Valaris Limited (VAL): Business Model Canvas [Dec-2025 Updated]

You're digging into the engine room of Valaris Limited (VAL), trying to map out exactly how they're making money in late 2025, and honestly, the picture is rock solid: they've got a massive, high-spec fleet driving near-perfect operational efficiency-think 95% revenue efficiency in Q3-and a backlog of about $4.5 billion giving you serious revenue visibility. This isn't just about day rates; it's about strategic moves like the ARO Drilling joint venture with Saudi Aramco and even dipping into offshore wind support, all while maintaining a strong cash position of $676 million as of September 30, 2025. If you want the precise, analyst-level breakdown of their nine building blocks, from their key activities to their revenue streams, look no further; the full canvas is detailed below.

Valaris Limited (VAL) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that keep Valaris Limited's high-specification fleet running and expanding. These aren't just vendors; they are strategic anchors, especially in the Middle East and the growing offshore wind sector. Honestly, the backlog figures tell a lot of the story here.

As of October 23, 2025, Valaris Limited's total contract backlog stood at approximately $4.5 billion. This figure reflects the strength of these key alliances, with recent awards adding about $190 million to that total since the July 2025 fleet status report. The trailing twelve-month revenue for Valaris Ltd, as of September 30, 2025, was $2.42B.

The partnerships are heavily weighted toward long-term commitments in key regions:

• Valaris has a 50% ownership interest in the ARO Drilling joint venture.
• The company sold the jackup VALARIS 247 in August 2025 for cash proceeds of approximately $108 million.

ARO Drilling: 50/50 Joint Venture with Saudi Aramco

The relationship with ARO Drilling, the 50/50 joint venture with Saudi Aramco, is foundational for Valaris' jackup utilization. This partnership is executing a visionary program, including the construction of new rigs like the Kingdom 3 jack-up rig, for which Seatrium won a tender for equipment and a license in February 2025.

The core of this partnership involves bareboat charter extensions for five rigs leased to ARO Drilling:

Saudi Aramco: Direct and Indirect Engagement

The five-year bareboat charter extensions for the five rigs leased to ARO Drilling directly support Saudi Aramco's drilling program offshore Saudi Arabia. The bareboat charter revenue from these rigs contributed to higher revenues exclusive of reimbursable items in the first quarter of 2025 compared to the fourth quarter of 2024.

GE Vernova: Expanding into Offshore Wind Support

Valaris Limited is diversifying its customer base by supporting the energy transition through a new partnership with GE Vernova in the UK North Sea. This represents a crossover into offshore wind support services.

• VALARIS 248 secured a 120-day contract starting November 2025.
• The contract adds over $8 million to the contracted revenue backlog.
• It includes six priced options totaling an additional 104 days.

Key Suppliers: Critical Equipment and Services

Strategic relationships with suppliers are vital for fleet maintenance and newbuild support. The ongoing construction of ARO Drilling's newbuilds highlights this dependency.

• Seatrium won a tender in February 2025 to supply equipment and a license for the ARO Drilling Kingdom 3 jack-up rig.
• Valaris expects around 30 days out of service for planned maintenance on the VALARIS 248 in 4Q 2025 and another 30 days in 2Q26.

Finance: draft 13-week cash view by Friday.

Valaris Limited (VAL) - Canvas Business Model: Key Activities

You're managing a high-specification, mobile offshore drilling fleet, so your key activities revolve around keeping those expensive assets working safely and profitably under attractive terms. Valaris Limited's focus is clearly on maximizing utilization of its deepwater drillships and modern jackups globally.

Contract drilling is the core of what Valaris does. They operate ultra-deepwater drillships and modern jackups across international waters. You should know that as of the Q3 2025 earnings release, the company had a fleet that included 13 drillships and 33 jackup rigs, though this followed the retirement of three older semisubmersibles (DPS-3, DPS-5, and DPS-6) in April 2025. That's a deliberate move to high-grade the fleet, cutting costs for idle rigs. For instance, in Q3 2025, the Floaters segment brought in operating revenues of $302.9 million, while Jackups contributed $237.1 million for the three months ending September 30, 2025.

