VAL - Earnings call 4 2023 | Valaris Limited

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Operator

Good day, and welcome to the Valaris Fourth Quarter 2023 Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

Today, we are experiencing national AT&T coverage issues. Should the presentation be interrupted at any time, we will attempt to reconnect and continue. [Operator Instructions] I would now like to turn the conference over to Darin Gibbins, Vice President of Investor Relations and Treasurer. ahead. go Please

Darin Gibbins

and the me to Senior Quarter Conference management Vice XXXX President members and Welcome, our of are Valaris President With executive President Senior Weber; today CFO, Dibowitz; Matt and Call. Lyne; and other everyone, team. Chris Fourth CCO, CEO, Vice Anton

duty cause are is Many on We our website list make Please release events results. are expectations today company refer to which to our results subject press risks at uncertainties. available and no note actual and factors and define and to that and our update could SEC statements materially issued expectations. forward-looking please filings release, impact future the valaris.com. differ Also, website, our factors statements. about forward-looking forward-looking on press from could other Any that that we to statements risk undertakes comments our

and the for During and to we measures. GAAP refer website our financial on see this will additional reconciliations. release non-GAAP Please required call, information press

As most call. which recent website An available the a our investor across contracts presentation Fleet issued rig updated our on our we details on Report, will provides after Status be last week, reminder, fleet.

President Now and call Anton over I'll turn to CEO. the Dibowitz,

Anton Dibowitz

to Thanks, Darin, everyone. and and good morning afternoon

our offshore call During market performance our with Chris provide results the an the contracting today's the success over I and for call, contracting provide then with markets and more wrap some and an I recent finish guidance, overview floater will to financial closing our XXXX. return will the drilling an on before of during then outlook jackup on update the for our begin comments. our capital I'll outlook and discuss in quarter, overview discuss hand After that, call up to of Matt and some commentary with program. high-level the detail

during this quarter, about we cover call. points detail the our to highlight I will discuss in I that business more Before want some key

we upcycle, increasing strength for and duration the First, this positive, the with and remain demand supply of outlook tightening the is and constrained in confident Valaris market.

the total $X contract to Second, with day at we billion, on Today, backlog sit $X.X XXXX, more backlog expect we rates. of meaningfully execute ago. revenue front, financial XX% coverage our a of year's continue contract billion improved with nearly secured improvement new commercial XX from than during in meaningful in And this we months more XX% underpins increase nearly of the results. contracted XXXX than

our finally, EBITDA million are repurchase maintaining to continue to range are in our of demonstrate returning and million we capital $XXX guidance from authorization to We of shareholders. we $XXX $XXX Third, commitment XXXX, our shares now share million. increasing we XXXX to $XXX And million million. to $XXX repurchased

the year we the Starting We with focused Operating personnel and priority, like improvement, remains I world. and momentum, efficiently top quarter safely of of around we wherever keeping the thank strongest with on operations. performance onshore and our would mind safety our ended fourth following top safety the systems being our safe remain year. offshore their and for dedication continued the crews positive with work operate all to and of to

and we these the like Valaris incident, during teams. each celebrate X I'd milestones to a without Of particular XXX and recordable XX, congratulate several fantastic a note, had quarter, Norway by safety the reaching XXX rigs years for achievement

our operations global awarded the Oil safe XXX working and TotalEnergies' rig We're focus of example Company's to customers. jackup efficient A Year. approach and North of equally with and our for being proud collaborative our VALARIS on of great

since completed marked commence the ahead VALARIS a following that contract early DS-X. XXXX during Petrobras, the acceptance the The into its start-up second I to This successful with reactivation also team September. DS-XX schedule. enabling want the to of executed completed and of customer drillship Brazil congratulate our the for in Valaris importation of rig and best-in-class the entire we've and fifth team XXXX, reactivation reactivation

active We a another contract continue this to the adding make year later good progress on Africa. fleet X.X-year reactivating forward offshore look West DS-X for to drillship and to

has XXXX ability meaningful important to these that industry-leading part driver key to and expect our growth we Our execute beyond. financial in story complex our for been results projects an a the of improvement see in and

for of million financial of adding and to and generated performance Moving quarter. results EBITDA costs Chris $XX back provide our onetime financial further will guidance adjusted little later. details $XX We our EBITDAR, adjusted million. the on reactivation a

for price investment around the Commodity with Brent be remain of to barrel, undeveloped which are expected $XX XX% approximately projects, offshore the market. long-cycle prices X-year profitable. at continued [ offshore a per Turning to in our forward reserves supportive attention ] level

addition, hydrocarbons In to means that barrels needed be energy for these needs. demand will growing world's the meet global

years. growth X offshore rate the According expected over a of CapEx X% XXXX ] by to data next in upstream is Restat, from at and [ to XX% annual compound increase

