Core Insights - Valaris Limited (VAL) is highlighted as an exciting investment opportunity in the energy sector, despite the analyst typically focusing on technology sectors like SaaS and cloud businesses [1]. Company Overview - Valaris Limited operates in the energy sector, which is not the primary focus of the analyst but has garnered attention due to its potential [1]. Analyst Background - The analyst has over a decade of experience in financial markets, primarily in hedge funds, and maintains rigorous standards for investment [1].

Financial Data and Key Metrics Changes - Total revenues for the third quarter were $596 million, down from $615 million in the prior quarter, primarily due to fewer operating days for the floater fleet [29] - Adjusted EBITDA was $163 million compared to $201 million in the prior quarter, with the decrease attributed to fewer operating days and a non-recurring benefit recognized in the previous quarter [30] - Adjusted free cash flow for the quarter was $237 million, with cash flow from operations amounting to $198 million [30] Business Line Data and Key Metrics Changes - The jackup segment saw increased EBITDA year over year, driven by more operating days and higher average day rates [13] - The drillship fleet added approximately $1.4 billion of backlog year to date, representing nine years of total contract duration [16] - The total backlog now stands at $4.5 billion, significantly enhancing contract coverage for 2026 and beyond [17] Market Data and Key Metrics Changes - Global utilization for the jackup fleet remains around 90%, driven by national oil companies focused on energy security [12] - The offshore drilling market is expected to see a recovery in utilization rates, with seventh-generation drillships anticipated to exit 2026 with utilization levels around 90% [11] - Demand for offshore drilling services is developing, particularly in deepwater projects, with a robust pipeline of opportunities expected [10] Company Strategy and Development Direction - The company remains focused on operational excellence, commercial execution, and disciplined cost management to drive long-term value for shareholders [4] - A strategic focus on securing attractive contracts has resulted in all four drillships with near-term availability being contracted for work beginning next year [9] - The company is in advanced discussions for additional contracts, particularly for rigs scheduled to complete contracts in the second half of 2026 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term outlook for the offshore drilling industry, citing a need for sustained investment in oil and gas [10] - The company anticipates meaningful growth in deepwater project sanctioning over the next few years as customers pursue exploration and development [11] - Management highlighted the importance of ongoing investment to offset natural field declines, with the IEA estimating a potential 8% annual decline in global oil production without continued investment [10] Other Important Information - The company repurchased $75 million of shares during the quarter, reflecting its commitment to returning capital to shareholders [5] - The sale of the 27-year-old jackup Valaris 247 for $108 million was noted as part of the company's disciplined approach to cost management [14] - The company expects to receive approximately $70 million in upfront payments from customers this year for contract-specific upgrades [33] Q&A Session Summary Question: Share repurchase strategy and cash utilization - Management confirmed a commitment to returning capital to shareholders and indicated that repurchases would be opportunistic based on market conditions [40][42] Question: Exploration activity and customer discussions - Management noted an increase in exploration discussions, driven by the necessity to meet future energy needs, which is seen as positive for the market [46] Question: Future asset sales and shareholder returns - Management emphasized that operational cash flow will drive capital returns, with asset sales being opportunistic to enhance financial flexibility [48][50] Question: Day rates and market outlook - Management believes day rates for high-spec ships have troughed in the high $300,000s to low $400,000 range, with expectations for recovery in utilization and day rates [58][59] Question: Rig contracts and market dynamics - Management expressed confidence in securing extensions for rigs in Angola and highlighted ongoing discussions for gap-fill work for idle rigs [60][61]

