Good day, everyone, and welcome to the Valaris Third Quarter 2025 Results Conference Call. Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Nick Georgas, Vice President, Treasurer and Investor Relations. Please go ahead.

Welcome, everyone, to the Valaris Third Quarter 2025 Conference Call. With me today are President and CEO, Anton Dibowitz; Senior Vice President and CFO, Chris Weber; Senior Vice President and CCO, Matt Lyne; and other members of our executive management team. We issued our press release, which is available on our website at valaris.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 Dibowitz, 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 VALARIS DS-12 with BP Offshore Egypt. With this award, all four of our drillships 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 deepwater opportunities for our high-specification fleet, and we are in advanced customer discussions for our drillships 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. VALARIS 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, floaters VALARIS DS-12, DS-18, and DPS-1, along with jack-ups 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 a 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 DS-12, which will return to Egypt with BP, building on our previous campaign that included drilling the successful El King 2 and El Fayum 5 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. Valaris 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 drillships 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 environments 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 field 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 Rystad, approximately 70% of deepwater spending expected to be sanctioned over the next three years is tied to programs with breakeven 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 to convert to contracts. And based on our ongoing conversations with customers, we anticipate additional awards for Valaris and the broader industry in the coming months. We continue to expect that utilization for the global drillship 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 seventh-generation drillships 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 drillship fleet, with 12 of our 13 ships being seventh-generation units, the highest concentration in the industry. Seventh-generation drillships have historically enjoyed a utilization and day rate advantage, and we expect this trend to 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 jack-ups. Shallow water demand remains robust with global utilization around 90%, driven primarily by national oil companies focused on energy security and infrastructure development. Recently, Saudi Aramco 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 jack-up fleet. Our versatile jack-up 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 leased to ARO 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 jack-up VALARIS 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 VALARIS MS-1 and DPS-1 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, Valaris is well positioned to deliver long-term value for shareholders. With that, I'll now hand the call over to Matt.

