Valaris Limited

Comparability note. FY2021 is split into Predecessor (1 Jan–30 Apr 2021) and Successor (1 May–31 Dec 2021) periods under fresh-start accounting and is not comparable. Tables therefore cover FY2022–FY2025, with 1H 2026 shown separately. All figures are in US$ millions unless stated.

Income statement

Valaris has not paid a common dividend since emerging from Chapter 11.

Quarterly run-rate (most recent five quarters)

Source: Q2 2026 PR five-quarter tables; Q3 2025, Q4 2025 and Q1 2026 PRs. Q1 2025 total revenue is derived as US$620.7 m (FY2025 total less Q2–Q4), and Q1 2025 net income as about −US$39.2 m.

Margins (computed from the tables above)

KoalaGains reports FY2025 gross margin of 31.2%, operating margin of 20.1% and EBITDA margin of 26.3% (aggregator). FY2022–FY2025 revenue CAGR is about 13.9% (1,602 to 2,369 over three years).

Gross profit. Valaris does not report gross profit. Using revenue minus contract drilling expense minus depreciation, KoalaGains estimates about a 31% gross margin for FY2025.

Balance sheet

Sources: Q2 2026 cash and Q1 2026 cash [Q2 2026 PR via Quiver]; FY2025 cash of about US$599 m (Tradmap, from XBRL).

Tradmap reports FY2025 ROE of 30.9% and ROA of 18.5%, which implies equity of about US$3.2 bn and total assets of about US$5.3 bn (derived; treat as indicative).

Cash flow

• FY2025 operating cash flow was US$546.2 m (KoalaGains, from the 10-K); free cash flow was about US$203 m (Tradmap).

• Q3 2025 capex was US$70 m and Q4 2025 was US$106 m.

• FY2026 capex guidance was US$425–475 m [Q4 2025 PR via Equibles].

• Buybacks: FY2023 per the Q4 2023 PR; FY2025 per the Q4 2025 PR (US$25 m in Q4, US$75 m in Q3).

Ratios

Trend commentary.

1. Revenue inflection, 2022–2024. Revenue grew from about US$1.6 bn to US$2.36 bn. The 10-K FY2024 attributes US$401.7 m of incremental 2024 revenue to reactivated drillships DS-17, DS-8 and DS-7, plus US$165.8 m from higher average daily revenue, partly offset by US$30.9 m from fewer operating days.

2. Plateau in 2025 and trough in 1H 2026. FY2025 revenue was flat at US$2,369 m, with fewer operating days offset by higher day rates [10-K FY2025]. Floater white space then pushed Q1 2026 revenue to US$465 m. Q2 2026 rebounded to US$539 m as DS-12, DS-10 and a third drillship restarted.

3. Earnings quality. FY2023 (US$790 m tax benefit) and FY2025 (US$680 m Q4 tax benefit, about US$691 m related to tax changes [Q1 2026 PR]) are flattered by non-cash tax items. FY2025 attributable net income of US$983 m compares with OCF of US$546 m.

4. Middle East conflict impact. About US$30 m of negative Adjusted EBITDA impact in Q2 2026, from war-risk insurance and delayed bareboat charter returns, which management expected to moderate in 2H 2026 [Q2 2026 PR].

5. Asset monetization. Gains on sale were US$90 m in Q3 2025 (V247) and US$38 m in Q2 2026 (V104), with US$74 m of proceeds from V104/V109. These support liquidity while capex is elevated.

6. FY2026 guidance (Feb 2026, now suspended). Total operating revenues of US$2,125–2,205 m, Adjusted EBITDA of US$485–565 m excluding merger costs, and capex of US$425–475 m [Q4 2025 PR]. 1H 2026 Adjusted EBITDA was about US$164 m, implying 2H 2026 of about US$321–401 m to reach the range.

Guidance. FY2026 guidance (February 2026) was revenue of US$2,125–2,205 m, Adjusted EBITDA of US$485–565 m and capex of US$425–475 m. It is no longer being updated. 1H 2026 Adjusted EBITDA was about US$164 m, so the guidance implies a materially stronger 2H as DS-15, DS-18, DS-7 and DS-9 programmes start and Middle East impacts moderate.

Bull case.

1. The ~US$10 bn combined backlog and more than US$200 m of synergies, owned through a ~47% stake in the merged Transocean, give leverage to a 2027–28 deepwater upcycle.

2. Strong 2026–27 floater contract coverage (DS-4, DS-7, DS-8, DS-9, DS-16, DS-18) supports a step-up in earnings from the 1Q 2026 trough.

3. ARO and the jackup franchise provide diversification that Transocean lacks today.

Bear case.

1. Middle East escalation could prolong war-risk costs and disrupt ARO.

2. Floater white space may recur if 2027 tenders slip, and the stacked DS-13/14 remain a drag.

3. Integration risk and combined leverage at Transocean dilute Valaris's cleaner balance sheet.

Catalysts and monitorables (next 12 months). Q3 2026 results on 2 November 2026; the Court Meeting and Transocean EGM on 24 November 2026; the Bermuda court sanction and closing (expected Q4 2026); delivery of the first synergies; DS-18 sequencing (Suriname vs the Anadarko contract); V116's return to ARO; 2027 contract tendering in Brazil and West Africa.

Analyst verdict. Valaris enters what is likely its final quarter as an independent listed company in good operating shape and with a credible commercial position. Since its 2021 restructuring, management has rebuilt a premium franchise. It reactivated six drillships, sustained revenue efficiency at or above 96% for five years, kept net leverage below one times EBITDA, and raised backlog to its highest level in about a decade. Those achievements are why Transocean was willing to pay roughly a 32% premium in an all-stock structure that leaves Valaris holders with nearly half of a 73-rig market leader.

The standalone story is not flawless. Reported profitability in 2023 and 2025 was heavily flattered by non-cash tax benefits. Cash generation lagged accounting earnings, and floater contract gaps produced a sharp revenue trough in Q1 2026. The 2026 Middle East conflicts added insurance costs and delayed ARO-related income. The FY2026 guidance therefore depends heavily on the second half, and the absence of earnings calls reduces transparency into delivery.

With the DOJ review closed and the board unanimously recommending the scheme, the investment case has effectively become a call on the combined Transocean–Valaris entity. That means a call on deepwater day rates in 2027–28, on synergy capture of more than US$200 m, and on the combined group's ability to deleverage. For holders, the key near-term variables are the 24 November votes and the closing mechanics. VAL is likely to keep trading at the 15.235 exchange ratio with only a small spread.

On fundamentals, Valaris contributes high-quality, contracted assets and a unique Saudi franchise at a reasonable price. Our assessment is that the transaction is strategically sound for Valaris shareholders, with execution and geopolitical risk as the main offsets rather than structural flaws.

---

Data-gap register (for follow-up)

Items to verify directly in the 10-K FY2025, the 2026 proxy and the DEFM14A:

• Full-year segment revenue and geographic revenue tables

• Total assets and equity

• Employee count and three-year trend

• Executive compensation

• Top-10 institutional holders

• Credit ratings

• ESG metrics

• Peer financial benchmarks

• Confirmation of the auditor and CUSIP/ISIN