Valaris Reports Fourth Quarter 2021 Results

02/21/2022

Strong Operational Performance – 97% Revenue Efficiency in 4Q 2021 and 98% in FY 2021
Contract Backlog Increased to $2.4 Billion from $1.0 Billion at the Beginning of 2021
Approximately $330 Million of Contract Backlog Added Since Reporting 3Q 2021 Results
Four Floater Reactivation Projects in Progress for Contracts Beginning in 1H 2022
Operational Leverage to Improving Floater Market

HAMILTON, Bermuda--(BUSINESS WIRE)-- Valaris Limited (NYSE: VAL) ("Valaris" or the "Company") today reported fourth quarter 2021 results.

President and Chief Executive Officer Anton Dibowitz said, “We focus every day on delivering safe, reliable and efficient operations to our customers. I would like to thank the Valaris team for continuing to deliver the strong performance that our customers have come to expect from us, achieving revenue efficiency of 97% during the fourth quarter and more than 98% over the course of 2021. We also improved our personal safety performance by 25% as compared to 2020. These accomplishments are particularly impressive considering the challenging working conditions faced by our offshore crews and support teams during the ongoing pandemic.”

Dibowitz added, “This strong operational performance has translated into contracting success, increasing our contract backlog to $2.4 billion from $1.0 billion at the beginning of 2021. Since our last quarterly report, we have added approximately $330 million of new backlog, including three-year contract extensions for four of our jackup rigs leased to ARO Drilling as well as floater contracts in the U.S. Gulf of Mexico and offshore Australia.”

Dibowitz concluded, “We are in the midst of a transitional period that will extend into the second quarter of this year as we incur reactivation costs to ready three drillships and one semisubmersible for contracts that are expected to commence before the end of the second quarter. We anticipate that financial results will improve significantly as these reactivations are completed. Additionally, we have three uncontracted drillships remaining within our stacked fleet providing operational leverage to the improving floater market. We will be disciplined in exercising our operational leverage and will only return these assets to the active fleet for opportunities that provide meaningful returns.”

Fourth Quarter Review

Revenues decreased to $306 million in the fourth quarter 2021 from $327 million in the third quarter 2021. Excluding reimbursable items, revenues decreased to $269 million in the fourth quarter from $293 million in the third quarter primarily due to fewer operating days and lower average day rates for the jackup fleet.

Contract drilling expense increased to $286 million in the fourth quarter 2021 from $275 million in the third quarter 2021. Excluding reimbursable items, contract drilling expense increased to $264 million in the fourth quarter from $255 million in the third quarter. The sequential quarter increase was primarily due to higher rig reactivation costs, which increased to $37 million in the fourth quarter from $19 million in the third quarter, as we prepare several rigs for contracts that are expected to commence in the first half of 2022. This was partially offset by lower costs resulting from fewer operating days across the fleet in the fourth quarter.

Depreciation expense marginally increased to $25 million in the fourth quarter 2021 from $24 million in the third quarter 2021. General and administrative expense decreased to $18 million in the fourth quarter 2021 from $27 million in the third quarter 2021 primarily due to severance costs related to the departure of three senior executives during the third quarter.

Other income was $21 million in the fourth quarter 2021 compared to other expense of $3 million in the third quarter 2021. Fourth quarter other income included a $21 million gain on sale of assets related to the sale of jackups VALARIS 22, 37 and 142 compared to a gain on sale of assets of less than $1 million in the third quarter.

Tax benefit was $31 million in the fourth quarter 2021 compared to a tax expense of $53 million in the third quarter 2021. The fourth quarter tax provision included $30 million of discrete tax benefit primarily related to a reduction in liabilities for unrecognized tax benefits associated with tax positions taken in prior years and deferred tax benefits associated with Swiss tax reform. The third quarter tax provision included $39 million of discrete tax expense primarily related to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years. Adjusted for discrete items, tax benefit of $1 million in the fourth quarter compared to tax expense of $14 million in the third quarter. The decrease in tax expense is primarily due to a reduction in valuation allowances on deferred tax assets.

Adjusted EBITDA of $3 million in the fourth quarter 2021 compared to $30 million in the third quarter 2021. Adjusted EBITDAR of $40 million in the fourth quarter 2021 compared to $49 million in the third quarter 2021.

Segment Review

Floaters

Floater revenues decreased to $101 million in the fourth quarter 2021 from $104 million in the third quarter 2021. Excluding reimbursable items, revenues decreased to $89 million in the fourth quarter from $94 million in the third quarter. The sequential quarter decline was primarily due to VALARIS MS-1 starting a short-term contract at a lower day rate during the fourth quarter and fewer operating days for VALARIS DPS-5, which completed a contract during the fourth quarter and is currently undergoing a five-year survey prior to starting a new contract that is expected to commence in the first quarter 2022. This was partially offset by more operating days for VALARIS DS-12, which was idle for a majority of the third quarter.

Contract drilling expense increased to $114 million in the fourth quarter 2021 from $92 million in the third quarter 2021. Excluding reimbursable items, contract drilling expense increased to $106 million in the fourth quarter from $84 million in the third quarter. The sequential quarter increase was primarily due to higher rig reactivation costs, which increased to $34 million in the fourth quarter from $1 million in the third quarter, as we prepare drillships VALARIS DS-4, DS-9 and DS-16 as well as semisubmersible VALARIS DPS-1 for new contracts that are expected to commence in the first half of 2022.

Approximately $428 million of backlog as of February 21, 2022 is attributable to a contract awarded to drillship VALARIS DS-11 for an eight-well contract for a deepwater project in the U.S. Gulf of Mexico expected to commence in mid-2024. In February 2022, the customer decided not to sanction and therefore withdraw from the project associated with this contract. As of the date hereof, the customer has not terminated the contract, but may do so upon the payment of an early termination fee should the project not receive a final investment decision (FID). The project has not received FID. We are in discussions with the customer and its partner on the project to determine next steps.

Jackups

Jackup revenues decreased to $172 million in the fourth quarter 2021 from $186 million in the third quarter 2021. Excluding reimbursable items, revenues decreased to $152 million in the fourth quarter from $168 million in the third quarter. The sequential quarter decline was primarily due to idle time between contracts for VALARIS Norway, Viking and 144 as well as a decline in the average day rate for the harsh environment jackup fleet primarily due to VALARIS Norway moving from drilling operations offshore Norway to accommodation mode in the UK North Sea. This was partially offset by higher revenues from VALARIS 76, which returned to operations late in the third quarter following a suspension period.

Contract drilling expense decreased to $128 million in the fourth quarter 2021 from $142 million in the third quarter 2021. Excluding reimbursable items, contract drilling expense decreased to $117 million in the fourth quarter from $134 million in the third quarter. The sequential quarter decline was primarily due to lower rig reactivation costs, which decreased to $3 million in the fourth quarter from $18 million in the third quarter mostly related to reactivation costs for VALARIS 249, and lower costs due to fewer operating days across the jackup fleet in the fourth quarter.

