Valaris Limited

Good day, everyone, and welcome to the Valeris third quarter 2025 results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, press star and then one on your touch-tone phones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Nick Georges, President, Treasurer, and Investor Relations. Please go ahead.

Welcome, everyone, to the Volaris Third Quarter 2025 Conference Call. With me today are President and CEO Anton Divovits, Senior Vice President and CFO Chris Weber, Senior Vice President and CCO Matt Line, and other members of our Executive Management team. We issued our press release which is available on our website at Volaris.com. Any comments we make today about expectations are forward-looking statements and are subject to risks and uncertainties. Many factors could cause actual results to differ materially from our expectations. Please refer to our press release and SEC filings on our website that define forward-looking statements and list risk factors and other events that could impact future results. Also, please note that the company undertakes no duty to update forward-looking statements. During this call, we will refer to GAAP and non-GAAP financial measures. Please see the press release on our website for additional information and required reconciliations. Last week, we issued our most recent fleet status report, which provides details on our rig fleet, including new contract awards. Now, I'll turn the call over to Anton Dibovitz, President and CEO.

Thanks, Nick, and good morning and afternoon to everyone. I'll begin today's call with a summary of our third quarter performance and highlight our recent commercial achievements. I'll then provide an update on the offshore drilling market before discussing how our continued focus on operational excellence, commercial execution, and disciplined cost and fleet management is driving long-term value for shareholders. I'll then turn the call over to Matt, who will provide additional detail on our contracting activity and the broader floater and jack-up markets. After that, Chris will walk through our financial results and guidance, and I'll finish with a few closing remarks. To begin, I want to highlight a few key points. First, I want to thank the entire Valaris team for continuing to deliver safe and efficient operations. This solid operational performance contributed to another strong quarter of financial results, with meaningful EBITDA and free cash flow generation. Second, we continue to execute our commercial strategy, having recently secured an attractive contract for Valeris DS12 with BP Offshore Egypt. With this award, all four of our drill ships with near-term availability are now contracted for work beginning next year. Third, despite near-term commodity price uncertainty, demand for offshore drilling services is developing as we expected. We continue to see a robust pipeline of deep-order opportunities for our high-specification fleet, and we are in advanced customer discussions for our drill ships scheduled to complete contracts in the second half of 2026. In summary, we remain focused on delivering outstanding operational performance, executing on our commercial strategy, and prudently managing our costs and fleet. By staying disciplined and focused on these priorities, Valaris is well positioned to deliver long-term value for our shareholders. Moving to operations, delivering safe and efficient operations is always our top priority. It protects our people, strengthens relationships with our customers, and serves as the foundation for everything we do. Our teams once again delivered solid operational performance, achieving fleet-wide revenue efficiency of 95% in the third quarter. This execution helped deliver another quarter of strong financial results, including adjusted EBITDA of $163 million and adjusted free cash flow of $237 million. In addition, we repurchased $75 million of shares during the quarter, demonstrating our commitment to returning capital to shareholders. Several rigs reached notable safety milestones during the quarter. Valera Stavanger marked an impressive four years recordable free, a remarkable achievement that reflects the crew's commitment to safety and the strength of their leadership. In addition, seven other rigs, Floater's Valaris DS-12, DS-18, and DPS-1, along with Jacob's Valaris 92, 123, 247, and 249, each achieved one-year recordable free. Congratulations to all involved on these outstanding results. We were also proud to be recognized by the Center for Offshore Safety for the third consecutive year. most recently for our Video After Action Review initiative, reflecting both the strength of our safety culture and our commitment to continuous improvement through innovation. We continue to execute our commercial strategy. This is supported by our solid operational performance since many of our recent contract awards have come from existing customers, reflecting the strength of our relationships and the confidence they place in us to deliver safe and efficient operations. A great example is our recent contract for Valaris DS12, which will return to Egypt with BP, building on our previous campaign that included drilling the successful El-King II and El-Fayoum V exploration wells earlier this year. Egypt continues to make meaningful progress in attracting investment from IOCs, with several majors awarded offshore acreage in a licensing round earlier this year. Valeris has a long and successful history operating offshore Egypt, spanning roughly two decades of drilling programs, including seven years for BP. We're excited about this upcoming campaign and the prospect for continued activity offshore Egypt in the years ahead. At the start of the year, we outlined our commercial focus on securing attractive contracts to bookend the white space for our drill ships with near-term availability. and we have accomplished this objective as these four rigs are now contracted for work beginning next year. This is a fantastic achievement by our commercial