announced an agreement Thursday in which Exxon will capture carbon emissions from Nucors direct reduced iron (DRI) plant in Convent, Louisiana and permanently store it in underground reservoirs. This is a bit unusual for an offshore drilling company which typically preferred to announce major contracts in separate press releases, while other news was published in regular fleet status reports. In general, all floaters, drillships and semi-subs, will need a significant increase in demand for higher dayrates. In this case, it was a true, healthy restructuring which put the company into a net cash position. If you look at where the world is today and where we are with the energy transition and the path to net zero - which is not very far along - and how much work we have left to dowe need all of the above, he says. Combined with Exxons previously-announced CCS agreements with CF Industries and Linde, the deal with Nucor will, when operational, enable the companys Low Carbon Solutions business unit to transport and store 5 million metric tons per year (MTA) for third-party customers. Vladimir Zernov 16.11K Follower s Follow Summary Valaris announced many new contracts since it exited bankruptcy in May 2021. Momentum is building as customers recognize our ability to solve emission challenges at scale.. This is a major advantage in the current market environment as the timing of the upside in dayrates is still uncertain. The company has good near-term contract coverage, but its backlog for 2023 is very small, so a lot will depend on the next "contracting season.". (AP Photo/Timothy D. Easley). The rig will work for 300 days. Thats with just three projects across these heavy industries., ExxonMobils release notes that emissions captured at the Nucor site will flow into the same infrastructure to be used for the nearby project with fertilizer company CF Industries. The plant is in operation 24 hours a day, seven days a week to meet demand. In the near term, the company's shares will remain sensitive to the fluctuations of the oil market, and there is little that Valaris can do about it. Please. Combine all of those advantages with state governments that are willing to not just allow but encourage these kinds of projects, and you have an ideal situation. ExxonMobil Valaris is financially healthy after restructuring, but the stock will remain highly sensitive to oil price fluctuations as the company has little backlog for 2023. Drillship DS-12 has already received a one-well contract from Total (TOT) (Q3 2021) and a four-well contract from BP (BP) (Q1 2022, estimated duration 285 days). David Blackmon is a Texas-based public policy analyst/consultant. I use technical analysis as well as fundamental analysis in my research. jimmcdowall/iStock Editorial via Getty Images. Borr Drilling investors know that this thesis did not play out within the expected timeframe due to the major blow from the coronavirus pandemic, but I think that it will be ultimately proven correct, and old rigs will leave the market, which will be bullish for jack-up dayrates and positive for drillers with modern jack-ups. The semi-sub segment is now limited to 3 active rigs (8505, MS-1, DPS-1) and 2 stacked rigs (8506, 8503). The real discussion is, where are the projects, when are they going into execution, and what kind of impact are the going to have? But as evidenced by our actions, we do not expect this will happen for at least 2 years". No recommendation or advice is being given as to whether any investment is suitable for a particular investor. I wrote this article myself, and it expresses my own opinions. Entering text into the input field will update the search result below. After restructuring, Valaris has 4 active drillships (DS-10, DS-12, DS-15 and DS-18), 7 stacked drillships (DS-4, DS-7, DS-8, DS-9, DS-11, DS-16, DS-17) and 2 options to purchase newbuild drillships by the end of 2023 (DS-13 for $119 million and DS-14 for $218 million). One that far exceeds most competitors. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. news page on Valaris' website or wait for the fleet status report which will be published in the upcoming weeks). There is no practical need to discuss these contracts one by one (if you are interested, you can visit the news page on Valaris' website or wait for the fleet status report which will be published in the upcoming weeks). I asked Ammann to address that criticism. Instead, I'll focus on the company's segments and their current position. They can have a very significant, positive impact on a very capital efficient basis.. I have no business relationship with any company whose stock is mentioned in this article. ExxonMobil XOM -0.7%, the largest U.S. domestic oil and gas company, and big steel . It looks that Valaris management believes that drillships will have competitive advantage in most regions, so it decisively shrank its semi-sub fleet and focused two of the three active semi-subs on Australia which is a region for semi-subs. Whats interesting is that, with just two projects in Louisiana, we are already reaching the point at which the infrastructure at one site supports another, he says. Fellow contributor Henrik Alex discussed the company's position right after the completion of its restructuring, so I will focus on the developments that happened after the company exited bankruptcy and discuss the current situation. Before exiting restructuring, Valaris retired 5 semi-subs compared to just 3 drillships. Saudi Aramco is Valaris' major customer (for both Valaris-owned rigs and rig owned by ARO Drilling, a joint venture with Saudi Aramco), so the ultimate end of OPEC+ deal will serve as an additional positive catalyst for this segment. In our interview, though, I noted that critics of CCS continue to promote a narrative claiming that, despite having been in practice in the U.S. across decades now, the ability for industrial-based CCS to make a big difference in advancing net-zero ambitions is limited and unproven. Semi-sub Valaris DPS -1 has recently received a contract from Woodside offshore Australia. Both states are rich in underground storage pore space, rich in the necessary infrastructure, rich in the kinds of human expertise required to manage such projects, and, of course, richer than any other region of North America in the number and scale of industrial emitters. Theoretically, smaller companies should ultimately step in, grab some assets from the majors who divest them in an attempt to "reduce their carbon footprint", and develop them on their own, which will be bullish for drillers. To me, debating whether it is this or that or the other thing is really the wrong discussion. Things are. Valaris has no survival risks post-restructuring, it is surely a driller to follow. It should be noted that jack-up dayrates remain under pressure, but the ultimate elimination of older jack-ups in the upcoming years should tip the scales towards higher dayrates: The same thesis was the idea behind the creation of Borr Drilling (BORR). In my opinion, at least some of them will not survive. Second, it's hard to estimate the exact cost of reactivation. XOM Valaris has decent contract coverage in the jack-up segment, and the company announced new jack-up contracts after the publication of its May fleet status report. As the biggest player operating in such a target-rich environment, we can expect many future announcements of similar projects by ExxonMobil in the years to come. