1,632.4
$
1,731.8
(1)
Contract drilling backlog reflects
commitments, represented by signed drilling contracts, and is
calculated by multiplying the contracted day rate by the contract
period. The contracted day rate excludes certain types of lump sum
fees for rig mobilization, demobilization, contract preparation, as
well as customer reimbursables and bonus opportunities.
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
AVERAGE DAILY REVENUE (1)
Owned Rigs
$
100,000
$
91,000
$
90,000
$
99,000
$
95,000
Leased Rigs (2)
97,000
98,000
98,000
98,000
91,000
Total
$
98,000
$
95,000
$
95,000
$
98,000
$
93,000
UTILIZATION (3)
Owned Rigs
96
%
91
%
83
%
91
%
96
%
Leased Rigs (2)
94
%
95
%
98
%
95
%
91
%
Total
95
%
93
%
91
%
93
%
93
%
REVENUE EFFICIENCY (4)
Owned Rigs
94
%
99
%
95
%
98
%
97
%
Leased Rigs (2)
98
%
97
%
99
%
95
%
93
%
Total
96
%
98
%
97
%
96
%
95
%
NUMBER OF RIGS (AT QUARTER END)
(5)
Owned Rigs
8
7
7
7
7
Leased Rigs (2)
8
8
8
8
8
Total
16
15
15
15
15
AVAILABLE DAYS (6)
Owned Rigs
695
644
637
630
644
Leased Rigs (2)
736
736
728
720
736
Total
1,431
1,380
1,365
1,350
1,380
OPERATING DAYS (7)
Owned Rigs
668
585
532
575
618
Leased Rigs (2)
691
697
713
683
672
Total
1,359
1,282
1,245
1,258
1,290
(1)
Average daily revenue is derived by
dividing contract drilling revenues, adjusted to exclude certain
types of non-recurring reimbursable revenues, revenues earned
during suspension periods and revenues attributable to amortization
of drilling contract intangibles, by the aggregate number of
operating days.
(2)
All ARO leased rigs are leased from
Valaris.
(3)
Rig utilization is derived by dividing the
number of operating days by the number of available days in the
period for the rig fleet.
(4)
Revenue efficiency is day rate revenue
earned as a percentage of maximum potential day rate revenue.
(5)
Rig count for owned rigs as of December
31, 2023 excludes a rig under construction, which is expected to be
delivered in the first half of 2024.
(6)
Represents the maximum number of days
available in the period for the rig fleet, calculated by
multiplying the number of rigs in each asset category by the number
of days in the period, irrespective of asset status.
(7)
Represents the total number of days under
contract 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 deferred
and amortized over a future period, for example when we receive
fees while mobilizing to commence a new contract or while being
upgraded in a shipyard, the related days are excluded from days
under contract.
Non-GAAP Financial Measures
To supplement Valaris’ condensed consolidated financial
statements presented on a GAAP basis, this press release provides
investors with Adjusted EBITDA and Adjusted EBITDAR, which are
non-GAAP measures.
Valaris defines "Adjusted EBITDA" as net income (loss) from
continuing operations before income tax expense, interest expense,
other (income) expense, depreciation expense, amortization, loss on
impairment and equity in (earnings) losses of ARO. 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.
Valaris defines "Adjusted EBITDAR" as Adjusted EBITDA before
reactivation costs. Adjusted EBITDAR is a non-GAAP measure that our
management uses to assess the performance of our fleet excluding
one-time rig reactivation costs. We believe that this measure is
useful to investors and analysts in allowing for greater
transparency of our core operating performance. Adjusted EBITDAR
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
EBITDAR may not be comparable to other similarly titled measures
reported by other companies.
Valaris defines ARO "EBITDA" as net income before income tax
expense, other expense, net and depreciation expense. EBITDA is a
non-GAAP measure that our management uses to facilitate
period-to-period comparisons of ARO's core operating performance
and to evaluate ARO's long-term financial performance against that
of ARO's peers. We believe that this measure is useful to investors
and analysts in allowing for greater transparency of ARO's core
operating performance and makes it easier to compare ARO's results
with those of other companies within ARO's industry. 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. EBITDA may not be
comparable to other similarly titled measures reported by other
companies.
The Company is not able to provide a reconciliation of the
Company's forward-looking Adjusted EBITDA, as discussed on its
fourth quarter 2023 earnings conference call, to the most directly
comparable GAAP measure without unreasonable effort because of the
inherent difficulty in forecasting and quantifying certain amounts
necessary for such a reconciliation, including forward-looking tax
expense and other income (expense).
