Valaris Limited (VAL) Business Profile

What it does

Valaris Limited provides offshore contract drilling services to oil and gas companies. Its rigs and crews drill and complete wells at sea for international oil companies, government-owned companies and independent operators. Founded in 1987, Valaris is headquartered in London and led by President and Chief Executive Officer Anton Dibowitz.

The company supplies the rig and personnel needed to perform drilling work, while the customer generally pays the costs of constructing the well and supporting the operation. Customers also bear the economic risk of whether a well is successful. Valaris can use its rigs for other work, including well interventions, plugging and abandonment, decommissioning, and carbon capture and sequestration projects.

As of February 20, 2026, Valaris owned 46 rigs: 13 drillships, two semisubmersible rigs and 31 jackup rigs. Drillships and semisubmersibles are grouped as floaters. Valaris also held a 50% interest in ARO, an unconsolidated joint venture with Saudi Aramco that owned an additional nine rigs.

Valaris operates across offshore markets in the Americas, Europe, the Middle East, Africa and Asia Pacific. As of December 31, 2025, its global workforce numbered approximately 5,070 people, including contractors. Most personnel worked on offshore rigs.

How it makes money

Valaris principally earns revenue by providing a drilling rig and crew under contracts that pay a daily rate. The rate can vary from the full rate to zero during the contract, depending on what the rig is doing. Lower rates generally apply during certain operational suspensions, equipment repairs or delays; a zero rate can apply after specified periods or while performance issues are remedied.

The company can also receive lump-sum fees or similar compensation for moving rigs to and from a job and for capital upgrades. Some contracts allow Valaris to recover certain increases in labor and other operating costs through rate adjustments or direct reimbursement. Customers generally pay substantially all well-construction and drilling-support costs and bear the risk of the well’s success.

The business has four operating segments. Floaters covers drillships and semisubmersible rigs; Jackups covers jackup rigs; ARO is the Saudi Aramco joint venture; and Other includes management services for rigs owned by third parties and activities associated with leasing rigs to ARO. Because ARO is unconsolidated, Valaris reflects its share of ARO’s earnings in its results rather than including the joint venture’s full operating results.

Contracts generally run for a specified period or for the time needed to drill one or more wells. Customers may have extension options, but they can also have early termination rights, including termination for convenience in some cases without an early termination payment. Contract backlog represents commitments under signed drilling contracts, calculated using contracted operating day rates and contract periods. Actual revenue and its timing can differ because of repairs, weather, terminations and other factors.

Customers and how it sells

Valaris sells drilling services to major international oil and gas companies, government-owned companies and independent operators. Contracts are negotiated with customers and most are awarded through competitive bidding. They can cover a fixed period or the drilling of one or more wells, with customer options to extend in some cases.

In FY2025, Petrobras accounted for 13.0% of revenue, BP for 12.0% and Azule Energy for 10.0%. Each was a customer accounting for at least 10% of consolidated revenue. The company’s contracts can allow customers to terminate early for operational reasons or, in certain cases, for convenience.

Valaris operates in the Gulf of America, South America, the North Sea, the Mediterranean, the Middle East, Africa and Asia Pacific. Non-U.S. operations accounted for 86% of consolidated revenue in the year ended December 31, 2025.

As of December 31, 2025, excluding a rig held for sale, 17 owned rigs were in Europe, 16 in the Middle East and Africa, eight in North and South America, and four in Asia and the Pacific Rim. Rig locations can change as equipment moves to drilling sites under contracts.

Suppliers and costs

Valaris pays the operating expenses of its rigs, including crew labor, incidental supplies and maintenance. It also incurs costs to move rigs, prepare them for contracts, reactivate equipment and carry out capital upgrades. Customers may reimburse some or all moving costs through an up-front payment, a higher day rate or direct reimbursement.

Inflation has increased personnel costs and the prices of goods and services needed to operate rigs and execute capital projects. Valaris expects costs to continue rising in the near term and cannot predict whether it will successfully recover higher costs under provisions in some long-term contracts. Its operating and maintenance costs do not necessarily move in proportion to operating revenue.

