What changed in this filing

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Item 1. Business

2025-02-20 compared with 2024-02-22 · 31 added, 49 removed, 244 unchanged (25% of the section changed)

3 unchanged sentences

We own the world's largest offshore drilling rig fleet, including one of the newest ultra-deepwater fleets in the industry and a leading premium jackup fleet.

We currently own 53 rigs, including 13 drillships, four dynamically positioned semisubmersible rigs, one moored semisubmersible rig, 35 jackup rigs and a 50% equity interest in ARO, our 50/50 unconsolidated joint venture with Saudi Aramco, which owns an additional eight rigs.

As of February 20, 2025, we own 52 rigs, including 13 drillships, four dynamically positioned semisubmersible rigs, one moored semisubmersible rig, 34 jackup rigs and a 50% equity interest in ARO, our 50/50 unconsolidated joint venture with Saudi Aramco, which owns an additional nine rigs.

Our customers include many of the leading international and government-owned oil and gas companies, in addition to many independent operators.

We are among the most geographically diverse offshore drilling companies with global operations.

The markets in which we operate include the Gulf of Mexico, South America, the North Sea, the Middle East, Africa and Asia Pacific.

The markets in which we operate include the Gulf of Mexico, South America, the North Sea, the Mediterranean, the Middle East, Africa and Asia Pacific.

We provide drilling services on a day rate contract basis.

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Our customers bear substantially all of the costs of constructing the well and supporting drilling operations as well as the economic risk relative to the success of the well.

Demand for offshore drilling services continues to improve as evidenced by increasing global utilization and day rates for offshore drilling rigs.

In recent years, oil prices have experienced significant volatility as a result of the global COVID-19 pandemic, production disputes among major oil producing countries and various other factors.

This volatility meaningfully impacted both the supply of, and demand for, offshore rigs.

Since 2021, oil prices have become relatively more stable due to, among other factors, rebounding demand for hydrocarbons, a measured approach to production increases by OPEC+ members, reduction in supply due to Russia’s invasion of Ukraine and the subsequent sanctions placed on Russia, and a focus on cash flow and returns by major exploration and production companies.

In 2023, prices have remained at levels that are supportive of offshore exploration and development activity.

The more constructive oil price environment has led to an improvement in contracting and tendering activity for our industry.

Demand for offshore drilling is impacted by fundamental supply and demand dynamics for crude oil.

Since late 2022, Brent crude oil prices have been largely trading in a range between $70 and $90 per barrel, with OPEC+ members managing supply in an effort to keep the market in balance.

Importantly, longer-dated Brent crude oil prices have remained stable, with the five-year forward price above $65 per barrel, a level at which nearly 90% of undeveloped offshore reserves are expected to be profitable.

As a result, we believe the constructive oil price environment is supportive of continued investment in long-cycle offshore projects.

Rig attrition in the industry over the last decade, particularly for floaters, has resulted in a smaller global fleet of rigs that is available to meet customer demands.

While demand for offshore drilling services has declined modestly since early 2024, global demand for hydrocarbons continues to increase and offshore production, particularly deepwater, is expected to play an important role in providing secure, reliable and affordable energy to meet the world’s growing energy needs.

Consequently, our outlook for the offshore drilling business is positive.

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Floaters, Jackups and ARO are also reportable segments.

We own and operate 53 rigs, of which 16 are located in the Middle East and Africa, 16 are located in North and South America, 16 are located in Europe, and five are located in Asia and the Pacific Rim as of December 31, 2023.

As of December 31, 2024, we owned 53 rigs, of which 16 are located in the Middle East and Africa, 16 are located in North and South America, 15 are located in Europe, and six are located in Asia and the Pacific Rim.

Our drilling rigs drill and complete oil and natural gas wells.

