Valaris Limited (VAL): A Bull Case Theory

Tue, Sep 16, 2025, 11:56 AM 3 min read

We came across a bullish thesis on Valaris Limited on Value investing subreddit by AvocadoCorrect9725. In this article, we will summarize the bulls’ thesis on VAL. Valaris Limited's share was trading at $50.26 as of September 4^th. VAL’s trailing and forward P/E were 13.16 and 13.97 respectively according to Yahoo Finance.

marchello74 / shutterstock.com

Valaris (VAL) is a leading provider of offshore drilling rigs and crews, offering oil and gas companies the equipment and expertise to access and produce hydrocarbons without owning the resources themselves. Emerging from bankruptcy with minimal net debt and a modernized fleet, Valaris is well-positioned to capitalize on the recovering offshore drilling market, where supply of high-spec rigs has contracted while demand has rebounded sharply.

This supply-demand dynamic has driven day rates significantly higher, with seventh-generation drillships reportedly doubling from roughly $250K/day to $500K/day since 2022. Operational efficiency and fleet utilization have further amplified revenue, with reported revenue efficiency of 96–99%, driving revenues from $1.2 billion in 2021 to $2.4 billion TTM.

The company has secured numerous long-term contracts across key regions such as Brazil, West Africa, the North Sea, and Southeast Asia, building a backlog exceeding $4 billion, highlighting the durability and profitability of its high-spec fleet. Since April 2025, Valaris has added over $1 billion in new contract commitments, bringing total backlog to approximately $4.7 billion, signaling healthy ongoing demand and a favorable market outlook.

With strong cash flow and a solid balance sheet, Valaris is actively returning capital to shareholders through its share repurchase program, with roughly 10% of its market capitalization remaining under the buyback authorization. Overall, Valaris offers a compelling investment case as a modernized, efficiently operated offshore driller with robust backlog, high-margin revenue streams, and multiple avenues for shareholder value creation, poised to benefit from sustained strength in offshore drilling demand.

Previously we covered a bullish thesis on Valaris Limited (VAL) by Alpha Ark in February 2025, highlighting its modernized fleet, rising day rates, and NAV-driven upside. The stock has appreciated approximately 9% since coverage, reflecting improving offshore demand and operational efficiency. The thesis still stands as Valaris maintains strong backlog. AvocadoCorrect9725 shares a similar view but emphasizes recent contract wins and shareholder returns.