The commercial strategy is all about locking in that high-specification fleet for the long haul. They're focused on securing attractive, long-term contracts. A recent win was the five-well contract for drillship VALARIS DS-12 with bp offshore Egypt, an award with an estimated duration of 350 days. Honestly, that was a big deal because it meant all four of Valaris Limited's active drillships with near-term availability were contracted for work starting in 2026. This execution is what builds the backlog. As of October 23, 2025, the total contracted revenue backlog stood at approximately $4.5 billion.

Here's a quick look at some of those key Q3 2025 operational and financial markers:

Fleet management involves prudent divestment to keep the asset base modern. A key action here was the sale of jackup VALARIS 247. Valaris Limited agreed to sell this 27-year-old jackup to BW Energy for cash proceeds of approximately $108 million. This transaction was completed in August 2025, and the gain on sale of $90 million was included in the Q3 2025 Net Income of $187 million. This divestiture aligns with their goal to streamline the portfolio towards higher-specification assets, which should help manage future costs and improve financial flexibility. They also repurchased $75 million of shares during the quarter.

Delivering operational excellence is non-negotiable, and the numbers back this up. The teams delivered high fleet-wide revenue efficiency of 95% in Q3 2025. This performance helped drive strong cash generation, with Cash from operating activities hitting $198 million and Adjusted Free Cash Flow reaching $237 million for the same quarter. The CEO noted this was due to safe and efficient operations. The company also received the 2025 Safety Leadership Award from the Center for Offshore Safety, marking the third consecutive year for that recognition.

• Secured $190 million in new contract backlog from awards subsequent to the July 24, 2025 report.
• Drillship average day rates in the October 2025 report ranged up to $454,000 for newer designs.
• The sale of VALARIS 247 provided $108 million in cash proceeds.
• Adjusted EBITDA for Q3 2025 was $163 million, exceeding the guidance range of $120-$140 million.

Finance: draft 13-week cash view by Friday.

Valaris Limited (VAL) - Canvas Business Model: Key Resources

You're looking at the core assets Valaris Limited uses to generate revenue and maintain its market position. These aren't just pieces of equipment; they are the high-value tools that command premium day rates in the current market cycle.

High-specification fleet: Modern drillships and jackups for deep and shallow water.

Valaris Limited operates one of the industry's most technologically advanced fleets, which is a critical resource for securing high-value contracts. The focus is clearly on the most capable assets. As of the July 2025 fleet status report, the company operated a total of 49 rigs, broken down into 15 floaters and 34 jackups. The quality of the floater segment is particularly noteworthy; 12 of 13 of their drillships are classified as 7th generation assets, meaning they rank among the most technically capable rigs globally. These drillships are equipped with features like dual derricks and two blowout preventers, which deliver efficiencies to customers. The jackup fleet is positioned for operations ranging from the calm waters of the Middle East to the harsh environment of the North Sea, with high-specification and HPHT-capable rigs available.

Contract backlog: Robust revenue visibility with approximately $4.5 billion as of October 2025.

This backlog figure gives you a clear view of near-term revenue certainty. As of October 23, 2025, Valaris Limited reported a contract backlog of approximately $4.5 billion. This figure excludes lump sum payments like mobilization fees. This visibility is a direct result of securing new contracts and extensions, such as the five-well contract for drillship VALARIS DS-12 in Egypt, valued at an estimated $140 million inclusive of mobilization. Also, a four-year extension for jackup VALARIS 110 offshore Qatar added approximately $117 million to the backlog.

Cash position: Strong liquidity with $676 million in cash as of September 30, 2025.

Liquidity remains solid, which is key for funding operations and capital expenditures without immediate external pressure. Cash and cash equivalents and restricted cash stood at $676 million as of September 30, 2025. This was an increase from $516 million at the end of the second quarter, June 30, 2025. The Q3 increase was fueled by cash flow from operations, which was $198 million for the quarter, and proceeds from the sale of jackup VALARIS 247.

Human capital: Experienced crews and technical expertise for safe, efficient operations.

The people operating these complex assets are non-negotiable resources. Valaris Limited emphasizes its well-trained crews who perform at high levels even in challenging environments. This expertise translates directly into financial performance metrics. For instance, the company maintained a revenue efficiency of 95% in the third quarter of 2025. Furthermore, the team achieved strong safety performance, recording no Lost Time Incidents (LTI) through the first half of 2025. The company has also maintained revenue efficiency above 96% for four consecutive years.