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• term extension options, exercisable by our customers, upon advance notice to us, at mutually agreed, indexed, fixed rates or current rate at the date of extension,

• provisions permitting early termination of the contract, which may include (1) if the rig is lost or destroyed, (2) if operations are suspended for a specified period of time due to various events, including damage or breakdown of major rig equipment, unsatisfactory performance, or "force majeure" events, (3) failure of the customer to receive final investment decision (FID) approval with respect to projects for which the drilling rig was contracted or (4) at the convenience (without cause) of the customer, exercisable upon advance notice to us, and in certain cases without making an early termination payment to us,

• provisions permitting early termination of the contract, which may include (1) if the rig is lost or destroyed, (2) if operations are suspended for a specified period of time due to various events, including damage or breakdown of major rig equipment, unsatisfactory performance, "force majeure" events or breach of contract, (3) failure of the customer to receive final investment decision (FID) approval with respect to projects for which the drilling rig was contracted or (4) at the convenience (without cause) of the customer, exercisable upon advance notice to us, and in certain cases without making an early termination payment to us,

• payment of compensation to us is (generally in U.S.

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• provisions allowing us to recover certain labor and other operating cost increases from our customers through day rate adjustment or direct reimbursement for certain cost increases due to changes in applicable law or rising operational expenses.

While contracting and tendering activity has increased, contract awards remain subject to a highly competitive bidding process, which could result in contracts that contain unfavorable contractual and commercial terms, such as certain limitations on our ability to be indemnified from operator and third-party damages caused by our fault, resulting in increases in the nature and amounts of liability allocated to us.

Contract awards generally remain subject to a highly competitive bidding process, which could result in contracts that contain unfavorable contractual and commercial terms, such as certain limitations on our ability to be indemnified from operator and third-party damages caused by our negligence, gross negligence or willful misconduct, resulting in increases in the nature and amounts of liability allocated to us, which we endeavor to limit through a financial cap.

Backlog Information

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Drilling contracts are, for the most part, awarded on a competitive bid basis.

Price is often the primary factor in determining which contractor is awarded a contract, although quality of service, operational and safety performance, equipment suitability and availability, location of equipment, reputation and technical expertise also are factors.

Revenues from non-U.S.

operations were 80%, 78%, 87% and 81% of our total consolidated revenues during the years ended December 31, 2023 and 2022, eight months ended December 31, 2021 (Successor), and four months ended April 30, 2021 (Predecessor), respectively.

operations were 84%, 80% and 78% of our total consolidated revenues during the years ended December 31, 2024, 2023 and 2022, respectively.

See " Item 1A.

Risk Factors - Our non-U.S.

operations involve additional risks not associated with U.S.

operations involve additional risks not typically associated with U.S.

Insurance and Indemnification Matters

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Gulf of Mexico.

We currently carry limited insurance for loss of hire for several of our rigs.

We carry limited insurance for loss of hire for several of our rigs.

Our customers typically indemnify us for most well-control events.

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We generally indemnify the customer for legal and financial consequences of spills of waste oil, fuels, lubricants, motor oils, pipe dope, paint, solvents, ballast, bilge, garbage, debris, sewage, hazardous waste and other liquids, the discharge of which originates from our rigs or equipment above the surface of the water and in some cases from our subsea equipment.

Our contracts generally provide that, in the event of any such spill from our rigs, we are responsible for the related fines and penalties.

Our contracts generally provide that, in the event of any such spill from our rigs, we are also responsible for the related fines and penalties.

The above description of our insurance program and the indemnification provisions of our drilling contracts is only a summary as of the date hereof and is general in nature.

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We incorporate by reference herein the disclosures on governmental regulations, including environmental matters, contained in the following sections of this Annual Report on Form 10-K:

• " Item 1A .

Risk Factors – Regulatory, Legal and Tax Risks ";

• " Item 1A .

Risk Factors – Sustainability Risks ";

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For further discussion of sustainability-related risks and considerations see “ Risk Factors ” in Item 1A and “ Management’s Discussion and Analysis of Financial Condition and Results of Operations ” in Item 7 of this Annual Report on Form 10-K.