ARO Drilling

Revenues decreased to $105 million in the fourth quarter 2021 from $118 million in the third quarter 2021 primarily due to fewer operating days across the fleet as two leased rigs completed contracts in the third quarter. Contract drilling expense decreased to $89 million in the fourth quarter from $94 million in the third quarter. EBITDA was $11 million in the fourth quarter compared to $18 million in the third quarter.

Other

Revenues decreased to $33 million in the fourth quarter 2021 from $36 million in the third quarter 2021 due to lower bareboat charter revenues resulting from VALARIS 22 and 37 completing lease contracts with ARO Drilling in the third quarter, and subsequently being retired from the fleet. Contract drilling expense of $15 million in the fourth quarter was in line with the third quarter. EBITDA was $17 million in the fourth quarter compared to $22 million in the third quarter.

 

Fourth Quarter

 

Floaters

Jackups

ARO

Other

Reconciling
Items

Consolidated Total

(in millions of $, except %)

Q4
2021

Q3
2021

Chg

Q4
2021

Q3
2021

Chg

Q4
2021

Q3
2021

Chg

Q4
2021

Q3
2021

Chg

Q4
2021

Q3
2021

Q4
2021

Q3 2021

Chg

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

100.5

 

104.3

(4

%)

172.3

186.3

(8

%)

105.4

 

117.7

(10

%)

32.7

36.1

(9

%)

(105.4

)

(117.7

)

305.5

 

326.7

(6

%)

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contract drilling

113.8

 

91.7

24

%

128.0

141.8

(10

%)

88.9

 

94.4

(6

%)

15.4

14.5

6

%

(60.6

)

(67.8

)

285.5

 

274.6

4

%

Impairment

 

%

 

 

%

%

 

 

 

 

Depreciation

11.7

 

11.4

3

%

12.1

12.1

%

17.7

 

16.8

5

%

1.1

0.9

22

%

(17.5

)

(16.8

)

25.1

 

24.4

3

%

General and admin.

 

%

%

5.1

 

5.4

(6)

%

%

13.2

 

21.8

 

18.3

 

27.2

(33)

%

Other Operating Income

 

%

%

 

%

%

 

 

 

%

Equity in earnings of ARO

 

%

%

 

%

%

(1.3

)

2.6

 

(1.3

)

2.6

nm

Operating income (loss)

(25.0

)

1.2

nm

32.2

32.4

(1

%)

(6.3

)

1.1

nm

16.2

20.7

(22

%)

(41.8

)

(52.3

)

(24.7

)

3.1

nm

Fresh Start Accounting

Valaris emerged from Chapter 11 bankruptcy protection on April 30, 2021 (the "Effective Date"). Upon emergence, Valaris applied fresh start accounting which resulted in Valaris becoming a new reporting entity for accounting and financial reporting. Accordingly, our financial statements and notes after the Effective Date are not comparable to our financial statements and notes prior to that date. As required by GAAP, results for the second quarter must be presented separately for the predecessor period from April 1, 2021, through April 30, 2021 (the "Predecessor" period) and the successor period from May 1, 2021, through June 30, 2021 (the "Successor" period). However, the Company has combined certain results of the Predecessor and Successor periods ("Combined" results) as non-GAAP measures to compare the combined second quarter with other quarters since we believe it provides the most meaningful basis to analyze our results. The Predecessor and Successor results for the second quarter are more fully discussed in our quarterly report on Form 10-Q for the period ended June 30, 2021 filed with the SEC on August 3, 2021.

As previously announced, Valaris will hold its fourth quarter 2021 earnings conference call at 9:00 a.m. CST (10:00 a.m. EST and 3:00 p.m. London) on Tuesday, February 22, 2022. An updated investor presentation will be available on the Valaris website after the call.

About Valaris Limited

Valaris Limited (NYSE: VAL) is the industry leader in offshore drilling services across all water depths and geographies. Operating a high-quality rig fleet of ultra-deepwater drillships, versatile semisubmersibles, and modern shallow-water jackups, Valaris has experience operating in nearly every major offshore basin. Valaris maintains an unwavering commitment to safety, operational excellence, and customer satisfaction, with a focus on technology and innovation. Valaris Limited is a Bermuda exempted company. To learn more, visit the Valaris website at www.valaris.com.

Forward-Looking Statements

Statements contained in this press release that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include words or phrases such as "anticipate," "believe," "estimate," "expect," "intend," "likely," "plan," "project," "could," "may," "might," "should," "will" and similar words and specifically include statements regarding expected financial performance; expected utilization, day rates, revenues, operating expenses, rig commitments and availability, cash flow, contract status, terms and duration, contract backlog, capital expenditures, insurance, financing and funding; the effect, impact, potential duration and other implications of the ongoing COVID-19 pandemic; impact of our emergence from bankruptcy; the offshore drilling market, including supply and demand, customer drilling programs, stacking of rigs, effects of new rigs on the market and effects of declines in commodity prices; expected work commitments, awards and contracts; effective tax rates; letters of intent; scheduled delivery dates for rigs; performance of our joint venture with Saudi Aramco; the timing of delivery, mobilization, contract commencement, availability, relocation or other movement of rigs; future rig reactivations; expected divestitures of assets; general market, business and industry conditions, trends and outlook; future operations; increasing regulatory complexity; the outcome of tax disputes; assessments and settlements; and expense management. The forward-looking statements contained in this press release are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including the COVID-19 outbreak and global pandemic and the related public health measures implemented by governments worldwide, which may, among other things, impact our ability to staff rigs and rotate crews; cancellation, suspension, renegotiation or termination of drilling contracts and programs, including drilling contracts which grant the customer termination rights if final investment decision (FID) is not received with respect to projects for which the drilling rig is contracted; potential additional asset impairments; failure to satisfy our debt obligations; our ability to obtain financing, service our debt, fund capital expenditures and pursue other business opportunities; adequacy of sources of liquidity for us and our customers; the effects of our emergence from bankruptcy on the Company's business, relationships, comparability of our financial results and ability to access financing sources; actions by regulatory authorities, or other third parties; actions by our security holders; commodity price fluctuations and volatility, customer demand, new rig supply, downtime and other risks associated with offshore rig operations; severe weather or hurricanes; changes in worldwide rig supply and demand, competition and technology; consumer preferences for alternative fuels; increased scrutiny of our Environmental, Social and Governance ("ESG") practices and reporting responsibilities; changes in customer strategy; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties; terrorism, piracy and military action; risks inherent to shipyard rig reactivation, upgrade, repair, maintenance or enhancement; our ability to enter into, and the terms of, future drilling contracts; suitability of rigs for future contracts; the cancellation of letters of intent or letters of award or any failure to execute definitive contracts following announcements of letters of intent, letters of award or other expected work commitments; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; environmental or other liabilities, risks or losses; debt restrictions that may limit our liquidity and flexibility; and cybersecurity risks and threats. In addition to the numerous factors described above, you should also carefully read and consider "Item 1A. Risk Factors" in Part I and "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II of our most recent annual report on Form 10-K, as updated in our subsequent quarterly reports on Form 10-Q, which are available on the SEC’s website at www.sec.gov or on the Investor Relations section of our website at www.valaris.com. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to update or revise any forward-looking statements, except as required by law.