Financial Performance - Total operating revenues for Q3 2025 were $595.7 million, a decrease of 7.4% from $643.1 million in Q3 2024[16] - Net income attributable to Valaris for the nine months ended September 30, 2025, was $265.3 million, compared to $239.7 million for the same period in 2024, reflecting an increase of 10.5%[16] - Operating income for Q3 2025 was $130.5 million, up 37.5% from $94.9 million in Q3 2024[16] - Basic earnings per share for Q3 2025 were $2.66, compared to $0.89 in Q3 2024, reflecting a significant increase of 199.1%[16] - Comprehensive income attributable to Valaris for Q3 2025 was $189.1 million, compared to $64.7 million in Q3 2024, marking an increase of 192.5%[17] - For the nine months ended September 30, 2025, total operating revenues were $1,831.6 million, compared to $1,778.2 million for the same period in 2024, representing a growth of 3%[94] - The company reported a net loss of $37.9 million for the nine months ended September 30, 2025[69] - The company reported a net income of $188.1 million for the quarter ended June 30, 2025[69] Cash and Liquidity - Cash and cash equivalents increased to $662.7 million as of September 30, 2025, compared to $368.2 million at the end of 2024, representing an increase of 79.9%[20] - The company reported a net cash provided by operating activities of $474.0 million for the nine months ended September 30, 2025, compared to $230.8 million for the same period in 2024, an increase of 105.5%[21] - The company has $375.0 million available for borrowing under the 2028 Credit Agreement, which matures in 2028[173] - ARO had cash and cash equivalents of $116.0 million as of September 30, 2025, and has not made any cash distributions of earnings to its partners since its formation[182] Assets and Liabilities - Total assets rose to $4,638.0 million as of September 30, 2025, compared to $4,419.8 million at the end of 2024, indicating a growth of 4.9%[20] - Total liabilities stood at $2,187.4 million as of September 30, 2025, slightly up from $2,175.5 million at the end of 2024[20] - Shareholders' equity increased to $1,664.2 million as of September 30, 2025, from $1,398.9 million at the end of 2024[69] - The allowance for doubtful accounts was $16.0 million as of September 30, 2025, slightly down from $16.6 million at the end of 2024, indicating stable credit risk management[97] Capital Expenditures and Investments - Capital expenditures for Q3 2025 totaled $69.8 million, compared to $81.9 million in Q3 2024, indicating a reduction in investment spending[92][93] - The company expects capital expenditures in 2025 to approximate $380.0 million to $400.0 million, primarily for maintenance and upgrades[179] - The total property and equipment at cost increased to $2,507.7 million as of September 30, 2025, from $2,309.4 million as of December 31, 2024[50] Contractual Obligations and Backlog - The total contract backlog as of October 23, 2025, is $4,450.3 million, up from $3,608.5 million on February 18, 2025, representing an increase of approximately 23.3%[110] - The backlog for floaters increased to $2,625.1 million, primarily due to multi-year contracts executed, contributing an incremental backlog of approximately $1.4 billion[110] - ARO's backlog increased to $2,164.6 million, up from $1,422.9 million, primarily due to five-year contract extensions for leased rigs[110] Tax and Regulatory Matters - The consolidated effective tax rate for the three months ended September 30, 2025, was 14.1%, while for the nine months it was 14.8%[75] - The company recognized a deferred tax expense of $168.8 million in Q1 2025 due to a valuation allowance on deferred tax assets[74] - The Luxembourg tax assessments resulted in a revised aggregate tax assessment of approximately $65.0 million, which was contested and led to a tax benefit of the same amount in Q2 2024[77] - The Malaysian subsidiary faced a tax assessment totaling approximately $28.0 million, with all payments under a seven-month payment plan completed as of September 30, 2025[78] - The Australian tax assessments totaled approximately A$101.0 million, with a settlement reached in December 2024 resulting in a tax benefit of approximately $18.0 million[79] Joint Ventures and Partnerships - ARO, a 50/50 joint venture, owned nine jackup rigs and had ordered one newbuild jackup rig as of September 30, 2025, with plans to purchase 20 newbuild jackup rigs over approximately 10 years[41][42] - The equity method investment in ARO is recorded at fair value, with basis differences primarily related to long-lived assets and favorable drilling contract