Valaris Ltd
For the period ended Jun 30, 2025. Filed Jul 31, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Jul 31, 2025
VAL$79.77+3.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0000314808-25-000076
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-07-31.
0000314808-25-000126
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 150 previous paragraphs and 153 current paragraphs.
82 unchanged; 45 reworded; 25 added; 23 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 11 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
(2)The increase for Jackups is primarily due to various contract awards and extensions executed, which resulted in incremental aggregate backlog of approximately $345.0 million, partially offset by revenues realized. In June 2025, we received a suspension notice for our current contract on VALARIS 120, which becomes effective upon the completion of its current well, currently estimated to be during September 2025. The table above includes approximately $130.0 million of backlog for the period after the expected suspension date in mid-September.
Current report
Revenues decreased in the current quarter compared to the preceding quarter, primarily due $27.9 million of lower revenues for VALARIS DS-12, which completed its contract in March 2025 and was subsequently warm stacked, largely offset by $18.2 million of revenues for VALARIS 144, which commenced a contract following its mobilization during the preceding quarter. Further contributing to the decrease was the recognition of a non-recurring $7.3 million termination fee in the preceding quarter related to the cancellation of a short-term contract for VALARIS 247. These net decreases were partially offset by a $10.3 million net increase in average daily revenues for the remaining fleet, primarily driven by various jackups commencing new contracts at higher day rates than those earned in the preceding quarter, reduced in part by lower amortized mobilization and upgrade revenue for VALARIS DS-17, which completed its initial contract term late in the preceding quarter.
Current report
Contract drilling expense decreased in the current quarter compared to the preceding quarter, primarily driven by a partial reversal of $17.1 million for a previously accrued legal matter in the current quarter. Further contributing to the decrease was a $6.3 million decrease in amortized mobilization costs, largely attributable to VALARIS DS-17, and a $4.3 million decrease in expenses for the Retired Semis (as defined below), which were sold in April 2025, and VALARIS DS-12, which was warm stacked upon the completion of its contract in the preceding quarter. These decreases were partially offset by a $6.7 million increase in costs associated with VALARIS 144, which commenced a new contract in late March 2025.
Current report
General and administrative expense decreased in the current quarter compared to the preceding quarter, primarily driven by a $7.4 million cost recovery award recognized in the current quarter for fees incurred related to a legal matter.
Current report
Revenues increased compared to the prior year period in part due to incremental revenues of $69.9 million for VALARIS DS-7, following its reactivation and commencement of a contract in May 2024, and $35.8 million for VALARIS 247, which returned to work in the second half of 2024 following contract preparation and mobilization. For the remaining fleet, we had a net increase of $115.4 million from higher average daily revenues, primarily due to various rigs working under higher day rate contracts during the six months ended June 30, 2025. These increases were partially offset by a net decrease of $142.5 million from fewer operating days in the current quarter, largely driven by certain of our floater rigs, including VALARIS DPS-5, which completed its contract in the third quarter of 2024 and was sold in April 2025, and VALARIS DS-10 and VALARIS DS-12, which completed their contracts and were warm stacked since the prior year period.
Current report
In connection with the retirement of the Retired Semis, we recognized a loss on impairment of $7.8 million during the six months ended June 30, 2025. See "Note 5 -Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for information regarding the retirement of these assets.
Current report
General and administrative expenses decreased primarily due to a $7.4 million cost recovery award recognized in the second quarter of 2025 for fees incurred related to a legal matter, combined with lower professional fees and lower compensation related to our long-term incentive plans compared to the prior year period.
Current report
Floater revenues decreased $36.3 million, or 10%, for the current quarter compared to the preceding quarter, primarily due to $27.9 million of lower revenues for VALARIS DS-12, which completed its contract in March 2025 and was subsequently warm stacked. Further contributing to the decrease was a net decline in average daily revenues, largely attributable to $9.6 million of lower amortization of mobilization and upgrade revenues for VALARIS DS-17, which completed its initial contract term late in the preceding quarter.
Current report
Floater contract drilling expense decreased $27.7 million, or 14%, for the current quarter compared to the preceding quarter, primarily driven by a partial reversal of $17.1 million for a previously accrued legal matter in the current quarter. Further contributing to the decrease were $5.5 million of lower amortized mobilization costs, largely attributable to VALARIS DS-17, and a $4.3 million decrease in expenses for the Retired Semis, which were sold in April 2025, and VALARIS DS-12, which was warm stacked upon the completion of its contract in the preceding quarter.
Current report
In connection with our plan to sell the Retired Semis, we recognized a loss on impairment of $7.8 million during the preceding quarter. See "Note 5 - Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for information regarding the retirement of these assets.
Current report
Jackup revenues increased $26.1 million, or 14%, for the current quarter compared to the preceding quarter, primarily driven by $18.2 million of incremental revenue related to the commencement of a contract for VALARIS 144 following its mobilization during the preceding quarter. For the remainder of the jackup fleet, there was a net increase of $10.3 million from higher average daily revenues, largely due to various jackups in our fleet commencing new contracts at higher day rates than those earned in the preceding quarter. These increases were partially offset by a $7.3 million decrease from the recognition of a non-recurring termination fee in the preceding quarter related to the cancellation of a short-term contract for VALARIS 247.
Current report
Jackup contract drilling expense increased $7.6 million, or 7%, for the current quarter compared to the preceding quarter, primarily due to a $6.7 million increase in costs associated with VALARIS 144, which commenced a new contract following its mobilization during the preceding quarter.
Current report
ARO revenue increased $5.2 million, or 4%, for the current quarter compared to the preceding quarter, primarily due to an increase of $7.8 million from higher average daily revenues resulting from the commencement of four long-term contract extensions at higher day rates than those earned in the preceding quarter. This increase was partially offset by a net decrease of $2.3 million from fewer operating days in the current quarter for certain rigs that underwent scheduled repairs.