 

VALARIS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share amounts)

 

 

Three Months Ended

 

Successor

 

Combined
(Non-GAAP) (1)

 

Predecessor

 

December
31, 2021

 

September
30, 2021

 

June 30,
2021

 

March 31,
2021

 

December
31, 2020

OPERATING REVENUES

$

305.5

 

 

$

326.7

 

 

$

293.1

 

 

$

307.1

 

 

$

296.5

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Contract drilling (exclusive of depreciation)

 

285.5

 

 

 

274.6

 

 

 

258.8

 

 

 

253.6

 

 

 

307.8

 

Loss on impairment

 

 

 

 

 

 

 

 

 

 

756.5

 

 

 

 

Depreciation

 

25.1

 

 

 

24.4

 

 

 

54.1

 

 

 

122.1

 

 

 

122.4

 

General and administrative

 

18.3

 

 

 

27.2

 

 

 

19.1

 

 

 

24.3

 

 

 

26.5

 

Total operating expenses

 

328.9

 

 

 

326.2

 

 

 

332.0

 

 

 

1,156.5

 

 

 

456.7

 

EQUITY IN EARNINGS (LOSSES) OF ARO

 

(1.3

)

 

 

2.6

 

 

 

6.0

 

 

 

1.9

 

 

 

(0.2

)

OPERATING INCOME (LOSS)

 

(24.7

)

 

 

3.1

 

 

 

(32.9

)

 

 

(847.5

)

 

 

(160.4

)

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

Interest income

 

11.0

 

 

 

9.7

 

 

 

8.8

 

 

 

2.6

 

 

 

4.5

 

Interest expense, net (Unrecognized contractual interest expense for debt subject to compromise was $32.6 million, $100.3 million and $94.8 million for the three months ended June 30, 2021, March 31, 2021 and December 31, 2020, respectively)

 

(11.7

)

 

 

(11.3

)

 

 

(9.1

)

 

 

(1.3

)

 

 

(1.4

)

Reorganization items, net

 

(4.9

)

 

 

(6.5

)

 

 

(3,536.5

)

 

 

(52.2

)

 

 

(30.1

)

Other, net

 

27.0

 

 

 

5.5

 

 

 

9.0

 

 

 

22.5

 

 

 

4.8

 

 

 

21.4

 

 

 

(2.6

)

 

 

(3,527.8

)

 

 

(28.4

)

 

 

(22.2

)

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES

 

(3.3

)

 

 

0.5

 

 

 

(3,560.7

)

 

 

(875.9

)

 

 

(182.6

)

 

 

 

 

 

 

 

 

 

 

PROVISION (BENEFIT) FOR INCOME TAXES

 

(31.0

)

 

 

53.3

 

 

 

(0.4

)

 

 

31.7

 

 

 

(113.5

)

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

27.7

 

 

 

(52.8

)

 

 

(3,560.3

)

 

 

(907.6

)

 

 

(69.1

)

 

 

 

 

 

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

 

 

 

(1.7

)

 

 

(2.9

)

 

 

(2.4

)

 

 

(1.8

)

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO VALARIS

$

27.7

 

 

$

(54.5

)

 

$

(3,563.2

)

 

$

(910.0

)

 

$

(70.9

)

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) PER SHARE - BASIC AND DILUTED

$

0.37

 

 

$

(0.73

)

 

 

n/m

 

 

$

(4.56

)

 

$

(0.36

)

WEIGHTED-AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED

 

75.0

 

 

 

75.0

 

 

 

n/m

 

 

 

199.6

 

 

 

199.5

 

(1)

Represents the combined results of operations for the two months ended June 30, 2021 (Successor) and the one month ended April 30, 2021 (Predecessor).


VALARIS LIMITED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions)

 

 

Successor

 

 

Predecessor

 

December
31, 2021

September
30, 2021

June 30,
2021

 

 

March 31,
2021

 

December
31, 2020

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

608.7

$

620.8

$

608.8

 

 

$

291.7

 

$

325.8

Restricted cash

 

35.9

 

33.9

 

53.1

 

 

 

17.1

 

 

11.4

Accounts receivable, net

 

444.2

 

455.8

 

436.1

 

 

 

449.8

 

 

449.2

Other current assets

 

117.8

 

117.0

 

119.7

 

 

 

366.4

 

 

386.5

Total current assets

$

1,206.6

$

1,227.5

$

1,217.7

 

 

$

1,125.0

 

$

1,172.9

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT, NET

 

890.9

 

892.3

 

897.8

 

 

 

10,083.9

 

 

10,960.5

 

 

 

 

 

 

 

 

 

LONG-TERM NOTES RECEIVABLE FROM ARO

 

249.1

 

241.3

 

234.3

 

 

 

442.7

 

 

442.7

 

 

 

 

 

 

 

 

 

INVESTMENT IN ARO

 

86.6

 

87.9

 

85.4

 

 

 

122.8

 

 

120.9

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

176.0

 

153.5

 

166.5

 

 

 

172.5

 

 

176.2

 

 

 

 

 

 

 

 

 

 

$

2,609.2

$

2,602.5

$

2,601.7

 

 

$

11,946.9

 

$

12,873.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

Accounts payable - trade

$

225.8

$

203.0

 

183.9

 

 

$

176.8

 

$

176.4

Accrued liabilities and other

 

196.2

 

223.8

 

212.7

 

 

 

290.6

 

 

250.4

Total current liabilities

$

422.0

$

426.8

$

396.6

 

 

$

467.4

 

$

426.8

 

 

 

 

 

 

 

 

 

LONG-TERM DEBT

 

545.3

 

545.1

 

544.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER LIABILITIES

 

581.1

 

591.3

 

569.8

 

 

 

704.6

 

 

762.4

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE

 

1,548.4

 

1,563.2

 

1,511.2

 

 

 

1,172.0

 

 

1,189.2

 

 

 

 

 

 

 

 

 

LIABILITIES SUBJECT TO COMPROMISE

 

 

 

 

 

 

7,313.7

 

 

7,313.7

 

 

 

 

 

 

 

 

 

TOTAL EQUITY

 

1,060.8

 

1,039.3

 

1,090.5

 

 

 

3,461.2

 

 

4,370.3

 

 

 

 

 

 

 

 

 

 

$

2,609.2

$

2,602.5

$

2,601.7

 

 

$

11,946.9

 

$

12,873.2


VALARIS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

 

Successor

 

 

Predecessor

 

Combined
(Non-GAAP)

 

Predecessor

 

Eight Months
Ended
December 31, 2021

 

 

