HAMILTON, Bermuda, August 05, 2026--(BUSINESS WIRE)--Valaris Limited (NYSE: VAL) ("Valaris" or the "Company") today reported second quarter 2026 results.
President and Chief Executive Officer Anton Dibowitz said, "I want to thank our teams across the organization for their unwavering commitment to safe, reliable and efficient operations. Together we delivered another quarter of strong performance, highlighted by revenue efficiency of 98% and the successful startup of two drillships. These achievements helped drive solid financial results despite the impact of the ongoing conflicts in the Middle East."
Dibowitz added, "We successfully returned VALARIS DS-12 and DS-10 to work on schedule and on budget during the second quarter. With two additional drillships set to commence new contracts before year-end, these rig startups, together with continued strong operational execution across our fleet, are expected to drive further improvement in our financial performance over the remainder of the year."
Dibowitz concluded, "We remain positive on the outlook for offshore drilling. The pipeline of deepwater contract opportunities remains robust, and we expect to see further awards across the industry, supported by favorable market fundamentals and strong customer demand for high-specification assets. We are also excited about the pending business combination with Transocean, which is on track to close in the fourth quarter of 2026. The combination is expected to deliver meaningful value to our shareholders through anticipated synergies and the enhanced capabilities of the combined company."
Financial and Operational Highlights
Total operating revenues of $539 million and net income of $47 million
Adjusted EBITDA of $97 million, which includes approximately $30 million of negative impacts from the Middle East conflicts
Revenue efficiency of 98% during the quarter and year to date
Successful startup of drillships VALARIS DS-12 and DS-10 for new contracts
Added more than $160 million of backlog for the North Sea jackup fleet, further enhancing Valaris' industry-leading contract coverage for jackups across 2026 and 2027
High-graded the fleet through the sale of long-term stacked jackups VALARIS 104 and 109 in June and July 2026, respectively, for total cash proceeds of $74 million
Second Quarter Review
Net income of $47 million compared to net loss of $18 million in the first quarter 2026. Net income included a gain on the sale of assets of $38 million compared to a loss of $2 million in the first quarter. Adjusted EBITDA of $97 million compared to $67 million in the first quarter 2026.
Revenues exclusive of reimbursable items increased to $502 million from $430 million in the first quarter 2026, primarily due to more operating days for the floater fleet as three drillships recently commenced new contracts, with one commencing late in the first quarter and the other two during the second quarter.
Contract drilling expenses exclusive of reimbursable items increased to $380 million from $340 million in the first quarter 2026, primarily due to incremental operating costs associated with the three drillships that recently commenced new contracts, higher repair and maintenance costs largely associated with planned shipyard projects, and a full quarter of higher costs to maintain insurance coverage for war-related risks for jackups that Valaris operates in the Middle East. These items were partially offset by the reversal of a previously recognized bad debt expense following the collection of long-outstanding customer invoices.
General and administrative expenses increased to $27 million from $25 million in the first quarter 2026.
Merger and integration expenses, which are primarily related to professional fees incurred in connection with the pending business combination with Transocean, decreased to $11 million from $14 million in the first quarter 2026.
Other income of $30 million compared to other expense of $10 million in the first quarter 2026, primarily due to a gain on the sale of jackup VALARIS 104.
Tax expense increased to $34 million from $28 million in the first quarter 2026. The second quarter tax provision included a $6 million discrete tax benefit and the first quarter tax provision included a $2 million discrete tax expense, which were primarily related to the resolution of prior period tax matters. Adjusted for these items, tax expense increased to $40 million from $26 million in the first quarter due to higher income before tax and a change in the jurisdictional mix of income.
Capital expenditures increased to $106 million from $101 million in the first quarter 2026.
Cash and cash equivalents decreased to $541 million as of June 30, 2026, from $578 million as of March 31, 2026, primarily due to capital expenditures, partially offset by cash flow from operations and proceeds from asset sales.