Thanks, Anton, and good morning and afternoon, everyone. I'll begin with a summary of our recent contract awards before providing updates on the major floater and jack-up markets where we operate. Since our second quarter call, we've secured new contracts and extensions, adding nearly $200 million to our contract backlog. And we are in advanced customer discussions on several contract opportunities for both drillships and jack-ups that we expect to conclude before year-end. Starting with drillships, year-to-date, we've added approximately $1.4 billion of backlog for our drillship fleet, representing nine years of total contract duration. Most recently, we've secured a five-well contract for VALARIS DS-12 with BP offshore Egypt. The contract is expected to commence in mid-second quarter 2026 with an estimated duration of 350 days and a total contract value of approximately $140 million. The contract also includes three option wells, which could extend the program to more than two years in total duration. Turning to jack-ups. We have secured more than 500 days of additional work in the North Sea, including contract extensions for the VALARIS Norway, 121, and 122, as well as a four-month program for the 248, which helps bridge most of the gap between the SPS and the start of the next program in 2026. Fleet-wide, we've added over $2.2 billion in contracted revenue backlog year-to-date, significantly enhancing our contract coverage for 2026 and beyond. And current total backlog stands at $4.5 billion. Turning now to the major floater and jack-up regions where we operate. Consistent with last quarter, we are tracking more than 30 longer-term floater opportunities with planned start dates in 2026 and 2027, each with durations of a year or more. We continue to see programs we are tracking progress through the commercial process with long-term contracts typically awarded at least nine months before their planned commencement. We expect to see further awards both for Valaris and our peers before year-end. Offshore Africa, including West Africa, East Africa, and the Mediterranean, remains the most active region for future floater demand, representing roughly half of the long-term opportunities in our pipeline. Starting with Egypt, the country is experiencing declining output from mature fields and views new offshore exploration and development as key to satisfy growing domestic demand. The government has made meaningful progress attracting IOC investment, with several majors awarded offshore blocks in a licensing round earlier this year, and we look forward to continuing our long history of operations offshore Egypt in the years ahead. Elsewhere in the Mediterranean, Cyprus is a potential bright spot with exploration and development programs anticipated in 2026 and 2027. Angola is facing a similar situation to Egypt, with production from mature fields declining, resulting in total production recently dropping below 1 million barrels per day for only the second time this decade. The Angolan government is focused on stabilizing production above this level by incentivizing both new exploration and brownfield development. We currently have the VALARIS DS-7 and DS-9 working offshore Angola with the DS-7 currently drilling an exploration well in Block 47 for Azule. Both rigs have delivered strong operational performance, positioning them well for follow-on work when their current contracts expire in the second half of 2026. Elsewhere in West Africa, we expect to see growth offshore Nigeria with two multiyear programs with IOCs presently in the tendering phase, one of which is expected to be awarded soon. Offshore Ivory Coast, Eni has issued a request for information for a long-term development program at the Baleine field that is expected to commence in 2027. Similarly, we anticipate incremental demand from Namibia, where TotalEnergies is expected to tender soon for a long-term development for its Venus project, potentially leading to several years of work for multiple rigs. Other operators are advancing plans for further exploration and potential development programs that could begin within the next couple of years. In Mozambique, Eni recently reached FID on its Coral North project and is tendering for a drillship to start work in the second half of 2026. Additional tenders for programs starting in 2027 with TotalEnergies and Exxon are expected in the coming months. Valaris has a long and successful track record offshore Africa. And we expect development activity around the continent will be the main driver of incremental floater demand over the next few years. With five of our high-specification drillships now contracted around the continent, we are well positioned to benefit from this growth. Moving to Brazil, we continue to expect that Petrobras' rig count remains stable. Petrobras also recently received an environmental license to drill an exploration well in the Equatorial Margin, an important step toward potential future development activity in this region, which lies adjacent to the prolific offshore basins of Guyana and Suriname. Beyond Petrobras, we also see opportunities with IOCs in Brazil, including Shell's Orca project, formerly known as Gato do Mato, which is nearing award. In addition, we expect that BP's Bumerangue discovery, which was drilled by VALARIS DS-15, will lead to future appraisal and development activity. Overall, we continue to see solid floater demand offshore Brazil and expect it remains the largest market for deepwater rigs. In the U.S. Gulf, customer demand remains healthy with several term extensions announced by our peers following the long-term Oxy contracts for VALARIS DS-16 and DS-18 that we announced in July. We were pleased to have secured these contracts as they provided five years of backlog, solidified our presence in the region, and deepened our relationship with Oxy, who is a major leaseholder in the U.S. Gulf. We expect this market to remain fairly balanced with demand largely met by the existing supply of rigs in the region. Outside of the Golden Triangle, we are tracking requirements for seven drillships offshore India, Southeast Asia, and Australia, representing more than ten years of firm demand. This activity could draw additional supply away from the Golden Triangle as recently occurred with the drillship mobilizing to Indonesia after completing work offshore West Africa. Valaris MS-1 and DPS-1 are scheduled to complete contracts offshore Australia during the fourth quarter. We currently see no new work for these rigs in 2026 but continue to have discussions about potential opportunities in 2027 and beyond. In line with our disciplined fleet management approach, we plan to mobilize both rigs to Malaysia to be warm stacked while we evaluate these opportunities. Turning to jack-ups, current global marketed utilization remains steady at around 90%. We have a strong and focused presence in strategic shallow water markets. This has helped us to achieve industry-leading contract coverage on our jack-up fleet, with nearly 80% of available days of our active rigs contracted for 2026 and more than 60% contracted for 2027. In benign environments, we have open availability in 2026 for just two rigs, VALARIS 106 in Indonesia and VALARIS 107 in Australia. We are in advanced customer discussions for both rigs and expect to secure additional work soon. In the North Sea, recent awards have enhanced our contract coverage. We now have availability on just two of our jack-ups in the region during the first half of next year, and we are tracking a number of short-term opportunities that line up well with our limited availability during this time. Looking further ahead, we anticipate demand improves across the region in the second half of 2026 and into 2027. In the U.K., we see a range of opportunities that include gas drilling, plug and abandonment work, new energy and infrastructure projects, and we anticipate supply will largely meet demand. We expect activity in the Dutch sector will remain steady, keeping four rigs busy, and we see opportunities in Denmark for up to two rigs during 2026, representing an uptick in activity given no rigs are currently operating there. Our strong operational track record and long-standing customer relationships have supported our best-in-class utilization in the region over the past few years, and we continue to see multiple opportunities well-suited for our rigs with availability in 2026. In summary, we are successfully executing our commercial strategy, having secured more than $2.2 billion in new backlog so far this year. We continue to engage constructively with customers on future programs, and our focus remains on building backlog through attractive contracts that will further strengthen our earnings and cash flow. I'll now hand the call over to Chris, who will take you through the financials.

