On November 7, 2023, Valaris Ltd (VAL, Financial) released its third quarter 2023 earnings report, revealing a notable improvement in its financial performance. The company reported a net income of $17 million, a significant turnaround from a net loss of $27 million in the second quarter of 2023. The Adjusted EBITDA also rose to $40 million from $15 million in the previous quarter.
Financial and Operational Highlights
Valaris Ltd (VAL, Financial) reported a revenue efficiency of 94% during the quarter and 97% year to date. The company was recognized by the Center for Offshore Safety with its 2023 Safety Leadership Award for the Valaris Basic Training program. Moreover, the company executed a $400 million add-on to Senior Secured Second Lien Notes to finance the expected exercise of purchase options for newbuild drillships VALARIS DS-13 and DS-14.
Third Quarter Review
Revenues increased to $455 million from $415 million in the second quarter 2023. The increase was primarily due to two jackups and one floater commencing contracts during the quarter after not working in the second quarter, as well as an increase in average daily revenue for both the floater and jackup fleets. Contract drilling expense increased to $391 million from $374 million in the second quarter 2023.
Third Quarter Segment Review
Floater revenues increased to $243 million from $227 million in the second quarter 2023. The increase was primarily due to VALARIS DS-17 commencing its contract with Equinor offshore Brazil in early September, following its reactivation, as well as an increase in average daily revenue for the rest of the floater fleet during the third quarter.
Jackup revenues increased to $166 million from $145 million in the second quarter 2023. Revenues from the jackup fleet benefited from contract startups for VALARIS 121 and 249, as well as several rigs commencing new contracts at higher day rates.
ARO Drilling revenues increased to $122 million from $118 million in the second quarter 2023 primarily due to more operating days resulting from less out of service time for planned maintenance during the third quarter.
Outlook
Valaris Ltd (VAL, Financial) remains on track to deliver on its 2023 share repurchase target of $200 million. The company's CEO, Anton Dibowitz, expressed confidence in the strength and duration of the upcycle, expecting to deliver meaningfully improved earnings in both 2024 and 2025.
Explore the complete 8-K earnings release (here) from Valaris Ltd for further details.
