Valaris Q1 revenue falls 14% on fewer operating days

Overview

• Offshore drilling contractor's Q1 revenue fell 14% yr/yr as operating days declined

• Company posted Q1 net loss of $18 mln and adjusted EBITDA of $67 mln

Outlook

• Valaris expects a meaningful improvement in financial results through 2026

• Company says backlog at $4.9 bln supports future earnings and cash flow

• Valaris does not intend to provide future earnings guidance due to pending Transocean deal

Result Drivers

• FEWER OPERATING DAYS - Revenue fell due to fewer operating days across both floater and jackup fleets, with certain rigs undergoing contract preparation or experiencing idle periods

• MIDDLE EAST INSURANCE COSTS - Expenses rose due to higher insurance costs for war-related risks for jackups operating in the Middle East

• RIG PREPARATION AND IDLE TIME - Specific rigs such as VALARIS 106 had reduced revenue due to contract preparation activities and idle periods

Company press release: ID:nBwbcl334a

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 8 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the oil & gas drilling peer group is "buy."

• Wall Street's median 12-month price target for Valaris Ltd is $62.50, about 38.9% below its May 1 closing price of $102.23

• The stock recently traded at 22 times the next 12-month earnings vs. a P/E of 17 three months ago

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