Current report
ARO contract drilling expense increased $10.8 million, or 13%, for the current quarter compared to the preceding quarter, primarily due to higher repairs and maintenance costs of $4.9 million related to scheduled repairs and an increase of $4.3 million from higher bareboat charter lease expenses resulting from the commencement of four long-term bareboat charter lease extensions at higher rates than the preceding quarter.
Current report
Other revenue increased $4.7 million, or 13%, for the current quarter compared to the preceding quarter, primarily due to an increase in lease revenue resulting from the commencement of four long-term bareboat charter lease extensions at higher rates for our leased rigs to ARO in the current quarter.
Current report
Segment information for the six months ended June 30, 2025 and 2024 is as follows (in millions):
Current report
Six Months Ended June 30, 2025
Current report
Six Months Ended June 30, 2024
Current report
Floater revenues decreased $4.5 million, or 1%, during the six months ended June 30, 2025 compared to the prior year period, primarily due to a $150.2 million decrease resulting from fewer operating days largely driven by VALARIS DPS-5, which completed its contract in the second half of 2024 and was sold in April 2025, and VALARIS DS-10 and VALARIS DS-12, which completed their contracts and were warm stacked since the prior year period, partially offset by $69.9 million of incremental revenue for VALARIS DS-7, following its reactivation and commencement of a new contract in May 2024. The decline in operating days was partially offset by a net increase of $75.5 million from higher average daily revenues, driven by certain rigs working under higher day rate contracts during the six months ended June 30, 2025 compared to the prior year period, partially offset by lower amortization of mobilization and upgrade revenues.
Current report
Floater contract drilling expense decreased $104.0 million, or 21%, during the six months ended June 30, 2025 compared to the prior year period, primarily due to $24.0 million of lower costs for the Retired Semis, which were sold in April 2025, a $17.8 million decrease in expenses related to VALARIS DS-7, largely driven by reactivation costs incurred in the prior year period which were partially offset by incremental operating costs in the six months ended June 30, 2025, and $13.5 million of lower operating costs for VALARIS DS-10 and VALARIS DS-12, which operated in the prior year period but are now warm stacked. Further contributing to the decrease were a $17.1 million partial reversal of a previously accrued legal matter in the second quarter of 2025, $10.8 million of lower personnel-related costs, primarily driven by incremental headcount requirements for VALARIS DS-17 while working in Argentina in the prior year period, and $10.4 million from lower amortized mobilization costs attributable to certain rigs in the floater fleet.
Current report
In connection with the retirement of the Retired Semis, we recognized a loss on impairment of $7.8 million during the six months ended June 30, 2025. See "Note 5 - Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for information regarding the retirement of these assets.
Current report
Jackup contract drilling expense increased $14.7 million, or 6%, during the six months ended June 30, 2025 compared to the prior year period, primarily due to $11.1 million of incremental costs related to VALARIS 247, which returned to work in the second half of 2024.
Current report
Other revenue remained relatively flat during the six months ended June 30, 2025 compared to the prior year period.
Current report
Other contract drilling expense increased $2.4 million, or 8%, during the six months ended June 30, 2025 compared to the prior year period, primarily due to increased repairs and maintenance costs of $1.6 million.
Current report
In May 2025, we entered into an agreement to sell VALARIS 247, a rig within our Jackups segment, for approximately $108.0 million, subject to certain customary closing conditions and the completion of its current drilling contract. In accordance with the agreement, a $21.5 million deposit was made by the buyer into an escrow account held by a third party during the second quarter of 2025. We expect to collect the deposit and remaining proceeds and to recognize a pre-tax gain of approximately $87.0 million upon completion of the sale, which is expected to occur during the second half of 2025.
Removed paragraphs (23)
Previous report
(2)The increase for Jackups is primarily due to a 545-day contract award for VALARIS 117 offshore Trinidad, a two-year contract award for VALARIS 248 in our North Sea operating region and a 180-day contract extension for VALARIS 107 offshore Australia, which resulted in incremental aggregate backlog of approximately $200.0 million, partially offset by revenues realized.
Previous report
Revenues increased in the current quarter compared to the preceding quarter, primarily due to $30.6 million of incremental revenue generated by VALARIS DS-4, which commenced a new contract in December of 2024 after planned downtime for contract upgrades and preparation activities. Further contributing to the increase were higher average daily revenues of $21.5 million, largely driven by VALARIS DS-15 and VALARIS 107 commencing new contracts in late December and early November 2024, respectively, at higher day rates than those earned under their previous contracts, and the recognition of a $7.3 million termination fee related to the cancellation of a short-term contract for VALARIS 247 during the current quarter. These increases were partially offset by a $26.3 million net decrease in revenues due to fewer operating days in the current quarter, largely driven by the completion of a contract for VALARIS DS-12 in March 2025 and mobilizations and scheduled repairs for certain jackups between contracts during the current quarter.
Previous report
Contract drilling expense decreased in the current quarter compared to the preceding quarter, primarily driven by a non-recurring accrual of $16.0 million for a legal matter which was recognized in the preceding quarter. This decrease was partially offset by higher costs for VALARIS DS-4 of $12.2 million due to incremental operations in the current quarter following its contract commencement in December 2024.
Previous report
Revenues increased in part due to incremental revenue of $41.5 million for VALARIS DS-7 in the current quarter, following its reactivation and commencement of a contract in May 2024. For the remaining fleet, revenues increased $62.0 million from higher average daily revenues, primarily due to certain rigs working under higher day rate contracts during the current quarter as compared to the prior year period, which was reduced in part by lower amortization of mobilization revenues for certain rigs. Additionally, we recognized a $7.3 million termination fee in the current quarter related to the cancellation of a short-term contract for VALARIS 247. These increases were reduced by $24.6 million from fewer operating days in the current quarter, largely driven by VALARIS DS-10 and VALARIS DPS-5 completing contracts in the second half of 2024 and subsequently being warm stacked, which were partially offset by more operating days for our jackup fleet.
