Valaris Limited · NYSE:VAL
Valaris — Q1 2024 Earnings Presentation
31 slides from Valaris's earnings presentation, May 2, 2024
Slide 1: Investor Presentation May 2024
Investor Presentation M AY Y 2 0 2 4 v FOCUSED VALUE DRIVEN RESPONSIBLE
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements contained in this investor presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
Slide 3: Valaris is well positioned to deliver meaningful value to shareholders
Valaris is well positioned to deliver meaningful value to shareholders Leading Strong Valaris Earnings Offshore Industry & Cash Flow Driller Fundamentals Growth Largest and highest specification fleet in Commodity supply and demand is highly Significant growth in earnings and cash the industry const
Slide 4: Leading Offshore Driller
Leading Offshore Driller 4
Slide 5: Largest fleet of modern offshore drilling rigs in the industry
Largest fleet of 13 DRILLSHIPS Average age 8 years 5 SEMISUBMERSIBLES Average age 12 years modern offshore drilling rigs in the industry 12 HD HARSH 21 HD & SD MODERN 2 SD LEGACY JACKUPS 1 JACKUPS 1 JACKUPS 1 Average age 15 years Average age 14 years Average age 42 years 1 HD = Heavy Duty; SD = Stan
Slide 6: Largest fleet of high-specification assets
Largest fleet of high-specification assets Fleet Quality of Major International Offshore Drillers Q1 Q2 Q3 Q4 Floaters Q1 Q2 Q3 Q4 Avg. Age1 Valaris2 30 16 6 1 53 Transocean 37 11 Noble 19 11 Transocean 12 13 6 6 37 Valaris 18 9 Seadrill3 14 12 Shelf 7 6 11 12 36 Diamond 12 27 Noble 16 13 2 1 32 Jac
Slide 7: Strong customer relationships with major IOCs, NOCs and independents
Strong customer relationships with major IOCs, NOCs and independents Majors1 National Oil Companies and Other Select Customers1 Floaters Jackups Locations Floaters Jackups Locations ✓ ✓ Brazil, Mediterranean, Southeast Asia, Trinidad ✓ Middle East ✓ U.S. GOM ✓ Brazil ✓ ✓ Australia, Mexico, North Sea
Slide 8: Focused on key basins expected to drive a large share of future demand
Focused on key basins expected to drive a large share of future demand 9 North Sea & Norway 7% U.S. GOM & Mexico 1 8% Mediterranean 2 1 23% Middle East 2 11% West Africa 48% 1% 2 Trinidad Southeast Asia 4% 18% % share of expected benign environment floater demand 11 2 10% 5% over next five years1 Br
Slide 9: ARO Drilling joint venture provides strong presence in the largest jackup market
ARO Drilling joint venture provides strong presence in the largest jackup market in the world ARO is an unconsolidated 50/50 JV with Saudi Aramco that owns Income $497M and operates jackups in Saudi Arabia, providing a strategic Statement Revenue partnership with the largest customer for jackups in
Slide 10: Reduce emissions from our own operations and partner with customers
Reduce emissions from our own operations and partner with customers Reduce Emissions Four focus areas identified Target to reduce emissions from our own to achieve this target: intensity by Operations 1. Energy Efficient Practices 2. Energy-Saving Upgrades and Procedures 10% to 20% 3. Biofuel Blends
Slide 11: Strong Industry Fundamentals
Strong Industry Fundamentals 11
Slide 12: Commodity supply and demand is constructive for our industry
Commodity supply and demand is constructive for our industry % of P50 Reserves Global Liquid Fuels Consumption (Million Barrels Per Day) Offshore Breakeven Oil Prices for Undeveloped Reserves Cumulative % of P50 Reserves 105 100% 25 95% 100 100 93% 91% 87% 90 95 83% Demand for 20% 78% hydrocarbons 2
Slide 13: Offshore upstream capex and new project sanctioning are expected to increase
Offshore upstream capex and new project sanctioning are expected to increase Offshore Upstream Capex ($B) Deepwater Shelf Growing demand for hydrocarbons, attractive project economics and low carbon +7% emissions intensity are expected to drive 228 205 210 increased investment in offshore projects 1
Slide 14: Demand for offshore drilling is expected to increase over the next several years
Demand for offshore drilling is expected to increase over the next several years Benign Environment Floater Demand By Wellbore Purpose (Rig Years) Exploration Production P&A and Intervention Benign environment floater demand is expected to increase at a compound annual growth rate (CAGR) of 9% throu
Slide 15: Significant supply rationalization has improved market balance
Significant supply rationalization over the past several years has improved market balance Benign Environment Floater Supply and Utilization Jackup Supply and Utilization 300 100% 550 100% 90% 500 90% 250 450 80% 80% 200 400 70% 70% 350 150 60% 60% 300 100 50% 250 50% 50 40% 200 40% Jan Jan Jan Jan
Slide 16: Active utilization currently 90%+ for drillships and benign environment jackups
