Valaris Limited · NYSE:VAL

Valaris — Proxy Contest (December 2019)

41 slides from Valaris's proxy contest presentation, Dec 4, 2019

Slide 1: Valaris plc Board Meeting
VALARIS PLC BOARD MEETING AUGUST 20, 2019 ϭ KE&/Ed/>
Slide 2: Table of Contents
TABLE OF CONTENTS / /ŶƚƌŽĚƵĐƚŝŽŶ // sĂůĂƌŝƐWĞƌĨŽƌŵĂŶĐĞ /// KƉĞƌĂƚŝŽŶĂů/ƐƐƵĞƐĂŶĚKƉƉŽƌƚƵŶŝƚŝĞƐ͗ƌŝƐŝƐŽĨŽŶĨŝĚĞŶĐĞ /s ĂƉŝƚĂů^ƚƌƵĐƚƵƌĞKƉƉŽƌƚƵŶŝƚŝĞƐ͗WĂƚŚƚŽƌĞĂƚŝŶŐŶĚƵƌŝŶŐsĂůƵĞ s dŚĞŽĂƌĚDƵƐƚĞZĞĨƌĞƐŚĞĚĂŶĚŶŚĂŶĐĞĚ s/ ŽŶĐůƵƐŝŽŶ ĂŶĚEĞǆƚ^ƚĞƉƐ Ϯ KE&/Ed/>
Slide 3: I. Introduction
|. INTRODUCTION 3 CONFIDENTIAL LUMINUS MANAGEMENT, LLC
Slide 4: Introduction to Luminus Management
INTRODUCTION TO LUMINUS MANAGEMENT >ƵŵŝŶƵƐŵĂŶĂŐĞƐŵŽƌĞƚŚĂŶΨϮ͘ϱďŝůůŝŽŶ &ĂŵŝůǇͲĨŽƵŶĚĞĚ;ŝŶϮϬϬϮͿ͕ĞŵƉůŽǇĞĞŽǁŶĞĚ Manages Over tĞŵĂŶĂŐĞŵŽŶĞǇĨŽƌŝŶǀĞƐƚŽƌƐǁŝƚŚůŽŶŐͲƚĞƌŵŚŽƌŝǌŽŶƐ͕ƐƵĐŚĂƐƉĞŶƐŝŽŶĨƵŶĚƐ͕ ƵŶĚƐ͕ $2.5 Billion ŐŽǀĞƌŶŵĞŶƚŽƌŐĂŶŝǌĂƚŝŽŶƐĂŶĚĨŽƵŶĚĂƚŝŽŶƐ tĞƐƉĞĐŝĂůŝǌĞŝŶĞŶĞƌŐǇĂŶĚƉŽǁĞƌŝŶǀĞƐƚŵĞŶƚƐ dĞĂŵŽĨĂŶĂůǇƐƚ
Slide 5: Luminus' Interest in Valaris
LUMINUS’ INTEREST IN VALARIS /ŶǀĞƐƚŽƌŝŶsĂůĂƌŝƐŽƌŝƚƐƉƌĞĚĞĐĞƐƐŽƌƐƐŝŶĐĞϮϬϭϯ Investor Since >ĂƌŐĞƐƚĞĐŽŶŽŵŝĐĞǆƉŽƐƵƌĞƚŽsĂůĂƌŝƐ ĞƋƵŝƚǇ͗ ĞƋƵŝǀĂůĞŶƚƚŽĂƉƉƌŽǆŝŵĂƚĞůǇ ĂƚĞůǇ 2013 ϭϵйŽĨƐŚĂƌĞƐŽƵƚƐƚĂŶĚŝŶŐΎ tĞƉůĂŶƚŽŵŽǀĞƚŽĚŝƌĞĐƚŽǁŶĞƌƐŚŝƉƵƉŽŶĂƉƉƌŽǀĂůĨƌŽŵĂŶƚŝƚƌƵƐƚĂƵƚŚŽƌŝƚŝĞƐ ĂƵƚŚŽƌŝ tĞŚĂǀĞĂǀĞƌǇƐŵĂůů͕ůŽŶŐƉŽƐŝƚŝŽŶ;ΕΨ
Slide 6: Luminus Interactions with Valaris
LUMINUS INTERACTIONS WITH VALARIS >ƵŵŝŶƵƐŚĂƐŚĂĚĂůŽŶŐĂŶĚĐŽůůĂďŽƌĂƚŝǀĞƌĞůĂƚŝŽŶƐŚŝƉǁŝƚŚsĂůĂƌŝƐŵĂŶĂŐĞŵĞŶƚ ,ŝƐƚŽƌŝĐĂůůǇ͕ǁĞǀŽŝĐĞĚŽƵƌ;ƵůƚŝŵĂƚĞůǇũƵƐƚŝĨŝĞĚͿĐŽŶĐĞƌŶƐĂŶĚƌĞƐĞƌǀĂƚŝŽŶƐƉƌŝǀĂƚĞůǇ͕ďƵƚǁĞŚĂǀĞƐƵƉƉŽƌƚĞĚŵĂŶĂŐĞŵĞŶƚ ĞůǇ͕ď ďƵƚ >ƵŵŝŶƵƐǀŽƚĞĚǁŝƚŚƚŚĞ^sĂŶĚZŽĂƌĚƐŝŶƚŚĞ^sͲdtĂŶĚZͲ^sŵĞƌŐĞƌƐ͕ĚĞƐƉŝƚĞĐŽŶĐĞƌŶƐǁĞĞǆƉƌĞ
Slide 7: Executive Summary
EXECUTIVE SUMMARY >ƵŵŝŶƵƐŚĂƐƚŚĞůĂƌŐĞƐƚĞĐŽŶŽŵŝĐĞǆƉŽƐƵƌĞƚŽƚŚĞĞƋƵŝƚǇŽĨsĂůĂƌŝƐ Ăƚϭϵй͕ŝŶĐůƵĚŝŶŐϰ͘ϱйďĞŶĞĨŝĐŝĂůŽǁŶĞƌƐŚŝƉŽĨƐƚŽĐŬ ϰ͘ϱй KƵƌŐŽĂůƐĂŶĚŽďũĞĐƚŝǀĞƐĂƌĞĂůŝŐŶĞĚǁŝƚŚƚŚĞŽŵƉĂŶǇ͛ƐůŽŶŐͲƚĞƌŵƐƵĐĐĞƐƐ tĞŚĂǀĞĞŶŐĂŐĞĚǁŝƚŚŵĂŶĂŐĞŵĞŶƚĂƌŽƵŶĚĂƐĞƚŽĨŝĚĞĂƐƚŽŚĞůƉĐƌĞĂƚĞǀĂůƵĞ tĞƐŚĂƌĞĂĐŽŵŵŽŶŐŽĂůǁŝƚŚƚŚĞŽĂƌĚƚŽƉƌŽƚĞĐƚĂŶĚĐƌĞĂ