Previous report
Contract drilling expense decreased primarily due to $15.0 million of lower operating costs related to the warm stacking of VALARIS DPS-5 and VALARIS DS-10 in the second half of 2024 and a $14.5 million net decrease in costs related to VALARIS DS-7, largely driven by reactivation costs incurred in the prior year period which were partially offset by incremental operating costs incurred for the rig in the current quarter. Further contributing to the decrease was $11.3 million of lower mobilization costs for certain other rigs in the current quarter.
Previous report
In connection with our plan to sell the Retired Semis, we recognized a loss on impairment of $7.8 million during the current quarter. See "Note 5 -Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for information regarding the retirement of these assets.
Previous report
(6)During the second quarter of 2024, we leased VALARIS 76 to ARO.
Previous report
Three Months Ended March 31, 2024
Previous report
Floater revenues increased $28.3 million, or 9%, for the current quarter as compared to the preceding quarter, primarily due to $30.6 million of incremental revenue generated by VALARIS DS-4, which commenced a new contract in December of 2024 after planned downtime for contract upgrades and preparation activities. For the remaining fleet, there was a net increase of $7.1 million from higher average daily revenues, largely driven by certain rigs working under higher day rate contracts relative to the preceding quarter, including VALARIS DS-15 which commenced a new contract in December 2024. These increases were partially offset by a $9.1 million net decrease due to fewer operating days in the current quarter, primarily due to the completion of a contract for VALARIS DS-12 in March 2025.
Previous report
Floater contract drilling expense decreased $6.9 million, or 3%, for the current quarter as compared to the preceding quarter, primarily driven by a non-recurring accrual of $16.0 million for a legal matter which was recognized in the preceding quarter and lower personnel-related costs of $1.7 million. These decreases were partially offset by higher costs for VALARIS DS-4 of $12.2 million due to incremental operations in the current quarter following its contract commencement in December 2024.
Previous report
In connection with our plan to sell the Retired Semis, we recognized a loss on impairment of $7.8 million during the current quarter. See "Note 5 - Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for information regarding the retirement of these assets.
Previous report
Jackup revenues decreased $1.9 million, or 1%, for the current quarter as compared to the preceding quarter, primarily driven by a $18.4 million net decrease from fewer operating days in the current quarter, which was largely due to scheduled repairs on VALARIS 249 and mobilizations between contracts for certain of our rigs. This decrease was partially offset by a net increase of $9.1 million from higher average daily revenues, as a result of certain rigs working under higher day rate contracts compared to the preceding quarter, and the recognition of a $7.3 million termination fee related to the cancellation of a short-term contract for VALARIS 247.
Previous report
Jackup contract drilling expense increased $2.8 million, or 2%, for the current quarter as compared to the preceding quarter, primarily due to a $5.2 million increase in repairs and maintenance costs for leg repairs on VALARIS 249 in the current quarter.
Previous report
ARO revenue remained relatively flat for the current quarter as compared to the preceding quarter.
Previous report
ARO contract drilling expense increased $4.1 million, or 5%, for the current quarter as compared to the preceding quarter, largely driven by higher bareboat charter lease expense in the current quarter.
Previous report
Other revenue increased $3.4 million, or 10%, for the current quarter as compared to the preceding quarter, primarily due to a $3.8 million increase in revenue earned from lease agreements with ARO.
Previous report
Other contract drilling expense decreased $1.6 million, or 9%, for the current quarter as compared to the preceding quarter, primarily due to a $3.3 million decrease in repairs and maintenance costs as a result of special periodic survey projects on the leased rigs in the preceding quarter, which were partially offset by higher personnel-related costs for our managed rigs of $1.2 million.
Previous report
Floater revenues increased $46.2 million, or 15%, for the current quarter compared to the prior year period, primarily due to incremental revenue of $41.5 million for VALARIS DS-7 in the current quarter, following its reactivation and commencement of a contract in May 2024. For the remaining fleet, revenues increased $44.7 million from higher average daily revenues, primarily due to certain rigs working under higher day rate contracts during the current quarter as compared to the prior year period, which was reduced in part by lower amortization of mobilization revenues for certain rigs. These increases were partially offset by a $40.2 million net decrease from fewer operating days in the current quarter, largely driven by VALARIS DS-10 and VALARIS DPS-5 completing contracts in the second half of 2024 and subsequently being warm stacked.
Previous report
In connection with our plan to sell the Retired Semis, we recognized a loss on impairment of $7.8 million during the current quarter. See "Note 5 - Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for information regarding the retirement of these assets.
Previous report
Jackup contract drilling expense decreased $4.9 million, or 4%, for the current quarter compared to the prior year period primarily due to $3.5 million of lower mobilization costs related to certain rigs that moved to shipyards for projects between contracts in the prior year period.
Previous report
Other revenue decreased $6.2 million, or 15%, for the current quarter compared to the prior year period, primarily due to lower revenue earned from lease agreements with ARO of $5.5 million, primarily driven by contract terminations for VALARIS 143, VALARIS 147 and VALARIS 148 since the prior year period.
Previous report
Interest income decreased $2.2 million, or 13%, for the current quarter compared to the preceding quarter, primarily due to a $2.2 million decrease in interest income earned on our outstanding 10-year shareholder notes receivable due from ARO (the "Notes Receivable from ARO"). This decrease was driven by lower interest rates as a result of an annual interest rate reset, which occurs at the end of the preceding year in accordance with the terms Notes Receivable from ARO.
Previous report
Interest expense increased $2.2 million, or 10%, for the current quarter compared to the preceding quarter, primarily due to lower capitalized interest for certain rigs that underwent capital projects in the preceding quarter.
