Slide 1: Investor Presentation August 2023
VALARIS (NYSE: VAL) Investor Presentation August 2023
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 • Largest and highest specification fleet in the industry with exposure to both floaters and jackups Leading • Presence and scale in key offshore basins, with deep customer relationships Offshore Driller • Strong balance sheet pr
Slide 4: Leading Offshore Driller
Leading Offshore Driller FOCUSED | VALUE DRIVEN | RESPONSIBLE - as el ie "qt VALARIS
Slide 5: Largest fleet of modern offshore drilling rigs in the industry
Largest fleet of modern offshore drilling rigs in the industry 11 Drillships1 5 Semisubmersibles Average age 8 years Average age 11 years 12 HD Ultra-Harsh & Harsh 21 HD & SD Modern Jackups2 2 SD Legacy Jackups2 Jackups2 Average age 14 years Average age 14 years Average age 41 years 1 Excludes newbu
Slide 6: Largest fleet of high-specification assets
Largest fleet of high-specification assets Fleet Quality of Major International Offshore Drillers Floaters Avg. Age1 2 Transocean 38 12 Valaris 28 16 6 1 51 Noble 19 10 Transocean 12 12 6 8 38 Valaris 2 16 9 3 Seadrill 14 11 Shelf 7 6 16 7 36 Diamond 12 27 Q1 Q2 Q3 Q4 Noble 18 11 2 1 32 Jackups Borr
Slide 7: Strong customer relationships with major IOCs, NOCs and independents
Strong customer relationships with major IOCs, NOCs and independents 1 1 Majors National Oil Companies and Other Select Customers Floaters Jackups Locations Floaters Jackups Locations ✓ ✓ Latin America, Mediterranean, Southeast Asia ✓ 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 11 North Sea & Norway 7% 2 3 U.S. GOM & Mexico 5 1 20% 1 Middle East 47% 12% 2 7% West Africa Southeast Asia 2 % share of expected floater 11% demand over next five years1 4% 12% 12 % share of expected jackup demand over next fiv
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 and operates jackups in Saudi Arabia, providing a strategic partnership with the largest customer for jackups in the world • 50% Equity Owners
Slide 10: Reduce emissions from our own operations and partner with customers
Reduce emissions from our own operations and partner with customers Reduce Emissions from our own Operations • Target to reduce emissions intensity by 10% to 20% by 2030 compared to a 2019 baseline • Four focus areas identified to achieve this target: 1. Energy Efficient Practices 2. Energy-Saving U
Slide 11: Strong balance sheet provides capital allocation flexibility
Strong balance sheet provides capital allocation flexibility Net Debt1 ($M) • Refinancing and revolving credit facility (123) (107) 335 449 1,295 1,549 6,413 transaction, executed in April 2023, enhances capital structure 7,447 ‒ New $375M revolving credit facility 1,800 1,439 ‒ New $700M 2L notes r
Slide 12: Strong Industry Fundamentals
Strong Industry Fundamentals 12
Slide 13: Commodity supply and demand is constructive for our industry
Commodity supply and demand is constructive for our industry Global Liquid Fuels Consumption (Million Barrels Per Day) Offshore Breakeven Oil Prices for Undeveloped Reserves 105 100% 100 25 100 83% of undeveloped reserves estimated to 87% 88% 90% 90 95 be profitable at $65/bbl 83% Demand for 80% hyd
Slide 14: Offshore upstream capex and new project sanctioning are expected to increase
Offshore upstream capex and new project sanctioning are expected to increase Offshore Upstream Capex ($B) • Record free cash flows in 2022 for +16% +4% exploration and production companies and 198 191 attractive project economics are expected to 164 140 138 95 97 drive increased investment in offsho
Slide 15: 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 Floater Demand by Wellbore Purpose (Rig Years) • Floater demand is expected to increase at a 200 +7% compound annual growth rate (CAGR) of 7% 138 147 through 2026 150 134 124 107 107 112 • Approximately two-thirds of fl
Slide 16: 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 17: Active utilization currently >90% for drillships and benign environment jackups
Active utilization currently >90% for drillships and benign environment jackups 6/7G Time Stacked – Available and Cold Stacked Rigs 6/7G Harsh Benign Delivered Rigs Benign Drillships1 2 Jackups 2 Jackups 2 Semis Drillships Benign Semis Contracted 73 24 27 376 1 2 2 4 Available 3 6 6 7 22 1 1 Active
Slide 18: Supply dynamics are supportive of a sustained upcycle
Supply dynamics are supportive of a sustained upcycle Floaters • Benign environment floater supply has declined by 44% to 156 from a peak of 281 in late 2014 • Available capacity is shrinking: ‒ Only 10 competitive1 warm or cold stacked drillships remaining, including VALARIS DS-11 ‒ Only 8 newbuild
