Valaris Limited (NYSE: VAL) ("Valaris" or the "Company") today
reported third quarter 2024 results.
President and Chief Executive Officer Anton Dibowitz said, “We
delivered strong operating performance and financial results in the
third quarter, including solid free cash flow generation. Our
fleetwide revenue efficiency of 98% included a full quarter of
operations for VALARIS DS-7 following its contract startup in the
second quarter. Building on our track record of safe, reliable and
efficient operations, we are proud to be recognized for the second
consecutive year by the Center for Offshore Safety with its Safety
Leadership Award for the development of our Restricted Zone
Analysis tool.”
Dibowitz added, “We maintain our conviction in the strength and
duration of this upcycle and believe Valaris is well positioned to
drive long-term value creation. While we have seen some customer
demand deferred, the outlook for 2026 and beyond remains robust. We
continue to focus on securing attractive, long-term work for our
available rig fleet to support our earnings and cash flow
growth."
Dibowitz concluded, “As expected, our free cash flow profile
improved relative to the first half of the year, and we repurchased
$100 million of shares during the third quarter. We remain
committed to returning 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 $63 million and Adjusted EBITDA of $150
million;
- Revenue efficiency of 98%;
- Generated $193 million of cash from operating activities and
$111 million of free cash flow;
- Repurchased $100 million of shares;
- Recognized by the Center for Offshore Safety with its 2024
Safety Leadership Award for development of the Restricted Zone
Analysis tool;
- Full quarter of operations for drillship VALARIS DS-7 following
completion of its reactivation and contract startup in the second
quarter; and
- Three-year contract extension for jackup VALARIS 118 awarded in
October, adding $168 million of contract backlog.
Third Quarter Review
Net income decreased to $63 million from $151 million in the
second quarter 2024. Net income included tax expense of $24 million
compared to a tax benefit of $30 million in the second quarter.
Adjusted EBITDA increased to $150 million from $139 million in the
second quarter primarily due to a full quarter of operations for
VALARIS DS-7 following its contract startup and higher average
daily revenue for the floater fleet. These items were partially
offset by lower utilization for VALARIS DPS-5 and DS-10 as well as
out of service time and repair costs for VALARIS 249 due to leg
repairs.
Revenues increased to $643 million from $610 million in the
second quarter 2024. Excluding reimbursable items, revenues
increased to $598 million from $573 million in the second quarter
primarily due to an increase in operating days and amortized
mobilization revenue associated with VALARIS 247, a full quarter of
operations for VALARIS DS-7 and higher average daily revenue for
the floater fleet. These items were partially offset by lower
utilization for VALARIS DPS-5 and DS-10 as well as out of service
time for VALARIS 249.
Contract drilling expense increased to $462 million from $439
million in the second quarter 2024. Excluding reimbursable items,
contract drilling expense increased to $423 million from $407
million in the second quarter primarily due to an increase in
amortized mobilization expense associated with VALARIS 247 and
higher costs associated with a full quarter of operations for
VALARIS DS-7. This was partially offset by lower reactivation
expense and lower personnel costs for VALARIS DS-17 associated with
a change in operating location.
Depreciation expense increased to $32 million from $30 million
in the second quarter 2024 primarily due to new assets placed in
service for certain rigs following reactivation projects and
capital upgrades. General and administrative expense decreased to
$31 million from $33 million in the second quarter 2024 primarily
due to lower professional fees.
Other expense was $8 million compared to other income of $12
million in the second quarter 2024 primarily due to a decrease in
interest income and foreign currency exchange losses compared to
gains in the second quarter.
Tax expense was $24 million compared to tax benefit of $30
million in the second quarter 2024. The third quarter tax provision
included an immaterial discrete tax expense and the second quarter
tax provision included $64 million of discrete tax benefit, which
were primarily attributable to changes in liabilities for
unrecognized tax benefits associated with tax positions taken in
prior years. Adjusted for discrete tax items, tax expense decreased
to $24 million from $34 million in the second quarter.
Capital expenditures of $82 million decreased from $110 million
in the second quarter 2024 primarily due to lower maintenance and
upgrade capital expenditures.
Cash and cash equivalents and restricted cash decreased to $392
million as of September 30, 2024, from $410 million as of June 30,
2024. The decrease was primarily due to share repurchases and
capital expenditures, partially offset by cash flow from
operations.
Third Quarter Segment Review
Floaters
Floater revenues increased to $389 million from $384 million in
the second quarter 2024. Excluding reimbursable items, revenues
increased to $373 million from $370 million in the second quarter.
The increase was primarily due to more operating days for VALARIS
DS-7, which commenced a contract in the second quarter, and higher
average daily revenue for the floater fleet mostly due to VALARIS
DS-16, which started a new higher day rate contract late in the
second quarter. This was partially offset by fewer operating days
for VALARIS DPS-5 and DS-10, which completed their contracts in the
third quarter.
Contract drilling expense decreased to $248 million from $257
million in the second quarter 2024. Excluding reimbursable items,
contract drilling expense decreased to $235 million from $245
million in the second quarter. The decrease was primarily due to
lower reactivation expense as VALARIS DS-7 returned to work in the
second quarter and lower personnel expense for VALARIS DS-17
associated with a change in operating location. This was partially
offset by higher costs associated with a full quarter of operations
for VALARIS DS-7.
Jackups
Jackup revenues increased to $214 million from $186 million in
the second quarter 2024. Excluding reimbursable items, revenues
increased to $193 million from $167 million in the second quarter
primarily due to operating days and amortized mobilization revenue
associated with VALARIS 247, which commenced a contract offshore
Australia in July following its mobilization from the UK. This was
partially offset by out of service time for leg repairs on VALARIS
249.