Reworded paragraphs (45)
Previous wording
We are a leading provider of offshore contract drilling services to the international oil and gas industry with operations in almost every major offshore market across six continents. We own the world's largest offshore drilling rig fleet, including one of the newest ultra-deepwater fleets in the industry and a leading premium jackup fleet. As of May 1, 2025, we own 49 rigs, including 13 drillships, one dynamically positioned semisubmersible rigs, one moored semisubmersible rig, 34 jackup rigs and a 50% equity interest in ARO, our 50/50 unconsolidated joint venture with Saudi Aramco, which owns an additional nine rigs.
Current wording
We are a leading provider of offshore contract drilling services to the international oil and gas industry with operations in almost every major offshore market across six continents. We own the world's largest offshore drilling rig fleet, including one of the newest ultra-deepwater fleets in the industry and a leading premium jackup fleet. As of July 31, 2025, we own 49 rigs, including 13 drillships, two semisubmersible rigs, 34 jackup rigs and a 50% equity interest in ARO, our 50/50 unconsolidated joint venture with Saudi Aramco, which owns an additional nine rigs.
Previous wording
Demand for offshore drilling is impacted by fundamental supply and demand dynamics for hydrocarbons. In recent weeks, the macroeconomic outlook has become more uncertain, with fears that increased tariffs on trade and corresponding increased supply chain costs could lead to a slowdown in global economic growth and a reduction in demand for hydrocarbons. At the same time, OPEC+ has announced a larger-than-expected reversal of oil production cuts, which could increase global crude oil supply. As a result, Brent crude oil prices have declined into the $60-$70 range per barrel. While near-term Brent crude oil prices have been volatile in recent weeks, longer-dated Brent crude oil prices have remained relatively stable, with the five-year forward price above $65 per barrel, a level at which nearly 90% of undeveloped offshore reserves are expected to be profitable based on Rystad Energy estimates. However, if oil prices continue to decline, demand and pricing for our services could also decline and have a material adverse effect on our operations and financial condition.
Current wording
Demand for offshore drilling is primarily influenced by fundamental supply and demand dynamics for hydrocarbons. In recent months, the macroeconomic outlook grew more uncertain, with concerns that increased trade tariffs and corresponding increased supply chain costs could lead to a slowdown in global economic growth and a reduction in demand for hydrocarbons. Additionally, OPEC+ announced larger-than-expected reversals of oil production cuts, which could increase global crude oil supply. As a result, the average price of Brent crude oil declined to approximately $68 per barrel in the second quarter, more than 10% lower than the prior quarter. While near-term prices have been volatile, longer-dated Brent crude oil prices have remained relatively stable, with the five-year forward price remaining above $65 per barrel. At this level, nearly 90% of undeveloped offshore reserves are expected to be profitable according to Rystad Energy estimates. However, if oil prices continue to decline, demand and pricing for our services could be negatively impacted, which may have a material adverse effect on our business, results of operations and financial condition.
Previous wording
(1)The increase for Floaters is primarily due to a two-year contract award for VALARIS DS-10 offshore West Africa and a six-month contract extension for VALARIS DS-9 offshore Angola, which resulted in incremental aggregate backlog of approximately $391.0 million, partially offset by revenues realized.
Current wording
(1)The increase for Floaters is primarily due to multi-year contracts executed for VALARIS DS-16 and VALARIS DS-18 in the Gulf of America, a two-year contract award for VALARIS DS-10 offshore West Africa and a 250-day contract for VALARIS DS-15 offshore West Africa, which resulted in incremental aggregate backlog of approximately $1.2 billion, partially offset by revenues realized.
Previous wording
(3)Other includes the backlog for our managed rig services and the bareboat charter backlog for the jackup rigs leased to ARO in order for ARO to fulfill certain of its drilling contracts with Saudi Aramco. The increase in Other is primarily due to five-year contract extensions for leased rigs VALARIS 116, VALARIS 140, VALARIS 141, VALARIS 146 and VALARIS 250, which resulted in incremental aggregate backlog of approximately $407.0 million, partially offset by revenues realized.
Current wording
(3)Other includes the backlog for our managed rig services and the bareboat charter backlog for the jackup rigs leased to ARO in order for ARO to fulfill certain of its drilling contracts with Saudi Aramco. The increase in Other is primarily due to five-year contract extensions for five of our leased rigs, VALARIS 116, VALARIS 140, VALARIS 141, VALARIS 146 and VALARIS 250, which resulted in incremental aggregate backlog of approximately $407.0 million, partially offset by revenues realized.
Previous wording
(4)The increase for ARO is primarily due to five-year contract extensions for VALARIS 116, VALARIS 140, VALARIS 141, VALARIS 146 and VALARIS 250, which resulted in incremental aggregate backlog of approximately $1.2 billion, partially offset by revenues realized.
Current wording
(4)The increase for ARO is primarily due to five-year contract extensions for the five leased rigs referenced above, which resulted in incremental aggregate backlog of approximately $1.2 billion, partially offset by revenues realized.
Previous wording
After several years of increasing global floater utilization and day rates, the pace of contracting began to slow in mid-2024 with customer demand for 2024 and 2025 being deferred to future periods. As a consequence, we have seen a decline in the number of contracted benign environment floaters from a recent peak of 128 in April 2024 to 118 at March 31, 2025, representing 84% utilization of the global marketed fleet, which has put some pressure on day rates in the near term. While the outlook for our sector has become more uncertain since the announced increased tariffs on trade and the recent OPEC+ announcement to increase oil production, we are still in active discussions with customers on various opportunities with anticipated contract commencements in mid-2026 and beyond for our floater fleet.
Current wording
After several years of increasing global floater utilization and day rates, the pace of contracting began to slow in mid-2024 with customer demand for 2024 and 2025 being deferred to future periods. As a consequence, we have seen a decline in the number of contracted benign environment floaters from a recent peak of 128 in April 2024 to 119 at June 30, 2025, representing 86% utilization of the global marketed fleet, which has put some pressure on day rates in the near term. While the macroeconomic outlook remains uncertain, both Valaris and the broader industry have seen a recent uptick in contracting activity for work commencing in mid-2026 and beyond, and we remain in active discussions with customers on additional opportunities for our floater fleet.