Slide 8: Executive Summary (Continued)
EXECUTIVE SUMMARY (CONTINUED) dŚĞƌĞĂƌĞƐƚƌĂƚĞŐŝĐĂŶĚŽƉĞƌĂƚŝŽŶĂůŝŵƉƌŽǀĞŵĞŶƚƐƚŚĂƚĐĂŶĞŶŚĂŶĐĞƚŚĞŽŵƉĂŶǇ͛ƐƉĞƌĨŽƌŵĂŶĐĞ ĞƌĨŽ Žƌŵ EĞĐĞƐƐĂƌǇƚŽƉƌŝŽƌŝƚŝǌĞĂŶĚĨŽĐƵƐŵĂŶĂŐĞŵĞŶƚƚŝŵĞĂŶĚƌĞƐŽƵƌĐĞƐŽŶƌƵŶŶŝŶŐƚŚĞďƵƐŝŶĞƐƐ KƵƌǀŝĞǁŝƐƚŚĂƚƚŚĞŽŵƉĂŶǇŚĂƐŶŽƚƉĞƌĨŽƌŵĞĚǁĞůůŝŶĂƌĞĂƐŝŶĐůƵĚŝŶŐŵĂƌŬĞƚŝŶŐ͕ŐŽǀĞƌŶĂŶĐĞ͕DΘĂŶĚĐĂƉŝƚĂůŵĂƌŬĞƚƐĞǆĞĐƵƚ
Slide 9: II. Valaris Performance
II. VALARIS PERFORMANCE ϵ KE&/Ed/>
Slide 10: Amongst the Best and Most Diversified Assets in the World
AMONGST THE BEST AND MOST DIVERSIFIED ASSETS IN THE WORLD PRO-FORMA FLEET (2025) WƌŽ&ŽƌŵĂ&ůĞĞƚ;ϮϬϮϱͿ Z/' s> ^Z> E K W Z>K K> :ĂĐŬƵƉƐ LARGEST :ͲϳϬEKZ^K<ͲŽŵƉůŝĂŶƚ:ĂĐŬƵƉƐ Ϯ͘Ϭ ϭ͘Ϭ ϰ͘Ϭ JACKUP FLEET EKZ^K<ͲŽŵƉůŝĂŶƚ:ĂĐŬƵƉƐ ϯ͘Ϭ Ϯ͘Ϭ ,ĂƌƐŚͬh<ͲĂƉĂďůĞ:ĂĐŬƵƉƐ ϭϭ͘Ϭ ϭ͘Ϭ ϵ͘Ϭ ϱ͘Ϭ ^ƚĂŶĚĂƌĚ:ĂĐŬƵƉƐ Ϯϲ͘ϱ ϭϯ͘ϵ Ϯ͘Ϭ Ϯ͘Ϭ dŽ
Slide 11: Market Values Valaris' Fleet at a Discount to Peers
YET, THE MARKET VALUES VALARIS’ FLEET AT A DISCOUNT TO PEERS IMPLIED PRICE PER DRILLSHIP IMPLIED MPLIED P PRICE PER DRILLSHIP CHARTER ADJUSTED – 7th GEN CHARTER ADJUSTED – 6th GEN CHART ΨϮϬϬ ΨϮϬϬ AVERAGE EX-VALARIS 7G FLOATER: $182 ΨϭϴϬ ΨϭϴϬ Ϭ ΨϭϲϬ ΨϭϲϬ AVERAGE EX-VALARIS 6G FLOATER: $140 A W ΨϭϰϬ Ψ
Slide 12: Shareholders Have Lost Significant Value
SHAREHOLDERS HAVE LOST SIGNIFICANT VALUE dŽƚĂůƐŚĂƌĞŚŽůĚĞƌƌĞƚƵƌŶŝƐŶĞŐĂƚŝǀĞϴϭй ŽǀĞƌƚŚĞůĂƐƚƚŚŝƌƚǇǇĞĂƌƐ͕ĞǀĞŶĂƐƚŚĞŵĂƌŬĞƚŝƐƵƉϭϱǆĂŶĚŽŝůƉƌŝĐĞƐŚĂǀĞƚƌŝƉůĞĚ ϭϴǆ Shareholders have lost ϭϳǆ $3 billion even since the lows of the ϭϱ͘ϲǆ^ΘWϱϬϬ ϭϲǆ financial crisis, ten years ago ϭϱǆ ϭϰǆ ϭϯǆ Shareholders have ϭϮǆ los
Slide 13: Total Shareholder Returns Have Lagged Depressed Peers
TOTAL SHAREHOLDER RETURNS HAVE EVEN LAGGED DEPRESSED PEERS OVER ALL RELEVANT PERIODS ONE-YEAR TOTAL SHAREHOLDER RETURN THREE-YEAR TOTAL L SHAREHOLDER SH RETURN s> Z/' K E s> Z/' K E ͲϰϬй ͲϰϬй ͲϱϬй ͲϱϬй ͲϲϬй ͲϲϬй ͲϳϬй ͲϳϬй ͲϴϬй ͲϴϬй ͲϵϬй ͲϵϬй VW ͲϭϬϬй ͲϭϬϬй X FIVE-YEAR TOTAL SHAREHOLDER RETURN TEN-YE