Active utilization currently 90%+ for drillships and benign environment jackups 6/7G 6/7G Harsh Benign Delivered Rigs Drillships1 Benign Semis2 Jackups2 Jackups2 Time Stacked – Available And Cold Stacked Rigs Contracted 76 26 30 382 6/7G DRILLSHIPS1 6/7G BENIGN SEMIS1 1 Available3 8 8 3 23 4 2 4 5 4
Slide 17: Supply dynamics are supportive of a sustained upcycle
Supply dynamics are supportive of a sustained upcycle FLOATERS JACKUPS Benign environment floater supply has declined by 41% to 166 from a peak of Jackup supply has declined by 8% to 497 from a peak of 542 in early 2015 281 in late 2014 Available capacity is shrinking, with approximately 10 drillshi
Slide 18: Day rates have increased meaningfully since early 2021
Day rates have increased meaningfully since early 2021 Day Rates for 6th & 7th Generation Drillship Fixtures1 Day Rates for Benign Environment Jackup Fixtures2 $550,000 $200,000 $500,000 $175,000 $450,000 $150,000 $400,000 $350,000 $125,000 $300,000 $100,000 $250,000 $75,000 $200,000 $150,000 v v $5
Slide 19: Valaris Earnings & Cash Flow Growth
Valaris Earnings & Cash Flow Growth 19
Slide 20: Significant earnings and cash flow growth expected over the next few years
Significant earnings and cash flow growth expected over the next few years Rigs Recontracting Impact of Recent and Additional at Higher Day Rates Ongoing Reactivations Operating Leverage v Three uncontracted stacked 7th generation Most of Valaris’ floaters currently on legacy VALARIS DS-8 and DS-17
Slide 21: Earnings from floater fleet expected to increase as rigs reprice to market rates
Earnings from floater fleet expected to increase meaningfully as rigs reprice to market rates 2024 2025 2026 Rig Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Avg. Day Rate1 Contract Backlog DS-10 DS-16 DS-15 Legacy Drillship Legacy Drillship DS-4 Contracts Contracts DS-18 $247,000 $300 Million DS-9 DS-17 DS-8 v
Slide 22: Proven track record of winning attractive contracts for drillships requiring reactivation
Proven track record of winning attractive contracts for drillships requiring reactivation Drillships – Average Contracted Utilization % By Quarter1 Major Peers2 Valaris 6 contracts won for stacked drillships since relisting in May 2021 100% From To 90% Contributed to drillship backlog increasing by
Slide 23: Additional operating leverage from three stacked 7th generation drillships
Additional operating leverage from three stacked Key Technical high-specification 7th generation drillships Specifications Strong pipeline of long-term programs provides attractive opportunities 7th Generation for VALARIS DS-11, DS-13 and DS-14 to be contracted Drillships ASSET TYPE Among the highes
Slide 24: Significant earnings potential and cash flow from Valaris fleet
Significant earnings potential and cash flow from Valaris fleet Total Rigs Under Contract or Illustrative Annual Earnings and Cash Flow from Valaris Fleet1 Rigs with Future Contract Illustrative Scenario A B C 13 10 Drillship Day Rates $400K $450K $500K 5 3 Benign Semisubmersible Day Rates $300K $35
Slide 25: Value-driven approach to capital allocation
Value-driven approach to capital allocation Pursue Accretive Investments Maintain a Strong in our Fleet and/or Strategic Return Free Cash Flow to Balance Sheet Growth Opportunities Shareholders v Intend to return all future free cash flow to Committed to maintaining a conservative Near-term investme
Slide 26: Valaris is well positioned to deliver meaningful value to shareholders
Valaris is well positioned to deliver meaningful value to shareholders Leading Strong Valaris Earnings Offshore Industry & Cash Flow Driller Fundamentals Growth Largest and highest specification fleet in Commodity supply and demand is highly Significant growth in earnings and cash the industry const
Slide 27: Appendix
Appendix 27
Slide 28: Contract Backlog as of April 30, 2024
Contract Backlog as of April 30, 2024 Contract Backlog Contract Backlog by Customer Type Contract Backlog(1) (2) ($ millions) 2024 2025 2026+ Total Contracted Days(1) (2) 2024 2025 2026+ Drillships $ 720.9 $ 870.9 $ 632.1 $ 2,223.9 Drillships 2,098 2,260 1,493 8% Semis 127.3 53.4 - 180.7 Semis 548 2
Slide 29: Valaris owns 50% of joint venture with Saudi Aramco
Valaris owns 50% of joint venture with Saudi Aramco, the world’s largest jackup customer 50% $403M 50% $419M Ownership Shareholder Ownership Shareholder Notes Receivable Notes Receivable 9 20 Leased Jackups1 Newbuild Jackups • v Day rates set by an agreed pricing • Initial 8-year contracts; day rate
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations (In millions) Year-Ended December 31, ARO 2023 Net income $ 2.5 Add (subtract): Income tax expense 8.3 Other expense, net 31.8 Operating income $ 42.6 Add (subtract): Depreciation expense 65.9 EBITDA $ 108.5 30
Slide 31: Focused Value Driven Responsible
FOCUSED VALUE DRIVEN RESPONSIBLE