case 20-34114 document 1367 filed in txsb on 08/30/21 page
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PRO SE - ADVERSARY COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL PENALTIES, RESTITUTION, AND OTHER EQUITABLE RELIEF - 1
Confidential
Sebastian Miralles Acuña Av. Paseo de la Reforma 246, floor 41, Cuauhtémoc, Mexico City 06600 smiralles@tempestcapital.com +52 (55) 18776252 August 30th, 2021
BANKRUPTCY COURT
SOUTHERN DISTRICT OF TEXAS
SEBASTIAN MIRALLES ACUÑA,
Plaintiff,
vs.
VALARIS PLC, LUMINUS MANAGEMENT LLC, AND DOES 1 THROUGH 50, INCLUSIVE,
Defendants
Case No.: 20-34114
PRO SE - ADVERSARY COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL PENALTIES, RESTITUTION, AND OTHER EQUITABLE RELIEF
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 1 of 133
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INTRODUCTION
1. This is an adversary proceeding brought by the right of Plaintiff Sebastian Miralles Acuña
(“Plaintiff”) against the Defendant Valaris PLC (“Valaris” or “The Company”), Luminus Management LLC
(“Luminus”) and Does 1-50 (collectively, “Defendants”), to request compensatory damages, treble exemplary
damages and equitable relief pursuant the Defendants violation of 11 U.S.C. § 1123(a)(4), 18 U.S. Code § 152
(1)(2)(3)(6)(7)(9), as well as other varied violations. To request under 11 U.S. Code § 1144 for equitable relief, or a
revocation of the Plan Confirmation pertaining to the Valaris Chapter 11 procedure. As well as to alert the Court of
the actions here described so it may the act in a Sua Ponte basis as it deems fit.
JURISDICTION
2. The United States Bankruptcy Court for the Southern District of Texas (the “Court”) has
jurisdiction over this matter pursuant to 28 U.S.C. § 1334, as this case involves questions of bankruptcy law.
3. This Court also has jurisdiction pursuant to 28 U.S.C. § 157, and 11 U.S.C § 1144as the Plaintiff
seeks equitable relief and compensation for broad violations of 18 U.S.C. § 152(1)(2)(3)(6)(7)(9), 11 U.S.C. §
1123(a)(4), all major matters considered by the Court.
VENUE
4. Venue is proper under 28 U.S.C. § 1408 and 28 U.S.C. § 1409.
PARTIES
5. Defendant Valaris PLC et al is the world´s largest provider of offshore contract drilling services
to the international oil and gas industry. The Company was founded in April 2019 after the merger of ENSCO plc
(“ENSCO”) and Rowan Companies plc (“Rowan”), two of the main offshore drilling companies worldwide. Currently,
Valaris counts with a diverse rig fleet consisting of ultra-deepwater drillships, versatile semisubmersibles and modern
shallow-water jackups capable of meeting a wide spectrum of customers’ well program requirements. The company
owns 60 rigs in total, making it the world's largest fleet.
6. Defendant Luminus Management LLC is an investment management firm founded in 2002 by
Jonathan Barret with offices in New York, NY and Houston, TX.
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7. Plaintiff Sebastian Miralles Acuña, a Mexican national, is the Founder and Managing Partner of
Tempest Capital, a private equity investment management firm. Relevant to the case, Mr. Miralles began his career
as a forensic finance professional with Kroll, Inc.
NATURE OF THIS ACTION
8. This is an action brought pursuant to flagrant violations of Title 18 U.S. Code § 152 (6)(9), 11
U.S.C. § 1123(a)(4) and 11 U.S.C. § 1126(b)(1), among others.
9. Plaintiff seeks injunctive relief, compensatory damages, punitive damages, equitable relief, and
his reasonable attorneys’ fees and litigation expenses as remedies for Defendants’ violations of Federal and Texas
statutory laws.
STANDING
10. Plaintiff was an investor for 152,900 shares of Valaris that purchased at a cost basis of
US$960,612 which he mostly accumulated during the month of September 2019. Since 2016 he was an active investor
in the predecessor entities of ENSCO and Atwood Oceanics Inc (“Atwood”). His investment was predicated on the
Company’s representation that the Fair Market Value of their assets was in excess of $13 billion (after already having
gone through fair market value impairment testing, and the company reporting $23.9 Billion in Replacement Value)
while having approximately $6.5 billion in financial liabilities. At the same time, Valaris management represented
that they had ample liquidity, available for at least 2 years of operation. During this period, the company traded at a
pricing band of approximately $1 billion in equity value. The Plaintiff has currently been assigned a pari-passu
ownership interest in Warrants for 7% of the value of the restructured entity, Valaris LTD, as determined by the Plan.
As outlined below, Mr. Miralles and other Class 13 unsecured Creditors had consequential economic interest vested
in Valaris at the time it was plunged into bankruptcy through Fraud upon the Court. He still retains consequential
economic interest in the Company, which he seeks to protect through equitable relief under the provisions of 11 U.S.
Code § 1144, 11 U.S. Code § 105(a), and 11 U.S. Code § 1142 (b).
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STATEMENT OF FACTS
A. Defendant’s Bankruptcy Case
11. On August 19, 2020, Valaris and certain of its direct and indirect subsidiaries filed a voluntary
petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. During the bankruptcy process, Lazard,
which was originally the investment banker hired by Valaris for the task of raising equity, was hired again for the
Bankruptcy process. Lazard performed a valuation based on management guidance. Based on this valuation Valaris
claimed an impairment of over ~ 90% of the value of its already previously impaired assets, valuing Property Plant &
Equipment at a mere $1.2B, within less than 3 months of the last independent fair value opinions provided by the
Company´s investor presentation (See Exhibit C). The independent fair value opinions came from by DNB Markets,
Morgan Stanley, Scotiabank, SpareBank and Wells Fargo as required by the debt indentures of the Creditors and
assigned a replacement cost of such assets at $23.9 billion1 and $9.9 billion in fully impaired fair market value.
Additionally, on the previously mentioned investor presentation Valaris claimed it had 2 years of liquidity available
as of February 2020. This 90% impairment, together with the claim of an industrial accident, that was fully insured,
were used by Valaris´s Management to plunge the company into bankruptcy.
12. Management´s and Lazard´s valuation were never updated to reflect oil markets fully recovering,
and exploration contracting at significantly higher levels than in December 2020, while Lazard lists an Effective
Valuation Date of March 30, 2020 (The effective valuation date for the Plan under 26 CFR § 1.430(g)-1).
B. Modification to Cooperation and Support Agreement - August 28th, 2020 – 8K
13. Valaris offered the largest equity holder (Luminus Management, LLC) special compensation to
agree to not purse its interests as equity holder. The Material Definitive Agreement from Valaris SEC 8-K filed on
August 28th, 2020 (the “Agreement”) in the form of a modification of the existing Cooperation and Support Agreement
that existed between Valaris and Luminus (See Exhibit A). In fact, the Agreement was a de-facto Prepetition
Restructuring Support Agreement. In exchange for signing this joinder, the Agreement allowed Luminus to purchase
10% of the Company´s outstanding indebtedness held by the Creditor at the then prevailing price of cents on the dollar,
1 Valaris, Investor Presentation, February 2020, pg. 27, https://s23.q4cdn.com/956522167/files/doc_presentations/2020/01/02032020-Valaris-Investor-Presentation.pdf (last visited Aug. 11, 2021).
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in exchange for this consideration, Luminus has enjoined to refrain from exercising any rights as equity holders.
Through the joinder Luminus, as debtor, accepted the RSA in direct impact to other equity holders. The Parties
involved further agreed to withhold said Agreement from the Court, unless specifically mandated. It is notable that
this Agreement was negotiated, by Trustee, the Debtor in Possession, and necessarily was known by the Creditors
Committee.
C. Materially Inconsistent valuations of PP&E across different fillings
14. Valaris stated in their SEC filings that it performed quarterly recoverability tests of its entire
fleet, based on fair market values, impairing the book value of PP&E for any changes in market conditions. That is to
say, Valaris was representing to the market that its Book Value was already priced to Fair Market Value.
15. The fair market value of PP&E given by the lender´s third party independent appraisers2, the
Company´s SEC filings (10-Ks & 10-Qs), and the one presented to court by Lazard3 for bankruptcy (BK) differ
materially within a short period of time. Lazard valuation of PP&E, which was ratified when the bankruptcy plan was
confirmed, and the PP&E value of the 1Q21 filing, differ by 8.5x within a 28-day period.
2 Valaris, Investor Presentation, February 2020, pg. 27, https://s23.q4cdn.com/956522167/files/doc_presentations/2020/01/02032020-Valaris-Investor-Presentation.pdf (last visited Aug. 11, 2021). 3 Valaris, Disclosure Statement, December 2020, pg. 437, https://cases.stretto.com/public/X088/10396/PLEADINGS/1039612162080000000061.pdf (last visited Aug. 11, 2021).
9,10010,950
1,182
10,083
Lender´sThird- Party
(MD&A Feb-20)
10-K 2020(FYE 2020)
Lazard BKValuation
(Mar-2021)
1Q21(Mar-2021)
Inconsistent PP&E Fair Market Value(US$ MM)
1,182
10,083
March 3rd, 2021 (Lazard@ BK Confirmation Plan)
March 31st, 2021(First 10-Q 2021)
Variation of PP&E Fair Market Value within March 2021
(US$ MM)
89.2% Loss
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16. ASC 820-10-05 states that the objective of a fair value measurement is to estimate the price at
which an orderly transaction to sell or transfer the asset would take place between market participants at the
measurement date under current market conditions.
17. Impairment is calculated by reference to fair value. One of the most important considerations to
measure the fair value of non-financial assets is the “highest and best use”. This is a valuation concept that represents
the use of an asset by market participants that would maximize the value of the asset or asset group, or maximize its
sale. Valaris book value of PP&E presented in the 2020 10K, 1Q21 and 10Q´s materially differs from the one
presented to court by Lazard, which doesn´t fairly represent market conditions. Said values differ by ~10x. The
Company is in effect declaring one Fair Market Value to the Court, while at the same time consistently presented
different Fair Market Values to the SEC and the broader investment public.
D. Inconsistent Impairment Tests
18. ENSCO and Rowan were merged on April 14, 2019, as a result, both entities were subject to
Valaris extensive valuation exercises, and impairment tests throughout 2019. However, Rowan assets were subject to
an impairment of 0.8% for 1Q20, whereas Ensco assets were subject to an impairment of 23.0% for 1Q204.
19. Rowan assets were valued for the first quarter of 2020 at $2,989 million and had an impairment
of $26 million. While Ensco assets were valued at $12,137 million and had an impairment of $2,808 million. The
above-mentioned represents a 28x greater impairment for Rowan PP&E than for Ensco PP&E.
4 Valaris, 1Q20 Report, March 2020, p.13, https://s23.q4cdn.com/956522167/files/doc_financials/2020/q1/VAL-3.31.2020-10Q-FINAL.pdf (last visited Aug. 11, 2021).
0.8%
23.0%
Rowan Assets Ensco Assets
Impairment % of Valaris PP&E 1Q20
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20. Impairment valuation testing was not being performed uniformly to substantially the same assets,
in direct violation of U.S. GAAP ASC 360-10.
21. It is worth noting that at the time Rowan bondholders had an active dispute with Valaris. This
may have created an incentive for presenting a higher valuation. Demonstrating a pattern for willingly modifying the
fair market value of assets as convenient for management and the Company.
E. Conflicted Plan Valuation by Lazard
22. In its Engagement Letter for the fairness opinion for the Plan, Lazard was held out as
independent and free of conflicts, despite having previously provided capital markets services to Valaris shareholders
during 20195, knowing the Company´s financial information and being aware of previous valuations. Lazard´s
compensation during Valaris bankruptcy was approximately $39 million, considerably more than the customary
compensation received for raising equity, which on average is 50 to 100 basis points over the equity raised.
23. The average Gross PP&E estimated by five independent analysts is US$9.4B, with a replacement
value of US$23.9B, as presented in the February 2020 Valaris investor presentation6 (See Exhibit C). Third-Party
5 Valaris ,Proxy Materials DEFA14A, December 2019, https://d18rn0p25nwr6d.cloudfront.net/CIK-0000314808/7c1caf10-59ed-4472-a7db-4567b29f7c6d.pdf (last visited Aug. 11, 2021). 6 Valaris, Investor Presentation, February 2020, pg. 27, https://s23.q4cdn.com/956522167/files/doc_presentations/2020/01/02032020-Valaris-Investor-Presentation.pdf (last visited Aug. 11, 2021).
Gross Asset Value Estimates (In US$B for Feb-20)
Analyst 1 10.1 Analyst 2 9.7 Analyst 3 9.5 Analyst 4 9.1 Analyst 5 8.9
Avg. provided by analysts of $9.4B Analyst Gross Asset Value Estimates include
DNB Markets, Morgan Stanley, Scotiabank, SpareBank and Wells Fargo
25.5 23.9
9.4
1.2 1.2 1.2
Constuction Cost ReplacementCost
Gross AssetValue
Independent Analysts Valuations of PP&E presented in Feb-20 MD&A vs Lazard
Valuation(US$B)
MD&A (Feb-20) Lazard Net PP&E
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independent appraisers selected by Valaris´s lenders gave a ~8x higher valuation to PP&E than the one presented by
Lazard7 in Bankruptcy.
24. The conflicted Lazard valuation shows a +US$8B discrepancy in valuation of PP&E not
congruent with the ones presented in the Company´s filings and with the valuations prepared by the independent
appraisers hired under the bond indentures prior to bankruptcy. It is notable that these independent appraisals were
endorsed and accepted by the Creditors as of December 2019, but these same Creditors claimed these assets to be
essentially worthless a few months later.
25. Additionally, the high number of awarded and extended contracts announced in the latest 2 fleet
status reports by Valaris8 demonstrate that the company was quickly recovering. Contracts in this industry take
upwards of 6 months to multi-year periods to negotiate. Management guidance did not reflect this in either the
valuation, nor in the representations made to the Court. The Lazard valuation opinion letter specifically states that
they did not try to challenge Management assumptions, nor did they perform any valuation of the physical assets. This
7 Valaris, Disclosure Statement, December 2020, pg. 437, https://cases.stretto.com/public/X088/10396/PLEADINGS/1039612162080000000061.pdf (last visited Aug. 11, 2021). 8 Valaris, Fleet Status Report, August 2021, https://s23.q4cdn.com/956522167/files/doc_news/2021/08/8.2.2021-Valaris-Fleet-Status-Report.pdf (last visited Aug. 11, 2021).
8 9
1210
13
16 16
5
2123
10,919 10,919
12,874
12,616
15,097
10,96110,083
1,182
0
2000
4000
6000
8000
10000
12000
14000
16000
0
5
10
15
20
25
Feb-16 Dec-16 Jul-17 Oct-17 Jul-18 Oct-18 Jul-19 Apr-20 Mar-21 May-21 Aug-21
Contracts Awarded per Fleet Report
Ensco Rowan Valaris 10-K PP&E Book Value Lazard Valuation
Ensco & Rowan
Merger
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is in violation of the Uniform Standards of Professional Appraisal Practice (USPAP) as commonly used in the United
States. The nature of this conflicted relationship is implicitly recognized by the Defendants and Lazard in the strongly
worded Indemnitee Letter that was requested by Lazard as part of its acceptance of the Engagement
26. Amongst other surprising choices, the ARO notes were valued at a significant discount despite
the counter-party being Sauid Aramco, one of the world’s largest companies that enjoys a pristine credit rating of A
assigned by Fitch. Hence, Lazard´s valuation was based in flawed management guidance that didn´t fairly represent
the going concern value of the company. The US$8.2B loss in value is not congruent with market conditions.
27. When using DCF to value assets, FASB ASC Topic 852 paragraph 852-10-05-10 mentions that
“The reorganization value generally approximates fair value of the entity before considering liabilities and
approximates the amount a willing buyer would pay for the assets of the entity immediately after the restructuring¨.
Lazard´s valuation did not meet this standard. The value did not fairly represent the going concern fair market value
of the assets that a willing buyer would pay after restructuring since the UFCFs were not appropriately calculated.
28. The abovementioned, deems invalid the Balance Sheet Test argument that the company was
insolvent due to its liabilities exceeding its assets.
F. Management’s Motives to Profit From A Bankruptcy Process
29. As a result of the reorganization plan, a management incentive plan was put in motion, in which
an ESOP of 10% was established for management9. In terms of bankruptcy valuation (BK) of equity, ESOP would
represent $244.8 million; on a book value valuation, it would represent $437.0 million; and in terms of replacement
value of assets, ESOP would represent management profiting $2.3 billion (10% of $23.9 billion of PP&E at
replacement value). Replacement value of equity is 9.5x is higher than the BK.
9 Valaris, Disclosure Statement, December 2020, pg. 28 https://reorg-research.com/pdf/3266692_join.pdf (last visited Aug. 11, 2021).
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30. Lazard´s valuation was made with management guidance. Under the Plan, Management had up
to $2.3B of potential personal gains by taking the Company into bankruptcy. This provides for compelling profit
motive to question the independence and fairness of Management´s inputs used for the preparation of the Bankruptcy
It is notable that despite this windfall ESOP. CEO Tom Burke, CFO Jonathan Baksht, and General Counsel Michael
T. McGuinty have all stepped down
G. Sale of Assets of the Estate Below Fair Market Value
31. On July 2020, Valaris declared it had sold ENSCO 8500 and EENSCO 8501 to Space
Exploration Technologies Corp (“SpaceX”). The rigs were relatively young by industry standards, and had cost more
than $650 million in 2008/09. They were sold for $3.5 million each; a sum reportedly below the scrap value of the
244.8 437.5
2,390.0
BK Valuation 10-K 2020 Equity @Replacement Value
Management ESOP equivalents(US$MM)
0.53%
10%
Pre-bankruptcy ownership Post-bankruptcyownership
Management beneficial ownership (ESOP %)
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rigs which Bassoe Offshore estimated at between $28-36 million each10. This is approximately 1% of their build cost,
and 10% of the valuation estimated by third parties at the time.
32. The sale was reported by Valaris to have been made directly to SpaceX to transform the rigs
into rocket launching platforms. However, the sale was actually a self-declared affiliate of SpaceX, Lone Star Mineral
Development LLC (“Lone Star”)11. Lone Star is an Oil and Gas Exploration company with permit OPERATOR NO.
507234 from the Texas Railroad Commission12. It was incorporated on June 23, 2020; shortly before the transfer13. It
is worth noting that LS Power Development LLC (“LS Power”), the self-declared parent entity of Luminus, owns
EVgo Inc. (“EVgo”)14 a major supplier for Tesla Inc. (“Tesla”) , which shares clear ownership links to SpaceX, and
presumably Lone Star Mineral Development, LLC.
33. Within this context, it is worth mentioning that Valaris also sold 3 young drill ships for scrap
2010-built Valaris DS-3, 2011-built Valaris DS-5 and 2012-built Valaris DS-6. These had an estimated value of
between $40-54 million each but were sold for just $6 million apiece15. These drill ships had an initial value of
approximately $2.25 billion when acquired from Pride International Inc. (“Pride International”)16. This represents a
discount of about a 99.9% to build value, and an 88% discount over third-party valuation estimates. As of Aug 23rd,
2021, over a year since the sale, Valaris DS-6 still has its EIS transponder active and is listed as anchored at Karystos,
Greece.17
10 Teresa Wilkie, Asset valuations become even more confusing as rig owners sacrifice rigs to stay afloat, March 2, 2021 https://www.bassoe.no/asset-valuations-become-even-more-confusing-as-rig-owners-sacrifice-rigs-to-stay-afloat/news/195/ (last visited, Aug 23, 2021) 11 Michael Sheetz, CNBC, SpaceX bought two former Valaris oil rigs to build floating launchpads for its Starship rocket, January 2021, https://www.cnbc.com/2021/01/19/spacex-bought-former-valaris-oil-rigs-to-build-starship-launchpads.html (last visited Aug. 11, 2021).0 12 Sergio Chapa, Bloomberg , Musk Wins SpaceX Starbase Land Dispute in Texas Regulator Vote, August 2021, https://www.bloomberg.com/news/articles/2021-08-03/musk-wins-spacex-starbase-land-dispute-in-texas-regulator-vote (last visited Aug. 11, 2021). 13 https://opencorporates.com/companies/us_tx/0803663368 (last visited Aug. 13, 2021). 14 EvGo, Press Release, January 2020 https://www.evgo.com/press-release/ls-power-completes-acquisition-of-evgo/ (last visited Aug. 11, 2021). 15 Teresa Wilkie, Asset valuations become even more confusing as rig owners sacrifice rigs to stay afloat, March 2, 2021 https://www.bassoe.no/asset-valuations-become-even-more-confusing-as-rig-owners-sacrifice-rigs-to-stay-afloat/news/195/ (last visited, Aug 23, 2021) 16 Jason Jiang, Valaris scraps three young drillships originally ordered for $2.25bn, https://splash247.com/valaris-scraps-three-young-drillships-originally-ordered-for-2-25bn/ (last visited Aug. 23, 2021) 17 MarineTraffic, https://www.marinetraffic.com/en/ais/details/ships/shipid:713294/mmsi:613003625/imo:9535929/vessel:ENSCO_DS_6/_:b0edca5205294abed72d158197ed5657 (last visited Aug 23, 2021)
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H. Reasonable Questions Regarding Background of Counterparties
34. Some individuals, and entities involved have in the past been linked to previous highly contested
bankruptcy practices and been linked to questionable business practices that raise legitimate questions on their
character, and good faith.
35. Jonathan Barrett is the Founder and CEO of Luminus Management LLC, the largest shareholder
of Valaris and which betrayed the interests of shareholders by accepting compensation in order to join the RSA as
debt in Valaris´s Material Definitive Agreement from August 28th, 2020. Mr. Barret began his career working with
NYC based investment management firm, J. Epstein & Co. (From highly questionable investor Jeffrey Epstein) and
Ossa Properties (an affiliate Real Estate company) rising to the level of CFO18.
36. Moreover, Jonathan Barrett shared the same legal address of 301 E. 66th St. as Epstein19. Which
according to court filings, that building served to host Epstein´s associates, businesses, employees, and girlfriends.
Jonathan Barret´s brother, Anthony, is the current president of Ossa Properties, owned by Jeffrey Epstein´s brother
Mark. Ossa properties owns the majority of the units in the mysterious 301 E. 66th St. building20.
37. Luminus is a declared affiliate of LS Power. Despite these links, Mr. Barrett is now listed as a
Managing Director within LS Power. LS power itself has been previously investigated for fraudulent conveyance of
assets in the following bankruptcy cases: Dynegy21, Mirant, GenOn / NRG. LS Power founder Mikhail Segal began
his career as a non-descript “Soviet official” and as Managing Director of The Energy Systems Company
(“ENESCO”)22. The first recorded public transaction of ENESCO was alongside Pagnotti Enterprises, a firm linked
to the Bufalino crime family via founder mafia boss Louis Pagnotti23. Court documents show the transaction included
allegations of bankruptcy fraud.
18 LittleSis, Data Base https://littlesis.org/person/172917-Jonathan_Barrett# (last visited Aug. 11, 2021). 19 ICIJ - Offshore Leaks https://offshoreleaks.icij.org/nodes/80039116?e=true (last visited Aug. 11, 2021). 20 Gabrielle Bluestone, Business Insider, Inside the mysterious Manhattan apartment building on East 66th Street, where underage models, lawyers, and key players in Jeffrey Epstein’s sex-trafficking circle all live. Ex-Israeli Prime Minister Ehud Barak is a frequent visitor, August 2019, https://www.businessinsider.com/the-nyc-building-at-the-center-of-jeffrey-epsteins-web-2019-8?r=MX&IR=T (last visited Aug. 11, 2021). 21 Dynegy Holdings LLC, Ch. 11 Case, March 2012, https://www.sec.gov/Archives/edgar/data/1105055/000110465912018950/a12-6988_1ex99d1.htm (last visited Aug. 11, 2021). 22 LS Power, Founder´s Biography https://www.lspower.com/mike-segal/ (last visited Aug. 11, 2021). 23 Matter of Fa Potts and Co., Inc., 93 B.R. 62 (E.D. Pa. 1988), https://law.justia.com/cases/federal/district-courts/BR/93/62/2005353/
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38. Before officially contemplating bankruptcy, a Cooperation agreement was made on January 24th,
2020 between Luminus and Valaris, appointing Richard Katz as key man of the Finance Committee. Mr. Katz was
hired as a financial advisor despite there being no record of him holding such a license. Mr. Katz, and his firm Torque
Point Advisors, LLC (“Torque”), which specializes in bankruptcies were hired to “improve performance” and
represent the interest of equity. However, during August 2020, Mr. Katz was receiving class 9 (General unsecured
claims) and class 10 (Newbuild claims) notifications, when in theory he was hired for class 13. These simultaneous
representations fall within the well-established precedents of conflict of interest as outlined in Re Rusty Jones.
39. Richard Katz was a partner in Cantor-Katz Collateral Monitor LLC (“Cantor-Katz”), which was
involved in the bankruptcy of Puerto Rico. In that situation they were being represented by Schulte Roth & Zabel LLP,
the same firm that represented Luminus in the Cooperation Agreement. Aurelius Capital Management LP (“Aurelius”)
lobbied for the appointment of a new Board which incorporated Cantor-Katz. Aurelius is one of the creditors for
Valaris, and was also one of the creditors in the Puerto Rico bankruptcy.
40. A similar situation to Mr. Katz’s conflict was also present in the Engagement of Kirkland &
Ellis LLP (“Kirkland & Ellis”). In the August 18, 2020 Declaration of Jonahtan Baksht, CFO in support of the Chapter
11 Petitions, it is stated that in late 2019 and early 2020, the Debtors engaged Kirkland & Ellis LLP to provide advice
pertaining to out-of-court liability management transactions to reduce leverage and capture discount. By the very
nature of the Engagement, this was in the benefit of Shareholders, representing Creditors in the bankruptcy would
seem to also fall within the well-established precedents for conflicts of interests as argued in Re Rusty Jones.
41. Further, days before Valaris filed for bankruptcy, Millennium Management LLC (“Millenium”)
purchased 8,766,778 Class A Ordinary Shares or 4.4% of the Class A Ordinary Shares outstanding24. Millennium
bought just below 8,974,359 shares, the limit for which Valaris requested a stay from the Court. Asking the parties
that any transaction above it needed to be filed with the Court. Through its senior management, the SEC has found
Millennium, has engaged multiple times in market manipulation25.
