VAL - Earnings call transcript Q2 2024

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Operator

Good day, and welcome to the Valaris Second Quarter 2024 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Nick Georgas, Vice President, Treasurer and Investor Relations. Please go ahead.

Nick Georgas

Welcome, everyone, to the Valaris Second Quarter 2024 Conference Call. With me today are President and CEO, Anton Dibowitz, Senior Vice President and CFO, Chris Weber, Senior Vice President and CEO, Matt Lyne; and other members of our executive management team. release, available press at our our valaris.com. issued which on is website We make are about are comments today Any we expectations risks uncertainties. subject and forward-looking to and statements our results Many cause to expectations. differ factors actual materially could from refer website define and our other Please filings that could risk and that our and forward-looking press SEC to impact on list events statements factors release future results. the company update to undertakes forward-looking duty that no note please Also, statements.

on see our refer to for GAAP non-GAAP our the call, press required this updated Please after release most recent and week, we call. will information which Fleet During this on Status across website the contracts investor fleet. we website our on our financial additional An and will Earlier presentation Report, available measures. reconciliations. details rig provides issued be

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

Anton Dibowitz

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

an then I the I the in detail I comments. detail our highlight as contract call, will Chris with discuss recent begin outlook. more call. guidance in quarter will the points to about more call additional on financial key floater and provide and finish discuss some today's offshore an and during we To closing before jackup cover color After during results During that of on well markets hand to contracting over some update begin, with will will I and to some that, awards our our as want Matt business provide performance market. the drilling overview our this

of operating entire another would built XXXX Valaris and like the financial on congratulate the our safety, we performance. quarter great and First, delivering in team excellent on to second to quarter, start

increase to securing backlog. $X.X our contracts our than billion. in execute building consecutive backlog, marks quarter attractive continue our new the now which more strategy, seventh we totals Second, This past and commercial

are expected conviction strong maintain and XXXX demand to and that XXXX. in duration see commence and the customer this for up we cycle projects in strength our Third, of

operations. to Turning

contract performance. success a second XX% Our we foundation team. considering fleet-wide the more or operating the delivered new a great In the built its work. even starting following we incident, new frontier safety and several contracts and lost including is locations that to rigs out and survey the of had by changing countries achievement Stavanger contracts during periods operating either in North achievement the be to drill Valaris well DS-X and DS-XX in Sea quarter, for XXX quarter, entire time efficiency continues exploration preparation of the This commencing on Valaris VALARIS impressive without a moving reactivation, of following strong Argentina service revenue

without I we addition, Valaris safety In reaching the recordable well years like everyone several to a as quarter, for the a the reaching would team X X celebrate milestones XXX as year during Well incident to DS-XX done involved. Valaris had each and rigs for and recordable incident. XXX congratulate teams without

of global to part fleet and we with DS-XX DS-XX, demand growth have also completed began and contracts delivered marking reactivating a results reactivation still in growth our our returning Valaris its contract long-term contract in the was seventh-generation capacity on of Africa. have benefit reactivated. offshore that continued build DS-X strong record be on to attractive our drillship one to organic to our reactivation project track the financial for DS-X, our contracts the meet highest played and reactivating We schedule, for time large on specification by customer sixth drillships The work that increasing on yet since has XXXX. earnings Successfully West drillships rigs rigs DS-XX, story, Valaris

EBITDA, adding efficiency million during the contracts expected due than subsequent Moving in our $XXX the further than and costs million. meaningfully $XX quarter. reactivation in XX% quarter, primarily Certain was better second details onetime from a in quarters. million be to increased to back up Adjusted EBITDA Chris achieving guidance, on later. costs were financial recognized to to team our financial These the of will the performance. $XXX Adjusted results are extending and quarter. revenue results that longer now the previously timing provide little anticipated our first guidance

stable the plus increasing of to hydrocarbons effectively The largely OPEC Turning managing combination prices to now so market. supply this and Brent led crude year, far trading demand $XX with per broader relatively for barrel. offshore oil global prices has spot drilling above

$XX are barrel, expected Brent forward more undeveloped is profitable. to which at than X-year level price XX% per of be the further, a out reserves around Looking offshore

offshore As commodity long-cycle a result, in supportive projects. investment for very continued prices remain