Four Months
Ended
April 30,
2021

 

Year Ended
December 31, 2021

 

Year Ended
December 31, 2020

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net loss

$

(29.2

)

 

 

$

(4,463.8

)

 

$

(4,493.0

)

 

$

(4,857.6

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation expense

 

66.1

 

 

 

 

159.6

 

 

 

225.7

 

 

 

540.8

 

Deferred income tax expense (benefit)

 

(21.3

)

 

 

 

(18.2

)

 

 

(39.5

)

 

 

(105.7

)

(Gain) loss on asset disposals

 

(21.2

)

 

 

 

(6.0

)

 

 

(27.2

)

 

 

(11.8

)

Accretion of discount on shareholders note

 

(20.8

)

 

 

 

 

 

 

(20.8

)

 

 

 

Net periodic pension and retiree medical income

 

(8.7

)

 

 

 

(5.4

)

 

 

(14.1

)

 

 

(14.6

)

Equity in losses (earnings) of ARO

 

(6.1

)

 

 

 

(3.1

)

 

 

(9.2

)

 

 

7.8

 

Share-based compensation expense

 

4.3

 

 

 

 

4.8

 

 

 

9.1

 

 

 

21.4

 

Amortization, net

 

2.3

 

 

 

 

(4.8

)

 

 

(2.5

)

 

 

6.2

 

Debt discounts and other

 

0.5

 

 

 

 

 

 

 

0.5

 

 

 

36.8

 

Loss on Impairment

 

 

 

 

 

756.5

 

 

 

756.5

 

 

 

3,646.2

 

Adjustment to (gain on) bargain purchase

 

 

 

 

 

 

 

 

 

 

 

6.3

 

Gain on debt extinguishment

 

 

 

 

 

 

 

 

 

 

 

(3.1

)

Debtor in Possession financing fees and payments on Backstop Agreement

 

 

 

 

 

 

 

 

 

 

 

40.0

 

Non-cash reorganization items, net

 

 

 

 

 

3,487.3

 

 

 

3,487.3

 

 

 

436.4

 

Other

 

0.3

 

 

 

 

7.3

 

 

 

7.6

 

 

 

33.3

 

Changes in operating assets and liabilities, net of acquisition

 

10.3

 

 

 

 

68.5

 

 

 

78.8

 

 

 

(22.0

)

Contributions to pension plans and other post retirement benefits

 

(2.7

)

 

 

 

(22.5

)

 

 

(25.2

)

 

 

(12.1

)

Net cash used in operating activities

$

(26.2

)

 

 

$

(39.8

)

 

$

(66.0

)

 

$

(251.7

)

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Additions to property and equipment

$

(50.2

)

 

 

$

(8.7

)

 

$

(58.9

)

 

$

(93.8

)

Net proceeds from disposition of assets

 

25.1

 

 

 

 

30.1

 

 

 

55.2

 

 

 

51.8

 

Net cash provided by (used in) investing activities

$

(25.1

)

 

 

$

21.4

 

 

$

(3.7

)

 

$

(42.0

)

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Issuance of First lien notes

$

 

 

 

$

520.0

 

 

$

520.0

 

 

$

 

Payments to Predecessor Creditors

 

 

 

 

 

(129.9

)

 

 

(129.9

)

 

 

 

Reduction of long-term borrowings

 

 

 

 

 

 

 

 

 

 

 

(9.7

)

Borrowings on credit facility

 

 

 

 

 

 

 

 

 

 

 

596.0

 

Repayments of credit facility borrowings

 

 

 

 

 

 

 

 

 

 

 

(15.0

)

Debtor in Possession financing fees and payments on Backstop Agreement

 

 

 

 

 

 

 

 

 

 

 

(40.0

)

Purchase of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

(7.2

)

Other

 

 

 

 

 

(1.4

)

 

 

(1.4

)

 

 

(1.9

)

Net cash provided by (used in) financing activities

$

 

 

 

$

388.7

 

 

$

388.7

 

 

$

522.2

 

Effect of exchange rate changes on cash and cash equivalents

$

(0.1

)

 

 

$

(0.1

)

 

$

(0.2

)

 

$

0.1

 

 

 

 

 

 

 

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

$

(51.4

)

 

 

$

370.2

 

 

$

318.8

 

 

$

228.6

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR

 

696.0

 

 

 

 

325.8

 

 

 

325.8

 

 

 

97.2

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR

$

644.6

 

 

 

$

696.0

 

 

$

644.6

 

 

$

325.8

 


VALARIS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

 

Three Months Ended

 

Successor

 

 

Combined
(Non-GAAP) (1)

 

Predecessor

 

December 31,
2021

September 30,
2021

 

 

June 30,

2021

 

March 31,
2021

 

December
31, 2020

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net loss

$

27.7

 

$

(52.8

)

 

 

$

(3,560.3

)

 

$

(907.6

)

 

$

(69.1

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

Depreciation expense

 

25.1

 

 

24.4

 

 

 

 

54.1

 

 

 

122.1

 

 

 

122.4

 

(Gain) loss on asset disposals

 

(21.0

)

 

(0.3

)

 

 

 

(4.5

)

 

 

(1.4

)

 

 

(3.1

)

Accretion of discount on shareholder note

 

(7.9

)

 

(6.9

)

 

 

 

(6.0

)

 

 

 

 

 

 

Amortization, net

 

(0.5

)

 

3.1

 

 

 

 

(0.5

)

 

 

(4.6

)

 

 

(8.2

)

Equity in losses (earnings) of ARO

 

1.3

 

 

(2.6

)

 

 

 

(6.0

)

 

 

(1.9

)

 

 

0.2

 

Share-based compensation expense

 

2.7

 

 

1.6

 

 

 

 

1.0

 

 

 

3.8

 

 

 

3.6

 

Net periodic pension and retiree medical income

 

(2.6

)

 

(3.7

)

 

 

 

(3.8

)

 

 

(4.0

)

 

 

(7.5

)

Deferred income tax expense (benefit)

 

(22.5

)

 

0.1

 

 

 

 

(18.0

)

 

 

0.9

 

 

 

(2.1

)

Debt discounts and other

 

0.2

 

 

(0.1

)

 

 

 

0.4

 

 

 

 

 

 

 

Debtor in Possession financing fees and payments on Backstop Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

(3.8

)

Loss on impairment

 

 

 

 

 

 

 

 

 

 

756.5

 

 

 

 

Non-cash reorganization items, net

 

 

 

 

 

 

 

3,487.3

 

 

 

 

 

 

(11.5

)

Other

 

0.3

 

 

0.2

 

 

 

 

1.3

 

 

 

5.8

 

 

 

15.1

 

Changes in operating assets and liabilities

 

(9.0

)

 

45.0

 

 

 

 

21.9

 

 

 

20.9

 

 

 

109.8

 

Contributions to pension plans and other post-retirement benefits

 

(1.0

)

 

(1.1

)

 

 

 

(0.9

)

 