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. Transocean (RIG) has recently reiterated that reactivating cold stacked floaters would cost $50 million-$75 million, but real costs could be higher as rigs spent years without work. Since then, the company published 10 press releases which indicated new contract awards. ExxonMobil, Nucor Ink Big Carbon Capture Deal. David Blackmon is a Texas-based public policy analyst/consultant. In its latest earnings call, Valaris stated: "We will reactivate these rigs when dayrates and contract durations can justify it. I may trade any of the above-mentioned stocks. The stock has recently traded at post-bankruptcy highs, but the. The situation with the company's stacked drillships is more challenging. Instead, I'll focus on the company's segments and their current position. Please disable your ad-blocker and refresh. A high-level overview of Valaris Limited (VAL) stock. As Ive written here previously, the growing roster of companies involved in the CCS sector in the United States recognizes the richness of the Texas/Louisiana region in terms of advantages for mounting these kinds of projects. The contract is projected to begin at the end of Q1 2022 or at the beginning of Q2 2022. Drillship DS-18 got a three-year contract from Chevron (CVX) in the U.S. Gulf of Mexico, and the rig will begin working in the first quarter of 2022 in direct continuation of the current contract. Seeking Alpha Valaris: An Expensive Hole In The Water Fluidsdoc Summary The market is awarding a rich earnings multiple to Valaris Limited. However, the speed of this process is anybody's guess at this point. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. The company's fleet status report, which was released on May 3, contained a significant number of contracts and contract extensions. Rolls of steel are stored outside the rolling, facility and await shipment at the NUCOR Steel Gallatin plant, Wednesday, July 25, 2018, in Ghent, Ky. Valaris exited bankruptcy with $655 million of cash and $550 million of debt due 2028. Valaris: Upgrading Shares On Improved Financial Flexibility And Strong Buyback Commitment Summary Last month, Valaris reported better-than-expected Q1/2023 results and reiterated its full-year. So, were already getting to the types of economies of scale that we think will be not only helpful, but necessary to support the scaling-up of these kinds of projects, as opposed to just doing everything on a one-off basis.. The fate of the two stacked rigs is unclear at this point. Valaris announced many new contracts since it exited bankruptcy in May 2021. First, they will need higher dayrates (before COVID, industry executives often talked about $300,000 dayrates for activation). With just four active drillships, Valaris should not have problems with keeping them busy, especially after the recent positive developments in the oil market which should provide some support to contracting activity in the deepwater space. However, it is not clear whether this increase in demand will be big in the near term as national oil companies are traditionally more focused on shallow water activity while majors are under huge pressure from politicians, environmental groups and ESG investors. Opinions expressed by Forbes Contributors are their own. For ExxonMobil, the deal is its third major carbon capture and storage (CCS) project announced in the last seven months as it advances its strategy for growing a portfolio of such projects along the Texas and Louisiana Gulf Coast. Stay up to date on the latest stock price, chart, news, analysis, fundamentals, trading and investment tools. I am not receiving compensation for it (other than from Seeking Alpha). Back at the beginning of May, Valaris (NYSE:VAL) emerged from bankruptcy and its shares began to trade on NYSE. Thats why were so focused on getting real world projects signed up with real large scale emitters. Asked about the extent of new infrastructure, such as pipelines, that would have to be constructed related to the Nucor project, Ammann replied It will be quite limited, since the Nucor facility is geographically quite close to the CF Industries site., Ammann emphasizes that this aspect of the Nucor and CF Industries project means his LCS unit is already taking advantage of one of its most important goals in advancing its CCS business. So, of course we should be pursuing these kinds of projects. I wrote this article myself, and it expresses my own opinions. It should be noted that the rig has no contracts until the Woodside contract and is currently located in Malaysia. If you have an ad-blocker enabled you may be blocked from proceeding. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. We need everything, and we need it now, and we need it at large scale. The stock has recently traded at post-bankruptcy highs, but the recent weakness in the oil market has put some pressure on Valaris' shares. In this light, the money-making power of Valaris' drillship segment is limited for the next few years, and the ultimate fate of its cold stacked rigs is uncertain. Is this happening to you frequently? Bassoe Offshore estimated that the dayrate on the contract is $220,000 which is nothing to boast about since Australia is an expensive region. its restructuring, so I will focus on the developments that happened after the company exited bankruptcy and discuss the current situation. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. I'm a trader who trades both short-term and long-term. I have no business relationship with any company whose stock is mentioned in this article. In an interview Thursday morning, Ammann pointed out that that magnitude of emissions is the equivalent of changing 2 million gas powered cars to EVs, and thats the total number of EVs that have been sold in the United States. I started my career as a day-trader for a trading firm, but then turned to longer time frames and went on my own to manage my portfolio. Our agreement with Nucor is the latest example of how were delivering on our mission to help accelerate the world's path to net zero and build a compelling new business, Dan Ammann, president of ExxonMobil Low Carbon Solutions (LCS), said in the companys release. Analysts Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I am not receiving compensation for it (other than from Seeking Alpha). NUE , the largest U.S. domestic oil and gas company, and big steel-maker Nucor
Beautynetkorea Discount Code, Abloy Protec Deadbolt, Pacsun Men's Jeans Black, Zella Quilted Bomber Jacket, How To Finish White Oak For Exterior Use,