What changed in this filing

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Item 1. Business

2026-02-20 compared with 2025-02-20 · 66 added, 55 removed, 220 unchanged (35% of the section changed)

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We are a leading provider of offshore contract drilling services to the international oil and gas industry with operations in almost every major offshore market across six continents.

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.

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 fleet of offshore drilling rigs is among the largest in the world and includes one of the highest specification ultra-deepwater fleets, as well as a leading premium jackup fleet.

As of February 20, 2026, we own 46 rigs, including 13 drillships, two semisubmersible rigs, 31 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 Mediterranean, the Middle East, Africa and Asia Pacific.

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

We provide drilling services on a day rate contract basis.

Under day rate contracts, we provide an integrated service that includes the provision of a drilling rig and rig crews for which we receive a daily rate that may vary between the full rate and zero rate throughout the duration of the contractual term, depending on the operations of the rig.

Under day rate contracts, we provide an integrated drilling service that includes the provision of a drilling rig and rig crews for which we receive a daily rate that may vary between the full rate and zero rate throughout the duration of the contractual term, depending on the operations of the rig.

We also may receive lump-sum fees or similar compensation for the mobilization, demobilization and capital upgrades of our rigs.

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 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.

Pending Business Combination with Transocean

On February 9, 2026, Valaris and Transocean Ltd.

("Transocean") entered into a business combination agreement (the “Business Combination Agreement”) under which Transocean will acquire all of the issued and outstanding common shares of Valaris in exchange for shares of Transocean at an exchange ratio of 15.235 Transocean shares for each Valaris share.

The Business Combination will be effected by way of a court-approved scheme of arrangement between Valaris and the holders of the Valaris shares pursuant to section 99 of the Companies Act 1981 of Bermuda, as amended.

The Transocean shares are expected to be issued in reliance on the exemption from the registration requirements of the U.S.

Securities Act of 1933, as amended, provided by Section 3(a)(10) thereof and pursuant to exemptions from registration under any applicable state securities laws.

Following the consummation of the Business Combination, Transocean’s existing shareholders and Valaris’ existing shareholders will own approximately 53% and 47%, respectively, of the combined company on a fully diluted basis assuming conversion to shares of Transocean’s exchangeable bonds due 2029.

See " Par t II .

Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Introduction - Pending Business Combination with Transocean" for further information .

The offshore drilling industry is cyclical and primarily influenced by global energy demand, oil and gas supply dynamics and customer capital allocation decisions.

Periods of oil oversupply generally place downward pressure on commodity prices, while periods of undersupply can result in higher and more volatile oil prices, influencing investment decisions across the upstream sector.

While the oil market is currently in a period of oversupply, industry fundamentals are generally viewed as constructive over the medium to long term.

Market participants generally expect the current oil supply imbalance to shift to a structurally tighter market over the next few years, driven by past underinvestment in upstream development and slowing production growth from non-OPEC sources.

Industry studies, including those published by the International Energy Agency and the U.S.

Energy Information Administration, indicate that substantial upstream investment is required to offset natural field declines and maintain existing production levels.

Against this backdrop, customers continue to emphasize the need for sustained investment in oil and gas to support secure, reliable and affordable energy supply, with increasing focus on offshore developments, particularly in deepwater.

Compared to other sources of supply, deepwater projects typically offer large resource potential, competitive project economics and lower carbon intensity per barrel.

Despite near-term commodity price uncertainty, customers are continuing to advance long-cycle offshore developments.

Industry participants anticipate increased deepwater project sanctioning over the next five years across greenfield, brownfield and exploration opportunities.

According to Rystad Energy estimates, approximately 70% of this expected activity is associated with projects with breakeven oil prices below $50 per barrel and over 80% is associated with projects with breakeven prices below $60 per barrel.

Operating results in the offshore drilling industry are directly related to the demand for and the available supply of drilling rigs, each of which affects rig utilization and day rates.

While the balance of rig supply and demand can vary somewhat between regions, significant variations between most regions are generally short-term due to rig mobility.

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 demand.

Contract Drilling Operations

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Floaters, Jackups and ARO are also reportable segments.

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.

As of December 31, 2025, we owned 46 rigs and excluding our held-for-sale rig, 17 are located in Europe, 16 are located in Middle East and Africa, eight are located in North and South America and four are located in Asia and the Pacific Rim.

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

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During the year ended December 31, 2025, our five largest customers accounted for 49% of consolidated revenues.

BP plc, our only customer who accounts for 10% or more of consolidated revenues, accounted for 17% of consolidated revenues.

Petróleo Brasileiro S.A.

("Petrobras"), BP plc ("BP") and Azule Energy ("Azule"), our customers who account for 10% or more of consolidated revenues, accounted for 35% of consolidated revenues.

The offshore contract drilling industry is highly competitive.

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We retain the risk for liability not indemnified by the customer in excess of, and for risks not covered by, our insurance coverage.