Contract drilling expense increased to $157 million from $123
million in the second quarter 2024. Excluding reimbursable items,
contract drilling expense increased to $137 million from $108
million in the second quarter primarily due to an increase in
amortized mobilization expense associated with VALARIS 247 and
repair costs for VALARIS 249.
ARO Drilling
Revenues decreased to $114 million from $124 million in the
second quarter 2024 primarily due to the contract termination for
VALARIS 143 in the second quarter and contract suspensions for
VALARIS 147 and 148 during the third quarter. Subsequently, ARO
elected to terminate these suspended contracts in October. Contract
drilling expense of $94 million was in line with the second
quarter.
Other
Revenues of $40 million were in line with the second quarter
2024. Contract drilling expense increased to $22 million from $20
million in the second quarter.
Three Months Ended
(Unaudited)
Floaters
Jackups
ARO (1)
Other
Reconciling Items (1)(2)
Consolidated Total
(in millions of $, except %)
Q3
2024
Q2
2024
Chg
Q3
2024
Q2
2024
Chg
Q3
2024
Q2
2024
Chg
Q3
2024
Q2
2024
Chg
Q3
2024
Q2
2024
Q3
2024
Q2
2024
Chg
Revenues
$
389.0
$
383.9
1
%
$
213.7
$
185.8
15
%
$
113.7
$
124.2
(8
)%
$
40.4
$
40.4
—
%
$
(113.7
)
$
(124.2
)
$
643.1
$
610.1
5
%
Operating expenses
Contract drilling
247.7
257.4
4
%
156.7
123.2
(27
)%
93.8
94.1
—
%
22.1
19.6
(13
)%
(58.2
)
(55.6
)
462.1
438.7
(5
)%
Loss on impairment
—
—
—
%
—
—
—
%
28.4
—
nm
—
—
—
%
(28.4
)
—
—
—
—
%
Depreciation
14.8
14.1
(5
)%
11.4
10.9
(5
)%
21.1
19.7
(7
)%
2.9
2.5
(16
)%
(18.5
)
(17.5
)
31.7
29.7
(7
)%
General and admin.
—
—
—
%
—
—
—
%
4.9
5.5
11
%
—
—
—
%
25.7
27.0
30.6
32.5
6
%
Equity in losses of ARO
—
—
—
%
—
—
—
%
—
—
—
%
—
—
—
%
(23.8
)
(0.3
)
(23.8
)
(0.3
)
nm
Operating income (loss)
$
126.5
$
112.4
13
%
$
45.6
$
51.7
(12
)%
$
(34.5
)
$
4.9
nm
$
15.4
$
18.3
(16
)%
$
(58.1
)
$
(78.4
)
$
94.9
$
108.9
(13
)%
Net income (loss)
$
126.8
$
114.1
11
%
$
45.7
$
52.8
(13
)%
$
(54.0
)
$
(6.7
)
nm
$
16.3
$
18.3
(11
)%
$
(71.9
)
$
(27.7
)
$
62.9
$
150.8
(58
)%
Adjusted EBITDA
$
141.3
$
126.4
12
%
$
57.0
$
62.6
(9
)%
$
15.0
$
24.6
(39
)%
$
18.3
$
20.8
(12
)%
$
(81.2
)
$
(95.5
)
$
150.4
$
138.9
8
%
Adjusted EBITDAR
$
143.2
$
137.3
4
%
$
57.0
$
62.6
(9
)%
$
15.0
$
24.6
(39
)%
$
18.3
$
20.8
(12
)%
$
(81.2
)
$
(95.5
)
$
152.3
$
149.8
2
%
nm - Not meaningful
(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, these 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 third quarter
2024 earnings conference call at 9:00 a.m. CT (10:00 a.m. ET) on
Thursday, October 31, 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, including in any return of capital plans;
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)
(Unaudited)
Three Months Ended
Sep 30, 2024
Jun 30, 2024
Mar 31, 2024
Dec 31, 2023
Sep 30, 2023
OPERATING REVENUES
$
643.1
$
610.1
$
525.0
$
483.8
$
455.1
OPERATING EXPENSES
Contract drilling (exclusive of
depreciation)
462.1
438.7
444.8
402.0
390.9
Depreciation
31.7
29.7
26.8
27.5
25.8
General and administrative
30.6
32.5
26.5
24.3
24.2
Total operating expenses
524.4
500.9
498.1
453.8
440.9
EQUITY IN EARNINGS (LOSSES) OF ARO
(23.8
)
(0.3
)
2.4
8.3
2.4
OPERATING INCOME
94.9
108.9
29.3
38.3
16.6
OTHER INCOME (EXPENSE)
Interest income
17.5
31.0
21.0
27.2
26.6
Interest expense, net
(22.4
)
(22.6
)
(17.7
)
(21.7
)
(19.4
)
Other, net
(2.8
)
3.5
5.8
(5.5
)
3.9
(7.7
)
11.9
9.1
—
11.1
INCOME BEFORE INCOME TAXES
87.2
120.8
38.4
38.3
27.7
PROVISION (BENEFIT) FOR INCOME TAXES
24.3
(30.0
)
12.9
(790.2
)
10.7
NET INCOME
62.9
150.8
25.5
828.5
17.0
NET (INCOME) LOSS ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
1.7
(1.2
)
—
6.7
(4.1
)
NET INCOME ATTRIBUTABLE TO VALARIS
$
64.6
$
149.6
$
25.5
$
835.2
$
12.9
EARNINGS PER SHARE
Basic
$
0.89
$
2.07
$
0.35
$
11.47