The This with floater to continues duration evident opportunities seeing, longer are the current of increased sign growing of activity providing cycle. are with term times, customer the for market lead we up positively. in great that is the pipeline develop a a

and schedules However, call, we XXXX. would some industry contract see across acquired to our mentioned in quarterly the repositioning gaps during lengthening in rigs as for lead we times, expect considering previous upgrades customer work,

high balance and rates most they higher that total day move mid- the new to as as continue will leading-edge build fixtures, stacked tightens. and capacity XXXs, the we continue our drillship to and recent pricing, to believe time, over demand be further the to by in supply continues demonstrated and remaining at X diminish Looking

to X-year a be the rates, contractors see rates for close to X- be duration lower or likely programs believe rate X-year some a to and while are lower leading-edge to as at opportunities, accept of may willing secure some we long-term awarded to backlog. We plus that may

see lower fill jobs on somewhat idle. rigs to may we becoming Similarly, rates gap shorter-term avoid

our contract possible the each in by of the situation. on bidding For unique keeping profitability our utilized securing highly maximizing rigs fleet Valaris, economics we best active are and focused

purchase the we of rigs in strength and up Our attractive DS-XX right confidence VALARIS be the highly And disciplined recent newbuild of our in to DS-XX. VALARIS these DS-XX and waiting opportunities drillships, reactivate cycle. demonstrates duration at and prices, for the will

to Moving water. shallow

While uncertainty, on created we Arabia remain the has the recent from outlook some market. positive announcement for the Saudi jack-up

pace X barrels First, change that be will foreseeable a market capacity. of we the expect which that Saudi develop the recent for Arabia We world announcement their timing spare continue the jackup resources, the largest understand million they hold about Saudi will to the reflects in currently and given at in future.

the XX demand. is expected on we to X per XX day delay and long-term for on be think The and it the oil for resources, need Manifa, million barrels expansion of sustainable in focused from not the these increasing view to just maximum capacity given growing Safaniyah Kingdom's changes their do million oilfields: expectations

approaching is later. demand Second, a to will extremely we outside at active utilization XX% coming to level of X with highest years, its tight, and global Saudi rig see and jackup contracted the about little bit talk market Arabia, count Matt incremental market continue the in nearly which

XX% be the decline likely of fleet rigs jackups least XX and it global approximately further over And at fleet retired, representing that old. more is XX overall will contracted contracted in will years jackups number Meaning, than by time. of of the the finally, some jackup these global

Saudi with commence leased ARO, additional scheduled rigs this we to have unconsolidated Aramco, our venture X business, joint rigs an our year. X leases Regarding with to

its Saudi our ARO, For our remain including on have contract program. rigs fully context, on And for which all business. the a our to will Saudi Kingdom accounts XXXX revenue any, X% the Vision the committed backlog. the program, we cornerstone is charter new that recent of and if leased think of just project minimal, announcement impact Aramco build

our update on an capital to program. now return Moving

and rigs a it. expect growth few earnings to the free years, rigs intend rates as back to go better value all And and work. we over for market shareholders, cash or reprice is more there We accretive to next deliver return reactivated cash flow use significant future to day to unless we flow

authorized We opportunistically repurchase the $XXX returning demonstrate and providing to increased year, continue program our shares. to million million, returned share to million and to we a increasing shareholders, now are we shareholders. $XXX capital $XXX to repurchase authorization commitment capacity to Last

over the in Matt to our to jackup outlook for contracting overview hand an more of provide to discuss call markets detail our the XXXX. success and floater and and I'll Now contracting recent

Matt Lyne

These Anton, and representing months. secured the have Thanks, afternoon, morning our awards everyone. an past contracts than new an billion. increase beginning the over associated Since billion, and with quarter, fourth of good $X.X increased total to more have $X.X of approximately we XX extensions, contract XX% almost backlog and backlog the

a awarded Mexico. contracts Brazil received of multiyear for More nearly floater VALARIS Petrobras billion contract DS-X Oxy with and this backlog contract the X-year including than in DS-X $X and is extension DS-XX. Gulf was U.S. the of for drillships, with X-year DS-XX a offshore new fleet,

to are contracts day financial expected meaningful rates. results, with low in these leading-edge rates from XXXs, the rates legacy Importantly, to in transitioning contribute to improvement day a

