HAMILTON, Bermuda - Valaris Limited (NYSE: VAL), a global provider of offshore drilling services, has announced a substantial contract award from Equinor Energy do Brasil Ltda. for the VALARIS DS-17 drillship to support operations offshore Brazil. The agreement, which is part of the Project Raia development, also involves project partners Repsol (OTC:REPYY) Sinopec (OTC:SHIIY) Brazil and Petrobras.
The total value of the contract is estimated at approximately $498 million, a figure that encompasses managed pressure drilling (MPD), additional services, and fees for mobilization and minor rig upgrades.
The contract stipulates a 672-day drilling program set to commence in the first half of 2026, with an additional standby period of 180 days scheduled between the end of the current program and the start of operations. During the standby phase, the drillship may be available for alternative assignments both within and outside Brazil, potentially generating supplementary income.
Anton Dibowitz, President and Chief Executive Officer of Valaris, expressed gratitude towards Equinor for their investment in safety and automation technology on the VALARIS DS-17 and for entrusting the company with the execution of their development programs in Brazil.
Dibowitz emphasized the contract as a reflection of the company's successful commercial strategy, which involves securing new contracts at higher day rates and building a robust backlog. He noted strong customer demand for work anticipated to begin in 2025 and 2026, which is expected to support Valaris's earnings and cash flow growth in the coming years.
Valaris, known for its offshore drilling services across various water depths and geographies, operates a fleet of ultra-deepwater drillships, versatile semisubmersibles, and modern shallow-water jackups. The company prides itself on its commitment to safety, operational excellence, and customer satisfaction, with a strong focus on technological innovation.
The information in this article is based on a press release statement from Valaris Limited.
In other recent news, Valaris Ltd has seen a series of significant developments. The company's Q1 revenues for 2024 reached a robust $525 million, with an adjusted EBITDA of $54 million. Moreover, Valaris has secured new contracts leading to a backlog exceeding $4 billion and projects a Q2 2024 revenue range of $580 million to $600 million.
In a recent shareholder meeting, Valaris received approval for its executive compensation and elected directors to its board. Among the elected directors, James W. Swent III and Kristian Johansen received notable shareholder support. The company's executive pay structure was also approved, reflecting shareholder backing.
Valaris is actively tracking numerous floater opportunities in Brazil, Africa, and the Mediterranean, anticipating strong customer demand for offshore drilling. The company also expects significant growth in the jackup market. Still, additional contracts are needed to fill uncontracted days and secure work for 2025 and beyond.
Finally, KPMG LLP has been approved as the company's independent registered public accounting firm. These recent developments indicate a period of strategic focus and financial discipline for Valaris as it navigates the competitive oil and gas drilling industry.
InvestingPro Insights
As Valaris Limited (NYSE: VAL) secures a significant contract with Equinor Energy do Brasil Ltda., the financial metrics from InvestingPro paint a promising picture for investors. The company's market capitalization stands at a robust $5.54 billion, reflecting its substantial presence in the offshore drilling sector.
Valaris's P/E ratio, an indicator of the company's valuation, is relatively low at 6.65, which drops even slightly lower to 6.55 when looking at the last twelve months as of Q1 2024. This suggests that the company's shares might be trading at a value that is potentially attractive to investors seeking earnings growth.
The company's revenue growth is also notable, with a 9.62% increase over the last twelve months as of Q1 2024, and an even more impressive quarterly surge of 22.06% in Q1 2024. Such growth figures may indicate that Valaris is successfully expanding its market share and improving its financial health, which could be a positive sign for future earnings potential.
InvestingPro Tips spotlight the company's solid return on assets of 23.1%, which is a strong indicator of efficient management and profitability. Moreover, with the stock price hovering at 94.68% of its 52-week high, investors may see potential for further gains, especially considering the recent contract win that could bolster future performance.
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