Valaris Limited · NYSE:VAL
Valaris — Investor Presentation (February 2023)
35 slides from Valaris's investor presentation, February 2023
Slide 1: Investor Presentation February 2023
VALARIS (NYSE: VAL) Investor Presentation February 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements Statements contained in this investor presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
Slide 3: Valaris Overview
Valaris Overview "yy VALARIS 3
Slide 4: Valaris is the industry leader in offshore drilling with unmatched scale and financial strength
Valaris is the industry leader in offshore drilling with unmatched scale and financial strength Fleet Operational Financial 11 drillships • Demonstrated track record • Strong balance sheet with 5 semisubmersibles of safety and operational net cash of $206 million2 36 jackups excellence as of Decembe
Slide 5: We are focused, value driven and responsible in our decision making
We are focused, value driven and responsible in our decision making To Provide Responsible Solutions Purpose That Deliver Energy to the World Focused Value Driven Responsible Building enduring presence and Exercising financial discipline Advancing our sustainability long-term relationships and drivi
Slide 6: Largest fleet of modern offshore drilling rigs in the industry
Largest fleet of modern offshore drilling rigs in the industry 11 Drillships1 5 Semisubmersibles Average age 8 years Average age 11 years 12 HD Ultra-Harsh & Harsh 21 HD & SD Modern Jackups2 3 SD Legacy Jackups2 Jackups2 Average age 14 years Average age 13 years Average age 40 years 1 Excludes newbu
Slide 7: Largest fleet of high-specification assets
Largest fleet of high-specification assets Fleet Quality of Major International Offshore Drillers Floaters Avg. Age1 2 Transocean 39 12 Valaris 28 16 8 52 Noble 19 10 Transocean 12 13 6 8 39 Valaris 2 16 9 Seadrill 14 10 Shelf 7 6 11 12 36 Diamond3 12 26 Q1 Q2 Q3 Q4 Noble 18 11 2 1 32 Jackups Borr 2
Slide 8: Strong customer relationships with major IOCs, NOCs and independents
Strong customer relationships with major IOCs, NOCs and independents 1 1 Majors National Oil Companies and Other Select Customers Floaters Jackups Locations Floaters Jackups Locations ✓ ✓ Latin America, Southeast Asia, West Africa ✓ Middle East ✓ ✓ U.S. GOM, West Africa ✓ ✓ Brazil ✓ ✓ Australia, Mex
Slide 9: Focused on key basins expected to drive a large share of future demand
Focused on key basins expected to drive a large share of future demand 11 North Sea & Norway 8% 2 3 U.S. GOM & Mexico 5 1 18% 3 Middle East 45% 12% 1 7% West Africa Southeast Asia 2 % share of expected floater 10% demand over next five years1 4% 11% 13 % share of expected jackup demand over next fiv
Slide 10: Delivering safe, reliable and efficient operations is our primary focus
Delivering safe, reliable and efficient operations is our primary focus Safety Reliability Efficiency Objectives Objectives Objectives • Control Process Safety Risk • Maximize Rig Uptime Performance • Maximize Productivity of Well • Reduce Personal Safety Exposure • 97% Revenue Efficiency in 2022 an
Slide 11: Industry-leading cost structure
Industry-leading cost structure Operating, Support and G&A Costs per Weighted Active Rig ($M)1 -20% 17.0 16.8 14.8 14.9 15.3 12.7 12.8 12.3 11.9 11.9 Valaris 2 Diamond Seadrill Noble Transocean Active Floaters 10 11 11 12 16 9 9 9 29 26 Active Jackups 28 24 0 0 11 5 12 10 0 0 # of Countries with 15
Slide 12: Strongest balance sheet in the offshore drilling sector
Strongest balance sheet in the offshore drilling sector Net Debt1 ($M) • Valaris is one of only two major offshore (206) (107) 427 567 1,019 1,519 5,860 drillers with a net cash position 7,201 • $748M3 total liquidity to fund operations 1,203 1,434 1,637 and support rig reactivations 542 521 488 (41
