Valaris Limited (NYSE:VAL) ("Valaris" or the "Company") today reported fourth quarter 2024 results.

President and Chief Executive Officer Anton Dibowitz said, "We continued to deliver solid operating and financial performance, achieving fleetwide revenue efficiency of 96% in the fourth quarter and 97% for the full year. We also had outstanding safety performance in 2024 and are proud to have been recognized with safety awards by both the IADC and the Center for Offshore Safety. I thank every member of the Valaris team around the world for their dedication, hard work and continued focus on operating safely and efficiently for our customers."

Dibowitz added, "The contracting outlook for 2026 and beyond remains strong for high-specification assets and we are focused on securing attractive, long-term programs for our active rigs. We will also continue to prudently manage our fleet as demonstrated by our recent actions to reduce costs for idle rigs and further focus our fleet on high-specification assets."

Dibowitz concluded, "We are steadfast in our belief that offshore oil and gas will play an important role in providing secure, reliable and affordable energy to the world. Valaris is well-positioned to help meet that need and drive sustainable, long-term value creation for our shareholders by virtue of our high-specification fleet and excellent safety and operational track record."

Financial and Operational Highlights

Delivered net income of $131 million and Adjusted EBITDA of $142 million;
Achieved revenue efficiency of 96% during the quarter and 97% for the year;
Generated $125 million of cash from operating activities and $13 million of Free Cash Flow;
Repurchased $25 million of shares;
Recognized by the International Association of Drilling Contractors ("IADC") Brazil Chapter with its 2024 Safety Award;
Secured approximately $120 million of contract backlog, including a multi-year contract for jackup VALARIS Stavanger in the North Sea; and
Announced in the first quarter 2025 the planned retirement of semisubmersibles VALARIS DPS-3, DPS-5 and DPS-6 and the sale of jackup VALARIS 75 for $24 million.

Fourth Quarter Review

Net income increased to $131 million from $63 million in the third quarter 2024, including a tax benefit of $7 million compared to tax expense of $24 million in the third quarter. Adjusted EBITDA decreased to $142 million from $150 million in the third quarter primarily due to lower utilization for the floater fleet, partially offset by more operating days for the jackup fleet.

Revenues exclusive of reimbursable items decreased to $548 million from $600 million in the third quarter primarily due to lower utilization for the floater fleet and lower amortized mobilization revenue, partially offset by more operating days for the jackup fleet.

Exclusive of reimbursable items, contract drilling expenses decreased to $381 million from $423 million in the third quarter primarily due to lower amortized mobilization expense, lower costs associated with rigs that were idle during the quarter and lower repair costs.

Depreciation expense increased to $34 million from $32 million in the third quarter 2024. General and administrative expenses decreased to $27 million from $31 million in the third quarter 2024 primarily due to lower compensation costs and professional fees.

Other income of $5 million compared to other expense of $8 million in the third quarter 2024. This increase was primarily due to foreign currency exchange gains compared to losses in the third quarter.

Tax benefit of $7 million compared to tax expense of $24 million in the third quarter 2024. The fourth quarter tax provision included $16 million of discrete tax benefit, which was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years. Exclusive of discrete tax items, tax expense decreased to $9 million from $24 million in the third quarter.

Capital expenditures increased to $112 million from $82 million in the third quarter 2024 primarily due to higher rig upgrade expenditures related to contract preparations for VALARIS 144 and DS-4.

Cash and cash equivalents and restricted cash decreased to $381 million as of December 31, 2024, from $392 million as of September 30, 2024. The decrease was primarily due to capital expenditures and share repurchases, partially offset by cash flow from operations.

Fourth Quarter Segment Review

Floaters

Revenues exclusive of reimbursable items decreased to $328 million from $375 million in the third quarter. The decrease was primarily due to lower utilization for the floater fleet associated with out of service time for VALARIS DS-15 and DS-17 to meet regulatory requirements in Brazil and for VALARIS DS-4 to complete upgrade work prior to the start of its contract as well as idle time for VALARIS DS-10 and DPS-5, which completed contracts during the third quarter.

Exclusive of reimbursable items, contract drilling expenses decreased to $211 million from $235 million in the third quarter primarily due to capitalization of costs for VALARIS DS-4 during its shipyard upgrade project, lower costs for VALARIS DPS-5 and DS-10 while the rigs were warm stacked during the fourth quarter and lower mobilization expense.

Jackups

Revenues exclusive of reimbursable items decreased to $188 million from $193 million in the third quarter primarily due to lower amortized mobilization revenue associated with VALARIS 247. This was partially offset by more operating days for the jackup fleet primarily due to VALARIS 249 returning to work after completing leg repairs and a full quarter of operations for VALARIS 247 and 122.

Exclusive of reimbursable items, contract drilling expenses decreased to $114 million from $137 million in the third quarter primarily due to lower amortized mobilization expense associated with VALARIS 247 and lower repair costs for VALARIS 249.

ARO Drilling

Revenues increased to $136 million from $114 million in the third quarter 2024 primarily due to a full quarter of operations for Kingdom 2, which commenced its maiden contract in the third quarter, and more operating days for Kingdom 1 due to out of service time in the prior quarter. Contract drilling expenses decreased to $82 million from $94 million in the third quarter primarily due to lower bareboat charter expense.

Other

Revenues exclusive of reimbursable items increased to $33 million from $32 million in the third quarter 2024. Exclusive of reimbursable items, contract drilling expenses increased to $18 million from $15 million in the third quarter due to higher survey costs for rigs leased to ARO.