Conflicts in the Middle East
The ongoing conflicts in the Middle East negatively impacted Adjusted EBITDA by approximately $30 million compared to $8 million in the first quarter, primarily due to a full quarter of higher costs to maintain insurance coverage for war-related risks for jackups operated by Valaris in the region, as well as incremental costs and lower revenues associated with project delays for VALARIS 250 and 116, which were undergoing planned maintenance and contract preparation projects in shipyards located in the region.
Based on information currently available, we expect these adverse impacts to moderate in the second half of 2026, as VALARIS 250 recommenced its bareboat charter contract in July and VALARIS 116 is expected to recommence its bareboat charter in the third quarter. In addition, insurance costs to maintain war-related coverage are expected to be lower than those incurred in the first half of the year primarily due to the sale of VALARIS 104 and lower premiums from securing longer term coverage.
Second Quarter Segment Review
Floaters
Revenues exclusive of reimbursable items increased to $279 million from $193 million in the first quarter 2026, primarily due to more operating days for VALARIS DS-17, DS-12 and DS-10, as DS-17 commenced a new contract late in the first quarter and DS-12 and DS-10 commenced new contracts during the second quarter.
Contract drilling expenses exclusive of reimbursable items increased to $168 million from $151 million in the first quarter 2026, primarily due to incremental operating costs associated with the three drillships that recently commenced new contracts. This was partially offset by the reversal of a previously recognized bad debt expense following the collection of long-outstanding customer invoices.
Jackups
Revenues exclusive of reimbursable items decreased to $183 million from $196 million in the first quarter 2026, primarily due to fewer operating days for VALARIS 117, which completed its contract early in the second quarter and began planned maintenance and contract preparations in the shipyard, as well as lower average daily revenues driven by lower day rate accommodation services provided by certain North Sea jackups.
Contract drilling expenses exclusive of reimbursable items increased to $144 million from $129 million in the first quarter 2026, primarily due to higher repair and maintenance costs, largely attributable to planned maintenance for VALARIS 117 and leg repairs for VALARIS 106, as well as a full quarter of higher costs to maintain insurance coverage for war-related risks for jackups operated by Valaris in the Middle East.
ARO Drilling
Revenues of $127 million were in line with the first quarter 2026. Contract drilling expenses decreased to $72 million from $75 million in the first quarter, primarily due to adjustments recorded by ARO in connection with the current quarter finalization of its 2025 financial statements. This was partially offset by higher repair and maintenance costs for rigs undergoing shipyard projects and higher personnel costs.
Other
Revenues exclusive of reimbursable items decreased to $40 million from $42 million in the first quarter 2026. Contract drilling expenses exclusive of reimbursable items increased to $27 million from $23 million in the first quarter, primarily due to planned maintenance and contract preparation projects for VALARIS 250 and 116, as well as a full quarter of higher costs to maintain insurance coverage for war-related risks for those rigs.
