Valaris | 10-Q: FY2026 Q1 Revenue Beats Estimate at USD 465.4 M

Revenue: As of FY2026 Q1, the actual value is USD 465.4 M, beating the estimate of USD 447.71 M.EPS: As of FY2026 Q1, the actual value is USD -0.24, missing the estimate of USD -0.0876.EBIT: As of FY2026 Q1, the actual value is USD 20.5 M.Consolidated Financial Performance (Three Months Ended March 31, 2026 vs. December 31, 2025)Operating Revenues: Valaris Limited’s total operating revenues decreased to $465.4 million from $537.4 million, representing a -13% change. Revenues (exclusive of reimbursable revenues) were $430.1 million, down from $502.2 million. Reimbursable revenues were $35.3 million, relatively flat compared to $35.2 million .Operating Expenses: Total operating expenses decreased to $452.2 million from $500.5 million, a -10% change. Contract drilling expenses (exclusive of depreciation and reimbursable expenses) decreased to $340.4 million from $380.3 million. Depreciation increased to $42.7 million from $40.6 million. General and administrative expenses decreased to $25.3 million from $27.0 million. Merger and integration expenses were $13.6 million, up from $0 million. Other operating income was -$2.8 million, a change from -$19.5 million loss in the preceding quarter .Operating Income: Operating income decreased to $20.0 million from $39.4 million, a -49% change .Net Loss: Net loss attributable to Valaris Limited was -$16.4 million, compared to net income of $717.5 million in the preceding quarter .Equity in Earnings of ARO: Equity in earnings of ARO increased to $6.8 million from $2.5 million .Cash and Cash Equivalents: Cash and cash equivalents were $578.3 million as of March 31, 2026, down from $599.4 million as of December 31, 2025 .Net Cash Provided by Operating Activities: Net cash provided by operating activities was $75.0 million .Capital Expenditures: Capital expenditures totaled -$100.9 million .Consolidated Financial Performance (Three Months Ended March 31, 2026 vs. March 31, 2025)Operating Revenues: Valaris Limited’s total operating revenues decreased to $465.4 million from $620.7 million, a -25% change. Revenues (exclusive of reimbursable revenues) were $430.1 million, down from $577.8 million. Reimbursable revenues were $35.3 million, down from $42.9 million .Operating Expenses: Total operating expenses decreased to $452.2 million from $480.3 million, a -6% change. Contract drilling expenses (exclusive of depreciation and reimbursable expenses) decreased to $340.4 million from $374.0 million. Depreciation increased to $42.7 million from $33.1 million. General and administrative expenses increased to $25.3 million from $24.4 million. Merger and integration expenses were $13.6 million, up from $0 million. Other operating income was -$2.8 million, a change from -$7.8 million loss in the prior year period .Operating Income: Operating income decreased to $20.0 million from $143.0 million, an -86% change .Net Loss: Net loss attributable to Valaris Limited was -$16.4 million, compared to -$37.9 million in the prior year period .Equity in Earnings of ARO: Equity in earnings of ARO increased to $6.8 million from $2.6 million .Net Cash Provided by Operating Activities: Net cash provided by operating activities was $75.0 million, down from $155.9 million .Capital Expenditures: Capital expenditures totaled -$100.9 million, compared to -$100.2 million .Segment Performance (Three Months Ended March 31, 2026)Floaters:Total operating revenues were $197.6 million (down from $265.9 million in Q4 2025 and $364.9 million in Q1 2025) .Total contract drilling expenses (exclusive of depreciation) were $155.5 million (down from $207.5 million in Q4 2025 and $212.3 million in Q1 2025) .Depreciation was $15.7 million (down from $16.2 million in Q4 2025, up from $14.2 million in Q1 2025) .Operating income was $29.2 million (up from $26.4 million in Q4 2025, down from $130.6 million in Q1 2025) .Property and equipment, net was $1,275.0 million (up from $1,162.3 million in Q4 2025) .Capital expenditures were $55.3 million (up from $27.0 million in Q4 2025) .Rig utilization (Total Fleet) was 33% (down from 45% in Q4 2025 and 57% in Q1 2025) .Rig utilization (Active Fleet) was 45% (down from 57% in Q4 2025 and 81% in Q1 2025) .Average daily revenue was $436,000 (up from $409,000 in Q4 2025 and $384,000 in Q1 2025) .Jackups:Total operating revenues were $210.2 million (down from $224.1 million in Q4 2025 and $213.6 million in Q1 2025) .Total contract drilling expenses (exclusive of depreciation) were $142.0 million (up from $134.6 million in Q4 2025, down from $143.1 million in Q1 2025) .Depreciation was $16.5 million (up