24 Valaris, SC13 Form, August 2020, https://sec.report/Document/0001487118-20-000002/ (last visited Aug. 11, 2021). 25 Secutiries and Exchange Commission, Press Release, 2005 https://www.sec.gov/news/press/2005-170.htm (last visited Aug. 11, 2021).
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G. Naked Short Selling and Market Manipulation
42. The presence of Valaris stock in the SEC Fail-to-Deliver list as one of the most highly shorted
stock in the US markets26, seems to indicate possible naked short selling. Naked Short Selling is illegal unless it is
done by market makers on a Bona Fide basis. Naked short selling drastically distorted the price of Valaris and
invalidates share price as an argument for bankruptcy. As evidence by the recent GameStop Corp. squeeze, naked
short selling is a relevant event in the market, that artificially distorts the value of shares.
43. In 2020, Valaris traded at an average short interest of 28% and 56% adjusting for free float as
adjusted by Morningstar. This is which indicates latent naked short selling distorting the share price. On the other
hand, Days to Cover in the first quarter of 2020 was above 8. Potential naked short selling distorted the price of the
stock. Invalidating it as an argument that was presented by the Creditors to the Courts.
Count 1
Bribery & Fraud Upon the Court
44. Lenders co-opted the process of Chapter 11 by offering the largest equity holder (Luminus
Management, LLC) what can best be described as a sweetheart deal. The Material Definitive Agreement was a de-
facto Prepetition Restructuring Support Agreement where valuable Consideration was both offered and received. The
26 Securities and Exchange Commission, Fails to Deliver VAL, https://sec.report/fails.php?tc=VAL (last visited Aug. 11, 2021).
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Court does not need to debate the value of said Consideration. That this Consideration was both valuable and desirable
can be reasonably gleamed by the fact the parties had failed to reach an agreement prior to its offering. It is thus
reasonable to assume, that prior to the Agreement, Luminus believed by its own criteria there was value in its equity,
and that said Agreement provided superior value in the form of 10% interest of the restructured entity. In exchange
for signing this joinder, the Agreement allowed Luminus to purchase 10% of the Company´s outstanding indebtedness
held by Creditor at the then prevailing price of cents on the dollar. Luminus in turn was enjoined from exercising any
rights as equity holder. Through the joinder, Luminus, as debtor, accepted the RSA in direct impact to other equity
holders. This may also be considered a violation of Duty of Loyalty and Fiduciary Duty owed by the Luminus Board
Member to other Shareholders under both US and UK Company law.
45. The offering and receiving of Consideration for forbearing to act in a case under Title 11 falls
neatly within the definition of the Bribery provision of Bankrupcty Fraud as defined under 18 U.S. Code § 152 (6).
Further, that this Consideration was only offered to Luminus within the Class violated 11 U.S.C. § 1123(a)(4) as seen
In re Combustion Eng’g, Inc., 391 F. 3d 190, 239 (3d Cir 2004). This also defeats any argument that the Consideration
was a normal part of negotiation of an RSA.
46. Defendants further conspired to withhold knowledge of said agreement from the Bankruptcy
Court, tainting the proceedings in a clear violation of Title 18 U.S. Code § 152 (1)(2)(8). This was only compounded
when several of the parties, such as the Trustee, and the Debtor in Possession became Officers of the Court upon the
Chapter 11 filing that came immediately after. This became a more serious case of Title 18 U.S. Code § 152 (1)(9).
To this regard it is important to remember that Courts have repeatedly determined that willfully withholding relevant
information on the state of the affairs is also considered as Concealment, see Tully. United States Court of Appeals,
First Circuit. May 4, 1987. 818 F.2d 106 (1st Cir. 1987) & United States v. Turner, 725 F.2d 1154. Furthermore, the
Pre-Petition nature of the act is also indicative of Bad Faith as seen in Marrama v. Citizens Bank of Mass. Malicious
intent is further evidenced since the Trustee was advised through this entire process by some of the most experienced
bankruptcy attorneys practicing within the United States who are well versed on the law, had ample resources at their
disposal, and were amply rewarded with fees of $11,115,997.50.
47. A further indication of Fraud and Fraudulent Intent is indicated by the appointment of Mr. Katz
by Luminus as Board Representative. Mr. Katz was held out to be a restructuring professional that would help the
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firm improve its finances, but in fact is a seasoned bankruptcy professional. This may have been an indication of intent
under 18 U.S. Code § 157 (7) to defeat a future Chapter 11 process. This is further compounded by the inherent conflict
of interest of Mr. Katz receiving notifications for multiple classes of creditors in contravention of well-established
practice, as considered in akin trust situations In re Rusty Jones, Inc.
48. The facts surrounding the Agreement are a matter of public record. There can be no doubt on its
basic provisions. Its multiple violations of 18 U.S. Code § 157 are self-evident. By itself, it satisfies the Preponderance
of the Evidence standards as for bankruptcy fraud as established in Grogan v. Garner and reaffirmed in Tenn-Fla
Partners v. First Union National Bank of Florida. The violations committed were highly pernicious, and involved
Officers of the Court, and qualify as Fraud Upon the Court as defined by Demjanjuk v. Petrovsky, 10 F.3d 338 (6th
Cir. 1993)
1. On the part of an officer of the court;
2. That is directed to the "judicial machinery" itself;
3. That is intentionally false, wilfully blind to the truth, or is in reckless disregard for the truth;
4. That is a positive averment or is concealment when one is under a duty to disclose;
5. That deceives the court.
49. The actions outlined clearly meet the standards set for the Revocation of an Order of
Confirmation as per 11 U.S. Code § 1144.
Count 2
Misstatements and Confirmation of Inequitable Plan
50. The parties conspiring to withhold said information caused the Courts to, unbeknownst, confirm
a Plan that was not Equitable to Class 13 securities, did not follow absolute priority principle, after a solicitation that
was tainted through willfully withholding adequate disclosures, in violation of 11 U.S.C. § 1123(a)(4) and 11 U.S.C.
§ 1126(b)(1)(2) respectively.
51. 11 U.S.C. § 1123(a)(4) provides that a for a Plan to be Confirmed must be Equitable and “provide
the same treatment for each claim…in a particular class, unless the holder of a particular claim…agrees to a less
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favorable treatment of such particular claim…” This requirement has been interpreted to mean that similarly situated
claims must receive the same treatment under a plan. See, e.g. and In re Combustion Eng’g, Inc., 391 F. 3d 190, 239
(3d Cir 2004). Clearly Luminus received an economic interest that was not only greater than other Class 13 equity
holders, but even greater than other class of creditors with higher seniority. Such practices has been subject to judicial
denunciation by the Supreme Court for over 120 years. See, Louisville Trust Co. v. Louisville, New Albany & Chicago
Railway Co.
52. U.S.C. § 1126(b)(1) provides for the solicitation of a Plan to be deemed accepted, such
acceptance is subject to the adequacy of disclosures, a standard that was clearly willfully not met. This was affirmed
in Re Tully. United States Court of Appeals, First Circuit. May 4, 1987. 818 F.2d 106 (1st Cir. 1987)., Re Michelson,
which also specifically address that disclosure outside of the Bankruptcy process as being insufficient. Anything
otherwise would violate the Good Faith assumption that underlies the functioning of the Courts, as it would transfer
the burden of vigilance to the Creditors, and transform the role of the Court from being a court of Equity to an
unworkable corporate game of cat and mouse. This was eloquently summarized in Re Tully.
"debtor cannot, merely by playing ostrich and burying his head deeply enough in the sand, disclaim all
responsibility for statements which he has made under oath"
52. Further compounding matters were the affirmations at the Confirmation hearing by the
Defendant, and Trustee that the Plan was proposed under Good Faith, Equitable, and followed the Absolute Priority
Principle, when they knew, or should have known this was false. This deceit too falls under the provisions for the
standard of Fraud Upon the Court and is codified under 18 U.S.C. § 152(3).
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Count 3
Fraudulent Conveyance
53. The Sale of Enesco 8500 and Enesco 8501 were clearly made under a willful misrepresentation
by Valaris who necessarily knew that the purchasing entity was Lone Star Mineral Development, LLC. Not only were
these sold for the ludicrous sum of 1% build cost, but even a 90% discount to the then existing depressed market
valuation. This amount is purportedly even below scrap value of the rigs. Such a discount is hard to understand by any
reasonable means. It only compounds matters, that there are documented business links between Valaris’ largest
shareholder at the time, and the receiving party of the property, the same shareholder who was bribed to not present
itself at the Confirmation hearing. This is the very definition of Concealment as per United States v. Turner, 725 F.2d
1154, and would fall under 18 U.S.C. § 152 (1)(7).
54. Lone Star Mineral Development, SpaceX, and its Officers may have further participated in a
violation of 18 U.S.C. § 152 (7) by receiving property from the Estate at what was evidently a price below its market
value, and by issuing public press releases with apparent misstatement as to the ultimate recipient and ultimate use of
the rigs at a time when Valaris had already publicly declared its intention to file for Chapter 11.
55. There is less information available on the sale of Valaris DS-3, Valaris DS-5, and Valaris DS-6.
Their sale at a discount of about a 99.9% to build value, and an 88% discount over third-party valuation estimates also
raises reasonable questions as to whether Valaris was fulfilling its fiduciary duty to protect the value of the Estate.
56. While Fraudulent Conveyance in and by itself does not meet the standards for Fraud Upon the
Court, it should be taken as an additional potential factor for the Court to consider when evaluating the extent of the
elements of Bankruptcy Fraud present in the case.
CONSIDERATIONS ON TIMING
57. The following Adversial Pleading is being filed within the 180 day limit from Plan Confirmation
established in 11 U.S.C § 1144. Despite the Plaintiff following the Court filings, he did not find out about the
Agreement until after the Plan Confirmation had occurred. The Defendants argued against the establishment of an
Equity Committee. The Defendants argued it would have been both overly costly and damaging to the Estate, and that
Creditor Committee and Trustee would already tasked with safeguarding the best-interest of all parties. This begs the
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question of how individual equity holders would have been expected shoulder said overly burdensome responsibility
for which Kirkland & Ellis charged the Estate $20,412,981.50. At the same time, Shareholders had every right to
expect that the Defendants were acting in good faith in his supervision and was acting in the benefit of all parties
involved. The Defendants should not be allowed to argue in their benefit the delays that were caused by their own act
of Concealment, and their willful hindrance of the Court, as per In re Tully, United States v. Turner, and In re
Michelson.
CONSIDERATION ON DAMAGES
58. The Plaintiff was greatly and measurably harmed by the actions of the Defendant that led to his
participation being eliminated and exchanged for deeply Out-of-the-Money Warrants. Unfortunately, the Defendants
through their inconsistent financial disclosures, conflicted valuations and general willful disregard for truth have
created a situation where it is extremely difficult to fairly determine the value of the Estate, both prior to and after
their actions. The Plaintiff had his firm, Tempest Capital, SC, prepare an exemplary Valuation Exercise (Exhibit D).
The Valuation of the firm is highly sensitive to inputs pertaining to Day Rates and Utilization. Estimates for Enterprise
Value of the Firm range from $49.2 billion to $7.4 billion. On a fully unlevered basis, this approximately would equate
to a range from to $48.61 to $321.54 per share; a range not inconsistent to where Valaris and component entities traded
in the prior decade. This is also consistent with the Enterprise Value of a Company whose 2020 10K still reported
$10.1 billion in PP&E, and that had purported to have $23.9 billion in Replacement Value of Assets. The Company
currently trades at $28.39 per share. However, this uncertainty does not render the calculation of damages impossible
as established under Eastman Co. v. Southern Photo Co., 273 U.S. 359, 379 (1927)
“Damages are not rendered uncertain because they cannot be calculated with absolute exactness.
It is sufficient if a reasonable basis of computation is afforded, although the result be only approximate." This, we
think, was a correct statement of the applicable rules of law. Furthermore, a defendant whose wrongful conduct has
rendered difficult the ascertainment of the precise damages suffered by the plaintiff, is not entitled to complain that
they cannot be measured with the same exactness and precision as would otherwise be possible.”
58. The Defendant proposes to use Book Value of Equity as of the 2019 10K with the Company’s
financial position as of December 31, 2019. Said document was compiled proximate to the Rowan & ENSCO merger
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and reflected extensive valuations and impairment testing. Furthermore, the estimates of PP&E were stated to be
derived from the fair value opinions issued by five independent appraisers, in addition to the valuation impairment
test that the external auditor, KPMG was obligated to perform under US GAAP. This would seem to provide a
reasonable alternative to cut through the uncertainty and is based on the public affirmations made by Valaris under
which the Defendant invested.
60. The Book Value as of December 31, 2019 was $9,310.9 million with 197.3 million shares
outstanding. This equates to a Book Value per Share of approximately $47.20 per share. Mr. Miralles’ 152,900 shares
would be worth $7,216,295.20. This sum is the best proximate estimate for the fair market value of the property prior
to the fraudulent conduct and would constitute adequate Compensatory Damages. This methodology is codified in
BVS-III (II)(A) Asset-Based Approach to Business Valuation of the American Society of Appraisers, and substantially
congruent to the Balance Sheet Test applied by Bankruptcy Courts.
61. In addition, the current situation merits Exemplary Damages as per the criteria set in Walker v.
Sheldon, 10 N.Y.2d 401 (N.Y. 1961) as a deterrence to fraud when a high degree of moral turpitude is present and
when the conduct in question is aimed at the public generally, involves a high degree of moral culpability, and rises
to a level of "such wanton dishonesty as to imply a criminal indifference to civil obligations”. When considering this
BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996) complements that Exemplary Damages must consider "the
degree of reprehensibility of the defendant's conduct," the "ratio to the actual harm," and the disparity between "the
punitive damages award and the civil or criminal penalties that could be imposed for comparable misconduct." As
argued, the acts committed by the Defendants can be accurately categorized as Fraud Upon de Court representing an
offense directed to the "judicial machinery itself”. Elements of bad-faith and malicious intent, including acts with
criminal penalties, have been amply documented in the Defendant’s exposition. That these acts were executed by well-
established bankruptcy investors, and legal practitioners is a further factor to consider. Should this conduct become
prevalent practice, it would significantly hinder the proper functioning of the Bankruptcy Courts. The acts merit the
highest level of condemnation that this Court can extend.
61. When considering the ratio to the actual harm, the Supreme Court has largely argued for a
guideline of not more than four times damages, See BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), and
three times damages in cases of bankruptcy fraud, See Cohen v. de la Cruz, 523 U.S. 213 (1998). The request of Treble
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Damages for the Defendant is perfectly aligned the nefarious nature of the acts, as well as with well-established
practice of the Courts.
63. The resulting treble multiple of said Compensatory and Exemplary Damages is $21,648,885.60.
This amount is not Material to the size of the Estate, would not affect the going concern of Restructured Valaris, and
would not harm the Innocent Parties who may have purchased shares since the Confirmation of the Plan.
CONCLUSION
64. Valaris was plunged into bankruptcy by a tangled web of conflicted relationships,
misrepresentations, fraudulent conveyance of assets, and outright Fraud Upon the Court. These parties colluded to
show the Company was insolvent, when in fact the last Independent Value Opinions showed it had significant positive
equity and would pass any reasonable Balance Sheet Test. In the worst-case scenario, and only after believing the
representations from Management regarding short-term liquidity constraints, the entity would have been a Solvent
Debtor granting a strong residual interest to Junior Unsecured Creditors and Shareholders.
65. Bankruptcy relief is intended for the honest, but unfortunate debtor approaching the Court with
Clean Hands. It is well established that Bankruptcy should not be a conduit for a fraudulent discharge of Creditors.
(“Since the Code limits the opportunity for a completely unencumbered new beginning to the honest but unfortunate
debtor by exempting certain debts from discharge, it is unlikely that Congress would have fashioned a proof standard
that favored an interest in giving the perpetrators of fraud a fresh start over an interest in protecting the victims of
fraud. Requiring the creditor to establish by a preponderance of the evidence that his claim is not dischargeable reflects
a fair balance between these conflicting interests.)
Grogan v. Garner, 498 U.S. 279 (1991)
66. The proper remedy contemplated in the Code for this situation is a Revocation of the
Confrimation Order under 11 U.S.C § 1144 with Fraud and Fraud Upon the Court being amply shown on a
Preponderance of Evidence standard as contemplated in Grogan v. Garner. This would give other Shareholders the
right to a proper hearing under a Process managed by an independent Trustee designated by the US Trustee.
67. Unfortunately, this remedy, while amply justified under the current circumstances needs to be
carefuly considered by the Court, that must evaluate if it is still feasible to “unscramble the egg” without potential to
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harm entities having acquired rights in good faith reliance of the order. The Plaintiff is not blind to this conundrum,
and its impact.
68. This requires the Court to use its broad powers in 11 U.S. Code § 105(a) and 11 U.S. Code §
1142 (b) as a Court of Equity to seek alternative remedies to remedy bad faith, and abuse of process. Such a position
is amply documented in Marrama v. Citizens Bank of Massachusetts, Re Tully, and by this very Court which stated
“Bankruptcy courts are courts of equity and rely on the good faith of parties to function efficiently” in re Thomas,
66. The request for Damages has precedent in Re Trico Marine Services where the Court ruled, in
response to the Defendant’s motion, that it could not vacate the confirmation order, but granted the Plaintiffs leave to
amend their complaint to assert damage claims, whereby exercising its right to provide equitable relief.
67. The Plaintiff expresses a preference that damages be awarded in cash given the amount sought
is not material to the Estate, would not materially affect the premises under which new investors participated in Good-
Faith, nor would it endanger the potential solvency of Restructured Valaris.
68. Alternatively, the Plaintiff posits that damages could be assigned in the form of additional units
of the Warrants in Restructured Valaris at the current OTC market price. Valaris has repeatedly represented to the
Court and the Investment Public that said Warrants are deep-out-of-the-money, and worthless. The strike price on said
Warrants is set at the price that would make Secured Creditors whole. Restructured Valaris investors have no factual
basis to claim that said Warrants transfer value that they were represented was theirs, and their assignment would
respect the Absolute Priority of Claims. This would appear to be an equitable settlement in the case of a Solvent
Debtor, and draws from common law precedents prior to the current Code.
69. The Plaintiff is a firm believer that investor trust is paramount to the well-functioning of financial
markets. The emblematic nature of this case deserves to be heard, as it would help set a precedent for the market and
would further the public good.
PRAYER FOR RELIEF
WHEREFORE Plaintiff prays for the entry of judgment against Defendant as follows:
1. Provide Equitable Tolling as necessary for the Court to fully evaluate the evidence provided.
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2. Determine that the Plan was procured by fraud, in a degree of Fraud Upon the Court, which
justifies the Revocation criteria set out in 11 U.S.C § 1144,
3. That the Court determine that the Plan was not Equitable and did not comply with 11 U.S. Code
§ 1123.
4. Enjoin the Court’s broad powers under 11 U.S. Code § 105(A) for modification and
implementation of the Plan to provide equitable relief for compensatory damages, and treble
exemplary damages in the amount of $21,648,885.60 in favor of the Plaintiff,
3. For costs of suit herein incurred; and
4. For such other actions, and further relief, as this Court deems just and proper acting on a Sua
Ponte basis.
Finally, I beg the Court’s indulgence for any mistakes made in Good Faith that may have arisen
from my lack of legal training.
Dated: August 29th, 2021 Respectfully submitted,
Sebastian Miralles Acuña, CFA & CAIA
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Confidential
Table of Authorities
Statutes
11 U.S. Code § 102(1)(B)(i)(ii)
(1)“after notice and a hearing”, or a similar phrase—authorizes an act without an actual hearing if such
notice is given properly and if—(i) such a hearing is not requested timely by a party in interest; or
(ii)there is insufficient time for a hearing to be commenced before such act must be done, and the court
authorizes such act;
11 U.S. Code § 105(a)
The court may issue any order, process, or judgment that is necessary or appropriate to carry out the
provisions of this title. No provision of this title providing for the raising of an issue by a party in interest
shall be construed to preclude the court from, sua sponte, taking any action or making any determination
necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process.
11 U.S.C. § 1123(a)(4)
provide the same treatment for each claim or interest of a particular class, unless the holder of a particular
claim or interest agrees to a less favorable treatment of such particular claim or interest.
18 U.S.C. § 152(1)
knowingly and fraudulently conceals from a custodian, trustee, marshal, or other officer of the court charged
with the control or custody of property, or, in connection with a case under title 11, from creditors or the
United States Trustee, any property belonging to the estate of a debtor;
18 U.S.C. § 152(2)
knowingly and fraudulently makes a false oath or account in or in relation to any case under title 11;
18 U.S.C. § 152(3)
knowingly and fraudulently makes a false declaration, certificate, verification, or statement under penalty of
perjury as permitted under section 1746 of title 28, in or in relation to any case under title 11;
18 U.S.C. § 152(6)
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Confidential
(knowingly and fraudulently gives, offers, receives, or attempts to obtain any money or property,
remuneration, compensation, reward, advantage, or promise thereof for acting or forbearing to act in any
case under title 11;
18 U.S.C. § 152 (7)
in a personal capacity or as an agent or officer of any person or corporation, in contemplation of a case
under title 11 by or against the person or any other person or corporation, or with intent to defeat the
provisions of title 11, knowingly and fraudulently transfers or conceals any of his property or the property
of such other person or corporation;
18 U.S.C. § 152(9)
after the filing of a case under title 11, knowingly and fraudulently withholds from a custodian, trustee,
marshal, or other officer of the court or a United States Trustee entitled to its possession, any recorded
information (including books, documents, records, and papers) relating to the property or financial affairs
of a debtor,
11 U.S.C. § 1123(a)(4)
Notwithstanding any otherwise applicable nonbankruptcy law, a plan shall—provide the same treatment for
each claim or interest of a particular class, unless the holder of a particular claim or interest agrees to a less
favorable treatment of such particular claim or interest;
11 U.S. Code § 1142 (b)
The court may direct the debtor and any other necessary party to execute or deliver or to join in the execution
or delivery of any instrument required to effect a transfer of property dealt with by a confirmed plan, and to
perform any other act, including the satisfaction of any lien, that is necessary for the consummation of the
plan.
11 U.S.C § 1144
On request of a party in interest at any time before 180 days after the date of the entry of the order of
confirmation, and after notice and a hearing, the court may revoke such order if and only if such order was
procured by fraud.
11 U.S.C. § 1126(b)(1)
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the solicitation of such acceptance or rejection was in compliance with any applicable nonbankruptcy law,
rule, or regulation governing the adequacy of disclosure in connection with such solicitation
11 U.S.C. § 1126(b)(2)
if there is not any such law, rule, or regulation, such acceptance or rejection was solicited after disclosure
to such holder of adequate information, as defined in section 1125(a) of this title.
11 U.S.C. 1129(b)(2)(B)(ii)
The holder of any claim or interest that is junior to the claims of such class will not receive or retain under
the plan on account of such junior claim or interest any property, except that in a case in which the debtor
is an individual, the debtor may retain property included in the estate under section 1115, subject to the
requirements of subsection (a)(14) of this section.
17 C.F.R. § 240.10(b)
To make any untrue statement of a material fact or to omit to state a material fact necessary in order to make
the statements made, in the light of the circumstances under which they were made, not misleading
18 U.S. Code § 157
A person who, having devised or intending to devise a scheme or artifice to defraud and for the purpose of
executing or concealing such a scheme or artifice or attempting to do so.
17 C.F.R. § 240.10(c)
To engage in any act, practice, or course of business which operates or would operate as a fraud or deceit
upon any person, in connection with the purchase or sale of any security.
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Cases
Grogan v. Garner, 498 U.S. 279 (1991)
Courts should apply the "preponderance of the evidence" standard when dealing in bankruptcy cases.
In re Tully. United States Court of Appeals, First Circuit. May 4, 1987. 818 F.2d 106 (1st Cir. 1987)
Holding that the bankruptcy code forbids a debtor from obtaining a discharge if the debtor made inaccurate
representations to the court as a result of willfully ignoring relevant information because a "debtor cannot,
merely by playing ostrich and burying his head deeply enough in the sand, disclaim all responsibility for
statements which he has made under oath"
Tenn-Fla Partners v. First Union National Bank of Florida, 229 B.R. 720 (W.D. Tenn. 1999)
Finding that, when determining whether to revoke confirmation procured due to fraud in a Chapter 11 case
pursuant to Section 1144, the proper evidentiary standard was preponderance of the evidence, not clear and
convincing evidence
United States v. Turner, 725 F.2d 1154
Finding that withholding knowledge or preventing disclosure or recognition is included in the definition of
concealment.
In re Michelson, 141 B.R. 715 (Bankr. E.D. Cal. 1992)
Considering the "accuracy of disclosure" as "an issue that must be addressed at the confirmation hearing"
in revoking the order confirming a plan of reorganization for fraud on the court.
Demjanjuk v. Petrovsky, 10 F.3d 338 (6th Cir. 1993)
Holding that "only actions that actually subvert the judicial process can be the basis for upsetting otherwise
settled decrees" on the basis of fraud on the court.
Bank of America Nat. Trust and Sav. Assn. v. 203 North LaSalle Street Partnership, 526 U.S. 434 (1999)
A plan may be found to be fair and equitable if "the holder of any claim ... junior to the claims of such class
will not receive or retain under the plan on account of such junior claim ... any property." § 1129(b)(2)(B)(ii).
Under this "absolute priority rule," the Bank argued, the plan could not be confirmed as a cramdown because
the Debtor's old equity holders would receive property even though the Bank's unsecured deficiency claim
would not be paid in full.
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Louisville Trust Co. v. Louisville, New Albany & Chicago Railway Co., 174 U.S. 674 (1899)
This is based upon the familiar rule that the stockholder's interest in the property is subordinate to the rights
of creditors; first of secured and then of unsecured creditors. And any arrangement of the parties by which
the subordinate rights and interests of the stockholders are attempted to be secured at the expense of the
prior rights of either class of creditors comes within judicial denunciation.
In re Combustion Eng’g, Inc., 391 F. 3d 190, 239 (3d Cir 2004)
Similarly situated claims must receive the same treatment under a plan.
Marrama v. Citizens Bank of Massachusetts, 549 U.S. 365 (2007)
Describing the broad authority § 105 grants to bankruptcy judges to take any action necessary to prevent an
abuse of process
Pre-petition bad faith. Established the 7 elements of fraudulent intent.
In re Thomas, 223 Fed. Appx. at 313
Bankruptcy Courts are courts of equity.