Slide 14: Ensco-Rowan Merger Has Diverged from Promised Results
ENSCO-ROWAN MERGER HAS DIVERGED FROM PROMISED RESULTS WHILE OIL PRICES ARE UNCHANGED MERGER RATIONALE: TOTAL TOTA AL S SHAREHOLDER RETURN SINCE UNANIMOUS U BOARD APROVAL ͞^ƚƌŽŶŐůŝƋƵŝĚŝƚǇĂŶĚĨůĞǆŝďůĞĐĂƉŝƚĂůƐƚƌƵĐƚƵƌĞĞŶŚĂŶĐĞƐ s> Z/' K E ĂďŝůŝƚǇƚŽŶĂǀŝŐĂƚĞƚŚƌŽƵŐŚŝŶĚƵƐƚƌǇĐǇĐůĞƐĂŶĚŐĞŶĞƌĂƚĞ ͲϯϬй Ͳϯϱй ƐŚĂƌĞ
Slide 15: Crisis of Confidence Spans the Entire Capital Structure
CRISIS OF CONFIDENCE SPANS THE ENTIRE CAPITAL STRUCTURE 2024 BOND 2044 LONG BOND EQUITY Ψϴϱ ΨϳϬ ΨϮϬ ΨϴϬ Ψϭϴ Ψϲϱ Ψϭϲ Ψϳϱ ΨϲϬ Ψϭϰ ΨϳϬ ΨϭϮ Ψϱϱ ΨϭϬ Ψϲϱ Ψϴ ΨϱϬ ΨϲϬ Ψϲ Ψϰ W Ψϱϱ Ψϰϱ ΨϮ ΨϱϬ ΨϰϬ ΨϬ XV XJ DEC 31, 2017 DEC EC 31, 2018 APRIL 11, 2019 JUNE 14, 2019 AUG 15, 2019 I$ zĞĂƌŶĚ zĞĂƌŶĚ ůŽƐĞŽĨZŽǁĂŶĞĂů >Ƶ
Slide 16: Sellside Is Skeptical About Current Trajectory
SELLSIDE IS SKEPTICAL ABOUT CURRENT TRAJECTORY We believe the Company’s outlook has more inherent Heightened concerns around VAL's capital structuree and We struggle to see VAL as a compelling long case given risk going forward with lower EBITDA forecasts, a fleet management / marketing continue to
Slide 17: Unforced Errors Have Contributed to a Crisis of Confidence
UNFORCED ERRORS HAVE CONTRIBUTED TO A CRISIS OF CONFIDENCE QUANTIFIABLE EXAMPLES INCLUDE OTHER EXAMPLES INCLUDE MARKET EVIDENCE ƚǁŽŽĚĞƋƵŝƚǇŝƐǁŽƌƚŚŶĞŐĂƚŝǀĞΨϮϮϲŵŝůůŝŽŶ /ŶĞĨĨĞĐƚŝǀĞŵĂƌŬĞƚŝŶŐƐƚƌĂƚĞŐǇ dŽƚĂůƐŚĂƌĞŚŽůĚĞƌƌĞƚƵƌŶƐŝŐŶŝĨŝĐĂŶƚůǇďĞůŽǁ ĂƚƚŽĚĂǇ͛ƐŝŵƉůŝĞĚƌŝŐƉƌŝĐĞƐǀƐ͘ΕΨϴϲϰŵŝůůŝŽŶ ƚŚŽƐĞŽĨƉĞĞƌƐ ZĞ
Slide 18: III. Operational Issues and Opportunities
III. OPERATIONAL ISSUES AND OPPORTUNITIES “CRISIS OF CONFIDENCE” ϭϴ KE&/Ed/>
Slide 19: Operational Issues Overview