from $16.0 million in Q4 2025 and $12.7 million in Q1 2025) .Operating income was $51.7 million (down from $69.8 million in Q4 2025 and $57.8 million in Q1 2025) .Property and equipment, net was $635.3 million (up from $625.5 million in Q4 2025) .Capital expenditures were $23.0 million (down from $70.2 million in Q4 2025) .Rig utilization (Total Fleet) was 67% (up from 64% in Q4 2025 and 57% in Q1 2025) .Rig utilization (Active Fleet) was 94% (down from 97% in Q4 2025, up from 87% in Q1 2025) .Average daily revenue was $135,000 (down from $139,000 in Q4 2025, up from $128,000 in Q1 2025) .ARO:Total operating revenues were $127.4 million (down from $139.6 million in Q4 2025 and $134.7 million in Q1 2025) .Total contract drilling expenses (exclusive of depreciation) were $75.1 million (down from $87.1 million in Q4 2025 and $85.6 million in Q1 2025) .Depreciation was $24.9 million (down from $28.3 million in Q4 2025 and $29.5 million in Q1 2025) .Operating income was $20.3 million (up from $13.8 million in Q4 2025 and $13.3 million in Q1 2025) .Property and equipment, net was $1,243.9 million (up from $1,227.8 million in Q4 2025) .Capital expenditures were $32.3 million (up from $8.0 million in Q4 2025) .Rig utilization (Total Fleet) was 79% (down from 84% in Q4 2025 and 87% in Q1 2025) .Rig utilization (Active Fleet) was 79% (down from 84% in Q4 2025 and 87% in Q1 2025) .Average daily revenue was $112,000 (down from $113,000 in Q4 2025, up from $108,000 in Q1 2025) .Other:Total operating revenues were $57.6 million (up from $47.4 million in Q4 2025 and $42.2 million in Q1 2025) .Total contract drilling expenses (exclusive of depreciation) were $37.6 million (up from $30.2 million in Q4 2025 and $22.3 million in Q1 2025) .Depreciation was $6.2 million (up from $4.6 million in Q4 2025 and $2.8 million in Q1 2025) .Operating income was $13.8 million (up from $12.6 million in Q4 2025, down from $17.1 million in Q1 2025) .Property and equipment, net was $200.2 million (up from $131.6 million in Q4 2025) .Capital expenditures were $22.5 million (up from $0 million in Q4 2025) .Rig utilization (Total Fleet) was 78% (down from 86% in Q4 2025 and 100% in Q1 2025) .Rig utilization (Active Fleet) was 78% (down from 86% in Q4 2025 and 100% in Q1 2025) .Average daily revenue was $66,000 (up from $53,000 in Q4 2025 and $44,000 in Q1 2025) .Operational MetricsTotal Valaris Fleet: As of March 31, 2026, Valaris Limited’s total fleet comprised 46 rigs, including 15 Floaters, 24 Jackups, and 7 Other rigs, with an active fleet of 35 rigs .ARO Fleet: ARO owned 9 jackup rigs and leased 7 rigs from Valaris Limited. ARO’s total fleet was 9 active rigs as of March 31, 2026, and they had ordered two newbuild jackup rigs, Kingdom 3 and Kingdom 4, which are under construction .Backlog: As of May 4, 2026, Valaris Limited’s contract backlog was $4,929.1 million, with Floaters contributing $3,319.8 million, Jackups $1,135.6 million, and Other $473.7 million. ARO’s total contract backlog was $1,916.7 million. The Floaters backlog increased primarily due to a $426.0 million contract extension for VALARIS DS-4 .Property and Equipment, Net: Total Property and equipment, net was $2,165.0 million as of March 31, 2026, up from $2,088.8 million as of December 31, 2025 .Notes Receivable from ARO: The carrying value of Notes Receivable from ARO was $351.1 million as of March 31, 2026, up from $345.0 million as of December 31, 2025. Interest income on these notes was $11.6 million for Q1 2026, compared to $10.1 million for Q1 2025 .Future Outlook and StrategyValaris Limited entered into a business combination agreement with Transocean Ltd. on February 9, 2026, where Transocean will acquire all outstanding common shares of Valaris Limited, with completion subject to customary closing conditions including shareholder and regulatory approvals . Valaris Limited expects capital expenditures for 2026 to approximate $425.0 million to $475.0 million, primarily for maintenance and upgrade projects, with additional expenditures possible for rig upgrades or acquisitions subject to restrictions . The offshore drilling market is expected to tighten due to past underinvestment and slowing non-OPEC production growth, with deepwater projects gaining focus due to large resource potential, competitive economics, and lower carbon intensity . Global marketed drillship fleet utilization was approximately 92% as of March 31, 2026, and global jackup utilization remains solid at approximately 88%, driven by national oil companies . Valaris Limited has approximately $175.0 million available for share repurchases under its program as of March 31, 2026 .