 

(22.2

)

 

 

(1.1

)

Net cash provided by (used in) operating activities

$

(7.2

)

$

6.9

 

 

 

$

(34.0

)

 

$

(31.7

)

 

$

144.7

 

 

 

 

 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Additions to property and equipment

$

(26.5

)

$

(15.6

)

 

 

$

(10.8

)

 

$

(6.0

)

 

$

(10.9

)

Net proceeds from disposition of assets

 

23.6

 

 

1.3

 

 

 

 

26.6

 

 

 

3.7

 

 

 

7.6

 

Net cash provided by (used in) investing activities

$

(2.9

)

$

(14.3

)

 

 

$

15.8

 

 

$

(2.3

)

 

$

(3.3

)

 

 

 

 

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

Issuance of first lien notes

$

 

$

 

 

 

$

520.0

 

 

$

 

 

$

 

Payments to Predecessor creditors

 

 

 

 

 

 

 

(129.9

)

 

 

 

 

 

 

Debtor in Possession financing fees and payments on Backstop Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

3.8

 

Other

 

 

 

 

 

 

 

(1.4

)

 

 

 

 

 

 

Net cash provided by (used in) financing activities

$

 

$

 

 

 

$

388.7

 

 

$

 

 

$

3.8

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

$

 

$

0.2

 

 

 

$

(0.3

)

 

$

(0.1

)

 

$

0.2

 

 

 

 

 

 

 

 

 

 

 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

$

(10.1

)

$

(7.2

)

 

 

$

370.2

 

 

$

(34.1

)

 

$

145.4

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD

 

654.7

 

 

661.9

 

 

 

 

291.7

 

 

 

325.8

 

 

 

180.4

 

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD

$

644.6

 

$

654.7

 

 

 

$

661.9

 

 

$

291.7

 

 

$

325.8

 

(1)

Represents the combined results of operations for the two-months ended June 30, 2021 (Successor) and the one-month ended April 30, 2021 (Predecessor).


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

(In millions)

 

Three Months Ended

 

Successor

 

Combined
(Non-GAAP)

 

Predecessor

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

REVENUES

 

 

 

 

 

 

 

 

 

Floaters

 

 

 

 

 

 

 

 

 

Drillships

$

73.5

 

$

67.5

 

$

42.6

 

$

81.0

 

$

93.8

Semisubmersibles

 

27.0

 

 

36.8

 

 

25.5

 

 

16.3

 

 

11.7

 

$

100.5

 

$

104.3

 

$

68.1

 

$

97.3

 

$

105.5

Jackups (1)

 

 

 

 

 

 

 

 

 

HD Ultra-Harsh & Harsh Environment

$

94.0

 

$

102.8

 

$

104.9

 

$

95.5

 

$

96.2

HD & SD Modern

 

56.2

 

 

59.6

 

 

57.7

 

 

50.5

 

 

61.1

SD Legacy

 

22.1

 

 

23.9

 

 

25.7

 

 

26.6

 

 

22.1

 

$

172.3

 

$

186.3

 

$

188.3

 

$

172.6

 

$

179.4

 

 

 

 

 

 

 

 

 

 

Total

$

272.8

 

$

290.6

 

$

256.4

 

$

269.9

 

$

284.9

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Leased and Managed Rigs

$

32.7

 

$

36.1

 

$

36.7

 

$

37.2

 

$

11.6

 

 

 

 

 

 

 

 

 

 

Valaris Total

$

305.5

 

$

326.7

 

$

293.1

 

$

307.1

 

$

296.5

 

 

 

 

 

 

 

 

 

 

ARO

 

 

 

 

 

 

 

 

 

ARO Total

$

105.4

 

$

117.7

 

$

124.8

 

$

122.7

 

$

117.5

Valaris 50% Share (unconsolidated)

 

52.7

 

 

58.9

 

 

62.4

 

 

61.4

 

 

58.8

 

 

 

 

 

 

 

 

 

 

Adjusted Total (2)

$

358.2

 

$

385.6

 

$

355.5

 

$

368.5

 

$

355.3

(1)

HD = Heavy Duty; SD = Standard Duty. Heavy duty jackups are well-suited for operations in tropical revolving storm areas.


 

(2)

Adjusted total is Valaris consolidated total plus Valaris 50% share of ARO (unconsolidated).


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

(In millions)


Three Months Ended

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

ADJUSTED EBITDAR (1)

 

 

 

 

 

 

 

 

 

Active Fleet (1) (2)

$

79.6

 

 

$

93.0

 

 

$

82.1

 

 

$

88.8

 

 

$

59.1

 

Leased and Managed Rigs (1)

 

17.4

 

 

 

22.2

 

 

 

22.9

 

 

 

22.7

 

 

 

24.0

 

 

$

97.0

 

 

$

115.2

 

 

$

105.0

 

 

$

111.5

 

 

$

83.1

 

 

 

 

 

 

 

 

 

 

 

Stacked Fleet (1) (3)

 

(11.0

)

 

 

(12.5

)

 

 

(17.1

)

 

 

(17.7

)

 

 

(31.5

)

 

$

86.0

 

 

$

102.7

 

 

$

87.9

 

 

$

93.8

 

 

$

51.6

 

 

 

 

 

 

 

 

 

 

 

Support costs

 

 

 

 

 

 

 

 

 

General and administrative expense

$

18.3

 

 

$

27.2

 

 

$

19.1

 

 

$

24.3

 

 

$

26.3

 

Onshore support costs

 

28.0

 

 

 

27.1

 

 

 

29.1

 

 

 

32.2

 

 

 

35.6

 

 

$

46.3

 

 

$

54.3

 

 

$

48.2

 

 

$

56.5

 

 

$

61.9

 

Add:

 

 

 

 

 

 

 

 

 

Merger transaction and integration cost included in contract drilling expense

 

0.2

 

 

 

0.9

 

 

 

0.9

 

 

 

1.9

 

 

 

2.1

 

 

 

 

 

 

 

 

 

 

 

Valaris Total

$

39.9

 

 

$

49.3

 

 

$

40.6

 

 

$

39.2

 

 

$

(8.2

)

 

 

 

 

 

 

 

 

 

 

ARO

 

 

 

 

 

 

 

 

 

ARO Total

$

11.4

 

 

$

17.9

 

 

$

27.8

 

 

$

33.4

 

 

$

46.1

 

Valaris 50% Share (unconsolidated)

 

5.7

 

 

 

9.0

 

 

 

13.9

 

 

 

16.7

 

 

 

23.1

 

 

 

 

 

 

 

 

 

 

 

Adjusted Total (4)

$

45.6

 

 

$

58.3

 

 

$

54.5

 

 

$

55.9

 

 

$

14.9

 

 

 

 

 

 

 

 

 

 

 

Reactivation costs (5)

$

37.1

 

 

$

19.4

 

 

$

24.0

 

 

$

11.1

 

 

$

1.6

 

 

 

 

 

 

 

 

 

 

 

(1)

Adjusted EBITDAR is earnings before interest, tax, depreciation, amortization and reactivation costs. Adjusted EBITDAR for active fleet, leased and managed rigs and stacked fleet also excludes onshore support costs and general and administrative expense.