Previous wording
Global jackup utilization and day rates increased for several years but started to moderate following Saudi Arabia's announcement in early 2024 that they plan to maintain maximum sustainable capacity at 12 million barrels per day. Since this announcement, Saudi Aramco has suspended contracts for 33 rigs, which represents 8% of the marketed jackup fleet, including VALARIS 143, VALARIS 147 and VALARIS 148. To date, 15 of the 33 suspended rigs have been contracted in other regions and one rig has been retired from the offshore drilling fleet. We believe that less than half of the remaining suspended rigs are likely to be competitive in other higher-specification, benign environment regions.
Current wording
Global jackup utilization and day rates increased for several years but started to moderate following Saudi Arabia's announcement in early 2024 that they plan to maintain maximum sustainable capacity at 12 million barrels per day. Since this announcement, Saudi Aramco has suspended contracts for 37 rigs, which represents 8% of the marketed jackup fleet, including VALARIS 143, VALARIS 147 and VALARIS 148. To date, 18 of the 37 suspended rigs have been contracted in other regions and one rig has been retired from the offshore drilling fleet. We believe that less than half of the remaining suspended rigs are likely to be competitive in other higher-specification, benign environment regions.
Previous wording
Utilization for the global marketed jackup fleet was 90% at March 31, 2025, compared to 94% in early 2024. This decrease in global utilization has put some downward pressure on day rates in certain benign environment regions. However, other benign environment markets where we operate, such as Australia and Trinidad, have been largely insulated from this and day rates in these regions have remained firm.
Current wording
Utilization for the global marketed jackup fleet was 90% at June 30, 2025, compared to 94% in early 2024. This decrease in global utilization has put some downward pressure on day rates in certain benign environment regions. However, other benign environment markets where we operate, such as Australia and Trinidad, have been largely insulated from this and day rates in these regions have remained relatively firm.
Previous wording
From a supply perspective, as of March 31, 2025, there were 502 jackups in the global fleet, with 29% of the current jackup fleet being more than 40 years of age with limited useful lives remaining. Further, we believe that some of the jackups that are currently idle are not competitive, either due to their age or the length of time stacked. Expenditures required to reactivate some of these rigs may prove cost prohibitive and drilling contractors may instead elect to scrap certain rigs. We believe there are only 11 newbuild jackups remaining at shipyards, of which eight are at Chinese shipyards, some of which are expected to be used locally in China.
Current wording
From a supply perspective, as of June 30, 2025, there were 500 jackups in the global fleet, with 28% of the current jackup fleet being more than 40 years of age with limited useful lives remaining. Further, we believe that some of the jackups that are currently idle are not competitive, either due to their age or the length of time stacked. Expenditures required to reactivate some of these rigs may prove cost prohibitive and drilling contractors may instead elect to scrap certain rigs. We believe there are only 11 newbuild jackups remaining at shipyards, of which eight are at Chinese shipyards, some of which are expected to be used locally in China.
Previous wording
Management believes the comparison of the most recently completed quarter to the immediately preceding quarter provides more relevant information needed to understand and analyze the business. As such, as permitted under applicable SEC rules, we have elected to discuss any material changes in our results of operations by including a comparison of our most recently completed fiscal quarter ended March 31, 2025 (the "current quarter") to the immediately preceding fiscal quarter ended December 31, 2024 (the "preceding quarter"). We also discuss any material changes in our results of operations for the three months ended March 31, 2025 compared to the corresponding period of the preceding fiscal year (the "prior year period"), as required under the applicable SEC rules.
Current wording
Management believes the comparison of the most recently completed quarter to the immediately preceding quarter provides more relevant information needed to understand and analyze the business. As such, as permitted under applicable SEC rules, we have elected to discuss any material changes in our results of operations by including a comparison of our most recently completed fiscal quarter ended June 30, 2025 (the "current quarter") to the immediately preceding fiscal quarter ended March 31, 2025 (the "preceding quarter"). We also discuss any material changes in our results of operations for the six months ended June 30, 2025 compared to the corresponding period of the preceding fiscal year (the "prior year period"), as required under the applicable SEC rules.
Previous wording
During the current quarter, we approved a plan to retire VALARIS DPS-3, VALARIS DPS-5 and VALARIS DPS-6 rigs (collectively, the "Retired Semis") and the rigs were subsequently sold for recycling and removed from service in April 2025. In connection with this plan, we recognized a loss on impairment of $7.8 million during the current quarter. See "Note 5 -Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for information regarding the retirement of these assets.
Current wording
During the preceding quarter, we approved a plan to retire VALARIS DPS-3, VALARIS DPS-5 and VALARIS DPS-6 rigs (collectively, the "Retired Semis") and the rigs were subsequently sold for recycling and removed from service in April 2025. In connection with this plan, we recognized a loss on impairment of $7.8 million during the preceding quarter. See "Note 5 -Property and Equipment" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for information regarding the retirement of these assets.
Previous wording
Other income, net, increased primarily due to an aggregate $27.0 million of pre-tax gains recognized in the current quarter from the sales of VALARIS 75 and an office building in Angola. These gains were partially offset by a $14.6 million decrease from unfavorable foreign currency exchange rate fluctuations, a $2.2 million decrease from lower interest income and a $2.2 million increase in interest expense.
Current wording
Other income (expense), net, decreased primarily due to an aggregate $27.0 million of pre-tax gains recognized in the preceding quarter related to the sales of VALARIS 75 and an office in Angola.
Previous wording
The consolidated effective tax rate, excluding the impact of discrete tax items for the current quarter, was 15.1%. Discrete tax items for the current quarter were primarily attributable to the establishment of a $168.8 million valuation allowance in connection with the retirement of the Retired Semis. See "Note 10 - Income Taxes" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for additional information. Discrete income tax benefit for the preceding quarter was $15.8 million and was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years. Excluding the aforementioned discrete tax items, income tax expense was $9.0 million for the preceding quarter.