terms[44] - The company has a potential obligation to fund ARO for newbuild jackup rigs, with a maximum aggregate contribution of $1.25 billion from each partner[82] Sales and Other Income - The company recognized a pre-tax gain of $88.4 million from the sale of VALARIS 247, which generated cash proceeds of approximately $108.0 million[51] - The total cash proceeds from the sale of three retired semisubmersible rigs were $10.0 million, with an impairment loss of $7.8 million recognized[52][53] - Other income increased significantly to $78.3 million, driven by pre-tax gains from asset sales totaling $115.4 million[130] Market and Operational Insights - The global marketed jackup fleet utilization was 91% as of September 30, 2025, down from 94% in early 2024[114] - The five-year forward price of Brent crude oil remains above $65 per barrel, which is expected to make over 80% of undeveloped offshore reserves profitable[104] - Rig utilization for the total fleet was 67% as of September 30, 2025, compared to 66% in the same period of 2024[136] Shareholder Actions - The company has authorized a share repurchase program of up to $600.0 million for its outstanding Common Shares[71] - As of September 30, 2025, the company repurchased 1.5 million shares at an aggregate cost of $75.0 million, with an average price per share of $48.88[72]

Investor Presentation O c t o b e r 2 0 2 5 Forward-Looking Statements Statements contained in this investor presentation 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," "outlook," "plan," "project," "could," "may," "might," "s ...

Core Viewpoint - Valaris Limited reported quarterly earnings of $2.65 per share, significantly exceeding the Zacks Consensus Estimate of $1 per share, marking an earnings surprise of +165.00% compared to $0.88 per share a year ago [1][2] Financial Performance - The company achieved revenues of $595.7 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 4.56%, although this represents a decline from year-ago revenues of $643.1 million [2] - Over the last four quarters, Valaris has exceeded consensus EPS estimates three times and topped consensus revenue estimates four times [2] Stock Performance - Valaris shares have increased approximately 27.7% since the beginning of the year, outperforming the S&P 500's gain of 17.2% [3] Future Outlook - The company's earnings outlook will be crucial for assessing future stock performance, with current consensus EPS estimates at $0.33 for the coming quarter and $2.41 for the current fiscal year [7] - The Zacks Rank for Valaris is currently 5 (Strong Sell), indicating expectations of underperformance in the near future due to unfavorable estimate revisions prior to the earnings release [6] Industry Context - The Oil and Gas - Drilling industry, to which Valaris belongs, is currently ranked in the bottom 7% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Another company in the same industry, Helmerich & Payne, is expected to report a significant year-over-year earnings decline of -65.8% in its upcoming results [9]

Core Insights - Valaris Limited reported strong financial results for the third quarter of 2025, with a net income of $187 million, up from $114 million in the previous quarter, driven by a gain on asset sales [3][14] - The company secured a contract for the VALARIS DS-12 drillship with bp offshore Egypt, ensuring all four active drillships with near-term availability are contracted for work starting next year [2][14] - Despite commodity price uncertainties, demand for offshore drilling services is expected to grow, with a solid pipeline of deepwater opportunities for Valaris' high-specification fleet [2] Financial Performance - Net income increased to $187 million from $114 million in Q2 2025, including a $90 million gain on asset sales compared to $1 million in the previous quarter [3][14] - Adjusted EBITDA was reported at $163 million, down from $201 million in Q2 2025 [3] - Total revenues, excluding reimbursable items, decreased to $556 million from $572 million, primarily due to fewer operating days for the floater fleet [4][14] Operational Highlights - Contract drilling expenses rose to $368 million from $355 million in Q2 2025, with the previous quarter benefiting from a $17 million accrual reversal related to arbitration outcomes [5][14] - General and administrative expenses increased to $27 million from $19 million, influenced by a $7 million benefit in Q2 from the arbitration outcome [6] - Cash and cash equivalents increased to $676 million as of September 30, 2025, from $516 