OPERATIONAL ISSUES OVERVIEW “CRISIS OF CONFIDENCE” sĂůĂƌŝƐ͛ŵĂŶĂŐĞŵĞŶƚƚĞĂŵ ŚĂƐďĞĞŶŐĞŶĞƌĂůůǇǁĞůůͲƌĞƐƉĞĐƚĞĚďǇƐƚĂŬĞŚŽůĚĞƌƐ͕ďƵƚƚŝŵĞŝƐƌƵŶŶŝŶŐŽƵƚ ŬĞŚ ^ĞǀĞƌĂůŝƐƐƵĞƐƐŚŽƵůĚďĞƐƚƵĚŝĞĚďǇƚŚĞŽĂƌĚ W DĂƌŬĞƚŝŶŐĐŽŶĐĞƌŶƐ͗sĂůĂƌŝƐŚĂƐƚĂŬĞŶĂĚŝĨĨĞƌĞŶƚĂƉƉƌŽĂĐŚƚŚĂŶƉĞĞƌƐĂŶĚŝƐůŽƐŝŶŐŵĂƌŬĞƚƐŚĂƌĞ ĂŶƉĞĞ XV ĂƉŝƚĂůŵĂƌŬĞƚƐĞǆĞĐƵƚŝŽ
Slide 20: Marketing Strategy and Leadership Should Be Carefully Reviewed
“CRISIS OF CONFIDENCE” MARKETING STRATEGY AND LEADERSHIP SHOULD BE CAREFULLY REVIEWED Top 5 Floater Rig Cu Customers usto vs. Drilling Contractor of Choice (by rig ig years y over the past 24 months) DĂƌŬĞƚŝŶŐŝƐĐƌŝƚŝĐĂů DRILLING CONTRACTOR ĞŶƚƌĂůŝǌĞĚĚĂƚĂĐŽůůĞĐƚŝŽŶĂŶĚĐƵƐƚŽŵĞƌŝŶƚĞůůŝŐĞŶĐĞĂƌĞŶĞĐĞƐƐĂƌ
Slide 21: Valaris' Capital Market Execution Has Impaired Value
“CRISIS OF CONFIDENCE” VALARIS’ CAPITAL MARKET EXECUTION HAS IMPAIRED VALUE ^ŝŐŶŝĨŝĐĂŶƚǀĂůƵĞ͞ƚƌĂŶƐĨĞƌƌĞĚ͟ƚŽďŽŶĚŚŽůĚĞƌƐ &ĂĐĞsĂůƵĞŽĨ ŝƌĞĐƚsĂůƵĞ DĂŶĂŐĞŵĞŶƚƚĞůĞŐƌĂƉŚĞĚƚŚĞďŽŶĚƚĞŶĚĞƌƚŽƚŚĞ^ƚƌĞĞƚǁĞůůŝŶĂĚǀĂŶĐĞ͕ĂƌƚŝĨŝĐŝĂůůǇ /ƐƐƵĞ dĞ dĞŶĚĞƌ ƵƌƌĞŶƚ WƌŝĐĞ ŽŶĚƐdĞŶĚĞƌĞĚ ĞƐƚƌŽǇĞĚ ŝŶĨůĂƚŝŶŐďŽŶĚƉƌŝĐĞƐ WƌŝĐĞ W WƌŝĐĞ
Slide 22: M&A and Capital Allocation Decisions Have Been Poor
“CRISIS OF CONFIDENCE” M&A AND CAPITAL ALLOCATION DECISIONS AT BOTH PREDECESSOR BOARDS HAVE BEEN PO O POOR dŚĞZŽǁĂŶŽĂƌĚ;ϱŽĨϭϭsĂůĂƌŝƐĚŝƌĞĐƚŽƌƐͿŝŶŝƚŝĂůůǇŶĞŐŽƚŝĂƚĞĚ ŽƚŚďŽĂƌĚƐĐŽŵŵŝƚƚĞĚΕΨϭϬďŝůůŝŽŶŝŶĐĂƉĞǆŶĞĂƌƚŚĞ ĚƐĐŽŵŵŝƚƚ ŵĂƌŬĞƚ ĂŶƵŶĂĐĐĞƉƚĂďůĞĚĞĂů ƉĞĂŬǁŝƚŚŽƵƚůŽŶŐͲƚĞƌŵĐŽŶƚƌĂĐƚǀŝƐŝďŝůŝƚǇ ƚŚŽƵƚůŽŶ dŚĞZŽǁ
Slide 23: Questionable Decisions Continue to Harm Valaris' Credibility
“CRISIS OF CONFIDENCE” QUESTIONABLE DECISIONS CONTINUE TO HARM VALARIS’ CREDIBILITY 2019 Street EBITDA BITDA AEEstimates Since Merger Approval ŐŐƌĞƐƐŝǀĞ^ŵĞƌŐĞƌĨŝůŝŶŐƐĚƌŽǀĞĂƌƚŝĨŝĐŝĂůůǇŚŝŐŚ/dĞǆƉĞĐƚĂƚŝŽŶƐĂŶĚƐĞƚ sĂůĂƌŝƐƵƉƚŽŵĂƚĞƌŝĂůůǇĚŝƐĂƉƉŽŝŶƚŝŶǀĞƐƚŽƌƐ ΨϯϱϬ DĂŶĂŐĞŵĞŶƚǁĂƐĨŽƌĐĞĚƚŽŐƵŝĚĞĚŽǁŶƐƚƌĞĞƚŝŶŝƚƐĨŝƌ
Slide 24: IV. Capital Structure Opportunities
IV. CAPITAL STRUCTURE OPPORTUNITIES PATH TO CREATING ENDURING VALUE Ϯϰ KE&/Ed/>
Slide 25: Capital Structure Objectives for $6+ Billion Capital Stack