Current wording
The consolidated effective tax rate, excluding the impact of immaterial discrete tax items for the current quarter, was 15.2%. The consolidated effective tax rate, excluding the impact of discrete tax items for the preceding quarter, was 15.1%. Discrete tax items for the preceding quarter were primarily attributable to the establishment of a $168.8 million valuation allowance in connection with the retirement of the Retired Semis.
Previous wording
The following table summarizes our Condensed Consolidated Results of Operations for the three months ended March 31, 2025 and 2024 (in millions, except percentages):
Current wording
The following table summarizes our Condensed Consolidated Results of Operations for the six months ended June 30, 2025 and 2024 (in millions, except percentages):
Previous wording
Floater contract drilling expense decreased $35.6 million, or 15%, for the current quarter compared to the prior year period, primarily due to $15.0 million of lower operating costs related to the warm stacking of VALARIS DPS-5 and VALARIS DS-10 in the second half of 2024 and a $14.5 million net decrease in costs for VALARIS DS-7, largely driven by reactivation costs incurred in the prior year period which were partially offset by incremental operating costs incurred for the rig in the current quarter. Further contributing to the decrease was lower amortization of mobilization costs of $11.8 million for certain other floaters in the current quarter.
Current wording
Contract drilling expense decreased primarily due to $24.0 million of lower costs for the Retired Semis, which were sold in April 2025, a $17.8 million decrease related to VALARIS DS-7, largely driven by reactivation costs incurred in the prior year period which were partially offset by incremental operating costs in the six months ended June 30, 2025, and $13.5 million of lower operating costs for VALARIS DS-10 and VALARIS DS-12, which operated in the prior year period but are now warm stacked. For the remaining fleet, we had a decrease of $17.2 million from lower mobilization costs for certain rigs compared to the prior year period and a decrease of $17.1 million for the partial reversal of a previously accrued legal matter in the second quarter of 2025.
Previous wording
Depreciation expense increased primarily due to new assets placed in service since the prior year period, including those related to rigs that underwent reactivation projects and capital upgrades.
Current wording
Depreciation expense increased primarily due to new assets placed in service since the prior year period, including those related to rigs that underwent capital upgrades.
Previous wording
Other income, net, increased primarily due to an aggregate $27.0 million of pre-tax gains recognized in the current quarter related to the sales of VALARIS 75 and an office in Angola. These gains were partially offset by unfavorable foreign currency exchange rate fluctuations of $10.6 million, lower interest income of $6.6 million and a $6.6 million increase in interest expense.
Current wording
Other income (expense), net, decreased primarily due to lower interest income of $22.5 million, unfavorable foreign currency exchange rate fluctuations of $22.2 million and an $8.8 million increase in interest expense. These decreases were partially offset by an aggregate $27.0 million of pre-tax gains recognized in the six months ended June 30, 2025 related to the sales of VALARIS 75 and an office in Angola.
Previous wording
The consolidated effective tax rate, excluding the impact of discrete tax items for the current quarter, was 15.1%. Discrete tax items for the current quarter were primarily attributable to the establishment of a $168.8 million valuation allowance in connection with the retirement of the Retired Semis. See "Note 10 - Income Taxes" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for additional information. Discrete income tax benefit for the prior year period was $6.6 million and was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years, partially offset by the resolution of prior period tax matters. Excluding the aforementioned discrete tax items, income tax expense for the prior year period was $19.5 million.
Current wording
The consolidated effective tax rate, excluding the impact of discrete tax items for the six months ended June 30, 2025, was 15.2%. Discrete tax items during this period were primarily attributable to the establishment of a $168.8 million valuation allowance in connection with the retirement of the Retired Semis. Discrete income tax benefit for the prior year period was $70.5 million and was primarily attributable to changes in liabilities for unrecognized tax benefits associated with tax positions taken in prior years, including the reversal of a liability associated with tax assessments received from the Luxembourg tax authorities (see "Note 10 -Income Taxes" to our consolidated financial statements included in "Item 1. Financial Statements" for information on this matter), and the resolution of other prior period tax matters. Excluding the aforementioned discrete tax items, income tax expense for the prior year period was $53.4 million.
Previous wording
(5)During the first quarter of 2025, we removed VALARIS DPS-5 from the active fleet and reclassified it to Assets held for sale as of March 31, 2025. VALARIS DPS-5, as well as VALARIS DPS-3 and VALARIS DPS-6 were sold in April of 2025.
Current wording
(1)During the second quarter of 2025, VALARIS DPS-3, VALARIS DPS-5 and VALARIS DPS-6 were sold.
Previous wording
(1)Since the first quarter of 2024, we leased VALARIS 76 to ARO. Also, the lease contracts with ARO for VALARIS 143, VALARIS 147 and VALARIS 148 were terminated and these three rigs have since been preservation stacked. During the first quarter of 2025, we sold VALARIS 75.
Current wording
(2)During the fourth quarter of 2024, the contracts with ARO for VALARIS 147 and VALARIS 148 were terminated and these two rigs have since been preservation stacked. During the first quarter of 2025, we sold VALARIS 75.
Previous wording
(2)This represents the jackup rigs leased to ARO through bareboat charter agreements whereby substantially all operating costs are incurred by ARO. Rigs leased to ARO operate under long-term contracts with Saudi Aramco. Since the first quarter of 2024, we leased VALARIS 76 to ARO and the lease contracts with ARO for VALARIS 143, VALARIS 147 and VALARIS 148 were terminated.
Current wording
(3)This represents the jackup rigs leased to ARO through bareboat charter agreements whereby substantially all operating costs are incurred by ARO. Rigs leased to ARO operate under long-term contracts with Saudi Aramco. During the fourth quarter of 2024, the lease contracts with ARO for VALARIS 147 and VALARIS 148 were terminated.