CapEx In addition, CapEx bolstering over increase annual project compared demand. demand, for over next increase including have a and X we which deepwater X% rate indicators strong ago. the to sanctioning drive years, Rystad upstream and are X global floater expected rates are compound growth leading offshore According to cycle. few continued months in rig our up the anticipated to that to growth in of to see growth upstream at expected view structural day to further a of is drillships is Average years, XX next

the technology Valaris West announced is of growth fixtures safety by of the these of $XXX quality this period collaborative program. market relationship in year. day Gulf day crews of Africa U.S. to contract to have automation to of rate recently wait a on rate. million the all for demonstrated And in while have demand. the rig have drilling of our and strength Just capabilities which the per Brazil, testament to we fixtures added year, for backlog investments and the standby and is they Asia, X $XXX,XXX the new This customer day the spanned already of and keep compared X where contract further their includes our evidence who our a will nearly with The contract rig multiyear the past above meaningful nature the halfway just commence new leading-edge Mexico, contract a last the of operations, a DS-XX, pay DS-XX. This customer broad-based of Equinor, made point seen innovative at

maximizing remains in rigs keeping we growth. economics as XXXX of beyond can that expected securing our utilized securing our earnings this as flow highly best commencing and and priority further our work possible. and cash XXXX With days the fleet laser-focused contract will in on active support in Our are the mind, uncontracted profitability and by many filling we term

year and jackup environment Discussions suspensions are subject an orderly XX%. Valaris routing earlier ongoing first rigs Moving to the shallow already offshore to transition leading-edge environment benign of are jackup other up Aramco to market to rigs VALARIS effective In with connection owned slightly with date contract as drilling the XXX recently these evidenced suspensions. benign with of have move of could from additional VALARIS Aramco, international X for made of tight into our the where there notices the round Several from rigs along Arabia with the Aramco XXX, anticipated going marketed forward suspensions this and XXX or to utilization The leased instead are expected to day fixtures. be rigs suspended. Saudi second water, the rig the XXX. ARO for with count day $XXX,XXX suspend still be received per market, remains working is Saudi Saudi recent and lower rates north of by suspensions,

market While million, Taking our estimate by in just full adversely backlog. we $XX contract billion currently could the $XX to represent EBITDA of our year as up X% X up of change suspension impact the by marketed Aramco $X.X suspensions fleet. XXXX contracts X to these million back, the represent step they Saudi approximately not does a of additional view of the global rigs jackup our

the in the improved North latter For harsh half meaningfully in XXXX. Sea the environment of balance jackups, supply-demand

active are contracted for rigs rigs availability X We with Our availability. region across year we that for this XXXX. up less in our XXXX, see and programs in strong currently interest the rig of limited well fully customer have line than X

industry in Before market contract adding a With on driving to comment backlog. be increasing strong like return day to our briefly I objectives. capital and I'd we're durations, finish, rates positive contract fundamentals

noted our flow which to I As front, on cash supports this and growth. strides we continue make earlier, major earnings

and shareholders XXXX beyond, free use all we to free and for flow and intend return it. expect we meaningful unless future there in value sustained to accretive a or is ahead, Looking cash cash flow to more generate better

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

Matt Lyne

a Since and than good year backlog a compared extensions awards and afternoon, seventh we million. total These morning the billion, increase to XX% our $XXX of quarter, approximately backlog with second Anton, associated everyone. have consecutive backlog quarter the beginning contract our $X.X of more secured and increased ago contracts growth. new and Thanks, to of

secured revenue been as at has backlog. day day seen daily in quarterly rates evident and the within backlog our average for particularly growing This results, higher our the our included rates within fleet. is drillship this increased Importantly, average

to the Over XX% $X.X XX nearly backlog billion. has more increased than drillship by past months,

we rate expect In to of as roll drillships upfront within within our our addition, the contracts day we day. to drillship have contracts rate the have day average to rate of a And $XXX,XXX impact increased exclude rates. payments, backlog we our we per on from day for meaningful averages average These day backlog market the secured several $XXX,XXX increase legacy

contract with Brazil multiyear Equinor DS-XX. for drillship offshore recent awards Our include contract a VALARIS

have their We at while good half to look of direct the XXXX to rig's drilling strong new and commence we to of in second current as standby customer's new XXXX. pay market ahead the rate. program a strength willingness program a a pleased wait is of very to rate, a are secured they indication The contract continuation day

