Valaris Limited (VAL): A Bull Case Theory

We came across a bullish thesis on Valaris Limited on Altbridge Insights’s Substack by Nazym Azimbayev. In this article, we will summarize the bulls’ thesis on VAL. Valaris Limited's share was trading at $95.75 as of February 20th. VAL’s trailing and forward P/E were 13.14 and 13.95 respectively according to Yahoo Finance.

Valaris Limited, together with its subsidiaries, provides offshore contract drilling services in Brazil, the United Kingdom, U.S. Gulf of Mexico, Australia, Angola, and internationally. VAL has delivered a powerful validation of the offshore drilling bull thesis, rising approximately 70% since it was first highlighted in the low-$40s as tight rig supply, accelerating day rates, and disciplined capital allocation began to be reflected in its valuation.

The most consequential development yet is Transocean’s agreement to acquire Valaris in an all-stock transaction valued at roughly $5.8 billion, a move that crystallizes the strategic value embedded in Valaris’s premium fleet. Under the terms, Valaris shareholders will receive 15.235 shares of Transocean for each VAL share, resulting in approximately 47% ownership of a combined $17 billion enterprise operating 73 offshore rigs and holding a contract backlog near $10 billion. Valaris contributes a diversified, high-quality fleet and the strategically important ARO joint venture with Saudi Aramco, while expected synergies exceeding $200 million further enhance the transaction’s financial appeal.

The backdrop reinforces the bullish case. Leading-edge drillship day rates have climbed from the low $300,000s to $450,000–$500,000, with premium assets nearing $600,000 per day. Valaris’s own average drillship day rates are projected to rise from $355,000 in 2024 to $477,000 in 2026, underscoring the earnings leverage embedded in the cycle. Despite temporary softness in 2025 tied to Saudi suspensions and project deferrals, utilization for drillships is expected to reach 92–94% by 2026–2027 amid minimal newbuild activity and an aging global fleet.

With consolidation accelerating across the sector and replacement costs exceeding $800 million per modern drillship, the acquisition signals that strategic buyers see sustained upside. For Valaris shareholders, the transaction represents both recognition of intrinsic value and continued exposure to a strengthening deepwater upcycle into 2027–2028.

Previously, we covered a bullish thesis on Valaris Limited (VAL) by Alpha Ark in February 2025, which highlighted fleet scarcity, rising day rates, balance sheet reset, and NAV-driven multi-bagger upside potential. VAL's stock price has appreciated by approximately 107.74% since our coverage. Nazym Azimbayev shares a similar view but emphasizes on the Transocean acquisition as the primary catalyst for valuation recognition.

Valaris Limited is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held VAL at the end of the third quarter which was 57 in the previous quarter. While we acknowledge the risk and potential of VAL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VAL and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.