Previous wording
(3)This represents the jackup rigs owned by ARO, which are operating under long-term contracts with Saudi Aramco. This table does not include Kingdom 3, a newbuild jackup that is under construction in the Middle East.
Current wording
(4)This represents the jackup rigs owned by ARO, which are operating under long-term contracts with Saudi Aramco. This table does not include Kingdom 3, a newbuild jackup that is under construction in the Middle East.
Previous wording
(4)Active fleet represents rigs that are not preservation stacked or classified as held for sale and includes rigs that are in the process of being reactivated.
Current wording
(5)Active fleet represents rigs that are not preservation stacked and includes rigs that are in the process of being reactivated.
Previous wording
We provide management services in the U.S. Gulf of Mexico on two rigs owned by a third-party that are not included in the table above.
Current wording
We provide management services in the Gulf of America on two rigs owned by a third-party that are not included in the table above.
Previous wording
Segment information for the current quarter, preceding quarter and prior year period is as follows (in millions):
Current wording
Segment information for the current quarter and preceding quarter is as follows (in millions):
Previous wording
Other contract drilling expense remained flat for the current quarter compared to the prior year period.
Current wording
Other contract drilling expense remained relatively flat for the current quarter compared to the preceding quarter.
Previous wording
Jackup revenues increased $46.6 million, or 33%, for the current quarter compared to the prior year period, primarily due to a $21.6 million net increase from more operating days attributable to certain rigs which were preparing for new contracts or undergoing scheduled maintenance activities in the prior year period. Further contributing to the increase were higher average daily revenues of $17.5 million, resulting from various rigs working under contracts with higher day rates than the prior year period, and the recognition of a $7.3 million termination fee related to the cancellation of a short-term contract for VALARIS 247 during the current quarter.
Current wording
Jackup revenues increased $91.8 million, or 30%, during the six months ended June 30, 2025 compared to the prior year period, primarily due to incremental revenues of $35.8 million from VALARIS 247, which returned to work in the second half of 2024 following contract preparation and mobilization from the United Kingdom to Australia. Further contributing to the increase were higher average daily revenues of $31.2 million, largely due to various jackups in our fleet commencing new contracts at higher day rates relative to those earned in the prior year period, and a $17.5 million net increase from more operating days, primarily attributable to rigs which were preparing for new contracts or undergoing scheduled maintenance activities in the prior year period.
Previous wording
ARO revenue decreased $3.6 million, or 3%, for the current quarter compared to the prior year period, primarily driven by a decrease of $24.0 million related to the contract terminations for VALARIS 143, VALARIS 147 and VALARIS 148 in 2024. This decrease was partially offset by $21.8 million of incremental revenue from Kingdom 2, which commenced operations in August 2024, and VALARIS 108, which we began leasing to ARO during the first quarter of 2024.
Current wording
ARO revenue increased $12.1 million, or 5%, during the six months ended June 30, 2025 compared to the prior year period, primarily driven by an increase of $33.6 million from Kingdom 2, which commenced operations in August 2024, and VALARIS 108, which we began leasing to ARO late in the first quarter of 2024. Further contributing to the increase were higher average daily revenues of $12.2 million resulting from the commencement of four long-term contract extensions at higher day rates than those earned in the prior year period, and a net increase of $10.5 million from more operating days as a result of certain rigs which were undergoing maintenance projects in the prior year period. These increases were partially offset by a decrease of $45.6 million related to the contract terminations for VALARIS 143, VALARIS 147 and VALARIS 148 during 2024.
Previous wording
ARO contract drilling expense decreased $12.7 million or 13% for the current quarter compared to the prior year period, primarily due to a decrease of $5.5 million from lower bareboat charter lease expense and $4.3 million of lower personnel-related costs, both of which are primarily related to the terminations of contracts and corresponding bareboat charter lease agreements for VALARIS 143, VALARIS 147 and VALARIS 148.
Current wording
ARO contract drilling expense decreased $10.4 million, or 5%, during the six months ended June 30, 2025 compared to the prior year period, primarily due to lower personnel-related costs of $5.5 million and a $3.3 million net decrease in bareboat charter lease expense, both of which are primarily related to the terminations of contracts and corresponding bareboat charter lease agreements for VALARIS 143, VALARIS 147 and VALARIS 148.
Previous wording
ARO depreciation expense increased $10.5 million, or 55%, for the current quarter compared to the prior year period, primarily due to the additions of Kingdom 1 and Kingdom 2 to the fleet.
Current wording
ARO depreciation expense increased $19.5 million during the six months ended June 30, 2025 compared to the prior year period, primarily due to the additions of Kingdom 1 and Kingdom 2 to the fleet.
Previous wording
Net gains on the sale of property increased $27.0 million for the current quarter compared to the preceding quarter, as a result of the completion of sales of VALARIS 75 and an office in Angola during the current quarter, which resulted in pre-tax gains of $23.0 million and $4.0 million, respectively.
Current wording
Net gains on sale of property in the preceding quarter related to the sales of VALARIS 75 and an office in Angola, which resulted in pre-tax gains of $23.0 million and $4.0 million, respectively.
Previous wording
Net foreign currency exchange losses were $5.2 million in the current quarter compared to $9.4 million gains in the preceding quarter, primarily driven by unfavorable exchange rate movements in Brazilian reals and euros.
Current wording
Net foreign currency exchange losses were $9.1 million in the current quarter compared to $5.2 million in the preceding quarter, primarily driven by unfavorable exchange rate movements in euros and Australian dollars relative to the preceding quarter.
Previous wording
Interest income decreased $6.6 million, or 31%, for the current quarter compared to the prior year period, primarily due to a $3.9 million decrease in interest income earned on our outstanding Notes Receivable from ARO, which was largely driven by lower interest rates as a result of an annual interest rate reset that occurred at the end of the preceding year and a lower principal balance relative to the prior year period. Further contributing to the decrease was lower interest income on cash equivalents of $2.6 million as a result of lower average balances during the current quarter.