 
(2)

Active fleet represents rigs that are not preservation stacked, including rigs that are in the process of being reactivated.


 
(3)

Stacked fleet represents the combined total of all preservation and stacking costs.


 
(4)

Adjusted total is Valaris consolidated total plus Valaris 50% share of ARO (unconsolidated).


 
(5)

Reactivation costs, all of which are attributed to the active fleet, are excluded from adjusted EBITDAR.


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

(In millions)

 

Three Months Ended

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

ADJUSTED EBITDAR (1)

 

 

 

 

 

 

 

 

 

Floaters

 

 

 

 

 

 

 

 

 

Drillships (1)

$

17.7

 

$

8.9

 

$

(2.5

)

 

$

16.1

 

 

$

5.1

 

Semisubmersibles (1)

 

3.2

 

 

8.3

 

 

6.5

 

 

 

(1.0

)

 

 

(11.5

)

 

$

20.9

 

$

17.2

 

$

4.0

 

 

$

15.1

 

 

$

(6.4

)

 

 

 

 

 

 

 

 

 

 

Jackups

 

 

 

 

 

 

 

 

 

HD Ultra-Harsh & Harsh (1)

$

24.3

 

$

38.7

 

$

42.3

 

 

$

31.0

 

 

$

16.6

 

HD & SD - Modern (1)

 

11.6

 

 

15.6

 

 

6.7

 

 

 

12.0

 

 

 

10.1

 

SD - Legacy (1)

 

11.8

 

 

9.0

 

 

12.0

 

 

 

13.0

 

 

 

7.3

 

 

$

47.7

 

$

63.3

 

$

61.0

 

 

$

56.0

 

 

$

34.0

 

 

 

 

 

 

 

 

 

 

 

Total

$

68.6

 

$

80.5

 

$

65.0

 

 

$

71.1

 

 

$

27.6

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Leased and Managed Rigs (1)

$

17.4

 

$

22.2

 

$

22.9

 

 

$

22.7

 

 

$

24.0

 

 

 

 

 

 

 

 

 

 

 

Total

$

86.0

 

$

102.7

 

$

87.9

 

 

$

93.8

 

 

$

51.6

 

 

 

 

 

 

 

 

 

 

 

Support costs

 

 

 

 

 

 

 

 

 

General and administrative expense

$

18.3

 

$

27.2

 

$

19.1

 

 

$

24.3

 

 

$

26.3

 

Onshore support costs

 

28.0

 

 

27.1

 

 

29.1

 

 

 

32.2

 

 

 

35.6

 

 

$

46.3

 

$

54.3

 

$

48.2

 

 

$

56.5

 

 

$

61.9

 

Add:

 

 

 

 

 

 

 

 

 

Merger transaction and integration cost included in contract drilling expense

 

0.2

 

 

0.9

 

 

0.9

 

 

 

1.9

 

 

 

2.1

 

 

 

 

 

 

 

 

 

 

 

Valaris Total

$

39.9

 

$

49.3

 

$

40.6

 

 

$

39.2

 

 

$

(8.2

)

 

 

 

 

 

 

 

 

 

 

ARO

 

 

 

 

 

 

 

 

 

ARO Total

$

11.4

 

$

17.9

 

$

27.8

 

 

$

33.4

 

 

$

46.1

 

Valaris 50% Share (unconsolidated)

 

5.7

 

 

9.0

 

 

13.9

 

 

 

16.7

 

 

 

23.1

 

 

 

 

 

 

 

 

 

 

 

Adjusted Total (2)

$

45.6

 

$

58.3

 

$

54.5

 

 

$

55.9

 

 

$

14.9

 

(1)

Adjusted EBITDAR is earnings before interest, tax, depreciation, amortization and reactivation costs. Adjusted EBITDAR for asset category also excludes onshore support costs and general and administrative expense.


 
(2)

Adjusted total is Valaris consolidated total plus Valaris 50% share of ARO (unconsolidated).


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

(In millions)

 

Three Months Ended

 

December
31, 2021

 

September
30, 2021

 

June
30, 2021

 

March 31,
2021

 

December 31,
2020

ADJUSTED EBITDA (1)

 

 

 

 

 

 

 

 

 

Floaters

 

 

 

 

 

 

 

 

 

Drillships (1)

$

(6.6

)

 

$

8.6

 

$

(2.5

)

 

$

16.1

 

 

$

5.1

 

Semisubmersibles (1)

 

(6.3

)

 

 

7.2

 

 

6.4

 

 

 

(6.7

)

 

 

(12.7

)

 

$

(12.9

)

 

$

15.8

 

$

3.9

 

 

$

9.4

 

 

$

(7.6

)

 

 

 

 

 

 

 

 

 

 

Jackups

 

 

 

 

 

 

 

 

 

HD Ultra-Harsh & Harsh (1)

$

21.0

 

 

$

25.1

 

$

22.2

 

 

$

29.3

 

 

$

16.5

 

HD & SD - Modern (1)

 

11.6

 

 

 

11.2

 

 

2.9

 

 

 

8.3

 

 

 

9.8

 

SD - Legacy (1)

 

11.8

 

 

 

9.0

 

 

12.0

 

 

 

13.0

 

 

 

7.3

 

 

$

44.4

 

 

$

45.3

 

$

37.1

 

 

$

50.6

 

 

$

33.6

 

 

 

 

 

 

 

 

 

 

 

Total

$

31.5

 

 

$

61.1

 

$

41.0

 

 

$

60.0

 

 

$

26.0

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Leased and Managed Rigs (1)

$

17.3

 

 

$

22.1

 

$

22.9

 

 

$

22.7

 

 

$

24.0

 

 

 

 

 

 

 

 

 

 

 

Total

$

48.8

 

 

$

83.2

 

$

63.9

 

 

$

82.7

 

 

$

50.0

 

 

 

 

 

 

 

 

 

 

 

Support costs

 

 

 

 

 

 

 

 

 

General and administrative expense

$

18.3

 

 

$

27.2

 

$

19.1

 

 

$

24.3

 

 

$

26.3

 

Onshore support costs

 

28.0

 

 

 

27.1

 

 

29.1

 

 

 

32.2

 

 

 

35.6

 

 

$

46.3

 

 

$

54.3

 

$

48.2

 

 

$

56.5

 

 

$

61.9

 

Add:

 

 

 

 

 

 

 

 

 

Merger transaction and integration cost included in contract drilling expense

 

0.2

 

 

 

0.9

 

 

0.9

 

 

 

1.9

 

 

 

2.1

 

 

 

 

 

 

 

 

 

 

 

Valaris Total

$

2.7

 

 

$

29.8

 

$

16.6

 

 

$

28.1

 

 

$

(9.8

)

 

 

 

 

 

 

 

 

 

 

ARO

 

 

 

 

 

 

 

 

 

ARO Total

$

11.4

 

 

$

17.9

 

$

27.8

 

 

$

33.4

 

 

$

46.1

 

Valaris 50% Share (unconsolidated)

 

5.7

 

 

 

9.0

 

 

13.9

 

 

 

16.7

 

 

 

23.1

 

 

 

 

 

 

 

 

 

 

 

Adjusted Total (2)

$

8.4

 

 

$

38.8

 

$

30.5

 

 

$

44.8

 

 

$

13.3

 

(1)

Adjusted EBITDA is earnings before interest, tax, depreciation and amortization. Adjusted EBITDA for asset category also excludes onshore support costs and general and administrative expense.


