Valaris (VAL) risk factors, FY2025 10-K

Risks Related to the Business Combination

1. 01Our pending Business Combination may be delayed or not occur at all for a variety of reasons, some of which are outside of the parties’ control, and if these conditions are not satisfied, the Business Combination Agreement may be terminated and the Business Combination may not be completedNew
2. 02Efforts to complete the Business Combination could disrupt our relationships with third parties and employees, divert management’s attention, or result in negative publicity or legal proceedings, any of which could negatively impact our operating results and ongoing businessNew
3. 03The Business Combination Agreement contains provisions that limit our ability to pursue alternatives to the Business Combination which could discourage a potential competing acquiror from making an alternative transaction proposalNew
4. 04While the Business Combination Agreement is in effect, we are subject to restrictions on our business activitiesNew

Risks Related to Our Business, Operations, Financing Arrangements and Market Conditions

1. 05The success of our business depends on the level of activity in offshore oil and natural gas exploration, development and production, which can be significantly affected by volatile oil and natural gas prices
2. 06The offshore contract drilling industry is highly competitive and cyclical
3. 07Our current backlog of contract drilling revenue may not be fully realized and may decline significantly in the future
4. 08Our business will be materially adversely affected if we are unable to secure contracts on economically favorable terms or if option periods in existing contracts are not exercised as expected
5. 09Our customers may be unable or unwilling to fulfill their contractual commitments to us, including their obligations to pay for losses, damages or other liabilities
6. 10The loss of a significant customer or customer contract, as well as customer consolidation and changes to customer strategy, could materially adversely affect our business30% rewritten
7. 11Our long-term contracts are subject to the risk of cost increases, which could adversely impact our profitability
8. 12Our network and systems, including rig operating systems and critical data, are subject to cybersecurity risk and technical disruptions
9. 13Rig reactivation, upgrade and enhancement projects are subject to risks, including delays and cost overruns, which could materially adversely affect our financial position, operating results or cash flows
10. 14We make significant expenditures to meet customer requirements, maintain our fleet to comply with laws and the applicable regulations and standards of governmental authorities and organizations, or to expand our fleet, and we may be required to make significant expenditures to maintain our competitiveness59% rewritten
11. 15Failure to recruit, develop and retain skilled personnel could materially adversely affect our business22% rewritten
12. 16Our use of a shared service center creates risks relating to the processing of transactions and recording of financial information, which could materially adversely affect our financial condition, operating results or cash flows
13. 17AI presents risks and challenges that can impact our business55% rewritten
14. 18We may not realize the expected benefits of our ARO joint venture24% rewritten
15. 19Joint venture investments could be adversely affected by our joint venture partners’ actions, financial condition and liquidity and disputes between us and our joint venture partners
16. 20Our business involves operating hazards, and our insurance and indemnities from our customers or other parties may not be adequate to cover any potential losses60% rewritten
17. 21Geopolitical events and violence could materially adversely affect the markets for our services and have a material adverse effect on our business and cost and availability of insurance
18. 22Our drilling contracts with national oil companies may expose us to greater risks than we normally assume in drilling contracts with non-governmental customers
19. 23Unionization efforts and labor regulations in certain countries in which we operate could materially increase our costs or limit our flexibility with regard to the management of our personnel
20. 24Significant equipment or part shortages, supplier capacity constraints, supplier production disruptions, supplier quality and sourcing issues or price increases could materially adversely affect our financial position, operating results or cash flows
21. 25Our operating and maintenance costs will not necessarily fluctuate in proportion to changes in our operating revenues
22. 26Our ability to pay our operating and capital expenses and make payments due on our debt depends on many factors beyond our control
23. 27The agreements governing our debt, including the Indenture and the 2028 Credit Agreement, contain various covenants that impose restrictions on us and certain of our subsidiaries that may affect our ability to operate our business and to make payments on our debt
24. 28We may experience risks associated with future mergers, acquisitions or dispositions of businesses or assets, including our drilling rigs, or other strategic transactions39% rewritten
25. 29The exercise of all or any number of outstanding warrants or the issuance or settlement of stock-based awards may dilute the holders of our Common Shares

Regulatory, Legal and Tax Risks

1. 30Increasing regulatory complexity could adversely impact the costs associated with our offshore drilling operations and reduce demand for our services
2. 31Compliance with or breach of environmental laws can be costly and could limit our operations27% rewritten
3. 32The IRS may not agree with the conclusion that we should be treated as a foreign corporation for U.S. federal tax purposes
4. 33Governments may pass laws that subject us to additional taxation or may challenge our tax positions
5. 34As required by law, we file periodic tax returns that are subject to review and examination by various revenue agencies within the jurisdictions in which we operate. We are subject to tax assessments in various jurisdictions, which we are contesting
6. 35Our consolidated effective income tax rate may vary substantially over time
7. 36We are subject to litigation that could have a material adverse effect on us
8. 37We are a Bermuda company and it may be difficult to enforce judgments against us or our directors and executive officers
9. 38Our bye-laws restrict shareholders from bringing legal action against our officers and directors
10. 39Provisions in our bye-laws could delay or prevent a change in control of our company, which could materially adversely affect the price of our Common Shares
11. 40Legislation enacted in Bermuda as to Economic Substance may affect our business
12. 41Our business could be affected as a result of activist investors

Risks Related to Our International Operations

1. 42Regulation of GHG and climate change could have a negative impact on our business29% rewritten
2. 43Consumer preferences for alternative fuels and electric-powered vehicles, as part of the global energy transition, may lead to reduced demand for our services
3. 44Increased scrutiny from stakeholders and others regarding climate change, as well as our sustainability practices, initiatives and reporting responsibilities, could result in additional costs or risks