Valaris Rebounds as New Drillship Contracts Lift Revenue
Adjusted EBITDA climbed 45% from the prior quarter to $96.5 million.
Valaris (VAL), the offshore drilling contractor, returned to profit in the second quarter as three drillships began new contracts, reversing a first-quarter loss.
The quarter marked a sequential rebound after revenue had declined in the first three months of the year. Results nevertheless remained below year-earlier levels, while conflict-related costs in the Middle East weighed more heavily on earnings.
Total operating revenue increased 16% from the prior quarter to $539.2 million, though it fell 12% from a year earlier. Revenue excluding reimbursable items rose 17% sequentially to $502.3 million as DS-17, DS-12 and DS-10 added operating days.
Net income was $47 million, compared with an $18 million loss in the first quarter and income of $114.2 million a year earlier. The latest result included a $38 million gain from asset sales, while operating income increased 156% sequentially to $51.1 million.
Floaters drove the improvement. Revenue excluding reimbursables from the segment jumped 45% to $279.0 million, and adjusted EBITDA rose 165% to $111.6 million as the three drillships entered service. Total-fleet floater utilization increased to 47% from 33%, while average daily revenue rose to $451,000 from $436,000.
Jackups moved in the other direction, with revenue excluding reimbursables falling 6% and adjusted EBITDA dropping 40% to $40.6 million. Fewer operating days for VALARIS 117 and lower-rate North Sea accommodation work contributed to the decline, as total utilization slipped to 64% from 67%.
Middle East conflict costs reduced adjusted EBITDA by about $30 million, compared with $8 million in the first quarter, reflecting war-risk insurance, project delays and lower revenue. Valaris expects that drag to moderate in the second half as VALARIS 250 and 116 return to service and insurance costs decline.
Valaris stopped updating forward guidance after announcing its combination with Transocean and said it does not intend to hold future earnings calls. The transaction is expected to close in the fourth quarter of 2026, leaving a shrinking $4.585 billion backlog and the planned combination as the principal markers for the months ahead.