Moving to water. shallow

for contracts in new and include quarter, work year for Securing nearly of both for a beginning North the have of We for which rigs for XXX X our the XXXX Valaris the coverage since second XX X region. X-year were work and VALARIS further rigs contract next enhancing of secured extensions program days Norway. the in Sea. approximately all or of These

rate increase at high XXX in the our from we region. X-year previous the a In addition, a a secured contract in representing for $XXX,XXX, XX% offshore contract award VALARIS Trinidad day

XX% remained an evident of at Starting is benign the first the high-specification we an recent for seen count Moving quarter, in approximately the half second from second drillships, seventh highest highest seen XXXX. decade. a comprise in utilization have level the of during rates since and of Marketed this benign particularly generation months. above $XXX,XXX floater market the rates reached contracts, XXXX late environment day the of overview quarter. have Valaris' nearly markets. strength fleet. its of now to XXXX XXX XX which the environment to with contracted increased fleet floater major recent have point increasing drillships for point the The at the its And in day during of is seventh-generation Average half approximately for contracts fixtures for in XX number as in first $XXX,XXX of mentioned, floaters, Anton $XXX,XXX the in we drillship

second We the a and opportunities for continue see half of robust in of work XXXX to commencing pipeline XXXX.

ongoing duration approximately for these XX expected future at tracking X Looking at of opportunities the durations least and opportunities tenders, floater is approximately years. we firm year, with X.X and are demand average

the With can timing predict. and awards to extending be of durations for times lead the average contract programs hard

next be see confident the will become offshore the number year. tenders anticipate XX XX fixtures. Africa. However, roughly see months awarded that that within greatest the high We of of a as for long-term this expected contract will we rate opportunities we opportunities of end we are the programs with are several And before that tracking XX we conversion

dozen early in years the as CapEx Angola that more may Nigeria, including activity tracking the several Nigeria an than currently a currently expected one to of Rystad's than least by are ongoing the XX tenders rigs up end a to X before at to tenders, Offshore ongoing in yet year Taking compared countries, increased are as primarily and work Roncador, X be including for across floaters X for tender opportunities, we X there their X now contracted, driven has for deepwater Brazil, that to XXXX. the tenders commence rigs of forecast contracts. IOCs, multiple decade example, Sepia and including have for follow awards contract is and of fields. more We forecast expected Ghana. Petrobras end This through a just anticipate with doubled to these we further ago. has issued recently long-term see

longevity While likely in go are keep of most and to that rigs These work demand Brazil. rigs customer of occupied showing in the to already these awards XXXX, scopes country. into are XXXX many will

see in strong through demand opportunities Gulf incremental later several and in for long-term could seen we by on a years over become few an years. in commencing potential at In anticipate with opportunities combination significant of could programs. incremental long-term still the demand largely Guyana, Mexico, exploration its for the decade. remain proximity we could floater radar fairly of market demand is growth major the with that the in region. require the programs And to a Suriname, region. the Southeast some to several IOC existing the over Namibia, have met the of there also In balanced incremental Outside given looking uptick couple Asia market the development past lead rigs success we which in addition, demand next that to operators expect In potential this see Petrobras we markets, supply and of from

remains shallow Southeast China other And to Asia, rig over this were has increased The regions. least Arabia place. X a Africa contracted at year The in in market and Moving seen already India, work the months. X earlier in Saudi healthy we jackup in have global that find suspended count rigs past West water.

the work that up In XX And that expect the in on sectors continue our active with the X be absorbed limited Danish Dutch with alter remaining Arabia additional view. outside contracted. can Saudi U.K. and in all elect the Saudi of Sea, conditions impact currently to not market. rigs market jackups to does Arabia North improve suspensions We to suspended broader seat expected the rigs

