Valaris Limited Quarterly Report for the Period Ended March 31, 2024
Valaris Limited, a Bermuda-based company, filed a Form 10-Q for the quarterly period ended March 31, 2024, with the U.S. Securities and Exchange Commission. The company has filed all required reports for the past 12 months and is a large accelerated filer. As of April 26, 2024, there were 72,410,818 Common Shares outstanding.
Overview
Valaris is a leading offshore drilling contractor with operations across the globe. The company owns a large, high-specification fleet focused on ultra-deepwater floaters and premium jackups.
In 2024, Valaris has seen improved activity and financial performance compared to recent years due to higher oil prices and increasing demand for offshore drilling. The company generated net income of $25.5 million in the first quarter of 2024.
Industry Trends
The offshore drilling industry is recovering from a years-long downturn:
- Oil prices have stabilized at constructive levels, supporting more drilling activity
- Floater utilization and day rates have improved meaningfully since early 2021
- Contracting activity continues to increase
However, inflationary pressures have resulted in higher operating costs. Valaris has contractual mechanisms to recover some but not all of these cost increases.
Floaters
- 127 contracted floaters now vs. 101 in early 2021
- 86% utilization for marketed fleet now vs. 73% in early 2021
- Day rates increasing, especially for 6th and 7th gen drillships
- Limited uncontracted competitive supply remaining
Jackups
- 412 contracted jackups now vs. 341 in early 2021
- 94% utilization for marketed fleet vs. 78% in early 2021
- Older rigs likely to be retired given age and costs
- Only 16 competitive newbuilds remaining
Financial Results
Revenue
- Increased 22% year-over-year to $525 million in Q1 2024
- Higher average daily revenue rates and more operating days
Expenses
- Increased 17% year-over-year in Q1 2024
- Largely due to higher activity, inflationary pressures, and rig reactivations
Segment Performance
Floaters
- Revenue up 51% year-over-year in Q1 2024
- Driven by recently reactivated rigs and higher rates
Jackups
Revenue down 10% year-over-year in Q1 2024 due to fewer operating days
ARO Joint Venture
- Revenue up 12% year-over-year in Q1 2024
- Added newbuild jackup Kingdom 1 in late 2023
Liquidity and Capital Resources
$494 million of cash and equivalents at March 31, 2024
$375 million available borrowing capacity
Principal debt payments not due until 2030
Focused on maintaining strong liquidity position
Capital Expenditures
- Totaled $151 million in Q1 2024
- Focused on rig maintenance, reactivation costs
- Expect $420-460 million for full year 2024
Outlook
Valaris sees continued recovery in offshore drilling industry but also faces inflationary headwinds. The company is focused on maintaining its competitive position through an active high-specification fleet and strong liquidity.
