Valaris Adjusted EBITDA Rebounds as Drillships Return to Work

The Tip Desk · November 3, 2026 · 4 min read

Adjusted EBITDA rose to $151 million from $97 million in the second quarter as three drillships started contracts after idle periods.

Valaris Limited (VAL), an offshore drilling contractor, reported adjusted EBITDA of $151 million for the third quarter of 2026, up from $97 million in the second quarter, as more drillships returned to work after idle periods and Middle East conflict costs eased.

Net income was $47 million, in line with the second quarter. Total operating revenues were $594 million. Revenues exclusive of reimbursable items increased to $556 million from $502 million. The company said the increase was primarily due to more operating days and higher average daily revenues for the floater fleet, as three drillships commenced new contracts during the second and third quarters following idle periods and another drillship started a new contract at a higher day rate in the third quarter. Those gains were partially offset by fewer operating days for the jackup fleet.

President and Chief Executive Officer Anton Dibowitz said revenue efficiency was 97% in the third quarter and 98% year to date. He said four drillships had been returned to work this year after significant idle periods and that all ten active drillships were on contract.

Floaters revenues exclusive of reimbursable items increased to $346 million from $279 million, primarily due to a full quarter of operations for VALARIS DS-10 and DS-12, which commenced new contracts in June and April, and a new contract for VALARIS DS-15 in September after a shipyard project. VALARIS DS-9 also commenced a new contract at a higher day rate in the third quarter. Floaters contract drilling expenses exclusive of reimbursable items increased to $189 million from $168 million. The company attributed the expense increase to the reversal of a previously recognized bad debt expense in the second quarter after collection of long-outstanding invoices, as well as higher operating costs for drillships that started contracts after idle periods.

Jackups revenues exclusive of reimbursable items decreased to $171 million from $183 million, primarily due to fewer operating days for VALARIS 249, which was in the shipyard for planned maintenance for most of the third quarter. Jackups contract drilling expenses exclusive of reimbursable items decreased to $129 million from $144 million, which the company said was primarily due to lower mobilization costs, lower personnel-related costs for rigs in planned maintenance and lower war-risk insurance costs, partially offset by higher repair and maintenance costs primarily related to VALARIS 249.

ARO Drilling revenues increased to $145 million from $127 million as VALARIS 250 and 116 recommenced long-term bareboat charters with ARO in July and September after shipyard projects in the Middle East. ARO Drilling contract drilling expenses increased to $92 million from $72 million, primarily due to non-recurring adjustments that reduced second-quarter expenses in connection with the finalization of ARO’s 2025 financial statements and higher bareboat charter expenses. Other revenues exclusive of reimbursable items decreased to $38 million from $40 million. Other contract drilling expenses exclusive of reimbursable items decreased to $21 million from $27 million.

Consolidated contract drilling expenses exclusive of reimbursable items of $380 million were in line with the second quarter. General and administrative expenses decreased to $26 million from $27 million. Merger and integration expenses, primarily professional fees related to the pending business combination with Transocean, increased to $16 million from $11 million. Other income decreased to $20 million from $30 million, primarily due to lower pre-tax gains on asset sales. Tax expense increased to $55 million from $34 million, including a $23 million discrete tax expense that is primarily non-cash and related to rig sales. Adjusted for those items, tax expense decreased to $32 million from $40 million due to a change in the jurisdictional mix of income. Capital expenditures increased to $122 million from $106 million. Cash and cash equivalents decreased to $525 million as of September 30, 2026, from $541 million as of June 30, 2026.

The ongoing conflicts in the Middle East negatively impacted Adjusted EBITDA by approximately $24 million, compared with $30 million in the second quarter. The company said the adverse impacts began to moderate during the third quarter, primarily due to lower war-risk insurance costs after longer-term policies were negotiated at lower rates.

Valaris added approximately $600 million of new contract backlog since reporting second-quarter results, increasing total backlog to approximately $4.8 billion. It sold semisubmersible VALARIS MS-1 for recycling and long-term stacked jackup VALARIS 111 for conversion to a mobile offshore production unit. VALARIS DS-18 commenced a new contract after quarter-end.

Dibowitz said the pending combination with Transocean has received required regulatory approvals and is anticipated to close on or about December 1, 2026. The company said it does not intend to hold future earnings conference calls or provide updates to forward-looking guidance in connection with the pending transaction.