XXXX, rig During of of an last the the we to year. half and increase same number contracts total years of awarded saw in as number compared the first period

increased second in to half leading-edge remains half continuing the In with interest the XXXX, Customer strong, seen region programs $XXX,XXX push in commencing first rates addition, for second day in average of $XXX,XXX approximately the we from for XXXX. have fixtures the rates of XXXX, to half new particularly day of higher. and in

by encouraged region. incremental abandonment this also and of are longer-term in result programs plug We the energy in and number that could new increasing demand

of our we availability will recently with floaters. contract DS-XX Mexico terms XX have Eni on DPS-X Shell active with of priorities, offshore completed Nigeria coming In X our its just contracting days. XXXX in its offshore and continue complete the contract to

in And we future the the been have quarter. expected for the rig now these the opportunities current sublets. into well either Currently, commenced filled for these and positioned delayed, Subsequently, in pursuing were the customer meantime, were short-term program BP opportunities, work to early been with to expected reduced afield. second scopes next our by continue available rigs offshore opportunities Egypt for long-term we continue the programs We seen see further of half short-term Africa fourth is both of to rigs the or XXXX. and in offshore its DS-XX year, that their actively both is At time start expected are opportunities third call, discussions active in in start for are quarter. that last opportunities. for both rigs to

and fleet that of days of our XXXX options, Given contracting anticipate active spoken for. for available nearly priced are expected exercise XX% now floater recent we the

Aside other semisubmersibles from X days just with only the the X the in in for our floaters are and I Chevron working DS-X, in U.S. mentioned, which rigs Gulf is XXXX Australia. currently available

with rigs customer are either that other year. in commence active for with to or work operators programs discussions the already regarding work these are next follow-on We existing expected

attractive expect over we drillships continue growing these demand and And in will to reactivation, seventh DS-XX, time. that provide requiring rigs the see DS-XX. work to addition, put interest to In our increasingly opportunities VALARIS customer DS-XX we generation

the have secure we for on availability benign and and XXX to XXX, for keep Valaris expect XXX, Looking year. jackups, environment that we will work rigs next our these them XXXX at busy

are Anton notices ongoing. regarding recent Aramco suspension discussions As noted, from Saudi

While existing to XXXX. And in complete are form on exact we due we extensions are will their at not do end XXXX. with these or part take, the that the know discussions terms early of suspensions rigs for of lease Aramco

region. as In in terms recently mentioned additional Sea of for rigs the North our work jackups, secured X we earlier,

flow we for entered of our than With options X expect we see availability across remain active term to during exercise, work day securing increasing laser-focused We filling on XXXX. can and with our XXXX contract of to continue attractive securing by and many these a based focus contracts on active as rates. as ahead. in with backlog out less year We building uncontracted at hand year XXXX days X sold expected we contracts in North our anticipate commencing similar summary, Chris customers fleet now growth. position our in rigs now I customers, over that And Sea earnings cash of you and we support to discussions through to will that the the financials. and take the fully further being start on XXXX call we before XXXX. beyond the will In

Christopher Weber

back morning million commenced which remarks, our its million, full million good reactivation Africa successful from million $XXX quarter DPS-X, EBITDA and and commenced late in the offshore project. In second operations for third the the $XXX EBITDAR, quarter, the quarter million, due in my results. was Matt, of quarter, results, contract our full outlook jackup quarter. $XX Thanks, the floater In following lower quarter year. meaningfully I prior $XX second reactivation up $XXX Revenue up during adds an completion in guidance along due average to contracts prior provide our for which quarter DS-X, in up utilization the both higher second afternoon, with the overview revenue with the both DS-XX increased $XXX quarter, will May, increased daily Adjusted second and and which with primarily expense. prepared million, everyone. quarter Starting prior and floater from expense quarter. and from of revenues the was and was drilling the a adjusted in along of Adjusted VALARIS to EBITDA first for fleets, the operations West for

addition, average higher second of during daily to contract revenue. XXX, VALARIS commenced first higher the and started contributed Jackup quarter offshore which increased In quarter, rate DS-XX including for which the VALARIS operations full primarily day in in DS-XX contracts a utilization, a Australia an increase to quarter. revenues new due

quarter, time In expense started primarily expense drilling in Contract quarter, undergoing new of contracts to service addition, second its reactivation during work. following preparation the in first completed decreased Stavanger contract VALARIS and second it reactivation North as the out Sea survey the the rigs XXX in the were lower due while for DS-X project. quarter,

to In addition, to returned first we time preparations by for increased costs DS-XX for offset operating survey expense fleet incurred service the fleet of repair lower work DS-XX. work These jackup rigs higher were and the in items cost following maintenance as contract for and stack utilization to the due VALARIS partially out and and floater quarter.