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.
Reconciliation of Net Income to Adjusted EBITDA
A reconciliation of net income as reported to Adjusted EBITDA is
included in the tables below (in millions):
Three Months Ended
Dec 31, 2023
Sep 30, 2023
VALARIS
Net income
$
828.5
$
17.0
Add (subtract):
Income tax expense (benefit)
(790.2
)
10.7
Interest expense
21.7
19.4
Other income
(21.7
)
(30.5
)
Operating income
38.3
16.6
Add (subtract):
Depreciation expense
27.5
25.8
Equity in earnings of ARO
(8.3
)
(2.4
)
Adjusted EBITDA
$
57.5
$
40.0
Three Months Ended
Dec 31, 2023
Sep 30, 2023
ARO
Net income (loss)
$
10.3
$
(1.3
)
Add:
Income tax expense
6.0
0.4
Other expense, net
3.6
9.0
Operating income
$
19.9
$
8.1
Add:
Depreciation expense
19.5
15.8
EBITDA
$
39.4
$
23.9
Reconciliation of Net Income to Adjusted EBITDA and Adjusted
EBITDAR
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
FLOATERS
Net income
$
24.3
$
14.5
Subtract:
Other income
(2.1
)
(0.6
)
Operating income
$
22.2
$
13.9
Add:
Depreciation
15.0
14.2
Other
—
0.1
Adjusted EBITDA
$
37.2
$
28.2
Add:
Reactivation costs
38.5
50.9
Adjusted EBITDAR
$
75.7
$
79.1
JACKUPS
Net income
$
46.1
$
34.4
Subtract:
Other income
(1.3
)
(0.4
)
Operating income
$
44.8
$
34.0
Add:
Depreciation
11.2
10.2
Adjusted EBITDA
$
56.0
$
44.2
Adjusted EBITDAR
$
56.0
$
44.2
OTHER
Net income
$
22.1
$
25.8
Operating income
$
22.1
$
25.8
Add (subtract):
Depreciation
1.2
1.3
Other
(0.1
)
0.1
Adjusted EBITDA
$
23.2
$
27.2
Adjusted EBITDAR
$
23.2
$
27.2
Reconciliation of Net Income (Loss) to Adjusted
EBITDAR
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
ACTIVE FLEET (1)
Net income
$
78.7
$
57.5
$
68.2
$
55.4
$
79.9
Subtract:
Other income
$
(3.3
)
$
(1.0
)
$
(27.4
)
$
—
$
(0.9
)
Operating income
$
75.4
$
56.5
$
40.8
$
55.4
$
79.0
Add (subtract):
Reactivation costs
38.5
50.9
44.1
26.3
20.7
Depreciation and amortization
23.5
21.9
19.6
18.9
21.9
Other
0.1
—
—
(0.2
)
(0.1
)
Adjusted EBITDAR (2)
$
137.5
$
129.3
$
104.5
$
100.4
$
121.5
LEASED AND MANAGED RIGS
Net income
$
22.1
$
25.8
$
23.8
$
24.0
$
21.2
Operating income
$
22.1
$
25.8
$
23.8
$
24.0
$
21.2
Add (subtract):
Depreciation
1.2
1.3
1.2
1.3
1.3
Other
(0.1
)
0.1
(0.1
)
0.1
(0.2
)
Adjusted EBITDAR (2)
$
23.2
$
27.2
$
24.9
$
25.4
$
22.3
STACKED FLEET
Net loss
$
(8.3
)
$
(8.6
)
$
(11.7
)
$
(15.8
)
$
(6.9
)
Subtract:
Other income
$
(0.1
)
$
—
$
—
$
(0.5
)
$
(3.9
)
Operating loss
$
(8.4
)
$
(8.6
)
$
(11.7
)
$
(16.3
)
$
(10.8
)
Add (subtract):
Depreciation
2.7
2.5
3.6
3.2
2.7
Other
(0.1
)
0.1
(0.1
)
—
—
Adjusted EBITDAR (2)
$
(5.8
)
$
(6.0
)
$
(8.2
)
$
(13.1
)
$
(8.1
)
TOTAL FLEET
Net income
$
92.5
$
74.7
$
80.3
$
63.6
$
94.2
Subtract:
Other income
$
(3.4
)
$
(1.0
)
$
(27.4
)
$
(0.5
)
$
(4.8
)
Operating income
$
89.1
$
73.7
$
52.9
$
63.1
$
89.4
Add (subtract):
Reactivation costs
38.5
50.9
44.1
26.3
20.7
Depreciation and amortization
27.4
25.7
24.4
23.4
25.9
Other
(0.1
)
0.2
(0.2
)
(0.1
)
(0.3
)
Adjusted EBITDAR (2)
$
154.9
$
150.5
$
121.2
$
112.7
$
135.7
(1)
Active fleet represents rigs that are not
preservation stacked, including rigs that are in the process of
being reactivated.
