Valaris signs multi-million dollar drilling contracts with Petrobras, TotalEnergies

(WO) — Valaris Limited signed new drilling contracts with Petrobras, TotalEnergies and Beach Energy.

Drilling contract details

Valaris signed a three-year contract with Petrobras for drillship VALARIS DS-8. The rig will be reactivated for this contract. The total contract value is approximately $500 million, including a $30 million mobilization fee.

The company also signed a 100-day contract with a TotalEnergies affiliate for drillship VALARIS DS-12. The contract is expected to commence in the second quarter 2023.

In addition, Valarais signed a 70-day drilling contract with Beach Energy, offshore New Zealand, for heavy duty modern jackup VALARIS 107. The contract is expected to commence in third quarter 2023. The total contract value is approximately $26 million.

President and CEO Anton Dibowitz said, “We are particularly pleased to have secured the award for preservation stacked drillship VALARIS DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner. This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021 and speaks volumes about our demonstrated track record of project execution when reactivating rigs.”

Dibowitz added, “Following the reactivation of VALARIS DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years.”

Valaris updates 2023 guidance

As a result of the contract awarded to VALARIS DS-8, which will require the rig to be reactivated from preservation stack, the company is updating its first quarter 2023 and full-year 2023 guidance provided on its Q4 2022 conference call on February 21, 2023.

Q1 2023

Contract drilling expense is expected to increase by approximately $5 million to $385 million to $395 million.

Adjusted EBITDA is expected to decrease by approximately $5 million to negative $5 million to breakeven. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the guidance provided on the company’s Q4 2022 conference call.

Full-Year 2023

Revenues are anticipated to be $1.8 billion to $1.9 billion, unchanged from the guidance provided on the Q4 2022 conference call.

Contract drilling expense is expected to increase by approximately $60 million to $1.49 billion to $1.59 billion.

Adjusted EBITDA is expected to decrease by approximately $60 million to $180 million to $220 million. Adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $280 million to $320 million, unchanged from the guidance provided on the Q4 2022 conference call.

Capital expenditures are expected to increase by $60 million to $320 million to $360 million.