Nikoloutsos v. Nikoloutsos (In re Nikoloutsos), 199 F.3d 233, 236
A court of equity is enabled to frustrate fraud and work complete justice.
In re Trico Marine Services, Inc., 337 B.R. 811 (Bankr. S.D.N.Y. 2006)
Request for revocation was denied, but was given a stay to present claims of damages instead. Damages
were granted. There is precedent for requesting damages for fraud Post-Confirmation.
Walker v. Sheldon, 10 N.Y.2d 401 (N.Y. 1961)
Holding that only gross and wanton conduct against the public can support an award of punitive damages.
Stating that "those who deliberately and cooly engage in a far-flung scheme, systematically conducted for
profit, are very much more likely to pause and consider the consequences if they have to pay more than the
actual loss suffered by an individual plaintiff
Eastman Co. v. Southern Photo Co., 273 U.S. 359 (1927)
Explaining "a defendant whose wrongful conduct has rendered difficult the ascertainment of the precise
damages suffered by the plaintiff, is not entitled to complain that they cannot be measured with the same
exactness and precision as would otherwise be possible"
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Salmon v. Brookshire, 301 S.W.2d 48 (Mo. Ct. App. 1957)
Where the recipient of fraud or deceit is left with no value whatsoever, the proper measure of damages is
"the amount ... paid with interest from the date of payment, plus incidental losses and expenses suffered as a
result of the seller's misrepresentations."
Cohen v. de la Cruz, 523 U.S. 213 (1998)
Holding that “§ 523 prevents the discharge of all liability arising from fraud,” stressing that this provision
applies to treble damages and to attorney fees and costs.
BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996)
Holding that a court must consider "the degree of reprehensibility of the defendant's conduct," the "ratio to
the actual harm," and the disparity between "the punitive damages award and the civil or criminal penalties
that could be imposed for comparable misconduct."
In re Rusty Jones, Inc., 134 B.R. 321 (Bankr. N.D. Ill. 1991)
It is well established that simultaneous representation of both a debtor and a debtor's shareholder may under
some circumstances create a conflict of interest under sections 327 and 328. Attorneys for a Chapter
11 corporate debtor owe a fiduciary duty to the corporation and not to the employees, officers, directors, or
dominant shareholders of the corporation or of a controlling parent company.
In re Tabor, 583 B.R. 155 (Bankr. N.D. Ill. 2018)
Holding that bankruptcy courts have authority to oversee and correct for attorney conduct under Chambers
v. NASCO, Inc., 501 U.S. 32; bankruptcy courts have, essentially, four types of authority that might be
invoked: " the power to regulate behavior before it inherent in all courts; the direct, specific authority of a
statute or rule; the ability to regulate the practice of the federal bar, as delegated to the court by the United
States District Court for this District; and the authority afforded specifically to the bankruptcy courts under
section 105 of the Bankruptcy Code."
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Standards
BVS-III (II)(A) Asset-Based Approach to Business Valuation of the American Society of Appraisers.
The asset-based approach is a general way of determining a value indication of a business, business
ownership interest, security, or intangible asset using one or more methods based on the value of the assets
net of liabilities.
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EXHIBITS
Exhibit A: Valaris 8-K SEC Filing, August 28th, 2020
Exhibit B: Illustrative presentation prepared by Tempest Capital
Exhibit C: Valaris Investor Presentation from February 2020
Exhibit D: Tempest Valaris Valuation Presentation
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EXHIBIT A
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EXHIBIT B
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706.
026.
MI.1
TE
MP
ES
T C
AP
ITA
LV
AL
AR
IS P
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L
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 51 of 133
706.
026.
MI.1
Conf
iden
tial
DIS
CLA
IMER
Tem
pe
stC
ap
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2
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refle
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ange
s.No
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deem
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cons
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acco
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toyo
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ouri
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and
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Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 52 of 133
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026.
MI.1
Conf
iden
tial
I.In
trod
uctio
n
II.M
ater
ially
Inco
nsist
ent F
air M
arke
t Val
ues
III.
Viol
atio
n of
ASC
360
-10
IV.
Mot
ives
to P
rofit
from
a B
ankr
uptc
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s
V.Co
-opt
ed C
hapt
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1 Pr
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s
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Ent
erpr
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VII.
Nake
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d M
arke
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ipul
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VIII.
Bias
ed a
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onfli
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alua
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X.Ap
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11
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lysi
s
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MI.1
I. I
NT
RO
DU
CT
ION
4Co
nfid
entia
l
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MI.1
Conf
iden
tial
AB
OU
TV
ALA
RIS
AN
DR
ELEV
AN
TEV
ENTS
Exe
cuti
veSu
mm
ary
Vala
rispl
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e“C
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isth
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offs
hore
cont
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toth
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tern
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ilan
dga
sin
dust
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hey
curr
ently
own
anof
fsho
redr
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grig
fleet
of60
rigs,
with
drill
ing
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nsin
alm
oste
very
maj
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arke
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oss
five
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heir
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clude
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On
Oct
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7,20
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On
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019,
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Ensc
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Ensc
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Va
laris
plc
Vala
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ankr
uptc
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On
Augu
st19
,202
0,Va
laris
and
cert
ain
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ctsu
bsid
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sfil
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lunt
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petit
ions
for
reor
gani
zatio
nun
der
Chap
ter
11of
the
U.S.
Bank
rupt
cyCo
de.D
urin
gth
eba
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proc
ess,
Laza
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solv
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5
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MI.1
Conf
iden
tial
Misl
eadi
ngan
din
cons
isten
tva
luat
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base
don
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agem
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guid
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acro
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gov
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am
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ys.
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tvio
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USGA
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taliz
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ma
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RCF
Lend
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om
ake
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Swee
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ess
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ngth
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the
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Conf
licte
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proc
essa
ndw
ould
inva
lidat
epr
ocee
ding
ssin
ceit
repr
esen
tsa
clea
rvio
latio
nof
Title
18U.
S.Co
de§
152.
Pote
ntia
lcrim
inal
ente
rpris
e.Ke
ypa
rtie
sha
vebe
enac
cuse
din
the
past
for
mar
ket
man
ipul
atio
nan
dba
nkru
ptcy
fraud
with
poss
ible
RICO
impl
icatio
n.
Evid
ence
ofna
ked
shor
tsel
ling,
and
mar
ketm
anip
ulat
ion,
elim
inat
ing
shar
epr
iceas
core
argu
men
tfor
bank
rupt
cy.
Bias
edan
dco
nflic
ted
appr
aisa
lofe
nter
prise
valu
epr
epar
edby
Laza
rd
Patte
rnof
self-
deal
ing
bym
anag
emen
tign
orin
gsh
areh
olde
rs’a
ndde
btho
lder
s’in
tere
sts.
Exem
plifi
edby
the
sale
of2
rigs
that
cost
over
$650
mill
ion
in20
08/0
9at
$3.5
mill
ion
each
toan
oila
ndga
scom
pany
inJu
ly20
20.
SEEK
ING
AFO
RM
AL
INV
ESTI
GA
TIO
NO
FV
ALA
RIS
PO
TEN
TIA
L$
23
.9B
BA
NK
RU
PTC
YA
ND
SEC
UR
ITIE
SFR
AU
DM
ult
iple
vio
lati
on
so
fU
.S.
GA
AP
pri
nci
ple
s,co
nfl
icts
of
inte
rest
,e
rosi
on
of
valu
e,
an
dp
ote
nti
al
ba
nkr
up
tcy
fra
ud
.
6
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 56 of 133
706.
026.
MI.1
II.
MA
TER
IALL
Y I
NC
ON
SIT
ENT
FA
IR M
AR
KET
VA
LUES
7Co
nfid
entia
l
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 57 of 133
706.
026.
MI.1
Conf
iden
tial
9,10
0
10,9
50
1,18
2
10,0
83
Lend
er´s
Third
- Par
ty(M
D&A
Feb-
20)
10-K
202
0(F
YE 2
020)
Laza
rd B
K Va
luat
ion
(Mar
-202
1)1Q
21(M
ar-2
021)
Inco
nsist
ent P
P&E
Fair
Mar
ket V
alue
(US$
MM
)
Acco
rdin
g to
U.S
. GAA
P, im
pairm
ents
are
requ
ired
to re
flect
the
Fair
Mar
ket V
alue
(FM
V). C
ompa
ny is
in e
ffect
dec
larin
g on
e FM
V to
the
Cour
t, an
d an
othe
r diff
eren
t to
the
SEC
.
Sour
ce: 2
020
10-K
and
10-
Q 2
021.
Disc
losu
re S
tate
men
t. KP
MG
impa
irmen
t of n
on-fi
nanc
ial a
sset
s han
dboo
k.
•In
viol
atio
nof
USGA
APAS
C36
0an
dAS
C82
0,La
zard
´sva
luat
ion
does
notr
efle
ctth
ere
alfa
irm
arke
tval
ue,s
how
ing
ade
clin
eof
~90%
ofth
eas
setv
alue
in3
mon
ths.
•Co
nflic
ting
valu
eof
PP&
Ein
1Q21
com
pare
dto
the
valu
epr
esen
ted
toth
eco
urt,
with
adi
ffere
nce
of$8
.9B
8
89.2
% lo
ss
1,18
2
10,0
83
Mar
ch 3
rd, 2
021
(@ B
K Co
nfirm
atio
n Pl
an)
Mar
ch 3
1st,
2021
(Firs
t 10-
Q 2
021)
Varia
tion
of P
P&E
Fair
Mar
ket V
alue
with
in M
arch
202
1 (U
S$ M
M)
Fora
llim
pairm
entm
odel
s,im
pairm
enti
sca
lcula
ted
byre
fere
nce
tofa
irva
lue.
•On
eof
the
mos
tim
port
antc
onsid
erat
ions
tom
easu
reth
efa
irva
lue
ofno
n-fin
ancia
lass
etsi
sthe
“hig
hest
and
best
use”
•Th
isis
ava
luat
ion
conc
eptt
hatr
epre
sent
sth
eus
eof
anas
set
bym
arke
tpa
rtici
pant
sth
atw
ould
max
imize
the
valu
eof
the
asse
tora
sset
grou
p.M
easu
rem
ento
ffai
rval
ueis
pres
ente
din
USGA
APAS
C82
0.
U.S.
GAA
P AS
C 36
0-10
MA
TER
IALL
Y I
NC
ON
SIST
ENT
FA
IR M
AR
KET
VA
LUES
OV
ER T
HE
SAM
E P
ERIO
D
In
con
sist
en
t va
lua
tio
ns
of
PP
&E
acr
oss
dif
fere
nt
fili
ngs
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 58 of 133
706.
026.
MI.1
Conf
iden
tial
15,4
55
10,7
00
15,5
20
15,0
96
9,10
012,1
57
13,2
20
13,2
15 1,18
2
10,9
60
1,18
21,
18210
,083
10,0
83
Jun-
19Au
g-19
Oct
-19
Dec-
19Fe
b-20
Apr-2
0Ju
n-20
Aug-
20O
ct-2
0De
c-20
Feb-
21Ap
r-21
Valu
atio
ns o
f PP&
E(U
S$M
M)
SEC
10-Q
and
10-
k fil
ings
Man
agem
ent P
rese
ntat
ions
Laza
rd B
K Va
luat
ion
9
Row
an –
Ensc
o M
erge
r af
ter f
arne
ss o
pini
ons
2Q19
3Q19
10-K
201
9
1Q20
2Q20
3Q20
10-K
202
0
Laza
rd D
S Va
luat
ion
@
con
firm
atio
n1Q21
Sour
ce: C
ompa
ny 1
0-Q
s, 10
-Ks a
nd D
isclo
sure
Sta
tem
ent
MA
TER
IALL
Y I
NC
ON
SIST
ENT
FA
IR M
AR
KET
VA
LUES
OV
ER T
HE
SAM
E P
ERIO
D
M
isle
ad
ing
valu
ati
on
s o
f P
P&
E b
etw
ee
n S
EC
fil
ings
, Le
nd
er´
s T
hir
d-
Pa
rty
ap
pra
ise
rs a
nd
by
Laza
rd.
Gros
s Ass
et V
alue
MD&
A Fe
b-20
, acc
ordi
ng to
le
nder
´s in
depe
nden
t app
raise
rs
Gros
s Ass
et V
alue
MD&
A Au
g-19
, acc
ordi
ng to
le
nder
´s in
depe
nden
t app
raise
rs
Laza
rdLa
zard
Valu
atio
n pr
esen
ted
for
secu
ritie
s re
gist
ratio
n us
ing
fresh
star
t ac
coun
ting
at F
air
Mar
ket V
alue
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 59 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: C
orpo
rate
repo
rts,
2020
10-
K. K
PMG
Impa
irmen
t of n
on-fi
nanc
ial a
sset
s han
dboo
k
10
Gros
s Ass
et V
alue
Est
imat
es(In
US$
B fo
r Feb
-20)
Anal
yst 1
10.1
Anal
yst 2
9.7
Anal
yst 3
9.5
Anal
yst 4
9.1
Anal
yst 5
8.9
•Th
eav
erag
eGr
oss
PP&
Ees
timat
edby
five
inde
pend
enta
naly
stsi
sUS$
9.4B
with
are
plac
emen
tval
ueof
US$2
3.9B
,aso
fFeb
ruar
y20
20
•Th
ird-P
arty
inde
pend
ent
appr
aise
rsse
lect
edby
Lend
er´s
gave
a~8
xhi
gher
valu
atio
nto
PP&
Eth
anth
eon
epu
blish
edon
the
Disc
losu
rest
atem
ent
ofth
eBa
nkru
ptcy
plan
.
MA
TER
IALL
Y I
NC
ON
SIST
ENT
FA
IR M
AR
KET
VA
LUES
OV
ER T
HE
SAM
E P
ERIO
D
Le
nd
er´
s in
de
pe
nd
en
t a
pp
rais
ers
gav
e f
un
da
me
nta
lly
dif
fere
nt
valu
ati
on
fro
m t
he
on
e p
rese
nte
d b
y La
zard
25.5
23.9
9.4
1.2
1.2
1.2
Con
stuc
tion
Cost
Rep
lace
men
t Cos
t G
ross
Ass
et V
alue
Inde
pend
ent A
naly
sts V
alua
tions
of P
P&E
pres
ente
d in
Feb
-20
MD&
A vs
Laza
rd V
alua
tion
(US$
B)
MD&
A (F
eb-2
0)La
zard
Net
PP&
E
Aver
age
prov
ided
by
anal
ysts
of $
9.4B
Anal
yst G
ross
Ass
et V
alue
Est
imat
es in
clude
DN
B M
arke
ts, M
orga
n St
anle
y, S
cotia
bank
, Sp
areB
ank
and
Wel
ls Fa
rgo
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 60 of 133
706.
026.
MI.1
III.
VIO
LATI
ON
OF
ASC
36
0-1
0
11Co
nfid
entia
l
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 61 of 133
706.
026.
MI.1
Conf
iden
tial
0.8%
23.0
%
Row
an A
sset
sEn
sco
Asse
ts
Impa
irmen
t % o
f Val
aris
PP&
E 1Q
20
VIO
LATI
ON
ASC
36
0-1
0 B
Y A
PP
LYIN
G I
RR
EGU
LAR
IM
PAIR
MEN
T
TES
TS A
CR
OSS
TH
E SA
ME
ASS
ETS
Dif
fere
nt
imp
air
me
nt
test
s u
sed
in
th
e 1
Q-2
0 f
or
Va
lari
s R
igs
Viol
atio
n of
U.S
. GAA
P AS
C 36
0-10
Impa
irmen
tte
stm
ust
bepe
rform
edon
agr
oup
ofas
sets
.Th
eas
setg
roup
isde
term
ined
by:
•O
pera
tiona
lfin
ancia
linf
orm
atio
n
•In
depe
nden
ceof
the
cash
flow
sw
ithre
spec
tto
anot
hera
sset
grou
p
Impa
irmen
t val
uatio
n te
st is
not
bei
ng a
pplie
d un
iform
ly to
subs
tant
ially
the
sam
e as
sets
,
in d
irect
vio
latio
n of
U.S
. GAA
P AS
C 36
0-10
Sour
ce: 1
0-Q
for t
he th
ird q
uart
er q
uart
er o
f 202
0 p.
25
and
KPM
G Im
pairm
ent o
f non
-fina
ncia
l ass
ets h
andb
ook
12
Ensc
oan
dRo
wan
wer
em
erge
don
April
14,2
019.
Both
entit
iesw
ere
subj
ectt
oVa
laris
impa
irmen
ttes
tthr
ough
out2
019.
How
ever
,
•Ro
wan
asse
tsw
ere
subj
ectt
oan
impa
irmen
tof0
.8%
,on
1Q20
•En
sco
asse
tsw
ere
subj
ectt
oan
impa
irmen
tof2
3.0%
,on
1Q20
•Ro
wan
bond
swer
eun
derl
egal
disp
ute,
crea
ting
anin
cent
ive
fora
high
erva
luat
ion
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 62 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: V
alar
is Sc
hedu
le o
f Ass
ets a
nd Li
abili
ties
durin
g th
e ba
nkru
ptcy
pro
cess
13
Vala
risst
ated
inth
eirS
ECfil
ing
that
itre
alize
da
quat
erly
reco
vera
bilit
yte
stof
itsen
tire
fleet
,im
pairi
ngth
ebo
okva
lue
ofPP
&E
fora
nych
ange
sin
mar
ketc
ondi
tions
.The
reco
vera
bilit
ytes
tund
erAS
C36
0-10
ism
eant
toas
sess
the
fair
mar
ketv
alue
ofas
sets
.
How
ever
,Va
laris
isst
atin
gth
atth
ebo
okva
lue
ofPP
&E
pres
ente
din
the
10K
&10
Q’s
mat
eria
llydi
ffer(
itdi
ffers
by~1
0x)f
rom
the
one
pres
ente
din
the
Disc
losu
reSt
atem
ent.
How
can
that
reas
onab
lyre
conc
ileto
mat
eria
llysim
ilarF
airM
arke
tVal
ues?
Vala
risad
mits
inth
eSc
hedu
leof
Asse
tspr
esen
ted
toco
urta
sreq
uire
din
the
rule
1007
ofth
eBa
nkru
ptcy
Proc
edur
e,th
atde
spite
the
quar
terly
impa
irmen
ttes
tsof
asse
ts,t
heBo
okVa
lue
didn
´tre
pres
ente
dth
eFa
irM
arke
tVal
ue.
Scre
ensh
ot fr
om V
alar
is Sc
hedu
le A
/B: P
rope
rty
Non
-Indi
vidu
al c
ourt
filli
ng:
Eith
erVa
laris
lied
to in
vest
ors o
n th
eir 1
0-Ks
& 1
0-Q
s com
mitt
ing a
ccou
ntin
g fra
ud, o
r Val
aris
lied
on it
s ban
krup
tcy f
illin
g an
d co
mm
itted
ban
krup
tcy
fraud
.
VIO
LATI
ON
OF
ASC
36
0-1
0V
ala
ris
sta
ted
th
at
the
Bo
ok
Va
lue
of
PP
&E
did
n´t
re
pre
sen
ted
th
e
Fair
Ma
rke
t V
alu
e d
esp
ite
ap
ply
ing
qu
art
erl
y re
cove
rab
ilit
y te
sts
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 63 of 133
706.
026.
MI.1
IV.
MO
TIV
ES T
O P
RO
FIT
FR
OM
A B
AN
KR
UP
TCY
PR
OC
ESS
14Co
nfid
entia
l
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 64 of 133
706.
026.
MI.1
Conf
iden
tial
WIT
HA
REP
LAC
EMEN
TV
ALU
EO
FA
SSET
SO
FU
S$2
3.9
B,
THER
EA
RE
CO
NFL
ICTS
OF
INT
ERES
TIN
TH
EB
AN
KR
UP
TCY
PR
OC
ESS
Acc
om
pa
nie
db
ya
US$
2.3
Bin
cen
tive
toca
pit
ali
ze,
ma
na
gem
en
tm
ayh
ave
alt
ere
din
de
pe
nd
en
tva
lua
tio
n
Sour
ce: C
orpo
rate
repo
rts,
2020
10-
K. D
isclo
sure
stat
emen
t. Fo
r mor
e in
form
atio
n, s
ee a
ppen
dix
C, sl
ide
37.
0.53
%
10%
Pre-
bank
rupt
cy o
wne
rshi
pPo
st-b
ankr
uptc
y ow
ners
hip
Man
agem
ent b
enef
icial
ow
ners
hip
Inte
rms
ofre
plac
emen
tva
lue,
man
agem
ent
will
keep
US$2
.3B,
whi
chis
9.5x
high
erth
anth
eva
luat
ion
base
don
man
agem
entg
uida
nce
Laza
rd´s
val
uatio
n w
as m
ade
with
man
agem
ent g
uida
nce,
so m
anag
emen
t had
$2.
3B o
f rea
sons
to ju
stify
ban
krup
tcy.
Asa
resu
ltof
the
reor
gani
zatio
npl
an,
am
anag
emen
tin
cent
ive
plan
was
mad
e,in
whi
chan
ESO
Pof
10%
was
esta
blish
edfo
rman
agem
ent.
15
244.
843
7.5
2,39
0.0
BK V
alua
tion
10-K
202
0Eq
uity
@ R
epla
cem
ent
Valu
e
Man
agem
ent 1
0% o
wne
rshi
p eq
uiva
lent
s(U
S$M
M)
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 65 of 133
706.
026.
MI.1
Conf
iden
tial
WIT
HA
REP
LAC
EMEN
TV
ALU
EO
FA
SSET
SO
FU
S$2
3.9
B,
THER
EA
RE
CO
NFL
ICTS
OF
INT
ERES
TIN
TH
EB
AN
KR
UP
TCY
PR
OC
ESS
Re
volv
er
Cre
dit
Faci
lity
ow
ne
rsw
ill
po
ten
tia
lly
reco
ver
13
xo
fth
eir
pri
nci
pa
lb
yge
ttin
g3
2.5
%o
fn
ew
Va
lari
se
qu
ity
Sour
ce: C
orpo
rate
repo
rts,
2020
and
201
9 10
-K. D
isclo
sure
stat
emen
t. Fo
r mor
e in
form
atio
n, s
ee a
ppen
dix
C, sl
ide
38
InFe
brua
ry20
20,
man
agem
ent
men
tione
dth
atVa
laris
had
US$9
7.2
MM
inca
shan
dUS
$1.6
Bin
undr
awn
capa
city
unde
rits
RCF,
whi
chex
pire
dun
tilSe
ptem
ber2
022
Alle
ging
COVI
Dan
don
efu
llyin
sure
drig
accid
ent,
RCF
decla
red
am
ater
iala
dver
seef
fect
,whi
chw
asno
tco
ntes
ted
bym
anag
emen
t.No
furt
her
borr
owin
gsw
ere
perm
itted
,da
mag
ing
Vala
risliq
uidi
ty.
With
a 3
2.5%
of t
he n
ew V
alar
is eq
uity
, RCF
lend
ers w
ill re
cove
r 13.
0x o
f the
ir pr
incip
al, w
hich
is e
quiv
alen
t to
US7.
5B.
It´
s wor
th to
men
tion
that
Cha
pter
11
seek
s to
prov
ide
reco
very
for d
ebth
olde
rs, n
ot to
enr
ich th
em.
With
the
reor
gani
zatio
npl
an,
RCF
lend
ers
can
keep
a32
.5%
ofth
ene
wVa
laris
equi
ty
RCF
Debt
prin
cipa
lEq
uity
val
ue B
K va
luat
ion
2020
10-
KRe
plac
emen
t val
ue
RV –
prin
cipal
582.
1 79
5.6
1,42
1.7
7,58
8.8
7,00
6.7
RFC
reco
very
100.
0%13
6.7%
244.
2%13
03.7
%
795.
6
7,58
8.8
Equi
ty v
alue
BK
valu
atio
nEq
uity
@ re
plac
emen
t val
ue
RCF
Lend
ers r
ecov
ery
unde
r reo
rgan
izatio
n pl
an(U
S$ M
M)
16
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 66 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: D
ebto
rs a
pplic
atio
n fo
r ent
ry (d
ocum
ent 2
10 B
K fil
ing)
. DEF
A14A
(Pro
xy m
ater
ials)
201
9-12
-04.
Laza
rd d
ecla
red
itsel
f ind
epen
dent
and
free
of c
onfli
cts,
havi
ng p
revi
ously
pro
vide
d se
rvice
s to
Vala
ris, k
now
ing
the
Com
pany
´s fi
nanc
ial i
nfor
mat
ion
and
bein
g aw
are
of p
revi
ous v
alua
tions
.
Durin
g20
19,L
azar
dpr
ovid
edfin
ancia
ladv
isory
serv
ices
toVa
laris
tora
iseeq
uity
orde
btw
ithou
tsu
cces
s.In
addi
tion,
Laza
rdse
rved
asad
viso
rw
hen
Vala
rissu
ffere
da
disp
ute
with
Lum
inus
Man
agem
ent
LLC,
one
ofth
em
ost
impo
rtan
tsh
areh
olde
rsof
Vala
ris.I
nAu
gust
2020
,Laz
ard
stop
ped
repr
esen
ting
Vala
riseq
uity
,and
star
ted
repr
esen
ting
the
debt
,so
they
are
noti
ndep
ende
ntpa
rtie
s.
Laza
rd´s
com
pens
atio
ndu
ring
Vala
risba
nkru
ptcy
will
beap
prox
imat
ely
US$3
9MM
,co
nsid
erab
lym
ore
than
the
com
pens
atio
nre
ceiv
edfo
rrai
sing
equi
ty,w
hich
onav
erag
eis
50ba
sispo
ints
over
the
equi
tyra
ised.
Laza
rd is
not
in
depe
nden
t
Laza
rd co
mpe
nsat
ion
stru
ctur
e
Laza
rd e
ngag
emen
t le
tter
wai
vers
Inth
een
gage
men
tlet
ter,
Laza
rdis
prot
ectin
gits
elfa
gain
stan
ypo
tent
iall
iabi
litie
sder
ived
from
the
prov
ision
ofits
serv
ices
toVa
laris
,in
whi
ch,i
nan
ysit
uatio
n,Va
laris
will
have
toco
mpe
nsat
ean
ylo
ss,c
laim
,dam
age
and
liabi
lity
orex
pens
essu
bjec
tund
eran
yap
plica
ble
fede
ralo
rsta
tela
w.