Deleveraged balance sheet: No significant debt maturities until 2030.

The capital structure is significantly cleaner following the 2021 restructuring. While the outline suggests no material debt maturities until 2030, the concrete data available points to specific near-term obligations related to the ARO joint venture. The Notes Receivable from ARO, which are governed by Saudi Arabian laws, have scheduled maturities in October 2027 ($213.6 million) and October 2028 ($163.0 million) as of June 30, 2025. This structure defers major principal payments well into the latter half of the decade, supporting the overall deleveraged narrative.

• Notes Receivable from ARO Maturity in 2027: $213.6 million
• Notes Receivable from ARO Maturity in 2028: $163.0 million
• Jackup VALARIS 247 sold for cash proceeds of approximately $108 million in August 2025.

Valaris Limited (VAL) - Canvas Business Model: Value Propositions

You're looking at the core reasons customers choose Valaris Limited for their offshore drilling and support needs as of late 2025. It's all about having the right, high-spec assets ready to go, backed by proven performance.

High-specification drilling: Access to 7th generation drillships for complex deepwater projects

Valaris Limited focuses on its high-quality fleet to meet complex deepwater demand. As of July 24, 2025, the fleet comprised 49 rigs, including 15 high-specification floaters and 34 jackups. The company has strategically positioned this floater fleet in the 'Golden Triangle' regions (Gulf of Mexico, Brazil, and West Africa), which are projected to drive 70% of benign environment floater demand through 2029. Recent deepwater contract wins underscore this focus; for example, drillships VALARIS DS-16 and DS-18 added a combined five years of term and approximately $760 million to the contract backlog. Drillships have secured average day rates above $400,000 since the first quarter of 2025.

Operational reliability: Consistent, high revenue efficiency for minimized customer downtime

The value proposition here is consistent uptime and performance, which translates directly to customer cost control. Valaris Limited has maintained a revenue efficiency above 96% for four consecutive years. For the second quarter of 2025, the reported revenue efficiency was 96%. The company has a full-year 2025 EBITDA guidance range of $565-605 million. The Adjusted EBITDA for Q2 2025 reached $201 million. This operational consistency supports a total contract backlog of approximately $4.5 billion as of October 23, 2025.

Geographic flexibility: Ability to operate in nearly every major offshore basin

Valaris Limited operates across nearly every major offshore market worldwide, with a presence in six continents as of early 2025. This wide reach allows them to service global energy majors wherever they sanction projects. For instance, recent contract activity spans the Middle East (ARO Drilling extensions in Saudi Arabia), Egypt (BP contract), and the UK North Sea.

Safety track record: Recognized with the 2025 Safety Leadership Award

Safety is a core deliverable, evidenced by industry recognition. Valaris Limited was named a Winner in the Contractor Category for the 2025 Safety Leadership Award by the Center for Offshore Safety (COS) for its Video After Action Review. Furthermore, the company reported no Lost Time Incidents (LTI) through the first half of 2025.

Energy transition support: Providing accommodation and support services for offshore wind

Valaris Limited is actively supporting the energy transition by deploying assets for non-hydrocarbon projects. The jackup rig VALARIS 248 was contracted by GE Vernova to provide accommodation support services for an offshore wind project in the UK North Sea. This specific contract is for 120 days, starting in November 2025, and is valued at over $8 million, with an additional six priced options totaling 104 days.

• VALARIS 248 contract duration: 120 days firm term.
• VALARIS 248 contract value: Over $8 million.
• Additional optional duration: 104 days.

Valaris Limited (VAL) - Canvas Business Model: Customer Relationships

You're managing relationships in a cyclical industry where contract visibility is everything; so, focusing on direct engagement and proven performance is how Valaris Limited secures its high-specification assets for the long haul.

Dedicated Account Management: Direct Engagement for Long-Term Contract Negotiation and Renewal

Valaris Limited prioritizes direct engagement, which is evident in the successful conversion of their deepwater pipeline into secured work. The company reported securing approximately $1.9 billion in new contract backlog year-to-date as of the third quarter of 2025. This commercial execution resulted in the total contract backlog, excluding certain payments, standing at approximately $4.7 billion as of late 2025. This focus on securing long-term programs for high-specification assets is a direct result of this dedicated approach.