Slide 19: Day rates have increased meaningfully since early 2021
Day rates have increased meaningfully since early 2021 2 Day Rates for 6th & 7th Generation Drillship Fixtures 1 Day Rates for Benign Environment Jackup Fixtures $500,000 $150,000 $450,000 73% $400,000 $125,000 $350,000 $300,000 $100,000 $250,000 $200,000 $75,000 $150,000 $100,000 $50,000 Jan-20 Jan
Slide 20: Earnings and Cash Flow Growth
Earnings and Cash Flow Growth 20
Slide 21: Significant earnings and cash flow growth expected over the next few years
Significant earnings and cash flow growth expected over the next few years • Most of Valaris’ floater fleet currently on legacy day rate contracts in the low to mid $200s Rigs Recontracting • Leading edge floater day rates are in the mid to high $400s at Higher Day Rates • Eight floaters expected to
Slide 22: 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 2023 2024 2025 Repricing Opportunity Avg. Day Rate in Rig Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Contract Backlog1 DS-17 Reactivation startups at $414,000 DS-8 recent market rates DS-7 DS-10 DS-15 < 12 Months $22
Slide 23: Drillship reactivations provide a compelling return at current market rates
Drillship reactivations provide a compelling return at current market rates Reactivation Overview Reactivation Example • Disciplined approach to reactivations – rigs only VALARIS DS-7 3Q23 reactivated for opportunities expected to provide a meaningful return over initial contract term Reactivation C
Slide 24: Additional operating leverage from purchase options on two newbuild drillships
Additional operating leverage from attractive purchase options on two newbuild drillships Given the strong market outlook, we intend to exercise the purchase VALARIS DS-13 and DS-14 options for DS-13 and DS-14 • Among the highest specification drillships in the global fleet • Both rigs equipped with
Slide 25: Significant earnings potential and cash flow from Valaris fleet
Significant earnings potential and cash flow from Valaris fleet Rigs Under Illustrative Annual Earnings and Cash Flow from Valaris Fleet1 Total Rigs Contract or with Future Contract Illustrative Scenario A B C 11 10 6th / 7th Gen Drillship Day Rates $400K $450K $500K 5 3 Benign Semisubmersible Day R
Slide 26: Value-driven approach to capital allocation
Value-driven approach to capital allocation 1 • Provides capital allocation flexibility Maintain a Strong Balance Sheet • Recent refinancing and revolving credit facility transaction enhanced capital structure and liquidity 2 Pursue Accretive • Near-term investments in our fleet expected to generate
Slide 27: Valaris is well positioned to deliver meaningful value to shareholders
Valaris is well positioned to deliver meaningful value to shareholders • Largest and highest specification fleet in the industry with exposure to both floaters and jackups Leading • Presence and scale in key offshore basins, with deep customer relationships Offshore Driller • Strong balance sheet pr
Slide 28: Appendix
Appendix FOCUSED | VALUE DEN | RESPONSIBLE “ES? Fea A "y VALARIS
Slide 29: Contract Backlog as of August 1, 2023
Contract Backlog as of August 1, 2023 Contract Backlog (1) (2) ($ millions) 2023 2024 2025+ Total Contracted Days (1) (2) 2023 2024 2025+ Contract Backlog by Drillships $ 300.4 $ 741.7 $ 642.8 $ 1,684.9 Drillships 1,142 2,189 1,655 Customer Type Semis 115.0 144.1 13.3 272.4 Semis 459 627 59 Floaters
Slide 30: 3Q 2023 and Full Year 2023 Guidance as of August 2, 2023
3Q 2023 and Full Year 2023 Guidance as of August 2, 2023 • The below table shows our 3Q and FY 2023 guidance as of our second quarter conference call on August 2, 2023 (highlighted green row at bottom of table) • For reconciliation purposes, the table also shows our 3Q and FY 2023 guidance before th
Slide 31: 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% 50% Ownership Ownership Valaris operates one jackup offshore Saudi Arabia outside of ARO Drilling joint venture1 $403M $419M Shareholder Shareholder Notes Receivable Notes Receivable Leased Jackups (9) Owned
Slide 32: Non-GAAP Reconciliations
Non-GAAP Reconciliations (In millions) Year-Ended December 31, ARO 2022 Net income $ 20.7 Add (subtract): Income tax expense 3.8 Other expense, net 11.1 Operating income $ 35.6 Add (subtract): Depreciation expense 63.4 EBITDA $ 99.0 The Company is not able to provide a reconciliation of forward- loo
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