17
WIT
HA
REP
LAC
EMEN
TV
ALU
EO
FA
SSET
SO
FU
S$2
3.9
B,
THER
EA
RE
CO
NFL
ICTS
OF
INT
ERES
TIN
TH
EB
AN
KR
UP
TCY
PR
OC
ESS
$3
9M
Mfe
ein
cen
tive
for
Laza
rdto
rep
rese
nt
the
len
de
rsju
sta
fte
rre
pre
sen
tin
gV
ala
ris
eq
uit
y
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 67 of 133
706.
026.
MI.1
V.
CO
-OP
TED
CH
AP
TER
11
PR
OC
ESS
18Co
nfid
entia
l
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 68 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: C
ompa
ny 8
-K fr
om A
ugus
t 28th
, 202
0
CO
-OP
TED
CH
AP
TER
11
PR
OC
ESS
Swe
eth
ea
rtd
ea
lto
be
tray
the
inte
rest
so
fsh
are
ho
lde
rs
19
Lend
ers
co-o
pted
the
proc
ess
ofCh
apte
r11
byof
ferin
gth
ela
rges
teq
uity
hold
er(L
umin
us)
asw
eeth
eart
deal
(allo
win
git
toge
t10%
ofth
eCo
mpa
ny´s
outs
tand
ing
inde
bted
ness
)to
vote
inas
debt
and
acce
ptth
eRS
Ain
dire
ctim
pact
toot
here
quity
hold
ers.
Votin
gas
both
debt
and
equi
tyis
nota
llow
edun
derC
hapt
er11
;tai
ntin
gth
epr
ocee
ding
s.
Scre
ensh
ot fr
om A
ugus
t 28th
, 202
0 an
noun
cem
ent f
ound
in th
e re
spec
tive
8-k
fillin
g:
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 69 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: C
ompa
ny 8
-K fr
om A
ugus
t 28th
, 202
0
CO
-OP
TED
CH
AP
TER
11
PR
OC
ESS
Swe
ath
ea
rtd
ea
lw
as
wil
lfu
lly
wit
he
ldfr
om
the
ba
nkr
up
tcy
cou
rt
20
Law
yers
and
advi
sors
forL
ende
rsan
dLu
min
usag
reed
nott
odi
sclo
sesa
idag
reem
entt
oth
eCo
urt
Scre
ensh
ots f
rom
Aug
ust 2
8th , 2
020
anno
unce
men
t fou
nd in
the
resp
ectiv
e 8-
k fil
ling:
The
Cour
tass
umed
Clas
s13
(Equ
ity)w
ere
bein
gre
pres
ente
d,w
hich
they
wer
eno
t
Unkn
own
whi
chof
Lum
inus
’ fun
dsor
Prin
cipal
srec
eive
dth
ebe
nefit
ofth
eth
eSw
eath
eart
Deal
. Thi
sisp
oten
tially
anile
gal a
sset
tran
sfer
from
one
grou
pof
Lum
inus
inve
stor
sto
anot
her
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 70 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: C
ompa
ny 8
-K fr
om A
ugus
t 28th
, 202
0
CO
-OP
TED
CH
AP
TER
11
PR
OC
ESS
Vio
lati
on
of
Tit
le1
8U
.S.
Co
de
§1
52
-C
on
cea
lme
nt
of
ass
ets
;fa
lse
oa
ths
an
dcl
aim
s;b
rib
ery
21
The
Title
18of
the
USCo
de,P
art1
,Cha
pter
9,Se
ctio
n15
2st
ates
the
follo
win
g:
Rega
rdin
gbr
iber
yand
exto
rtio
nin
conn
ectio
nw
itha
case
unde
rTitl
e11
;
“(6)
know
ingl
yan
dfra
udul
ently
give
s,of
fers
,re
ceiv
es,
orat
tem
pts
toob
tain
any
mon
eyor
prop
erty
,re
mun
erat
ion,
com
pens
atio
n,re
war
d,ad
vant
age,
orpr
omise
ther
eoff
orac
ting
orfo
rbea
ring
toac
tin
any
case
unde
rtitl
e11
;”
Rega
rdin
gth
ew
ithho
ldin
gof
docu
men
tsfro
mth
ead
min
istra
tors
ofa
case
unde
rTitl
e11
;
“(9)
afte
rth
efil
ing
ofa
case
unde
rtit
le11
,kno
win
gly
and
frau
dule
ntly
with
hold
sfr
oma
cust
odia
n,tr
uste
e,m
arsh
al,
orot
her
offic
erof
the
cour
tor
aUn
ited
Stat
esTr
uste
een
title
dto
itspo
sses
sion,
any
reco
rded
info
rmat
ion
(inclu
ding
book
s,do
cum
ents
,rec
ords
,and
pape
rs)r
elat
ing
toth
epr
oper
tyor
finan
ciala
ffairs
ofa
debt
or,”
The
swee
thea
rt d
eal o
ffere
d to
Lum
inus
clea
rly v
iola
tes T
itle
18 U
.S. C
ode
§15
2
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 71 of 133
706.
026.
MI.1
Conf
iden
tial
CO
-OP
TED
CH
AP
TER
11
PR
OC
ESS
Lum
inu
sge
tssw
ee
the
art
de
al
tob
etr
ayth
ein
tere
sts
of
sha
reh
old
ers
Sour
ce: 8
-k fr
om A
ugos
t28th
, 202
0 an
d co
rpor
ate
anno
unce
men
ts
Lum
inus
Man
agem
entL
LC,w
hoow
ned
appr
oxim
atel
y18
.7%
ofVa
laris
plc
equi
ty,i
ssue
din
Augu
st20
19a
lett
erto
Vala
rissh
areh
olde
rsex
pres
sing
conc
erns
rega
rdin
gye
arso
fper
siste
ntst
rate
gic,
oper
atio
nala
ndgo
vern
ance
failu
resa
tthe
Com
pany
.Arg
uess
tock
coul
dtr
ade
4xth
epr
ice.
Lum
inus
disp
ute
with
Val
aris
22
Lum
inus
expr
esse
dth
atfo
rVal
aris
toim
prov
eit
need
edto
appo
intn
ewbo
ard
mem
bers
from
itsla
rges
tsh
areh
olde
rs.
Fina
lly,
inJa
nuar
y20
20th
eyre
ache
dan
agre
emen
tan
dVa
laris
appo
inte
dAd
amW
eitz
man
toits
boar
dof
dire
ctor
sand
Rich
ard
Katz
.Lu
min
us g
ets
boar
d se
at
Lum
inus
get
s sw
eeth
eart
dea
l
Afte
rso
me
mon
ths
with
Adam
inth
em
anag
emen
t,Va
laris
decla
res
itha
sde
cided
tofil
efo
rCh
.11.
How
ever
,Ada
mw
hich
was
ther
eto
defe
ndth
ein
tere
sts
ofsh
areh
olde
rs,r
each
edan
agre
emen
twith
the
lend
ers
allo
win
gLu
min
usto
buy
upto
10%
ofth
eou
tsta
ndin
gde
bt(w
hich
was
trad
ing
atan
imm
ense
disc
ount
)in
exch
ange
ofap
prov
ing
the
RSA.
Bydo
ing
that
Lum
inus
wou
ldbe
able
togr
eatly
capi
taliz
efro
mth
eba
nkru
ptcy
proc
ess.
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 72 of 133
706.
026.
MI.1
Conf
iden
tial
CO
-OP
TED
CH
AP
TER
11
PR
OC
ESS
Swe
eth
ea
rtd
ea
lto
be
tray
the
inte
rest
so
fsh
are
ho
lde
rs
23
11U.
S.C.
§11
26(b
)(1)
Prov
ides
fort
heso
licita
tion
ofa
Plan
tobe
deem
edac
cept
ed,s
uch
acce
ptan
ceis
subj
ectt
oth
ead
equa
cyof
disc
losu
res,
ast
anda
rdth
atw
ascle
arly
will
fully
notm
et.
11U.
S.C.
§11
23(a
)(4)
Prov
ides
that
afo
raPl
anto
beCo
nfirm
edm
ustb
eEq
uita
ble
and
“pro
vide
the
sam
etr
eatm
entf
orea
chcla
im…
ina
part
icula
rcla
ss,
unle
ssth
eho
lder
ofa
part
icula
rcla
im…
agre
esto
ale
ssfa
vora
ble
trea
tmen
tofs
uch
part
icula
rcla
im…
”Th
isre
quire
men
thas
been
inte
rpre
ted
tom
ean
that
simila
rlysit
uate
dcla
imsm
ustr
ecei
veth
esa
me
trea
tmen
tund
era
plan
.See
,e.g
.In
reCo
mbu
stio
nEn
g’g,
Inc.
,391
F.3d
190,
239
(3d
Cir2
004)
.
•Th
esw
eeth
eart
deal
offe
red
toLu
min
usst
ands
infla
gran
tvio
latio
nof
Title
18U.
S.Co
de§
152
(6)(9
)and
cons
titut
esba
nkru
ptcy
fraud
.
•Th
epa
rtie
scon
spiri
ngto
with
hold
said
info
rmat
ion
caus
edth
eCo
urts
to,u
nbek
now
nst,
conf
irma
Plan
that
was
notE
quita
ble
toCl
ass
13se
curit
ies
(equ
itysh
areh
olde
rs),
afte
raso
licita
tion
that
was
tain
ted
thro
ugh
will
fully
with
hold
ing
adeq
uate
disc
losu
res,
invi
olat
ion
of11
U.S.
C.§
1123
(a)(4
)and
11U.
S.C.
§11
26(b
)(1)r
espe
ctiv
ely.
•Th
efra
udul
ent
proc
urem
ento
fthe
conf
irmat
ion
falls
unde
rth
ere
voca
tion
ofan
orde
rof
conf
irmat
ion
aspe
r11
U.S.
Code
§11
44.
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 73 of 133
706.
026.
MI.1
VI.
PO
TEN
TIA
L C
RIM
INA
L EN
TER
PR
ISE
24Co
nfid
entia
l
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 74 of 133
706.
026.
MI.1
Conf
iden
tial
PO
TEN
TIA
LC
RIM
INA
LEN
TER
PR
ISE
Lum
inu
s´C
EO
dir
ect
lyli
nke
dto
the
Jeff
rey
Ep
ste
ino
rga
niz
ati
on
Sour
ce: B
usin
ess I
nsid
er, I
CIJ,
and
cour
t fili
ngs
For f
urth
er In
form
atio
n pl
ease
refe
r to
Appe
ndix
D p.
61 o
f the
pre
sent
atio
n
25
Jona
than
isth
eCE
Oof
Lum
inus
Man
agem
ent,
the
larg
est
shar
ehol
der
ofVa
laris
and
bene
fact
orof
the
prev
ious
lym
entio
ned
swee
thea
rtde
al.
Jona
than
bega
nhi
sca
reer
wor
king
with
NYC
base
din
vest
men
tm
anag
emen
tfir
m,J
.Eps
tein
&Co
.(Fr
omhi
ghly
ques
tiona
ble
inve
stor
Jeffr
eyEp
stei
n)an
dO
ssa
Prop
ertie
s(an
affil
iate
Real
Esta
teco
mpa
ny)r
ising
toth
ele
velo
fCFO
.
Inad
ditio
n,Jo
nath
anBa
rret
shar
edth
esa
me
lega
ladd
ress
of30
1E.
66th
St.a
sEps
tein
.Whi
chac
cord
ing
toco
urtf
iling
stha
tbui
ldin
gse
rved
toho
stEp
stei
n´sa
ssoc
iate
s,bu
sines
ses,
empl
oyee
sand
girlf
riend
s.
Jona
than
Barr
et´s
brot
her
Anth
ony
isth
ecu
rren
tpr
esid
ent
ofO
ssa
Prop
ertie
s,ow
ned
byJe
ffrey
Epst
ein´
sbr
othe
rM
ark.
Ossa
prop
ertie
sow
nsth
em
ajor
ityof
the
units
inth
em
yste
rious
301
E.66
thSt
.bui
ldin
g.
Jona
than
Bar
ret (
Lum
inus
Man
agem
ent F
ound
er) i
s lin
ked
to Je
ffrey
Eps
tein
by
serv
ing
as C
FO o
f J.
Epst
ein
& C
o an
d O
ssa
Prop
ertie
s, us
ing
the
sam
e re
siden
tial a
ddre
ss a
nd b
y ha
ving
his
brot
her
Anth
ony b
e th
e Pr
esid
ent o
f Oss
a Pr
oper
ties w
hich
is cu
rren
tly o
wne
d by
Jeffr
ey E
pste
in's
brot
her M
ark.
Jeffr
eyEp
stei
n
Dire
ctly
Link
ed
Jona
than
Barr
ett
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 75 of 133
706.
026.
MI.1
Conf
iden
tial
PO
TEN
TIA
LC
RIM
INA
LEN
TER
PR
ISE
Lum
inu
sa
nd
LSP
ow
er´
sh
isto
ryo
fsu
spic
iou
sa
sse
ttr
an
sfe
rs
Sour
ce: B
ankr
uptc
y fil
ings
Dyn
egy,
CNB
C, B
usin
ess I
nsid
er, B
ankr
uptc
y No
. 81-
0363
9 T.
--In
Re
F.A.
Pot
ts &
Co.
, 86
B.R.
853
, 853
(Ban
k. E
.D.P
a. 1
988)
26
Coul
d th
e sa
le o
f th
e 2
Vala
ris ri
gs to
an
Oil a
nd G
as co
mpa
ny b
e sim
ilar t
o th
e ot
her c
ases
in
whi
ch LS
pow
er w
as in
vest
igat
ed fo
r fra
udul
ent c
onve
yanc
e of
ass
ets?
Lum
inus
isa
decla
red
affil
iate
ofLS
Pow
er,w
hich
owns
EVgo
am
ajor
supp
lierf
orTe
sla.
The
abov
emen
tione
dis
rele
vant
since
inJu
ly20
20Va
laris
sold
2rig
sth
atco
stm
ore
than
$650
mill
ion
in20
08/0
9fo
r$3
.5m
illio
nea
chto
Spac
eX
subs
idia
ryLo
neSt
arM
iner
alDe
velo
pmen
tLL
C,an
Oil
and
Gas
com
pany
with
perm
itsto
expl
ore
byth
eTe
xasR
ailro
adCo
mm
issio
n.
LSpo
wer
has
been
prev
ious
lyin
vest
igat
edfo
rfra
udul
ent
conv
eyan
ceof
asse
tsin
the
follo
win
gba
nkru
ptcy
case
s:
•Dy
negy
•M
irant
•Ge
nOn
/NRG
–CE
Ois
Mich
aelL
iebe
lson
co-fo
unde
rofL
SPo
wer
with
pote
ntia
lcon
flict
sofi
nter
est
Foun
derM
ikha
ilSe
galb
egan
hisc
aree
rasa
“Sov
ieto
fficia
l”an
din
ENES
CO.F
irstp
ublic
tran
sact
ions
wer
eal
ongs
ide
Pagn
otti
Ente
rpris
eslin
ked
toth
eBu
falin
ocr
ime
fam
ilyvi
am
afia
boss
Loui
sPag
nott
i.
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 76 of 133
706.
026.
MI.1
Conf
iden
tial
PO
TEN
TIA
LC
RIM
INA
LEN
TER
PR
ISE
Lum
inu
sh
ire
da
nu
nli
cen
sed
fin
an
cia
la
dvi
sor
wh
osp
eci
ali
zed
inb
an
kru
ptc
ies
to“i
mp
rove
pe
rfo
rma
nce
”a
nd
rep
rese
nt
eq
uit
y
Sour
ce: V
alar
is co
oper
atio
n ag
reem
ent w
ith L
umin
us. T
orqu
e Po
int A
dviso
rs w
eb p
age.
Val
aris
supp
lem
enta
l cer
tifica
te o
f ser
vice
(d
oc. 9
99 B
K fil
ing)
Rich
ard
Katz
Torq
uePo
int’s
Foun
dera
ndCh
iefE
xecu
tive
Offi
cer,
Rich
ard
Katz
,is
afo
rmer
Man
agin
gDi
rect
orof
Gold
man
,Sac
hs&
Co.,
whe
rehe
serv
edfo
rov
er18
year
s(fr
om19
88to
2007
),an
da
form
erCh
ief
Fina
ncia
lOffi
cer
ofa
heal
thca
rese
rvice
sst
art-u
p,w
here
hese
rved
for
four
year
s(fr
om20
07to
2011
).M
r.Ka
tzre
ceiv
eda
B.A.
from
Yale
Univ
ersit
yin
1988
.
ACo
oper
atio
nag
reem
ent
was
mad
eon
Janu
ary
24,
2020
byLu
min
usan
dVa
laris
,app
oint
ing
Rich
ard
Katz
aske
ym
anof
the
finan
ceco
mm
ittee
.
Rich
ard
Katz
was
apa
rtne
rin
Cant
or-K
atz
Colla
tera
lM
onito
rLL
C,in
volv
edin
the
bank
rupt
cyof
Puer
toRi
co,b
eing
repr
esen
ted
bySc
hulte
Roth
&Za
bel,
the
sam
efir
mth
atre
pres
ente
dLu
min
usin
the
coop
erat
ion
agre
emen
t.Ad
ditio
nally
,Aur
eliu
sCa
pita
lM
anag
emen
t(kn
own
fora
ggre
ssiv
elit
igat
ion
tact
icsto
max
imize
retu
rns)
,was
one
ofth
ecr
edito
rsfo
rVal
aris
and
one
ofth
ecr
edito
rsin
the
Puer
toRi
coba
nkru
ptcy
.Ca
sein
whi
chAu
reliu
slo
bbie
dfo
rth
eap
poin
tmen
tofa
new
Boar
dw
ithCa
ntor
-Kat
zon
it.
Durin
gAu
gust
2020
,Val
aris
filed
for
bank
rupt
cyan
dKa
tzw
asre
ceiv
ing
clas
s9
(Gen
eral
unse
cure
dcla
ims)
and
clas
s10
(New
build
claim
s)no
tific
atio
ns,w
hen
inth
eory
hew
ashi
red
forc
lass
13.
Rich
ard
Katz
is n
ot re
gist
ered
as a
Fin
ancia
l Adv
isor o
r Bro
ker.
Addi
tiona
lly, h
e w
as re
ceiv
ing
notif
icatio
ns
from
mor
e th
an o
ne cl
ass,
whi
ch is
not
allo
wed
by
Chap
ter 1
1.
27
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 77 of 133
706.
026.
MI.1
VII
. N
AK
ED S
HO
RT
SEL
LIN
G A
ND
MA
RK
ET M
AN
IPU
LAT
ION
28Co
nfid
entia
l
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 78 of 133
706.
026.
MI.1
Conf
iden
tial
HIG
HV
OLU
ME
OF
FAIL
STO
DEL
IVER
IND
ICA
TES
PO
TEN
TIA
LN
AK
EDSH
OR
TSE
LLIN
GEv
ide
nce
of
ma
rke
tm
an
ipu
lati
on
Sour
ce: S
EC V
AL F
ails-
to-d
eliv
er s
cree
nsho
t
The
pres
ence
ofVa
laris
stoc
kin
high
volu
me
inth
efa
ilto
deliv
erlis
toft
heSE
C,se
emst
oin
dica
tepo
ssib
lena
ked
shor
tsel
ling,
som
eof
itm
ayha
vebe
endo
neby
bond
hold
ers,
whi
chis
illeg
alun
less
itis
done
bym
arke
tmak
ersb
yBo
naFi
de.N
aked
shor
t-sel
ling
dras
tical
lydi
stor
ted
the
pric
eof
Vala
risan
din
valid
ates
the
shar
epr
iceas
anar
gued
byle
nder
sin
cour
t.As
evid
ence
byth
ere
cent
Gam
eSto
psq
ueez
e,na
ked
shor
tsel
ling
isa
rele
vant
even
tin
the
mar
ket,
that
artif
icial
lydi
stor
tsth
eva
lue
ofsh
ares
.
Pote
ntia
l nak
ed sh
ort s
ellin
g di
stor
ted
the
price
of t
he st
ock.
In
valid
atin
g sh
are
pric
e as
an
argu
men
t for
ban
krup
tcy.
29
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 79 of 133
706.
026.
MI.1
Conf
iden
tial
30
CO
NSI
DER
AB
LYH
IGH
SHO
RT
-IN
TER
EST
AN
DD
AY
S-TO
-CO
VER
IND
ICA
TE
PO
TEN
TIA
LN
AK
EDSH
OR
TSE
LLIN
GEv
ide
nce
of
ma
rke
tm
an
ipu
lati
on
0246810
0%10%
20%
30%
40% De
c-19
Jan-
20Fe
b-20
Mar
-20
Apr-2
0M
ay-2
0Ju
n-20
Jul-2
0
$VAL
Sho
rt In
tere
stDa
ys to
Cov
erPr
ice $
Price
d in
crea
sed
by 5
25%
with
in d
ays
from
$0.
35 to
$2
.19
with
out r
easo
n. P
rovi
ng th
e ex
isten
ce o
f nak
ed
shor
t sel
ling.
End
ed v
ia a
blo
ck tr
ade
nego
tiate
d by
br
oker
s with
maj
or sh
areh
olde
r AzV
alor
Wha
tiss
hort
inte
rest
?
Shor
tint
eres
tis
the
num
bero
fsha
res
that
have
been
sold
shor
tbut
have
noty
etbe
enco
vere
dor
close
dou
t.Sh
orti
nter
est,
whi
chca
nbe
expr
esse
das
anu
mbe
ror
perc
enta
ge,i
san
indi
cato
rof
mar
ket
sent
imen
t.W
here
asda
ys-to
-cov
erm
easu
res
the
expe
cted
num
bero
fday
sto
close
outa
com
pany
'sou
tsta
ndin
gsh
ares
that
have
been
sold
shor
t.
Whe
nsh
ort
inte
rest
asa
perc
enta
geof
float
isab
ove
20%
ispe
rcei
ved
tobe
extr
emel
yhi
gh.V
alar
istr
aded
atan
aver
age
shor
tin
tere
stof
28%
durin
g20
20,w
hich
indi
cate
sla
tent
nake
dsh
ortd
istor
ting
the
shar
epr
ice.O
nth
eot
herh
and,
Days
toCo
veri
nth
efir
stqu
arte
rof2
020
was
abov
e8,
signa
ling
the
pote
ntia
lfor
ash
orts
quee
zean
dex
trem
em
arke
tvol
atili
ty.
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 80 of 133
706.
026.
MI.1
Conf
iden
tial
PO
TEN
TIA
LM
AR
KET
MA
NIP
ULA
TIO
N(S
HO
RT
-AN
D-D
ISTO
RT
)Se
em
ing
lyco
ord
inat
ed
po
sts
by
blo
gge
rsto
du
mp
the
pri
ceo
f$
VA
Lst
ock
an
dth
en
pu
mp
ito
nce
ite
me
rge
dfr
om
ba
nkr
up
tcy
Sour
ce:.
Vala
ris S
C13G
(ow
ners
hip
repo
rt).
SEC
new
s pre
ss
31
Addi
tiona
lly, p
oten
tial p
aid
twitt
er b
ots a
lso a
ppea
r to
be
coor
dina
ted.
For r
efer
ence
: @
mai
lbox
mon
ey6
Befo
reVa
laris
wen
tba
nkru
pt,
itap
pear
edto
bea
coor
dina
ted
effo
rtby
blog
gers
and
twitt
erbo
tsto
port
ray
itin
bad
light
.St
atin
gth
ein
dust
ryw
ould
neve
rre
cove
r.No
neth
eles
s,fe
wm
onth
spa
ssaw
ayan
dno
wth
atVa
laris
emer
ged
from
bank
rupt
cyth
eyar
eov
ertly
optim
istic
onth
ein
dust
ryan
dhi
ghly
reco
mm
end
Vala
risas
anin
vest
men
t.
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 81 of 133
706.
026.
MI.1
Conf
iden
tial
PO
TEN
TIA
LM
AR
KET
MA
NIP
ULA
TIO
NB
YH
EDG
EFU
ND
Mil
len
niu
ma
nd
its
ow
ne
rsh
ipin
Va
lari
s
Sour
ce:.
Vala
ris S
C13G
(ow
ners
hip
repo
rt).
SEC
new
s pre
ss
Days
befo
reVa
laris
filed
for
bank
rupt
cyM
illen
nium
Inte
rnat
iona
lM
anag
emen
t,M
illen
nium
Man
agem
ent,
Mill
enni
umGr
oup
Man
agem
ent
and
Mr.
Engl
ande
rm
aybe
deem
edto
have
bene
ficia
llyow
ned
8,76
6,77
8of
the
Issue
r’sCl
assA
Ord
inar
ySh
ares
or4.
4%of
the
Issue
r’sCl
ass
AO
rdin
ary
Shar
esou
tsta
ndin
g.
Inte
rest
ingl
y,M
illen
nium
boug
htju
stbe
low
8,97
4,35
9sh
ares
,the
limit
seta
fterb
ankr
uptc
yby
man
agem
ent.
Aski
ngth
epa
rtie
stha
tany
tran
sact
ion
abov
eit
need
edto
befil
edw
ithth
eCo
urt.
Mill
enni
um ca
pita
l ow
ners
hip
SEC
has f
ound
Mill
enni
um, t
hrou
gh it
s sen
ior m
anag
emen
t eng
aged
in th
e fo
llow
ing
cond
ucts
•Cr
eate
dap
prox
imat
ely
100
new
lega
lent
ities
tohi
deits
iden
tity
ther
eby
enab
ling
itto
exec
ute
mar
kett
imin
gtr
ades
inm
utua
lfun
dsh
ares
with
outd
etec
tion
byth
em
utua
lfun
dfa
mili
es.
•En
gage
din
mar
ket
timin
gtr
adin
gva
riabl
ean
nuity
cont
ract
s,em
ploy
ing
anu
mbe
rof
dece
ptiv
epr
actic
esto
avoi
dde
tect
ion
asa
mar
ket
timer
.
•Us
edbr
oker
swith
mul
tiple
regi
ster
edre
pres
enta
tive
num
bers
inor
dert
oev
ade
cert
ain
mut
ualf
unds
'mar
kett
imin
gre
stric
tions
.
Why
wou
ld o
ne o
f the
larg
est h
edge
fund
s in
the
wor
ld, w
ith a
hist
ory o
f mar
ket m
anip
ulat
ion,
w
ould
bot
her t
o ta
ke a
maj
or p
ositi
on th
at re
quire
d fil
ing
in w
hat a
t the
tim
e w
as a
pen
ny st
ock?
32
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 82 of 133
706.
026.