market. $XXX the received This a are XXX the the in contracts an Sea, U.K. notably, current Trinidad strength Most backlog, and North contract that jackup for is Energy North day broad-based expected quarter at a across Sea Australia, several with extension the added water X-year Harbour in combined rates, shallow of extension We awarded market. of rate million also new North is than Sea. of jackup which we XXXX, higher in nearly improving demonstrating the commence third to VALARIS spot indicative meaningfully the

starting benign point count XX%. for drillships on highest Moving sixth during some and generation at now our seventh commentary active to was XXX contracted late XXXX. floaters. reached environment quarter, The major And floater utilization the its fourth the since with markets,

by We or approximately today's candidates We of ships we strong XX fleet to in end the stacked currently of need newbuild of that compares opportunities reactivations commence see half of favorably are than expected duration met of these opportunities approximately X newbuilds greater active before are of pool likely year, either tracking stranded for a each stacked incremental moving the will continue XXXX. prospects, floaters, that a rigs and pipeline considered market. This XX estimated with are an approximately to to and anticipate drill across regions. that and be reactivation to

handful will later commence XXXX remainder and this In estimate XX a between we opportunities weighted XXXX. these evenly with year, that be likely to terms of of the timing,

of floater has currently driver key a being for [ its ultra-deepwater Brazil ] see developments demand. to across and opportunities Hankador Petrobras And X Sepi continue rigs We outstanding.

are the we up that increase floater offshore beyond anticipate Petrobras count likely we opportunities these to market Brazil by to additional additional for rigs. to and X could addition, come X combined the tenders, that active rigs In believe

opportunities more We than currently coast off tracking a dozen Africa. the are of

long-term some in of cover excited rigs including add with activity by and XX. locations attractive prospect programs large DS-XX, may over multiple could several be this increased and for that few the the that the fleet active operating We both next to expected region, IOCs opportunities XX are years, our

approximately remainder Brazil of and with and opportunities X/X total the other large across Africa and Asia spread parts America, the with Mexico, account IOCs. Southeast the of for of South primarily Gulf combined

to business, with jackup of years. level its jackup the count side demand the On contracted continues at almost X now steadily highest increase, in the

result, for As established approaching in firmly rates active jack-ups regions. utilization above day a several is XX%, XXX,XXX leading-edge with

see expect We to years absorb over West could incremental of East, range few the demand Middle the to and broader XX in growth in Africa Southeast the rigs. XX solid that Asia next

for Australia, over recent the some per XXX-day Trinidad contract the and offshore the contract increase of strength a by a representing evidenced our at a jackup of a of global market second XXX VALARIS contract approximately market-leading current is for its $XXX,XXX, rate rate. XX% offshore XXX $XXX,XXX day, at day awards, including The

new fleet the our awards Sea more success in North secured VALARIS contracting Having Stavanger And now for out backlog sold million 'XX XXXX. fully is in and associated beginning mean discussions of great opportunities of we and fourth are that for XXX the XXX had active active $XXX for quarter. commencing in extensions, beyond. North have since contracts the Sea. with We and than Contract

the the strengthening The provides for X-year of environment mentioned in good that U.K. onwards. XXX XXXX commercial VALARIS North a Sea from earlier I extension indication

start since have quarter Our the the of contract contract coverage. improved wins further our fourth XXXX

to with the DS-XX On floater floaters, side, DPS-X, its existing active the contract we have Shell the towards Nigeria the believe just availability. placed end region we late offshore long-term rig with near-term to of XXXX And the quarter. complete contract expected of for in now X are well is is the early XXXX. and due opportunities first DS-XX in the our that commence XX or

potential the some In that actively interim, short-term the are of we opportunities gap. could pursuing fill

NI the offshore XXX-day DPS-X is for contract Mexico. currently its mobilizing with

are We in the active second time half the some the year. in experience rig discussions the regarding region, but of anticipate in idle opportunities will

down X of remaining sight have rigs, offshore the developments we and contract seen for in And permit result, side, XXX the to is the availability encouraging XXXX for we VALARIS projects XXX. On as line environmental into jackup a approvals our good work now future Recently, Australia. VALARISXXX. the just have around

XXX, in of Mexico, the to looking region. For VALARIS the outside pursue while continue opportunities we opportunities the longer-term of Gulf near-term for

