Valaris plc (“Valaris”) reported a net loss attributable to the Company of $910 million, or $4.56 per share, for the first quarter 2021 compared
to a net loss of $71 million, or $0.36 per share, in the fourth quarter 2020. The Company reported adjusted EBITDA of $28 million in the first quarter 2021 compared to negative $10 million in the fourth quarter 2020, and an adjusted loss of $0.39 per share in the first quarter 2021 versus an adjusted loss of
$0.65 per share in the prior quarter.
Chief Executive Officer and President Tom Burke said, “This month marks two years since the Valaris merger. We successfully integrated the two predecessor companies during this period, then subsequently transformed our Company to improve its service delivery capabilities and cost structure. As a result of these efforts, Valaris now has a higher focus on safe and operations with a leaner and more flexible cost structure that is fit for purpose and complements its high-quality modern fleet of rigs
and highly skilled workforce.”
Burke concluded, “We are beginning to see early signs of a recovery in customer demand following the downturn caused by the COVID-19 pandemic, for which we have been reactivating rigs, including most recently one of our high-specification heavy duty harsh environment jackup rigs in
advance of a long-term contract commencing later this year. We look forward to soon emerging from chapter 11 as a strong and stable company ready to take advantage of opportunities as they arise.”
First Quarter Results
Revenues increased to $307 million in the first quarter 2021 from $297 million in the fourth quarter 2020. Excluding reimbursable items, revenues increased to $277 million in the first quarter 2021 from $250 million in the fourth quarter 2020 primarily due to a negative adjustment in the prior quarter resulting
from the modification of our charter agreements with ARO Drilling.
Contract drilling expense declined to $252 million in the first quarter 2021 from $305 million in the prior quarter. Excluding reimbursable items, contract drilling expense declined to $237 million in the first
quarter 2021 from $274 million in the prior quarter primarily due to fewer operating days across the fleet and lower holding costs for our stacked and marketed assets that are currently without contracts.
First quarter 2021 results included a non-cash asset impairment charge of $757 million related to two floaters.
Depreciation expense of $122 million in the first quarter 2021 was in line with the prior quarter. General and administrative expense declined to $24 million from $27 million in the prior quarter primarily due to expense reduction initiatives.
Other expense increased to $30 million in the first quarter 2021 from $25 million in the prior
quarter. First quarter 2021 other expense included $52 million related to reorganization items compared
with $30 million in the prior quarter. The sequential quarter increase was primarily due to losses on lease
rejections in the first quarter 2021 compared to a gain on lease rejections in the prior quarter, and higher professional fees as we approach our expected emergence date. This was partially offset by other income of $21 million in the first quarter 2021, compared to $2 million in the prior quarter, mostly related
to foreign currency gains.
Tax expense was $32 million in the first quarter 2021 compared to a tax benefit of $113 million in
the prior quarter. The first quarter 2021 tax provision included $20 million of discrete tax expense related
to uncertain tax positions taken for prior years, compared to $125 million of discrete tax benefit in the
fourth quarter 2020 primarily resulting from the carryback under the U.S. CARES Act of U.S. net
operating losses to recover taxes paid in prior years. Adjusted for discrete items, tax expense of $12
million in the first quarter 2021 was in line with the prior quarter.
Segment Highlights
Floaters
Floater revenues declined to $97 million in the first quarter 2021 from $106 million in the prior
quarter. Excluding reimbursable items, revenues declined to $88 million in the first quarter 2021 from $92
million in the prior quarter primarily due to a decline in average day rates to $198,000 from $206,000.
Utilization increased by three percentage points to 29%.
Contract drilling expense declined to $99 million in the first quarter 2021 from $121 million in the fourth quarter 2020. Excluding reimbursable items, contract drilling expense declined to $95 million in the first quarter 2021 from $113 million in the prior quarter primarily due to lower costs for stacked and
marketed assets that are currently without contracts.
Jackups
Jackup revenues declined to $173 million in the first quarter 2021 from $179 million in the prior
quarter. Excluding reimbursable items, revenues increased to $157 million in the first quarter 2021 from $152 million in the prior quarter. The sequential quarter increase was primarily due to an increase in average day rates, which were $95,000 in the first quarter 2021 compared to $86,000 in the prior quarter
and a five percentage point increase in utilization to 50%.
Contract drilling expense declined to $135 million in the first quarter 2021 from $164 million in the
fourth quarter 2020. Excluding reimbursable items, contract drilling expense declined to $129 million in
the first quarter 2021 from $147 million in the prior quarter primarily due to lower holding costs for stacked
and marketed assets that are currently without contracts.
ARO Drilling
Revenues increased to $123 million in the first quarter 2021 from $118 million in the prior quarter.
Contract drilling expense increased to $86 million from $68 million in the prior quarter primarily due to an
adjustment in the prior quarter resulting from the modification of charter agreements on the leased rigs.
Other
Revenues increased to $37 million in the first quarter 2021 from $12 million in the fourth quarter
2020 primarily due to a negative adjustment in the prior quarter resulting from the modification of our
charter agreements with ARO Drilling. Contract drilling expense declined to $18 million in the first quarter
2021 from $20 million in the prior quarter.
