Valaris LtdVAL

Valaris Ltd Leases Disclosure

10-KFiled Feb 20, 20262 min read
LEASES
We have operating leases for office space, facilities, equipment, employee housing and certain rig berthing facilities. For all asset classes, except office space, we account for the lease component and the non-lease component as a single lease component. Short-term leases with a term of one year or less are not recorded in the Consolidated Balance Sheets. Our leases have remaining lease terms of less than one month to six years, some of which include options to extend. The lease term used for calculating our right-of-use assets and lease liabilities is determined by considering the non-cancelable lease term, as well as any extension options that we are reasonably certain to exercise. Our right-of-use assets, current lease liabilities, and long-term lease liabilities are included within Other assets, Accrued liabilities and other, and Other liabilities, respectively, in the Consolidated Balance Sheets.

We evaluate the carrying value of our right-of-use assets on a periodic basis to identify events or changes in circumstances, such as lease abandonment, which indicate that the carrying value of such right-of-use assets may be impaired.

The components of lease expense are as follows (in millions):
Years Ended December 31,
202520242023
Long-term operating lease cost$41.9 $35.4 $24.6 
Short-term operating lease cost21.3 17.6 13.2 
Variable lease cost (1)
13.8 9.8 11.3 
Total operating lease cost$77.0 $62.8 $49.1 
(1)Variable lease costs are excluded from the measurement of right-of-use assets and lease liabilities and consist primarily of variable fees related to offshore equipment rentals.
Supplemental balance sheet information related to our operating leases is as follows (in millions, except lease term and discount rate):
December 31,
20252024
Operating lease right-of-use assets$69.3$84.5
Current lease liability$35.6$28.0
Long-term lease liability37.356.9
Total operating lease liabilities$72.9$84.9
Weighted-average remaining lease term (in years)2.53.2
Weighted-average discount rate (1)
7.67 %7.75 %
(1)Represents our estimated incremental borrowing cost on a secured basis for similar terms as the underlying leases.

Supplemental cash flow information related to our operating leases is as follows (in millions):

Years Ended December 31,
202520242023
ROU assets obtained in exchange for operating lease liabilities
$19.4 $39.4 $80.3 
Cash paid for amounts included in the measurement of our operating lease liabilities
$40.1 $34.9 $26.2 

Maturities of lease liabilities as of December 31, 2025 were as follows (in millions):
2026$39.8 
202725.4 
20288.3 
20293.5 
20302.7 
Thereafter0.4 
Total lease payments$80.1 
Less imputed interest(7.2)
Total$72.9 

Historical Timeline

Fiscal YearFiled
2025Feb 20, 2026Showing above
2024Feb 20, 2025
2023Feb 22, 2024
2022Feb 21, 2023
2021Feb 22, 2022
2020Mar 2, 2021
2019Feb 21, 2020
2016Feb 28, 2017
2015Feb 25, 2016

About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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