Drilling rig operator Valaris upped its share repurchases amid a steady quarter in which it grew both its backlog and net income.
Valaris (NYSE:VAL) reported net income of $49 million – an improvement on the $31m last quarter.
The first three months of the year saw contracts and extensions worth around $820m in backlog, taking total contract backlog to $2.8 billion.
Valaris said the results were “better than prior guidance” due to the timing of projects moving from the first quarter to subsequent quarters, but maintained its outlook for the rest of 2023.
President and CEO Anton Dibowitz said: “In the first quarter, we achieved strong revenue efficiency of 99% and won new contracts and extensions with associated contract backlog of approximately $820 million, including a three-year contract offshore Brazil for which we will reactivate drillship VALARIS DS-8.”
Mr Dibowitz also pointed to a recent refinancing which added a $375m revolving credit facility and increased the firm’s liquidity by almost $500m.
“We continue to be highly constructive on the outlook for the industry and our business, with increasing demand and constrained supply continuing to tighten the market,” he added.
“As a result of our strong business outlook and commitment to returning capital to shareholders, the Valaris Board of Directors has increased our share repurchase authorization to $300 million, and we intend to repurchase $150 million of shares by the end of the year.”
By segment, Valaris’ floating revenues increased marginally to $215m, primarily due to higher day rates for VALARIS DPS-5 and DS-12, which commenced new contracts during the first quarter.
Jackup revenues fell to $170m from $182 million Q4 2022, a factor the company said was legrly linked to lower utilization for its harsh-environment fleet, including idle time for its three N-Class jackups as well as the VALARIS 121 and 247.
The 121 – currently moored in Dundee – is the subject of an investigation by the UK’s Health and Safety Executive after inspectors found a hole in the deck had appeared the same day a worker went missing from the vessel, sparking a huge search off Aberdeen.
Revenues at ARO Drilling – its 50/50 joint venture with Saudi Aramco- also grew marginally to $124m on the back of higher average day rates, following the start of three-year contract extensions for VALARIS 147 and 148 in December 2022 and February 2023, respectively.
New CEO for ARO
At the same time, the company confirmed the appointment of Mohamed Hegazi as chief executive of ARO Drilling.
Mr Hegazi previously served as CEO of wellbore integrity services firm TGT Diagnostics, and various senior leadership positions at SLB (then Schlumberger).
He replaces Derek Kent who will be retiring from his role as head of ARO following a handover period.