$
0.18
Diluted
$
0.88
$
2.03
$
0.35
$
11.30
$
0.17
WEIGHTED-AVERAGE SHARES OUTSTANDING
Basic
72.4
72.4
72.4
72.8
73.7
Diluted
73.2
73.7
73.6
73.9
74.8
VALARIS LIMITED AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In millions)
(Unaudited)
As of
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$
379.3
$
398.3
$
494.1
$
620.5
$
1,041.1
Restricted cash
12.9
12.0
15.0
15.2
16.2
Accounts receivable, net
555.8
631.7
510.9
459.3
492.4
Other current assets
163.5
182.6
177.6
177.2
178.7
Total current assets
$
1,111.5
$
1,224.6
$
1,197.6
$
1,272.2
$
1,728.4
PROPERTY AND EQUIPMENT, NET
1,842.7
1,809.4
1,732.3
1,633.8
1,159.9
LONG-TERM NOTES RECEIVABLE FROM ARO
265.4
259.2
289.3
282.3
275.2
INVESTMENT IN ARO
102.7
126.5
126.8
124.4
116.1
DEFERRED TAX ASSETS
837.0
841.1
854.8
855.1
53.8
OTHER ASSETS
174.1
154.8
153.6
154.4
151.5
$
4,333.4
$
4,415.6
$
4,354.4
$
4,322.2
$
3,484.9
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable - trade
$
303.7
$
347.0
$
394.2
$
400.1
$
376.4
Accrued liabilities and other
388.6
360.6
366.5
344.2
346.6
Total current liabilities
$
692.3
$
707.6
$
760.7
$
744.3
$
723.0
LONG-TERM DEBT
1,081.8
1,081.0
1,080.1
1,079.3
1,079.4
DEFERRED TAX LIABILITIES
31.1
31.2
31.6
29.9
17.1
OTHER LIABILITIES
404.4
408.4
451.7
471.7
465.4
TOTAL LIABILITIES
2,209.6
2,228.2
2,324.1
2,325.2
2,284.9
TOTAL EQUITY
2,123.8
2,187.4
2,030.3
1,997.0
1,200.0
$
4,333.4
$
4,415.6
$
4,354.4
$
4,322.2
$
3,484.9
VALARIS LIMITED AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended September
30,
2024
2023
OPERATING ACTIVITIES
Net income
$
239.2
$
38.3
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense
88.2
73.6
Accretion of discount on notes receivable
from ARO
(33.8
)
(21.2
)
Share-based compensation expense
22.4
19.5
Equity in losses (earnings) of ARO
21.7
(5.0
)
Deferred income tax expense
19.3
2.3
Net (gain) loss on sale of property
0.3
(27.9
)
Loss on extinguishment of debt
—
29.2
Changes in contract liabilities
(13.5
)
(3.9
)
Changes in deferred costs
32.6
(29.3
)
Other
5.0
5.2
Changes in other operating assets and
liabilities
(131.0
)
94.5
Contributions to pension plans and other
post-retirement benefits
(19.6
)
(4.5
)
Net cash provided by operating
activities
$
230.8
$
170.8
INVESTING ACTIVITIES
Additions to property and equipment
$
(343.4
)
$
(233.1
)
Net proceeds from disposition of
assets
0.2
29.2
Net cash used in investing activities
$
(343.2
)
$
(203.9
)
FINANCING ACTIVITIES
Payments for share repurchases
$
(101.4
)
$
(147.4
)
Payments related to tax withholdings for
share-based awards
(29.7
)
(5.2
)
Issuance of Second Lien Notes
—
1,103.0
Redemption of First Lien Notes
—
(571.8
)
Debt issuance costs
—
(36.7
)
Net cash provided by (used in) financing
activities
$
(131.1
)
$
341.9
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS AND RESTRICTED CASH
$
(243.5
)
$
308.8
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
635.7
748.5
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
392.2
$
1,057.3
VALARIS LIMITED AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
OPERATING ACTIVITIES
Net income
$
62.9
$
150.8
$
25.5
$
828.5
$
17.0
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation expense
31.7
29.7
26.8
27.5
25.8
Equity in losses (earnings) of ARO
23.8
0.3
(2.4
)
(8.3
)
(2.4
)
Share-based compensation expense
7.0
7.4
8.0
7.8
6.8
Accretion of discount on notes receivable
from ARO
(6.2
)
(20.6
)
(7.0
)
(7.1
)
(7.2
)
Deferred income tax expense (benefit)
3.8
13.5
2.0
(788.7
)
(4.8
)
Net (gain) loss on sale of property
0.2
—
0.1
(0.7
)
—
Changes in contract liabilities
11.3
(17.8
)
(7.0
)
8.8
3.6
Changes in deferred costs
33.4
(3.0
)
2.2
3.2
(22.4
)
Other
0.8
2.4
1.8
0.6
2.7
Changes in other operating assets and
liabilities
37.8
(147.5
)
(21.3
)
27.3
31.0
Contributions to pension plans and other