mobilizations repair second into timing outperformance guidance, costs operating second timing better efficiency, and Our came half including to versus the certain contracts, our of the XX% the we expected primarily primarily to DS-XX X running is and pushing the than cost of the the quarter spend. performance timing and half maintenance of revenue quarter. This in than and of demobilizations longer certain primarily attributable EBITDA and third due and roughly strong as drove DPS-X factors: achieved guidance year,

of driven to quarter, by generated start-up $XXX declined cash position. million. contract. of We utilization the due negatively operating cash partially million accounts large a and In by by the cash capital operations at million $XX build due and had cash working of Cash the of to $XXX to second quarter, the of increase offset during primarily expenditures the from quarter. flow impacted higher DS-X financial by $XX an million, in equivalents our Moving the fleet receivable in primarily capital, was end

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

now third outlook. Moving our to quarter

repair latest the in be million the the of DS-XX, $XXX in compared million. to $XXX $XXX range completing is approximately being lower move of after second $XXX Contract to $XXX drilling to partially XXX. revenues rest a be EBITDA to its expense EBITDA impact second DS-X, and the operating operations offset to Valaris-XXX for and jackup costs to to third $XX is quarter total million. expected Valaris-XXX day the and contract Australia million to that quarter expected of million the items potential the VALARIS for $XXX in commencement the quarter higher due the full of million $XXX expected to These the time out expect impact DS-XX have Sea are expense and We shifted Adjusted service million quarter, DS-XX G&A North their mobilization DPS-X and for of quarter. for contracts, of of idle from both XXX rates contract million full the by of VALARIS from cost the a suspensions quarter. Saudi the Aramco following of recent for and and at

rig Regarding rig $XX damage in the from of repair will estimate off while million. moving required million service We the leg $X of costs that out will financial time impact its recently weeks the out-of-service total next complete several that contract. Valaris-XXX, be range advance location to the and inclusive and repairs to for the of currently incurred

third scheduled in revenue to expense is next because CapEx the trailing be Reactivation contract-specific the $XXX rig's the move from associated largely and want and will also flag it the with be offshore to $XX $XX the for expected including the Total expected expected is related approximately to long-term of costs million. Australia start commenced Valaris-XXX contract, mobilization CapEx to primarily in I million to the third Maintenance commence million, be is CapEx recognized to be mid-July. that to North its some related prior Angola year. project upgrade amortized Valaris-XXX, early during associated contract quarter to the and to that $XX spend XXX-day its approximately initial DS-X. million, upgrade over is will be For to which quarter Sea

year outlook. full our to Turning

to million, lowering $XXX billion, guidance are $X.XX with billion of to We expense G&A $XXX of and $X.XX drilling year $X.X to million range billion in the contract EBITDA of revenue million. $XXX expense full range approximately our approximately

guidance We year. range, due half second the current DPS-X in and for have EBITDA the the outlook of primarily the DS-XX updated to the

mentioned, reduces EBITDA for quarter, and updated opportunities We fourth fill XXXX the to current this the starting work midpoint of EBITDA Matt gap quarter our for the achieve available rigs one As both potential. to are the work range. need the short-term now secure in fourth the of during or

impact $XXX this Our This as XXXX to guidance mentioned, the suspensions for Saudi which, contract expected expected reflects $XXX as Aramco also capital XXX well prior VALARIS expenditures expected the of financial Valaris-XXX being Anton total leg our as be to the be year VALARIS damage capitalized are discussed and were I project-related guidance, previously $XX certain that deferred to previously expense. impact slightly higher of up XXX, costs primarily million than to million year. is due could Full to potential million.

be second through $XX that full the reminder, is of As to customer our of received expected payments, reimbursed we approximately the which will year. in XXXX a half expect of upfront million year CapEx be most

are and And call and our profile expect about impacting driven the some for results conclude by we first of on hand back the future of noting of half are our stepping year. spend half in And day contract that higher in to back I'll now we've lower great the we second preparations. had outlook the want utilization discrete and the remains items a I in Finally, second rates to year, free our closing Anton by reactivations and business are improve year, cash flow while the very there excited few half strong. for that to the the remarks. a

