Valaris Ltd

What they do

Valaris provides offshore contract drilling services to the international oil and gas industry, operating in almost every major offshore market across six continents. As of February 20, 2026, the company owned 46 rigs, including 13 drillships, two semisubmersible rigs, and 31 jackup rigs, plus a 50% equity interest in ARO, a 50/50 joint venture with Saudi Aramco that owns an additional nine rigs. Services are provided on a day rate contract basis, with customers bearing substantially all well construction and drilling support costs.

Revenue drivers

• Floater fleet (drillships and semisubmersibles) — Day rate contracts for ultra-deepwater drilling; revenue exclusive of reimbursables rose to $502 million in Q2 2026 from $430 million in Q1 2026 primarily due to more operating days as three drillships commenced new contracts.
• Jackup fleet — Premium jackup day rate contracts across the North Sea, Middle East and other markets; the company added more than $160 million of North Sea jackup backlog during Q2 2026.
• ARO joint venture — 50/50 unconsolidated joint venture with Saudi Aramco owning nine rigs; equity in earnings of ARO was $10.6 million in Q2 2026 versus a $1.1 million loss in Q2 2025.
• Reimbursable revenues — Pass-through of customer costs; $36.9 million in Q2 2026, down from $42.9 million in Q2 2025.

Recent performance

For Q2 2026, Valaris reported total operating revenues of $539 million and net income of $47 million, compared with revenues of $615 million and net income of $114 million in Q2 2025. Adjusted EBITDA was $97 million, including approximately $30 million of negative impacts from Middle East conflicts, up from $67 million in Q1 2026. Revenue efficiency was 98% for the quarter. The quarter included a $38 million gain on the sale of assets, including jackup VALARIS 104, and the company returned drillships VALARIS DS-12 and DS-10 to work on schedule and on budget. First half 2026 revenues were $1,004.6 million with net income attributable to Valaris of $34.0 million.

Strategy

Valaris is focused on safe, reliable and efficient operations while high-grading its fleet through divestment of non-core assets, selling long-term stacked jackups VALARIS 104 and 109 in June and July 2026 for total cash proceeds of $74 million. The company is restarting high-specification drillships on new contracts and building backlog, adding more than $160 million of North Sea jackup backlog in Q2 2026. Its stated priority is completing the pending business combination with Transocean, expected to close in Q4 2026, which management says should deliver synergies and enhanced capabilities. Capital expenditures were $106 million in Q2 2026 and $101 million in Q1 2026.

Risks

• Business combination may not close — The Transocean acquisition is subject to conditions including shareholder approvals, a court sanction order, NYSE listing approval, regulatory approvals and the absence of a material adverse effect, and may be delayed or not occur at all.
• Middle East conflict exposure — Q2 2026 Adjusted EBITDA included approximately $30 million of negative impacts from ongoing Middle East conflicts, including higher insurance costs for war-related risks for jackups operating in the region.
• Cyclical offshore drilling demand — The industry is cyclical and driven by global energy demand and customer capital allocation; the oil market is currently in a period of oversupply, which can pressure commodity prices and customer spending.
• Contract and operating concentration — Revenue depends on a limited set of international and government-owned oil and gas customers and on day rate contracts that may pay between the full rate and zero rate depending on rig operations.

Outlook

Management remains positive on the offshore drilling outlook, citing a robust pipeline of deepwater contract opportunities and favorable market fundamentals supporting demand for high-specification assets. The company expects two additional drillships to commence new contracts before year-end, which together with recent rig startups and operational execution is expected to drive further improvement in financial performance over the remainder of the year. The pending business combination with Transocean is described as on track to close in the fourth quarter of 2026.