Valaris Limited (NYSE:VAL) Q4 2023 Earnings Call Transcript

Anton Dibowitz: Look, I mean, stalling out or taking a pause versus being solid with leading-edge day rates generating $100 million annually of EBITDA, is a really good market and incremental demand continues to come to market. The number of attractive sideline capacity in the form of stack rigs continues to dwindle around 10 today. So I think this is a process that plays out over time. And we fully expect there, as the supply-demand balance continues to tighten, there to be continued pressure on day rates and day rates to move higher over time. It’s going to be — we see a long duration cycle, and we just need to play it out and be disciplined as we play into that cycle, which is why we have the 11, the 13 and the 14, and we’re going to be patient and disciplined about bringing that capacity back to the market.

Kurt Hallead: Okay. And then lastly on shareholder distributions, you made it clear that you think your stock is undervalued, which is why you’re going to buy back stock. Obviously, if the market starts to recognize the inherent value, starts begging the question as to whether or not you may consider a dividend. So can you just give us an update on how you’re thinking about the dynamics between share repo and the dividend strategy longer term?

Unidentified Company Representative: Yes. No, Kurt, great question. As we said, when this business really starts generating sustained and meaningful free cash flow, which we don’t think we’re that far away from, we think having both

makes sense. And so from a dividend would obviously want to have that be at a level that sustainable through the cycle, but we think both are good components of a capital return policy.

Operator: This concludes our question-and-answer session. I would now like to turn the conference back over to Darin Gibbins for any closing remarks.

Darin Gibbins: Thanks, MJ, and thank you to everyone on the call, for your interest in Valaris. We look forward to speaking with you again when we report our first quarter 2024 results. Have a great rest of your day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect your lines.