Thanks, Matt, and good morning and afternoon, everyone. In my prepared remarks today, I'll begin with an overview of our third quarter results, followed by our outlook for the fourth quarter. Starting with our third quarter results, total revenues were $596 million compared to $615 million in the prior quarter, primarily due to fewer operating days for our floater fleet as drillships VALARIS DS-15 and DS-18 completed contracts midway through the third quarter without immediate follow-on work. In addition, jack-up VALARIS 247 completed its contract in late July and was sold in August. These items are partially offset by more operating days for several rigs in the jack-up fleet. Adjusted EBITDA was $163 million compared to $201 million in the prior quarter. The decrease was primarily due to fewer operating days for our floater fleet and the $24 million nonrecurring benefit we recognized in the second quarter from a previously disclosed favorable arbitration outcome. Third quarter adjusted EBITDA exceeded our guidance range of $120 million to $140 million, primarily due to certain contracts running longer than previously anticipated, higher revenues from ARO leased rigs, and lower support costs. Third quarter CapEx totaled $70 million, coming in below guidance due to timing as certain project spend has shifted to the fourth quarter. During the quarter, we generated $198 million of cash flow from operations and received just over $100 million in net proceeds from the sale of VALARIS 247. After deducting capital expenditures, this resulted in $237 million of adjusted free cash flow. We repurchased $75 million of shares in the third quarter at an average price of $49 per share. We ended the quarter with $676 million of cash and cash equivalents. Moving now to our fourth quarter outlook, we expect total revenues in the range of $495 million to $515 million, down from $596 million in the third quarter. The anticipated decrease is primarily due to fewer operating days across the fleet. Within our floater fleet, drillships VALARIS DS-15 and DS-18 are currently idle after completing contracts during the third quarter, and semisubmersible VALARIS DPS-1 and MS-1 are both expected to complete contracts offshore Australia before year-end. For our jack-up fleet, VALARIS 247 was sold during the third quarter and VALARIS 120 and 248 are expected to have fewer operating days due to mobilization between jobs for the 120 and out-of-service time for the 248 SPS. We also expect lower revenues from ARO leased rigs as VALARIS 116 and 250 begin shipyard projects. We expect contract drilling expense of $390 million to $405 million compared to $406 million in the third quarter. The decrease is primarily due to cost reduction on rigs that have completed contracts without immediate follow-on work. Both revenue and contract drilling expense in the fourth quarter are expected to include $25 million to $30 million of reimbursable items. We anticipate G&A expense will be approximately $27 million, in line with the prior quarter as we continue to prudently manage our cost structure. Fourth quarter adjusted EBITDA is expected to be $70 million to $90 million. Finally, we expect CapEx of $145 million to $165 million, which is higher than prior quarters due to certain project spend shifting from earlier in the year. The midpoint of our fourth quarter guidance implies expected full-year adjusted EBITDA of approximately $625 million, which is roughly $40 million above the midpoint of guidance we provided on our second quarter call. This increase is primarily due to our outperformance in the third quarter as well as an expected improvement in our fourth quarter outlook, mostly driven by more operating days for the jack-up fleet. The midpoint of our fourth quarter CapEx guidance implies expected full-year CapEx of approximately $390 million, roughly in line with the midpoint of our prior guidance. As a reminder, we expect to receive approximately $70 million in upfront payments from customers this year to reimburse certain contract-specific upgrades. This concludes my review of our financial results and guidance. I'll now hand the call back to Anton for some closing remarks.