MI.1
VII
I. C
ON
FLIC
TED
& B
IASE
D L
AZA
RD
VA
LUA
TIO
N
33Co
nfid
entia
l
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 83 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: V
alue
s pre
sent
ed in
Disc
losu
re S
tate
men
t by
Laza
rd
34
Whe
nus
ing
DCF
tova
lue
asse
ts,F
ASB
ASC
Topi
c85
2pa
ragr
aph
852-
10-0
5-10
men
tions
that
“The
reor
gani
zatio
nva
lue
gene
rally
appr
oxim
ates
fair
valu
eof
the
entit
ybe
fore
cons
ider
ing
liabi
litie
sand
appr
oxim
ates
the
amou
nta
will
ing
buye
rw
ould
pay
for
the
asse
tsof
the
entit
yim
med
iate
lyaf
ter
the
rest
ruct
urin
g ¨.
Asw
eca
nse
eab
ove,
the
valu
ew
asdi
dn´t
fairl
yre
pres
ente
dth
ego
ing
conc
ern
fair
mar
ket
valu
eof
the
asse
tsan
dw
hat
aw
illin
gbu
yer
wou
ldpa
yaf
ter
rest
ruct
urin
gsin
ceth
eUF
CFsw
ere
nota
ppro
pria
tely
calcu
late
d.
The
abov
emen
tione
d,de
ems
inva
lidth
ear
gum
ent
that
the
com
pany
was
inso
lven
tdue
tono
thav
ing
enou
ghas
sets
tosu
stai
nits
fund
ing
need
s.
CO
NFL
ICT
ED
TH
IRD
-PA
RT
YV
ALU
AT
ION
SH
OW
SA
US
$9
.7B
LOS
SIN
VA
LUE
NO
TC
ON
GR
UE
NT
WIT
HM
AR
KE
TC
ON
DIT
ION
SLa
zard
´sva
lua
tio
nre
vea
led
an
89
.2%
de
cre
ase
inva
lue
con
tra
dic
tin
gre
cove
rym
ark
et
con
dit
ion
sa
nd
uti
liza
tio
nra
tes
10,9
19
12,8
74
12,6
16
15,0
97
10,9
61
1,18
2
0%20%
40%
60%
80%
-
4,0
00
8,0
00
12,
000
16,
000
2016
2017
2018
2019
2020
2021
Net P
P&E
and
utili
zatio
n re
latio
n fro
m 1
0-Ks
PP&
E%
of u
tiliza
tion
E.V.
acc
ordi
ng to
Laza
rd
Low
Est
imat
e1,
945
Med
ium
Est
imat
e2,
560
High
Est
imat
e3,
240
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 84 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: K
PMG
Impa
irmen
t of n
on-fi
nanc
ial a
sset
s han
dboo
k,
CO
NFL
ICT
ED
TH
IRD
-PA
RT
YV
ALU
AT
ION
SH
OW
SA
US
$9
.7B
LOS
SIN
VA
LUE
NO
TC
ON
GR
UE
NT
WIT
HM
AR
KE
TC
ON
DIT
ION
SLa
zard
´sva
lua
tio
nw
as
no
tco
nco
rda
nt
wit
hth
e¨h
igh
est
an
db
est
use
¨st
an
da
rdW
hati
saHi
ghes
tand
Best
Use?
High
esta
ndbe
stus
eis
ava
luat
ion
conc
eptt
hatr
epre
sent
sth
eus
eof
ano
nfin
ancia
lass
etby
mar
ketp
artic
ipan
tsth
atw
ould
max
imize
the
valu
eof
the
asse
tort
hegr
oup
ofas
sets
and
liabi
litie
s(e.
g.a
busin
ess)
with
inw
hich
the
asse
twou
ldbe
used
.
25.5
23
.9
10.1
9.
7 9.
5 9.
1 8.
9
1.2
Cons
truc
tion
Cost
Repl
acem
ent C
ost
Anal
yst 1
Anal
yst 2
Anal
yst 3
Anal
yst 4
Anal
yst 5
Laza
rd V
alua
tion
Vala
risPP
&E
Valu
atio
ns fr
om M
anag
emen
t´s F
ebru
ary
2020
Pre
sent
atio
n(U
S$ B
illio
ns)
Avg.
val
uatio
n of
US$
9.5B
7.9x
(1)A
naly
stsv
alue
estim
ates
inclu
deDN
BM
arke
ts,M
orga
nSt
anle
y,Sc
otia
bank
,Spa
reBa
nkan
dW
ells
Farg
oin
Febr
uary
2020
with
Dece
mbe
r201
9da
ta
Laza
rd v
alue
d 7.
9x lo
wer
than
the
Inde
pend
ent a
naly
sts(1
) did
mon
ths b
efor
e.
Both
val
uatio
ns w
ere
mad
e w
ith M
anag
emen
t inp
uts.
Hard
to su
stai
n th
e La
zard
val
uatio
n as
sum
ptio
ns fo
llow
the
High
est a
nd B
est U
se st
anda
rd
35
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 85 of 133
706.
026.
MI.1
Conf
iden
tial
89
1210
13
1616
5
2123
10,9
1910
,919
12,8
74
12,6
16
15,0
97
10,9
6110
,083
1,18
2
02000
4000
6000
8000
1000
0
1200
0
1400
0
1600
0
0510152025
Feb-
16De
c-16
Jul-1
7O
ct-1
7Ju
l-18
Oct
-18
Jul-1
9Ap
r-20
Mar
-21
May
-21
Aug-
21
Cont
ract
s Aw
arde
d pe
r Fle
et R
epor
t
Ensc
oRo
wan
Vala
ris10
-K P
P&E
Book
Val
ueLa
zard
Val
uatio
n
36
CO
NFL
ICT
ED
TH
IRD
-PA
RT
YV
ALU
AT
ION
SH
OW
SA
US
$8
.2B
LOS
SIN
VA
LUE
NO
TC
ON
GR
UE
NT
WIT
HM
AR
KE
TC
ON
DIT
ION
SLa
zard
´sva
lua
tio
nw
as
no
tco
nco
rda
nt
wit
hm
ark
et
con
dit
ion
s
Laza
rd d
oes n
ot fa
irly
repr
esen
t the
pos
t-con
firm
atio
n go
ing
conc
ern
valu
e of
the
com
pany
as e
stab
lishe
d in
the
Bank
rupt
cy C
ode
sect
ion
1129
.
The
high
num
ber
ofaw
arde
dan
dex
tend
edco
ntra
cts
anno
unce
din
the
2la
test
fleet
repo
rts
byVa
laris
dem
onst
rate
sth
atth
eco
mpa
nyw
asqu
ickly
reco
verin
g,co
ntra
ryto
man
agem
entg
uida
nce
that
alle
ged
the
oppo
site
durin
gth
eba
nkru
ptcy
proc
ess.
Ther
eby,
Laza
rd´s
valu
atio
nw
asba
sed
infla
wed
man
agem
entg
uida
nce
that
didn
´tfa
irly
repr
esen
tthe
goin
gco
ncer
nva
lue
ofth
eco
mpa
ny.
(1) E
stim
ated
from
new
s rel
ease
sSo
urce
: Tem
pest
´s e
stim
ates
and
com
pany
filin
gs
Ensc
o &
Row
an
Mer
ger
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 86 of 133
706.
026.
MI.1
Conf
iden
tial
37
May
3rd,2
021
Anno
unce
d21
new
cont
ract
s(5
com
ing
from
ARO
)in
itsfle
etre
port
.
CO
NFL
ICTE
DT
HIR
D-P
AR
TYV
ALU
AT
ION
SHO
WS
AU
S$8
.2B
LOSS
INV
ALU
EN
OT
CO
NG
RU
ENT
WIT
HM
AR
KET
CO
ND
ITIO
NS
Laza
rd´s
valu
ati
on
wa
sn
ot
con
cord
an
tw
ith
ma
rke
tco
nd
itio
ns
Sour
ce: V
alar
isan
noun
cem
ents
and
new
s rep
orts
May
10th
,202
1Ne
wex
tens
ion
for
VALA
RIS
JU-1
15
May
19th
,202
1Ne
wco
ntra
ctaw
ard
forV
ALAR
ISJU
-117
June
1st,
2021
New
cont
ract
awar
dfo
rVA
LARI
SDS
-12
June
2nd,
2021
New
cont
ract
awar
dfo
rVA
LARI
SJU
-291
June
8th,
2021
New
cont
ract
awar
dfo
rVAL
ARIS
DS-1
8
April
30th
,202
1Re
emer
ges
from
Bank
rupt
cy
May
Ju
ne
In th
e m
onth
s prio
r to
bank
rupt
cy V
alar
isan
noun
ced
zero
new
cont
ract
s. Ho
wev
er, r
ight
afte
r em
ergi
ng fr
om b
ankr
uptc
y it s
tart
ed re
port
ing
new
cont
ract
aw
ards
on
a co
nsta
ntly
bas
is an
d in
the
Augu
st 2
021
Flee
t rep
ort i
t rep
orte
d ov
er U
S$1
billi
on in
bac
klog
.
The
high
num
ber o
f con
trac
t aw
ards
righ
t afte
r ban
krup
tcy c
ontr
adic
tsLa
zard
´s v
alua
tion
assu
mpt
ions
(root
ed in
flaw
ed
man
agem
ent g
uida
nce)
sinc
e th
ey a
re n
ot in
acc
orda
nce
with
mar
ket c
ondi
tions
.
Augu
st2n
d,20
21La
test
fleet
repo
rtan
noun
ced
23ne
wco
ntra
ctsr
epre
sent
ing
over
US$1
billi
onin
back
log.
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 87 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: M
anag
emen
t cor
pora
te p
rese
ntat
ions
: Sep
-201
9; F
eb-2
020.
Disc
losu
re s
tate
men
t. Br
ent c
rude
oil
price
s. Fo
r mor
e in
form
atio
n, s
ee a
ppen
dix
B, sl
ide
27-3
2.
-
20
40
60
80 Ja
n-19
Jun-
19No
v-19
Apr-
20Se
p-20
Feb-
21
Oil
price
s fro
m 2
019
to 2
021
(US$
)
Pre-
COVI
D pr
ices
COVI
D-19
Vala
ris
Bank
rupt
cyLa
zard
Va
luat
ion
Inde
pend
ent t
hird
-par
ty v
alua
tion
38
CO
NFL
ICT
ED
TH
IRD
-PA
RT
YV
ALU
AT
ION
SH
OW
SA
US
$8
.2B
LOS
SIN
VA
LUE
NO
TC
ON
GR
UE
NT
WIT
HM
AR
KE
TC
ON
DIT
ION
SLa
zard
´sva
lua
tio
nw
as
no
tco
nco
rda
nt
wit
hm
ark
et
con
dit
ion
s
99.7
91.0
96.4
99.5
101.
210
2.3
103.
210
4.1
2019
2020
2021
2022
2023
2024
2025
2026
Estim
ated
oil
dem
and
for t
he n
ext f
ive
year
s(m
b/d)
•In
spite
ofa
proj
ecte
dut
iliza
tion
indu
stry
aver
age
of70
%by
2021
,PP&
Elo
ss90
%of
itsva
lue
•Th
eoi
ldem
and
will
surp
asst
heex
istin
gde
man
dbe
fore
the
pand
emic,
bene
fitin
gth
em
arke
tco
nditi
ons
and
indi
catin
gan
econ
omic
reac
tivat
ion.
Note
: The
oil
dem
and
was
take
n fro
m th
e In
tern
atio
nal E
nerg
y Age
ncy
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 88 of 133
706.
026.
MI.1
IX.
OT
HER
IR
REG
ULA
RIT
IES
39Co
nfid
entia
l
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 89 of 133
706.
026.
MI.1
Conf
iden
tial
OTH
ERIR
REG
ULA
RIT
IES
Ma
na
gem
en
tco
mp
en
sati
on
incr
ea
sed
de
spit
eco
vid
-19
Sour
ce:.
Vala
ris 2
020
10-K
.
5.8
3.4
3.2
11.5
7.6
4.2
3.8
5.0
T.P.
Bur
keJ.
Baks
htM
. McG
uint
yC.
G. T
row
ell
Exec
utiv
e to
tal c
ompe
nsat
ion
2019
-202
0 (U
S$ M
M)
2019
2020
Nam
e an
d Pr
incip
al P
ositi
onSa
lary
Bonu
sSh
are
Awar
dsNo
n-Eq
uity
Inc.
pla
nO
ther
com
pens
atio
nTh
omas
P. B
urke
(CEO
)85
5,00
0 1,
282,
500
1,42
3,44
7 3,
397,
129
609,
014
Jona
than
Bak
sht(
CFO
)55
0,00
0 1,
375,
000
582,
699
1,62
8,02
2 83
,847
M
ichae
l McG
uint
y (G
ener
al c
ouns
el)
510,
000
1,27
5,00
0 44
9,51
2 1,
235,
704
299,
844
Carl
G. T
row
ell(
Exec
utiv
e Ch
airm
an)
189,
150
--
-4,
838,
803
Durin
g20
20,d
espi
teCO
VID
19:
•Bu
rke´
sco
mpe
nsat
ion
incr
ease
d30
.7%
from
the
prio
rye
ar.
•Ba
ksht
´sco
mpe
nsat
ion
incr
ease
d25
.7%
from
the
prio
rye
ar.
•M
cGui
nty´
scom
pens
atio
nin
crea
sed
19.2
%co
mpa
red
topr
iory
ear.
•Tr
owel
lste
pped
dow
nas
exec
utiv
ech
airm
anon
April
30,2
020.
Exec
utiv
e co
mpe
nsat
ion
incr
ease
d de
spite
bad
man
agem
ent.
Also
, let
´s n
ot fo
rget
the
10%
ES
OP
rese
rved
for
them
in th
e re
orga
niza
tion
plan
40
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 90 of 133
706.
026.
MI.1
Conf
iden
tial
0102030405060708090
0510152025303540 May
-18
Aug-
18No
v-18
Feb-
19M
ay-1
9Au
g-19
Nov-
19Fe
b-20
May
-20
Aug-
20No
v-20
Feb-
21M
ay-2
1
Oil Price $US
Valaris US$
Vala
risBr
ent O
il Pr
ice
41
OTH
ERIR
REG
ULA
RIT
IES
Co
nst
an
tm
isle
ad
ing
sta
tem
en
tsb
ym
an
age
me
nt
Vala
ris a
dds A
dam
Wei
tzm
an a
s Bo
ard
Mem
ber
Covi
d-19
Ensc
o en
tere
d in
to a
mer
ger
agre
emen
t with
Row
an
Ensc
o an
d Ro
wan
mer
ge to
fo
rm V
alar
is
Oil p
rices
reco
vere
d
Vala
ris g
ets l
isted
aga
in ju
st o
ne
mon
th a
fter c
ourt
app
rove
d an
d co
nfirm
ed r
estr
uctu
ring
plan
Vala
ris a
nnou
nced
pos
sible
re
stru
ctur
ing
Vala
ris fi
led
for C
hapt
er 1
1 Vala
ris re
ceiv
ed
cour
t app
rova
l of
chap
ter 1
1 pl
an
¨We
are
seei
ng h
ighe
r le
vels
of cu
stom
er
dem
and¨
-3Q
18 E
C
¨We
have
bor
row
ing c
apac
ity o
f $2
bill
ion
thro
ugh
Sept
embe
r 20
19, $
1.3
billi
on fr
om O
ctob
er
2019
to S
epte
mbe
r 202
0, an
d $1
.2
billi
on fr
om O
ctob
er 2
020
thro
ugh
Sept
embe
r 202
2¨-4
Q18
EC
¨Ava
ilabl
e liq
uidi
ty w
as $
1.6
billi
on, o
f whi
ch $
130
mill
ion
was
ca
sh a
nd $
1.5
billi
on w
as u
ndra
wn
capa
city
on th
eir r
evol
ving
cred
it fa
cility
¨-3Q
19 E
C
¨I'm
ple
ased
to re
port
that
as o
f ye
ar-e
nd, w
e ha
d no
am
ount
dr
awn
on o
ur re
volv
ing c
redi
t fa
cility
¨-4Q
19 E
C
¨Hig
h-Q
ualit
y Fl
eet P
rovi
des
Sign
ifica
nt A
sset
Cov
erag
e to
Ra
ise C
apita
l to
Cove
r Int
erim
Fu
ndin
g Gap
s¨-F
eb-2
0 M
D&A
Sour
ce: C
ompa
ny S
EC fi
lings
, M
D&As
and
Ear
ning
s Ca
lls
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 91 of 133
706.
026.
MI.1
Conf
iden
tial
42
OTH
ERIR
REG
ULA
RIT
IES
Hig
hly
un
usu
al
de
pa
rtu
reo
fC
hie
fLe
gal
Off
ice
r
How
ever
, let
's no
t for
get t
hat:
•As
are
sult
ofth
ere
orga
niza
tion
plan
,am
anag
emen
tin
cent
ive
plan
was
mad
e,in
whi
chan
ESO
Pof
10%
was
esta
blish
edfo
rman
agem
ent
•Va
laris
man
agem
ent
ince
ntiv
epl
anw
illve
stno
earli
erth
an1
year
onw
hich
the
awar
dis
gran
ted,
subj
ect
toco
ntin
ued
serv
icean
dth
eac
hiev
emen
tofp
erfo
rman
cem
etric
s
Why
wou
ld th
e CL
O le
ave
havi
ng ju
st b
een
awar
ded
an e
quity
ESO
P pa
ckag
e po
tent
ially
wor
th h
undr
eds o
f mill
ions
of d
olla
rs?
Sour
ce:.
Vala
ris 8
-K fr
om M
ay 5
th, 2
021
Mic
hael
T. M
cGui
nty
On
May
5th,
2021
,Va
laris
was
notif
ied
that
,ef
fect
ive
asM
ay31
st,
2021
,M
ichae
l,th
eCo
mpa
ny’s
Seni
orVi
cePr
esid
ent,
Gene
ral
Coun
sel
and
Secr
etar
y,w
illre
sign
from
the
Com
pany
.
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 92 of 133
706.
026.
MI.1
Conf
iden
tial
OTH
ERIR
REG
ULA
RIT
IES
Laza
rda
nd
oth
er
con
flic
tso
fin
tere
st
Sour
ce: Y
ahoo
Fin
ance
. Disc
losu
re st
atem
ent.
Sam
Whi
ttak
er re
join
ed
Laza
rd F
inan
cial A
dviso
ry a
s M
anag
ing
Dire
ctor
Laza
rdLt
dan
noun
ced
that
Sam
Whi
ttake
rwill
re-jo
inLa
zard
Fina
ncia
lAdv
isory
asa
Man
agin
gDi
rect
or,
effe
ctiv
eim
med
iate
ly.S
amjo
insf
rom
PJT
Part
ners
whe
rehe
wor
ked
fort
hela
stfiv
eye
ars,
mos
trec
ently
asa
Man
agin
gDi
rect
orin
itsEM
EARe
stru
ctur
ing
grou
p.Bo
thLa
zard
and
JTP
part
ners
had
prov
ided
finan
ciala
dviso
ryse
rvice
sto
Vala
risto
raise
equi
ty,h
owev
er,i
twas
unsu
cces
sful
.Its
houl
dbe
note
dth
atfe
esre
ceiv
edin
rest
ruct
urin
gm
aybe
mat
eria
llyhi
gher
than
thos
ere
ceiv
edfo
rrai
sing
equi
tyor
debt
.
Laza
rd p
rofe
ssio
nal C
ompe
nsat
ion
•A
mon
thly
fee
of$2
50,0
00
•A
rest
ruct
urin
gfe
eof
17,0
00,0
00.
•En
hanc
edRe
stru
ctur
ing
Fee
of$5
,000
,000
.
•Ex
chan
geFe
eof
$17,
000,
000.
Oth
er in
cons
isten
cies i
n va
luat
ion
Laza
rddi
dno
test
imat
eth
eva
lue
ofan
yta
xas
sets
,nor
did
ites
timat
eth
eim
pact
ofan
yca
ncel
latio
nof
inde
bted
ness
inco
me
onth
eRe
orga
nize
dVa
laris
’Pro
ject
ions
.The
fore
goin
gis
rele
vant
beca
use
they
coul
dha
vea
signi
fican
tim
pact
onva
luat
ion.
Likew
ise,n
ova
lue
was
assig
ned
toAR
O.
43
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 93 of 133
706.
026.
MI.1
Conf
iden
tial
OTH
ERIR
REG
ULA
RIT
IES
RC
Fle
nd
ers
alo
ng
wit
hm
an
age
me
nt
may
hav
ep
lott
ed
for
Va
lari
sto
gob
an
kru
pt
Sour
ce: D
isclo
sure
stat
emen
t. Va
laris
201
9-20
10-
K.
Vala
ris Li
quid
ity re
port
ed b
y m
anag
emen
t In
the
2019
10-K
,file
don
Febr
uary
21,2
020,
Man
agem
entr
epor
ted
that
they
had
US$9
7.2
MM
inca
shan
dUS
$1.6
Bun
draw
nca
pacit
yun
dert
heir
cred
itfa
cility
,whi
chex
pire
din
Sept
embe
r202
2.
The
impa
ct o
f CO
VID-
19 in
Va
laris
Liqu
idity
Inth
e20
1910
-K,f
iled
onFe
brua
ry21
,202
0,M
anag
emen
trep
orte
dth
atth
eyha
dUS
$97.
2M
Min
cash
and
US$1
.6B
undr
awn
capa
city
unde
rthe
ircr
edit
facil
ity,w
hich
expi
red
inSe
ptem
ber2
022.
Anin
ciden
ton
one
ofth
eVa
laris
plat
form
s(w
hich
was
fully
insu
red)
caus
eda
maj
orco
ntra
ctto
beca
ncel
edan
da
back
log
ofap
prox
imat
ely
150
mill
ion
lost
.Com
bine
dw
ithCO
VID-
19,t
heRC
Fle
nder
sde
clare
da
mat
eria
ladv
erse
effe
ct,w
hich
was
notc
onte
sted
bym
anag
emen
t.Th
isha
da
signi
fican
tne
gativ
eef
fect
,whi
chw
asa
maj
orfa
ctor
inth
eba
nkru
ptcy
.
RCF
Agen
t´s V
alua
tion
Disp
ute
Desp
iteha
ving
acce
pted
prev
ious
valu
atio
ns,t
heRC
FLe
nder
shad
adi
sput
ew
hen
seek
ing
that
,with
aneq
uity
ofUS
$1.
0B,
apa
rtici
patio
nof
54.7
%w
asre
serv
edfo
rthe
m,w
hich
impl
ied
a1.
7xla
rger
owne
rshi
pco
mpa
red
to32
.5%
ofLa
zard
'sva
luat
ion,
whi
chgi
vest
hem
a10
0%pr
incip
alre
cove
ry.
32.5
%
54.7
%
BK v
alua
tion
Disp
uted
by
RCF
lend
ers
RCF
equi
ty o
wne
rshi
p
44
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 94 of 133
706.
026.
MI.1
Conf
iden
tial
OTH
ERIR
REG
ULA
RIT
IES
Ma
na
gem
en
ta
lon
gw
ith
len
de
rsso
ug
ht
tod
ete
rre
do
the
rp
art
ies
fro
mta
kin
go
ver
an
dim
ple
me
nti
ng
an
alt
ern
ati
vep
lan
Sour
ce: V
alar
is w
eb p
age
new
s. VA
L –
NOL
(Equ
ity tr
adin
g) In
terim
Ord
er R
evise
d
Vala
rispl
can
noun
ced
that
onAu
gust
19,
2020
itw
asno
tifie
dby
the
New
York
Stoc
kEx
chan
geof
itsde
term
inat
ion
toin
defin
itely
susp
end
trad
ing
ofth
eCo
mpa
ny’s
com
mon
stoc
kan
dto
com
men
cepr
ocee
ding
sto
delis
tthe
Com
pany
’sco
mm
onst
ock
from
the
NYSE
,in
acco
rdan
cew
ithSe
ctio
n80
2.01
Dof
the
NYS
ELis
ted
Com
pany
Man
ual
due
toth
eCo
mpa
ny’s
volu
ntar
yfil
ing
for
reor
gani
zatio
nun
der
Chap
ter
11of
the
Bank
rupt
cyCo
deon
Augu
st19
,202
0.
Trad
ing
susp
ensio
n an
d de
listin
g of
Val
aris
com
mon
stoc
k
Proc
edur
es th
at a
pply
to tr
ansf
ers
of C
omm
on S
tock
Asa
resu
ltof
the
susp
ensio
nan
dde
listin
gof
the
Vala
risco
mm
onst
ock,
ifth
ere
are
tran
sact
ions
ofa
cons
ider
able
volu
me
ofat
leas
t8,9
74,3
59sh
ares
,the
part
iest
osu
chtr
ansa
ctio
nm
ustf
ilew
ithth
eCo
urt,
and
serv
eup
onth
eNo
tice
Part
ies,
anad
vanc
ew
ritte
nde
clara
tion
ofth
ein
tend
edtr
ansf
erof
Com
mon
Stoc
k.
Man
agem
ent i
nten
t to
prot
ect t
ax
attr
ibut
es
One
ofth
ein
tent
ions
ofsu
spen
ding
tran
sact
ions
with
Vala
risst
ock
isth
atM
anag
emen
twan
tsto
prot
ectt
heta
xat
trib
utes
,whi
char
est
illat
risk.
The
Tax
Attr
ibut
esar
epo
tent
ially
ofsig
nific
antv
alue
toVa
laris
and
thei
res
tate
sbe
caus
eth
eCo
mpa
nyca
nca
rry
forw
ard
cert
ain
Tax
Attr
ibut
esto
offs
etfu
ture
taxa
ble
inco
me
infu
ture
year
s.
Vala
ris m
anag
emen
t sou
ght t
o pr
even
t a th
ird p
arty
from
taki
ng o
ver t
he co
mpa
ny a
nd im
plem
entin
g
an
alte
rnat
e pl
an b
y p
reve
ntin
g pu
rcha
ses o
f sha
res
45
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 95 of 133
706.
026.
MI.1
AP
PEN
DIX
A:
U.S
. G
AA
P I
MPA
IRM
ENT
PO
LIC
Y
Conf
iden
tial
46
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 96 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: K
PMG
Impa
irmen
t of n
on-fi
nanc
ial a
sset
s han
dboo
k
AP
PE
ND
IXA
:U
.S.
GA
AP
IMPA
IRM
EN
TP
OLI
CY
U.S
.G
AA
PA
SC3
60
-10
Issu
e1:
Vala
risdi
dno
tim
paire
deq
ually
the
asse
tgr
oup.
