Valaris erased $7.1B of debt in Chapter 11 and rode the offshore drilling recovery

Valaris, formed by the 2019 Ensco-Rowan merger, ran the largest offshore drilling fleet in the world — and the debt that came with it. When COVID-19 crushed oil demand in 2020 and exploration budgets were slashed, the company filed Chapter 11 in August 2020 to restructure roughly $7 billion of pre-petition debt.

The plan was confirmed in March 2021 and completed on April 30, 2021. It eliminated $7.1 billion of debt and injected $520 million of capital through $550 million of new secured notes due 2028. Valaris emerged with $615 million of available cash, $40 million of restricted cash and just $550 million of total debt, and relisted on the NYSE under VAL.

Because the fleet — drillships, semisubmersibles and 41 jackups — survived intact, Valaris caught the offshore upcycle that began in 2022 as deepwater activity and dayrates climbed. Management scrapped old rigs, reactivated modern ones and rebuilt its contract backlog quarter by quarter.

By the fourth quarter of 2024 the turnaround was visible in the accounts: net income rose to $131 million from $63 million the prior quarter, with fleet-wide revenue efficiency of 96% in the quarter and 97% for the full year, plus about $120 million of new backlog signed in the quarter alone.

Eliminated $7.1B of debt, raised $520M of new capital and emerged with $615M cash; Q4 2024 net income hit $131M with 97% full-year revenue efficiency.

The restructuring eliminated $7.1 billion of debt — more than 90% — instead of stretching maturities.

New secured notes brought in $520 million of fresh capital, so Valaris emerged liquid, not just solvent.

The fleet was preserved through the case, leaving it ready when deepwater demand returned in 2022.

Post-emergence discipline — retiring old semisubmersibles and selling surplus jackups — kept costs below revenue.

When a cyclical industry bottoms, the player who restructures fastest owns the recovery: Valaris cut 93% of its debt while rivals still argued with creditors.

Valaris remains the largest offshore driller by fleet size, based in Bermuda with operations managed from Houston, trading on the NYSE as VAL. It continues to add multi-year jackup and floater contracts at higher dayrates, having converted a 2020 near-death capital structure into one of the strongest balance sheets in offshore drilling.