Valaris — Income Statement, Cash Flows & Balance Sheet
Is Valaris profitable?
Valaris delivered a sharp improvement in operating profitability, with operating income surging as costs fell sharply.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Total operating revenues ($M) | $2,362.6 | $2,369.0 | +0.3% |
| Contract drilling expenses (excl. depreciation, $M) | $1,760.9 | $1,629.7 | -7.5% |
| Operating income ($M) | $352.3 | $477.0 | +35.4% |
| Operating margin | 14.9% | 20.1% | +6.2 pp |
Revenue was essentially flat year over year, but Valaris cut its contract drilling costs meaningfully, which drove a substantial jump in operating margin and operating income.
Net income more than doubled, but a large non-cash tax benefit is the key reason — underlying profitability is more modest.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Operating income ($M) | $352.3 | $477.0 | +35.4% |
| Total income tax benefit ($M) | $0.4 | $426.8 | — |
| Net income attributable to Valaris ($M) | $373.4 | $982.8 | +163% |
The headline net income leap is mostly explained by a large non-cash deferred tax benefit (GAAP), driven by the release of valuation allowances on tax assets in Luxembourg — not by the core business earning dramatically more cash. Investors should focus on operating income as the cleaner measure of underlying performance.
Where does Valaris's revenue come from?
Jackups nearly doubled their operating income, while Floaters declined — a meaningful shift in which segment is carrying results.
| Segment | 2024 Operating Income ($M) | 2025 Operating Income ($M) | Change |
|---|---|---|---|
| Floaters | $397.4 | $376.6 | -5.2% |
| Jackups | $168.5 | $280.5 | +66.4% |
| Other | $70.7 | $77.0 | +8.9% |
Jackups, which serve shallower-water markets, posted a major improvement as revenues jumped while costs held relatively steady. Floaters — Valaris's deepwater rigs, historically the higher-value segment — saw a slight dip, with revenue falling from the prior year even as costs came down.
Brazil and the UK are the two largest geographic revenue drivers, together representing roughly 41% of total revenue.
| Geography | 2024 Revenue ($M) | 2025 Revenue ($M) | Change |
|---|---|---|---|
| Brazil | $497.9 | $587.3 | +18.0% |
| United Kingdom | $375.2 | $391.8 | +4.4% |
| Angola | $196.7 | $293.5 | +49.2% |
Brazil and Angola both grew meaningfully, reflecting strong Floater demand in those markets, while the UK remains Valaris's largest Jackup market.
Does Valaris generate cash?
Operating cash flow improved strongly and Valaris is now generating meaningful free cash flow after years of heavy investment.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Operating cash flow ($M) | $355.4 | $546.2 | +53.7% |
| Capital expenditures ($M) | $455.1 | $343.5 | -24.5% |
| Free cash flow (GAAP operating CF minus capex, $M) | -$99.7 | +$202.7 | — |
The swing to positive free cash flow (operating cash minus capital spending) is significant — Valaris moved from cash-flow negative to generating over $200 million in excess cash, driven by both higher earnings and a reduction in rig investment spending.
How strong is Valaris's balance sheet?
Valaris carries a single debt instrument and its cash position grew substantially, leaving it in a comfortable liquidity position.
| Metric | 2024 | 2025 | Change |
|---|---|---|---|
| Cash & equivalents ($M) | $368.2 | $599.4 | +63% |
| Long-term debt ($M) | $1,082.7 | $1,086.0 | +0.3% |
| Total shareholders' equity ($M) | $2,244.3 | $3,171.7 | +41.3% |
Valaris holds a single bond — $1.1 billion of 8.375% Second Lien Notes maturing in 2030 — and carries no revolving credit borrowings. Cash grew by over $230 million during the year, and the company's equity base expanded sharply, partly reflecting that large deferred tax asset recognition. The company also repurchased $100 million of its own shares during 2025 and had approximately $175 million remaining under its buyback authorization at year end.
A large deferred tax asset is now the biggest single item on the balance sheet and warrants attention.
| Asset | 2024 ($M) | 2025 ($M) | Change |
|---|---|---|---|
| Deferred tax assets | $849.5 | $1,364.2 | +60.6% |
| Property & equipment, net | $1,932.9 | $2,088.8 | +8.1% |
The deferred tax asset (a future tax benefit Valaris expects to realize) now exceeds $1.3 billion and is the balance sheet's largest single asset — larger even than the rig fleet. Whether Valaris can generate enough taxable income across its many jurisdictions to actually use these benefits is a key uncertainty investors should monitor.