We encourage you to review our latest Sustainability Report, located on our website (www.valaris.com), for more detailed information regarding our sustainability and human capital targets, including our GHG emissions intensity reduction target, programs and initiatives.

We encourage you to review our latest Sustainability Report, located on our website (www.valaris.com), for more detailed information regarding our sustainability programs and initiatives.

Nothing on our website, including our Sustainability Report or sections thereof, shall be deemed incorporated by reference into this Annual Report on Form 10-K or other filings that we make with the SEC.

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We believe our people are one of the most important elements of our success, and we benefit from a motivated, engaged and diverse workforce.

Our approach to attracting, developing, and retaining a diverse workforce of high-performing talent is anchored in a long-term employment model that seeks to foster personal growth and engagement.

Our approach to attracting, developing and retaining a workforce of high-performing talent is anchored in a long-term employment model that seeks to foster personal growth and engagement.

Purpose and Culture

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Approximately 338 personnel attended the program in 2024.

We implemented an onshore leadership program in 2023, which included eight separate onshore leadership sessions, which was delivered to 157 personnel.

We provide regular training in health, safety, environmental and emergency response to our employees, as relevant to their roles, and we mandate that our employees complete training related to the Code, covering topics such as anti-corruption, workplace behavior and conflicts of interest.

In addition, in 2023, all employees were assigned unconscious bias training as part of supporting a more inclusive workforce.

In addition, in 2024, all employees were assigned "Workplace Harassment" training as part of supporting a more inclusive workforce.

Certain employees must also complete additional training on topics ranging from trade compliance to human trafficking.

We created the Valaris Basic Training Program to familiarize new rig workers to the offshore environment and to build experience in our key safety practices, such as our Safe Systems of Work (as described below).

The training program utilizes a jackup rig in the Gulf of Mexico as a training center for hands-on offshore experience.

In 2023, 482 personnel completed the training program.

The American Petroleum Institute’s Center for Offshore Safety recognized the Valaris Basic Training Center with the 2023 Safety Leadership Award.

Our policies set the expectation that causing no harm is a priority while conducting our operations.

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● Stop Work Authority – Empowerment to stop work if a risk to people, environment or assets is perceived to exist.

As mentioned above, the Valaris Basic Training Program demonstrates our dedication to a safety-first work culture, and the ways in which we implement our Safe Systems of Work into our work.

Executive Officers

Information about our Executive Officers

Officers generally serve for a one-year term or until successors are elected and qualified to serve.

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Prior to Halliburton, Mr.

Weber served as Chief Financial Officer of Parker Drilling Company, and held senior finance roles at Valaris predecessor companies, Ensco plc and Pride International, Inc.

Weber served as Chief Financial Officer of Parker Drilling Company and held senior finance roles at Valaris predecessor companies.

He received an MBA in Finance and Strategy from the Wharton School and a BA in Economics and English Literature from Vanderbilt.

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Previously, he served as Senior Vice President, Operations Support.

He joined Ensco in 1997.

Luca also served Ensco as Senior Vice President - Western Hemisphere, Vice President - Business Development and Strategic Planning, Vice President - Brazil Business Unit and General Manager - Europe and Africa.

Before joining Ensco as an Operations Engineer in The Netherlands, Mr.

He joined Valaris in 1997.

Luca also served Valaris as Senior Vice President - Western Hemisphere, Vice President - Business Development and Strategic Planning, Vice President - Brazil Business Unit and General Manager - Europe and Africa.

Before joining Valaris as an Operations Engineer in The Netherlands, Mr.

Luca was employed by Foramer Drilling and Schlumberger with assignments in France and Venezuela.

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He holds a Bachelor of Arts degree in Economics from The University of Chicago and a law degree from The University of Texas School of Law.

