{
  "@context": "https://frontierpicks.com/schemas/dossier.v1.json",
  "ticker": "VAL",
  "name": "Valaris Limited",
  "url": "https://frontierpicks.com/dossiers/VAL/",
  "json_url": "https://frontierpicks.com/dossiers/VAL.json",
  "status": "WATCHLIST",
  "current_conviction": "LOW",
  "archetype": {
    "code": "a5",
    "n": 5
  },
  "current_thesis": "Valaris shares are more likely to lag the S&P 500 because they trade as Transocean stock at 15.235 shares each, and Transocean's 2 November 2026 results showed lower revenue and a flat 2027 outlook. The 24 November 2026 votes, the 26 November 2026 Bermuda court hearing and Transocean's next contract awards settle it.",
  "invalidation_trigger": "A daily close above $94.69, the 2026-11-02 close before the third-quarter results, which would show the shares leading the S&P 500; Transocean raising its preliminary 2027 contract drilling revenue guide above $4.0 billion would also prove the call wrong.",
  "catalyst_date": "2026-11-24",
  "portfolio": null,
  "pick": null,
  "themes": [
    "oil-energy-geopolitical",
    "m-and-a-special-situations"
  ],
  "tags": [],
  "sources": [],
  "caveats": [],
  "source_links": [
    {
      "title": "Valaris Ltd - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0000314808/000031480826000152/a09302026ex991pressrelease.htm",
      "date": "2026-11-02"
    },
    {
      "title": "Transocean Ltd. - Form 8-K - FY2026",
      "url": "https://www.sec.gov/Archives/edgar/data/0001451505/000145150526000083/rig-ex99d1.htm",
      "date": "2026-11-02"
    },
    {
      "title": "Should Transocean Stock's Drop After Earnings Worry You?",
      "url": "https://www.trefis.com/stock/rig/articles/623260/should-transocean-stocks-drop-after-earnings-worry-you/2026-11-06",
      "date": "2026-11-06"
    },
    {
      "title": "Transocean and Valaris merger secures all regulatory approvals ahead of December 1 closing",
      "url": "https://www.bairdmaritime.com/offshore/drilling-production/transocean-valaris-merger-regulatory-approvals",
      "date": null
    },
    {
      "title": "Transocean and Valaris Set November Dates to Finalize Business Combination",
      "url": "https://www.panabee.com/news/transocean-and-valaris-set-november-dates-to-finalize-business-combination",
      "date": null
    }
  ],
  "evidence": [
    {
      "claim": "Q3 2026 revenue $593.6 million, net income $46.7 million, diluted EPS $0.66, adjusted EBITDA $150.6 million (Q2: $96.5 million), revenue efficiency 97%.",
      "source": "Valaris Q3 2026 results, 8-K exhibit 99.1",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Contract backlog $4,750.1 million after about $600 million of new contracts since the Q2 report; all ten active drillships on contract.",
      "source": "Valaris Q3 2026 results, 8-K exhibit 99.1",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Q3 EPS included a $23 million discrete tax expense, $16 million of merger and integration costs and a $3 million impairment; Middle East conflicts cut adjusted EBITDA by about $24 million (Q2: $30 million).",
      "source": "Valaris Q3 2026 results, 8-K exhibit 99.1",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Q3 EPS of $0.66 missed the $1.13 estimate; revenue of $593.6 million beat the $573.7 million estimate.",
      "source": "Benzinga",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Transocean Q3 contract drilling revenue $937 million (Q2: $966 million; Q3 2025: $1,028 million); backlog about $8.0 billion after about $2.0 billion of new fixtures.",
      "source": "Transocean Q3 2026 results, 8-K exhibit 99.1",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Transocean guides Q4 2026 contract drilling revenue to $915-965 million, full-year 2026 to $3,900-3,950 million and preliminary 2027 to $3,850-4,000 million.",
      "source": "Transocean Q3 2026 results, 8-K exhibit 99.1",
      "as_of": "2026-11-02"
    },
    {
      "claim": "Susquehanna kept a Neutral rating on Valaris and raised its price target to $91.",
      "source": "Benzinga analyst ratings",
      "as_of": "2026-11-04"
    },
    {
      "claim": "Each Valaris share converts into 15.235 Transocean shares; Valaris holders will own about 47% of the combined company, fully diluted.",
      "source": "Valaris/Transocean DEFM14A joint proxy statement",
      "as_of": "2026-10-13"
    }
  ],
  "view_changes": [],
  "frame": null,
  "filed_numbers": {
    "as_of": "2026-11-13",