	Three Months Ended (Unaudited)
	Floaters						Jackups						ARO ⁽¹⁾							Other						Reconciling Items^{(1) (2)}						Consolidated Total
(in millions, except %)	Q4 2024		Q3 2024		Chg		Q4 2024		Q3 2024		Chg		Q4 2024		Q3 2024			Chg		Q4 2024		Q3 2024		Chg		Q4 2024			Q3 2024			Q4 2024		Q3 2024			Chg
Operating revenues:
Revenues (exclusive of reimbursable revenues) ⁽³⁾	$	327.7	$	374.9	(13	)%	$	187.8	$	192.6	(2	)%	$	136.3	$	113.7		20	%	$	32.5	$	32.4	—	%	$	(136.3	)	$	(113.7	)	$	548.0	$	599.9		(9	)%
Reimbursable revenues ⁽³⁾		15.7		14.1	11	%		15.3		21.1	(27	)%		—		—		—	%		5.4		8.0	(33	)%		—			—			36.4		43.2		(16	)%
Total operating revenues ⁽³⁾		343.4		389.0	(12	)%		203.1		213.7	(5	)%		136.3		113.7		20	%		37.9		40.4	(6	)%		(136.3	)		(113.7	)		584.4		643.1		(9	)%
Operating expenses:
Contract drilling (exclusive of depreciation and reimbursable expense) ⁽³⁾		210.9		235.2	10	%		113.9		136.9	17	%		81.5		93.8		13	%		17.6		14.9	(18	)%		(43.4	)		(58.2	)		380.5		422.6		10	%
Reimbursable expenses ⁽³⁾		15.8		12.5	(26	)%		13.7		19.8	31	%		—		—		—	%		5.3		7.2	26	%		—			—			34.8		39.5		12	%
Total contract drilling (exclusive of depreciation) ⁽³⁾		226.7		247.7	8	%		127.6		156.7	19	%		81.5		93.8		13	%		22.9		22.1	(4	)%		(43.4	)		(58.2	)		415.3		462.1		10	%
Loss on Impairment		—		—	—	%		—		—	—			—		28.4		nm			—		—	—	%		—			(28.4	)		—		—		—
Depreciation		16.0		14.8	(8	)%		12.3		11.4	(8	)%		29.4		21.1		(39	)%		2.8		2.9	3	%		(26.6	)		(18.5	)		33.9		31.7		(7	)%
General and admin.		—		—	—	%		—		—	—	%		7.5		4.9		(53	)%		—		—	—	%		19.2			25.7			26.7		30.6		13	%
Equity in earnings (losses) of ARO		—		—	—	%		—		—	—	%		—		—		—	%		—		—	—	%		10.7			(23.8	)		10.7		(23.8	)	nm
Operating income (loss)	$	100.7	$	126.5	(20	)%	$	63.2	$	45.6	39	%	$	17.9	$	(34.5	)	nm		$	12.2	$	15.4	(21	)%	$	(74.8	)	$	(58.1	)	$	119.2	$	94.9		26	%

Net income (loss)	$	102.4	$	126.8	(19	)%	$	64.0	$	45.7	40	%	$	15.1	$	(54.0	)	nm		$	13.2	$	16.3	(19	)%	$	(64.1	)	$	(71.9	)	$	130.6	$	62.9		108	%

Adjusted EBITDA	$	116.7	$	141.3	(17	)%	$	75.5	$	57.0	32	%	$	47.3	$	15.0		215	%	$	15.0	$	18.3	(18	)%	$	(112.1	)	$	(81.2	)	$	142.4	$	150.4		(5	)%
Adjusted EBITDAR	$	118.5	$	143.2	(17	)%	$	75.5	$	57.0	32	%	$	47.3	$	15.0		215	%	$	15.0	$	18.3	(18	)%	$	(112.1	)	$	(81.2	)	$	144.2	$	152.3		(5	)%

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."

⁽³⁾ Certain previously reported line items presented in the table above (Total operating revenues and Total contract drilling expenses (exclusive of depreciation)) were further disaggregated to separately disclose Reimbursable revenues and Reimbursable expenses, respectively, to align with the updated presentation of our segment tables upon the adoption of ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("Update 2023-07"). The disaggregation of these line items was presentational only and was retrospectively applied to the prior periods presented. There were no impacts to the overall Total operating revenues or Total contract drilling expense (exclusive of depreciation) line items.

As previously announced, Valaris will hold its fourth quarter 2024 earnings conference call at 9:00 a.m. CT (10:00 a.m. ET) on Thursday, February 20, 2025.

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," "outlook," "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 and expected benefits 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; uncertainty around the use and impacts of artificial intelligence applications; 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, tariffs 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; the use of artificial intelligence by us, third-party service providers or our competitors; 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
	Dec 31, 2024		Sep 30, 2024		Jun 30, 2024		Mar 31, 2024		Dec 31, 2023
OPERATING REVENUES
Revenues (exclusive of reimbursable revenues) ⁽¹⁾	$	548.0	$	599.9	$	572.8	$	491.2	$	452.9
Reimbursable revenues ⁽¹⁾		36.4		43.2		37.3		33.8		30.9
Total operating revenues ⁽¹⁾		584.4		643.1		610.1		525.0		483.8

OPERATING EXPENSES
Contract drilling expenses (exclusive of depreciation and reimbursable expenses) ⁽¹⁾		380.5		422.6		402.9		412.5		372.4
Reimbursable expenses ⁽¹⁾		34.8		39.5		35.8		32.3		29.6
Total contract drilling expenses (exclusive of depreciation) ⁽¹⁾		415.3

Valaris Reports Fourth Quarter 2024 Results