Will Valaris' (VAL) Egypt Drillship Deal With BP Reinforce Its Long-Term Earnings Narrative?

• Valaris Limited announced it has secured a five-well contract with BP Exploration Delta Limited for the VALARIS DS-12 drillship in Egypt, expected to begin in the second quarter of 2026 and last approximately 350 days with an estimated total value of US$140 million, including a mobilization fee.
• This contract builds on Valaris’ commercial relationship with BP in the Egyptian offshore market and features the possibility of three additional option wells, underscoring continued demand for high-specification offshore drilling assets.
• We’ll examine how the multi-well Egypt contract with BP strengthens Valaris’ contract backlog and supports its long-term earnings narrative.

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Valaris Investment Narrative Recap

To be a shareholder in Valaris, you need confidence in sustained demand for advanced offshore drilling, supported by the company's sizable contract backlog and the global energy requirements driving offshore activity. The newly announced US$140 million, five-well BP contract adds visibility to future revenue, but does not fundamentally shift the most immediate catalyst, the pace of new contract awards and fleet utilization, nor does it alleviate the persistent risk of overcapacity and day rate competition in the coming years.

Among the recent announcements, the July contract extensions with Anadarko, which total nearly US$760 million and stretch well into 2028, are especially relevant as they reinforce Valaris’ position in securing long-cycle contracts for its drillships. These multi-year agreements, along with the latest BP award, contribute to the company’s growing contract backlog, a central catalyst for revenue stability and long-term earnings potential, though not without heightening fleet management demands.

However, investors should also be aware that while backlog growth signals opportunity, it does little to shield earnings if...

Read the full narrative on Valaris (it's free!)

Valaris is projected to generate $2.4 billion in revenue and $453.7 million in earnings by 2028. This outlook is based on an expected annual revenue decline of 1.2% and an earnings increase of $178.2 million from current earnings of $275.5 million.

Uncover how Valaris' forecasts yield a $52.10 fair value, a 8% upside to its current price.

Exploring Other Perspectives

Eight Simply Wall St Community fair value estimates for Valaris range widely from US$31.60 to US$249.50 per share. As the company benefits from robust contract wins, issues like future day rate pressure remain on many investors’ radar, check out more perspectives for a fuller picture.

Explore 8 other fair value estimates on Valaris - why the stock might be worth over 5x more than the current price!

Build Your Own Valaris Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Valaris research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Valaris research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Valaris' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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