    "sector": "Energy",
    "financials": {
      "status": "ok",
      "reason": null,
      "close_date": "2026-11-13",
      "latest_quarter": "2026-09-30",
      "figures": {
        "revenue": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-03",
              "restated": null,
              "value_musd": 593.6,
              "yoy_pct": -0.4
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-06",
              "restated": null,
              "value_musd": 539.2,
              "yoy_pct": -12.4
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-05",
              "restated": null,
              "value_musd": 465.4,
              "yoy_pct": -25
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-20",
              "restated": null,
              "value_musd": 537.4,
              "yoy_pct": -8
            },
            {
              "end": "2025-09-30",
              "filed": "2025-10-30",
              "restated": null,
              "value_musd": 595.7,
              "yoy_pct": -7.4
            },
            {
              "end": "2025-06-30",
              "filed": "2025-07-31",
              "restated": null,
              "value_musd": 615.2,
              "yoy_pct": 0.8
            }
          ]
        },
        "gross_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-03",
              "restated": null,
              "pct": 29.7
            },
            {
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              "restated": null,
              "pct": 22.9
            },
            {
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              "filed": "2026-05-05",
              "restated": null,
              "pct": 19.8
            },
            {
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              "filed": "2026-02-20",
              "restated": null,
              "pct": 23.1
            },
            {
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              "filed": "2025-10-30",
              "restated": null,
              "pct": 31.9
            },
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              "end": "2025-06-30",
              "filed": "2025-07-31",
              "restated": null,
              "pct": 35.7
            }
          ]
        },
        "operating_margin": {
          "status": "ok",
          "quarters": [
            {
              "end": "2026-09-30",
              "filed": "2026-11-03",
              "restated": null,
              "pct": 13.7
            },
            {
              "end": "2026-06-30",
              "filed": "2026-08-06",
              "restated": null,
              "pct": 9.5
            },
            {
              "end": "2026-03-31",
              "filed": "2026-05-05",
              "restated": null,
              "pct": 4.3
            },
            {
              "end": "2025-12-31",
              "filed": "2026-02-20",
              "restated": null,
              "pct": 7.3
            },
            {
              "end": "2025-09-30",
              "filed": "2025-10-30",
              "restated": null,
              "pct": 21.9
            },
            {
              "end": "2025-06-30",
              "filed": "2025-07-31",
              "restated": null,
              "pct": 26.7
            }
          ]
        },
        "pretax_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 101.4
        },
        "net_income": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "four_quarters_end": "2026-09-30",
          "value_musd": 46.1,
          "four_quarters_musd": 797.6
        },
        "operating_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "first_end": "2025-12-31",
          "value_musd": 227.5
        },
        "capital_spending": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "first_end": "2025-12-31",
          "value_musd": 434.3
        },
        "free_cash_flow": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "first_end": "2025-12-31",
          "value_musd": -206.8
        },
        "diluted_share_change": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "base_end": "2025-09-30",
          "pct": -1
        },
        "cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 525.1
        },
        "debt": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 1088.5,
          "composition": "non-current long-term debt"
        },
        "net_cash": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": -563.4
