Valaris Limited (VAL): A Bull Case Theory 

We came across a bullish thesis on Valaris Limited on DeepValue Capital’s Substack. In this article, we will summarize the bulls’ thesis on VAL. Valaris Limited’s share was trading at $56.91 as of December 2nd. VAL’s trailing and forward P/E were 10.09 and 17.45 respectively according to Yahoo Finance.

Valaris (VAL) is the world’s second-largest offshore drilling contractor, positioned as a cyclical play on the accelerating offshore oil recovery. The company operates 48 high-spec rigs globally, including 13 drillships, 2 semisubmersibles for ultra-deepwater wells, and 26 jackups, with 7 additional jackups leased to its Saudi joint venture, ARO Drilling.

Valaris provides full-service offshore drilling solutions for major clients such as ExxonMobil, Chevron, BP, Petrobras, and Saudi Aramco—who prefer leasing rigs to reduce capital intensity and maintain operational flexibility. ARO Drilling, a 50% JV with Aramco, is a key asset, offering recurring, contract-backed income through leases, shareholder loan interest, and equity returns, while building 20 new rigs customized for Saudi waters.

Emerging from Chapter 11 bankruptcy in 2021 with a deleveraged balance sheet and a lean cost structure, Valaris is now well positioned for the next upcycle. The offshore drilling recovery is gaining traction as global E&P budgets expand and supply constraints in deepwater basins tighten rig availability. Modern, high-spec rigs like Valaris’s command premium day rates, driving operating leverage as utilization rises.

Q3 results reflected some short-term softness from timing effects but reaffirmed a constructive long-term outlook, supported by increasing contract backlogs, strong customer demand, and improving day-rate visibility. With minimal debt, disciplined capital allocation, and significant embedded earnings power, Valaris offers a leveraged play on a multi-year offshore recovery. If the cycle continues to strengthen, the company’s cash flow inflection could unlock substantial equity value—potentially exceeding $250 per share within five years.

Previously we covered a bullish thesis on Valaris Limited (VAL) by Alpha Ark in February 2025, which highlighted its dominant offshore drilling position, lean balance sheet, and upside from tightening rig supply. The stock has appreciated approximately 23.47% since then as the offshore cycle strengthened. DeepValue Capital shares a similar view but emphasizes ARO Drilling’s steady cash flows and long-term earnings leverage.

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Disclosure: None.