The company relies on vendors for equipment and services. Equipment or part shortages, supplier capacity constraints, production disruptions, quality issues and price increases can affect its business. Some vendors limit their pollution liability to a monetary cap, leaving Valaris responsible for liability above that cap.

Customers typically indemnify Valaris for most well-control events, but insurance coverage and contract indemnities vary. Valaris retains liability for risks not covered by insurance or customer indemnification.

Competitive position

Offshore contract drilling is highly competitive, and most drilling contracts are awarded through bids. Price is often the primary factor in an award, although customers also consider service quality, operational and safety performance, equipment suitability and availability, rig location, reputation and technical expertise.

Seadrill is another global offshore drilling contractor. Valaris has also agreed to be acquired by Transocean, subject to closing conditions; the agreement does not by itself complete the combination. Rigs can move between regions, and differences in rig supply and demand between most regions are generally short-term because of that mobility.

Valaris owned 46 rigs as of February 20, 2026, including drillships, semisubmersibles and jackups. Its operations span offshore markets across six continents. The company also has an interest in ARO, its joint venture with Saudi Aramco.

Our reading: The range of rigs and operating locations gives Valaris capabilities for different offshore assignments, but rig mobility and competitive bidding limit the protection geography provides. Our reading: Operating experience, safety performance and equipment suitability can help Valaris compete, but price’s role in awards makes those advantages difficult to treat as a durable barrier on their own.

Growth opportunities

Valaris’s opportunities depend on customers committing capital to offshore exploration and development and on the availability of rigs for those projects. The company says customers continue to advance long-cycle offshore developments, including deepwater projects. Demand for rigs, the supply of available rigs, utilization and day rates all affect operating results.

Contract awards and extensions for various drillships added approximately $2.1 billion to floater backlog, partly offset by revenue realized. Awards and extensions for jackups added approximately $590.0 million, partly offsetting reductions that included revenue realized and the removal of backlog from a suspended contract. These movements were discussed in the backlog information as of February 17, 2026; backlog is not guaranteed revenue.

Five-year extensions for five rigs leased to ARO added approximately $407.0 million to Valaris’s Other backlog, partly offset by revenue realized. ARO’s own backlog also increased primarily because of those extensions. Valaris includes its rigs leased to ARO in its backlog at contractual lease rates, but excludes ARO’s backlog.

Valaris and Transocean agreed in February 2026 to an all-share acquisition of Valaris. On 2 November 2026, Valaris said the combination had received required regulatory approvals and was expected to close on or about December 1, 2026. Completion remained subject to the terms and conditions of the agreement.

Structural risks

• Cyclical demand: Offshore exploration and development activity can be significantly affected by volatile oil and natural gas prices. Rig demand and available supply affect utilization and day rates, while customers’ capital allocation decisions also influence demand.
• Contracts and concentration: Backlog may not be fully realized. Customers can have early termination rights, and some contracts permit termination for convenience without an early termination payment. The loss of a significant customer or contract could materially affect Valaris.
• Operating hazards: Offshore drilling exposes Valaris to equipment failures, pollution and other losses. Insurance and customer indemnities may not cover every loss, and the protection provided by individual contracts can vary.
• Costs and suppliers: Personnel, equipment and maintenance costs can rise, while shortages or supplier disruptions can affect operations. Operating and maintenance costs do not necessarily fall in proportion to revenue.
• International exposure: Non-U.S. operations face risks including war, civil disturbance, changes in laws, trade barriers and limitations on insurance coverage. On 2 November 2026, Valaris said Middle East conflicts reduced third-quarter adjusted EBITDA by approximately $24 million.
• Pending combination: The Transocean transaction may be delayed or not completed. Under specified termination circumstances, Valaris could be required to pay a termination fee of $173.0 million.

Bottom line

Our reading

Valaris is a contract drilling business whose revenue depends on keeping offshore rigs working at negotiated day rates. Our reading: Its fleet and international reach provide access to a range of projects, but bidding pressure, cyclical customer spending and contracts that can be terminated limit the certainty of future revenue. The pending Transocean combination adds a separate transaction outcome to the operating risks. (item1; item7)