CAPITAL STRUCTURE OBJECTIVES FOR $6+ BILLION CAPITAL STACK APPROPRIATE, HOLISTIC GOALS BY CONTRAST, VALARIS ALAR HAS FOCUSED ON ONE CONSTITUENCY’S RIS H FOR CAPITAL STRUCTURE INTEREST ER THAN THE ENTERPRISE AS A WHOLE T RATHER RATHE ůůŽǁĨŽƌůŝƋƵŝĚŝƚǇƌƵŶǁĂǇŝŶƚŽϮϬϮϰĂƚƚŚĞǀĞƌǇůĞĂƐƚͶĂƐƐƵŵŝŶŐĂ &ŽĐƵƐĞĚŽ
Slide 26: Benefits of Balanced Approach to Capital Structure
BENEFITS OF BALANCED APPROACH TO CAPITAL STRUCTURE /ŶĐƌĞĂƐĞƐŝŶǀĞƐƚŽƌĐŽŶĨŝĚĞŶĐĞŝŶĐŽƌƉŽƌĂƚĞŐŽǀĞƌŶĂŶĐĞĂŶĚĂůŝŐŶŵĞŶƚ WƌŽǀŝĚĞƐŽƉƉŽƌƚƵŶŝƚǇƚŽĞĨĨĞĐƚŝǀĞůǇĂŶĚŵĂƚĞƌŝĂůůǇƌĞĚƵĐĞƚŚĞŽŵƉĂŶǇ͛ƐĐŽƐƚͲŽĨͲĐĂƉŝƚĂů Ɛƚ ŽĨ ĐĂƉŝƚ ĂůĂŶĐĞĚĐĂƉŝƚĂůƌĞƚƵƌŶƉƌŽŐƌĂŵĞŶŚĂŶĐĞƐƚŚĞůŝĂďŝůŝƚǇŵĂŶĂŐĞŵĞŶƚƉƌŽŐƌĂŵ ŽŐ ĂůĂŶĐĞĚƉƌŽŐƌĂŵĐƌĞĂƚĞƐŚĞĂůƚ
Slide 27: Executing on These Goals Is Complex and Requires Swift Action
EXECUTING ON THESE GOALS IS COMPLEX, INTERWOVEN AND REQUIRES PUBLIC MARKETS EXPERTISE AND SWIFT ACTION ůůĂĐƚŝŽŶƐĂƌĞůŝŶŬĞĚĂŶĚƌĞƋƵŝƌĞĚĨŽƌƚŚĞŽƚŚĞƌƐƚŽƐƵĐĐĞĞĚ ^ĞƋƵĞŶĐŝŶŐĂŶĚƚŝŵŝŶŐĂƌĞĐƌŝƚŝĐĂů͖ŵĂƌŬĞƚƐĂŶĚƉƌŝĐĞƐĂƌĞǀŽůĂƚŝůĞĂŶĚƌĞƋƵŝƌĞŵŽŶŝƚŽƌŝŶŐĂŶĚƋƵŝĐŬĚĞĐŝƐŝŽŶƐ ƌĞƋƵŝƌĞŵ STAKEHOLDER ACTION GOALS ZĞǀŽůǀĞƌĂŶŬƐ
Slide 28: An Illustration of the Holistic Approach
AN ILLUSTRATION OF THE HOLISTIC APPROACH ŵĞŶĚƌĞǀŽůǀŝŶŐĐƌĞĚŝƚĨĂĐŝůŝƚǇ ^ŵĂůůĞƌ &ŝƌƐƚͲŽƵƚĨĂĐŝůŝƚǇ WƵƐŚŵĂƚƵƌŝƚǇŽƵƚƚŽůĂƚĞϮϬϮϯ ZĞŵŽǀĞƌĞƐƚƌŝĐƚĞĚƉĂǇŵĞŶƚƐĂŶĚĚĞďƚůŝŵŝƚƐ /ƐƐƵĞΨϭ͘ϱďŝůůŝŽŶ^ĞŶŝŽƌWƌŝŽƌŝƚǇ'ƵĂƌĂŶƚĞĞĚďŽŶĚƐ;ĐŽƵůĚďĞŝŶŽŶĞŽƌŵŽƌĞƐƚĞƉƐͿ ƌĞƐƚĞƉƐ &ƵŶĚĂΨϱϬϬŵŝůůŝŽŶƐŚĂƌĞƚĞŶĚĞƌƚŽƌĞƚŝƌĞϭϬϬŵŝůůŝŽŶƐŚĂƌĞƐ;ΨϱͬƐ
Slide 29: The Illustrative Approach Achieves Key Goals
THE ILLUSTRATIVE APPROACH ACHIEVES KEY GOALS GOALS GO ǆƚĞŶĚ ŶƐƵƌĞ ZĞĚƵĐĞ DĞĚŝƵŵͲ WƌŝĐĞ WĞĐŬŝŶŐ /ŶĐƌĞĂƐĞ >ŝƋƵŝĚŝƚǇ DĂƌŬĞƚ ĂƌŬĞ ŽƐƚŽĨ ACTION dĞƌŵĞďƚƚ ĐĐĞƐƐ dƌĂŶƐƉĂƌĞŶĐǇ KƌĚĞƌ ĂƉŝƚĂů ZĞƚƵƌŶƐ DĂƚƵƌŝƚŝĞƐ ŝĞ W /ƐƐƵĞΨϭ͘ϱďŶŽĨ^ĞĐƵƌĞĚͬWƌŝŽƌŝƚǇ'ƵĂƌĂŶƚĞĞĚĞďƚ XV &ƵŶĚĂΨϱϬϬŵŵ^ŚĂƌĞƵǇďĂĐŬ >ĂƵŶĐŚĂΨϯϱϬŵŵ:ƌ͘WƌŝŽƌŝƚǇ'ƵĂ
Slide 30: Debt Maturities Profile Under Illustrative Approach
