Valaris Limited (NYSE:VAL) has reported a significant financial turnaround for Q3 2023, with a net income of $17 million. This comes after a Q2 net loss of $27 million. The company's revenues rose to $455 million, driven by new contracts commenced during Q3 for jack-ups VALARIS 121 and 249, and floater VALARIS DS-17.
Within the same quarter, Valaris secured new contracts and extensions worth approximately $465 million. This was further bolstered by an additional $335 million worth of contracts secured after the quarter's end. Notably, VALARIS DS-17 commenced its contract with Equinor offshore Brazil, contributing to the increased revenues.
The company also made strides in its share repurchase program, buying back $85 million of shares during Q3. This brings the total repurchased shares to $171 million, edging closer to its 2023 target of $200 million.
The firm's Adjusted EBITDA rose to $40 million, while Adjusted EBITDAR increased to $91 million. However, contract drilling expenses also saw an increase to $391 million due to higher reactivation expenses and operating costs resulting from the new contract startups.
Valaris strengthened its financial position by increasing cash and cash equivalents to $1.1 billion. This was primarily due to a $400 million add-on to Senior Secured Second Lien Notes intended to fund the purchase of drillships VALARIS DS-13 and DS-14.
In terms of operational efficiency, Valaris achieved a revenue efficiency of 94% for the quarter and 97% year-to-date. Although unplanned downtime related to several floaters partially offsetting gains, increased operating days and average daily revenue contributed to higher revenues for both floater and jack-up fleets.
ARO Drilling, a joint venture of Valaris, also saw increased revenues due to less out-of-service time for planned maintenance during Q3. The venture secured financing for new-build jack-ups Kingdom 1 and 2.
In addition to its financial achievements, Valaris was recognized by the Center for Offshore Safety with its 2023 Safety Leadership Award for its Basic Training program.
CEO Anton Dibowitz expressed confidence in the strength of the upcycle and committed to meeting the company's 2023 share repurchase target of $200 million. He highlighted the commencement of VALARIS DS-17's contract and the award of new contracts as key achievements for Q3.
The company also benefitted from foreign currency exchange gains and the sale of VALARIS 54. Its tax expense decreased to $11 million, aided by the resolution of prior period tax matters.
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