million at the end of Q2 2025, attributed to cash flow from operations and asset sales [8] Segment Performance - Floaters segment revenues decreased to $293 million from $320 million, mainly due to the completion of contracts for VALARIS DS-15 and DS-18 [9][14] - Jackups segment revenues increased to $217 million from $212 million, driven by more operating days for several rigs [11] - ARO Drilling revenues rose to $157 million from $140 million, supported by higher day rates and more operating days [12] Awards and Recognition - Valaris was recognized with the 2025 Safety Leadership Award by the Center for Offshore Safety, marking the third consecutive year the company received this honor [14]

Financial Performance - Net income for Q3 2025 was $187 million, a 64% increase from $114 million in Q2 2025, driven by a $90 million gain on asset sales[5] - Adjusted EBITDA for Q3 2025 was $163 million, down 19% from $201 million in Q2 2025[5] - Operating income for the three months ended September 30, 2025, was $130.5 million, compared to $94.9 million for the same period in 2024, representing a 37.5% increase[25] - Net income for the nine months ended September 30, 2025, was $262.3 million, an increase from $239.2 million in the same period of 2024, representing an increase of approximately 9.2%[29] - Net income for the third quarter was $2.4 million, a recovery from a net loss of $8.6 million in the previous quarter, reflecting improved financial health[50] - Valaris reported a net income of $187.3 million for the three months ended September 30, 2025, compared to $114.2 million for the previous quarter, representing a 64% increase[61] Revenue and Operating Metrics - Total operating revenues decreased to $596 million from $615 million in Q2 2025, primarily due to fewer operating days for the floater fleet[8] - Revenues from the floater segment decreased to $293 million, an 8% decline from $320 million in Q2 2025[12] - Revenues from the jackup segment increased to $217 million, a 2% increase from $212 million in Q2 2025[14] - ARO Drilling revenues rose to $157 million, a 12% increase from $140 million in Q2 2025, due to more operating days and higher day rates[15] - Total operating revenues for the three months ended September 30, 2025, were $595.7 million, compared to $584.4 million for the same period in 2024, representing a 1.1% increase[25] - Total operating revenues for the three months ended September 30, 2025, were $595.7 million, a decrease from $643.1 million in the same period of 2024, reflecting a decline of approximately 7.4%[33] Cash Flow and Capital Management - Cash from operating activities was $198 million, with Adjusted Free Cash Flow of $237 million[8] - Cash and cash equivalents increased to $676 million as of September 30, 2025, up from $516 million as of June 30, 2025, due to operational cash flow and asset sales[11] - Cash and cash equivalents increased to $662.7 million as of September 30, 2025, from $379.3 million as of September 30, 2024, marking a 74.8% increase[27] - Adjusted Free Cash Flow for the three months ended September 30, 2025, was $237.0 million, significantly higher than $62.6 million in the previous quarter[65] - The company generated $198.1 million in net cash from operating activities for the three months ended September 30, 2025, up from $120.0 million in the previous quarter[65] Assets and Liabilities - Total assets as of September 30, 2025, were $4,638.0 million, up from $4,333.4 million as of September 30, 2024, indicating a 7.0% growth[27] - Total liabilities decreased slightly to $2,187.4 million as of September 30, 2025, from $2,209.6 million as of September 30, 2024[27] - Long-term debt remained stable at $1,085.2 million as of September 30, 2025, compared to $1,081.8 million as of September 30, 2024[27] - The company reported total current assets of $1,343.6 million as of September 30, 2025, an increase from $1,111.5 million as of September 30, 2024, reflecting a 20.8% rise[27] Market Outlook and Contracts - The company anticipates continued growth in offshore drilling activity and expects to benefit from increased customer demand and favorable market conditions[22] - The company secured a contract for VALARIS DS-12 with an estimated duration of 350 days, with all four active drillships now contracted for work starting next year[3] - Total contract backlog as of October 23, 2025, is $4,450.3 million, a decrease from $4,714.4 million in July 2025, representing a decline of 5.6%[37] - The total contract backlog for jackups was $1,262.9 million as of October 23, 