 
(2)

Adjusted total is Valaris consolidated total plus Valaris 50% share of ARO (unconsolidated).


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

(In millions)

 

As of

 

February 21,
2022

 

October 27,
2021

 

August 2,
2021

 

March 31,
2021

 

December 31,
2020

CONTRACT BACKLOG (1)

 

 

 

 

 

 

 

 

 

Floaters

 

 

 

 

 

 

 

 

 

Drillships (2)

$

1,280.4

 

$

1,338.6

 

$

1,102.2

 

$

117.6

 

$

90.0

Semisubmersibles

 

384.9

 

 

277.9

 

 

294.0

 

 

171.4

 

 

73.7

 

$

1,665.3

 

$

1,616.5

 

$

1,396.2

 

$

289.0

 

$

163.7

Jackups

 

 

 

 

 

 

 

 

 

HD Ultra-Harsh & Harsh

 

309.7

 

 

307.6

 

 

364.4

 

 

403.8

 

 

358.7

HD & SD - Modern

 

252.1

 

 

274.5

 

 

299.9

 

 

180.6

 

 

211.8

SD - Legacy

 

81.2

 

 

85.5

 

 

102.9

 

 

134.4

 

 

167.1

 

$

643.0

 

$

667.6

 

$

767.2

 

$

718.8

 

$

737.6

 

 

 

 

 

 

 

 

 

 

Total

$

2,308.3

 

$

2,284.1

 

$

2,163.4

 

$

1,007.8

 

$

901.3

 

 

 

 

 

 

 

 

 

 

Other (3)

 

 

 

 

 

 

 

 

 

Leased and Managed Rigs

$

135.6

 

$

33.9

 

$

60.3

 

$

90.8

 

$

140.1

 

 

 

 

 

 

 

 

 

 

Valaris Total

$

2,443.9

 

$

2,318.0

 

$

2,223.7

 

$

1,098.6

 

$

1,041.4

 

 

 

 

 

 

 

 

 

 

ARO

 

 

 

 

 

 

 

 

 

Owned Rigs

$

1,040.9

 

$

757.4

 

$

818.7

 

$

869.5

 

$

84.2

Leased Rigs

 

460.2

 

 

88.7

 

 

134.5

 

 

192.2

 

 

263.3

ARO Total

$

1,501.1

 

$

846.1

 

$

953.2

 

$

1,061.7

 

$

347.5

 

 

 

 

 

 

 

 

 

 

Valaris 50% Share of ARO Owned Rigs

 

520.5

 

 

378.7

 

 

409.4

 

 

434.8

 

 

42.1

 

 

 

 

 

 

 

 

 

 

Adjusted Total (4)

$

2,964.4

 

$

2,696.7

 

$

2,633.1

 

$

1,533.4

 

$

1,083.5

(1)

Our contract drilling backlog reflects commitments, represented by signed drilling contracts, and is calculated by multiplying the contracted day rate by the contract period. Contract drilling backlog includes drilling contracts subject to final investment decision (FID) and drilling contracts which grant the customer termination rights if FID is not received with respect to projects for which the drilling rig is contracted. The contracted day rate excludes certain types of lump sum fees for rig mobilization, demobilization, contract preparation, as well as customer reimbursables and bonus opportunities.


 
(2)

Approximately $428 million of backlog as of February 21, 2022, is attributable to a contract awarded to drillship VALARIS DS-11 that is expected to commence in mid-2024. In February 2022, the customer decided not to sanction and therefore withdraw from the project. As of the date hereof, the customer has not terminated the contract, but it may do so upon the payment of an early termination fee should the project not receive a final investment decision (FID). The project has not received FID. Valaris is in discussions with the customer and its partner on the project to determine next steps.


 
(3)

Leased rigs and managed rigs included in Other reporting segment.


 
(4)

Adjusted total is Valaris consolidated total plus Valaris 50% share of ARO owned rigs.


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

 

 

Three Months Ended

 

December
31, 2021

 

September
30, 2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

AVERAGE DAY RATES (1)

 

 

 

 

 

 

 

 

 

Floaters

 

 

 

 

 

 

 

 

 

Drillships

$

196,000

 

$

189,000

 

$

212,000

 

$

208,000

 

$

214,000

Semisubmersibles

 

171,000

 

 

191,000

 

 

178,000

 

 

164,000

 

 

160,000

 

$

189,000

 

$

190,000

 

$

197,000

 

$

198,000

 

$

206,000

Jackups

 

 

 

 

 

 

 

 

 

HD Ultra-Harsh & Harsh

$

110,000

 

$

124,000

 

$

141,000

 

$

140,000

 

$

120,000

HD & SD Modern

 

76,000

 

 

77,000

 

 

73,000

 

 

70,000

 

 

74,000

SD Legacy

 

73,000

 

 

74,000

 

 

72,000

 

 

70,000

 

 

55,000

 

$

90,000

 

$

96,000

 

$

99,000

 

$

95,000

 

$

86,000

 

 

 

 

 

 

 

 

 

 

Total

$

111,000

 

$

115,000

 

$

114,000

 

$

116,000

 

$

110,000

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Leased and Managed Rigs

$

33,000

 

$

31,000

 

$

31,000

 

$

32,000

 

$

6,000

 

 

 

 

 

 

 

 

 

 

Valaris Total

$

89,000

 

$

90,000

 

$

87,000

 

$

89,000

 

$

76,000

 

 

 

 

 

 

 

 

 

 

ARO

 

 

 

 

 

 

 

 

 

Owned Rigs

$

101,000

 

$

99,000

 

$

99,000

 

$

98,000

 

$

116,000

Leased Rigs (2)

 

94,000

 

 

92,000

 

 

93,000

 

 

89,000

 

 

99,000

ARO Total

$

97,000

 

$

95,000

 

$

96,000

 

$

93,000

 

$

109,000

(1)

Average day rates are derived by dividing contract drilling revenues, adjusted to exclude certain types of non-recurring reimbursable revenues, lump-sum revenues, revenues earned during suspension periods and revenues attributable to amortization of drilling contract intangibles, by the aggregate number of contract days, adjusted to exclude contract days associated with certain suspension periods, mobilizations, demobilizations and shipyard contracts.