Thanks, Chris. Before we open the line for questions, I'd like to recap a few key points from today's prepared remarks. First, I want to reiterate my appreciation to the entire Valaris team for continuing to deliver safe and efficient operations, which contributed to another strong quarter of financial results with meaningful EBITDA and free cash flow generation. Second, we continue to execute our commercial strategy, and as a result, all four of our drillships with near-term availability are now contracted for work beginning next year. Third, demand for offshore drilling services is developing as we expected. We continue to see a robust pipeline of deepwater opportunities for our high-specification fleet, and we're in advanced customer discussions for our drillships scheduled to complete contracts in the second half of 2026. In summary, we continue to focus on delivering outstanding operational performance, executing 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 shareholders. We thank our employees for their focus and dedication and our customers and investors for their continued support. That concludes our prepared remarks. Operator, please open the line for questions.

Our first question today comes from Scott Gruber from Citigroup.

So, it was good to see the repurchases this quarter. I'm curious about your appetite moving forward. Looking at consensus, there isn't a forecast for much free cash next year as we transition to better times. But you do have $660 million of cash on the balance sheet. Can you speak to an appetite to use that cash to buy back additional shares now ahead of the potential recovery in late '26 and '27?

Yes, Scott, this is Chris. One, we remain committed to returning capital to shareholders. We executed the $75 million of repurchases in the quarter. We're excited about that. It reflects our confidence in the market and the outlook. But we've always said that our repurchases aren't necessarily going to be linear, not in a straight line, and we're going to be opportunistic, and that's what you saw this quarter. As we move forward, we'll see how the year progresses, what flexibility that provides for additional share repurchases, but excited about what we were able to execute this quarter.

What's your level of cash that you need to run the business? What's kind of a minimum cash balance for working capital purposes?

Yes. I mean from a minimum cash perspective, I would say around $200 million to run the business. And where we hold cash in excess of that is just really regarding what we are seeing in the market, what's the cash flow profile of our business going forward, and then those sorts of things.

Great. And then if I could sneak one more in. There's been a discussion around renewed appetite for exploration on various conference calls this quarter. Just wondering your perspective, in your conversations with customers, is there a tangible desire to increase exploration activity here in the years ahead? Are those conversations material? Or is it kind of a side conversation at this point?

This is Anton. I'll take it. Look, there's always some exploration going on. Even in a lot of development programs that we've been drilling historically, customers will slot in an exploration well here or there. But we do see an increase in exploration discussions. And that's based on the necessity. The consensus is that we're going to need additional developments in order to meet the world's energy needs as we head towards the end of the decade. And in order to get those developments, our customers need to explore. So, I think it's a simple cause and effect. I think it's great for the market that there is additional exploration or increased exploration activity expected from the various prognosticators in the market, also from the discussions we're having with our customers, and I think it portends well for where the market is going.

Our next question comes from Greg Lewis from BTIG.

Anton, could you provide more details regarding Scott's question about shareholder returns? We noticed the sale of the rig, which was a considerable profit, and cash flow was quite strong. Are there opportunities to sell some non-core rigs in the future? Given the strength of the balance sheet, should we view asset sales as a way to return cash to shareholders, or will the focus remain primarily on business operations, or possibly a combination of both?