The company has been actively working to secure future utilization for rigs coming off contract:

• All four active drillships with near-term availability were contracted for work beginning in 2026 as of the third quarter of 2025.
• VALARIS DS-15 and DS-18 completed contracts mid-third quarter 2025 but are both scheduled to start their next contracts in the second half of 2026.
• The company is in advanced customer discussions for drillships scheduled to complete contracts in the second half of 2026.

High-Touch Service: Focus on Safety and Operational Performance to Strengthen Relationships

Operational excellence and a strong safety record are non-negotiable elements that strengthen customer trust and drive repeat business. Valaris Limited achieved a fleet-wide revenue efficiency of 95% in the third quarter of 2025, following 96% in the second quarter of 2025. For the full year 2024, the efficiency stood at 97%. This focus on execution is recognized externally:

Valaris Limited was recognized by the Center for Offshore Safety with its 2025 Safety Leadership Award, marking the third consecutive year for this recognition. Furthermore, the company reported no Lost Time Incidents (LTI) through the first half of 2025. Safety improvements in 2024 included a 20% reduction in the Total Recordable Incident Rate (TRIR) and a 55% reduction in the Lost Time Incident Rate (LTIR) compared to the prior year.

Here's a snapshot of recent contract wins that reflect customer confidence in Valaris Limited's operational capability:

Joint Venture Model: Structured, Long-Term Relationship with Saudi Aramco via ARO Drilling

The 50/50 joint venture, ARO Drilling, with Saudi Aramco provides a stable, structured relationship, particularly for the jackup fleet. This venture is a significant driver of EBITDA growth potential as it expands its fleet over the next decade. ARO Drilling's strategic plan involves adding 20 rigs over the next decade, potentially leading to a fleet size of over 30 rigs, up from 16 as of late 2025.

Valaris Limited supports this growth by leasing rigs to the venture. As of the second quarter of 2025, Valaris leased 7 jackups to ARO Drilling. The company recently signed five-year Bareboat Charter (BBC) extensions for five jackups (VALARIS 116, 140, 141, 146, and 250) leased to ARO Drilling. Revenues exclusive of reimbursable items increased in Q3 2025 primarily due to higher bareboat charter revenue from these rigs leased to ARO Drilling. The JV also marked a milestone with the delivery of the Kingdom 1 and Kingdom 2 jack-up rigs, part of a visionary 20-rig program.

Customer Discussions: Advanced Talks for Rigs Completing Contracts in the Second Half of 2026

Management confirmed being in advanced customer discussions for drillships scheduled to complete contracts in the second half of 2026. This proactive engagement is key to maintaining high utilization for their high-specification assets. For instance, the VALARIS DS-12 contract with BP offshore Egypt is expected to commence in the second quarter of 2026. Furthermore, Valaris secured multi-year contracts for drillships VALARIS DS-16 and DS-18 in the US Gulf, starting in June 2026 and mid-fourth quarter 2026, respectively, adding approximately $760 million to the backlog.

The company is tracking a robust pipeline of opportunities, with over 20 floater opportunities exceeding one-year durations tracked, and an expected increase to nearly 30 opportunities as Petrobras launches new tenders.

Finance: draft 13-week cash view by Friday.

Valaris Limited (VAL) - Canvas Business Model: Channels

You're looking at how Valaris Limited secures its work, which is heavily reliant on direct engagement and clear market communication, especially given the high-value, long-term nature of offshore drilling contracts.

Direct sales team: Primary channel for securing multi-year contracts with IOCs and NOCs.

The direct sales effort focuses on placing the high-specification fleet, evidenced by securing new drillship backlog at average day rates above $400,000 as of the Q2 2025 earnings call. This team successfully converted deepwater opportunities, with management noting that the pipeline of floater opportunities was converting into contracts. The total contracted revenue backlog, excluding mobilization fees, stood at approximately $4.5 billion as of October 23, 2025. This backlog reflects significant recent additions, with $190 million added from new contracts and extensions announced in the report dated October 23, 2025.

Here's a snapshot of the contract activity that the direct sales channel drove:

ARO Drilling JV: Dedicated channel for the strategic Middle East jackup market.