Gulf are discussions manage Finally, soon. to we that platforms Mad contract expect Horse, and Dog Mexico, these in in related and we finalize of BP the advanced production the extensions Thunder with U.S. from we to X extensions

our remain and rates. in commencing contracting uncontracted XXXX, new XXXX extremely backlog in with and attractive In success focused remaining for beyond. and $X on improved billion We filling XXXX year day contracts pleased contract securing are our in the summary, nearly we during in laser days adding meaningfully work

now call will take you the over the hand Chris, to to financials. I through

Christopher Weber

everyone. morning full prepared Thanks, fourth also updated first of the of will Matt, for XXXX. and for good outlook year quarter quarter and I provide my an remarks, provide and the the I our will In afternoon, XXXX guidance results, overview

prior and expense, EBITDAR, to the million fourth results. reactation prior adjusted reactivation in the Revenue which Adjusted due $XX in adds primarily up $XX back prior up operating expense. increased in from EBITDA days $XXX $XX across the million quarter. fleet $XXX more was the our $XX from was quarter. from million, with was lower quarter million, up Adjusted Starting million, quarter million EBITDA and

DS-XX, Brazil the had Equinor VALARIS quarter, commenced offshore more its following which contract we September, In days for its reactivation. operating early with fourth in

XXX of which We the and quarter. idle also had more Norway, ] operating the days incurred all some time XXX, [ for VALARIS prior jackups, during

quarter completed shipyard partially were brief XXX, their are of mobilization contracts, for fourth DS-XX, and both operating maintenance next by offset the well preparation visit due in fewer work benefits the prior during between as and jackups and fourth quarter which the as contracts. and to These VALARIS days XX of a VALARIS contract undergoing to contracts start planned

for prior to DS-X, expense contract $XX in reactivation Brazil $XX its Fourth Petrobras which for year-end, is compared million to offset higher partially quarter offshore West which Africa primarily expense VALARIS by to its million at reactivation lower with contract was due quarter, reactivation VALARIS commence expected DS-X, mid-XXXX. the commenced expense offshore in

million quarter deferred note change that to benefit. tax is item in valuation $XXX that One income assets. a to This an certain for $XXX is noncash due fourth was million benefit tax a resulted allowance from

outlook, Given be over these that our believe now time. it is constructive likely assets we to able utilize we will

Palmas. to flow DS-XX for South related were incurred was of and to newbuild them million, costs from mobilization the purchase expenditures Cash quarter from the is capital for which fourth Las million DS-XX, $XXX VALARIS to rigs the Korea in drillships, in million $XX including and $XXX price purchase prepare of operations the comprised the

cash capital repurchases. million partially the quarter as of cash $XXX during at and the the by cash DS-XX expenditures, equivalents of had of and purchase end due Cash These quarter. declined DS-XX the from million million offset to by $XX generated We operations. as well of share primarily were $XXX

$XXX million facility fully Our the at of total the quarter. credit just providing over revolving $X of liquidity end billion available, remains

year full million, of repurchases X X% count. repurchased taking outstanding In shares total $XX representing or approximately million to shares, the of our we quarter, share million fourth $XXX the

provide a Drilling's overview I'll ARO brief Now financials. of

reminder, Valaris. not the consolidated results a As in financial is ARO of

operating fourth for main X, jackup November some to due planned $XX its out-of-service commencing prior million primarily maintenance the XXXX, from during contract for Kingdom quarter. the in days in quarter days increased million and third ARO following new to the EBITDA $XX ARO more build quarter, in

Moving now to XXXX our first quarter outlook.

million, We be as million the range $XXX revenues $XXX in to in expect $XXX fourth the of will total quarter. compared million to

are due expected revenues Floater for contract startups DS-XX. increase and DS-X to VALARIS to

idle surveys next to their Three of XXX, including decrease the XXX periodic are expected to to prior XXX. XXX commence of of preparations are However, to of and rigs jack-up contract and undergoing leaving shipyard, job. contracts, of these VALARIS for North start its revenues next these the from several rigs, are after scheduled due XXX, including second time VALARIS contracts before new quarter. Each will the Sea ahead to end the Australia mobilize which, rigs the special

We the contract mentioned. and as costs operating expect addition million that DS-XX, that DS-X compared work associated be and as contract drilling $XXX expense million to to VALARIS I quarter. with for will in primarily due to $XXX just as contract the million $XXX is jackup startups, fourth well SPS preparation following costs This their recent of the

In out of regions offshore at year. addition, increases in certain the wage the we rolled beginning

to million, and quarter. million administrative General be prior up approximately expense from is the expected in $XX $XX

adjusted As $XX expense range a ahead commencement expect for million $XX to the its $XX $XX EBITDA including result, million, second contract million to between we of reactivation to quarter. million in expected VALARIS DS-X, of

to to the $XXX CapEx and ahead VALARIS expected million, first to XXX, ARO. $XX upgrades $XXX Maintenance bareboat to million. including quarter approximately and is in is expected charters be million their XX of CapEx be upgrade long-term to