I want to start by emphasizing that our focus will be on the operations of the business. We are committed to returning sustained free cash flow to shareholders unless we identify a better or more beneficial use for it. Our actions reflect this commitment. Managing costs and our fleet involves seizing opportunities, such as selling the 27-year-old rig, which we did for a very favorable price, thereby enhancing our financial flexibility. However, the foundation of our capital return must be operational cash flow. We are navigating this transitional period and expect all 10 of our active ships to be under contract and operational by the end of 2026, supporting our ability to return capital to shareholders. In summary, our approach must be driven by effective operations, consistent earnings, and the strategic sale of assets when enticing opportunities arise; it is an opportunistic approach in addition to our core focus.

Okay. Great. My other question is about the recent term deals you made that include MPD additional services. I'm curious because it seems like the market fluctuates between incorporating MPD into the overall price and treating it like an optional add-on. If it's considered an add-on, is there any rough estimate on how often we should expect that service to be utilized, keeping in mind that every well and every customer is unique?

It's very customer dependent. It depends on what sort of drilling they're doing, so it's contract-specific and well-specific. Is it a development? It's hard to estimate. Matt, do you want to add anything?

Yes. I think Anton hit the nail on the head that each customer is so different, so there's no large rule. But I think you can assume, if you're just running general analysis, somewhere between 40% to 50% utilization.

Our next question comes from Eddie Kim from Barclays.

Just a bigger picture question here. You reiterated your expectation for seventh-gen drillships exiting 2026 at utilization around 90%. At the same time, we have seen a few day rates below $400,000 a day that DS-12 included in that, though I know that Egypt is a lower OpEx environment for you guys. But some investor concern around maybe some more day rate prints below $400,000. First, do you think those are coming? And second, how is that impacting your view on activity inflection higher in the back part of next year? It seems that it isn't, but just wanted to get your thoughts and your confidence level around that.

We have a few questions to address. I would describe the situation as follows: We believe the market is unfolding as we anticipated. Day rates for high-spec ships have mostly hit a low point in the high 300,000s to low to mid-400,000s range. Our industry is currently navigating a phase of opportunity, and many tenders are underway. We expect to see some additional contract awards in that range as these contracts move through the tender process. We still anticipate that utilization will reach its lowest point toward the end of this year or early next year, followed by a recovery. By the end of 2026, we expect the industry’s high-spec ships to be operating at or above 90% utilization, and typically, day rates will follow utilization trends. For now, we believe that day rates have reached their lowest point for this cycle in the high 300,000s to low to mid-400,000s range.

Great. Great. My follow-up is just on your rigs coming off contract next year. You have absorbed a lot of white space with your recent contract awards. But the DS-9 and the DS-7 are off contract mid- to late next year, both in Angola. And based on your, I mean, constructive outlook in Angola and West Africa in general, it feels like it's likely that those could get extended without any idle time between contracts. Just any thoughts there? And then DS-15, DS-18 have long-term contracts starting end of next year, but are idle today. What's the likelihood that you'll be able to secure some short-term gap-fill work for those before long-term contracts commence?

Matt, do you want to start on the gap-fill and then I'll come across as how we view them.

Sure. First, regarding Angola on the 9 and the 7, as I mentioned earlier, there is a decrease in production, and the government is collaborating with the IOCs to encourage drilling. Your assessment is correct that we are seeing optimistic discussions about future contracting opportunities for those rigs. Additionally, they have performed exceptionally well, which increases the chances of having strong potential for contract extensions. From a gap-fill perspective, we have effectively managed the near-term availability of our assets. While there are some short-term opportunities in the market, they may not be sufficient to fill all the rigs currently available. However, we continue to pursue work that aligns with the long-term opportunities we have secured.

I think Matt covered it well. Our expectation is that high-spec rigs will exit '26 with 90% plus utilization. Our team has done a fantastic job of delivering our commercial strategy to date, and I expect them to continue to do that. No pressure, Matt. But we expect that all ten of our active drillships will exit '26 on contract and working.

Our next question comes from Doug Becker from Capital One.

Valaris has a couple of rigs with Petrobras in Brazil. I want to get a sense for the focus of recent discussions with them to help reduce costs.

