Numbers
| Share Price | 43.58 |
| Market Cap | $3.28B |
| PE Ratio | N/A |
| EPS | |
| FCF (per share) | -0.5 |
| EBIDTA (per share) | -.36 |
| NAV | $1B |
| Quick Ratio | 1.4 |
| Net Debt | $1B |
| Cash | $578.2M |
Summary
Valaris Limited was incorporated in 2009 and is based in Hamilton, Bermuda. Valaris provides offshore contract drilling services to international, government-owned, and independent oil and gas companies all over the world with a drilling rig fleet of 56 rigs, which include 11 drillships, 4 dynamically positioned semisubmersible rigs, 1 moored semisubmersible rig, and around 40 jackup rigs. After going bankrupt in late 2020 due to low Brent crude oil prices (meaning less incentive for capex among producers on drilling equipment) and a shake-up of management last September, Valaris is now set to finally break even as a result of increasing demand for offshore oil. Relative to its industry, Valaris has a large fleet, low costs, large/diverse customer base, and a growing backlog of contracts. If the offshore oil industry continues to be successful over the next year, Valaris is a worthy investment.
Bull Case
This company is good because it is good.
Bear Case
The only bad thing about this company is that it sucks.
Systematic Factors
Headwinds
- hello world
- hello world
- hello world
- hello world
Tailwinds
- hello world
- hello world
- hello world
- hello world
Unsystematic Factors
Company Strengths
- New production from unsanctioned projects will be required to meet demand; Valaris, which does offshore drilling, can meet this demand. (This is especially the case as the industry shifts away from Russia generally in favor of energy production offshore).
- Valaris, in spite of management turnover, has continued to build up ~$2.7 billion of contract backlog since the beginning of 2021.
- Valaris has the largest customer base in the offshore drilling industry, with exposure to many of the largest holders of offshore oil and gas reserves. Customers (including Exxon, Chevron, Shell, Oxy) include major international, national and independent oil and gas companies across the world, increasing revenue potential and diversifying risk.
- Active in assessing whether to retire or sell off (recently retired 1 and sold a couple) ships rather than reactivate.
- They claim to have the lowest Operating, Support and G&A Costs per Weighted Active Rig in the industry.
- They have the largest fleet of modern offshore drilling rigs in the industry (16 floaters and 37 jackups).
- The expectation (https://finance.yahoo.com/news/breakeven-horizon-valaris-limited-nyse-161738342.html )is that Valaris will break even in 2023.
- They are part of a 50/50 joint venture with Saudi Aramco in ARO Drilling that owns and operates jackup drilling rigs in the Kingdom of Saudi Arabia (this venture is making good money and is scheduled to purchase more jackup rigs).
- They claim to be trading at a significant discount despite “recent outperformance”.
- They claim to have the “Strongest balance sheet in the offshore drilling sector”
- Valaris is the only major offshore driller with a net cash position
- Lowest net debt and net leverage in industry
Company Weaknesses
- Bottom line earnings have been negative (but Valaris is incurring reactivation costs to ready three drillships and one semisubmersible that expected to be completed by Q2; after revenues decreased from Q3 2021 to Q4 2021, they are up (but not to Q3 levels)).
- Recently had a contract terminated (no reason given and no loss sustained because of a termination fee, but could reflect poorly on Valaris).
- Could be a non-story but one of its ships broke loose and incurred minor damages
