April 30, 2020

Offshore drilling giant Valaris reported a net loss attributable to the Company of $3.01 billion for first quarter 2020 compared to a net loss of $216 million in fourth quarter 2019.
Revenues declined to $457 million in first quarter 2020 from $512 million in fourth quarter 2019 primarily due to a two percentage point decline in fleet utilization to 59% from 61% in the prior quarter. The sale of Valaris 6002, which operated in fourth quarter 2019 and was subsequently sold, also contributed to the sequential quarter revenue decline.
Chief Executive Officer and President Tom Burke said, “In the COVID-19 pandemic and corresponding economic crisis, the energy sector is facing a severe industry downturn caused by lower energy demand and a simultaneous increase in hydrocarbon supply. In response to these market conditions including lower oil prices, customers for offshore drilling services have significantly reduced their planned capital expenditures and are seeking to cancel or defer projects, which has led to terminations or renegotiations of existing contracts. The combination of these factors negatively impacted our first quarter 2020 financial results, and we expect to continue to report losses and negative cash flows throughout the remainder of the year.”
Burke concluded, “In light of these challenges, we are taking further steps to manage our cost base and preserve liquidity. We expect to stack certain uncontracted rigs and remove others from our fleet, including three drillships and four semisubmersibles. We are executing plans that will lower operating costs for contracted rigs, rightsize our onshore organization for anticipated lower levels of fleet utilization, and improve our working capital management. We are also evaluating various alternatives to address our capital structure and annual interest costs, including, without limitation, a comprehensive debt restructuring that may require a substantial conversion of our indebtedness to equity.”
(Source: Valaris – Image: Valaris DS-8)