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Valaris (VAL) Adds $1B Backlog From Drillship & Jackup Deals
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Valaris Limited (VAL - Free Report) , an offshore driller, has successfully secured new deals and contract extensions, adding approximately $1.14 billion to the firm backlog, excluding mobilization fees and capital reimbursements. The awards include two multi-year contracts for its drillships and several jackup deals spread over the North Sea, Trinidad and Australia.
Let’s discuss the contracts:
Drillships
Included among the most recent awards is the previously announced contract extension with the Brazilian energy company Petrobras (PBR - Free Report) for VALARIS DS-4, which entails work for the Buzios deepwater oilfield. This 1,064-day contract is valued at $519 million and is expected to start in December 2024, after the completion of its current deal with Petrobras in September. The drillship will remain out of service for 90 days before resuming operations for the Buzios oilfield project to undergo customer-required upgrades. The development concept for the Buzios program comprises 11 platforms, six of which are under construction.
The VALARIS DS-16 drillship has won a two-year contract extension with Anadarko Petroleum Corporation, a subsidiary of Occidental, in the U.S. Gulf of Mexico. The extended contract is scheduled to begin in June 2024, following up with the existing firm program.
Additionally, a 60-day priced option for the VALARIS DS-17 has been exercised by Equinor. The 60-day priced option has a fixed day rate of approximately $447,000, including MPD and additional services and is expected to begin work in March 2025 in continuation of the existing firm contract.
Apart from this, the offshore drilling company has also secured contracts for its jackup rigs.
Jackup Rigs
The U.K.-based exploration and production player Harbour Energy and Valaris have signed a three-year contract extension for the VALARIS 120 heavy-duty harsh environment jack-up rig for work in the U.K. North Sea. The extended contract is in direct continuation of the existing firm program and is expected to begin in the third quarter of 2025. The 2013-built VALARIS 120 heavy-duty harsh environment jack-up rig has been employed by Harbour since 2017.
In a new deal, French energy major TotalEnergies has locked in the heavy-duty ultra-harsh environment jack-up rig, VALARIS Stavanger, in the U.K. North Sea. The 330-day contract has been valued at approximately $48 million and is anticipated to start in March 2024.
London-based Shell has exercised two one-well-priced options for VALARIS 121 in the U.K. North Sea. The options have an estimated duration of 406 days and are expected to begin work in the summer of 2024. The total value of the priced option period is approximately $55 million.
Valaris has also landed two new one-well contracts with British oil and gas company Ithaca energy and Italian energy company Eni.
The deal with Ithaca for VALARIS 123 rig has a minimum value of $6.2 million. The duration of the contract is estimated between 45 and 72 days, and the contract is projected to commence in April 2024. Eni has won the contract for heavy-duty ultra-harsh environment jackup VALARIS 247 at a fixed operating day rate of $180,000. The contract has a minimum duration of 45 days and is expected to begin in the third quarter of 2024.
An anonymous operator has exercised a one-well contract option for heavy-duty ultra-harsh environment jackup VALARIS 249, valued at $137,500 per day. The one-well option will be extending the contract’s firm term by at least 35 days.
Another undisclosed operator has signed a 300-day contract for the VALARIS 249 rig offshore Trinidad at an operating day rate of $162,500. This contract is projected to start in the fourth quarter of 2024. The same operator has previously terminated a one-well contract for VALARIS 107 offshore Australia, which was scheduled to begin in the first quarter of 2024.
Zacks Rank & Stocks to Consider
Currently, Valaris has a Zacks Rank #3 (Hold).
Investors can also look at some better-ranked stocks in the energy sector, such as Vaalco Energy (EGY - Free Report) and Enbridge Inc. (ENB - Free Report) . While Vaalco Energy sports a Zacks Rank #1 (Strong Buy), Enbridge carries a Zacks Rank #2 (Buy) at present. You can seethe complete list of today’s Zacks #1 Rank stocks here.
Vaalco Energy is an independent energy company involved in upstream operation business with a diversified presence in Africa and Canada. The company has a very positive outlook for fiscal 2024. The bottom-line estimate is pegged at $1.49 per share, indicating a 325.7% increase from 35 cents in the previous year.
Enbridge is an energy infrastructure company with a diversified portfolio of midstream assets. It currently pays investors $2.60 in dividend payments annually. The company’s current dividend yield is 7.1% compared with the industry’s average of 6.4%.
