Valaris (VAL) Q1 2026 earnings summary

Executive summary

• Offshore drilling revenues declined 26% year-over-year to $430.1M, with total operating revenues at $465M and net loss narrowing to $16.4M from $37.9M in Q1 2025; adjusted EBITDA was $67M and revenue efficiency reached 98%.

• Pending all-stock merger with Transocean announced, with Valaris shareholders to own 47% of the combined entity, subject to regulatory and shareholder approvals.

• Industry faces cyclical pressures and near-term uncertainty from Middle East conflicts, causing operational downtime and higher insurance costs.

• Secured over $500M in new contract backlog, raising total backlog to $4.9B, the highest in nearly a decade.

• Entered a strategic collaboration with Petronas Suriname and Halliburton for offshore asset development.

Financial highlights

• Total operating revenues fell to $465.4M from $620.7M year-over-year, driven by fewer operating days and asset sales.

• Contract drilling expenses decreased 10% to $373.4M, reflecting lower costs from retired or stacked rigs; exclusive of reimbursable items, expenses fell to $340M.

• Depreciation rose 29% to $42.7M due to new assets placed in service.

• Adjusted EBITDA was $67M, down from $97M in Q4 2025.

• Cash and cash equivalents stood at $578.3M at quarter-end, with no debt maturities until 2030.

Outlook and guidance

• Capital expenditures for 2026 projected at $425M–$475M, focused on maintenance and upgrades.

• Management expects meaningful improvement in financial results through 2026, supported by strong project delivery and operational execution.

• Three additional drillships are on track to restart later in the year, and the DS-12 returned to operations ahead of schedule.

• No share repurchases in Q1; $175M remains authorized under the repurchase program.

• Continued cost inflation and geopolitical risks, especially in the Middle East, are expected.