Slide 13: Disciplined fleet management strategy focused on driving long term shareholder value
Disciplined fleet management strategy focused on driving long term shareholder value Optimization Reactivations Divestitures • Priority is to ensure that the active • Only reactivate rigs for opportunities • Rational and economic approach to fleet remains highly utilized that provide meaningful retu
Slide 14: Strong framework in place for advancing our sustainability program
Strong framework in place for advancing our sustainability program Board and Executive Management Oversight • Board of Directors has a dedicated Environmental, Social and Governance (ESG) Committee • New executive management position focused on Sustainability and New Energy • Green Sustainability Co
Slide 15: Reduce emissions from our own operations and partner with customers
Reduce emissions from our own operations and partner with customers Reduce Emissions from our own Operations • Engine optimization to lower SOX and CO2 emissions ‒ Completed on VALARIS DS-12 – the first vessel globally to achieve ABS Enhanced Electrical System Notation EHS-E ‒ Planned for VALARIS DS
Slide 16: Offshore Market Overview
Offshore Market Overview FOCUSED | VALUE DRIVEN | RESPONSIBLE = v = As ea TT ie "qt VALARIS
Slide 17: Commodity supply and demand is constructive for our industry
Commodity supply and demand is constructive for our industry Global Liquid Fuels Consumption (Million Barrels Per Day) Offshore Breakeven Oil Prices for Undeveloped Reserves 105 100% 100 25 95% 96% 96% 100 23% 92% 94% 90% 95 86% 87% 90 Demand for hydrocarbons 20 77% 80 Actual Forecast 19% 90 expecte
Slide 18: Offshore upstream capex and new project sanctioning are expected to increase
Offshore upstream capex and new project sanctioning are expected to increase Offshore Upstream Capex ($B) • Offshore upstream capex is expected to 158 13% 157 increase by 13% in 2023 149 139 117 123 • This growth in offshore spending is 100 107 96 97 primarily expected to come from 80 89 investments
Slide 19: Demand for offshore drilling is expected to increase over the next several years
Demand for offshore drilling is expected to increase over the next several years Floater Demand by Wellbore Purpose (Rig Years) • Floater demand is expected to increase at 200 +6% a compound annual growth rate (CAGR) of 141 150 149 6% over the next five years 150 136 129 123 120 108 107 111 • Approx
Slide 20: Significant supply rationalization over the past several years has improved market balance
Significant supply rationalization over the past several years has improved market balance Benign Environment Floater Supply and Utilization Jackup Supply and Utilization 300 100% 550 100% 90% 500 90% 250 450 80% 80% 200 400 70% 70% 350 150 60% 60% 300 100 50% 250 50% 50 40% 200 40% Jan Jan Jan Jan
Slide 21: Active utilization currently ~90% for most asset classes
Active utilization currently ~90% for most asset classes 1 1 1 Benign Harsh Benign Time Stacked – Available and Cold Stacked Rigs Delivered Rigs Drillships Semis Jackups Jackups Drillships Benign Semis Contracted 77 41 29 365 1 2 4 5 Available 7 11 4 33 4 2 Active Fleet 84 52 33 398 12 3 2 Cold Stac
Slide 22: Day rates have increased meaningfully since late 2020
Day rates have increased meaningfully since late 2020 Average Day Rates for Drillship Fixtures Signed 1 Average Day Rates for Benign Environment Jackup Fixtures Signed 2 +108% +39% 73% $402,000 $99,000 $71,000 $193,000 4Q20 4Q22 4Q20 4Q22 • Average day rates for drillship fixtures signed in 4Q22 • A
Slide 23: Value Proposition
Value Proposition FOCUSED || VALUE DEN | RESPONSIBLE ESP eee VN, "y VALARIS
Slide 24: Valaris has a compelling value proposition built on four key elements