Matt, do you want to?

Sure. I mean I think it's been widely reported that Petrobras are looking across their entire value supply chain for potential savings in 2026. So, while it's early days in discussions amongst all of their services, we've seen these discussions materialize before. So, I think what's important is recognizing that they want to maintain their production targets, which means they are likely to maintain a fleet of similar size over the long term, which is positive for us. And so, while constructive discussions continue, it's too soon to kind of discuss the specifics around it.

I think Matt said it really well. We expect Petrobras' rig fleet to remain stable. They have clear goals on what their production is, and that's going to mean they need to maintain a significant and the most significant drillship fleet in the world. And the discussions are very early days and very, very constructive. So, we'll just have to see how it plays out across the industry.

Definitely sounds encouraging. Maybe switching to Saudi Arabia. You mentioned Aramco has issued notices calling back several suspended rigs. It sounds like there's also been a recent tender. Do you think Saudi Arabia is a source of incremental demand, incremental work for Valaris next year?

Really positive to see Saudi Aramco reactivating and calling back suspended rigs. So, I think when you look at a global utilization of the jack-up market hovering around 90%, it just adds further benefit to that market. So we see that as a really positive data point. On incremental demand, there is potential for that. And with some idle capacity sitting over in the Middle East, we continue to monitor that closely together with our joint venture, which operates in Saudi Arabia.

And our next question comes from Josh Jain from Daniel Energy Partners.

Those in the market generally seem in unison with respect to a recovery in deepwater in the second half of '26. And I think the recent contract announcements largely support that. Maybe you could just talk a bit more about where geographically do you have the most confidence that rig counts will hold or increase and which regions do you see as having potential risk if we're in uncertain crude environment?

Matt, do you want to give Josh your thoughts?

Sure. I believe we have addressed some of these points in our earlier comments. Overall, we see South America, particularly Brazil, remaining stable with its fleet size, which is the largest in the floating market, indicating positive trends. We also see increasing demand in Africa, especially with Eni's project in Mozambique moving forward, and signs that force majeure is being lifted for Exxon and Total. There are positive developments in East Africa and ongoing projects in Egypt, which, despite declining production, are presenting unique opportunities in the Mediterranean and West Africa. We've also noticed some rigs relocating, with Asia presenting various opportunities despite insufficient supply. Customers are increasingly focused on higher-spec assets, which may lead to some rigs shifting from the Golden Triangle to meet the demand in Asia. Approximately half of the additional demand is expected to come from Africa, with about 25% originating from outside the Golden Triangle, while the U.S. Gulf and South America remain relatively stable.

Thank you. I want to ask a bit more about Aramco, as Doug mentioned in his previous question. It seems that over the past 18 months, Saudi Arabia has become more ambitious with their production targets for the next 6, 12, and 24 months. Could you provide more insight into how many rigs you think they might add over the next three years, considering the recent volatility and their ambitious production goals?

I think what I'd focus on in the recent news out of people talking about rigs going back to Saudi Aramco, Saudi Aramco's desire to bring rigs back into production is the fact that in the global fleet, high-spec jack-up utilization is 90% above, 90% and above. So, the market has held in there. The talk is in the near term, kind of mid- to high single digits plus potential for additional tenders beyond that. And every rig that goes back into their fleet is further supportive of the global market. So overall, the jack-up market, high-spec jack-up market is fairly healthy. And I think just to the extent they choose to bring rigs back in order to meet their production targets, it's just further support for a market that's already attractive.

And ladies and gentlemen, at this time, we'll be ending today's question-and-answer session. I'd like to turn the floor back over to Nick Georgas for any closing remarks.

Thanks, Jamie, and thank you to everyone on today's call for your interest in Valaris. We look forward to speaking with you again when we report our fourth quarter 2025 results. Have a great rest of your day.

And with that, we'll be concluding today's conference call and presentation. We thank you for joining. You may now disconnect your lines.