Current wording
Interest income decreased $22.5 million, or 43%, during the six months ended June 30, 2025 compared to the prior year period, primarily due to a $19.5 million decrease in interest income earned on our outstanding Notes Receivable from ARO, which was largely driven by the recognition of $13.9 million of non-cash interest income related to an adjustment to the discount on our outstanding Notes Receivable with ARO as part of a net settlement agreement in the prior year period and lower interest rates as a result of an annual interest rate reset that occurred at the end of 2024. Further contributing to the decrease was lower interest income on cash equivalents of $3.0 million as a result of lower average balances during the current quarter.
Previous wording
Interest expense increased $6.6 million, or 37%, for the current quarter compared to the prior year period, primarily due to lower capitalized interest for VALARIS DS-13 and VALARIS DS-14, which were delivered at the end of 2023 and mobilized to the shipyard in the prior year period.
Current wording
Interest expense increased $8.8 million, or 22%, during the six months ended June 30, 2025 compared to the prior year period, primarily due to lower capitalized interest for VALARIS DS-13 and VALARIS DS-14, which were delivered at the end of 2023 and mobilized to the shipyard in the prior year period.
Previous wording
Net gains on the sale of property increased $27.2 million for the current quarter compared to the prior year period as a result of the completion of sales of VALARIS 75 and an office in Angola during the current quarter, which resulted in pre-tax gains of $23.0 million and $4.0 million, respectively.
Current wording
Net gains on sale of property for the six months ended June 30, 2025 related to the sales of VALARIS 75 and an office in Angola in the first quarter of 2025, which resulted in pre-tax gains of $23.0 million and $4.0 million, respectively.
Previous wording
Net foreign currency exchange losses were $5.2 million during the current quarter compared to $5.4 million of gains in the prior year period, primarily driven by unfavorable exchange rate movements in euros and Brazilian real.
Current wording
Net foreign currency exchange losses were $14.3 million during the six months ended June 30, 2025 compared to $7.9 million of gains in the prior year period, primarily driven by unfavorable exchange rate movements in euros, Brazilian real and British pounds relative to the prior year period.
Previous wording
Our cash and cash equivalents as of March 31, 2025 and December 31, 2024 were $441.4 million and $368.2 million, respectively. We have no debt principal payments due until 2030 and had $375.0 million available for borrowing, including up to $150.0 million for the issuance of letters of credit, under the 2028 Credit Agreement as of April 25, 2025. See below and "Note 8 -Debt" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for additional information on the 2028 Credit Agreement and the 8.375% Second Lien Notes due 2030.
Current wording
Our cash and cash equivalents as of June 30, 2025 and December 31, 2024 were $503.4 million and $368.2 million, respectively. We have no debt principal payments due until 2030 and had $375.0 million available for borrowing, including up to $150.0 million for the issuance of letters of credit, under the 2028 Credit Agreement as of July 25, 2025. See below and "Note 8 -Debt" to our condensed consolidated financial statements included in "Item 1. Financial Statements" for additional information on the 2028 Credit Agreement and the 8.375% Second Lien Notes due 2030.
Previous wording
During the three months ended March 31, 2025, we generated $155.9 million of cash flow from operating activities primarily due to operating income for the period of $143.0 million and approximately$26.0 millionof tax refunds received from the Australian tax authority during the first quarter of 2025, partially offset by other changes in working capital. An additional source of cash was $14.0 million of cash proceeds related to the sale of VALARIS 75. Our primary uses of cash were $100.2 million for maintenance and upgrades of our drilling rigs.
Current wording
During the six months ended June 30, 2025, we generated $275.9 million of cash flow from operating activities primarily due to operating income for the period of$307.1 million and approximately$26.0 millionof tax refunds received from the Australian tax authority during the first quarter of 2025, partially offset by other changes in working capital. An additional source of cash was $24.0 million of cash proceeds related to the sale of VALARIS 75 and the sale of the Retired Semis. Our primary uses of cash were $167.4 million for maintenance and upgrades of our drilling rigs.
Previous wording
During the three months ended March 31, 2024, we generated $26.3 million of cash flow from operating activities primarily due to operating income for the quarter of $29.3 million and other changes in working capital. Our primary uses of cash were $151.3 million for maintenance and upgrades of our drilling rigs, including reactivation costs and costs to mobilize VALARIS DS-13 and VALARIS DS-14 to their stacking location.
Current wording
During the six months ended June 30, 2024, we generated $37.8 million of cash flow from operating activities primarily due to operating income for the period of $138.2 million, partially offset by changes in working capital. Our primary uses of cash were $261.5 million for maintenance and upgrades of our drilling rigs, reactivation costs and costs related to the mobilization of VALARIS DS-13 and VALARIS DS-14 to their stacking location in early 2024.
Previous wording
The distribution of earnings to the joint-venture partners is at the discretion of the ARO board of managers, consisting of 50/50 membership of managers appointed by Saudi Aramco and managers appointed by us, with approval required by both shareholders. The timing and amount of any cash distributions to the joint venture partners cannot be predicted with certainty and will be influenced by various factors, including the liquidity position and long-term capital requirements of ARO. ARO has not made a cash distribution of earnings to its partners since its formation. ARO had cash and cash equivalents of $37.6 million as of March 31, 2025.
Current wording
The distribution of earnings to the joint-venture partners is at the discretion of the ARO board of managers, consisting of 50/50 membership of managers appointed by Saudi Aramco and managers appointed by us, with approval required by both shareholders. The timing and amount of any cash distributions to the joint venture partners cannot be predicted with certainty and will be influenced by various factors, including the liquidity position and long-term capital requirements of ARO. ARO has not made a cash distribution of earnings to its partners since its formation. ARO had cash and cash equivalents of $73.0 million as of June 30, 2025.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
(6)During the first quarter of 2025, we removed VALARIS DPS-5 from the active fleet. The rig was subsequently sold in April 2025.