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Valaris adds over $1 billion in new rig deals for drillships, jackups

Valaris has secured new contracts and extensions, with an associated contract backlog of approximately $1.14 billion, after issuing the company’s most recent fleet status report on 1 November 2023.

“We are delighted to announce these contract awards and extensions, which add well over $1 billion of contract backlog, providing further evidence of the positive outlook for Valaris,” said President and CEO Anton Dibowitz. “These awards include two multi-year drillship contracts and several jackup contracts across the North Sea, Trinidad and Australia.”

In addition to the previously announced 1,064-day contract for drillship VALARIS DS-4 with Petrobras offshore Brazil, they’ve also been awarded a two-year contract extension with Anadarko Petroleum Corporation in the US Gulf of Mexico for drillship VALARIS DS-16, with work expected to commence in June 2024.

“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 dayrates transitioning from legacy rates in the low $200,000s to market rates,” Mr Dibowitz added. “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.”

A 60-day priced option exercised by Equinor offshore Brazil for drillship VALARIS DS-17 is expected to begin in March 2025 in direct continuation of the existing firm contract. The operating dayrate for the priced option period is approximately $447,000 including MPD and additional services.

Among the various jackup contracts is a three-year extension with Harbour Energy in the UK North Sea for heavy-duty harsh environment jackup VALARIS 120. Work is expected to commence in Q3 2025 in direct continuation of the existing firm program.

Other contracts involving heavy-duty harsh environment jackups include deals with TotalEnergies for the VALARIS Stavanger, two one-well priced options exercised by Shell for the VALARIS 121 and a one-well contract with Ithaca Energy for the VALARIS 123, with all work taking place in the UK North Sea. These contracts are expected to begin in March 2024, the summer of 2024 and April 2024 respectively.

Moving away from the UK North Sea, Valaris announced a one-well contract with Eni for its heavy-duty ultra-harsh environment jackup VALARIS 247, as well as a one-well option and separate 300-day contract with an undisclosed operator offshore Trinidad for its heavy-duty ultra-harsh environment jackup VALARIS 249. The operating dayrate for each stand at $137,500 and $162,500.

In conjunction with the 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 Q1 2024 with an estimated duration of 60 days. The operating dayrate for the terminated contract was $120,000.

Rounding out the latest report included announcements that Drillship VALARIS DS-8 had commenced a previously disclosed three-year contract with Petrobras offshore Brazil on 31 December 2023. However, the backlog associated with this contract is not included in the aforementioned incremental backlog that has been awarded since its most recent fleet status report.

Finally, 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.

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