CapEx be reactivation to including million, associated Reactivation XXXX. $XX of and spend $XX previously in that anticipated contract-specific late million is approximately was expected

expected be to CapEx related $XX mobilization new Las primarily approximately million, Korea is costs Finally, and VALARIS to DS-XX to Palmas from build for South DS-XX.

year financial for guidance our current quarter our for preliminary yet XXXX. the executed. have with account provide not be full to Consistent third reactivation does provided that the year guidance now call, for contracts XXXX full incremental the guidance I'll on any

million billion $X.XX and forecast of We $XXX billion G&A to contract expense $X.X billion revenues of billion, $X.X $XXX to million. of currently to $X.XX expense drilling

this At million. for $XX million adjusted of we maintaining approximately reactivation contracts and higher expense the higher earnings XXXX are of year $XXX EBITDA, North $XXX million. rate full jackup the EBITDA guidance contract year to As this drillships, than And Anton rolling Xx increase the midpoint, with during is approximately includes Sea by mentioned, our driven increased our primarily to reactivated start-ups day fleet. rigs from

in quarter, our we revenue our XX% at contract the fourth wins midpoint guidance Given our the now have contracted range. of of revenue XXXX

are revenues work. quarter increase contract due the SPS jackups preparation look the is meaningfully the following to improvement to across first primarily quarter, in contracts, compared year, expected rolling to several new is EBITDA we and second in in DS-X, starting rate contract Further second the rigs As and due contracts. reactivation year, expected day which and second its following late certain start the of VALARIS scheduled to half the primarily quarter, to its higher to

primarily range $XXX year to XXXX of prior DS-XX. million, year largely last spend. to new expected $XXX of of we Full reimbursable announced to CapEx the compared million late expenditures $XXX capital increase contract million to build timing is to million costs, are which $XXX and our due DS-XX upon the from are preparation guidance The and of delivery inclusive

and million, spares. SPS about as Maintenance is well with requirements $XXX CapEx This capital being million approximately covers $XX expected as contract preparation and be reimbursable. upgrade to

in is upfront contract largely with incremental to CapEx work is XXXX to be work and to compared related in expected upgrade guidance well which for maintenance we SPS as XXXX, DS-X's increase for $XX is fees. XXX, reimbursable X-year December Like through largely for ARO. bareboat projects. preparation This our contract a preparation VALARIS million preliminary heavy The with year charter Petrobras, as jackup CapEx announced

expected is was XXXX. fourth quarter to guidance, million our approximately incurred $XX higher into that expected pushing in CapEx be the contract-specific and which be to is preliminary spend million, to Reactivation due than $XX

of mobilization million, new South build the Las and to DS-XX Palmas. approximately related from of Finally, VALARIS Korea to we $XX anticipate CapEx DS-XX primarily

Anton our review some financial That to and results call hand the now guidance. concludes closing remarks. I'll of my for back

Anton Dibowitz

by Thanks, conclude the some prepared Chris. from our of I'll reiterating key points remarks.

constrained remain tightening and demand positive, confident up in Valaris supply and we the increasing market. is cycle, strength for the of First, with outlook and duration this the

delivering by our rigs reactivated thoughtful market to and on manner, with we contracts. much from successfully leverage rigs continue repricing execute rates rates to Second, day disciplined in attractive a operating legacy and higher

addition XXXX, year's the the contracted fourth of $X.X more has backlog improvement contract Our approximately the XX% recent in expected revenue contracting success, the in than billion since underpinning meaningful financial this beginning new of increased results. our coverage in quarter, including to

in demonstrate million. commitment to $XXX increasing million $XXX And repurchase returning finally, we share of authorization now by from shareholders and continue $XXX XXXX to our to capital to our million shares repurchasing

generate expect to We to flow there the next few a return it. unless use over intend and meaningful better to all it years, is or for cash accretive free value we more shareholders, sustained and

remarks. questions. for our the We've please open prepared now Operator, the reached of end line

Operator

We Heikkinen will Today's Instructions] begin David now Energy the from comes session. with Smith question question-and-answer [Operator Advisors. first

David Smith

that potential And amount the term active to Congratulations floater and next there's you quarter. to about in think reactivation an does opportunities drillship these, XX starting the work how seem versus locking space It for on how drillship minimizing the of a I'm the bidding in a fleet? XX between curious, healthy potential program for trade-off see you months. on white active versus of duration kind putting another

