Valaris announced that it has received a $200 million cash payment as a result of a previously disclosed arbitration proceeding with a vendor. An arbitration tribunal initially awarded the offshore driller $180 million in damages and the right to claim interest and costs as a result of a dispute with Samsung Heavy Industries. The parties have since settled the dispute, with Valaris receiving $200 million in cash, which will bolster its balance sheet.
Valaris also announced that it has won several new contracts and extensions for some of its drilling rigs. Overall, the company added about $100 million in revenue to its backlog as two customers exercised options to extend existing contracts while two others awarded it new work.
Finally, the company stated that it's making excellent progress on cost savings. It expects to capture $135 million in annual expense savings by the end of this year, which should increase to $235 million by the end of 2020. This success in its cost reduction will enable it to generate more cash flow.
Valaris has been under pressure from an activist investor to take steps to bolster its balance sheet and do a better job marketing its rigs. Today's update shows that the company is making progress on those goals. That puts it in a better position to create value for its investors, especially now that the offshore drilling market is finally starting to improve.