Anton Dibowitz

to I of some Chris. points reiterate want key today. covered the we Thanks,

strong through proud the year. the months. to an Congratulations First, performance Valaris first team am half I the entire on we and of the X excellent of financial delivered safety, operating that

is commence XXXX expected new maintain conviction projects support our strength will expected for rates cash that and continue flow believe in we positioned duration of growth Valaris of up see to Operator, we demand and are strength We've the now line duration our and over and the prepared thank remarks. at for and open this upcycle, and structural that strong XXXX. years. strategy, well higher in to our earnings We on reached securing And for employees, their benefit cycle our that support. please the to next questions. of customers customer this and day from investors execute we Second, the our contracts few end finally,

Operator

will question-and-answer session.[Operator Greg Instructions] begin with now We question comes first Lewis from the BTIG. The

Gregory Lewis

it's accelerate while. that to you hold for cash XX was to be could about associated those provide I allocation the if returning CapEx and kind on XX for we market are call next returning Valaris's most and going the to the does of the that of about bit or going way to ago, to have just at the a thinking X, CapEx about I'm you're little your us capital that XX talk cash reactivated were because is Anton, put reactivate it's of with that a bringing Markets little and those we over whether we least months on Does idle as opportunity shareholders are about you that maybe sidelines, be to hoping rigs And improved. that strong next this signing would to rigs, XX And hey, others on or thought, there's the definitely to and just rigs the an we're months DS-XX, sure how kind think shareholders? months? managing to allocation? XX Valaris flows But capital XX, XX on. going change that think to be talk

Anton Dibowitz

return don't shareholders year, the in a cash going We increasing legacy getting to in of new 'XX. amount we've Look, We've a amounts as 'XX XX to cash demonstrate we work think about returned the us go we contracts. been how pipeline to first company. and the point opportunities, very said, about clear going XX. half into year. as as I we last into 'XX, inflection of were onto coming And as to and strong through latter a There's of we and for capital generate half capital of of the contracts thoughts and we X% that our differently shareholders. real are a feel spent significant roll to the

In we going can see are a half XX in next the specification, operate it gen, on ships into we fact, XX our and second evolving as seventh we of 'XX. now, call we those year -- assets of and high see

see we've philosophy clear great very opportunities the still return shareholders. when we're direction it generating But going to in been and we're So cash, on we period, we're forward. our the and for to XX that all over going capital XX next and heading return

capacity place, have available commitment, that And in said shareholders. the in it. now. with and we're When through to year, going put We opportunistic right it would look be linear under we to we and not intend we necessarily return to cash authorization we be our will

Gregory Lewis

waits its where that willing then really talk when a of -- -- to of drilling in ready for a you standby job? needed a attractive that as that positioned and the the rate signs it drillship there. just DS-XX, the dynamics that to just the couple rig about market, start tightening company paid for quarters were the to next for And little able contract was they DS-XX how so a to rig Could bit pay get one pretty customer the those rate have high-end they could you was market of the is standby

Anton Dibowitz

Absolutely.

the see into a -- to in high-specification in had development The your rig. money They just a great assets. us the capital 'XX, amounts significant Equinor 'XX I going my on We a assets. crews it. is strong As great technology. partnered said DS-XX answer pipeline partnership innovative have done a market is of highest a Bakala we with rig The question, great the that for specification with tight on and with in very my invested and job customer. into

lot it, have arms a We AthemRTX automation rig. robotic of the on that on

going half where the confidence for market think and recognizing available asset think to that of spend to -- that the and that the assets And the going to where testament going see be going, they're of a market confidence invest great have they signal to that's development. So in relationships customer market And to of 'XX and I in money year deliver have development. a their one is willing the them. it's is good secure so right to the we higher They operators to having into I latter next it's it's to goods the rig going. that in do the where rig the