Anton Dibowitz

I can we've been pretty I think Dave, clear. look, --

is long clear to XX costs, that. that get numbers highly our million for inflation can above active the and as contract, first that now, around reactivation think utilized, capacity, the million, rates well. When I fact see about a leading-edge we $XXX as term meaningful you're up where to right Our we in to XX, are to great that do and been now. And expect with we've opportunities priority EBITDA, keep stack comes there on day given XX, do get opportunities pushing return it as maybe a $XXX us fleet some are those we generating to

continues on X the in highly fleet interest contracts, the again, see opportunity. the utilized we is attractive that for keep as for look to and our to XX right of XX, then increase. talking opportunities and all We to but coming have priority people first demand Waiting and XX, the incremental to market us active

goes working. X market of this rigs. work of we're we wait patient, the be couple given just see fair we those in X from ships the away were And the of a Once working. the to work. to a middle right stretch Look, the years put willing to with That's to opportunity year, where ago to we have XX in our for positive momentum rigs

David Smith

follow-up the to authorization I the if execution should $XXX year-end, I to to see question, which through Nice you think of see may. million share $XXX use appreciate about we a forward? pace How doubled the might And of nicer repurchases at that. the million. and that authorization going

Christopher Weber

question. Yes, shareholders. Dave, to Appreciate Chris. capital this returning is the committed to We remain

to As mentioned, returned share authorization. Anton capital last on $XXX we through of $XXX repurchases million shareholders a year million

And Our into to the our the authorization This 'XX, ability this Board from our is repurchase in million for to think and repurchases, commitment part just gives $XXX opportunistically an capital authorization. doubled all returning us million. I and capacity $XXX to open-ended shares shareholders. to is this additional that 'XX with of

Anton Dibowitz

the We discount put purpose. use to authorization value. it, opportunistic a intrinsic going it. be increased to We we We to at for into our intend trade believe we're place about a and

Operator

with The comes Eddie next Kim from question Barclays.

Unknown Analyst

ask trend you for Gap] floaters that to X mid- the day see how X to been months XXXs about wanted to have about rate [Audio in high Just now. in

work. potential day on did to in time, remarks over work mentioned gap longer-term believe move fill some will rates some lower highlight You day rates and you maybe even some your but that higher shorter-term for continue

you that to next year-end say flat again starting all the to thinking fair could would leading-edge higher trend together, before about be through year? levels Just it here? trend hold taking how just So are

Matt Lyne

for this customers are increase over when means start XX if a would from. are to supply support It's I advance out of coming what I that on at are rigs take we These time mean commence. now side we've which the recent up data think The in speculative last of durations all points I And XX most I'll picking Eddie, seeing as to market points I is or you months, look off. contracting which expect the fundamentals that seen in the Matt. on at lead tenders, market. speculative of look further increasing. the demand, we're think probably this it longevity majors classify data depending one they

look is have on while means of Total, -- if that what unlikely they of a you know long that announced string we those world, approval was it's So around they the development the at they all recently, JV opportunities programs. have

rigs picking idea their up avoid or them to that for, picking for can favorable they're the [ are to it demand ] rig some rates reasons with a -- alternatives. satisfy to their of that up they pick obviously, So up

So really business, to starting up strong is in speculative we where the demand a see back again. as that mark pick

the is illustrates So rates read across day in the that, market. that the strength

so And that range and we the continue. trend the see we to offer

Anton Dibowitz

what and wants leading-edge I higher tighten. will drive sitting this you supply market, mean a higher that time. if say, back art. to prognostication coming know market market look everybody The demand difficult we're Eddie, There to rates and day and are continues on quarters, simple economic I milestone the next rates always over over The are predict to But assets is I will Anton. reticent. sidelines average. incremental continue us when and to we going get is to that demand. grind to The attractive tighten. continues day less to on

upgrades. But single and positive do and the there repositioning programs market markets are in that will it, we to is overall, were time. given not to grind contracts needing rigs to But to on a when we extrapolate continue work gaps and attractive data say rates be in point lead increasing going to and take for not times shouldn't that higher over

Unknown Analyst

Saudi just is it. capacity My Great. expansion on it. Got Got the curtailment. follow-up

past I XX date. could mentioned, count think they've 'XX announcement it have view, the rig their you Kingdom's So our the big as needs I in a doesn't over believe, change had The to to 'XX. probably to XX but increase jack-up and in long-term jackups around, impact months

so just do higher year? that the could years X this afterwards? trending a you off decline what the for see this of that contract rig rigs or And in context, come count could end leased at X over bit mean So next before we think Saudi's jackup your

