![]() ![]() There was an increase in revenues from jackup rigs in Q2 2022 attributed to more operating days for Valaris 249 after VAL kicked off a New Zealand offshore contract in Q1 2022. In the past decade, Aramco has overseen an average of 45 jackups.īack in Q1 2022, Valaris signed new deals with Saudi Aramco that saw Valaris 250 (a jackup for the heavy-duty harsh environment), Valaris 116 (a heavy-duty modern jackup) and Valaris 143 & 146 (standard-duty modern jackups) commence 3-year extensions of their charter agreements with ARO Drilling after completion of their existing agreements in December 2021. The year 2023 may likely see the number of rigs rise to the range of 10 to 14 depending on market demand. Overall, Aramco’s total fleet of offshore rigs (on contract) in the Saudi Arabian Kingdom will rise to 78 jackups. Saudi Aramco- a state-owned oil company is expected to charter 26 new jackups in 2022 expected from ADES which is owned by Saudi Arabia’s Public Investment Fund ( PIF). Saudi Aramco owns and operates jack-up drilling rigs in Saudi Arabia, which is arguably the largest market for jack-up rigs in the world. The partial early repayment also demonstrates that neither Valaris nor Saudi Aramco will be required to provide additional financing to ARO for the new build project expected in H1 2023. By inference, Valaris is entitled to 50% of ARO’s net earnings due to this venture agreement. The reprieve for Valaris is that this agreement with Saudi Aramco- in the creation of ARO Drilling, prohibits the sale or transfer of shareholder notes to a third party. ![]() ![]() After adjusting the notes to fair value, a discount was recorded from the effective date to the principal amount of $442.7 million. The relationship between Valaris and ARO (a 50-50 joint venture between Saudi Aramco ( ARMCO) - the world’s largest oil and Gas Company) took shape in 20 when Valaris contributed cash to ARO in exchange for a 10-year shareholder notes receivable with interest. ![]() This payment means the shareholder notes receivable attributable to Valaris stand at $403 million, with $225 million due in October 2027 and about $178 million due in October 2028. Valaris Limited announced that it had received a $40 million partial payment from its joint venture ARO Drilling, of its shareholder notes receivable. It has reactivated its high-quality stack rigs to ensure it gets long-term contracts at good rates. I believe that VAL’s price return has gained⁓ 52% (YoY) boosted by a significant value in ARO Drilling and the company’s drive to build its contract backlog. The increase will coincide with higher labor and material costs, and spare depletion from its initial reactivations projects. However, the company is expected to increase its spending levels as it reactivates rigs as compared to 2021. The company is looking forward to new contracts and extension awards that will support its growth initiatives into 2023. Less than 1.5 years after emerging from Chapter 11 bankruptcy protection, Valaris' partnership with ARO Drilling has started paying off including partial early repayment of its shareholder notes. Despite being more expensive than onshore shale, offshore production sites can turn profits at lower prices than other production sites. The investments have been encouraged by surging oil prices as well as the increase in energy demand from Europe due to the ongoing Ukraine-Russia war. Global oil companies are injecting a lot of money into offshore drilling, a move seen to reverse a long decline in expenditures with projects lined in the U.S and Atlantic Coast of Canada. Valaris Limited ( NYSE: VAL) recently announced that it was rated the number one offshore driller in the customer satisfaction survey of 2022 by EnergyPoint Research covering offshore contract drillers. ![]()
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