post-retirement benefits
(13.5
)
(3.7
)
(2.4
)
(2.2
)
(1.9
)
Net cash provided by operating
activities
$
193.0
$
11.5
$
26.3
$
96.7
$
48.2
INVESTING ACTIVITIES
Additions to property and equipment
$
(81.9
)
$
(110.2
)
$
(151.3
)
$
(463.0
)
$
(105.8
)
Net proceeds from disposition of
assets
0.1
0.1
—
1.1
0.1
Net cash used in investing activities
$
(81.8
)
$
(110.1
)
$
(151.3
)
$
(461.9
)
$
(105.7
)
FINANCING ACTIVITIES
Payments for share repurchases
$
(100.0
)
$
—
$
(1.4
)
$
(51.2
)
$
(83.0
)
Payments for tax withholdings for
share-based awards
(29.3
)
(0.2
)
(0.2
)
(0.2
)
(4.8
)
Debt issuance costs
—
—
—
(1.9
)
(5.7
)
Issuance of Second Lien Notes
—
—
—
—
403.0
Other
—
—
—
(3.1
)
—
Net cash provided by (used in) financing
activities
$
(129.3
)
$
(0.2
)
$
(1.6
)
$
(56.4
)
$
309.5
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS AND RESTRICTED CASH
$
(18.1
)
$
(98.8
)
$
(126.6
)
$
(421.6
)
$
252.0
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH, BEGINNING OF PERIOD
410.3
509.1
635.7
1,057.3
805.3
CASH AND CASH EQUIVALENTS AND RESTRICTED
CASH, END OF PERIOD
$
392.2
$
410.3
$
509.1
$
635.7
$
1,057.3
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
(In millions)
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
REVENUES
Floaters
Drillships
$
322.3
$
291.5
$
249.6
$
190.7
$
168.2
Semisubmersibles
50.9
78.9
60.2
56.3
64.1
$
373.2
$
370.4
$
309.8
$
247.0
$
232.3
Reimbursable and Other Revenues (1)
15.8
13.5
14.6
16.2
11.0
Total Floaters
$
389.0
$
383.9
$
324.4
$
263.2
$
243.3
Jackups
(2)
HD Harsh Environment
$
118.8
$
87.6
$
67.5
$
76.6
$
75.5
HD & SD Modern
58.4
63.7
56.9
79.0
68.8
SD Legacy
15.4
15.4
14.8
14.2
10.5
$
192.6
$
166.7
$
139.2
$
169.8
$
154.8
Reimbursable and Other Revenues (1)
21.1
19.1
13.1
9.5
11.1
Total Jackups
$
213.7
$
185.8
$
152.3
$
179.3
$
165.9
Other
Leased and Managed Rigs
$
32.4
$
35.6
$
42.1
$
36.0
$
40.1
Reimbursable and Other Revenues (1)
8.0
4.8
6.2
5.3
5.8
Total Other
$
40.4
$
40.4
$
48.3
$
41.3
$
45.9
Total Operating Revenues
$
643.1
$
610.1
$
525.0
$
483.8
$
455.1
Total Reimbursable and Other Revenues
(1)
$
44.9
$
37.4
$
33.9
$
31.0
$
27.9
Revenues Excluding Reimbursable and Other
Revenues
$
598.2
$
572.7
$
491.1
$
452.8
$
427.2
(1)
Reimbursable and other revenues includes
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)
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
ADJUSTED EBITDA (1)
Floaters
Drillships
$
130.9
$
91.2
$
55.6
$
16.7
$
2.8
Semisubmersibles
10.4
35.2
15.4
20.5
25.4
$
141.3
$
126.4
$
71.0
$
37.2
$
28.2
Jackups
HD Harsh Environment
$
31.4
$
36.3
$
5.4
$
21.1
$
20.9
HD & SD Modern
20.0
21.3
8.6
30.1
20.4
SD Legacy
5.6
5.0
4.4
4.8
2.9
$
57.0
$
62.6
$
18.4
$
56.0
$
44.2
Total
$
198.3
$
189.0
$
89.4
$
93.2
$
72.4
Other
Leased and Managed Rigs
$
18.3
$
20.8
$
26.1
$
23.2
$
27.2
Total
$
216.6
$
209.8
$
115.5
$
116.4
$
99.6
Support
costs
General and administrative expense
$
30.6
$
32.5
$
26.5
$
24.3
$
24.2
Onshore support costs
35.6
38.4
35.3
34.6
35.4
$
66.2
$
70.9
$
61.8
$
58.9
$
59.6
Total
$
150.4
$
138.9
$
53.7
$
57.5
$
40.0
(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)
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
ADJUSTED EBITDAR (1)
Active Fleet (2)
$
213.1
$
218.1
$
126.3
$
137.5
$
129.3
Leased and Managed Rigs
18.3
20.8
26.1
23.2
27.2
$
231.4
$
238.9
$
152.4
$
160.7
$
156.5
Stacked Fleet (3)
(12.9
)
(18.2
)
(6.6
)
(5.8
)
(6.0
)
$
218.5
$
220.7
$
145.8
$
154.9
$
150.5
Support costs
General and administrative expense
$
30.6
$
32.5
$
26.5
$
24.3
$
24.2
Onshore support costs
35.6
38.4
35.3
34.6
35.4
$
66.2
$
70.9
$
61.8
$
58.9
$
59.6
Total
$
152.3
$
149.8
$
84.0
$
96.0
$
90.9
Reactivation costs (4)
$
1.9
$
10.9
$
30.3
$
38.5
$
50.9
(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 and includes rigs that are in the process of
being reactivated.