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Valaris (VAL) Adds $1B Backlog From Drillship & Jackup Deals
Valaris Limited (VAL - Free Report) , an offshore driller, has successfully secured new deals and contract extensions, adding approximately $1.14 billion to the firm backlog, excluding mobilization fees and capital reimbursements. The awards include two multi-year contracts for its drillships and several jackup deals spread over the North Sea, Trinidad and Australia.
Let’s discuss the contracts:
Drillships
Included among the most recent awards is the previously announced contract extension with the Brazilian energy company Petrobras (PBR - Free Report) for VALARIS DS-4, which entails work for the Buzios deepwater oilfield. This 1,064-day contract is valued at $519 million and is expected to start in December 2024, after the completion of its current deal with Petrobras in September. The drillship will remain out of service for 90 days before resuming operations for the Buzios oilfield project to undergo customer-required upgrades. The development concept for the Buzios program comprises 11 platforms, six of which are under construction.
The VALARIS DS-16 drillship has won a two-year contract extension with Anadarko Petroleum Corporation, a subsidiary of Occidental, in the U.S. Gulf of Mexico. The extended contract is scheduled to begin in June 2024, following up with the existing firm program.
Additionally, a 60-day priced option for the VALARIS DS-17 has been exercised by Equinor. The 60-day priced option has a fixed day rate of approximately $447,000, including MPD and additional services and is expected to begin work in March 2025 in continuation of the existing firm contract.
Apart from this, the offshore drilling company has also secured contracts for its jackup rigs.
Jackup Rigs
The U.K.-based exploration and production player Harbour Energy and Valaris have signed a three-year contract extension for the VALARIS 120 heavy-duty harsh environment jack-up rig for work in the U.K. North Sea. The extended contract is in direct continuation of the existing firm program and is expected to begin in the third quarter of 2025. The 2013-built VALARIS 120 heavy-duty harsh environment jack-up rig has been employed by Harbour since 2017.
In a new deal, French energy major TotalEnergies has locked in the heavy-duty ultra-harsh environment jack-up rig, VALARIS Stavanger, in the U.K. North Sea. The 330-day contract has been valued at approximately $48 million and is anticipated to start in March 2024.
London-based Shell has exercised two one-well-priced options for VALARIS 121 in the U.K. North Sea. The options have an estimated duration of 406 days and are expected to begin work in the summer of 2024. The total value of the priced option period is approximately $55 million.
Valaris has also landed two new one-well contracts with British oil and gas company Ithaca energy and Italian energy company Eni.
The deal with Ithaca for VALARIS 123 rig has a minimum value of $6.2 million. The duration of the contract is estimated between 45 and 72 days, and the contract is projected to commence in April 2024. Eni has won the contract for heavy-duty ultra-harsh environment jackup VALARIS 247 at a fixed operating day rate of $180,000. The contract has a minimum duration of 45 days and is expected to begin in the third quarter of 2024.
An anonymous operator has exercised a one-well contract option for heavy-duty ultra-harsh environment jackup VALARIS 249, valued at $137,500 per day. The one-well option will be extending the contract’s firm term by at least 35 days.
Another undisclosed operator has signed a 300-day contract for the VALARIS 249 rig offshore Trinidad at an operating day rate of $162,500. This contract is projected to start in the fourth quarter of 2024. The same operator has previously terminated a one-well contract for VALARIS 107 offshore Australia, which was scheduled to begin in the first quarter of 2024.
Zacks Rank & Stocks to Consider
Currently, Valaris has a Zacks Rank #3 (Hold).
Investors can also look at some better-ranked stocks in the energy sector, such as Vaalco Energy (EGY - Free Report) and Enbridge Inc. (ENB - Free Report) . While Vaalco Energy sports a Zacks Rank #1 (Strong Buy), Enbridge carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Vaalco Energy is an independent energy company involved in upstream operation business with a diversified presence in Africa and Canada. The company has a very positive outlook for fiscal 2024. The bottom-line estimate is pegged at $1.49 per share, indicating a 325.7% increase from 35 cents in the previous year.
Enbridge is an energy infrastructure company with a diversified portfolio of midstream assets. It currently pays investors $2.60 in dividend payments annually. The company’s current dividend yield is 7.1% compared with the industry’s average of 6.4%.