Anton Dibowitz

Yes, question. it's a good

quite will any you to increasing well. X expansion fields. Safaniyah in a and as have impact own resources remarks, develop have on Manifa, it's is they of demand They I minimal characterized our this our oil we as going I impact and see the Look, to early to But what, and delayed for to their on But stage, are said exact think at it my any, predictions, say fully expect the if bit be business. it time. far little these believe business, prepared gas oil-focused rig over count. in Saudi's

I global is important the market really overall count in almost jackup what's its rig years. think is Active that approaching right and now. X utilization highest XX% the at tight level really total

So incremental well, rigs. and XX to coming East Middle market we as XX demand incremental East fact, outside in the the in Middle see with to

rigs it's and those are if, if, to there If that a rigs. big on it's be relocated take still to are So there incremental seen. demand Saudi, from is

look leased have unconsolidated is we Valaris, ARO there. in have -- rigs you X an fleet, venture. If we our joint at X

These X for have additional We are contracts rigs going there. new in ARO.

there in have contracts we'll year. lease going So this new

project rigs, ARO And Aramco joint our of back. at that remainder of cornerstone the in fully on Saudi around operating the our focus. Two the fields, which is Saudi vision. not it's look rigs leased IMI a you are at we we those X% that committed if build of program the ] new remain the gas venture. is and have have [ Kingdom to The of XXXX

the position, our the jackup with comfortable position market. very in and and [indiscernible] global we're go-forward So also

Operator

Clarkson The Platou next question Fredrik, is from Securities.

Fredrik Stene

up to thing for given right the more And are, and share that guys I good that now totally is for steel my at values a wanted circle XXX capital. and opened agree back you've your million, framework. as you said I announced you where least in to now, repurchases

not out unless up time then stop However, XX, and I at be you in use say to way way. way point free to rigs wanted bit you'll value a of the return value-accretive is all better say have that no for the a it shareholders those there in value and for to that And cash you distribute you to you potentially look more addition is flow the you chasing want is then value a could accretion you've that Is more that? for challenge Could X end as now it. the well? there each a on forever XX sent to and where and beyond to getting DS-XX, done kind a center? If --

Anton Dibowitz

been increased it It's of I expect And the and what next about continue. an do our all earnings And over a shareholders. clear with growth. very intention earnings growth We're And going that significant we're and heading to it into for deliver we cash couple well to and question. into cycle, up to expect think good to years. flow flow we've we return cash

I absolute make idea a right? caveat. It's never great And much wouldn't statements, into that to so too read

a additional things very Our make us job is buy for to I'm an be whether there. out maximize there attractive examples shareholder MPD just or with may invest in And systems keeping asset. growth. it's throwing to sense opportunity that, that to in,

having So what unless use clear to never to return idea, statements let's When be policy our value on intend great accretive there cash, is a cash. all amounts shareholders, significant for return better a very that is. shareholder it but we're of is absolute clearly generating we

Fredrik Stene

That's very helpful.

more for Just one me.

them my -- prioritize some a of something Or that rigs would use? other Or future more you balance to optionality? for for X still semis, or come these But XX have the the nondrilling take consider point just and it to jackups this your world, have selling call XX clearly, would fleet. you et where cetera, any. DS-XX, You actively keep you is on there them are if some you your stacked for at scrapping are out, least should assets, across in

Anton Dibowitz

Look, and a capital attractive allocation we for contracts. reactivation leading-edge on and reactivation getting I return cost question to returns think about That's rates cost ships us, previous back earlier, question. the The versus talked to day on where are ability the that prioritize work.

a We there be increasing, internationally, may capital or a durations made capital do durations allocation jackups, assets. those have are those But For though we have some which less a attractive numbers do allocation opportunities means the jackups. jackup some even the see more the lot it increasingly, contracts, smaller, for of decision. of difficult

positive we options momentum right the the and the in with now. X, see attractive are we us our hold options where given are the now, for the to right in jack-ups us think But growth market, market, and there X for

Operator

The next question comes from Greg Lewis with BTIG.

