Solid write up. Story has been the same for a while here - just need shale to rollover and the bull case is astronomical. But taking a while to do that.
All FCF to shareholders until they make a bid for $NE.
My only annoyance this year is that they weren't ripping buybacks at sub-$40. Why do they need 500mm of cash on the sheet when they are FCF positive and no debt maturing until 2030... Again - makes me worried they are going to go all $BTU and try and be big boys and buy $NE...
Thanks Bob. I actually think they might be preparing to acquire Seadrill, which would explain why they’re piling up cash.
And honestly, I’d consider that a smart move — as long as they don’t overpay. It would make Valaris the largest drillship operator in the world, likely earning a higher multiple, especially if dayrates rise.
Seadrill currently has around 17 rigs, many 7th-generation, and the fleet could be worth $15 billion+. With Seadrill trading below $2 billion market cap, even a $3 billion acquisition for assets worth $15–20 billion would be a far better use of capital than holding cash.
Love the posts. Your warrior vs alpha met coal post was exceptional. Could you please do a post comparing Valaris and Noble and the pros and cons to owning either
Solid write up. Story has been the same for a while here - just need shale to rollover and the bull case is astronomical. But taking a while to do that.
In the meantime, future FCF is more than enough.
Thanks Bob, totally agree.
We’ll probably see a few quarters of softer day-rates, but once utilization moves solidly above 90%, pricing power could go almost vertical.
And all FCF goes straight to shareholders. That’s unusual today.
All FCF to shareholders until they make a bid for $NE.
My only annoyance this year is that they weren't ripping buybacks at sub-$40. Why do they need 500mm of cash on the sheet when they are FCF positive and no debt maturing until 2030... Again - makes me worried they are going to go all $BTU and try and be big boys and buy $NE...
I wrote more about this: https://substack.com/@sandrostocks/p-173193644
Thanks Bob. I actually think they might be preparing to acquire Seadrill, which would explain why they’re piling up cash.
And honestly, I’d consider that a smart move — as long as they don’t overpay. It would make Valaris the largest drillship operator in the world, likely earning a higher multiple, especially if dayrates rise.
Seadrill currently has around 17 rigs, many 7th-generation, and the fleet could be worth $15 billion+. With Seadrill trading below $2 billion market cap, even a $3 billion acquisition for assets worth $15–20 billion would be a far better use of capital than holding cash.
Yes boss. Sorry I have a newborn. I meant SDRL when I said NE!
Haha, oh I know the feeling boss — I’ve got three of them, and half the time I don’t even know which direction I’m running! :)
Love the posts. Your warrior vs alpha met coal post was exceptional. Could you please do a post comparing Valaris and Noble and the pros and cons to owning either
Absolutely. It’ll take a bit of time, since I’m working on a new post and a new idea where 100% of FCF goes to shareholders via buybacks 🙃
Sweet 😎