2025, down from $1,353.8 million in July 2025, a decline of 6.7%[37] Fleet and Utilization - Total fleet utilization for Valaris was 67% in September 2025, slightly down from 68% in June 2025[41] - Active fleet utilization reached 88% in September 2025, compared to 89% in June 2025, indicating a minor decrease[43] - Total rig utilization for the third quarter was 90%, up from 85% in the previous quarter, indicating better operational efficiency[54] - The total active fleet as of September 30, 2025, consisted of 29 rigs, a slight decrease from 30 rigs in the previous quarter[49] Segment Performance - FLOATERS segment net income was $90.0 million for the three months ended September 30, 2025, down from $128.8 million in the previous quarter, a decline of 30%[62] - JACKUPS segment net income increased to $166.9 million for the three months ended September 30, 2025, compared to $75.1 million in the previous quarter, reflecting a growth of 122%[62] - Adjusted EBITDA for Valaris was $163.2 million for the three months ended September 30, 2025, down from $200.7 million in the previous quarter, indicating a decrease of 18.7%[61] - Adjusted EBITDA for ARO increased to $59.7 million for the three months ended September 30, 2025, compared to $36.9 million in the previous quarter, marking a significant improvement[61]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgency to invest in AI technologies now [1][13] - The energy demands of AI technologies are highlighted as a critical concern, with data centers consuming as much energy as small cities, leading to potential crises in power supply [2][3] Investment Opportunity - A specific company is presented as a unique investment opportunity, positioned to benefit from the increasing energy demands of AI, owning critical energy infrastructure assets [3][6] - This company is not a chipmaker or cloud platform but is described as the "Toll Booth" operator of the AI energy boom, collecting fees from energy exports [4][5] Market Position - The company is noted for its ownership of nuclear energy infrastructure, making it integral to America's future power strategy and capable of executing large-scale energy projects [7][8] - It is characterized as debt-free, with a significant cash reserve amounting to nearly one-third of its market capitalization, which positions it favorably compared to other energy firms burdened with debt [8][10] Growth Potential - The company holds a substantial equity stake in another AI-related venture, providing investors with indirect exposure to multiple growth engines in the AI sector [9][10] - The stock is described as undervalued, trading at less than seven times earnings, which presents a compelling investment case given its ties to the booming AI and energy sectors [10][11] Industry Trends - The article discusses the broader trends of AI disruption across traditional industries, emphasizing the importance of investing in companies that are adapting to these changes [11][12] - The influx of talent into the AI field is noted as a driving force for innovation and advancements, reinforcing the potential for growth in AI investments [12][14]

Core Insights - Valaris Limited has issued a Fleet Status Report detailing the current status of its offshore drilling rig fleet and associated contract information [1][5]. Company Overview - Valaris Limited is a leading provider of offshore drilling services, operating a diverse fleet that includes ultra-deepwater drillships, versatile semisubmersibles, and modern shallow-water jackups [2]. - The company emphasizes safety, operational excellence, and customer satisfaction, with a strong focus on technology and innovation [2]. Investor Relations - For further inquiries, Valaris has designated investor and media contacts, including Nick Georgas, Vice President – Treasurer and Investor Relations, and Tim Richardson, Director – Investor Relations [3].

Core Insights - Valaris (VAL) has demonstrated exceptional quarterly earnings growth, with rates ranging from 780% to 78%, leading to a top EPS Rating of 99 [1] - The stock price of Valaris has increased significantly, rising from a low of 27.15 on April 9 to approximately 48 [1] - Valaris has received a Relative Strength (RS) Rating upgrade, indicating improved technical performance [1] Group 1 - Valaris achieved a Relative Strength Rating of 81, showcasing market leadership [3] - The stock has seen a substantial EPS surge of 775%, contributing to its rating upgrade [3] - Valaris' RS Rating has shown consistent improvement, climbing to 76 and then to 77 [3]