Valaris Limited · NYSE:VAL
Valaris — Investor Presentation (August 2019)
32 slides from Valaris's investor presentation, August 2019
Slide 1: Investor Presentation
Investor Presentation August 2019
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 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include words
Slide 3: Outline
Outline 1. Company Highlights 2. Market Dynamics 3. Fleet Overview 4. Financial Management 5. Operational Highlights 3
Slide 4: Valaris Rebranding
Valaris Rebranding • Establish capabilities as a larger, more global offshore driller ‒ Technologically-advanced, highly capable fleet of deep- and shallow- Strategic water rigs Positioning ‒ Largest global footprint ‒ Focus on operational efficiency and excellence ‒ Decades of expertise and knowled
Slide 5: Valaris Overview (NYSE: VAL)
Valaris Overview (NYSE: VAL) Fleet Financial Operational • Largest and amongst the highest-quality offshore drilling fleets in the world 16 drillships 12 semisubmersibles $ • $2.7 billion of liquidity • Presence in nearly all major 54 jackups ‒ $0.4 billion of cash and short- offshore markets and on
Slide 6: Market Dynamics
Market Dynamics ap
Slide 7: Offshore Project Approvals Expected to Lead to Higher Levels of Capital Expenditures
Offshore Project Approvals Expected to Lead to Higher Levels of Capital Expenditures Number of New Major Offshore Project Approvals • With lower project costs 91 88 relative to prior years and 81 74 increasing cash flows from 58 higher commodity prices, the 50 42 40 number of final investment decisi
Slide 8: Global Floater Market
Global Floater Market Total Utilization1 • Utilization for the global 90% floater fleet has gradually 80% increased since early 2017 70% due to a higher number of 60% rig years awarded for new 50% contracts, leading to slight 40% improvement in average Avg Spot 2013 2014 2015 2016 2017 2018 2019 spo
Slide 9: Global Jackup Market
Global Jackup Market Total Utilization1 • Utilization for the global 90% jackup fleet has also moved 80% higher since early 2017, as 70% a steady increase in rig 60% years awarded for new 50% contracts has led to a 40% modest improvement in Avg Spot 2013 2014 2015 2016 2017 2018 2019 average spot da
Slide 10: Fleet Overview
Fleet Overview e. é si ii ll ei " a ll —— VALARI s- Nth
Slide 11: Diverse Fleet Capable of Meeting a Broad Spectrum of Customers' Well Program Requirements
Fleet Overview Diverse Fleet Capable of Meeting a Broad Spectrum of Customers’ Well Program Requirements Drillships Semisubmersibles Jackups 16 Total 12 Total 54 Total – Average age of 6 years – 9 modern assets with sixth – Largest jackup fleet in the world – 11 assets equipped with dual 2.5 generat
Slide 12: Highest-Specification Drillships
Highest-Specification Drillships Key Rig Specifications Valaris Asset Value3 ($B) • Blowout preventers (BOPs): by having two 11 BOPs, one unit can be deployed while required 12 Valaris All Other maintenance is performed on the other unit, 2 adding redundancy for this critical piece of equipment and
Slide 13: Heavy Duty Ultra-Harsh & Harsh Environment Jackups
Heavy Duty Ultra-Harsh & Harsh Environment Jackups Key Rig Specifications Valaris Asset Value4 ($B) • Leg spacing: larger leg spacing enables jackups 13 to drill in deeper water depths and enhances Valaris stability required to operate in harsh environments 33 All Other 3 75 11 • Cantilever reach: l
Slide 14: Modern Heavy Duty & Standard Duty Jackups
Modern Heavy Duty & Standard Duty Jackups Key Rig Specifications Valaris Asset Value3 ($B) 25 • Pipe handling: offline capabilities increase the Valaris speed at which a well can be drilled • Accommodation capacity: larger 2 21 accommodations give customers more flexibility 174 Borr in moving third-
Slide 15: ARO Drilling Joint Venture
ARO Drilling Joint Venture 50/50 joint venture with Saudi Aramco, the largest customer for jackups in the world • ARO Drilling is expected to generate $160 – $180 million of EBITDA in 2019, of which Valaris recognizes 50% of net EBITDA earnings Generation • Nine leased rigs contribute additional rev
Slide 16: Value Proposition
Value Proposition Illustrative Rig-Level $ Million Annual EBITDA Asset Values2 Scenarios1 Replace- Fleet M H Net ment Highest Specification Drillships3 (11) $422 $1,305 $3,358 $5,304 Heavy Duty Ultra-Harsh & HE Jackups3 (13) 273 569 1,803 4,002 Modern Heavy & Standard Duty Jackups3 (25) 274 798 2,81
Slide 17: Financial Management
Financial Management 17
Slide 18: Limited Debt Maturities Through 2024
Limited Debt Maturities Through 2024 $ millions $1,764 $1,401 $850 $1,000 $850 $695 $621 $914 $400 $300 $201 $123 $114 $112 $353 2019 2020 2021 2022 2023 2024 2025 2026 2027 2040 2042 2044 Unsecured Senior Notes Convertible Notes Note: All amounts as of June 30, 2019 pro forma for tender offers comp
Slide 19: While Cash Flow Does Not Cover Costs at This Stage of the Cycle ...