The joint venture with Saudi Aramco serves as a crucial, dedicated channel for the Middle East jackup market. Valaris Limited leases jackup rigs to ARO Drilling under bareboat charter agreements (BBCs). This channel provided a direct revenue uplift, with revenues exclusive of reimbursable items increasing to $46 million in the third quarter of 2025 from $41 million in the second quarter of 2025, primarily due to higher bareboat charter revenue from these leased rigs.

The status of the ARO-leased fleet shows ongoing commitment:

• Five jackups (VALARIS 116, 140, 141, 146, and 250) secured five-year BBC extensions.
• VALARIS 116 and 250 were expected to be out of service at zero rate for approximately six months each from October 2025 to March 2026 for surveys.
• As of September 30, 2025, ARO operated 9 total and active rigs.

Fleet Status Reports: Publicly communicating rig availability and contract awards to the market.

Valaris Limited uses its Fleet Status Reports as the primary mechanism for transparently communicating the execution of its commercial strategy to the market. These reports detail contract awards, extensions, and fleet disposition actions. For instance, the July 2025 report announced new contracts adding over $1.0 billion to the backlog. Furthermore, the company actively manages its fleet composition through sales; the jackup VALARIS 247 was sold for cash proceeds of approximately $108 million in August 2025.

The overall fleet composition as of September 30, 2025, shows the assets being actively deployed:

The active jackup count of 17 reflects the deployment of rigs not under bareboat charter to ARO Drilling, which had 9 active rigs under its operation. Finance: review the impact of the $108 million VALARIS 247 sale on Q4 2025 cash flow by next Tuesday.

Valaris Limited (VAL) - Canvas Business Model: Customer Segments

You're looking at the core clients Valaris Limited serves across its high-quality rig fleet as of late 2025. The business model relies on securing long-duration contracts with major energy players globally, supplemented by emerging work in the energy transition space.

As of October 23, 2025, Valaris Limited's total contract backlog stood at approximately $4.5 billion. This backlog reflects commitments across the customer base, spanning deepwater and shallow-water drilling services.

Major International Oil Companies (IOCs) remain a cornerstone of the demand profile, particularly for the drillship and high-specification jackup fleet.

• BP: Secured a five-well contract in Egypt for the VALARIS DS-12 drillship, with an estimated total value of $140 million, including mobilization, set to begin in the second quarter of 2026. Valaris also had a 100-day contract for VALARIS 249 offshore Trinidad.
• Shell: Extended work for the VALARIS 121 jackup in the UK North Sea by 194 days, adding over $25 million to the backlog starting February 2026. Additionally, VALARIS 122 secured two 28-day extensions from Shell, valued at more than $6 million combined, for accommodation support starting January 2026.
• Occidental (Oxy): Through its subsidiary Anadarko Petroleum Corporation, Valaris secured contract extensions and new work for drillships VALARIS DS-16 and DS-18 in the Gulf of America, adding approximately $760 million to the contracted revenue backlog, with work commencing in late 2026.

National Oil Companies (NOCs) are serviced primarily through Valaris's joint venture structure.

The relationship with Saudi Aramco is managed via the ARO Drilling joint venture. As of February 2025, Valaris had short-term bareboat charter agreement extensions in place for jackups VALARIS 116, VALARIS 146, and VALARIS 250, with ongoing discussions for longer-term extensions. For the third quarter of 2025, bareboat revenue from rigs leased to ARO Drilling, exclusive of reimbursables, was reported at $46 million.

Independent E&P Companies contribute steady, often shorter-cycle, work, particularly in mature basins like the North Sea.

Ithaca Energy, an independent operator in the North Sea, extended the contract for the VALARIS Norway jackup by 150 days, commencing August 2026, with an estimated value of around $18 million.

The company is actively diversifying into the Offshore Wind Developers segment, using its jackup fleet for support services.

Valaris contracted the VALARIS 248 jackup to GE Vernova to provide accommodation support for a North Sea offshore wind project. This initial contract is for 120 days, starting November 2025, valued at over $8 million, and includes six priced options for 104 additional days.

Here's a quick look at the recent, specific contract values tied to these customer groups:

The total contract backlog as of the October 2025 updates, which includes these awards, reached approximately $4.5 billion.