Our insurance program also provides hull and machinery coverage for physical damage (including total loss) to our rigs, cargo and equipment, excluding damage arising from a named windstorm in the U.S.

Gulf of Mexico.

We separately purchase a small limit of named windstorm insurance for our floater rigs in the U.S.

Gulf of Mexico.

We separately purchase a small limit of named windstorm insurance for our floater rigs in the Gulf of America.

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

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Similar environmental laws apply in our other areas of operation.

Failure to comply with these statutes and regulations may subject us to civil or criminal enforcement action, which may not be covered by contractual indemnification or insurance, or for which indemnity is prohibited under applicable law, and could have a material adverse effect on our financial position, operating results and cash flows.

Additionally, climate change is receiving increasing attention from scientists and legislators, and significant focus is being put on companies in the oil and natural gas industry.

Globally, there are a number of legislative and regulatory proposals and executive orders at various levels of government in jurisdictions where we operate to address the GHG emissions that contribute to climate change, such as laws or regulations requiring reporting on GHG emissions, incentivizing or mandating the use of alternative energy sources such as wind power and solar energy, phasing-out of fossil fuel subsidies, reducing GHG emissions, increasing fuel efficiency standards, adopting carbon pricing mechanisms, restricting oil and gas development and programs to mandate or incentivize the conversion from internal combustion engine powered vehicles to electric-powered vehicles.

Although it is not possible at this time to predict how compliance with any such legislation or new regulations would impact our business, any such future laws and regulations could require us to incur increased operating costs or incremental capital expenditures.

Any such legislation or regulatory programs could also increase the cost of consuming oil and natural gas, and thereby reduce demand for oil and natural gas, which could reduce our customers’ demand for our services.

Consequently, legislation and regulatory programs to reduce GHG emissions could have an adverse effect on our financial position, operating results and cash flows.

Sustainability

Consistent with our purpose of providing responsible solutions that deliver energy to the world, we are focused on sustainability-related matters.

Our board of directors' Safety and Sustainability Committee regularly meets to address sustainability topics and is responsible for overseeing the Company’s policies, programs and practices related to sustainability and the Company’s management of risks in such areas.

We have a dedicated department focused on sustainability and new energy and also have an employee-led cross-functional working group to identify and evaluate opportunities and promote sustainable business practices.

We publish our annual sustainability report aligned with the standards of the Task Force on Climate-Related Financial Disclosures (TCFD), in addition to the Sustainability Accounting Standards Board (SASB), with references to other frameworks such as the Global Reporting Initiative (GRI) and the Carbon Disclosure Project (CDP), where relevant, and report scope 1, 2 and 3 GHG emissions.

Consistent with our purpose of providing responsible solutions that deliver energy to the world, we are focused on sustainability-related matters to drive continued shareholder value and meet the demands of our stakeholders.

Our board of directors' Safety and Sustainability Committee regularly meets to address sustainability topics and is responsible for overseeing the Company’s policies, programs and practices related to sustainability as well as the Company’s management of risks in such areas.

We also have a dedicated department focused on sustainability and new energy and a cross-functional working group to identify and evaluate opportunities and promote sustainable business practices.

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.

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Our values are designed to guide us in support of our purpose:

● Integrity – Doing the right thing;

whether or not anyone is watching;

• Integrity – Doing the right thing, whether or not anyone is watching;

• Safety – Causing no harm is always a priority;

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Our personnel represented 78 nationalities spread across 25 locations.

The majority of our personnel work on our offshore installations and are compensated on an hourly basis.

The majority of our personnel work on our offshore rigs and are compensated on an hourly basis.

A portion of our employees and contractors working outside of the U.S.

are represented under collective bargaining or similar agreements, which are subject to periodic salary negotiation.

As of December 31, 2024, women comprised 32% of our onshore employees and 1% of our offshore employees.

Employee Wellbeing and Engagement

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This program is designed to engage, support and provide leadership tools for our offshore supervisors, helping them assess and develop their team’s understanding and use of our safety processes and policies.

Approximately 338 personnel attended the program in 2024.

Approximately 1,620 personnel have attended the program since its launch.

Also, in 2025, we launched an enhanced leadership development program for senior offshore leaders, which was delivered through targeted workshops during the year to strengthen management effectiveness and decision-making in complex operating environments.

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.

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

We seek to control major operational hazards with effective safeguards and to implement our management systems to protect the health and safety of our personnel.

We seek to control major operational hazards with effective safeguards, robust barrier management, and the disciplined implementation of management systems designed to protect the health and safety of our personnel, the environment and our assets.

As part of our focus on preventing high-consequence events, in 2025, we implemented BarrierPulse TM a barrier management and performance monitoring framework that provides structured oversight of safety-critical barriers and escalation reporting for leadership visibility.

BarrierPulse TM supports the identification, verification, and monitoring of barriers intended to prevent, detect, or mitigate major accident hazards, enhancing our ability to understand barrier status and health, enhancing our ability to take timely corrective action before a major event occurs.