While Cash Flow Does Not Cover Costs at This Stage of the Cycle ... Illustrative Annual Illustrative Rig-Level Annual EBITDA Scenarios3 Cash Uses $3,993 million $1,305 • Other non-recurring uses: ‒ Newbuild capex ~$250M $569 Cash Breakeven Scenario Utilization Day Rate ‒ Debt maturities HS Drillship
Slide 20: EBITDA is Cyclical and Currently in Process of Troughing
EBITDA is Cyclical and Currently in Process of Troughing Global Fleet Utilization Valaris Pro Forma EBITDA1 ($B) 100% 90% +70 rigs 34 months 80% +82 rigs 28 months +118 rigs +195 rigs $3.9 70% +53 rigs 22 months 40 months $3.5 $3.7 17 months $3.0 $2.9 $2.0 60% +78 rigs $1.7 $1.9 +103 rigs $1.3 17 mo
Slide 21: High-Quality Fleet Provides Significant Asset Coverage to Raise Capital
High-Quality Fleet Provides Significant Asset Coverage to Raise Capital to Cover Interim Funding Gaps $ billions $25.9 • Largest fleet in the $24.4 offshore drilling sector; majority of rigs are $9.3 modern, high- $9.8 specification assets $0.3 $0.6 $5.3 $4.8 $11.2 • Rig fleet provides $3.7 $2.8 mea
Slide 22: Unsecured Capital Structure Provides Flexibility to Raise Capital
Unsecured Capital Structure Provides Flexibility to Raise Capital Financial Levers Comparison to Peers2 • Liquidity % of % of Total Debt Unsecured % of – Cash & short-term investments Unsecured ($ billion) Non- Secured – $2.3B revolving credit facility1 Guaranteed Guaranteed Transocean $9.8 40% 24%
Slide 23: Operational Highlights
Operational Highlights 23
Slide 24: Operational Excellence
Operational Excellence Consistent Operational Results Industry-Leading Customer Satisfaction Fleet-Wide Operational Effectiveness 99% 99% 99% 99% 98% 98% 2016 2017 2018 Ensco Rowan • Achieved nearly 100% operational • Won 10 of 17 categories in latest survey2 effectiveness for the past three years ‒
Slide 25: Innovation & Technology
Innovation & Technology Strategy Drilling Process Efficiency • Continuous Tripping Technology™ is a patented • Focused efforts on system that fully automates the pipe tripping process technology, systems and without stopping to make or break connections, processes to differentiate our enabling 3x fa
Slide 26: Global Reach and Geographic Diversity
Global Reach and Geographic Diversity • Presence in virtually all major offshore regions • Critical mass of highest-specification drillships well positioned to serve major deepwater basins of West Africa, South America and Gulf of Mexico • Versatile semisubmersible fleet capable of meeting a wide ra
Slide 27: Fleet Management Strategy
Fleet Management Strategy Marketed Rigs • Win new contracts for marketed rigs, prioritizing assets that are active with near- term availability • Manage time between contracts by winning new work to bridge gaps in utilization • Reduce costs during uncontracted periods • Divest non-core rigs upon com
Slide 28: Merger Integration and Synergies
Merger Integration and Synergies Targeted Synergies Progress to Date • $165 million of run rate annual • More than 50% of integration- expense synergies related activities completed – G&A and other support costs – 65% of planned staffing reductions – Regional office consolidation – Houston and Aberd
Slide 29: Appendix
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Slide 30: Global Rig Fleet
Global Rig Fleet Floaters Jackups • ~35 floaters1 could be Delivered Rigs candidates for retirement based Under Contract 134 330 on age and contract expirations Future Contract 26 44 Idle / Stacked 34 72 • ~150 jackups1 could be retired Marketed Fleet 194 446 Non-Marketed 46 73 as expiring contracts
Slide 31: Retirements Expected to Lead to Future Supply Contraction
Retirements Expected to Lead to Future Supply Contraction Illustrative Floater Supply • Further floater retirements -16 129 floaters retired since 3Q14 expected to offset newbuild 23 240 5 -11 deliveries -6 >30yrs idle 235 27 Other Build in Brazil Newbuilds w/o future contract >30yrs rolling off 15-
Slide 32: Boldly First
Boldly First