        },
        "deferred_revenue": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 208,
          "yoy_pct": 52
        },
        "backlog": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 208,
          "yoy_pct": 52
        },
        "receivables": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 538.1
        },
        "inventory": {
          "status": "not reported"
        },
        "equity": {
          "status": "ok",
          "end": "2026-09-30",
          "filed": "2026-11-03",
          "value_musd": 3271
        },
        "market_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-29",
          "basis_filed": "2026-11-03",
          "value_musd": 5842.9
        },
        "enterprise_value": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-29",
          "basis_filed": "2026-11-03",
          "value_musd": 6406.3
        },
        "ev_sales": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-29",
          "basis_filed": "2026-11-03",
          "multiple": 3
        },
        "ev_ebit": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-29",
          "basis_filed": "2026-11-03",
          "multiple": 33.4
        },
        "pe": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-29",
          "basis_filed": "2026-11-03",
          "multiple": 7.3
        },
        "pb": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-29",
          "basis_filed": "2026-11-03",
          "multiple": 1.8
        },
        "fcf_yield": {
          "status": "ok",
          "close_date": "2026-11-13",
          "basis_end": "2026-10-29",
          "basis_filed": "2026-11-03",
          "pct": -3.5
        }
      }
    },
    "short_interest": {
      "status": "ok",
      "settlement": "2026-10-15",
      "published": "2026-10-26",
      "short_pct_of_outstanding": 7.62,
      "days_to_cover": 5.9,
      "change_pct": -6.8
    },
    "insiders": {
      "status": "ok",
      "as_of": "2026-11-15",
      "windows": [
        {
          "days": 90,
          "status": "ok",
          "from": "2026-08-18",
          "bought_usd": 0,
          "sold_usd": 0,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        },
        {
          "days": 365,
          "status": "ok",
          "from": "2025-11-16",
          "bought_usd": 0,
          "sold_usd": 0,
          "bought_unpriced": 0,
          "sold_unpriced": 0
        }
      ]
    }
  },
  "body_markdown": "## Current Thesis\n\nValaris shares are more likely to lag the S&P 500 than to lead it. They now trade as Transocean stock at a fixed 15.235 Transocean shares each, and Transocean's 2026-11-02 results showed lower revenue and a flat outlook for 2027. The 2026-11-24 shareholder votes, the 2026-11-26 Bermuda court hearing and Transocean's next contract awards settle the case.\n\nThe rating is Low because the drivers of the next three months sit with Transocean and oil, and both weakened after the results. Transocean reported third-quarter contract drilling revenue of $937 million, down from $966 million in the second quarter and $1,028 million a year earlier (8-K, 2026-11-02). Its preliminary 2027 guide of $3,850–4,000 million brackets its 2026 guide of $3,900–3,950 million. Trefis reported on 2026-11-06 that Transocean shares fell 18.1% in the three sessions after the report, against a 2.5% fall in the S&P 500.\n\nValaris's own quarter was better than its headline. Revenue of $593.6 million beat the $573.7 million estimate, while earnings of $0.66 a share missed the $1.13 estimate (Benzinga, 2026-11-02). One-off costs explain most of the miss. They matter little now, because Valaris shareholders receive Transocean shares at completion, which the companies expect on or about 2026-12-01.\n\nThe price already reflects the deal terms and the post-results reset. The 2026-11-11 close of $80.69 sits 29.3% below the 52-week intraday high of $114.12 set on 2026-05-18.\n\n## Bull Case\n- **Operating earnings rose sharply.** Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $150.6 million in the third quarter, up from $96.5 million in the second, on revenue of $593.6 million against $539.2 million (8-K, 2026-11-02).\n- **Backlog grew during the deal.** Contract backlog was $4,750.1 million on 2026-11-02 after about $600 million of new contracts since the second-quarter report. All ten active drillships are now on contract (8-K, 2026-11-02).