DEBT MATURITIES PROFILE UNDER ILLUSTRATIVE APPROACH BASE CASE LUMINUS MINU US ILLUSTRATIVE CASE Ψϯ͕ϬϬϬ Ψϯ͕ϬϬϬ ΨϮ͘ϵŝůůŝŽŶŝŶhŶƐĞĐƵƌĞĚDĂƚƵƌŝƚŝĞƐ ΨϮ͘ϮŝůůŝŽŶŝŶhŶƐĞĐƵƌĞĚDĂƚƵƌŝƚŝĞƐ ΨϮ͕ϱϬϬ ΨϮ͕ϱϬϬ ͕ϱϬϬ W ΨϮ͕ϬϬϬ ΨϮ͕ϬϬϬ ΨϮ XV Ψϭ͕ϱϬϬ Ψϭ͕ϱϬϬ XJ Ψϭ͕ϬϬϬ I$ Ψϭ͕ϬϬϬ R ΨϱϬϬ ΨϱϬϬ $V ΨϬ ΨϬ ϮϬϮϮ ϮϬϮϯ ϮϬϮϰ ϮϬϮϱ ϮϬϮϲ ϮϬϮϳ
Slide 31: Holistic Approach Drives Success for Stakeholders
HOLISTIC APPROACH DRIVES SUCCESS FOR STAKEHOLDERS ŚŽůŝƐƚŝĐĂƉƉƌŽĂĐŚƚŽĐĂƉŝƚĂůƐƚƌƵĐƚƵƌĞŵĂŶĂŐĞŵĞŶƚĞŶŚĂŶĐĞƐĞƋƵŝƚǇƵƉƐŝĚĞƚŚƌŽƵŐŚĂƌĞĚƵĐĞĚƐŚĂƌĞĐŽƵŶƚǁŚŝůĞ ŽƵ ƵŐŚ ůĞŶŐƚŚĞŶŝŶŐƚŚĞƌƵŶǁĂǇƚŚƌŽƵŐŚĐŽŵƉĞƚŝƚŝǀĞůŝĂďŝůŝƚǇŵĂŶĂŐĞŵĞŶƚ͘ BASE CASE ILLUSTRATIVE CASE ILLUSTRATIVE CASE CAP STRUCTURE CAP STRUCTURE VAL SCENARIO H
Slide 32: Holistic Approach Enhances Shareholder Return
HOLISTIC APPROACH ENHANCES SHAREHOLDER RETURN dŚĞĐĂƉŝƚĂůĂůůŽĐĂƚŝŽŶĨůĞǆŝďŝůŝƚǇŝƐĞƐƉĞĐŝĂůůǇŝŵƉŽƌƚĂŶƚĨŽƌůŽŶŐͲƐƚĂŶĚŝŶŐŝŶǀĞƐƚŽƌƐƚŚĂƚŚĂǀĞŚŝŐŚƉĞƌͲƐŚĂƌĞĐŽƐƚďĂƐĞƐ Compounded Returns Weighted Average Estimated Luminus TYPE OF INVESTOR Entry Date Cost Basis Base Case Illustrative Case The holistic approach /ŶƐ
Slide 33: Valaris' Cost of Capital Is Too High
VALARIS’ COST OF CAPITAL IS TOO HIGH ͞ƌŝƐŝƐŽĨŽŶĨŝĚĞŶĐĞ͟ĂĐƌŽƐƐƚŚĞĐĂƉŝƚĂůƐƚƌƵĐƚƵƌĞŚĂƐůĞĚƚŽĞǆƚƌĞŵĞůǇŚŝŐŚĐŽƐƚŽĨĐĂƉŝƚĂů ĂƉŝƚĂů /ŶĐƵƌƌĞŶƚĞŶǀŝƌŽŶŵĞŶƚĞĂĐŚƐƚĂŬĞŚŽůĚĞƌĂƐƐƵŵĞƐĚŽǁŶƐŝĚĞďŝĂƐĨŽƌƚŚĞŝƌƉĂƌƚŝĐƵůĂƌƐĞĐƵƌŝƚǇʹ ĐƵůĂƌƐĞĐƵ ƵŶĐĞƌƚĂŝŶƚǇďĞŐĞƚƐƵŶĐĞƌƚĂŝŶƚǇ DEC 31, 2017 DEC 31, 2018 APRIL 111, 2019 AUG 15, 201
Slide 34: The Excessive Revolver Burdens Valaris' Ability to Fix Itself
THE EXCESSIVE REVOLVER BURDENS VALARIS’ ABILITY TO FIX ITSELF dŚĞƌĞǀŽůǀĞƌƉƌŽǀŝĚĞƐŶŽŚĞůƉŝŶƌĞƉĂǇŝŶŐƚŚĞĐůƵƐƚĞƌŽĨŵĂƚƵƌŝƚŝĞƐďĞŐŝŶŶŝŶŐŝŶϮϬϮϰ͖ĂŶǇďĞŶĞĨŝƚƐĂƌĞĐŽŶĨŝŶĞĚƚŽƚŚĞŶĞǆƚƚŚƌĞĞǇĞĂƌƐ ďĞŶĞĞĨŝƚƐ ZĞĚƵĐĞƐĚĞďƚĐĂƉĂĐŝƚǇĂŶĚůŽŶŐͲƚĞƌŵĂĐĐĞƐƐƚŽůŝƋƵŝĚŝƚǇ͖ŝŶĐƌĞĂƐĞƐĐŽƐƚ dŚĞƌĞǀŽůǀĞƌĚĞĐƌĞĂƐĞƐƐĞĐƵƌĞĚďĂƐŬĞƚďǇΕΨϭ͘ϳďŝůůŝŽ
Slide 35: V. The Board Must Be Refreshed and Enhanced
V. THE BOARD MUST BE REFRESHED AND ENHANCED ϯϱ KE&/Ed/>
