Valaris | The $46 Oil Stock I Expect to 5x on $2B in Free Cash Flow
Valaris is a $46 stock with $13B in hard assets and $2B in free cash flow on deck in a few years. The market’s still pricing in the last downturn. I’m betting on the next supercycle.
👋 Hey All 👋
Welcome to 📉 DeepValue Capital 📈
I will always be open and honest about my returns. Good, bad, or ugly. It just so happens things have been better than good.
2024: +85.23%
Cumulative (1/1/24 to 6/30/25): +190.43%
YTD (through 6/30/2025): +56.79%
All earned with businesses hiding in plain sight, broken charts, improving cash flows, and turnarounds the market hasn’t priced in yet.
If you want to learn more about what exactly I hold keep reading until the end where I break down my portfolio holdings, with weights, returns, and costs basis.
This week’s portfolio update covers Valaris ($VAL).
If you’re new here, don’t worry. I’ll walk through what they do, what changed, and how I’m thinking about valuation today.
By the end of this, you’ll know:
✅ What the offshore setup is.
✅ The upside for day rates and backlogs
✅ Why I still see $200+ per share
Let’s get into it.
What Valaris Does
Valaris is one of the world’s largest offshore drilling contractors. They don’t explore for oil themselves. Instead, they own a fleet of high-spec offshore rigs that oil companies lease to drill deepwater and shallow-water wells.
Their customers include ExxonMobil, Chevron, BP, Petrobras, and national oil companies like Saudi Aramco.
Owning and maintaining offshore rigs is expensive and inefficient for oil majors. Leasing from Valaris lets them avoid long idle periods, balance capex, and focus on reservoir development, not drilling logistics.
Valaris’ fleet includes:
Drillships and semisubmersibles for ultra-deepwater wells (up to 12,000 feet)
Jackups for shallower water (up to ~400 feet)
Managed rigs operated on behalf of joint ventures or state-backed customers
In total they operate 49 rigs across the globe. Most are modern, high-spec assets. Which matters because customers pay more for equipment that’s reliable, safe, and efficient.
Drillships: 13
Semisubmersibles: 2
Jackups: 34
Drillships and semisubmersibles are the high-end assets used in deepwater environments. They are capable of commanding much higher day rates than jackups, which are typically used in shallower, lower-cost fields.
Valaris earns revenue on a day-rate model. It gets paid per rig, per day, regardless of whether oil is found. Utilization and pricing are the key levers. When both rise, margins scale fast.
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