(3)
Adjusted EBITDAR for the 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)
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
ADJUSTED EBITDAR (1)
Floaters
Drillships
$
132.8
$
102.1
$
85.9
$
55.2
$
53.7
Semisubmersibles
10.4
35.2
15.4
20.5
25.4
$
143.2
$
137.3
$
101.3
$
75.7
$
79.1
Jackups
HD Harsh Environment
$
31.4
$
36.3
$
5.4
$
21.1
$
20.9
HD & SD Modern
20.0
21.3
8.6
30.1
20.4
SD Legacy
5.6
5.0
4.4
4.8
2.9
$
57.0
$
62.6
$
18.4
$
56.0
$
44.2
Total
$
200.2
$
199.9
$
119.7
$
131.7
$
123.3
Other
Leased and Managed Rigs
$
18.3
$
20.8
$
26.1
$
23.2
$
27.2
Total
$
218.5
$
220.7
$
145.8
$
154.9
$
150.5
Support
costs
General and administrative expense
$
30.6
$
32.5
$
26.5
$
24.3
$
24.2
Onshore support costs
35.6
38.4
35.3
34.6
35.4
$
66.2
$
70.9
$
61.8
$
58.9
$
59.6
Total
$
152.3
$
149.8
$
84.0
$
96.0
$
90.9
(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)
(Unaudited)
As of
Oct 30,
2024
Jul 29,
2024
Apr 30,
2024
Feb 15,
2024
Nov 1,
2023
CONTRACT BACKLOG (1)
Floaters
Drillships
$
2,289.7
$
2,508.3
$
2,223.9
$
2,307.6
$
1,726.5
Semisubmersibles
106.0
122.1
180.7
224.1
259.5
$
2,395.7
$
2,630.4
$
2,404.6
$
2,531.7
$
1,986.0
Jackups
HD Harsh Environment
$
635.1
$
665.0
$
607.0
$
646.8
$
327.9
HD & SD Modern
585.2
438.9
449.1
347.1
406.8
SD Legacy
178.4
189.0
128.8
173.5
186.9
$
1,389.7
$
1,292.9
$
1,184.9
$
1,167.4
$
921.6
Total
$
3,794.4
$
3,923.3
$
3,589.5
$
3,699.1
$
2,907.6
Other
Leased and Managed Rigs
$
310.4
$
384.2
$
427.7
$
222.3
$
250.5
Total
$
4,104.8
$
4,307.5
$
4,017.2
$
3,921.4
$
3,158.1
(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
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
AVERAGE DAILY REVENUE (1)
Floaters
Drillships
$
386,000
$
358,000
$
328,000
$
307,000
$
288,000
Semisubmersibles
247,000
289,000
261,000
229,000
257,000
$
359,000
$
340,000
$
312,000
$
285,000
$
279,000
Jackups
HD Harsh Environment
$
163,000
$
134,000
$
123,000
$
111,000
$
116,000
HD & SD Modern
111,000
115,000
103,000
119,000
105,000
SD Legacy
84,000
85,000
81,000
79,000
83,000
$
133,000
$
120,000
$
108,000
$
111,000
$
108,000
Total
$
228,000
$
217,000
$
197,000
$
174,000
$
171,000
Other
Leased and Managed Rigs
$
32,000
$
37,000
$
45,000
$
39,000
$
44,000
Total
$
171,000
$
167,000
$
153,000
$
136,000
$
134,000
(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, revenues attributable to amortization of
drilling contract intangibles and lump-sum revenues and
amortization thereof, by the aggregate number of operating
days.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
UTILIZATION - TOTAL FLEET (1)
Floaters
Drillships
70
%
69
%
64
%
60
%
58
%
Semisubmersibles
45
%
60
%
51
%
53
%
54
%
63
%
66
%
61
%
58
%
57
%
Jackups
HD Harsh Environment
72
%
65
%
55
%
68
%
64
%
HD & SD Modern
44
%
45
%
44
%
52
%
51
%
SD Legacy
100
%
100
%
100
%
97
%
69
%
60
%
58
%
53
%
62
%
58
%
Total
61
%
61
%
56
%
60
%
57
%
Other
Leased and Managed Rigs
100
%
100
%
100
%
100
%
100
%
Total
69
%
69
%
64
%
68
%
65
%
Pro Forma Jackups (2)
71
%
68
%
64
%
70
%
67
%
(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
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
UTILIZATION - ACTIVE FLEET (1)
(2)
Floaters
Drillships
91
%
90
%
84
%
68
%
63
%
Semisubmersibles
75
%
100
%
85
%
89
%
90
%
87
%
92
%
84
%
72
%
70
%
Jackups
HD Harsh Environment
88
%
80
%
67
%
83
%
79
%
HD & SD Modern
82
%
81
%
69
%
80
%
79
%
SD Legacy
100
%
100
%
100
%
97
%
68
%
87
%
82
%
71
%
83
%
78
%
Total
87
%
86
%
76
%
79
%
75
%
Other
Leased and Managed Rigs
100
%
100
%
100
%
100
%
100
%
Total
90
%
90
%
82
%
84
%
81
%
Pro Forma Jackups (3)
91
%
88
%
80
%
88
%
84
%
(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 and includes 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
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
AVAILABLE DAYS - TOTAL FLEET
(1)
Floaters
Drillships
1,196
1,183
1,183
1,032
1,012
Semisubmersibles
460
455
455
460
460
1,656
1,638
1,638
1,492
1,472
Jackups
HD Harsh Environment
1,012
1,001
1,001
1,012
1,012
HD & SD Modern
1,196
1,225
1,258
1,288
1,288
SD Legacy
184
182
182
184
184
2,392
2,408
2,441
2,484
2,484
Total
4,048
4,046
4,079
3,976
3,956
Other
Leased and Managed Rigs
1,012
959
926
920
920
Total
5,060
5,005
5,005
4,896
4,876
(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
