Valaris Posts Mixed Q2 Earnings Reflecting Fewer Operating Days For The Jackup Fleet

Valaris Ltd VAL reported Q2 2023 revenues of $415.2 million, beating the consensus of $412.3 million.

Excluding reimbursable items, revenues decreased to $390 million in Q2 2023 from $408 million in Q1 2023 due to fewer operating days for the jackup fleet and a decrease in mobilization and demobilization revenues.

In Q2, the company got new contracts and extensions, with an associated contract backlog of around $180 million, increasing to $3.0 billion. 

Contract drilling expenses stood at $374 million (vs. $374 million in Q1 2023).

Adjusted EBITDA stood at $15.3 million vs. $34.6 million a year ago.

EPS loss of $(0.39) was worse-than-consensus loss of $(0.26).

Capital expenditures increased to $71 million in Q2 from $56 million in Q1 2023.

Repurchase: Valaris repurchased $65 million of shares through June 30, 2023, and $94 million to date. 

The company had boosted the 2023 share repurchase target to $200 million from $150 million in tandem with the VALARIS DS-7 contract award.

"Our outlook for the industry and our business remains very positive, with increasing demand and constrained supply tightening the market. We continue to see increases in contract duration, lead times and day rates, all of which point towards a strong and sustained upcycle. Our earnings and cash flow should grow meaningfully over the next few years as rigs roll from legacy day rate contracts to higher market rates and reactivated rigs return to work on attractive contracts," said Anton Dibowitz, President and Chief Executive Officer.

Price Action: VAL shares closed lower by 1.15% at $75.92 on Tuesday.