Valaris Bags Three Offshore Drilling Contracts Including $500M Deal for Stacked Drillship

©harvey wilson
©harvey wilson

Offshore drilling contractor Valaris said Monday it had secured contracts for two drillships and one jack-up rig.  

One of the drillships in question is the Valaris DS-8,  which secured a three-year, $500 million contract with Petrobras in Brazil, including a $30 million mobilization fee. The rig has been preservation stacked in Las Palmas, Spain, and will need to be reactivated for the contract.

Furthermore, Valaris has secured a 100-day contract with TotalEnergies for the drillship VALARIS DS-12. The contract is expected to start in the second quarter of 2023. The rig is currently in Angola, according to its AIS.

In New Zealand,Valaris said it had secured a 70-day contract with Beach Energy for the heavy-duty modern jackup VALARIS 107. 

The contract is expected to start in the third quarter of 2023, and the total contract value is approximately $26 million.

President and Chief Executive Officer Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. 

"This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.”

Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.”

As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from the preservation stack, Valaris updated its first-quarter 2023 and full-year 2023 guidance.

In the update the company said that first-quarter contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million.

Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on our fourth quarter 2022 conference call.

Full-Year 2023 revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on the company's fourth quarter 2022 conference call. Contract drilling expense for the year is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion.

Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on our fourth quarter 2022 conference call. Capital expenditures are expected to increase by $60 million to $320 million to $360 million.

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