Valaris has reported second quarter 2025 results.
President and Chief Executive Officer Anton Dibowitz said, 'I am very proud of the entire Valaris team for delivering another quarter of strong operational and financial performance, with revenue efficiency of 96% contributing to meaningful EBITDA and free cash flow for the quarter.'
Dibowitz added, 'Since reporting our first quarter results, we have secured new contracts with associated revenue backlog of more than $1.0 billion, increasing our total backlog to approximately $4.7 billion. These awards include attractive contracts for three 7th generation drillships, and we have now secured work for three of our four drillships with near-term availability. These awards demonstrate the quality of our fleet, the strength of our operations and the consistent execution of our commercial strategy.'
Dibowitz concluded, 'As expected, the pipeline of floater opportunities we have discussed in recent quarters are converting into contracts, and we anticipate additional awards across the industry in the coming months. Given our high-specification fleet, proven operating track record and continued focus on execution and cost discipline, Valaris is well positioned to capitalize on these opportunities and deliver long-term value for our shareholders.'
Financial and Operational Highlights
- Total operating revenues of $615 million, with revenue efficiency of 96%;
- Net income of $114 million;
- Adjusted EBITDA of $201 million;
- Cash from operating activities of $120 million and Adjusted Free Cash Flow of $63 million;
- Strong safety performance, including no Lost Time Incidents (LTI) through the first half of 2025;
- Secured over $1.0 billion of new contract backlog since April's fleet status report, including attractive contract awards for 7th generation drillships VALARIS DS-15, DS-16 and DS-18, increasing total backlog to approximately $4.7 billion; and
- Agreed to sell jackup VALARIS 247 for cash proceeds of approximately $108 million.
Second Quarter Review
Net income of $114 million compared to net loss of $39 million in the first quarter 2025. Net income included tax expense of $32 million compared to $194 million in the first quarter. Adjusted EBITDA of $201 million compared to $181 million in the first quarter.
Revenues exclusive of reimbursable items decreased to $572 million from $578 million in the first quarter 2025 primarily due to fewer operating days and lower amortized revenue for the floater fleet, partially offset by more operating days and higher average daily revenue for the jackup fleet.
Exclusive of reimbursable items, contract drilling expense decreased to $355 million from $374 million in the first quarter 2025 primarily due to a favorable arbitration outcome related to previously disclosed patent license litigation, which led to a $17 million accrual reversal, as well as lower amortized expense for the floater fleet and a reduction in costs associated with three retired semisubmersibles that were sold for recycling during the quarter. These were partially offset by higher costs related to more operating days for the jackup fleet.
During the first quarter 2025, there was a loss on impairment of $8 million related to the Company's decision to retire semisubmersibles VALARIS DPS-3, DPS-5 and DPS-6.
General and administrative expense decreased to $19 million from $24 million in the first quarter 2025 due to a $7 million benefit from the favorable arbitration outcome that resulted in the recovery of legal costs incurred in prior quarters.
Other expense of $18 million compared to other income of $11 million in the first quarter 2025 primarily due to a gain on the sale of jackup VALARIS 75 in the first quarter.
Tax expense decreased to $32 million from $194 million in the first quarter 2025 primarily due to $167 million of discrete tax expense in the first quarter. Excluding discrete items, tax expense increased to $32 million from $27 million in the first quarter due to a change in the jurisdictional mix of income compared to the first quarter.
Capital expenditures decreased to $67 million from $100 million in the first quarter 2025 primarily due to lower contract-specific upgrade costs associated with jackup VALARIS 144.
Cash and cash equivalents and restricted cash increased to $516 million as of June 30, 2025, from $454 million as of March 31, 2025. The increase was primarily due to cash flow from operations, partially offset by capital expenditures.
Results Compared to Prior Guidance
The Company's second quarter 2025 Adjusted EBITDA of $201 million exceeded guidance of $140 to $160 million due to strong operating results and the $24 million benefit from the favorable arbitration outcome noted above.
Second Quarter Segment Review
Floaters
Revenues exclusive of reimbursable items decreased to $320 million from $356 million in the first quarter 2025 primarily due to VALARIS DS-12 completing a contract late in the first quarter without follow-on work as well as lower amortized revenue associated with mobilization and capital upgrades for VALARIS DS-17, which completed its initial contract term late in the first quarter.
Exclusive of reimbursable items, contract drilling expense decreased to $176 million from $204 million in the first quarter 2025 primarily due to the favorable arbitration outcome, which led to a $17 million accrual reversal, lower amortized expense associated with VALARIS DS-17, a reduction in costs associated with VALARIS DPS-3, DPS-5 and DPS-6, that were sold for recycling during the quarter, and lower costs for VALARIS DS-12, which was warm stacked following completion of its previous contract.
Jackups
Revenues exclusive of reimbursable items increased to $212 million from $186 million in the first quarter 2025 primarily due to a full quarter of operations for VALARIS 144, which commenced a new long-term contract late in the first quarter. In addition, average daily revenue increased due to several rigs starting new contracts at higher day rates than those earned in the prior quarter.
Exclusive of reimbursable items, contract drilling expense increased to $124 million from $117 million in the first quarter 2025 primarily due to higher costs for VALARIS 144 associated with a full quarter of operations.
ARO Drilling
Revenues increased to $140 million from $135 million in the first quarter 2025 primarily due to higher average daily revenue resulting from the commencement of four long-term contract extensions at higher day rates than those earned in the prior quarter. Contract drilling expense increased to $96 million from $86 million in the first quarter primarily due to higher repair and maintenance costs and higher bareboat charter expense associated with the contract extensions noted above.
Other
Revenues exclusive of reimbursable items increased to $41 million from $36 million in the first quarter 2025 primarily due to higher bareboat charter revenue from rigs leased to ARO, resulting from the contract extensions noted above. Exclusive of reimbursable items, contract drilling expense increased to $17 million from $16 million in the first quarter.
Source: Valaris
