Valaris Limited (NYSE: VAL) (“Valaris” or the “Company”) announced new contracts and contract extensions, with associated contract backlog of approximately $1.14 billion, awarded subsequent to issuing the Company’s most recent fleet status report on November 1, 2023. Contract backlog excludes lump sum payments such as mobilization fees and capital reimbursements.
President and Chief Executive Officer Anton Dibowitz said, “We are delighted to announce these contract awards and extensions, which add well over $1 billion of contract backlog at attractive economics, providing further evidence of the positive outlook for Valaris. These awards include two multi-year drillship contracts and several jackup contracts across the North Sea, Trinidad, and Australia.”
Dibowitz added, “The contract awards for VALARIS DS-4 and VALARIS DS-16 are great examples of how we are executing on the operating leverage inherent in our business, with day rates transitioning from legacy rates in the low $200,000s to market rates. We are also beginning to see early signs of a recovery in the North Sea jackup market from 2025 as evidenced by several awards at improving day rates.”
Floater Contract Awards
- A previously announced 1,064-day contract for drillship VALARIS DS-4 with Petrobras offshore Brazil. Based on the firm contract term, the total contract value is approximately $519 million, inclusive of mobilization fees and additional services. The contract is anticipated to commence late in the fourth quarter 2024, following completion of the rig’s current contract with Petrobras, which is expected to finish in September 2024. Upon completion of its current contract, the rig is expected to be out of service for approximately 90 days to complete customer-required capital upgrades prior to commencement of the new contract.
- Two-year contract extension with Anadarko Petroleum Corporation (a wholly owned subsidiary of Occidental) in the U.S. Gulf of Mexico for drillship VALARIS DS-16, commencing in June 2024 in direct continuation of the existing firm program. This extension replaces the one-year priced option which was agreed in July 2021. An additional day rate will be charged when MPD services are provided.
- 60-day priced option exercised by Equinor offshore Brazil for drillship VALARIS DS-17. The 60-day option is expected to commence in March 2025 in direct continuation of the existing firm contract. The operating day rate for the priced option period is approximately $447,000 including MPD and additional services.
Jackup Contract Awards
- Three-year contract extension with Harbour Energy in the UK North Sea for heavy duty harsh environment jackup VALARIS 120. The extension period is expected to commence in the third quarter 2025 in direct continuation of the existing firm program.
- A rig contract with TotalEnergies in the UK North Sea for heavy duty ultra-harsh environment jackup VALARIS Stavanger. The contract is expected to commence in March 2024 and has an estimated duration of 330 days excluding options. The approximate total contract value is $48 million including minor rig modifications.
- Two one-well priced options exercised by Shell in the UK North Sea for heavy duty harsh environment jackup VALARIS 121. The options are expected to commence in the summer of 2024, in direct continuation of the existing firm program, and have an estimated duration of 406 days. The priced option periods have an estimated total contract value of approximately $55 million.
- One-well contract with Ithaca Energy in the UK North Sea for heavy duty harsh environment jackup VALARIS 123. The contract is expected to commence in April 2024 and has an estimated duration of between 45 and 72 days. The minimum total contract value is $6.3 million.
- One well contract with Eni for heavy duty ultra-harsh environment jackup VALARIS 247. The contract is expected to commence in the third quarter 2024 in direct continuation of the rig’s current program, with another operator, and has a minimum duration of 45 days. The operating day rate is $180,000.
- One-well option exercised by an undisclosed operator offshore Trinidad for heavy duty ultra-harsh environment jackup VALARIS 249. The one-well option will extend the firm term of the contract by a minimum of 35 days. The operating day rate for the option period is $137,500.
- 300-day contract with an undisclosed operator offshore Trinidad for heavy duty ultra-harsh environment jackup VALARIS 249. The contract is expected to commence in the fourth quarter 2024 in direct continuation of a program with another operator. The operating day rate is $162,500.
- In conjunction with the above-mentioned contract extension and award for VALARIS 249, a previously disclosed one-well contract with the same operator offshore Australia for VALARIS 107 has been terminated. The terminated contract was expected to commence in the first quarter 2024 with an estimated duration of 60 days. The operating day rate for the terminated contract was $120,000.
Other Fleet Status Updates
- Drillship VALARIS DS-8 commenced a previously disclosed three-year contract with Petrobras offshore Brazil on December 31, 2023. The backlog associated with this contract is not included in the above-mentioned incremental backlog that has been awarded since the Company’s most recent fleet status report.
- As previously announced, Valaris has exercised its options and taken delivery of newbuild drillships VALARIS DS-13 and DS-14 for an aggregate purchase price of approximately $337 million. The rigs are being mobilized from South Korea to Las Palmas, Spain, where they will be stacked until they are contracted for work.