(2)
Adjusted EBITDAR for active fleet, leased
and managed rigs and stacked fleet excludes onshore support costs
and general and administrative expense.
Reconciliation of Net Income (Loss) to Adjusted
EBITDA
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
DRILLSHIPS
Net income (loss)
$
4.7
$
(9.9
)
$
(12.0
)
$
0.4
$
7.3
Subtract:
Other income
$
(2.0
)
$
(0.6
)
$
(0.4
)
$
(0.3
)
$
(0.9
)
Operating income (loss)
$
2.7
$
(10.5
)
$
(12.4
)
$
0.1
$
6.4
Add (subtract):
Depreciation
14.0
13.2
12.8
12.2
12.1
Other
—
0.1
(0.1
)
(0.1
)
—
Adjusted EBITDA (1)
$
16.7
$
2.8
$
0.3
$
12.2
$
18.5
SEMISUBMERSIBLES
Net income
$
19.6
$
24.4
$
29.9
$
27.1
$
19.3
Add (subtract):
Other (income) expense
$
(0.1
)
$
—
$
0.1
$
—
$
(0.2
)
Operating income
$
19.5
$
24.4
$
30.0
$
27.1
$
19.1
Add:
Depreciation
1.0
1.0
0.8
0.9
0.8
Other
—
—
—
—
0.1
Adjusted EBITDA (1)
$
20.5
$
25.4
$
30.8
$
28.0
$
20.0
(1)
Adjusted EBITDA for asset category
excludes onshore support costs and general and administrative
expense.
Reconciliation of Net Income (Loss) to Adjusted
EBITDA
(In millions)
Three Months Ended
Dec 31, 2023
Sep 30, 2023
Jun 30, 2023
Mar 31, 2023
Dec 31, 2022
HD ULTRA-HARSH & HARSH
JACKUPS
Net income (loss)
$ 15.4
$ 15.4
$ 0.4
$ (2.5
)
$ 29.3
Subtract:
Other income
$ (0.1
)
$ (0.2
)
$ —
$ (0.1
)
$ (3.5
)
Operating income (loss)
$ 15.3
$ 15.2
$ 0.4
$ (2.6
)
$ 25.8
Add (subtract):
Depreciation
5.8
5.7
5.7
5.8
5.7
Other
—
—
—
(0.2
)
(0.1
)
Adjusted EBITDA (1)
$ 21.1
$ 20.9
$ 6.1
$ 3.0
$ 31.4
HD & SD MODERN JACKUPS
Net income
$ 28.2
$ 17.7
$ 8.9
$ 7.2
$ 8.8
Subtract:
Other income
$ (1.2
)
$ (0.2
)
$ (0.1
)
$ (0.1
)
$ (0.1
)
Operating income
$ 27.0
$ 17.5
$ 8.8
$ 7.1
$ 8.7
Add (subtract):
Depreciation and amortization
3.0
2.9
2.9
2.4
4.4
Other
0.1
—
(0.1
)
(0.1
)
(0.1
)
Adjusted EBITDA (1)
$ 30.1
$ 20.4
$ 11.6
$ 9.4
$ 13.0
SD LEGACY JACKUPS
Net income
$ 2.5
$ 1.3
$ 29.8
$ 7.4
$ 8.3
Subtract:
Other income
$ —
$ —
$ (27.5
)
$ —
$ (0.1
)
Operating income
$ 2.5
$ 1.3
$ 2.3
$ 7.4
$ 8.2
Add (subtract):
Depreciation
2.4
1.6
1.0
0.9
1.6
Other
(0.1
)
—
0.1
0.1
—
Adjusted EBITDA (1)
$ 4.8
$ 2.9
$ 3.4
$ 8.4
$ 9.8
(1)
Adjusted EBITDA for asset category
excludes onshore support costs and general and administrative
expense.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240221354956/en/
Investor & Media Contacts:
Darin Gibbins Vice President - Investor Relations and Treasurer
+1-713-979-4623
Tim Richardson Director - Investor Relations +1-713-979-4619
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