Investor Presentation August 2019
Forward-Looking Statements Statements contained in this investor presentation that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “could,” “may,” “might,” “should,” “will” and similar words and specifically include statements involving expected financial performance, effective tax rate, expected expense savings, day rates and backlog, estimated rig availability; rig commitments and contracts; contract duration, status, terms and other contract commitments; estimated capital expenditures; letters of intent or letters of award; scheduled delivery dates for rigs; the timing of delivery, mobilization, contract commencement, relocation or other movement of rigs; our intent to sell or scrap rigs; and general market, business and industry conditions, trends and outlook. In addition, statements included in this investor presentation regarding the anticipated benefits, opportunities, synergies and effects of the merger between Ensco and Rowan are forward-looking statements. Such statements are subject to numerous risks, uncertainties and assumptions that may cause actual results to vary materially from those indicated, including actions by rating agencies or other third parties; actions by our security holders; costs and difficulties related to the integration of Ensco and Rowan and the related impact on our financial results and performance; our ability to repay debt and the timing thereof; availability and terms of any financing; commodity price fluctuations, customer demand, new rig supply, downtime and other risks associated with offshore rig operations, relocations, severe weather or hurricanes; changes in worldwide rig supply and demand, competition and technology; future levels of offshore drilling activity; governmental action, civil unrest and political and economic uncertainties; terrorism, piracy and military action; risks inherent to shipyard rig construction, repair, maintenance or enhancement; possible cancellation, suspension or termination of drilling contracts as a result of mechanical difficulties, performance, customer finances, the decline or the perceived risk of a further decline in oil and/or natural gas prices, or other reasons, including terminations for convenience (without cause); the cancellation of letters of intent or letters of award or any failure to execute definitive contracts following announcements of letters of intent, letters of award or other expected work commitments; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes; governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilled personnel on commercially reasonable terms; environmental or other liabilities, risks or losses; debt restrictions that may limit our liquidity and flexibility; tax matters including our effective tax rate; and cybersecurity risks and threats. In addition to the numerous factors described above, you should also carefully read and consider “Item 1A. Risk Factors” in Part I and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of our most recent annual report on Form 10-K, as updated in our subsequent quarterly reports on Form 10-Q, which are available on the SEC’s website at www.sec.gov or on the Investors section of our website at www.valaris.com. Each forward-looking statement speaks only as of the date of the particular statement, and we undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. 2
Outline 1. Company Highlights 2. Market Dynamics 3. Fleet Overview 4. Financial Management 5. Operational Highlights 3
Valaris Rebranding • Establish capabilities as a larger, more global offshore driller ‒ Technologically-advanced, highly capable fleet of deep- and shallow- Strategic water rigs ‒ Largest global footprint Positioning ‒ Focus on operational efficiency and excellence ‒ Decades of expertise and knowledge • Reinforce our role as a partner to customers ‒ Trusted to be there where needed and when needed Customer ‒ Instill confidence in our ability to do the job well, with an emphasis on Alignment integrity and safety ‒ Unrelenting customer-focus • Accelerate cultural alignment ‒ Encourage employee behaviors that are in line with our values, Employee helping us to achieve our purpose Alignment ‒ Create unifying identity so employees associate with the new, combined company instead of legacy companies 4
Valaris Overview (NYSE: VAL) Financial Fleet Operational • Largest and amongst the $ highest-quality offshore drilling fleets in the world 16 drillships 12 semisubmersibles • Presence in nearly all major • $2.7 billion of liquidity 54 jackups offshore markets and on six ‒ $0.4 billion of cash and short- term investments 1 continents • $11 billion of net asset ‒ $2.3 billion unsecured value from rig fleet • Large & diverse customer revolving credit facility 2 according to third party base including major, • $2.4 billion of contracted estimates national and independent revenue backlog 3 E&P companies • ARO Drilling 50/50 joint • $1.1 billion of debt • Strong track record of venture with Saudi Aramco, maturities prior to 2024 1 safety, innovation and the largest jackup customer – Ability to add guaranteed operational excellence worldwide and/or secured debt to capital structure 1 As of June 30, 2019 pro forma for debt tender offers completed in July that reduced cash and equivalents by $741 million 5 2 Borrowing capacity under revolving credit facility is approximately $2.3B through September 2019 and approximately $1.7B from October 2019 through September 2022. As of August 1, 2019, the Company had drawn $125 million on its revolver to partially fund repayment of the 2019 maturity. 3 As of most recent filing
Market Dynamics 6
Offshore Projects Approvals Expected to Lead to Higher Levels of Capital Expenditures • With lower project costs Number of New Major Offshore Project Approvals relative to prior years and 91 88 81 increasing cash flows from 74 higher commodity prices, the 58 50 number of final investment 42 40 decision approvals for large offshore projects has increased recently ‒ Drilling rigs required between 2012 2013 2014 2015 2016 2017 2018 2019E approval and first production, which averages ~4 years for E&P Offshore Capital Expenditures deepwater projects and ~1.5 years for shallow-water projects, 328 and for periodic maintenance 7% over the life of an offshore well CAGR 206 147 • As a result, capital expenditures are expected to increase at a gradual rate 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E over the next several years, Shallow Water Deepwater with the majority of this growth coming from projects in deepwater 7 Source: Rystad Energy ServiceDemandCube as of July 2019, major projects defined as projects with >$250 million of associated capital expenditures
Global Floater Market Total Utilization 1 • Utilization for the global floater fleet has gradually 90% increased since early 2017 80% due to a higher number of 70% rig years awarded for new 60% contracts, leading to slight 50% improvement in average 40% spot day rates 2014 2015 2016 2017 2018 2019 2013 Avg Spot ‒ With contract durations 439 392 258 202 178 205 Day Rates $ Thousand remaining relatively flat during this time period, the increase in New Contracts 2 rig years is driven by the number of new contracts 150 20 increasing 100 15 • Further increases in day rates require either a 50 10 greater number of new contracts or longer average 0 5 3 2013 2014 2015 2016 2017 2018 2019A durations for new contracts Rig Years (L Axis) Average Contract Duration (R Axis, Months) Source: IHS Markit RigPoint as of July 2019 1 Total utilization reflects rigs currently under contract and contracted for future work as a percentage of the global floater fleet; includes benign & 8 harsh-environment rigs 2 Fixtures data includes New Mutual contracts only 3 Year-to-date 2019 annualized
Global Jackup Market Total Utilization 1 • Utilization for the global jackup fleet has also moved 90% higher since early 2017, as 80% a steady increase in rig 70% years awarded for new 60% contracts has led to a 50% modest improvement in 40% average spot day rates 2014 2015 2016 2017 2018 2019 2013 Avg Spot ‒ In contrast to floaters, average 136 139 96 77 61 65 Day Rates $ Thousand contract durations for jackups have increased meaningfully in New Contracts 2 2019, contributing to the 20 increase in rig years awarded 400 for new contracts 18 320 • Both an increasing number 16 240 of new contracts and longer 14 160 average contract durations 12 80 are conducive to further 0 10 increases in average day 3 2013 2014 2015 2016 2017 2018 2019A rates for new jackup Rig Years (L Axis) Average Contract Duration (R Axis, Months) contracts Source: IHS Markit RigPoint as of July 2019 1 Total utilization reflects rigs currently under contract and contracted for future work as a percentage of the global jackup fleet; includes benign & 9 harsh-environment rigs 2 Fixtures data includes New Mutual contracts only 3 Year-to-date 2019 annualized
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