Valaris DS-15 Secures Strategic West Africa Contract: A Turning Point for the Drilling Giant?

The offshore drilling sector has long been a barometer of both energy demand and geopolitical risk. Now, Valaris Limited (VAR), the world’s largest offshore drilling contractor by fleet size, has announced a pivotal deal that could solidify its position in one of the most dynamic oil basins: West Africa. The company’s high-specification drillship VALARIS DS-15 has secured a standalone five-well contract, marking a critical step forward for a firm navigating a cyclical industry.

The Deal: A $135M Gamble on West Africa

The contract, announced in May 2025, awards Valaris $135 million for a multi-well program offshore West Africa. The rig is slated to begin operations in the third quarter of 2026, with an estimated duration of 250 days. Crucially, the agreement includes priced options for up to five additional wells, extending the potential duration to 350 days and boosting the total value to approximately $180 million if exercised. This structure reflects a balance between securing immediate cash flow and retaining upside potential in a region with untapped reserves.

The rig will undergo upgrades to its managed pressure drilling system, a high-tech feature critical for navigating West Africa’s complex subsurface geology. Valaris CEO Anton Dibowitz framed the deal as a “strategic milestone,” emphasizing the company’s focus on seventh-generation drillships—advanced rigs capable of handling ultra-deepwater projects.

The stock’s 18% year-to-date gain as of mid-2025 suggests investors are betting on Valaris’s ability to capitalize on a rebound in deepwater drilling activity.

Why West Africa Matters

West Africa’s oil reserves, particularly in Nigeria, Angola, and Ghana, have been underexploited due to political instability, outdated infrastructure, and high operational costs. However, the region’s pre-salt reserves—vast deposits beneath thick layers of salt—could rival Brazil’s prolific finds. For Valaris, the DS-15 contract is a bet on geopolitical stabilization and technological differentiation.

Competitors like Transocean (RIG) and Schlumberger (SLB) have also eyed the region, but Valaris’s fleet rationalization—such as selling older semisubmersibles for scrap—has streamlined its focus on premium assets. The DS-15’s advanced capabilities, including its upgraded drilling system, position it to compete in projects requiring precision in high-pressure, high-temperature environments.

Financial Implications: Backlog Growth and Risk

The deal contributes to Valaris’s $4.2 billion contract backlog as of early 2025, up from $3.6 billion just months earlier. This growth underscores the company’s success in securing long-term, high-margin work amid an industry recovery. However, the DS-15’s delayed start (2026) raises questions about execution risk. Delays in mobilization or client delays could erode margins, especially if dayrates compress due to oversupply in the drillship market.

While Valaris’s backlog growth outpaces Transocean’s, the latter’s higher backlog per rig reflects its focus on ultra-deepwater assets—a category in which Valaris is now aggressively competing.

Risks and Considerations

1. Client Identity: The contract’s client remains unnamed, raising concerns about concentration risk. Valaris’s top clients historically include ExxonMobil and Petrobras; reliance on a single entity in West Africa could amplify volatility.
2. Regional Instability: Political tensions in Nigeria and Angola could disrupt operations. Valaris’s experience in the Gulf of Mexico and Brazil may offer lessons, but West Africa’s security challenges are uniquely acute.
3. Technological Competition: Rival drillers are also upgrading their fleets. Ensuring the DS-15’s managed pressure system delivers efficiency gains will be key to securing future contracts.

Conclusion: A Bold Move, but the Jury Is Out

The Valaris DS-15 contract is a significant win, but its long-term impact hinges on execution. The deal adds $135 million in immediate value and opens a door to West Africa’s pre-salt potential, which could justify the rig’s advanced features. However, investors must weigh this against broader risks: Valaris’s debt-to-equity ratio of 1.2x (as of Q1 2025) leaves little room for operational missteps.

Crucially, the DS-15’s performance in 2026 will determine whether this contract becomes a catalyst for sustained growth or a one-off success. For now, the deal signals Valaris’s ambition to dominate the high-end of the drilling market—a strategy that could pay off if energy majors continue to prioritize deepwater exploration. The question remains: Can Valaris deliver on its promise without overextending in a still-fragile recovery?

In an industry where rig utilization rates hover around 65% (down from 80% in 2019), the DS-15’s West Africa contract offers a glimmer of hope—but it’s only the first step in a marathon.