Valaris has a compelling value proposition built on four key elements 1 Active Fleet 3 Leased and Managed Rigs • 32 rigs including drillship VALARIS DS-17 that is currently • Eight rigs owned by Valaris currently leased to ARO being reactivated Drilling under bareboat charter agreements, provide hig
Slide 25: Stacked rigs and newbuild options provide operating leverage in an improving market
Stacked rigs and newbuild options provide operating leverage in an improving market Stacked Fleet Overview Asset Value • Stacked fleet includes 12 high-quality modern As Built Illustrative Asset Value of Stacked Fleet assets with a total build cost of ~$4.0B and Cost significant useful lives remaini
Slide 26: Significant earnings potential in a market recovery scenario
Significant earnings potential in a market recovery scenario Rigs Under Contract or Total Rigs Illustrative Annual EBITDA from Valaris Fleet1 20142 with Future Contract 11 8 Drillship Day Rates $350K $400K $450K ~$500K 5 3 Benign Semisubmersible Day Rates $250K $300K $350K ~$400K 12 9 HD Ultra-Harsh
Slide 27: ARO Drilling joint venture provides strong presence in the largest jackup market in the world
ARO Drilling joint venture provides strong presence in the largest jackup market in the world ARO Drilling Overview • ARO Drilling (“ARO”) is an unconsolidated 50/50 joint venture with Saudi Aramco that owns and operates jackup rigs in Saudi Arabia • Strategic partnership with the largest global cus
Slide 28: Equity trades at a discount to largest peers and recent market transactions
Equity trades at a discount to largest peers and recent market transactions 1 Equity Performance Since Valaris Listing Recent Market Transactions for Drillships 212% Rig Name Buyer Seller Price 120% 110% 104% Crete $320 million 30% 5 Santorini $305 million Valaris Noble Transocean Diamond Seadrill 2
Slide 29: Disciplined approach to capital allocation and focus on free cash flow generation
Disciplined approach to capital allocation and focus on free cash flow generation Disciplined Opportunistic Returns Focused • Exercise operational leverage in • Rational and economic • Investments in our fleet in the a disciplined manner approach to fleet management, near-term will help to maximize
Slide 30: Key takeaways
Key takeaways 1 Largest fleet of high-specification rigs with a significant presence in all key offshore basins 2 Strong customer relationships with major IOCs, NOCs and independents 3 Industry leading cost structure and balance sheet 4 Improved rig supply and demand dynamics driving day rates highe
Slide 31: Appendix
Appendix FOCUSED | VALUE DEN | RESPONSIBLE “ES? Fea A "y VALARIS
Slide 32: Contract Backlog as of February 21, 2023
Contract Backlog as of February 21, 2023 Contract Backlog (1) (2) ($ millions) 2023 2024 2025+ Total Contracted Days (1) (2) 2023 2024 2025+ Drillships $ 554.5 $ 446.7 $ 61.1 $ 1,062.2 Drillships 2,210 1,412 219 Semis 199.1 115.5 - 314.6 Semis 825 508 - Floaters $ 753.6 $ 562.2 $ 61.1 $ 1,376.8 Floa
Slide 33: Valaris owns 50% of joint venture with Saudi Aramco, the world's largest jackup customer
Valaris owns 50% of joint venture with Saudi Aramco, the world’s largest jackup customer 50% 50% Ownership Ownership Valaris operates three jackups offshore Saudi Arabia outside of ARO Drilling joint venture1 $403M $419M Shareholder Shareholder Notes Receivable Notes Receivable Leased Jackups (8) Ow
Slide 34: Non-GAAP Reconciliations
Non-GAAP Reconciliations (In millions) (In millions) (In millions) Year-Ended Year-Ended Year-Ended December 31, December 31, December 31, ACTIVE FLEET 2022 LEASED & MANAGED RIGS 2022 ARO 2022 Net income (loss) $ 232.2 Net income (loss) $ 76.8 Net income $ 20.7 Add (subtract): Add (subtract): Add (s
Slide 35: VALARI ae
VALARI ae