\n- **Middle East losses are easing.** Conflict-related costs cut adjusted EBITDA by about $24 million in the third quarter, down from $30 million in the second, mainly on lower war-risk insurance costs (8-K, 2026-11-02).\n- **The merger partner has filled 2027.** Transocean reported about $8.0 billion of backlog on 2026-11-02, after about $2.0 billion of new fixtures at a weighted average day rate of about $423,000. Its chief executive put 2027 contract coverage at about 95% (8-K, 2026-11-02).\n- **The deal path is clear.** All regulatory approvals are in hand, and both companies target closing on or about 2026-12-01 (Valaris and Transocean 8-Ks, 2026-11-02). Transocean names $200 million of identified annual cost savings from the combination.\n- **One analyst lifted the target after results.** Susquehanna kept a Neutral rating and raised its price target to $91 on 2026-11-04 (Benzinga).\n\n## Bear Case\n- **Earnings missed by a wide margin.** Earnings per share of $0.66 missed the $1.13 estimate (Benzinga, 2026-11-02). The company cites a $23 million discrete tax charge, $16 million of merger costs, a $3 million impairment and lower gains on asset sales (8-K, 2026-11-02).\n- **Transocean's revenue is shrinking.** Third-quarter contract drilling revenue fell to $937 million from $1,028 million a year earlier, and fourth-quarter guidance is $915–965 million (Transocean 8-K, 2026-11-02).\n- **The 2027 outlook shows no growth.** Transocean's preliminary 2027 contract drilling revenue guide of $3,850–4,000 million sits around its $3,900–3,950 million 2026 range (8-K, 2026-11-02).\n- **The sector sold off after results.** Trefis reported on 2026-11-06 that Transocean fell 5.3% in the first session after the report while Valaris fell 5.0% and Noble 3.3%. Commentary tied the group's moves to oil prices.\n- **Cash fell as rigs were reactivated.** Valaris held $525 million of cash on 2026-09-30, down from $541 million on 2026-06-30, against $1,088.5 million of long-term debt (8-K, 2026-11-02).\n\n## Setup & Price Structure\n\nValaris closed at $80.69 on 2026-11-11. That is below the 50-day moving average of $86.00 and the 200-day moving average of $87.23. The shares are down 5.2% over three months from the $85.13 close of 2026-08-13.\n\nThe low point after the results was the $77.32 close on 2026-11-05, after $82.77 on 2026-11-04. Closes since then have held between $78.55 and $80.69. A return above both moving averages would show the post-results fall reversing. The 52-week closing low is $49.03 on 2025-12-18.\n\nThe SEC filings since the results are a 10-Q on 2026-11-03 and two 8-Ks on 2026-11-02, with no Form 4 insider transactions. Valaris holds no earnings calls and gives no guidance until the deal closes.\n\n## Catalyst Calendar\n\n- **2026-11-24:** Valaris court meeting and Transocean extraordinary general meeting. Both shareholder bases must approve the combination; Transocean's share-issuance vote is a condition of closing, and the court hearing proceeds only if both votes pass.\n- **2026-11-26:** Bermuda Supreme Court sanction hearing. The sanction order is the last legal step before the scheme of arrangement takes effect and Valaris shares convert into Transocean shares.\n- **~2026-12-01 (est.):** Expected completion of the Transocean combination. Valaris shares convert into Transocean shares and are delisted; from then on the exposure is Transocean stock, its 2027 revenue outlook and the $200 million cost-savings target.\n\n## What Would Change Our Mind\n\nA daily close above $94.69, the 2026-11-02 close before the third-quarter results, which would show the shares leading the S&P 500; Transocean raising its preliminary 2027 contract drilling revenue guide above $4.0 billion would also prove the call wrong.\n\n## Correlation Notes\n\nWith a fixed exchange ratio, Valaris moves almost one-for-one with Transocean (RIG). After completion the Valaris listing ends and the exposure is Transocean stock. Both trade closely with other offshore drillers such as Noble and Seadrill, and with Brent crude. Trefis noted on 2026-11-06 that traders treat the group as a higher-beta stand-in for crude, so a falling oil price would hit Valaris through Transocean even if the deal closes on schedule.",
  "first_seen": "2026-11-10",
  "last_analyzed": "2026-11-12T03:43:52+00:00",
  "last_synthesized": "2026-11-12",
  "date_modified": "2026-11-12",
  "license": "Content © FrontierPicks. Cite the canonical URL."
}