 

(2)

All ARO leased rigs are leased from Valaris and also included in Valaris leased and managed rigs average day rates.


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

 

 

Three Months Ended

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

UTILIZATION - TOTAL FLEET (1)

 

 

 

 

 

 

 

 

 

Floaters

 

 

 

 

 

 

 

 

 

Drillships

27 %

 

24 %

 

18 %

 

33 %

 

34 %

Semisubmersibles

30 %

 

39 %

 

30 %

 

20 %

 

11 %

 

28 %

 

28 %

 

22 %

 

29 %

 

26 %

Jackups

 

 

 

 

 

 

 

 

 

HD Ultra-Harsh & Harsh

73 %

 

72 %

 

58 %

 

50 %

 

44 %

HD & SD Modern

42 %

 

43 %

 

43 %

 

40 %

 

37 %

SD Legacy

66 %

 

74 %

 

93 %

 

100 %

 

100 %

 

55 %

 

57 %

 

54 %

 

50 %

 

46 %

 

 

 

 

 

 

 

 

 

 

Total

46 %

 

47 %

 

44 %

 

44 %

 

40 %

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Leased and Managed Rigs

100 %

 

100 %

 

100 %

 

100 %

 

100 %

 

 

 

 

 

 

 

 

 

 

Valaris Total

54 %

 

56 %

 

54 %

 

54 %

 

50 %

 

 

 

 

 

 

 

 

 

 

Pro Forma Jackups (2)

62 %

 

62 %

 

63 %

 

60 %

 

56 %

 

 

 

 

 

 

 

 

 

 

ARO

 

 

 

 

 

 

 

 

 

Owned Rigs

80 %

 

85 %

 

96 %

 

97 %

 

93 %

Leased Rigs (3)

89 %

 

86 %

 

83 %

 

85 %

 

53 %

ARO Total

84 %

 

86 %

 

89 %

 

90 %

 

70 %

(1)

Rig utilization is derived by dividing the number of operating days by the number of available days in the period for the total fleet.


 

(2)

Includes all Valaris jackups including those leased to ARO Drilling.


 

(3)

All ARO leased rigs are leased from Valaris and also included in Valaris leased and managed rigs utilization.


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

 

 

Three Months Ended

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

UTILIZATION - ACTIVE FLEET (1) (2)

 

 

 

 

 

 

 

 

 

Floaters

 

 

 

 

 

 

 

 

 

Drillships

57 %

 

79 %

 

51 %

 

91 %

 

96 %

Semisubmersibles

51 %

 

64 %

 

50 %

 

33 %

 

20 %

 

55 %

 

73 %

 

51 %

 

66 %

 

63 %

Jackups

 

 

 

 

 

 

 

 

 

HD Ultra-Harsh & Harsh

80 %

 

84 %

 

82 %

 

92 %

 

67 %

HD & SD Modern

76 %

 

75 %

 

74 %

 

84 %

 

68 %

SD Legacy

84 %

 

87 %

 

93 %

 

100 %

 

100 %

 

79 %

 

80 %

 

80 %

 

90 %

 

73 %

 

 

 

 

 

 

 

 

 

 

Total

72 %

 

79 %

 

74 %

 

84 %

 

71 %

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

Leased and Managed Rigs

100 %

 

100 %

 

100 %

 

100 %

 

100 %

 

 

 

 

 

 

 

 

 

 

Valaris Total

78 %

 

84 %

 

81 %

 

89 %

 

78 %

 

 

 

 

 

 

 

 

 

 

Pro Forma Jackups (3)

81 %

 

82 %

 

86 %

 

93 %

 

80 %

 

 

 

 

 

 

 

 

 

 

ARO

 

 

 

 

 

 

 

 

 

Owned Rigs

80 %

 

85 %

 

96 %

 

97 %

 

93 %

Leased Rigs (4)

89 %

 

86 %

 

83 %

 

85 %

 

53 %

ARO Total

84 %

 

86 %

 

89 %

 

90 %

 

70 %

(1)

Rig utilization is derived by dividing the number of operating days by the number of available days in the period for the active fleet.


 

(2)

Active fleet represents rigs that are not preservation stacked, including rigs that are in the process of being reactivated.


 

(3)

Includes all Valaris jackups including those leased to ARO Drilling.


 

(4)

All ARO leased rigs are leased from Valaris and also included in Valaris leased and managed rigs utilization.


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

 

 

Three Months Ended

 

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

REVENUE EFFICIENCY (1)

 

 

 

 

 

 

 

 

 

Floaters

 

 

 

 

 

 

 

 

 

Drillships

91.5 %

 

97.6 %

 

100.0 %

 

95.7 %

 

97.1 %

Semisubmersibles

97.7 %

 

96.7 %

 

100.0 %

 

100.0 %

 

100.0 %

 

93.0 %

 

97.3 %

 

100.0 %

 

98.2 %

 

98.8 %

Jackups

 

 

 

 

 

 

 

 

 

HD Ultra-Harsh & Harsh

99.1 %

 

99.5 %

 

100.0 %

 

95.1 %

 

95.7 %

HD & SD Modern

97.9 %

 

100.0 %

 

99.8 %

 

99.7 %

 

99.8 %

SD Legacy

100.0 %

 

99.0 %

 

96.9 %

 

100.0 %

 

100.0 %

 

98.8 %

 

99.6 %

 

99.0 %

 

99.3 %

 

99.1 %

 

 

 

 

 

 

 

 

 

 

Valaris Total

96.6 %

 

98.8 %

 

99.3 %

 

98.9 %

 

99.0 %

 

 

 

 

 

 

 

 

 

 

ARO

 

 

 

 

 

 

 

 

 

Owned Rigs

96.3 %

 

98.1 %

 

94.0 %

 

99.7 %

 

99.8 %

Leased Rigs

91.3 %

 

96.9 %

 

92.6 %

 

96.0 %

 

94.5 %

ARO Total

93.7 %

 

97.4 %

 

93.3 %

 

97.9 %

 

97.8 %

(1)

Revenue efficiency is day rate revenue earned as a percentage of maximum potential day rate revenue.


VALARIS LIMITED AND SUBSIDIARIES

OPERATING STATISTICS

 

 

As of

NUMBER OF RIGS

December 31,
2021

 

September 30,
2021

 

June 30,
2021

 

March 31,
2021

 

December 31,
2020

Active Fleet (1)

 

 

 

 

 

 

 

 

 

Floaters

 

 

 

 

 

 

 

 

 

Drillships

7

 

4

 

4

 

4

 

4

Semisubmersibles

3

 

3

 

3

 

3

 

3

 

10

 

7

 

7

 

7

 

7

Jackups

 

 

 

 

 

 

 

 

 

HD Ultra-Harsh & Harsh

10

 

10

 

10

 

9

 

9

HD & SD Modern

11

 

11

 

11

 

11

 

11

SD Legacy

3

 

3

 

4

 

4