Operator

question Eddie Barclays. Kim The next from with comes

Eddie Kim

paid alluded DS-XX the to mean, the to, of floaters standby a be other your say for the maybe your Equinor wanted that's operators the downturn. since a days, other the does period into more and Equinor could on probably similar others? I Would XXX it strong investment more mean for contract. Just than a reactivated like Greg kind for XXXX standby reactivated up DS-XX as It as have follow look was one-off of rate you I longest that invested that the seen rigs. on maybe we've did DS-XX? amount elevated Or read-through probably

Anton Dibowitz

a very that comes in technology North Norway, of lot for particular. A forward-leaning out technology mean Equinor is company. automation No. Sea, automation the technology of I desire

rig to capital automation. invested AthemRTX as the the in they and mentioned, I other some , So

is I be see coming that when think where to starting pipeline read much that timing opportunities the market. the the we and up into going of to as are strong of and is that program

it those in awarded XX, XX that 'XX. high-spec like those potential as next and seeing a coal customers attractive months. a feel remarks, do of the forward those and next really I against opportunities a rigs. year once potentially the And XX on the are we sitting drillships and seventh-gen into the now, we see in from his quarter Those that is we into the additional And are think opportunities about being line up are and the Matt we referenced as XX on, right of of we're why to been have And assets, the of the taken as we year that's where from roll Those to and XX heading on XX prepared when late that ongoing, heading 'XX for the XX reactivation opportunities there for good called that we period, a continue takes first by get the year, now good customers next be we -- wait when if goes have assets. end about discussions to to consider pipeline for but opportunity. up, going assets you more time increasingly rush. not with towards in now will in a year

Eddie Kim

on jackup on And notices XXX X just follow-up and my the the is VALARIS XXX. suspension

to Valaris whether come us are other other which than really around that factor here? that more around Is here? I contract suspended Saudi rigs Or you jackups. having X earlier I you round suspended heard jackups XXX the or correctly? from is say main I would discussions X total rigs could their maybe bring secondly, you believe be to mentioned Could hear instead. have just maybe more to guess, off there suspended XXX. something clarify, I know expected give expected the fleet, some second on that I you else? You the And this, Did leased insight across some

Anton Dibowitz

me last just these week. received So ARO JV in the let notices start off,

late-breaking like So I won't news. quite

notices So another while ARO look suspending XXX, and X leased We rates, may rig. instead in or XXX at productive, lease rig -- Aramco. the We we're the for with ARO-owned discussions. constructive with may the are these received and an discussions and were

to have we're So to discussions going see those how just develop.

and and we you suspended those X, the yes, be mean market. these understand needs in said, timing determined. from expect $XX million it X million year. the for $X.X X made backlog about this rigs, XXX context, if the is of those rigs, billion of through which for But is going was of the XXX from may context, in part specific we X. Valaris. is a to $XX back of discussions on out what rigs the those the based adjustments I step rigs, we've which EBITDA, But So still Taking of be

we the those take of leading-edge suspensions, we that international marketed where fixtures earlier first still have market, those in a to to this rates we've and So need of made markets now the jack-up purported from year, the as utilization right orderly In day suspended I be others into X seen us in north in a have the benign day market. context. we rigs of XX% global and that of see number about series XX very a transition $XXX,XXX a market number jack-ups. the rigs is X% And think from are

in not these competitive market it, fundamental the orderly market, change is in international this the to transition. jackup feel of competitive that we as an jackup market, the we'll the we So see a international are the all not those make rigs good and rigs and like about and market others. are in Those continue

Christopher Weber

decisions to rigs. and But or if the just be we're having there's not which just which discussions clear, rigs, more really X rigs for about ARO get rigs,

Operator

The next Hallead Benchmark. question from with comes Kurt

Kurt Hallead

just a I wanted little dig to maybe bit further.

peers one kind went -- already heard from dynamics, of went segmentation through this referenced the You your of through We of the you morning. market market. floater the

try to calibrate. So I just to want

rig when be? think XG expect So through say, you everything incremental in demand XXXX, to do see, net what the could deepwater you let's you that take aggregate