Gregory Lewis

I guess have asked. most my been of questions

So I venture was with kind rig of curious on your views, joint like Total Vantage. announced that

Total was kind relationship at you curious on forward? Valaris types opportunity of your have for really previously, potential those looked actually if good Ensco, that for that years. or of view I'm for something had going considered, and knowing and Just the JVs long-term a

Anton Dibowitz

they the rigs in think it's great programs I sign time in earlier, the well operators for at for or rates to to have to where going Look, market, [ contracting their that are looking Matt a market beyond and of going that are as time first said a market long tighten that general, ] going. the it to approved speaks day is be and view the continue FIDed

sign attractive it's great is the I it's going. where market opportunity, So think for and an a

absolutely of have We approach. scale business. important this part portfolio you will a And -- -- having this business to of take it's can in scale part in having means

some be So and that. sense for Yes, time fits on opportunity ships to and engaging we shareholders a looking willing each opportunistic if commercial But depends or it the something its that's at to have working makes opportunistic, long opportunity XX of work. is like And value baseload backlog to bidding look long-term go other the we But situation to and we backlog our look we at more to opportunity and at own available. are period would accretive an in rights. look of be absolutely it would assets. then secure into on portfolio, and that

Operator

Hallead with Benchmark. The next Kurt from comes question

Kurt Hallead

Some -- ships, ultra-deepwater of but that is drillships right? be the the of I'm you can couple on and kind focus of the have maybe curious a X in into brought activated market, the obviously, as semisubmersibles, market now, right, the context, mentioned, you

really question my that activation very the get assets. the sure Now this of course relates the have the they payment focused to industry, rigs over through these process upfront some this, activating been right? of XX making on gone much As the for of months, past drillers you've

mentioned just fewer less upfront forward in are the kind prep I'm to of but you, with going offshore and payments that's the So continue as customers in prep particular, demand from for kind roll drillers to curious work to contract you opportunities as your in of we happen. contract activations, a position

Anton Dibowitz

absolutely. Yes,

continues opportunity. that market have to tighten, we absolutely continue the As to

seeking helps kind helps charge kind it's -- we economics job. based of getting economics not flow look on I downtime the operational a payment, subject profile risk to and of in opportunity the It's and of think a payments. it opportunity, upfront significant we that led the and of on the at cash the one, the upfront

have cost cash all We some it rate, economics operators at versus And get are to we amenable and to the pay like of lower different customers. job. prefer headline would maybe the and look if upfront a not of it, capital our them but day a of

have if are opportunities are upfront not there, they payments more there think significant been. as for much than I ever So

Kurt Hallead

Okay. That's good color.

to aware, So right, reticent been offshore money has as put continue drillers the a broadly. into are bit little to investor community much flow guys you very

down due slowing of out but [ pace out, Some leading-edge activity was much maybe around nonetheless or concept to the stalling rates falling and about concerns pretty of contracting temporarily, the that ].

the I does the for is that But what -- so know. demand of mean, supply, comments. question elements are the don't both seems it guys some to your keep a driver like like prepared still companies demand exceeds beg is addressed in You I tight outlook if oil seat it to leverage know, lid have and pricing. on and don't the in seem I element of, you the --

think here? what play that is you So do

Anton Dibowitz

day or good Look, rigs million solid continues attractive form incremental out pause stalling being of of to annually versus demand to stack capacity The dwindle leading-edge $XXX rates sideline market today. is of XX with a and the a mean, market. generating continues come to EBITDA, number I really taking in around

long duration disciplined the and to continues continued play patient just and higher the to XX is It's capacity out we we're I a tighten, going and why bringing over this supply-demand pressure market. that which a move day rates we that So to and fully be there play disciplined we to cycle, out about it the cycle, we to XX, into as plays we XX, have need and be time. expect on that back and And the think as over to rates day there, time. is to be process balance see going be -- the

Kurt Hallead

Right.

why you And to stock starts made inherent undervalued, may Okay. consider you're or the if a back is that value, on think lastly shareholder the you buy not distributions, it then is clear to which [indiscernible] the to as starts market question your Obviously, dividend. going you begging whether stock. recognize

a So about can dynamics and an on longer repo you us just you're how thinking the term? the update dividend give strategy between share

Unknown Executive

question. great Kurt, No, Yes.

both generating meaningful think flow, this that we don't away we sustained business which when really from, we cash and free think having As said, far starts we're

sense. Gap] makes [Audio

And sustainable return cycle, think that so components but of good level at are have a through policy. from both a be dividend would the obviously want capital we a to that

Operator

back closing session. like question-and-answer Darin to now our Gibbins concludes remarks. for I to conference This would over any turn the

Darin Gibbins

interest call, to a results. thank your Have your and we rest on Thanks, look the when you speaking for you again MJ, to XXXX forward our We day. with report first great of everyone Valaris. in quarter

Operator

for The conference concluded. has Thank presentation. today's you now attending

You now may your lines. disconnect

Valaris Limited (VAL) 22 Feb 242023 Q4 Earnings call transcript