Valaris Q4 Revenues Slide Sequentially Reflecting Lower Utilization; Reaffirms Guidance

  • Valaris Ltd VAL reported Q1 2023 revenues of $430.1 million, up from $318.4 million a year ago and beating the consensus of $408.4 million.
  • Excluding reimbursable items, revenues decreased to $408 million in Q1 2023 from $413 million in Q4 2022 due to lower utilization for the harsh environment jackup fleet. 
  • In Q1, the company got new contracts and extensions, with an associated contract backlog of around $820 million, increasing to $2.8 billion. 
  • Contract drilling expenses stood at $377 million (vs. $353 million in Q4 2022), with higher repair and maintenance expenses related to special periodic surveys and increased reactivation costs.
  • Adjusted EBITDA stood at $24.3 million vs. adjusted loss of $30.9 million a year ago.
  • EPS of $0.61 surpassed the consensus loss of $(0.35).
  • Capital expenditures increased to $56 million in Q1 from $54 million in Q4 2022.
  • Repurchase: The Board of Directors authorized an increase in the share repurchase program to $300 million in April 2023 and intends to repurchase shares worth $150 million by the end-2023. 
  • VAL announced Mohamed Hegazi as the new CEO of ARO Drilling, its 50/50 joint venture with Saudi Aramco, effective immediately.
  • 2023 Outlook Reiterated: The company expects revenues of $1.8 billion-$1.9 billion (consensus of $1.80 billion), adjusted EBITDA of $180 million-$220 million, contract drilling expense of $1.49 billion-$1.59 billion and capital expenditures of $320 million-$360 million.
  • Price Action: VAL shares are trading lower by 6.05% at $55.97 on the last check Tuesday.
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