Our Safe Systems of Work are designed with the aim of completing each job safely and efficiently:

● Work Instruction – Step-by-step description of how to complete specific work activities, including mandatory precautions to be implemented;

● Permit to Work – Formal authorization and control process for the safe execution of potentially hazardous work that may present risk to people, environment or assets;

● Work Instruction – Step-by-step descriptions of how to complete specific work activities, including mandatory precautions and controls to be implemented;

● Permit to Work – Formal authorization and control process for the safe execution of potentially hazardous work that may present risk to people, the environment or assets;

● Energy Isolation – Formal isolation of all energy sources before performing work on equipment;

● Job Safety Analysis – Identification and control of job hazards before starting work;

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

● Job Safety Analysis – Identification and control of job-specific hazards before starting work;

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

Information about our Executive Officers

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Matthew Lyne 51 Senior Vice President and Chief Commercial Officer

Davor Vukadin 51 Senior Vice President and General Counsel

Davor Vukadin 52 Senior Vice President and General Counsel and Secretary

Set forth below is certain additional information on our executive officers, including the business experience of each executive officer for at least the last five years:

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Previously, he served as Chief Financial Officer of LUFKIN Industries, a leading global provider of rod lift optimization solutions, products, technologies and services to the oil and gas industry, from February 2021 to July 2022.

Weber has also served as Chief Financial Officer of Abaco Drilling Technologies from July 2019 to February 2021 and Chief Financial Officer of Haliburton Company from June 2017 to November 2018.

Weber also served as Chief Financial Officer of Abaco Drilling Technologies from July 2019 to February 2021 and Chief Financial Officer of Halliburton Company from June 2017 to November 2018.

Prior to Halliburton, Mr.

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In that event, the trading price of our securities could decline, and you could lose all or part of your investment.

Risks Related to the Business Combination

• Our pending Business Combination may be delayed or not occur at all for a variety of reasons.

• Efforts to complete the Business Combination could disrupt our relationships with third parties and employees, divert management's attention, or result in negative publicity or legal proceedings.

• The Business Combination Agreement contains provisions that limit our ability to pursue alternatives to the Business Combination.

• The Business Combination Agreement restricts our business activities.

Risks Related to Our Business, Operations, Financing Arrangements and Market Conditions

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• The loss of a significant customer or customer contract, as well as customer consolidation and changes to customer strategy, could materially adversely affect our business.

• Our long-term contracts are subject to the risk of cost increases, which could adversely affect our profitability.

• Our network and systems, including rig operating systems and critical data, are subject to cybersecurity risks and technical disruptions.

• Rig reactivation, upgrade and enhancement projects are subject to risks, including delays and cost overruns, which could materially adversely affect our financial position, operating results or cash flows.

• We make significant expenditures to meet customer requirements, maintain our fleet to comply with laws and the applicable regulations and standards of governmental authorities and organizations, or to expand our fleet, and we may be required to make significant expenditures to maintain our competitiveness.

• Our long-term contracts are subject to the risk of cost increases.

• Our network and systems are subject to cybersecurity risks and technical disruptions.

• Rig reactivation, upgrade and enhancement projects are subject to risks, including delays and cost overruns.

• We make significant expenditures for a variety of reasons, including to maintain our competitiveness.

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

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

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

• Joint venture investments could be adversely affected by our joint venture partners’ actions, financial condition and liquidity and disputes between us and our joint venture partners.

• We may not realize the expected benefits of our ARO joint venture, and joint venture investments could be adversely affected by our joint venture partners’ actions, financial condition and liquidity and disputes between us and our joint venture partners.

• Our business involves operating hazards, and our insurance and indemnities from our customers may not be adequate to cover any potential losses.

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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.

• Significant equipment or part shortages, supplier capacity constraints, supplier production disruptions, supplier quality and sourcing issues or price increases could materially adversely affect our financial position, operating results or cash flows.

• Our operating and maintenance costs will not necessarily fluctuate in proportion to changes in our operating revenues.

• 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 (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.

• The agreements governing our debt 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, including our drilling rigs, or other strategic transactions.

• 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 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.

• Provisions in our bye-laws could delay or prevent a change in control of our company.

• Legislation enacted in Bermuda as to Economic Substance may affect our operations.

• Our bye-laws restrict shareholders from bringing legal action against our officers and directors and provisions in our bye-laws could delay or prevent a change in control of our company.

• Legislation enacted in Bermuda as to Economic Substance may affect our business.

• Our business could be affected as a result of activist investors.

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• Our non-U.S.

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

operations involve risks not typically associated with U.S.

operations, and we are subject to additional risks associated with the expansion into new geographic markets.

Sustainability Risks

• 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.

• Regulation of GHG, consumer preferences for alternative fuels and electric powered vehicles and climate change could have a negative impact on our business.

• Increased scrutiny from stakeholders and others regarding our sustainability practices, initiatives and reporting responsibilities could result in additional costs or risks.

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