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
AVAILABLE DAYS - ACTIVE FLEET
(1)
Floaters
Drillships
920
910
910
920
920
Semisubmersibles
276
273
273
276
276
1,196
1,183
1,183
1,196
1,196
Jackups
HD Harsh Environment
828
819
819
828
828
HD & SD Modern
644
683
803
828
828
SD Legacy
184
182
182
184
184
1,656
1,684
1,804
1,840
1,840
Total
2,852
2,867
2,987
3,036
3,036
Other
Leased and Managed Rigs
1,012
959
926
920
920
Total
3,864
3,826
3,913
3,956
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
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
OPERATING DAYS (1)
Floaters
Drillships
834
815
761
622
584
Semisubmersibles
206
273
231
245
249
1,040
1,088
992
867
833
Jackups
HD Harsh Environment
731
655
549
691
652
HD & SD Modern
528
552
555
665
654
SD Legacy
184
182
182
178
126
1,443
1,389
1,286
1,534
1,432
Total
2,483
2,477
2,278
2,401
2,265
Other
Leased and Managed Rigs
1,012
959
926
920
920
Total
3,495
3,436
3,204
3,321
3,185
(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
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
REVENUE EFFICIENCY (1)
Floaters
Drillships
98
%
99
%
94
%
88
%
89
%
Semisubmersibles
100
%
100
%
99
%
94
%
93
%
98
%
99
%
95
%
90
%
90
%
Jackups
HD Harsh Environment
93
%
99
%
100
%
99
%
99
%
HD & SD Modern
100
%
100
%
99
%
97
%
97
%
SD Legacy
100
%
100
%
100
%
97
%
99
%
96
%
99
%
99
%
98
%
98
%
Total
98
%
99
%
97
%
93
%
94
%
(1)
Revenue efficiency is day rate revenue
earned as a percentage of maximum potential day rate revenue.
VALARIS LIMITED AND
SUBSIDIARIES
OPERATING STATISTICS
(Unaudited)
As of
NUMBER OF RIGS
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
Active Fleet (1)
Floaters
Drillships
10
10
10
10
10
Semisubmersibles
3
3
3
3
3
13
13
13
13
13
Jackups
HD Harsh Environment
9
9
9
9
9
HD & SD Modern
7
7
8
9
9
SD Legacy
2
2
2
2
2
18
18
19
20
20
Total Active Fleet
31
31
32
33
33
Stacked Fleet
Floaters
Drillships
3
3
3
3
1
Semisubmersibles
2
2
2
2
2
5
5
5
5
3
Jackups
HD Harsh Environment
2
2
2
2
2
HD & SD Modern
6
6
5
5
5
8
8
7
7
7
Total Stacked Fleet
13
13
12
12
10
Leased Rigs (2)
Jackups
HD Harsh Environment
1
1
1
1
1
HD & SD Modern
8
8
8
7
7
Total Leased Rigs
9
9
9
8
8
Total
53
53
53
53
51
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)
(Unaudited)
As of
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
Cash
$
129.3
$
131.7
$
69.5
$
92.9
$
110.3
Other current assets
129.4
157.8
198.3
184.0
191.2
Non-current assets
1,223.3
1,214.4
1,094.2
1,081.0
915.3
Total assets
$
1,482.0
$
1,503.9
$
1,362.0
$
1,357.9
$
1,216.8
Current liabilities
$
200.7
$
173.2
$
135.0
$
136.0
$
173.6
Non-current liabilities
1,176.9
1,172.2
1,057.6
1,056.8
886.2
Total liabilities
$
1,377.6
$
1,345.4
$
1,192.6
$
1,192.8
$
1,059.8
Shareholders' equity
$
104.4
$
158.5
$
169.4
$
165.1
$
157.0
Total liabilities and shareholders'
equity
$
1,482.0
$
1,503.9
$
1,362.0
$
1,357.9
$
1,216.8
ARO DRILLING
CONDENSED INCOME STATEMENT
INFORMATION
(In millions)
(Unaudited)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
Revenues
$
113.7
$
124.2
$
138.3
$
133.7
$
121.5
Operating expenses
Contract drilling (exclusive of
depreciation)
93.8
94.1
98.3
88.0
92.0
Loss on impairment
28.4
—
—
—
—
Depreciation
21.1
19.7
19.0
19.5
15.8
General and administrative
4.9
5.5
5.8
6.3
5.6
Operating income (loss)
$
(34.5
)
$
4.9
$
15.2
$
19.9
$
8.1
Other expense, net
15.3
13.4
13.1
3.6
9.0
Provision (benefit) for income taxes
4.2
(1.8
)
3.7
6.0
0.4
Net income (loss)
$
(54.0
)
$
(6.7
)
$
(1.6
)
$
10.3
$
(1.3
)
ARO Adjusted EBITDA
$
15.0
$
24.6
$
34.2
$
39.4
$
23.9
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
(Unaudited)
As of
(In millions)
Oct 30,
2024
Jul 29,
2024
Apr 30,
2024
Feb 15,
2024
Nov 1,
2023
CONTRACT BACKLOG (1)
Owned Rigs
$
1,236.9
$
1,322.9
$
1,398.9
$
1,475.4
$
1,547.0
Leased Rigs (2)
344.4
510.4
583.3
662.7
743.7
Total
$
1,581.3
$
1,833.3
$
1,982.2
$
2,138.1
$
2,290.7
(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.
(2)
Leased rigs backlog as of July 29, 2024,
included $113 million related to the drilling contracts for VALARIS
147 and VALARIS 148, which previously received suspension notices
from Saudi Aramco. The contracts were subsequently terminated and
are no longer included in leased rigs backlog as of October 30,
2024.