Onl
yEn
sco
asse
tw
ere
subs
tant
ially
impa
ired;
whi
leRo
wan
’sre
mai
nvi
rtua
lthe
sam
e.
Issu
e2:
Carr
ying
outt
hree
cons
ecut
ive
(Mar
ch,J
une,
and
Oct
ober
2020
)im
pairm
ents
ina
year
leng
thvi
olat
esth
em
anda
teof
refle
ctin
gth
em
arke
tva
lue
ofth
egr
oup
asse
t.
Wha
tisa
nIm
pairm
ent?
Anim
pairm
ents
isa
redu
ctio
nin
the
carr
ying
valu
eof
anas
set
grou
p.An
impa
irmen
tsoc
curs
whe
na
long
-live
dgr
oup
asse
tw
hen
the
com
pany
conc
lude
stha
tthe
dras
ticre
duct
ion
inth
eva
lue
ofth
elo
ng-li
ved
asse
tisn
otlo
nger
reco
vera
ble.
Impa
irmen
tmea
sure
men
tfor
long
-live
das
sets
Step
1
Step
2
Undi
scou
nted
Cash
Flow
-Est
imat
edfu
ture
cash
flow
sus
edto
test
the
reco
vera
bilit
yof
alo
ng-li
ved
asse
tsh
allo
nly
inclu
deth
efu
ture
cash
inflo
ws
less
dire
ctly
asso
ciate
dca
shou
tflow
sw
ithan
dth
atar
eex
pect
edto
arise
asa
dire
ctre
sult
ofth
eus
ean
dev
entu
aldi
spos
ition
ofth
eas
setg
roup
.Tho
sees
timat
essh
alle
xclu
dein
tere
stch
arge
stha
twill
bere
cogn
ized
asan
expe
nse
whe
nin
curr
ed.
Fair
valu
e-F
air
valu
eis
the
price
that
wou
ldbe
rece
ived
tose
llan
asse
tor
paid
totr
ansf
era
liabi
lity
inan
orde
rlytr
ansa
ctio
nbe
twee
nm
arke
tpar
ticip
ants
atth
em
easu
rem
ent
date
.Fai
rval
ueis
anex
itpr
ice.
47
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 97 of 133
706.
026.
MI.1
AP
PEN
DIX
B:
VA
LAR
IS V
ALU
ATI
ON
S A
ND
MA
RK
ET
CO
ND
ITIO
NS
Conf
iden
tial
48
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 98 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXB
:V
ALA
RIS
VA
LUA
TIO
NS
AN
DM
AR
KE
TC
ON
DIT
ION
SIn
de
pe
nd
en
tth
ird
-pa
rty
valu
ati
on
,Se
pte
mb
er
20
19
Sour
ce: M
anag
emen
tcor
pora
te p
rese
ntat
ion,
Sep
tem
ber 2
019,
pag
e 27
.
The
aver
age
Gros
s PP&
E es
timat
ed b
y fiv
e in
depe
nden
t ana
lyst
is U
S$10
.4B
with
a re
plac
emen
t val
ue o
f US$
24.4
B, a
s of
Augu
st 2
2, 2
019.
49
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 99 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXB
:V
ALA
RIS
VA
LUA
TIO
NS
AN
DM
AR
KE
TC
ON
DIT
ION
SIn
de
pe
nd
en
tth
ird
-pa
rty
valu
ati
on
,Fe
bru
ary
20
20
Sour
ce: M
anag
emen
t cor
pora
te p
rese
ntat
ion,
Feb
ruar
y 20
20, p
age
27
The
aver
age
Gros
s PP&
E es
timat
ed b
y fiv
e in
depe
nden
t ana
lyst
is U
S$9.
4B w
ith a
repl
acem
ent v
alue
of U
S$23
.9B,
as o
f De
cem
ber 1
0, 2
019.
50
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 100 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXB
:V
ALA
RIS
VA
LUA
TIO
NS
AN
DM
AR
KE
TC
ON
DIT
ION
SLa
zard
´sva
lua
tio
nd
ate
da
so
fD
ece
mb
er
20
20
Sour
ce: D
isclo
sure
stat
emen
t, pa
ge 4
44.
Laza
rd´s
valu
atio
nre
flect
sa
loss
inPP
&E
valu
eof
~90%
com
pare
dto
the
aver
age
ofth
efiv
epr
evio
usva
luat
ions
pres
ente
dby
man
agem
ent
inFe
brua
ry20
20.
Laza
rd´s
val
uatio
n co
ntra
dict
s pre
viou
s val
uatio
n an
d cu
rren
t mar
ket c
ondi
tions
, with
a lo
ss in
val
ue
of a
lmos
t 90%
of t
he P
P&E.
The
valu
atio
nis
not
refle
ctin
gth
eFa
irM
arke
tVa
lue
ofth
eas
sets
.
51
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 101 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXB
:V
ALA
RIS
VA
LUA
TIO
NS
AN
DM
AR
KE
TC
ON
DIT
ION
SM
ark
et
con
dit
ion
sp
rese
nte
db
ym
an
age
me
nt
inFe
bru
ary
20
20
Sour
ce: M
anag
emen
t cor
pora
te p
rese
ntat
ion,
Feb
ruar
y 20
20 p
age
7.
87
5442
32
58
72
91
2013
2014
2015
2016
2017
2018
2019
Num
ber o
f new
Maj
or O
ffsho
re P
roje
ct A
ppro
vals
•W
ithlo
wer
proj
ect
cost
sre
lativ
eto
prio
rye
ars
and
incr
easin
gca
shflo
wsf
rom
high
erco
mm
odity
price
s,th
enu
mbe
rof
final
inve
stm
entd
ecisi
onap
prov
als
for
larg
eof
fsho
repr
ojec
tsha
sinc
reas
edre
cent
ly
•Ca
pita
lex
pend
iture
sw
ere
expe
cted
toin
crea
seat
agr
adua
lra
teov
erth
ene
xtse
vera
lye
ars,
with
the
maj
ority
ofth
isgr
owth
com
ing
from
proj
ects
inde
epw
ater
The
aver
age
Gros
s PP&
E es
timat
ed b
y fiv
e in
depe
nden
t ana
lyst
is U
S$10
.4B
with
a re
plac
emen
t val
ue o
f US$
24.4
B, a
s of
augu
st 2
2, 2
019.
52
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 102 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXB
:V
ALA
RIS
VA
LUA
TIO
NS
AN
DM
AR
KE
TC
ON
DIT
ION
SO
ilp
rice
sfr
om
20
16
to2
02
1
Sour
ce: B
rent
crud
e oi
l pric
es (B
Z=F)
take
n fro
m y
ahoo
fina
nce.
- 1
0.0
20.
0 3
0.0
40.
0 5
0.0
60.
0 7
0.0
80.
0 9
0.0
100
.0 3/11
/201
611
/11/
2016
7/11
/201
73/
11/2
018
11/1
1/20
187/
11/2
019
3/11
/202
011
/11/
2020
Oil
price
s fro
m 2
016
to 2
021
Pre-
COVI
Dpr
ices
COVI
D-19
Vala
ris
Bank
rupt
cy
Durin
g CO
VID-
19 c
risis
in 2
020,
and
the
drop
in o
il pr
ices,
man
agem
ent a
rgue
d th
at th
e in
dust
ry w
as g
oing
to ta
ke so
me
time
to
reco
ver,
how
ever
, at t
he e
nd o
f 202
0, o
il pr
ices b
egan
to ri
se, c
urre
ntly
exc
eedi
ng th
e pr
ices t
hat t
hey
wer
e be
fore
the
pand
emic.
53
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 103 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXB
:V
ALA
RIS
VA
LUA
TIO
NS
AN
DM
AR
KE
TC
ON
DIT
ION
SV
ALP
Qst
ock
an
do
ilp
rice
sfr
om
ba
nkr
up
tcy
un
til
Ma
rch
20
21
Sour
ce: B
rent
crud
e oi
l pric
es (B
Z=F)
and
VAL
PQ st
ock
price
wer
e ta
ken
from
yah
oo fi
nanc
e.
Cont
rary
to m
anag
emen
t arg
umen
ts, t
he p
rice
of o
il ha
s bee
n on
the
rise
since
Val
aris
anno
unce
d its
ban
krup
tcy
in
Aug
ust 2
020,
whi
ch h
as b
een
refle
cted
in th
e st
ock
price
.
- 0.0
5
0.1
0
0.1
5
0.2
0
0.2
5
0.3
0
0.3
5
-
10.
00
20.
00
30.
00
40.
00
50.
00
60.
00
70.
00
80.
00
Aug-
20O
ct-2
0De
c-20
Feb-
21
Oil
price
com
pare
d w
ith V
alar
is st
ock
(US$
)
Oil
price
sVa
laris
stoc
k
Vala
ris B
ankr
uptc
yLa
st La
zard
´s v
alua
tion
54
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 104 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXB
:V
ALA
RIS
VA
LUA
TIO
NS
AN
DM
AR
KE
TC
ON
DIT
ION
SW
orl
do
ild
em
an
dfo
rn
ext
five
yea
rs
Sour
ce: I
EA a
naly
sis a
nd fo
reca
st: h
ttps
://w
ww
.iea.
org/
repo
rts/
oil-2
021?
utm
_cam
paig
n=IE
A%20
new
slett
ers&
utm
_sou
rce=
Send
Grid
&ut
m_m
ediu
m=E
mai
l
Oil D
eman
d (m
b/d)
2019
2020
2021
2022
2023
2024
2025
2026
Tota
l OEC
D
47.7
42
.1
44.7
45
.8
46.2
46
.2
46.0
45
.8
Tota
l non
-OEC
D 52
.0
48.9
51
.7
53.7
55
.0
56.1
57
.2
58.3
To
tal D
eman
d
99.7
91
.0
96.4
99
.5
101.
2 10
2.3
103.
2 10
4.1
99.7
91.0
96.4
99.5
101.
210
2.3
103.
210
4.1
2019
2020
2021
2022
2023
2024
2025
2026
Estim
ated
oil
dem
and
for t
he n
ext f
ive
year
s(m
b/d)
Afte
r the
dro
p in
oil
dem
and
in 2
020,
it w
ill g
row
app
roxi
mat
ely
2.3%
ann
ually
unt
il 20
26
By20
21,d
eman
dw
illha
veal
mos
trec
over
ed,a
ndby
2023
,pr
e-pa
ndem
icde
man
dw
illbe
surp
asse
d.
55
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 105 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXB
:V
ALA
RIS
VA
LUA
TIO
NS
AN
DM
AR
KE
TC
ON
DIT
ION
SW
orl
do
ilsu
pp
ly
Sour
ce: I
EA a
naly
sis a
nd fo
reca
st: h
ttps:
//w
ww
.iea.
org/
repo
rts/
oil-
2021
?utm
_cam
paig
n=IE
A%20
new
slett
ers&
utm
_sou
rce=
Send
Grid
&ut
m_m
ediu
m=E
mai
l
Supp
ly (
mb/
d)20
1920
2020
2120
2220
2320
2420
2520
26
Tota
l OEC
D 28
.5
27.9
28
.2
29.0
29
.6
29.9
29
.9
29.7
Tota
l non
-OEC
D 32
.0
30.5
30
.6
31.5
32
.0
32.0
32
.1
32.1
Proc
essin
g ga
ins (
1)2.
4 2.
1 2.
2 2.
4 2.
4 2.
4 2.
5 2.
5
Glob
al b
iofu
els
2.8
2.6
2.8
3.0
3.1
3.2
3.3
3.3
Tota
l non
-OPE
C 65
.7
63.1
63
.8
65.9
67
.1
67.5
67
.8
67.6
OPE
C
Crud
e 29
.5
25.7
-
--
--
-
OPE
C NG
Ls
5.4
5.2
5.3
5.5
5.5
5.6
5.6
5.7
Tota
l OPE
C 34
.9
30.9
-
--
--
-
Tota
l Sup
ply
100.
6 94
.0
--
--
--
65.7
63.1
63.8
65.9
67.1
67.5
67.8
67.6
2019
2020
2021
2022
2023
2024
2025
2026
Tota
l non
-OPE
C su
pply
(mb/
d)
Alth
ough
the
tota
les
timat
edgl
obal
supp
lyis
not
yet
avai
labl
e,th
esu
pply
from
non-
OPE
Cco
untr
ies
will
exce
edpr
e-pa
ndem
icle
vels
in20
22.
Note
1:Pr
oces
sing
gain
sar
ene
tvo
lum
etric
gain
san
dlo
sses
inth
ere
finin
gpr
oces
sand
mar
ine
tran
spor
tatio
nslo
sses
.
56
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 106 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXB
:V
ALA
RIS
VA
LUA
TIO
NS
AN
DM
AR
KE
TC
ON
DIT
ION
SO
ffsh
ore
rig
uti
liza
tio
nh
ea
de
dfo
r8
0%
ma
rkin
ne
xt3
yea
rs
Sour
ce: E
sgia
n, B
asso
eco
mm
enta
ry. M
anag
emen
t Cor
pora
te P
rese
ntat
ion,
Aug
ust 2
020,
pag
e 26
.
Bass
oe R
igs A
naly
tics
expe
ctat
ion
Bass
oeex
pect
sglo
balc
ompe
titiv
eut
iliza
tion
toris
efro
m62
%re
cord
edat
the
begi
nnin
gof
this
year
to70
%by
the
end
of20
21.B
yJu
ly20
24,c
ompe
titiv
eut
iliza
tion
will
hit8
0%an
dco
ntin
uera
ising
thro
ugh
2025
.Jac
kup
utili
zatio
nis
antic
ipat
edto
show
the
shar
pest
reco
very
ofth
ese
gmen
tsfro
m67
%in
Janu
ary
2021
to82
%by
late
2025
,whi
leth
eflo
atin
grig
segm
enti
spro
ject
edto
have
aslo
wer
revi
vali
nco
mpa
rison
buti
sstil
linc
reas
efro
m51
%in
Janu
ary
2021
and
tobe
78%
byla
te20
25.
Vala
ris m
anag
emen
t ex
pect
ed u
tiliza
tion
By20
21,
Vala
rism
anag
emen
tha
des
timat
ed46
%ut
iliza
tion,
whi
chw
ould
decli
neto
40%
durin
g20
22an
d20
23,
reco
verin
gin
2024
and
endi
ngat
67%
in20
25.
46%
67%
70%
80%
2021
2025
Vala
ris u
tiliza
tion
com
pare
d to
glo
bal r
igs
Vala
risGl
obal
offs
hore
rigs
The
expe
cted
glo
bal u
tiliza
tion
for 2
021
is 1.
5x
grea
ter t
han
the
repo
rted
by
Vala
ris m
anag
emen
t. 57
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 107 of 133
706.
026.
MI.1
AP
PEN
DIX
C:
MA
NA
GEM
ENT
AN
D R
CF
LEN
DER
S EQ
UIT
Y V
ALU
E C
ALC
ULA
TIO
N
Conf
iden
tial
58
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 108 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXC
:M
AN
AG
EM
EN
TA
ND
RC
FLE
ND
ER
SE
QU
ITY
VA
LUE
CA
LCU
LAT
ION
Ma
na
gem
en
te
qu
ity
valu
eca
lcu
lati
on
Sour
ce: M
anag
emen
t Cor
pora
te P
rese
ntat
ions
, Feb
ruar
y 20
20. D
isclo
sure
sta
tem
ent.
2020
10-
K.
Equi
ty va
lue
acco
rdin
g to
th
e BK
val
uatio
nAc
cord
ing
toLa
zard
´sva
luat
ion,
the
Equi
tyVa
lue,
afte
rre
stru
ctur
ing,
will
beUS
$2,4
48.0
MM
.Add
ition
ally
,as
part
ofre
orga
niza
tion
plan
,am
anag
emen
tinc
entiv
epl
anw
ascr
eate
d,w
hich
rese
rves
upto
10%
ofth
eEq
uity
tom
anag
emen
t.
244.
843
7.5
2,33
5.0
BK v
alua
tion
10-K
Equi
ty @
Rep
lace
men
tVa
lue
Man
agem
ent o
wne
rshi
p va
lue
(US$
MM
)
Equi
ty v
alue
BK
valu
atio
n (U
S$ M
M)
Vala
ris B
K eq
uity
val
ue
2,44
8.0
Man
agem
ent o
wne
rshi
p10
%M
anag
emen
t equ
ity v
alue
24
4.8
Equi
ty v
alue
10-
K (U
S$ M
M)
Vala
ris 1
0-K
equi
ty
4,37
4.6
Man
agem
ent o
wne
rshi
p10
%M
anag
emen
t equ
ity v
alue
43
7.5
Equi
ty v
alue
@ R
VRe
plac
emen
t val
ue a
s of D
ecem
ber 2
019
23,9
00.0
Va
laris
BK
valu
atio
n de
bt
550.
0Eq
uity
@ R
V -d
ebt
23,3
50.0
M
anag
emen
t ow
ners
hip
10%
Man
agem
ent e
quity
val
ue
2,33
5.0
10%
man
agem
ento
wne
rshi
pis
equi
vale
ntto
ava
lue
ofup
toUS
$2.3
B.
59
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 109 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXC
:M
AN
AG
EM
EN
TA
ND
RC
FLE
ND
ER
SE
QU
ITY
VA
LUE
CA
LCU
LAT
ION
RC
Fle
nd
ers
eq
uit
yva
lue
calc
ula
tio
n
Sour
ce: M
anag
emen
t Cor
pora
te P
rese
ntat
ions
, Feb
ruar
y 20
20. D
isclo
sure
sta
tem
ent.
2020
10-
K.
Equi
ty va
lue
acco
rdin
g to
th
e BK
val
uatio
nAc
cord
ing
toLa
zard
´sva
luat
ion,
the
Equi
tyVa
lue,
afte
rre
stru
ctur
ing,
will
beUS
$2,4
48.0
MM
.Ad
ditio
nally
,th
ere
orga
niza
tion
plan
rese
rves
32.5
%of
the
Vala
risEq
uity
toth
eRe
volv
erCr
edit
Facil
ityLe
nder
s.
795.
6
7,58
8.8
Equi
ty v
alue
BK
valu
atio
nEq
uity
@ re
plac
emen
t val
ue
RCF
Lend
ers r
ecov
ery
unde
r reo
rgan
izatio
n pl
an(U
S$ M
M)
Equi
ty v
alue
BK
valu
atio
n Va
laris
BK
equi
ty v
alue
2,
448.
0 RC
F ow
ners
hip
32.5
%RC
F eq
uity
val
ue
795.
6
Equi
ty v
alue
10-
K (U
S$ M
M)
Vala
ris 1
0-K
equi
ty
4,37
4.6
RCF
owne
rshi
p32
.5%
RCF
equi
ty v
alue
1,
421.
7
10%
RCF
lend
erso
wne
rshi
pis
equi
vale
ntto
ava
lue
ofup
toUS
$7.5
B.
Equi
ty v
alue
@ R
VRe
plac
emen
t val
ue a
s of D
ecem
ber 2
019
23,9
00.0
Va
laris
BK
valu
atio
n de
bt
550.
0Eq
uity
@ R
V -d
ebt
23,3
50.0
RC
F ow
ners
hip
32.5
%RC
F eq
uity
val
ue
7,58
8.8
60
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 110 of 133
706.
026.
MI.1
AP
PEN
DIX
D:
PR
OB
AB
LE C
RIM
INA
L EN
TER
PR
ISE
REL
ATE
D
DO
CU
MEN
TS
Conf
iden
tial
61
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 111 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXD
:P
RO
BA
BLE
CR
IMIN
AL
EN
TE
RP
RIS
ER
ELA
TE
DD
OC
UM
EN
TS
Lum
inu
sC
EOca
ree
r,a
nd
resi
de
nti
al
ad
dre
ssd
ire
ctly
lin
ked
toJe
ffre
yE
pst
ein
.G
rave
qu
est
ion
so
nch
ara
cte
r
Sour
ce IC
IJ, B
usin
ess I
nsid
er
62
Scre
ensh
ot fr
om B
usin
ess I
nsid
er a
rtic
leSc
reen
shot
of J
onat
han
Barr
et´s
Res
ume
Scre
ensh
ot fr
om IC
IJ –
Para
dise
Pap
ers
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 112 of 133
706.
026.
MI.1
AP
PEN
DIX
E:
OTH
ER R
ELEV
AN
T IN
FOR
MA
TIO
N
Conf
iden
tial
63
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 113 of 133
706.
026.
MI.1
Conf
iden
tial
Vala
risLT
D(th
e“C
ompa
ny”)
isa
lead
ing
prov
ider
ofof
fsho
reco
ntra
ctdr
illin
gse
rvic
esto
the
inte
rnat
iona
loil
and
gasi
ndus
try.
The
com
pany
was
foun
ded
inAp
ril20
19af
ter
the
mer
ger
ofEn
sco
and
Row
an,t
wo
ofth
em
ain
offs
hore
drill
ing
com
pani
esw
orld
wid
e.Cu
rren
tly,V
alar
isco
unts
with
adi
vers
erig
fleet
cons
istin
gof
ultr
a-de
epw
ater
drill
ship
s,ve
rsat
ilese
misu
bmer
sible
san
dm
oder
nsh
allo
w-
wat
erja
ckup
scap
able
ofm
eetin
ga
wid
esp
ectr
umof
cust
omer
s’w
ellp
rogr
amre
quire
men
ts.T
heco
mpa
nyow
ns60
rigsi
nto
tal,
mak
ing
itth
ew
orld
'sla
rges
tfle
etam
ongs
tcom
petit
ive
rigs.
64
11 D
rillsh
ips
5 Se
misu
bmer
sible
s44
Jack
ups
Tota
l PP&
E w
orth
~$2
3.9B
(1)
AP
PEN
DIX
E:O
THER
REL
EVA
NT
INFO
RM
AT
ION
Co
mp
an
yO
verv
iew
(1)
Valu
e at
Rep
lace
men
t Cos
t acc
ordi
ng to
Man
agem
ent G
uida
nce
•M
ax. W
ater
Dep
th 1
2,00
0´•
Max
. Dril
ling
Dept
h 40
,000
´•
Flee
t 5 y
ears
old
on
avg.
•M
ax. W
ater
Dep
th ~
9,00
0´•
Max
. Dril
ling
Dept
h ~3
7,50
0´•
Flee
t 9 y
ears
old
on
avg.
•M
ax. W
ater
Dep
th ~
400´
•M
ax. D
rillin
g De
pth
~35,
000´
•Fl
eet 1
2 ye
ars o
ld o
n av
g.
Cons
truc
tion
cost
per
Ja
ckup
rang
es fr
om
$150
mill
ion
to $
530
mill
ion
Cons
truc
tion
cost
per
Se
misu
bmer
sible
rang
es fr
om
$460
mill
ion
to $
770
mill
ion
Cons
truc
tion
cost
per
Dr
illsh
ip ra
nges
from
$5
50 m
illio
n to
$1.
2 bi
llion
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 114 of 133
706.
026.
MI.1
Conf
iden
tial
65
Sour
ce: V
alar
is 10
k –
2020
p. 7
4
Vala
rispr
ovid
esdr
illin
gse
rvic
eson
ada
yra
teco
ntra
ctba
sis.
Unde
rda
yra
teco
ntra
cts,
Vala
rispr
ovid
esan
inte
grat
edse
rvice
that
inclu
des
the
prov
ision
ofa
drill
ing
rigan
drig
crew
sfo
rw
hich
the
Com
pany
rece
ives
ada
ilyra
te.I
nad
ditio
n,Va
laris
rece
ives
alu
mp-
sum
infe
esor
simila
rcom
pens
atio
nfo
rthe
mob
iliza
tion,
dem
obili
zatio
nan
dca
pita
lupg
rade
soft
heir
rigs.
The
cust
omer
sbea
rsub
stan
tially
allt
heCA
PEX,
asw
ella
sthe
econ
omic
risk
rela
tive
toth
esu
cces
soft
hew
ell.
Vala
riscu
stom
ersi
nclu
dem
any
ofth
ele
adin
gna
tiona
land
inte
rnat
iona
loil
com
pani
es,i
nad
ditio
nto
man
yin
depe
nden
tope
rato
rs.
Vala
ris20
2020
1920
18Ri
g Ut
iliza
tion
Floa
ters
29%
47%
46%
Jack
ups
54%
66%
63%
Oth
er
98%
100%
100%
Tota
l Val
aris
54%
63%
56%
ARO
94%
93%
0%
Aver
age
Day
Rate
s (US
$)Fl
oate
rs17
8,37
2 21
8,83
7 24
8,39
5 Ja
ckup
s83
,618
78
,133
77
,086
O
ther
31,2
07
49,2
36
81,7
51
Tota
l Val
aris
83,8
45
108,
313
128,
365
ARO
100,
921
71,1
70
N/A
Rig
Utili
zatio
n X
Aver
age
Day
Rate
= R
even
ue
The
2m
ain
busin
ess
driv
ers
ofVa
laris
are
Rig
Utili
zatio
n(#
ofda
ysun
derc
ontr
act/
#of
days
inpe
riod)
and
Aver
age
Day
Rate
s(C
ontr
act
Drill
ing
Reve
nues
perR
ig/#
ofda
ysin
perio
d).
AP
PEN
DIX
E:O
THER
REL
EVA
NT
INFO
RM
AT
ION
Bu
sin
ess
Mo
de
l
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 115 of 133
706.
026.
MI.1
Conf
iden
tial
Feb-
19Ap
r-19
Jun-
19Au
g-19
Oct
-19
Dec-
19Ja
n-20
Mar
-20
May
-20
66
July
2019
Ensc
o-Ro
wan
PLC
chan
ged
itsna
me
toVa
laris
PLC.
Oct
ober
2019
Anno
unce
d7
new
cont
ract
awar
dsw
ithas
socia
ted
reve
nue
back
log
ofap
prox
.$24
5m
illio
n.
Nov
embe
r201
9An
noun
ced
10ne
wco
ntra
ctaw
ards
with
asso
ciate
dre
venu
eba
cklo
gof
appr
ox.$
285
mill
ion.
Nov
embe
r201
9An
noun
ced
the
appo
intm
ent
ofFr
eder
ickAr
nold
sto
the
Boar
dof
Dire
ctor
sto
serv
ein
the
Fina
nce
Com
mitt
eeas
anin
depe
nden
tbo
ard
mem
ber.
Augu
st20
19Lu
min
usas
larg
est
equi
tyho
lder
(19%
)as
ked
Vala
risto
inclu
dere
pres
enta
tives
from
itssh
areh
olde
rsw
ithth
egr
eate
stec
onom
icex
posu
re.
