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Does Shell’s 2027 Brazil Drillship Deal Change The Bull Case For Valaris (VAL)?

Simply Wall St · 1d ago
  • Valaris Limited announced that it has been awarded a multi-year contract with Shell offshore Brazil for drillship VALARIS DS-8, expected to start in the first quarter of 2027, run for about 800 days and deliver an estimated total contract value of roughly US$300 million.
  • This long-dated Shell contract adds further visibility to Valaris’s future workload at a time when some investors have exited the offshore sector, citing a pause in spending since 2024.
  • We’ll now examine how this multi-year Shell contract, starting in 2027, may influence Valaris’s contract backlog and overall investment narrative.

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Valaris Investment Narrative Recap

To own Valaris, you generally need to believe that long cycle offshore drilling will remain an important part of global energy supply and that its high specification fleet can stay contracted at reasonable day rates despite sector cyclicality. The new multi year Shell contract meaningfully extends Valaris’s backlog into 2027 and beyond, modestly supporting the near term catalyst of backlog visibility, but it does little to reduce the key risk of future day rate and utilization softness if offshore spending remains uneven.

Among recent announcements, the July 2025 awards for VALARIS DS-16 and DS-18, adding about US$760,000,000 of incremental backlog with Anadarko in the Gulf of Mexico, are most relevant here because they also lock in long dated work for high specification drillships. Taken together with the Shell DS-8 award, these contracts reinforce the current catalyst of a larger, longer dated backlog while still leaving investors exposed to longer term risks around offshore demand, fleet costs and customer concentration.

Yet despite the expanding backlog, investors should be aware that concentrated exposure to a handful of major offshore customers could...

Read the full narrative on Valaris (it's free!)

Valaris' narrative projects $2.4 billion revenue and $453.7 million earnings by 2028. This requires a 1.2% yearly revenue decline and about a $178 million earnings increase from $275.5 million today.

Uncover how Valaris' forecasts yield a $55.10 fair value, a 5% downside to its current price.

Exploring Other Perspectives

VAL 1-Year Stock Price Chart
VAL 1-Year Stock Price Chart

Nine Simply Wall St Community fair value estimates for Valaris span roughly US$31.60 to US$336.52, underlining how differently investors can view the same cash flows. When you weigh that spread against the growing multi year contract backlog, it becomes clear why many investors compare several viewpoints before deciding how much of their own portfolio to tie to Valaris’s offshore cycle.

Explore 9 other fair value estimates on Valaris - why the stock might be worth over 5x more than the current price!

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.