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
AVERAGE DAILY REVENUE (1)
Owned Rigs
$
109,000
$
104,000
$
105,000
$
100,000
$
91,000
Leased Rigs (2)
98,000
101,000
99,000
97,000
98,000
Total
$
103,000
$
102,000
$
102,000
$
98,000
$
95,000
UTILIZATION (3)
Owned Rigs
62
%
77
%
91
%
96
%
91
%
Leased Rigs (2)
71
%
86
%
93
%
94
%
95
%
Total
66
%
82
%
92
%
95
%
93
%
REVENUE EFFICIENCY (4)
Owned Rigs
70
%
90
%
98
%
94
%
99
%
Leased Rigs (2)
70
%
91
%
99
%
98
%
97
%
Total
70
%
91
%
98
%
96
%
98
%
NUMBER OF RIGS (AT QUARTER END)
Owned Rigs
9
9
8
8
7
Leased Rigs (2)
9
9
9
8
8
Total
18
18
17
16
15
AVAILABLE DAYS (5)
Owned Rigs
828
728
728
695
644
Leased Rigs (2)
828
765
744
736
736
Total
1,656
1,493
1,472
1,431
1,380
OPERATING DAYS (6)
Owned Rigs
510
561
664
668
585
Leased Rigs (2)
590
657
692
691
697
Total
1,100
1,218
1,356
1,359
1,282
(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, revenues attributable to amortization of
drilling contract intangibles and lump-sum revenues and
amortization thereof, 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)
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.
(6)
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 (Unaudited)
To supplement Valaris’ condensed consolidated financial
statements presented on a GAAP basis, this press release provides
investors with Adjusted EBITDA, Adjusted EBITDAR and Free Cash
Flow, which are non-GAAP measures.
Valaris defines "Adjusted EBITDA" as net income (loss) before
income tax expense, interest expense, other (income) expense,
depreciation expense, amortization, 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 Adjusted EBITDA" as ARO's net income (loss)
before income tax expense, other expense, net, depreciation expense
and loss on impairment. ARO Adjusted 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. ARO 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. ARO Adjusted 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
third quarter 2024 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).
Valaris defines "Free Cash Flow" as net cash provided by
operating activities less capital expenditures. Free Cash Flow is a
non-GAAP measure that our management uses to assess the cash
generation of our fleet after paying operating expenses and capital
expenditures to maintain and upgrade our assets. We believe that
this measure is useful to investors and analysts in allowing for
greater transparency of the cash generation of our business.
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 (Loss) to Adjusted
EBITDA
A reconciliation of net income as reported to Adjusted EBITDA is
included in the tables below (in millions):
Three Months Ended
Sep 30,
2024
Jun 30,
2024
VALARIS
Net income
$
62.9
$
150.8
Add (subtract):
Income tax expense (benefit)
24.3
(30.0
)
Interest expense, net
22.4
22.6
Other income
(14.7
)
(34.5
)
Operating income
$
94.9
$
108.9
Add:
Depreciation expense
31.7
29.7
Equity in losses of ARO
23.8
0.3
Adjusted EBITDA
$
150.4
$
138.9
A reconciliation of net loss as reported to ARO Adjusted EBITDA
is included in the tables below (in millions):
Three Months Ended
Sep 30,
2024
Jun 30,
2024
ARO
Net loss
$
(54.0
)
$
(6.7
)
Add (subtract):
Income tax expense (benefit)
4.2
(1.8
)
Other expense, net
15.3
13.4
Operating income (loss)
$
(34.5
)
$
4.9
Add:
Depreciation expense
21.1
19.7
Loss on impairment
28.4
—
ARO Adjusted EBITDA
$
15.0
$
24.6
Reconciliation of Net Income to Adjusted EBITDA and Adjusted
EBITDAR
(In millions)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
FLOATERS
Net income
$
126.8
$
114.1
Subtract:
Other income
(0.3
)
(1.7
)
Operating income
$
126.5
$
112.4
Add (subtract):
Depreciation
14.8
14.1
Other costs
—
(0.1
)
Adjusted EBITDA (1)
$
141.3
$
126.4
Add:
Reactivation costs
1.9
10.9
Adjusted EBITDAR (1)
$
143.2
$
137.3
JACKUPS
Net income
$
45.7
$
52.8
Subtract:
Other income
(0.1
)
(1.1
)
Operating income
$
45.6
$
51.7
Add:
Depreciation
11.4
10.9
Adjusted EBITDA (1)
$
57.0
$
62.6
Adjusted EBITDAR (1)
$
57.0
$
62.6
OTHER
Net income
$
16.3
$
18.3
Add (subtract):
Other income
(0.9
)
—
Operating income
$
15.4
$
18.3
Add:
Depreciation
2.9
2.5
Adjusted EBITDA (1)
$
18.3
$
20.8
Adjusted EBITDAR (1)
$
18.3
$
20.8
(1)
Adjusted EBITDA and EBITDAR excludes
onshore support costs and general and administrative expense.