The
reas
onbe
ing
that
Lum
inus
belie
ved
self-
infli
cted
wou
nds
and
miss
edop
port
uniti
esw
ere
resp
onsib
lefo
rpas
tmat
eria
llos
ses.
(2)
Janu
ary
2020
Appo
ints
Adam
Wei
tzm
anto
itsbo
ard
ofdi
rect
ors
aspa
rtof
the
com
preh
ensiv
ere
fresh
men
tpr
ogra
mpr
opos
edby
Lum
inus
.
Mar
ch20
20Th
elo
ckdo
wns
rega
rdin
gth
eCo
vid-
19pa
ndem
icst
arte
din
the
wes
tdi
srup
ting
the
O&G
indu
stry
.
April
2019
Ensc
obu
ysRo
wan
for
$2.4
Ban
dm
erge
tofo
rmEn
sco-
Row
anPL
C(la
terV
alar
is).
AP
PEN
DIX
E:O
THER
REL
EVA
NT
INFO
RM
AT
ION
Re
leva
nt
Eve
nts
Pt.
1
Sour
ce: S
EC fi
lings
, MD&
As, 1
0-Ks
and
qua
rter
ly re
port
s
Inte
rest
ingl
y,Lu
min
ushe
ldsh
ortp
ositi
ons
inDi
amon
dsO
ffsho
reDr
illin
gIn
c,No
ble
Corp
.and
oil,
whi
lebe
ing
supp
osed
lylo
ngin
Vala
ris.
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 116 of 133
706.
026.
MI.1
Conf
iden
tial
Mar
-20
May
-20
Jul-2
0Se
p-20
Nov-
20Ja
n-21
Mar
-21
May
-21
67
June
2020
Ente
red
aw
aive
rin
orde
rto
use
a30
-day
grac
epe
riod
inor
der
toav
oid
som
ein
tere
stra
tepa
ymen
ts. Au
gust
2020
Offi
cially
files
for
Bank
rupt
cyan
dth
eNY
SEpr
epar
edto
delis
tthe
com
pany
.
April
2020
Mak
espu
blic
itsin
tent
ion
tore
stru
ctur
eis
debt
.Sto
ckta
nks.
Sept
embe
r202
0Ge
tsap
prov
alfo
ra
Supe
rSe
cure
dDI
Pof
$500
mill
ion
byth
eBa
nkru
ptcy
Cour
t.
April
2020
Vala
risw
asno
tifie
dby
the
NYSE
that
the
stoc
ktr
aded
belo
wth
em
inim
umth
resh
old
of$1
and
that
itne
eded
tocu
reth
ede
ficie
ncy
ifth
eco
mpa
nyw
ante
dto
rem
ain
liste
d.
Augu
st20
20Ad
amW
eitz
man
leav
esth
eBo
ard.
Also
,Va
laris
amen
ded
the
RSA
toal
low
Lum
inou
sto
buy
upto
10%
ofth
eCo
mpa
ny´s
outs
tand
ing
inde
bted
ness
.
May
2020
Desp
iteth
eco
mpa
nygo
ing
thro
ugh
finan
cialt
roub
le,m
anag
emen
tdec
ided
toin
crea
seits
pay
argu
ing
they
need
edto
bem
ore
¨mot
ivat
ed¨.
Sept
embe
r202
0An
noun
ced
that
over
70%
ofits
note
hold
ersh
adac
cept
edth
eRS
Aan
dBC
A.
Mar
ch20
20Re
ceiv
esco
urt
appr
oval
ofch
apte
r11
plan
ofre
orga
niza
tion
May
2020
Com
plet
esre
stru
ctur
ing
and
islis
ted
agai
nin
the
NYSE
asVa
laris
LTD.
AP
PEN
DIX
E:O
THER
REL
EVA
NT
INFO
RM
AT
ION
Re
leva
nt
Eve
nts
Pt.
2
Sour
ce: S
EC fi
lings
, MD&
As, 1
0-Ks
and
qua
rter
ly re
port
s
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 117 of 133
706.
026.
MI.1
Conf
iden
tial
Sour
ce: V
ALPQ
and
RIG
pric
es w
ere
take
n fro
m y
ahoo
fina
nce.
AP
PEN
DIX
E:O
THER
REL
EVA
NT
INFO
RM
AT
ION
Va
lari
sco
mp
ari
son
wit
hTr
an
soce
an
-
5.0
10.
0
15.
0
20.
0
25.
0 Jan-
19Ju
n-19
Nov-
19Ap
r-20
Sep-
20Fe
b-21
RIG
vs V
ALPQ
stoc
k pr
ice co
mpa
rison
(US$
)
VALP
QRI
G
Som
e im
port
ant c
ompa
rison
s bet
wee
n Va
laris
and
Tr
anso
cean
are
:•
Vala
ris st
ock
price
has
falle
n m
ore
than
90%
sinc
e 20
19,
whi
le re
cent
ly, T
rans
ocea
n st
ock
has b
een
reco
verin
g.
•In
202
0, T
rans
ocea
n m
anag
ed to
rest
ruct
ure
US$
1.5B
of
debt
, avo
idin
g ba
nkru
ptcy
, w
hile
Val
aris
faile
d to
do
so in
20
19.
Loss
on
impa
irmen
t 20
1920
20Va
laris
10
4.0
3,64
6.2
Tran
soce
an
609.
0 58
7.0
With
the
sam
e m
arke
t con
ditio
ns, a
nd si
mila
r fix
ed a
sset
s, Va
laris
reco
gnize
d im
pairm
ent
loss
es 6
.2x
grea
ter t
han
thos
e of
Tra
nsoc
ean
Unlik
e Tr
anso
cean
, Val
aris
man
agem
ent h
as co
nsist
ently
des
troy
ed sh
areh
olde
r val
ue.
68
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 118 of 133
706.
026.
MI.1
Conf
iden
tial
69
AP
PEN
DIX
E:O
THER
REL
EVA
NT
INFO
RM
AT
ION
Ma
inP
laye
rs
Sour
ce: C
ompa
ny S
EC fi
lings
Adde
dBo
ard
Mem
bers
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 119 of 133
706.
026.
MI.1
Vehi
cles u
sed
for V
alar
is tr
ansa
ctio
n:
•Lu
min
us M
anag
emen
t, LL
C (D
elaw
are)
•Lu
min
us E
nerg
y Pa
rtne
rs M
aste
r Fun
d, Lt
d (H
amilt
on, B
erm
uda)
Othe
r Rel
ated
Veh
icles
:
Lum
inus
Ene
rgy
Part
ners
Ltd
(Ham
ilton
, Ber
mud
a)
Lum
inus
Ass
et P
artn
ers L
p(D
elaw
ere)
Lum
inus
Cap
ital P
artn
ers O
ffsho
re, L
td.(C
aym
an Is
land
s)
Lum
inus
Cap
ital P
artn
ers O
nsho
re, L
P (D
elaw
ere)
Lum
inus
Cre
dit I
, LLC
(Del
awer
e)
Lum
inus
Cre
dit O
ppor
tuni
ties I
Lp
(Del
awer
e)
Lum
inus
Cre
dit O
ppor
tuni
ties I
iLp
(Del
awer
e)
Lum
inus
Cre
dit O
ppor
tuni
ties P
ie I
Lp(D
elaw
ere)
Lum
inus
Cre
dit O
ppor
tuni
ties P
ie Ii
Lp(D
elaw
ere)
Lum
inus
Ene
rgy
Part
ners
QP
LP (D
elaw
ere)
Lum
inus
Spe
cial O
ppor
tuni
ties I
Mas
ter F
und,
Ltd
(Cay
man
Isla
nds)
Lum
inus
Spe
cial O
ppor
tuni
ties I
Ons
hore
, L.p
.(De
law
ere)
Lum
inus
Spe
cial O
ppor
tuni
ties I
PIE
, L.P
. (Ca
yman
Isla
nds)
Lum
inus
Rel
ated
Ep
I Lp
(Ukn
own)
Lum
inus
Rel
ated
I, Ll
c(D
elaw
ere)
70
AP
PEN
DIX
E:O
THER
REL
EVA
NT
INFO
RM
AT
ION
Ve
hic
les
use
db
yLu
min
us
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 120 of 133
706.
026.
MI.1
AP
PEN
DIX
F:
SOU
RC
ES
Conf
iden
tial
71
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 121 of 133
706.
026.
MI.1
Conf
iden
tial
Corp
orat
e re
port
s:•
Vala
ris 1
0-K
2020
.•
Vala
ris 1
0-K
2019
.•
Vala
ris 1
0-K
2018
. •
Vala
ris 1
0-Q
1Q
20, 1
0-Q
2Q
20,
10-Q
3Q
20.
•Va
laris
8-K
from
Aug
ust 2
8, 2
020
•M
anag
emen
t cor
pora
te p
rese
ntat
ions
from
Sep
tem
ber 2
019,
and
Feb
ruar
y 20
20 a
nd A
ugus
t 202
0
Bank
rupt
cy d
ocum
ents
:•
Disc
losu
re S
tate
men
t Rel
atin
g to
the
Debt
ors'
Third
Am
ende
d Jo
int C
hapt
er 1
1 Pl
an o
f Reo
rgan
izatio
n; F
iled
by V
alar
is pl
c.
http
s://c
ases
.stre
tto.
com
/pub
lic/X
088/
1039
6/PL
EADI
NGS/
1039
6123
0208
0000
0000
87.p
df•
Debt
ors´
appl
icatio
n fo
r ent
ry o
f an
orde
r aut
horiz
ing
the
debt
ors t
o (I)
reta
in a
nd e
mpl
oy La
zard
Frè
res &
Co.
LLC
as in
vest
men
t ban
ker
effe
ctiv
e as
of t
he p
etiti
on d
ate,
(II)
mod
ify ce
rtai
n tim
e-ke
epin
g re
quire
men
ts, a
nd (I
II) g
rant
ing
rela
ted
relie
f. ht
tps:/
/cas
es.st
rett
o.co
m/p
ublic
/X08
8/10
396/
PLEA
DING
S/10
3960
9152
0800
0000
0080
•DI
AMO
ND O
FFSH
ORE
DRI
LLIN
G, IN
C., e
t al.,
1: D
ebto
rs´a
pplic
atio
n fo
r ent
ry o
f an
orde
r (A)
Aut
horiz
ing
Laza
rd F
rère
s & C
o. LL
C as
in
vest
men
t ban
ker t
o th
e de
btor
s and
deb
tors
-in-p
osse
ssio
n nu
ncpr
o tr
unct
o th
e pe
titio
n da
te, (
B) M
odify
ing
cert
ain
time-
keep
ing
requ
irem
ents
, and
( C)
Gra
ntin
g re
late
d re
lief.
http
s://c
ases
.prim
ecle
rk.c
om/d
iam
ond/
Hom
e-Do
wnl
oadP
DF?i
d1=M
TQw
OTI
xNw
==&
id2=
0•
Supp
lem
ent c
ertif
icate
of s
ervi
ce: h
ttps
://ca
ses.s
tret
to.c
om/p
ublic
/X08
8/10
396/
PLEA
DING
S/10
3960
1302
1800
0000
0012
Oth
er d
ocum
ents
:•
Vala
ris a
nd Lu
min
us M
anag
emen
t Coo
pera
tion
and
Supp
ort A
gree
men
t. •
Vala
ris S
C 13
G (B
enef
icial
ow
ners
hip
repo
t) 20
20-0
8-21
and
201
6-04
-28
AP
PE
ND
IXF
Sou
rce
s
72
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 122 of 133
706.
026.
MI.1
Conf
iden
tial
AP
PE
ND
IXF
Sou
rce
s(I
I)
Rele
vant
link
s:
•Na
sdaq
.(2
019)
.Va
laris
Com
men
tson
Lum
inus
'Int
ent
toNo
min
ate
Dire
ctor
Cand
idat
es.
03/0
9/20
21,
deNa
sdaq
Sitio
web
:ht
tps:
//w
ww
.nas
daq.
com
/pre
ss-r
elea
se/v
alar
is-co
mm
ents
-on-
lum
inus
-inte
nt-to
-no
min
ate-
dire
ctor
-can
dida
tes-
2019
-12-
04
•Bl
oom
berg
.(2
019)
.Lu
min
usM
anag
emen
tto
Call
Mee
ting
ofVa
laris
Shar
ehol
ders
toUp
grad
eVa
laris
Boar
d.03
/09/
2021
,de
Bloo
mbe
rgSi
tiow
eb:
http
s ://
ww
w.b
loom
berg
.com
/pre
ss-r
elea
ses/
2019
-12-
04/lu
min
us-m
anag
emen
t-to
-cal
l-mee
ting-
of-v
alar
is-sh
areh
olde
rs-to
-upg
rade
-val
aris-
boar
d
•Bl
oom
berg
. (2
020)
. Val
aris
Hire
s Go
ldm
an, P
JT to
Hel
p Re
stor
e Fi
nanc
es. 0
3/09
/202
1, d
e Bl
oom
berg
Siti
o w
eb: h
ttps:
//w
ww
.blo
ombe
rg.c
om/n
ews/
artic
les/
2020
-03-
25/v
alar
is-is-
said
-to-h
ire-g
oldm
an-p
jt-to
-hel
p-re
stor
e-fin
ance
s
•Ba
ssoe
Offs
hore
. (20
21).
Bass
oe R
ig A
naly
tics w
eekl
y rig
mar
ket r
ound
-up
(wee
k 9)
:. 03
/09/
2021
, de
Bass
oe S
itio
web
: http
s://
ww
w.b
asso
e.no
/bas
soe-
rig-a
naly
tics-
wee
kly-
rig-m
arke
t-rou
nd-u
p-w
eek-
9/ne
ws/
196/
•Ba
ssoe
Offs
hore
. (20
21).
Asse
t val
uatio
ns b
ecom
e ev
en m
ore
conf
usin
g as
rig
owne
rs s
acrif
ice ri
gs to
stay
aflo
at. 0
3/09
/202
1
http
s://
ww
w.b
asso
e.no
/ass
et-v
alua
tions
-bec
ome-
even
-mor
e-co
nfus
ing-
as-r
ig-o
wne
rs-s
acrif
ice-r
igs-
to-s
tay-
aflo
at/n
ews/
195/
•CN
BC. (
Shor
t sel
lers
hel
p st
ocks
find
thei
r tru
e va
lues
and
exp
ose
fraud
, des
pite
the
hate
they
rece
ive)
. 202
1. 0
3/09
/202
1, fr
omCN
BC S
itio
web
:
http
s://
ww
w.c
nbc.
com
/202
1/02
/23/
shor
t-sel
lers
-hel
p-st
ocks
-find
-thei
r-tru
e-va
lues
-and
-exp
ose-
fraud
.htm
l
•CN
BC. (
Spac
eX b
ough
t tw
o fo
rmer
Val
aris
oil r
igs t
o bu
ild fl
oatin
g la
unch
pads
for i
ts S
tars
hip
rock
et) 2
021.
05/
23/2
021
from
:
http
s://
ww
w.c
nbc.
com
/202
1/01
/19/
spac
ex-b
ough
t-for
mer
-val
aris-
oil-r
igs-
to-b
uild
-sta
rshi
p-la
unch
pads
.htm
l
•IE
A an
alys
is an
d fo
reca
st:
http
s://
ww
w.ie
a.or
g/re
port
s/oi
l-202
1?ut
m_c
ampa
ign=
IEA%
20ne
wsle
tter
s&ut
m_s
ourc
e=Se
ndGr
id&
utm
_med
ium
=Em
ail
•Ba
nkru
ptcy
Dyn
egy
Filli
ng:
http
s://
ww
w.se
c.go
v/Ar
chiv
es/e
dgar
/dat
a/11
0505
5/00
0110
4659
1201
8950
/a12
-698
8_1e
x99d
1.ht
m
•Ep
stei
n m
yste
rious
301
E. 6
6thSt
apa
rtm
ent a
rticl
e:
http
s://
ww
w.b
usin
essin
sider
.com
/the
-nyc
-bui
ldin
g-at
-the-
cent
er-o
f-jef
frey-
epst
eins
-web
-201
9-8?
r=M
X&IR
=T
•LS
Pow
er a
cqui
sitio
n of
EVg
o:
http
s://
ww
w.e
vgo.
com
/pre
ss-r
elea
se/ls
-pow
er-c
ompl
etes
-acq
uisit
ion-
of-e
vgo/
•Jo
nath
an B
arre
t res
iden
tial a
ddre
ss IC
IJ:
http
s://
offs
hore
leak
s.ici
j.org
/nod
es/8
0039
116?
e=tr
ue
•SE
C ch
arge
s aga
inst
Mill
eniu
m:
http
s://
ww
w.se
c.go
v/ne
ws/
pres
s/20
05-1
70.h
tm
73
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 123 of 133
706.
026.
MI.1
Conf
iden
tial
Co
nta
ct:
Seba
stiá
n M
iralle
s, CF
AM
anag
ing
Part
ner
smira
lles@
tem
pest
capi
tal.c
om
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 124 of 133
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ADVERSARY COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL PENALTIES, RESTITUTION, AND OTHER EQUITABLE RELIEF
EXHIBIT D
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 125 of 133
Valaris Valuation Model Assumptions
August 2021
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 126 of 133
2
Legal Disclaimer
This document has been prepared by Tempest Capital SC for litigation purposes only. This document is an indicative summary of the assumptions made by Tempest to perform a scenario analysis on Valaris´ valuation model. This document contains the assignment-specific elements of information required to be included by the Uniform Standards of Professional Practice (USPAP) as promulgated by The Appraisal Foundation of Washington, DC. The data utilized to compute Valaris´ valuation model was based on public information available during the creation of the model. Tempest is not an independent party on this litigation process. Tempest does not guarantee the accuracy or completeness of information which is contained in this document and which is stated to have been obtained from or is based upon trade and statistical services or other third-party sources. Any data on past performance, modeling or backtesting contained herein is no indication as to future performance. No representation is made as to the reasonableness of the assumptions made within or the accuracy or completeness of any modeling or back-testing or any other information contained herein. All options and estimates are given as of the date hereof and are subject to change, and Tempest assumes no obligation to update this document to reflect any such changes. The value of any investment may fluctuate as a result of market changes. The information herein is not intended to predict actual results, and no assurances are given concerning it.
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 127 of 133
3
Contents Valuation Scenarios....................................................................................................................................... 4
Upside Case ............................................................................................................................................... 5
Tempest Case ............................................................................................................................................ 6
Management Case .................................................................................................................................... 7
Damages ........................................................................................................................................................ 8
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 128 of 133
4
VValuation Scenarios
Valaris Enterprise Value (“EV”) ranges in three different valuation scenarios. Each scenarios contains a series of assumptions and drivers based on industry research paramount to obtain a possible valuation range.
To compute the theoretical value of Valaris´s Enterprise Value Plaintiff used a Discounted Cash Flow (“DCF”) analysis, based on the Company's Free Cash Flow (FCFF). Weighted Average Cost of Capital (“WACC”) is assumed at 8.1%, for which the cost of capital is estimated (“Kc”) at 8.3%, a cost of debt of 8.25%, and a 10.7% Debt-to-Equity (“D/E”) ratio. To estimate the KC, a Capital Asset Pricing Model (“CAPM”) was used. CAPM considered a 1.58% risk-free rate, a 1.1 beta, and a 6.0% market risk premium.
Aside from the discount rate, the valuation was based upon 3 main drivers. Those drivers being 1) Fleet utilization of active rigs, 2) Number of active rigs, and 3) Average daily rate charged per rig. Using them as a based to compute sales and potential free cash flows.
Regarding the long-term growth rate used for the DCF, the estimate is in line with the expected growth in GDP of the regions served by Valaris.
7,432
17,253
26,043
14,268
33,310
50,088
Replacement Valueof PP&E $23,900
Management Case
Tempest Case
Upside Case
Valaris Enterprise Value(US$ MM)
Net PP&E 1Q21 $10,083
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 129 of 133
5
UUpside Case In this scenario, the model estimates the oil and gas industry quickly recovers to pre-pandemic levels, increasing the demand for specialized rigs and driving utilization back to levels seen in 2014.
Active fleet
It is assumed that Valaris will have to lightly increase its fleet due to a fast post-pandemic recovery and increased demand for fossil fuels from emerging markets in Africa and Asia; a progressive reactivation plan will take place in most of Valaris´ fleet to take advantage of such market conditions and improve the Company´s overall margins.
99.7
91.0
96.499.5 101.2 102.3 103.2 104.1
2019 2020 2021 2022 2023 2024 2025 2026
Estimated oil demand for the next five years(Millions of Barrels per Day)
Source: International Energy Agency (2021)
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 130 of 133
6
It is projected the oil demand will surpass the existing demand before the pandemic, as important parts of the economy have been reactivating, such as tourism. Benefiting overall market conditions.
Terminal value (US$ Million)
Long term growth rate 3.0%
2025 FCF x (1+g) 2,194
Terminal value in 2025 43,014
Present value of terminal value 29,139
Present value of stage 1 cash flows 6,436
Total Enterprise Value (TEV) 35,576
Valaris Upside Scenario gives an average Enterprise Value of $35.9 billion, ranging between a minimum value of $26.0 billion and a maximum value of $50.0 billion.
TTempest Case In this scenario, it is estimated the oil and gas industry recovers to pre-pandemic levels with progressive demand for specialized rigs. It is expected a considerable part of the global population will resume the utilization of transportation vehicles powered by fossil fuels, as well as key industries having to purchase such commodities, for their manufactured goods.
It is assumed a +86% utilization rate for Valaris´s overall fleet. An implied mean reversion to Company´s historical utilization average. Despite ups and downs caused by the volatility in oil and gas prices, Valaris has maintained a utilization rate ranging from 75% to 90% for the last three decades. Driving the average day rate to historic price levels.
Enterprise Value
Long term growth rate (g):35,576 1.0% 2.0% 3.0% 3.5% 5.0%
10.1% 20,679 22,645 25,165 26,712 33,171
9.1% 23,429 26,043 29,514 31,715 41,536
8.1% 26,961 30,562 35,576 38,900 55,306
7.1% 31,659 36,862 44,604 50,088 82,206
6.1% 38,210 46,247 59,470 69,896 158,043
WAC
C
$US millions
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 131 of 133
7
Assumptions of a moderate post-pandemic growth are conservative and believable based on Valaris’s two latest fleet reports, where the Company announced it was awarded and extended 44 contracts in the last 3 months. Demonstrating Valaris’ recovering capacity.
Terminal value (US$ Million)
Long term growth rate 3.0% 2025 FCF x (1+g) 1,465 Terminal value in 2025 28,727 Present value of terminal value 19,461 Present value of stage 1 cash flows 4,158
Total enterprise value (TEV) 23,619
Valaris Tempest case scenario gives an average Enterprise Value of $23.8 billion, ranging between a minimum value of $17.2 billion and a maximum value of $33.3 billion.
Management Case In this scenario, the model estimates the oil and gas industry will not recover to pre-pandemic levels, making the demand for specialized rigs to remain at the same level and with the total number of rigs active remaining at the same level having no further reactivation of rigs.
It is assumed an over 86% utilization rate for Valaris´ overall fleet since this have been the company´s average margins throughout its history. Despite having ups and downs due to volatility in oil and gas prices, Valaris has maintained a utilization rate ranging from 75 to 90% in the last three decades.
Enterprise Value
Long term growth rate (g):23,619 1.0% 2.0% 3.0% 3.5% 5.0%
10.1% 13,671 14,984 16,667 17,700 22,014
9.1% 15,507 17,253 19,571 21,041 27,600
8.1% 17,866 20,271 23,619 25,839 36,796
7.1% 21,003 24,478 29,648 33,310 54,760
6.1% 25,377 30,745 39,576 46,539 105,407
WAC
C
$US millions
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 132 of 133
8
Moreover, the model assumes Valaris will not have to increase its current fleet since demand for oil and rigs will remain stagnant.
Valaris Management case scenario gives an average Enterprise Value of $10.2 billion, ranging between a minimum value of $7.4 billion and a maximum value of $14.2 billion.
Terminal value (US$ Million) Long term growth rate 3.0% 2025 FCF x (1+g) 623 Terminal value in 2025 12,223 Present value of terminal value 8,280 Present value of stage 1 cash flows 1,862 Total enterprise value (TEV) 10,143
DDamages Based on Valaris’s 2019 10-K as of December 31st 2019, the implied share price based on Book Value of equity and the Replacement Value of its Assets, would have given the Plaintiff the following amounts for his investment:
Investment value based on Book Value Investment value based on Assets Replacement Value
Book value of equity $9,310.9 million
Replacement value of assets $23,900 million
Shares outstanding 197.3 million Shares outstanding 197.3 million
Implied price per share $47.2
Implied price per share $121.14 Plaintiff´s # of shares 152,900 Plaintiff´s # of shares 152,900 Total amount $7,216,295.2 Total amount $18,523,392.5
Considering the Plaintiff´s loss of his initial investment, lost profit, and economic damages, his 152,900 shares would have been worth at least $7,216,295.2, based on Valaris’s financial statements and disclosures. Equitable relief of treble damages would bring the total amount of damages to $$21,648,885.6.
