Valaris — Business Overview
What does Valaris do?
Valaris is one of the world's largest offshore drilling contractors, renting out its fleet of rigs to oil and gas companies that need to drill wells beneath the ocean floor. It owns 46 rigs as of early 2026, spread across four operating segments. Customers pay Valaris a daily fee — a day rate — to use those rigs and the crews that operate them. The customer bears the cost of actually building the well and takes on the risk of whether oil or gas is found.
The four segments are:
| Segment | What it is |
|---|---|
| Floaters | 13 drillships and 2 semisubmersible rigs capable of drilling in very deep water (ultra-deepwater) |
| Jackups | 31 rigs with legs that extend to the seabed, used in shallower water |
| ARO | A 50/50 joint venture (shared ownership company) with Saudi Aramco that owns 9 additional rigs; not consolidated into Valaris's financials |
| Other | Management services on rigs owned by third parties and lease arrangements related to ARO |
A pending merger with Transocean — announced February 9, 2026 — would combine the two companies, with existing Valaris shareholders owning roughly 47% of the combined entity. This is a major event that any prospective investor should factor in; the deal is not yet complete as of the filing date.
How does Valaris make money?
The core revenue model is simple: Valaris charges a daily rate for each rig it puts to work. Under a day rate contract, Valaris provides the rig and its crew, and the customer pays a fixed daily fee for the duration of the contract. The rate can drop to a reduced level — or even zero — if the rig is idle due to equipment breakdowns or other issues, so utilization matters enormously to revenue. Contracts also typically include lump-sum payments for moving a rig to and from a drill site (mobilization and demobilization fees).
Customer concentration is meaningful. The five largest customers accounted for 49% of 2025 revenues. Three customers — Petrobras (Brazil's national oil company), BP, and Azule Energy — together represented 35% of revenues, creating some dependence on a small group of counterparties.
What market does Valaris operate in?
Valaris operates in the offshore contract drilling industry, which is cyclical and tied closely to oil and gas prices and the spending decisions of energy companies. When oil prices are high and companies are investing aggressively in finding and producing oil, demand for rigs rises, day rates climb, and utilization improves. When prices fall or companies pull back, the reverse happens. The filing notes the oil market is currently in a period of oversupply, which creates near-term pressure.
The medium-term outlook for offshore drilling, particularly deepwater, is described as constructive. Industry studies from the IEA and EIA suggest substantial new investment is needed just to replace naturally declining oil fields. According to Rystad Energy estimates cited in the filing, roughly 70% of expected deepwater projects over the next five years have breakeven prices (the oil price at which a project is profitable) below $50 per barrel, making them economically resilient even in lower-price environments. Deepwater projects are also noted for large resource potential and lower carbon intensity per barrel compared to some alternatives.
Fleet attrition over the last decade has left the global rig supply smaller than it once was, which structurally supports day rates if demand holds up. Fewer rigs competing for contracts generally means better pricing power for the contractors that remain.
Who are Valaris's main competitors?
The offshore drilling industry is highly competitive, with contracts typically awarded through competitive bidding where price is often the deciding factor. Other criteria — safety record, operational performance, rig specifications, and reputation — also matter, but day rate pricing drives most contract decisions.
The industry is relatively consolidated at the top, with a small number of large global contractors owning most of the high-specification rigs. Valaris's pending merger with Transocean would create an even larger combined fleet. Other major competitors in the global offshore drilling space include Seadrill and Noble Corporation, though the filing does not name competitors directly. Valaris claims competitive advantages through the scale and specification of its fleet (particularly its ultra-deepwater drillships), broad geographic diversification, and the ARO joint venture, which provides a long-term, stable position in Saudi Arabia's offshore market.
Where does Valaris operate?
Valaris has a genuinely global footprint, with 86% of revenues coming from outside the United States in 2025 (up from 80% in 2023), making it overwhelmingly an international business. As of December 31, 2025, its 46 rigs were distributed as follows:
| Region | Number of rigs |
|---|---|
| Europe | 17 |
| Middle East and Africa | 16 |
| North and South America | 8 |
| Asia and the Pacific Rim | 4 |
The Middle East is a particularly significant region, anchored by the ARO joint venture with Saudi Aramco. That relationship provides Valaris with a long-term, strategically important presence in one of the world's most active offshore drilling markets. South America (notably Brazil, given Petrobras's status as the largest single customer) and the North Sea are also major revenue contributors. Operating across this many jurisdictions brings exposure to geopolitical risk, local regulations, and currency considerations, all of which the filing flags as meaningful risk factors.