Valaris
Priced For Bankruptcy, Poised For Growth
Market Cap: $3,318,210,000
P/B: 1.50x (understated book value)
Net Debt: $642,100,000
EV: $3,960,310,000
Shares Outstanding: 71,070,000
Business Overview
Valaris is one of the world’s largest contract drilling companies on the planet with a fleet comprised of fifteen high specification floating rigs (drillers and semi submersibles) and thirty-four jack up vessels that operate in Harsh and Benign environments (49 total vessels). Importantly, 12 of Valaris 13 drill ships are 7th Generation vessels with the best available technology that offer blowout prevention, improved water depth capabilities (10,000 – 12,000ft), and dual derrick systems that allow the rig to perform multiple tasks at the same time and allow for deeper and more precise wells. Aside from drilling, which is an essential part of the demand for Valaris fleet, the company also provides services for the installation of subsea trees which is seeing demand ramp from now through the end of 2028. In addition to the high-quality nature of the fleet Valaris has, the number of offshore rigs has been depleted with less than 150 rigs still in operation versus 300 in service at the end of the last drilling cycle leading to supply/demand tightness and firming contracted day rates for the drilling market.
Fig 1: 7th Gen Drillship Specs