Slide 36: Shareholder Returns Terrible During Tenure of Incumbent Directors
SHAREHOLDER RETURNS HAVE BEEN TERRIBLE DURING TENURE OF INCUMBENT DIRECTORS Total Value off VA alue o VAL V Start TSR DURING TENURE Tenure Ow Shares Owned* Last Open Market Purchase Date Rowan Valaris Total (Years) Date Price ŶƐĐŽ/ŶĚĞƉĞŶĚĞŶƚŝƌĞĐƚŽƌƐ ZŽĚĞƌŝĐŬůĂƌŬ DĂǇϮϬϬϴ Ͳϵϴ͘Ϯй Ͳϵϴ͘Ϯй ϭϭ͘Ϯ ϭ͘Ϯ Ψϱϵ͕ϭϯ
Slide 37: Board Lacks Critical Areas of Expertise and Alignment
BOARD LACKS CRITICAL AREAS OF EXPERTISE AND ALIGNMENT DIRECTOR EXPERIENCE AND AFFILIATION ATION N ŬĞƚƐĂŶ ĂƉŝƚĂůDĂƌŬĞƚƐĂŶĚ KƚŚĞƌWƵďůŝĐ &ŝŶĂŶĐŝĂůZŝƐŬ ŝĂůZŝ WƵďůŝĐDĂƌŬĞƚ ^ŚĂƌĞŚŽůĚĞƌ ǀĞƌĂŐĞŝƌĞĐƚŽƌ 'ůŽďĂůŶĞƌŐǇ ^ƵŝƚĞ ŽĂƌĚƐ DĂŶĂŐĞŵĞŶƚ ĂŐĞŵĞŶƚ /ŶǀĞƐƚŝŶŐ ZĞƉƌĞƐĞŶƚĂƚŝǀĞ /ŶǀĞƐƚŵĞŶƚsĂůƵĞ sĂůĂƌŝƐ ΨϵϮ͕ϲϰϰ W XV ŝĂ
Slide 38: Go-Forward Board Priorities
GO-FORWARD BOARD PRIORITIES ŶĂďůĞŵĂŶĂŐĞŵĞŶƚƚŽĨŽĐƵƐŽŶŬĞǇĂƌĞĂƐďǇŵŝŶŝŵŝǌŝŶŐĚŝƐƚƌĂĐƚŝŽŶƐ ĐƚŝŽŶ ŶƐ DĂƌŬĞƚŝŶŐͬĐŽŶƚƌĂĐƚŝŶŐ KƉĞƌĂƚŝŽŶƐ ^ǇƐƚĞŵƐĂŶĚĐŽŶƚƌŽůƐ EŽƚĐŽŶƐƚĂŶƚůǇŚĂǀŝŶŐƚŽĞǆƉůĂŝŶƐƚƌĂƚĞŐŝĐŵŝƐƐƚĞƉƐ VW &ŽĐƵƐŽŶƌĞƐŽůǀŝŶŐ͞ƌŝƐŝƐŽĨŽŶĨŝĚĞŶĐĞ͟ JX ^ƚƵĚǇĂŶĚƌĞƐŽůǀĞŽƉĞƌĂƚŝŽŶĂůĂŶĚƐƚƌĂƚĞŐŝĐŝƐƐƵĞƐ ƐƐƵĞƐ X &ŽƌŵĂ&ŝŶĂŶ
Slide 39: VI. Conclusion and Next Steps
VI. CONCLUSION AND NEXT STEPS ϯϵ KE&/Ed/>
Slide 40: Conclusion and Next Steps
CONCLUSION AND NEXT STEPS sĂůĂƌŝƐŚĂƐƵŶĚĞƌƉĞƌĨŽƌŵĞĚŝƚƐƉĞĞƌƐĂŶĚŝƚƐƐƚĂŬĞŚŽůĚĞƌƐŚĂǀĞůŽƐƚďŝůůŝŽŶƐ tĞďĞůŝĞǀĞƐĞůĨͲŝŶĨůŝĐƚĞĚǁŽƵŶĚƐĂŶĚŵŝƐƐĞĚŽƉƉŽƌƚƵŶŝƚŝĞƐǁĞƌĞƌĞƐƉŽŶƐŝďůĞĨŽƌƐŽŵĞŽĨƚŚĞƐĞůŽƐƐĞƐ ƌƐŽŵĞŽ ŽĨƚ DĂƌŬĞƚůĂĐŬƐĐŽŶĨŝĚĞŶĐĞŝŶsĂůĂƌŝƐ͛ŽĂƌĚ͕ŽƉĞƌĂƚŝŶŐƐƚƌĂƚĞŐǇĂŶĚĐĂƉŝƚĂůƐƚƌƵĐƚƵƌĞĚĞĐŝƐŝŽŶƐ ƵĐƚƵƌĞĚ tĞďĞůŝĞǀĞƚŚĞŽĂƌ
Slide 41: Disclaimer
DISCLAIMER dŚĞ ŵĂƚĞƌŝĂůƐ ŝŶ ƚŚŝƐ ĚŽĐƵŵĞŶƚ ;͞DĂƚĞƌŝĂůƐ͟Ϳ ĂƌĞ ĨŽƌ ŝŶĨŽƌŵĂƚŝŽŶĂů ƉƵƌƉŽƐĞƐ ŽŶůǇ ĂŶĚ ŵĂǇ ŶŽƚ ďĞ ƌĞůŝĞĚ ŽŶ ďǇ ĂŶǇ ƉĞƌƐŽŶ ĨŽƌ ĂŶǇ ƉƵƌƉŽƐĞ ĂŶĚ ĂƌĞ ŶŽƚ͕ ĂŶĚ ƐŚŽƵůĚ ŶŽƚ ďĞ ĐŽŶƐƚƌƵĞĚ ĂƐ ŝŶǀĞƐƚŵĞŶƚ͕ ĨŝŶĂŶĐŝĂů͕ ůĞŐĂů͕ ƚĂǆ Žƌ ŽƚŚĞƌ ĂĚǀŝĐĞ͘ dŚĞ DĂƚĞƌŝĂůƐ ƌĞƉƌĞƐĞŶƚ ƚŚĞ ŽƉŝŶŝŽŶƐ ŽĨ >ƵŵŝŶƵƐ DĂŶĂŐĞŵĞŶƚ

