DRILLING MARKETS & LEADERSHIP
doing these types of upgrades, which is
something where we need the operator’s
support. In today’s market and with higher inter-
est rates, the cost of capital is meaning-
fully higher. Reducing emissions intensity
is very important to us, as well as to our
customers, and we want to do our part
in helping them to provide responsible
energy to the world, but we have to be very
disciplined about where we allocate our
capital. How do you see that difficulty in
accessing capital impacting drilling
contractors now and in the future?
I think it’s clear that we’ll need to man-
age this business differently than how it
was managed before. Companies will have
to be much more disciplined about manag-
ing their balance sheets, which means not
speculatively building new rigs and not
speculatively reactivating rigs. Overall, we
have to be much more thoughtful about
bringing assets to the market.
Generally across the industry, that’s
exactly what we’re seeing so far. For our
own part, Valaris has said that we won’t
reactivate a rig unless we can generate a
meaningful return on the reactivation cost,
and that’s what we’ve done.
Can you talk about Valaris’ joint ven-
ture with Saudi Aramco, ARO Drilling?
What is your outlook for the drilling
market in Saudi Arabia, and what is
allowing such a large newbuild pro-
gram there? ARO Drilling has stated
that it’s committed to building 20 new
jackups over a 10-year period.
Saudi Aramco is the world’s largest user
of jackups in the world, and the Saudi mar-
ket for high-spec jackups continues to be
incredibly attractive.
Their newbuild program is focused as
much on fostering local content in the
Kingdom as it is on security of rig sup-
ply. The first two rigs of the ARO 20-rig
program, which are expected to be deliv-
ered before year-end, are being built in
the United Arab Emirates, but the next 18
are going to be built at the International
Maritime Industries’ yard in Ras Al Khair in
the Kingdom. That’s going to be the world’s
Valaris recently started deploying NOV’s ATOM RTX system in Brazil. The system
uses robotic arms to perform a variety of tasks on the drill floor.
second-largest rig yard when it’s completed
and will contribute toward supporting local
jobs and the building of local capabilities.
Each newbuild will also be built against
16 years of contract term – you just don’t
see that anywhere else in the world.
Economically speaking, these rig projects
not only make sense but are highly attrac-
tive. It’s definitely exciting for Valaris to be
able to partake in the amazing growth
story going on there. DC
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