Reconciliation of Net Income (Loss) to Adjusted
EBITDAR
(In millions)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
ACTIVE FLEET (1)
Net income
$
186.8
$
186.6
$
80.8
$
78.7
$
57.5
Subtract:
Other income
(0.4
)
(2.8
)
(7.0
)
(3.3
)
(1.0
)
Operating income
$
186.4
$
183.8
$
73.8
$
75.4
$
56.5
Add (subtract):
Reactivation costs
1.9
10.9
30.3
38.5
50.9
Depreciation
24.8
23.5
22.2
23.5
21.9
Other
—
(0.1
)
—
0.1
—
Adjusted EBITDAR (2)
$
213.1
$
218.1
$
126.3
$
137.5
$
129.3
LEASED AND MANAGED RIGS
Net income
$
16.3
$
18.3
$
24.8
$
22.1
$
25.8
Subtract:
Other income
(0.9
)
—
—
—
—
Operating income
$
15.4
$
18.3
$
24.8
$
22.1
$
25.8
Add (subtract):
Depreciation
2.9
2.5
1.3
1.2
1.3
Other
—
—
—
(0.1
)
0.1
Adjusted EBITDAR (2)
$
18.3
$
20.8
$
26.1
$
23.2
$
27.2
STACKED FLEET
Net loss
$
(14.3
)
$
(19.7
)
$
(7.9
)
$
(8.3
)
$
(8.6
)
Subtract:
Other income
—
—
(0.1
)
(0.1
)
—
Operating loss
$
(14.3
)
$
(19.7
)
$
(8.0
)
$
(8.4
)
$
(8.6
)
Add (subtract):
Depreciation
1.4
1.5
1.4
2.7
2.5
Other
—
—
—
(0.1
)
0.1
Adjusted EBITDAR (2)
$
(12.9
)
$
(18.2
)
$
(6.6
)
$
(5.8
)
$
(6.0
)
TOTAL FLEET
Net income
$
188.8
$
185.2
$
97.7
$
92.5
$
74.7
Subtract:
Other income
(1.3
)
(2.8
)
(7.1
)
(3.4
)
(1.0
)
Operating income
$
187.5
$
182.4
$
90.6
$
89.1
$
73.7
Add (subtract):
Reactivation costs
1.9
10.9
30.3
38.5
50.9
Depreciation
29.1
27.5
24.9
27.4
25.7
Other
—
(0.1
)
—
(0.1
)
0.2
Adjusted EBITDAR (2)
$
218.5
$
220.7
$
145.8
$
154.9
$
150.5
(1)
Active fleet represents rigs that are not
preservation stacked and includes 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
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
DRILLSHIPS
Net income (loss)
$
117.3
$
79.6
$
49.4
$
4.7
$
(9.9
)
Subtract:
Other income
(0.3
)
(1.5
)
(6.2
)
(2.0
)
(0.6
)
Operating income (loss)
117.0
78.1
43.2
2.7
(10.5
)
Add (subtract):
Depreciation
13.9
13.2
12.4
14.0
13.2
Other
—
(0.1
)
—
—
0.1
Adjusted EBITDA (1)
$
130.9
$
91.2
$
55.6
$
16.7
$
2.8
SEMISUBMERSIBLES
Net income
$
9.5
$
34.5
$
14.7
$
19.6
$
24.4
Add (subtract):
Other income
—
(0.2
)
(0.1
)
(0.1
)
—
Operating income
9.5
34.3
14.6
19.5
24.4
Add:
Depreciation
0.9
0.9
0.8
1.0
1.0
Other
—
—
—
—
—
Adjusted EBITDA (1)
$
10.4
$
35.2
$
15.4
$
20.5
$
25.4
(1)
Adjusted EBITDA for asset category
excludes onshore support costs and general and administrative
expense.
Reconciliation of Net Income to Adjusted EBITDA
(In millions)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Mar 31,
2024
Dec 31,
2023
Sep 30,
2023
HD HARSH ENVIRONMENT
Net income
$
24.8
$
31.0
$
0.4
$
15.4
$
15.4
Add (subtract):
Other (income) expense
0.2
(0.3
)
(0.3
)
(0.1
)
(0.2
)
Operating income
25.0
30.7
0.1
15.3
15.2
Add:
Depreciation
6.4
5.6
5.3
5.8
5.7
Adjusted EBITDA (1)
$
31.4
$
36.3
$
5.4
$
21.1
$
20.9
HD & SD MODERN JACKUPS
Net income
$
17.6
$
19.2
$
6.4
$
28.2
$
17.7
Subtract:
Other income
(0.2
)
(0.8
)
(0.6
)
(1.2
)
(0.2
)
Operating income
17.4
18.4
5.8
27.0
17.5
Add:
Depreciation
2.6
2.9
2.8
3.0
2.9
Other
—
—
—
0.1
—
Adjusted EBITDA (1)
$
20.0
$
21.3
$
8.6
$
30.1
$
20.4
SD LEGACY JACKUPS
Net income
$
3.3
$
2.6
$
2.0
$
2.5
$
1.3
Add (subtract):
Other (income) expense
(0.1
)
—
0.1
—
—
Operating income
3.2
2.6
2.1
2.5
1.3
Add (subtract):
Depreciation
2.4
2.4
2.3
2.4
1.6
Other
—
—
—
(0.1
)
—
Adjusted EBITDA (1)
$
5.6
$
5.0
$
4.4
$
4.8
$
2.9
(1)
Adjusted EBITDA for asset category
excludes onshore support costs and general and administrative
expense.
Reconciliation of Cash from Operating Activities to Free Cash
Flow
(In millions)
Three Months Ended
Sep 30,
2024
Jun 30,
2024
Net cash provided by operating
activities
$
193.0
$
11.5
Additions to property and equipment
(81.9
)
(110.2
)
Free cash flow
$
111.1
$
(98.7
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241029543925/en/
Investor & Media Contacts:
Nick Georgas Vice President - Treasurer and Investor Relations
+1-713-979-4632
Tim Richardson Director - Investor Relations +1-713-979-4619
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