Valaris — Proxy Contest (December 2019) on 6ix

Valaris — Proxy Contest (December 2019)

Slide 1: Valaris plc Board Meeting

Slide 2: Table of Contents

Slide 3: I. Introduction

Slide 4: Introduction to Luminus Management

Slide 5: Luminus' Interest in Valaris

Slide 6: Luminus Interactions with Valaris

Slide 7: Executive Summary

Slide 8: Executive Summary (Continued)

Slide 9: II. Valaris Performance

Slide 10: Amongst the Best and Most Diversified Assets in the World

Slide 11: Market Values Valaris' Fleet at a Discount to Peers

Slide 12: Shareholders Have Lost Significant Value

Slide 13: Total Shareholder Returns Have Lagged Depressed Peers

Slide 14: Ensco-Rowan Merger Has Diverged from Promised Results

Slide 15: Crisis of Confidence Spans the Entire Capital Structure

Slide 16: Sellside Is Skeptical About Current Trajectory

Slide 17: Unforced Errors Have Contributed to a Crisis of Confidence

Slide 18: III. Operational Issues and Opportunities

Slide 19: Operational Issues Overview

Slide 20: Marketing Strategy and Leadership Should Be Carefully Reviewed

Slide 21: Valaris' Capital Market Execution Has Impaired Value

Slide 22: M&A and Capital Allocation Decisions Have Been Poor

Slide 23: Questionable Decisions Continue to Harm Valaris' Credibility

Slide 24: IV. Capital Structure Opportunities

Slide 25: Capital Structure Objectives for $6+ Billion Capital Stack

Slide 26: Benefits of Balanced Approach to Capital Structure

Slide 27: Executing on These Goals Is Complex and Requires Swift Action

Slide 28: An Illustration of the Holistic Approach

Slide 29: The Illustrative Approach Achieves Key Goals

Slide 30: Debt Maturities Profile Under Illustrative Approach

Slide 31: Holistic Approach Drives Success for Stakeholders

Slide 32: Holistic Approach Enhances Shareholder Return

Slide 33: Valaris' Cost of Capital Is Too High

Slide 34: The Excessive Revolver Burdens Valaris' Ability to Fix Itself

Slide 35: V. The Board Must Be Refreshed and Enhanced

Slide 36: Shareholder Returns Terrible During Tenure of Incumbent Directors

Slide 37: Board Lacks Critical Areas of Expertise and Alignment

Slide 38: Go-Forward Board Priorities

Slide 39: VI. Conclusion and Next Steps

Slide 40: Conclusion and Next Steps

Slide 41: Disclaimer