Emergence from Financial Restructuring

On August 19, 2020 (the “Petition Date”), Valaris plc (“Legacy Valaris” or “Predecessor”) and certain of its direct and indirect subsidiaries (collectively, the “Debtors”) filed voluntary petitions for reorganization under chapter 11 of the Bankruptcy Code in the Bankruptcy Court under the caption In re Valaris plc, et al., Case No.

20-34114 (MI) (the “Chapter 11 Cases”).

On March 3, 2021, the Bankruptcy Court confirmed the Debtors' chapter 11 plan of reorganization.

On April 30, 2021 (the "Effective Date"), we successfully completed our financial restructuring and together with the Debtors emerged from the Chapter 11 Cases.

Upon emergence from the Chapter 11 Cases, we eliminated $7.1 billion of debt and obtained a $520 million capital injection by issuing the first lien secured notes (the "First Lien Notes").

See “ Note 8 - Debt" to our consolidated financial statements included in "Item 8.

Financial Statements and Supplementary Data" for additional information on the First Lien Notes.

On the Effective Date, the Legacy Valaris Class A ordinary shares were cancelled and common shares of Valaris with a nominal value of $0.01 per share (the “Common Shares”) were issued.

Also, former holders of Legacy Valaris' equity were issued warrants (the "Warrants") to purchase Common Shares.

See “ Note 9 - Shareholders' Equity" to our consolidated financial statements included in "Item 8.

Financial Statements and Supplementary Data" for additional information on the issuance of the Common Shares and Warrants.

See “ Note 2 – Chapter 11 Proceedings” and " Note 3 - Fresh Start Accounting" to our consolidated financial statements included in "Item 8.

Financial Statements and Supplementary Data" for additional details regarding the reorganization, Chapter 11 Cases and related items.

Available Information

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• Failure to recruit and retain skilled personnel could adversely affect our business.

• Our shared service center may not create the operational efficiencies that we expect and may create risks relating to the processing of transactions and recording of financial information.

• Our use of a shared service center creates risks relating to the processing of transactions and recording of financial information.

• AI presents risks and challenges that can impact our business.

• We may not realize the expected benefits of our ARO joint venture.

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• Our drilling contracts with national oil companies may expose us to greater risks than we normally assume in drilling contracts with non-governmental customers.

• The impact and effects of public health crises, pandemics and epidemics could have a material adverse effect on our business, financial condition and results of operations.

• Unionization efforts and labor regulations in certain countries in which we operate could materially increase our costs or limit our flexibility with regard to the management of our personnel.

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• Our ability to pay our operating and capital expenses and make payments due on our debt depends on many factors beyond our control.

• The agreements governing our debt, including the Indenture and the Credit Agreement, contain various covenants that impose restrictions on us and certain of our subsidiaries.

• The agreements governing our debt, including the Indenture and the Credit Agreement (as each are defined herein), contain various covenants that impose restrictions on us and certain of our subsidiaries.

• We may experience risks associated with future mergers, acquisitions or dispositions of businesses or assets or other strategic transactions.

• Our actual financial results after emergence from bankruptcy may not be comparable to our projections filed with the Bankruptcy Court in the course of the Chapter 11 Cases.

• The exercise of all or any number of outstanding warrants or the issuance of stock-based awards may dilute the holders of our Common Shares.

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• We are subject to litigation that could have a material adverse effect on us.

• As a Bermuda company, it may be difficult enforcing judgments against us, our directors and officers.

• We are a Bermuda company, and it may be difficult enforcing judgments against us, our directors and officers.

• Our bye-laws restrict shareholders from bringing legal action against our officers and directors.

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Sustainability Risks

• Regulation of GHGs and climate change could have a negative impact on our business.

• Regulation of GHG and climate change could have a negative impact on our business.

• Consumer preferences for alternative fuels and electric-powered vehicles, as part of the global energy transition, may lead to reduced demand for our services.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business