Valaris expands contract inventory with new prizes and renewals Ship’s crew

Offshore drilling company Valaris Limited (NYSE: VAL) has reported strong results for the first quarter of 2023, with approximately $820 million worth of new contracts and renewals announced.

The new contracts include a three-year offshore drilling project in Brazil that will allow for the reactivation of the VALARIS DS-8 drillship.

CEO Anton Dibowitz was optimistic about the company’s prospects. “We continue to be very constructive on the outlook for the industry and our business as rising demand and constrained supply continue to tighten the market,” he said.

Due to the positive outlook and to demonstrate its commitment to returning capital to shareholders, the Valaris Board of Directors has increased share buyback authorization to US$300 million and plans to repurchase US$150 million of shares by the end of the year.

Including the new contracts and renewals, Valaris’ backlog now stands at $2.8 billion.

The company also completed a refinancing transaction in April 2023 that included a $375 million revolving credit facility and increased its liquidity by nearly $500 million. Valaris said the move aims to improve the company’s flexibility in allocating capital and its ability to return capital to shareholders.

Revenue for the first quarter was $430 million, down only slightly from the fourth quarter of 2022, primarily due to lower utilization for the harsh environment jackup fleet, partly offset by a higher average daily rate for the floater fleet was balanced by Valaris.

Contract drilling costs increased to $377 million from $353 million in the fourth quarter of last year. The company said this was mainly due to increased repair and maintenance costs related to special periodic inspections and higher reactivation costs. The Company’s total liquidity, including cash and cash equivalents and restricted cash, increased to $844 million as of March 31, 2023.

Valaris’ floater segment saw revenue increase to $215 million from $211 million in the fourth quarter of 2022. The increase was mainly due to higher daily rates VALARIS DPS-5 And DS-12, which started new contracts in the first quarter. The decrease was partially offset by lower occupancy, mainly related to VALARIS DS-12which mobilized from Mauritania to Angola in the first quarter before starting operations for another customer.

Meanwhile, jackup revenue dropped to $170 million due to lower utilization for the harsh environment jackup fleet. ARO Drilling (Saudi Aramco Rowan Offshore Drilling Company), the joint venture between Saudi Aramco and Valaris, saw revenue increase to $124 million, mainly due to higher average daily rates VALARIS 147 And 148 Investments.

Overall, Valaris net income was $49 million for the first quarter of 2023 compared to $31 million for the fourth quarter of 2022. Adjusted EBITDA decreased to $24 million from $54 million in the fourth quarter.

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