Valaris finds work for stacked drillship and two more rigs
Offshore drilling contractor Valaris has secured new contracts for two drillships, including a stacked one, and a jack-up rig.
Valaris announced on Monday, 6 March 2023, new contracts for three rigs in its fleet, which were awarded subsequent to issuing its recent fleet status report on 21 February 2023, when the firm revealed contract awards and extensions with an associated contract backlog of approximately $230 million, including a floater contract offshore West Africa and jack-up contracts in the Middle East, Australia and Trinidad.
According to Valaris, a three-year contract has been awarded by Petrobras for the Valaris DS-8 drillship, which is stacked in Spain. Therefore, the drillship will need to be reactivated for this contract, which has a total value of approximately $500 million, including a $30 million mobilisation fee.
Anton Dibowitz, Valaris’ President and Chief Executive Officer, remarked: “We are particularly pleased to have secured the award for preservation stacked drillship Valaris DS-8, for a contract that is expected to generate a meaningful return over the firm contract term, and we remain focused on exercising our operational leverage in a disciplined manner.
“This most recent award represents the sixth contract awarded to one of our high-quality stacked floaters since mid-2021, and speaks volumes about our demonstrated track record of project execution when reactivating rigs.”
The 2015-built Valaris DS-8 drillship is of Samsung GF12000 design. It was constructed at Samsung Heavy Industries, Geoje in South Korea. The rig is capable of operating in water depths of 12,000 ft and can accommodate 200 people. The drillship’s maximum drilling depth is 40,000 ft.
“Following the reactivation of Valaris DS-17 and DS-8, we will have ten floaters working across the golden triangle, including four drillships in Brazil, a market where we expect to see continued growth over the next several years,” added Dibowitz.
Furthermore, the offshore drilling contractor also won a 100-day contract with a TotalEnergies affiliate for the Valaris DS-12 drillship. This contract is expected to start in the second quarter of 2023. Based on the company’s fleet status report, this drillship has several jobs lined up. The rig was scheduled to finish work for BP in Mauritania and Senegal in February 2023 and kick off its gig in Angola in March 2023 with an undisclosed operator.
Once it wraps up work for this operator in May 2023, the drillship is slated to move to Egypt in October 2023 to start its job with BP. This is expected to end in August 2024. The 780-foot Valaris DS-12 drillship was built by DSME Okpo shipyard in Geoje, South Korea and can accommodate 200 people. The rig’s maximum operating water depth is 12,000 ft while its maximum drilling depth is 40,000 ft.
In addition, Beach Energy awarded a 70-day contract for the Valaris 107 heavy-duty modern jack-up rig for work offshore New Zealand. The contract, with a total value of around $26 million, is slated to begin in the third quarter of 2023. Currently, this rig is working for Eni in Australia. This deal is expected to end in April 2023 when the rig will move to its assignment with GB Energy, which is anticipated to last until June 2023.
Afterwards, the rig will work for an undisclosed operator in Australia until September 2023. The 2006-built Valaris 107 jack-up rig is of KFELS MOD V – Class B design. It can accommodate 112 people. The rig’s maximum drilling depth is 30,000 ft.
Valaris reveals updated guidance for 2023
As a result of the contract awarded to the Valaris DS-8 drillship, which will require the rig to be reactivated from the preservation stack, Valaris has updated its first quarter of 2023 and full-year 2023 guidance.
In line with this, the firm outlines that its contract drilling expense for the first quarter of 2023 is expected to increase by about $5 million to $385 – $395 million, while its adjusted EBITDA is expected to decrease by around $5 million to negative $5 million to breakeven. Additionally, Valaris’ adjusted EBITDAR, which adds back one-time reactivation expense, is expected to be $25 million to $30 million, unchanged from the previous guidance.
On the other hand, the firm’s revenues for the full-year 2023 are anticipated to be $1.8 – $1.9 billion, unchanged from the previous guidance while the contract drilling expense is expected to increase by approximately $60 million to $1.49 – $1.59 billion.
Valaris’ adjusted EBITDA for full-year 2023 is expected to decrease by around $60 million to $180 – $220 million while adjusted EBITDAR, which adds back one-time reactivation expense, is anticipated to be $280 million to $320 million, unchanged from the previous guidance. The company’s capital expenditures are expected to increase by $60 million to $320 – $360 million.