team and everyone across the organization who played a role in making it happen. Turning now to the broader macro environment in the offshore drilling market. The long-term outlook for our industry is becoming increasingly constructive. There is a growing consensus that today's near-term oil supply surplus will give way to a structurally tighter market later in the decade as a result of historic underinvestment and slowing non-OPEC production growth. Our customers continue to emphasize the need for sustained investment in oil and gas, particularly in offshore developments that provide secure, reliable, and affordable energy supply. The IEA recently highlighted that nearly 90% of global upstream spending is required just to offset natural fuel declines, underscoring how much investment is needed to simply maintain existing production. Without continued investment, the IEA estimates global oil production would fall by 8% per year on average over the next decade, equivalent to losing more than the annual output of Brazil and Norway each year over the same time frame. Demand for offshore drilling continues to unfold as we expected, with customers increasingly looking to offshore projects, particularly deepwater, which offers large, accessible resource potential, compelling project economics, and comparatively lower carbon emissions to meet future energy needs. Even with some near-term commodity price uncertainty, customers are moving forward with long-cycle offshore developments, and we anticipate meaningful growth in deepwater project sanctioning over the next few years as customers pursue greenfield and brownfield developments, as well as exploration. Importantly, most of these projects are expected to be economically viable well below current oil prices. According to Restat, approximately 70% of deep water spending expected to be sanctioned over the next three years is tied to programs with break-even prices below $50 per barrel, compared to a five-year forward price above $65 per barrel. This reinforces our expectation that the floater opportunities we've been tracking will continue converting to contracts and, based on our ongoing conversations with customers, we anticipate additional awards for Valeris and the broader industry in the coming months. We continue to expect that utilization for the global drill ship fleet will trough late this year or early next year, before improving in the second half of 2026 as rigs begin new contracts. And we anticipate 7th generation drill ships will exit 2026 with utilization levels around 90%. Customers continue to prefer the most technically capable and efficient assets, which aligns well with our high-specification drill ship fleet, with 12 of our 13 ships being 7th generation units, the highest concentration in the industry. 7th generation drill ships have historically enjoyed a utilization and day rate advantage, and we expect this trend will continue. We have strategically positioned our assets with customers in basins where we see sustained, long-term demand, and we believe that this targeted commercial approach will allow us to maintain more consistent utilization over time. Turning to jackups, shallow water demand remains robust, with global utilization around 90%, driven primarily by national oil companies focused on energy security and infrastructure development. Recently, Sider Ramco has issued notices calling back several suspended rigs to resume operations next year, which we expect will further support the supply and demand balance of the global jackup fleet. Our versatile jackup fleet continues to be a significant and reliable driver of earnings, with EBITDA from the segment increasing year-over-year, driven by more operating days and higher average day rates. This reflects our strategic focus on markets where we hold strong positions, such as our market leading position in the North Sea, in Saudi Arabia through our rigs lease to Arrow, and in niche markets that require high specification assets like Trinidad and Australia. Turning to our broader fleet management strategy, we remain focused on maintaining our high quality and efficient asset base, while prudently managing our costs and fleet. This includes tightly managing expenses between contracts, selling assets when we can achieve attractive prices, and retiring rigs when their expected future economic benefit no longer justifies their associated costs. This focus was recently demonstrated by the highly accretive sale of 27-year-old Jacob Valera's 247, which we closed during the quarter for $108 million in cash. Consistent with our disciplined approach to cost management, following completion of their current programs, we plan to mobilize Valeris MS1 and DPS1 to Malaysia, where we will quickly reduce costs by warm stacking both rigs while we evaluate future opportunities. Before handing over to Matt, I'd like to briefly recap a few key points about the market and our strategy. Our customers continue to highlight the need for ongoing investment in oil and gas, particularly in offshore developments that offer secure, reliable, and affordable energy supply. Demand for offshore drilling is developing as we expected, and customers are increasingly turning to offshore projects to support future energy demand. We're well positioned to continue executing our commercial strategy by securing attractive floater contracts supported by our global scale and high-spec fleet. We're in advanced discussions with customers regarding opportunities for rigs scheduled to complete contracts in the second half of 2026, and we will continue to pursue gap fill programs in the first half of next year. Against this positive backdrop, we remain focused on three strategic priorities, delivering outstanding operational performance, executing our commercial strategy, and prudently managing our costs and fleet. By staying disciplined and focused on these priorities, Valeris is well positioned to deliver long-term value for shareholders. With that, I'll now hand the call over to Matt.