Three Months Ended | |||||||||||||||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||||||||||||||
Floaters | Jackups | ARO (1) | Other | Reconciling Items (1)(2) | Consolidated Total | ||||||||||||||||||||||||||||||||||||||
(in millions of $, except %) | Q2 | Q1 | Chg | Q2 | Q1 | Chg | Q2 | Q1 | Chg | Q2 | Q1 | Chg | Q2 | Q1 | Q2 | Q1 | Chg | ||||||||||||||||||||||||||
Operating revenues: | |||||||||||||||||||||||||||||||||||||||||||
Revenues (exclusive of reimbursable revenues) | $ | 279.0 | $ | 192.6 | 45 | % | $ | 183.4 | $ | 195.8 | (6 | )% | $ | 126.9 | $ | 127.4 | — | % | $ | 39.9 | $ | 41.7 | (4 | )% | $ | (126.9 | ) | $ | (127.4 | ) | $ | 502.3 | $ | 430.1 | 17 | % | |||||||
Reimbursable revenues | 11.0 | 5.0 | 120 | % | 13.8 | 14.4 | (4 | )% | — | — | — | % | 12.1 | 15.9 | (24 | )% | — | — | 36.9 | 35.3 | 5 | % | |||||||||||||||||||||
Total operating revenues | 290.0 | 197.6 | 47 | % | 197.2 | 210.2 | (6 | )% | 126.9 | 127.4 | — | % | 52.0 | 57.6 | (10 | )% | (126.9 | ) | (127.4 | ) | 539.2 | 465.4 | 16 | % | |||||||||||||||||||
Operating expenses | |||||||||||||||||||||||||||||||||||||||||||
Contract drilling expenses (exclusive of depreciation and reimbursable expenses) | 167.9 | 150.6 | (11 | )% | 143.9 | 128.8 | (12 | )% | 71.6 | 75.1 | 5 | % | 27.4 | 22.7 | (21 | )% | (30.4 | ) | (36.8 | ) | 380.4 | 340.4 | (12 | )% | |||||||||||||||||||
Reimbursable expenses | 10.5 | 4.9 | (114 | )% | 12.7 | 13.2 | 4 | % | — | — | — | % | 11.9 | 14.9 | 20 | % | — | — | 35.1 | 33.0 | (6 | )% | |||||||||||||||||||||
Total contract drilling expenses (exclusive of depreciation) | 178.4 | 155.5 | (15 | )% | 156.6 | 142.0 | (10 | )% | 71.6 | 75.1 | 5 | % | 39.3 | 37.6 | (5 | )% | (30.4 | ) | (36.8 | ) | 415.5 | 373.4 | (11 | )% | |||||||||||||||||||
Depreciation | 17.2 | 15.7 | (10 | )% | 16.2 | 16.5 | 2 | % | 22.0 | 24.9 | 12 | % | 6.1 | 6.2 | 2 | % | (16.9 | ) | (20.6 | ) | 44.6 | 42.7 | (4 | )% | |||||||||||||||||||
General and admin. | — | — | — | % | — | — | — | % | 10.6 | 7.1 | (49 | )% | — | — | — | % | 16.6 | 18.2 | 27.2 | 25.3 | (8 | )% | |||||||||||||||||||||
Merger and integration expenses | — | — | — | % | — | — | — | % | — | — | — | % | — | — | — | % | 11.4 | 13.6 | 11.4 | 13.6 | 16 | % | |||||||||||||||||||||
Other operating income | — | (2.8 | ) | nm | — | — | — | % | — | — | — | % | — | — | — | % | — | — | — | (2.8 | ) | nm | |||||||||||||||||||||
Total operating expenses | 195.6 | 168.4 | (16 | )% | 172.8 | 158.5 | (9 | )% | 104.2 | 107.1 | 3 | % | 45.4 | 43.8 | (4 | )% | (19.3 | ) | (25.6 | ) | 498.7 | 452.2 | (10 | )% | |||||||||||||||||||
Equity in earnings of ARO | — | — | — | % | — | — | — | % | — | — | — | % | — | — | — | % | 10.6 | 6.8 | 10.6 | 6.8 | 56 | % | |||||||||||||||||||||
Operating income | $ | 94.4 | $ | 29.2 | 223 | % | $ | 24.4 | $ | 51.7 | (53 | )% | $ | 22.7 | $ | 20.3 | 12 | % | $ | 6.6 | $ | 13.8 | (52 | )% | $ | (97.0 | ) | $ | (95.0 | ) | $ | 51.1 | $ | 20.0 | 156 | % | |||||||
Net income (loss) | $ | 94.1 | $ | 28.3 | 233 | % | $ | 60.7 | $ | 51.6 | 18 | % | $ | 14.8 | $ | 7.4 | 100 | % | $ | 7.9 | $ | 14.6 | (46 | )% | $ | (130.5 | ) | $ | (119.9 | ) | $ | 47.0 | $ | (18.0 | ) | nm | |||||||
Adjusted EBITDA | $ | 111.6 | $ | 42.1 | 165 | % | $ | 40.6 | $ | 68.2 | (40 | ... |