Valaris Limited Q4 FY2024 earnings call

Operational Execution - Finished 2024 with a solid quarter, fleet-wide revenue efficiency was 96% in Q4 and 97% for the full year, marking 4th consecutive year of at least 96% revenue efficiency. - Outstanding safety performance in 2024, with rigs like DS-4, DS-8, DS-17 in Brazil and Valaris 115 in Brunei achieving no recordable incidents.### Fleet Management - Recently announced plans to retire three semisubmersibles (Valaris DPS-5, DPS-3, DPS-6) as there's limited near-term work justifying keeping them active. - Over the past five years, retired 12 floaters, with current fleet of 15 floaters including 12 seventh-generation drillships.### Contracting Outlook - Contracting outlook for 2026 and beyond is strong for high specification assets. Currently tracking over 20 floater opportunities with duration of at least one year, expecting this to grow to nearly 30 when Petrobras launches new tenders. - Jackup segment has good contract coverage in 2025, with expected year-over-year growth in operating days and average day rates.

For the fourth quarter, adjusted EBITDA was $142 million. Revenues were $584 million. The jackup segment has seen contract backlog grow by more than 75% over the past two years. Floaters: Fourth quarter adjusted EBITDA was $142M, revenues $584M. Jackups: Contract backlog for jackups has grown by over 75% in the past two years, with good contract coverage in 2025 expected and year-over-year growth in operating days and average day rates anticipated.

2025 Guidance - Total revenues expected to be $2.15 billion. - Contract drilling expense expected to be $1.5 billion to $1.6 billion. - Adjusted EBITDA expected to be $480 million to $580 million. - First quarter 2025 revenues expected in the range of $586 to $600 million. - First quarter 2025 contract drilling expense expected $400 to $415 million. - First quarter 2025 adjusted EBITDA expected $145 to $165 million. - Full-year 2025 CapEx expected $350 million to $390 million.

Risks - Market conditions could impact rig utilization, potentially leading to lower revenues and EBITDA. - Delays in offshore project sanctioning could affect the contracting outlook for high specification assets. - Competitive market conditions in some regions could pressure day rates for jackups.

Q: Good morning. Just a question on your full-year 2025 EBITDA guidance. Maybe just taking the midpoint of that guidance range of $530 million. How much of that would you say is booked today versus an expectation of new awards you would need to secure for work later this year to hit that number?

A: Yeah, when we look at the midpoint, again, on the revenue, we're about 94% contracted for the year. So the majority of the remaining 6% is later in the year, but, yeah, about 94% contracted.

Q: Hi, good morning, everybody. Based on what your peers have said so far, and what you've said here today, it does look like there is some building momentum on some contract activity after a little bit of a lull. So that's always good to hear. So I guess the question I would have then is, you know, there's been some pretty explicit commentary from your peers about, you know, where pricing sits for, you know, ultra-deepwater rigs in particular. As well as sixth-gen rigs. Sounds like you guys are willing to, you know, be patient as you said and stack rigs if you can't get the price that you think is worthy? So just want to see if you can confirm the ranges. I think we've heard somewhere between mid to high fours for ultra-deepwater rigs and somewhere in the mid threes for sixth-gen. Is that how you're seeing the market?

A: Look, I'll say this. I mean, we only have, I'll say, fortunate to only have one ship in our fleet out of our thirteen. That is sixth-gen. That's the DS-4. And that rate's contracted until, what, fourth quarter of 2027. So for us, it's really the seventh-gen market. The rigs that customers that we talk to prefer for their long-term development programs. I think, you know, if you've seen there haven't been a lot of fixtures recently, but the fixtures that you've seen continued to be in the mid to high four hundreds for high spec assets and that's where the market is. And you're absolutely right. If, you know, I will on we've tried to clearly articulate our strategy is that we focus on delivering operation for customers because that's what gets us more work. We have a super high spec fleet. We're going to minimize costs on those rigs while they're not working, and we're going to find the right long-term opportunities for that high spec fleet to put it to work. And I think you have that exactly right.