Matt Lyne

remarks, the -- prepared So that a duration, average you in have I opportunities my think about longer XX but of are of an we're X.X if seeing we're year XX you're about, talking talking years. remember from than some from across

a opportunities. about those putting to number of incremental on you're if likely XX think provide XX see it, I you're potential

and And drillships into down that's our a are breaking Xth region. gen. think of we Obviously, I XX question to that Xth Now seventh know for preference is rates. rates, it your customers gen gen the XX incremental have

coal sideline I forward, But to incremental XX on feel months, potential rigs capacity. you suggest XX is The would say and sideline about sideline So into we as 'XX, what all good that and in XX, expectation and XX for rolled I highest-spec XX that a roll going think are we've by look sideline will I wouldn't I say XX capacity. the sideline we when potential, for the capacity, at that but capacity. why the capacity be it coal 'XX reason filled is

those for good there forward. be So to expect there opportunities going -- rigs we

Kurt Hallead

the very a expected free follow-up then going then And conversion shareholder-friendly are obviously target How terms is forward? on in what capital when you right. have or is flow I your are having targeting program, cash EBITDA guys allocation of you

Christopher Weber

what don't perspective. a returning We remain can conversion committed have But shareholders. a say, specific target to to I from we capital

generating mentioned significant authorization. free under improve be Anton the value to XXXX beyond, linear. It's it. year. and sustained cash the looking and it the intend free we return really we transition going going of the got existing flow call, to the of more cash better opportunistic. the on of profile to use part in use ahead to But not like I And we've accretive there's for expect shareholders business second to and a intend mentioned, capacity unless that's We as flow. half be to start to where to mentioned, that. Anton we We're As meaningful the And all

Kurt Hallead

the do end of M&A nothing drilling to year? before of But the there the within A be here, comment round specific. you expect another offshore right, general space

Christopher Weber

the of there can is to X timing Look, answer I the to and year. and contracting be and questions. with more Not is going predict very hard end certainty. both M&A only timing before

think business. I definitely this there room additional is for M&A in

a buy That of able as Looking highly grow fortunate it into people having of very and to from occurred be has and see still Valaris to organic We're a some being position, perspective, said, a this ships because high M&A capacity capacity through available the capacity have and that didn't XX business at in highly, or our go gen needed to M&A. pro having XX spec in we're that constructive. Xth market Xth being M&A. gen we very

to we engage makes this if shareholders, And sense, definitely it. think -- opportunities. will And in for business. and more creates room in at absolutely it it is look accretive of there's will We is value I

Operator

question next with Energy David from Pickering The Partners. comes Smith

David Smith

the from if point an and of quarter markets contracts. or April in rate direct Congratulations on off just made particular, or the some you've before wanted the the jackup solid the confirmation Trinidad. just no a was I of solid see past this agreed that really rate competition upon suspensions? nice to minimal will And Saudi In ask

Anton Dibowitz

finalized mean latter. -- the point and the announced I where up recently. contract continued discussion It's the that until Yes. was to

So that during Saud suspension. point the after first known the data is -- and Aramco

certain that their and So future indicative customers end focused are certainly, securing you're certain assets for it's top on the markets right, developments.

David Smith

But ask And wanted Mexico for maybe if of one your I for pace first we So about contracting your discussions negotiations, are slower can't at to seen of versus contracts times just of year? compared follow-up. also and shrinking reflecting implications to 'XX to availability. Gulf half too least. lead recent shrinking alter contracts. outside last rig shouldn't We be the nervous We've times year see a lead last

Anton Dibowitz

NOCs be through with as the look the concerned start linear year. of question. are question. of have versus direct where think we number in more negotiations is involved train different we Petrobras times contracting. a West your is mix I'll and contract it end pace lead question mean, contract very business or general going much may not there as at a And I times, in to the it negotiations. not Africa of formal about a I geographies you're Contracting kind be of may whether when execution this data, Different careful be we

see supply/demand we can kind Overall, lead when increasing, to look So and 'XX. to expect component. be a demand be 'XX there you of where late at into be mix we a geography component, especially times --

X these times we see durations as of higher much to some we continuing day see And fixtures. we of grind continue rates So And lead stretching to contract with out. as extend. see that, course,

above halfway year last day X just after versus only So through a year. $XXX,XXX the

all where lead on is market constructive those components to going. quite So us that be of

Operator

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

Nick Georgas

to on thank Valaris. Thanks, today's for interest you your to. Drew, everyone We forward in and look call

Operator

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

You may now disconnect.

Valaris Limited (VAL) 1 Aug 242024 Q2 Earnings call transcript