Valaris Limited (VAL) - Canvas Business Model: Cost Structure

You're looking at the money Valaris Limited spends to keep those high-specification rigs running and available for contracts. It's a capital-intensive business, plain and simple.

Contract drilling expense is the big one, covering the day-to-day operational costs. This includes everything from the crew wages and supplies to the necessary maintenance while the rig is working or standing by. For the full year 2025, Valaris Limited expected this expense to be between $1.57 billion and $1.6 billion based on guidance provided in October 2025. To give you a snapshot of a recent period, the third quarter 2025 contract drilling expense, exclusive of reimbursable items, was $368 million.

Then there's Capital expenditures (CapEx), which is the investment you make to keep the fleet modern and compliant. This is crucial for maintaining high utilization and commanding premium day rates. For the third quarter of 2025, Valaris Limited reported CapEx of $70 million. The full-year 2025 CapEx guidance, as of the October 2025 update, was set between $375 million and $415 million.

The company actively manages its asset base through fleet rationalization costs. This involves the expense associated with retiring or selling older, less efficient assets to focus on premium rigs. A significant part of this in early 2025 involved the decision to retire three semisubmersibles (VALARIS DPS-3, DPS-5, and DPS-6). This strategic move resulted in specific financial impacts:

• Non-cash loss on impairment of $8 million in the first quarter of 2025.
• Discrete tax expense of $167 million primarily related to the rig retirements in the first quarter of 2025.
• Sale of jackup VALARIS 75 for cash proceeds of $108 million, finalized in the third quarter of 2025.

General and administrative (G&A) expenses are your corporate overhead-the costs for running the headquarters and providing centralized support. The full-year 2025 G&A expense was anticipated to be between $100 million and $105 million, per the October 2025 guidance. For the third quarter of 2025 specifically, G&A expense was reported at $27 million.

Here's a quick look at how some of these major cost categories compare for the full year 2025 guidance and the specific Q3 2025 result for CapEx:

You can see the operating costs, the contract drilling expense, dwarfs the other categories on an annual basis. Still, managing the CapEx for shipyard work and major surveys is a constant cash flow consideration.

Valaris Limited (VAL) - Canvas Business Model: Revenue Streams

You're looking at the core ways Valaris Limited brings in cash, which is almost entirely tied to securing and operating its high-specification offshore drilling rigs for oil and gas exploration and production companies.

The primary engine for Valaris Limited's income is Contract drilling revenue, which comes from day rates charged for the use of its Floater (drillships and semi-submersibles) and Jackup segments. For the third quarter of 2025, the total operating revenue was $596 million. This revenue is segmented across the business units, giving you a clear picture of where the money is coming from right now.

Here is the revenue breakdown for Q3 2025:

The Jackup segment showed resilience in Q3 2025, driven by more operating days and higher average day rates, while the Floater segment saw a near-term decrease due to fewer operating days for certain drillships that finished contracts mid-quarter. To give you a sense of the high-end pricing power in the market, Valaris Limited secured multi-year contracts for its high-specification 7th-generation drillships at day rates up to $410,000.

Beyond the core day rates, other revenue sources contribute to the top line:

• Reimbursable revenue: Payments from customers for contract-specific rig upgrades (expected $70 million in 2025).
• Asset sales: Proceeds from selling older rigs, such as the VALARIS 247 jackup sold for $108 million in Q3 2025.
• Equity income: Share of profits from the ARO Drilling joint venture, in which Valaris Limited holds a 50% equity interest in the venture that owns nine rigs.

Looking closer at the Q3 2025 figures, revenues exclusive of reimbursable items totaled $556 million, meaning the actual reimbursable revenue for that quarter was approximately $40 million ($596 million total minus $556 million exclusive). The sale of the VALARIS 247 rig in Q3 2025 resulted in a net income gain of $90 million on the $108 million cash sale.

The ARO Drilling joint venture is a key component, with its segment revenue hitting $156.8 million in Q3 2025, which is partially represented by bareboat charter revenue from rigs leased to the venture. Valaris Limited is focused on executing its commercial strategy, with all four active drillships having near-term availability now contracted for work beginning next year.

Finance: draft 13-week cash view by Friday.