Initial investment Lost Profit Investment amount based onBV of equity
Equitable Relief
$960,612
$6,255,683.2 $7,216,295.2
$21,648,885.6
3x equity BV of invested amount
(Treble damages)
Enterprise Value
Long term growth rate (g):10,143 1.0% 2.0% 3.0% 3.5% 5.0%
10.1% 5,906 6,465 7,181 7,620 9,456
9.1% 6,689 7,432 8,418 9,044 11,834
8.1% 7,695 8,718 10,143 11,087 15,749
7.1% 9,031 10,510 12,710 14,268 23,395
6.1% 10,895 13,179 16,936 19,899 44,946
WAC
C
$US millions
Case 20-34114 Document 1367 Filed in TXSB on 08/30/21 Page 133 of 133
February 2020
Investor Presentation
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 1 of 42
Statements contained in this investor presentation that are not historical facts are forward-looking statements within the meaning ofSection 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statementsinclude words or phrases such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “could,” “may,” “might,”“should,” “will” and similar words and specifically include statements involving expected financial performance, effective tax rate,expected expense savings, day rates and backlog, estimated rig availability; rig commitments and contracts; contract duration,status, terms and other contract commitments; estimated capital expenditures; letters of intent or letters of award; scheduled deliverydates for rigs; the timing of delivery, mobilization, contract commencement, relocation or other movement of rigs; our intent to sell orscrap rigs; and general market, business and industry conditions, trends and outlook. In addition, statements included in this investorpresentation regarding the anticipated benefits, opportunities, synergies and effects of the merger between Ensco and Rowan areforward-looking statements. Such statements are subject to numerous risks, uncertainties and assumptions that may cause actualresults to vary materially from those indicated, including actions by rating agencies or other third parties; actions by our securityholders; costs and difficulties related to the integration of Ensco and Rowan and the related impact on our financial results andperformance; our ability to repay debt and the timing thereof; availability and terms of any financing; commodity price fluctuations,customer demand, new rig supply, downtime and other risks associated with offshore rig operations, relocations, severe weather orhurricanes; changes in worldwide rig supply and demand, competition and technology; future levels of offshore drilling activity;governmental action, civil unrest and political and economic uncertainties; terrorism, piracy and military action; risks inherent toshipyard rig construction, repair, maintenance or enhancement; possible cancellation, suspension or termination of drilling contractsas a result of mechanical difficulties, performance, customer finances, the decline or the perceived risk of a further decline in oiland/or natural gas prices, or other reasons, including terminations for convenience (without cause); the cancellation of letters ofintent or letters of award or any failure to execute definitive contracts following announcements of letters of intent, letters of award orother expected work commitments; the outcome of litigation, legal proceedings, investigations or other claims or contract disputes;governmental regulatory, legislative and permitting requirements affecting drilling operations; our ability to attract and retain skilledpersonnel on commercially reasonable terms; environmental or other liabilities, risks or losses; debt restrictions that may limit ourliquidity and flexibility; tax matters including our effective tax rate; and cybersecurity risks and threats. In addition to the numerousfactors described above, you should also carefully read and consider “Item 1A. Risk Factors” in Part I and “Item 7. Management’sDiscussion and Analysis of Financial Condition and Results of Operations” in Part II of our most recent annual report on Form 10-K,as updated in our subsequent quarterly reports on Form 10-Q, which are available on the SEC’s website at www.sec.gov or on theInvestors section of our website at www.valaris.com. Each forward-looking statement speaks only as of the date of the particularstatement, and we undertake no obligation to publicly update or revise any forward-looking statements, except as required by law.
2
Forward-Looking Statements
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 2 of 42
1. Company Highlights2. Market Dynamics3. Valaris Fleet4. ARO Drilling5. Financial Management6. Operational Highlights, Integration & Synergies
Outline
3
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 3 of 42
4
Valaris Overview (NYSE: VAL)
Fleet• Largest and amongst the
highest-quality offshore drilling fleets in the world
16 drillships
11 semisubmersibles1
52 jackups1
• ~$9 billion of gross asset value from rig fleet according to third party estimates
• ARO Drilling 50/50 joint venture with Saudi Aramco, the largest jackup customer worldwide
1Excludes one semisubmersible and one jackup that are held for sale; 2As of September 30, 2019; 3Borrowing capacity under revolving credit facility is approximately $1.6B through September 2022. As of September 30, 2019, the Company had drawn $141M on its revolver ; 4As of most recent 10-Q filing
Operational
• Presence in nearly all major offshore markets and on six continents
• Large & diverse customer base including major, national and independent E&P companies
• Strong track record of safety, innovation and operational excellence
Financial
• $1.6 billion of liquidity‒ $0.1 billion of cash and short-
term investments2
‒ $1.5 billion available under unsecured revolving credit facility3
• $2.3 billion of contracted revenue backlog4
• $1.0 billion of debt maturities prior to 20242
– Ability to add guaranteed and/or secured debt to capital structure
$
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 4 of 42
5
Valaris is Focused on Four Key Priorities in 2019
Fleet Strategy & Contracting Assets
Driving Value at ARO Drilling
Delivering on Integration & Synergy Capture and Operational Excellence
Proactive Financial Management
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 5 of 42
7
Offshore Project Approvals Expected to Lead to Higher Levels of Capital Expenditures
87
5442
32
5872
91
2013 2014 2015 2016 2017 2018 2019
Number of New Major Offshore Project Approvals • With lower project costs relative to prior years and increasing cash flows from higher commodity prices, the number of final investment decision approvals for large offshore projects has increased recently‒ Drilling rigs required between
approval and first production, which averages ~4 years for deepwater projects and ~1.5 years for shallow-water projects, and for periodic maintenance over the life of an offshore well
• As a result, capital expenditures are expected to increase at a gradual rate over the next several years, with the majority of this growth coming from projects in deepwaterSource: Rystad Energy ServiceDemandCube as of January 2020, major projects
defined as projects with >$250 million of associated capital expenditures
326
156200
2014 2015 2016 2017 2018 2019 2020E 2021E 2022E 2023E 2024E
E&P Offshore Capital Expenditures
Shallow Water Deepwater
5% CAGR
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 7 of 42
8
The Global Floater Market is Recovering
40%
50%
60%
70%
80%
90%
Total Utilization1
5
10
15
20
0
50
100
150
2013 2014 2015 2016 2017 2018 2019
New Contracts2
Rig Years (L Axis) Average Contract Duration (R Axis, Months)
• Utilization for the global floater fleet has gradually increased since early 2017 due to a higher number of rig years awarded for new contracts, leading to an improvement in average spot day rates
• Rig years awarded increased by ~17% in 2019 and we have recently seen an increase in the rate of tendering activity, particularly for work beginning mid-2020 and beyond
Source: IHS Markit RigPoint as of January 20201Total utilization reflects rigs currently under contract and contracted for future work as a percentage of the global floater fleet; includes benign & harsh-environment rigs; 2Fixtures data includes new mutual contracts only
2013 2014 2015 2016 2017 2018 2019
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 8 of 42
9
The Global Jackup Market is Recovering
40%
50%
60%
70%
80%
90%
Total Utilization1
10
12
14
16
18
20
0
80
160
240
320
400
2013 2014 2015 2016 2017 2018 2019
New Contracts2
Rig Years (L Axis) Average Contract Duration (R Axis, Months)
• Utilization for the global jackup fleet has also moved higher since early 2017, as a steady increase in rig years awarded for new contracts has led to a more significant improvement in average spot day rates as compared to floaters
• In addition, average contract durations for jackups have increased meaningfully in 2019, contributing to the increase in aggregate rig years awarded for new contracts
Source: IHS Markit RigPoint as of January 20201Total utilization reflects rigs currently under contract and contracted for future work as a percentage of the global jackup fleet; includes benign & harsh-environment rigs; 2Fixtures data includes new mutual contracts only
2013 2014 2015 2016 2017 2018 2019
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 9 of 42
11
Fleet Overview
Diverse Fleet Capable of Meeting a Broad Spectrum of Customers’ Well Program Requirements
Drillships Semisubmersibles Jackups
16 Total 11 Total 52 Total– Average age of 6 years– 11 assets equipped with dual 2.5
million lbs. hookload derricks and two blowout preventers
– 9 modern assets with sixth generation drilling equipment– 3 rigs capable of working in both
moored and dynamically-positioned mode
– 7 heavy duty ultra-harsh & 7 heavy duty harsh environment rigs
– 14 heavy duty & 11 standard duty modern benign environment rigs
– 13 standard duty legacy rigs
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 11 of 42
12
Highest-Specification Drillships1
40%
60%
80%
100%
Total Utilization
Highest-Spec Drillships Other Drillships
Illustrative Rig-Level EBITDA Scenarios3 ($M)
Day Rate
$200K $300K $500K
Util
izat
ion 70% (40) 241 803
85% 80 422 1,104
95% 161 542 1,305
Source: IHS Markit RigPoint as of January 2020; Wells Fargo Securities as of December 20191Drillships delivered in 2013 or later, equipped with dual BOP and 2.5mm lbs. hookload derricks. Includes 8 rigs that are under construction; 2Based on Wells Fargo Securities estimates; 3Assumes average operating expense of $150K/day, unadjusted for changes in utilization
47of 123
drillshipsworldwide
11Valaris
10Transocean
4 Diamond
4Noble
4Seadrill
14All Other
L M H
L
H
M
2013 2014 2015 2016 2017 2018 2019
60%
70%
80%
90%
100%
$100 $200 $300 $400 $500 $600 $700
Day Rates for New Contracts(2013 – Current)
Day Rates – $K/day
Tota
l Util
izat
ion
L
M
H
Utilization for highest-specification drillships at time of contract signing
$2.8
$5.3
Gross AssetValue
ReplacementValue
Valaris Asset Value2 ($B)
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 12 of 42
13
Contract Status & Priorities For Marketed Floaters1
VALARIS 6002
VALARIS 5004
VALARIS MS-1
VALARIS 8504
VALARIS 8503
VALARIS 8505
VALARIS DPS-1
VALARIS DS-6
VALARIS DS-11
VALARIS DS-17
VALARIS DS-7
VALARIS DS-4
VALARIS DS-9
VALARIS DS-16
VALARIS DS-18
VALARIS DS-15
VALARIS DS-12
VALARIS DS-8
VALARIS DS-10
Contracted Options
2020 2021
1 Excludes 2 drillships that are under construction as well as 2 drillships and 4 semisubmersibles that are preservation stacked
Dril
lshi
psSe
mis
ubm
ersi
bles
Priorities
• Increase contracted backlog on active rigs with near-term availability; warm stack and reduce costs to <$40K/day if uncontracted
• Increase contracted backlog on active rigs with near-term availability; warm stack and reduce costs to <$40K/day if uncontracted
• Divest unless new contract covers capital investment required to keep rigs active and provides adequate return of capital
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 13 of 42
14
Heavy Duty Ultra-Harsh & Harsh Environment Jackups1
50%
60%
70%
80%
90%
100%
Total Utilization
HD UH & HE Jackups Other Jackups
13Valaris
11Maersk10
Noble
5Borr
3SDRL
10All Other
49of 576
jackupsworldwide
Illustrative Rig-Level EBITDA Scenarios4 ($M)
Day Rate
$100K $150K $200K
Util
izat
ion 70% - 166 332
85% 71 273 475
95% 119 344 569
Source: IHS Markit RigPoint as of January 2020; Wells Fargo Securities as of December 20191Includes jackups with the following rig designs: GustoMSC CJ70, Le Tourneau Super Gorilla Class and KFELS N Class, and other jackupdesigns classified as harsh environment and North Sea capable delivered in 2000 or later; 2Includes 5 rigs that are under construction; 3Based on Wells Fargo Securities estimates; 4Assumes average operating expense of $70K/day, unadjusted for changes in utilization
2
L M H
L
H
M
2013 2014 2015 2016 2017 2018 2019
60%
70%
80%
90%
100%
$50 $150 $250 $350 $450
Day Rates for New Contracts(2012 – Current)
Day Rates – $K/day
Tota
l Util
izat
ion
Utilization for heavy duty ultra-harsh & harsh environment jackups at time of contract signing
L
M
H
2012
$1.6
$4.0
Gross AssetValue
ReplacementValue
Valaris Asset Value3 ($B)
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 14 of 42
15
Contract Status & Priorities ForHeavy Duty Ultra-Harsh & Harsh Environment Jackups
VALARIS JU-121
VALARIS JU-102
VALARIS JU-101
VALARIS JU-100
VALARIS JU-122
VALARIS JU-123
VALARIS JU-120
VALARIS JU-291
VALARIS JU-247
VALARIS JU-249
VALARIS JU-290
VALARIS JU-292
VALARIS JU-250
VALARIS JU-248
Contracted Options
2020 2021
1 VALARIS JU-100 excluded from slide 14 as the rig was delivered before 2000
Hea
vy D
uty
Ultr
a-H
arsh
Hea
vy D
uty
Har
sh
Priorities
• Increase contracted backlog on active rigs with near-term availability
Leased to ARO Drilling
1
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 15 of 42
40%
60%
80%
100%
Total Utilization
Modern HD & SD Jackups Legacy SD Jackups
16
Illustrative Rig-Level EBITDA Scenarios3 ($M)
Modern Heavy Duty & Standard Duty Jackups1
193of 576
jackupsworldwide
25Valaris
13Seadrill
22Borr
109All Other
16COSL
8Shelf
Day Rate
$75K $100K $150K
Util
izat
ion 70% (23) 137 456
85% 80 274 662
95% 148 365 798
Source: IHS Markit RigPoint as of January 2020; Wells Fargo Securities as of December 20191Benign environment jackups delivered in 1999 or later with 1.5 million lbs. hookload derrick capacity, a minimum of three mud pumps and capable of operating in a minimum water depth of 340 ft. Includes 19 rigs that are under construction; 2Based on Wells Fargo Securities estimates; 3Assumes average operating expense of $55K/day, unadjusted for changes in utilization
L M H
L
H
M
2013 2014 2015 2016 2017 2018 2019
60%
70%
80%
90%
100%
$0 $100 $200 $300
Day Rates for New Contracts(2012 – Current)
Utilization for modern heavy duty & standard duty jackups
at time of contract signing
Day Rates – $K/day
Tota
l Util
izat
ion
L
M
H
2012
$2.3
$4.8
Gross AssetValue
ReplacementValue
Valaris Asset Value2 ($B)
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 16 of 42
17
Contract Status & Priorities ForMarketed Modern Heavy Duty & Standard Duty Jackups1
VALARIS JU-145
VALARIS JU-75
VALARIS JU-140
VALARIS JU-141
VALARIS JU-146
VALARIS JU-143
VALARIS JU-144
VALARIS JU-147
VALARIS JU-148
VALARIS JU-76
VALARIS JU-118
VALARIS JU-104
VALARIS JU-117
VALARIS JU-115
VALARIS JU-107
VALARIS JU-110
VALARIS JU-109
VALARIS JU-108
VALARIS JU-116
VALARIS JU-106
Contracted Options
2020 2021
Hea
vy D
uty
Mod
ern
Stan
dard
Dut
y M
oder
n
Priorities
Leased to ARO Drilling
1 Excludes 5 jackups that are preservation stacked or cold stacked
• Increase contracted backlog on active rigs with near-term availability
• Warm stack and reduce costs to <$30K/day if uncontracted
• Reactivate preservation stacked capacity if initial contract covers reactivation cost and provides adequate return on capital
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 17 of 42
18
Valaris Value PropositionContext for Illustrative EBITDA Scenarios
• Average day rates for modern floaters and jackupsbottomed during 2018 after reaching recent highs between 2012 and 2014
• Based on historical build costs, we expect that day rates would need to be higher than the average used in Scenario H to incentivize new rig orders
– Since 2000, the average build costs for floaters was ~$665 million, while jackups averaged ~$200 million; an average day rate of ~$490K for floaters and ~$160K for jackups would be needed to meet a 15% unlevered internal rate of return1
50%
60%
70%
80%
90%
100%
$100 $200 $300 $400 $500 $600
Floater Average Utilization and Day Rates By Year(2008 – Current)
$K/day
50%
60%
70%
80%
90%
100%
$60 $80 $100 $120 $140 $160 $180
Jackup Average Utilization and Day Rates By Year(2008 – Current)
$K/daySource: IHS Markit RigPoint; Valaris analysis for comparable operating geographies1Discounted cash-flow analysis assumes 35-year useful life, average opex of $150K/day, $5 million of annual maintenance costs, $10 million of survey costs every five years for floaters; and 30-year useful life, average opex of $50K/day, $2.5 million of annual maintenance costs, $7 million of survey costs every five years for jackups; and 90% operational utilization. Analysis excludes debt service costs, shore-based support costs, taxes, and assumes no residual value at the end of the asset life.
2015
20192017
20092011
2013
2019
2017
201320092011
2015
M
H
Includes new contracts for all benign environment floaters delivered from 2000 onwards
Includes new contracts for all jackupsdelivered from 2000 onwards
M
H
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 18 of 42
19
Valaris Value Proposition
$ MillionIllustrative Rig-Level
Annual EBITDAScenarios1
Asset Values2
Fleet M H Gross Replace-ment
Highest Specification Drillships3 (11) $422 $1,305 $2,804 $5,304
Heavy Duty Ultra-Harsh & HE Jackups3 (13) 273 569 1,632 4,002
Modern Heavy & Standard Duty Jackups3 (25) 274 798 2,286 4,835
ARO Drilling Jackups4 (7) 51 94 373 575
Other Drillships5 (5) 153 376 1,032 2,570
Semisubmersibles6 (11) 241 512 705 4,550
Other Jackups7 (14) 139 256 266 2,020
Total $1,553 $3,910 $9,098 $23,856
Source: Wells Fargo Securities as of December 2019; Valaris analysis1Utilization assumptions: M: 85%, H: 95%; 2Based on Wells Fargo Securities estimates as of December 2019; 3Illustrative annual EBITDA based on assumptions from M and H scenarios in slides 12-14; 4Represents 50% ownership interest from ARO Drilling’s 7 owned rigs; Assumes day rates of M: $100K/day, H: $125K/day and average operating expense of $45K/day, unadjusted for changes in utilization; 5Assumes day rates of M: $275K/day, H: $375K/day and average operating expense of $150K/day, unadjusted for changes in utilization; 6Assumes day rates of M: $200K/day, H: $250K/day and average operating expense of $110K/day, unadjusted for changes in utilization; 7Assumes day rates of M: $85K/day, H: $100K/day and average operating expense of $45K/day, unadjusted for changes in utilization
M H
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 19 of 42
21
ARO Drilling Overview
50% Ownership
50% Ownership
~$450M Shareholder
Notes Receivable
~$450M Shareholder
Notes Receivable
Leased Rigs (9)
• Three-year contracts; day rates set by an agreed pricing mechanism
• Valaris receives bareboat charter fee based on % of rig-level EBITDA
• ~$190M of bareboat charter revenue backlog to Valaris as of September 30, 2019 (no associated operating expense to Valaris)
Owned Rigs (7)
• Rigs contracted for three-year terms
• Renewed and re-priced every three years for at least an aggregate of 15 years
Newbuild Rigs (20)
• Initial 8-year contracts; day rate set by an EBITDA payback mechanism1
• Further 8-year contracts; day rate set by a market pricing mechanism and re-priced every three years
• Preference given for future contracts thereafter
• Rigs contribute to ARO Drilling results, of which Valaris recognizes 50% of net income
• Expected to generate ~$170M EBITDA in 2019• 50% attributable to Valaris (not reflected in Valaris
financials)1 Down payment on each newbuild rig is no more than 25% before delivery. Illustrative in-service newbuild rig capital cost of $175 million would provide an average day rate of ~$150K/day for the initial eight-year contract, based on cash operating costs of $45K/day +shorebase overhead allocation of $7.5 million per year
Valaris operates seven jackups offshore Saudi Arabia outside of ARO
Drilling joint venture
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 21 of 42
22
ARO Drilling Financial Considerations
50% Ownership
50% Ownership
~$450M Shareholder
Notes Receivable
~$450M Shareholder
Notes Receivable
Shareholder Notes
• ~$900M with 10-year maturities
• Issued as consideration for cash and rigs contributed by joint venture partners in 2017 and 2018
• Interest rate is LIBOR +2%; interest can be either paid in cash or PIK’d on an annual basis at discretion of ARO Drilling Board
• No third-party debt
Cash & Distributions
• ARO Drilling had more than $200M of cash as of March 31, 20191
• In total, ARO Drilling is expected to generate ~$170M EBITDA during 2019
• Excess cash can be distributed to joint venture partners at the discretion of ARO Drilling Board
Future Growth
• 20-rig newbuild program over ten years, with delivery of rigs 1 and 2 expected in 2022
• Opportunities for external financing given long-term nature of contracts backed by strong counterparty
• Expected to be financed by ARO cash flows or external financing
1 From Valaris 1Q19 results conference call
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 22 of 42
24
Senior Notes
2020 2021 2022 2023 2024 2025 2026 2027
$141
$621
2040
Limited Debt Maturities to 2024
2042 2044
$ millions
$123
$762
$1,764
$850
$914
$695
$1,000
$112
$300$400
$1,401
Convertible Senior Notes
Note: All amounts as of September 30, 2019. Represents principal debt balances outstanding. Borrowing capacity under revolving credit facility is approximately $1.6B through September 2022. As of September 30, 2019 the drawn balance on the revolving credit facility was $141M
$850
$114
Revolving Credit Facility
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 24 of 42
25
• Cost management is a priority, with shore-based support costs and capex lower in 2020 than illustrative graph below
‒ ~$160M for Maintenance Capex
‒ ~$100M for G&A Expense
‒ ~$90M for Ops Support Exp.
Category 1
While Cash Flow Does Not Cover Costs at This Stage of the Cycle ...
~$400 million
~$120 million
~$180 million
$139 $139 $256 $241
$512 $153
$376
$64
$51
$94
$274
$274
$798
$273
$273
$569
$251
$422
LTM Cash BreakevenScenario
Scenario M Scenario H
Other Jackups Semis Other Drillships ARO Modern Jackups HE Jackups HS Drillships
Illustrative Rig-Level Annual EBITDA Scenarios3
~$950 million
$1,553 million
$3,910 million
1Includes taxes and other items2Annualized cash interest3Illustrative annual EBITDA based on M and H scenarios on slide 194LTM rig-level EBITDA excludes operations support costs included in contract drilling expense and G&A expense; excludes ARO Drilling
Ops Support Exp.
Other1
$1,305
~$950 million
Cash Breakeven Scenario Utilization Day RateHS Drillships 85% $250,000HE Jackups 85% $150,000Modern HD & SD Jackups 85% $100,000ARO Drilling 95% $100,000Other Drillships 70% $175,000Semisubmersibles 70% $150,000Other Jackups 85% $85,000
Interest on Senior Notes2
Maintenance Capex
~$150 millionG&A Expense
~$100 million
Illustrative AnnualCash Uses
$459 million
4 M H
Other non-recurring cash uses:• Newbuild capex ~$300M• Debt maturities
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 25 of 42
$2.0$1.7 $1.9
$3.0$3.5 $3.7 $3.9
$2.9
$1.3
$0.4
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
26
EBITDA is Cyclical and Currently in Process of Troughing
50%
60%
70%
80%
90%
100%
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
+103 rigs17 months
+53 rigs17 months
+70 rigs34 months
+118 rigs22 months
+82 rigs28 months
+195 rigs40 months
Global Fleet Utilization Valaris Pro Forma EBITDA1 ($B)
Source: IHS Markit RigPoint as of January 2020; Annual and Quarterly Filings1 EBITDA reflects net income, adjusted for interest, taxes, depreciation and impairment charges from Ensco plc, Rowan Companies plc and Atwood Oceanics, Inc. annual filings; Atwood Oceanics, Inc. 2017 results reflect the 9 months ended June 30, 2017 from their quarterly filing
+96 rigs37 months
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 26 of 42
27
$6.6 $7.4$5.3
$2.8
$3.7$4.0
$1.6
$5.3$4.8
$2.3
$0.3$0.6
$0.4
$8.9$9.1
$2.0$6.6
$25.5$23.9
$9.1
Net Debt Construction Cost Replacement Cost Gross Asset Value
Highest-Specification Drillships Heavy Duty Ultra-Harsh & Harsh Environment Jackups
Modern Heavy Duty & Standard Duty Jackups ARO Drilling - 50% of ARO Owned Assets
Other
High-Quality Fleet Provides Significant Asset Coverage to Raise Capital to Cover Interim Funding Gaps
$ billions
1 2 3 3
Source: IHS Markit RigPoint, Wells Fargo Securities, Valaris analysis1 Net debt represents total debt of $6.7B inclusive of principal balance of senior notes and amount outstanding on revolving credit facility less $0.1B of cash as of September 30, 2019 2 Construction cost per IHS Markit RigPoint3 Replacement cost and gross asset value per Wells Fargo Securities quarterly report dated December 10, 20194 Analyst Gross Asset Value Estimates include DNB Markets, Morgan Stanley, Scotiabank, SpareBank and Wells Fargo
• Largest fleet in the offshore drilling sector; majority of rigs are modern, high-specification assets
• Rig fleet provides meaningful asset coverage versus total debt even at currently depressed levels
Gross Asset Value Estimates4
Analyst 1 $10.1
Analyst 2 $9.7
Analyst 3 $9.5
Analyst 4 $9.1
Analyst 5 $8.9
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 27 of 42
Financial Levers• Liquidity
– Cash & short-term investments– Revolving credit facility1
• Issuance of securities– Valaris is one of two public offshore
drillers that has a largely unsecured capital structure
• Monetization of assets
• ~$450 million ARO shareholder notes
28
Unsecured Capital Structure Provides Flexibility to Raise Capital
1 Borrowing capacity under revolving credit facility is approximately $1.6B through September 20222 Based on most recent public filings, pro forma for recent transactions. Valaris as of September 30, 2019
Total Debt ($ billion)
% of Unsecured
Non-Guaranteed
% of Unsecured Guaranteed
% ofSecured
Transocean $9.8 40% 24% 36%
Seadrill $6.8 - - 100%
Valaris $6.7 98% 2% -
Noble $3.9 68% 29% 3%
Diamond $2.0 100% - -
Maersk $1.5 - - 100%
Borr $1.4 25% - 75%
Pacific $1.0 - - 100%
Comparison to Peers2
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 28 of 42
29
Operational Highlights, Integration & Synergies
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 29 of 42
30
Consistent Operational Results
• Achieved nearly 100% operational effectiveness for the past three years
• Focus on optimizing customers’ well delivery through well planning, drilling performance and performance contracts
Operational Excellence
Industry-Leading Customer Satisfaction
• Won 10 of 17 categories in latest survey2
1 Average of legacy Ensco “Operational Utilization” and legacy Rowan “Billed Uptime” for 2016, 2017 and 20182 2018 Oilfield Products & Services Customer Satisfaction Survey conducted by EnergyPoint Research
99% 99% 98%99% 99% 98%
2016 2017 2018
Fleet-Wide Operational Effectiveness1
Ensco Rowan
‒ Total Satisfaction
‒ Health, Safety & Environment
‒ Performance & Reliability
‒ Middle East
‒ North Sea
‒ Job Quality
‒ HPHT Wells
‒ Ultra-Deepwater Wells
‒ Deepwater Wells
‒ Shelf Wells
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 30 of 42
31
Innovation and Technology
Drilling Process Efficiency• Continuous Tripping Technology™ is a patented
system that fully automates the pipe tripping process without stopping to make or break connections, enabling 3x faster tripping speeds and delivering expected cost savings along with safer, more reliable operations
• Prototype installed on VALARIS JU-123, and technology is actively being marketed to customers
• Focused efforts on technology, systems and processes to differentiate our assets from the competition through better performance and reliability; key areas include:
‒ Improvements to the drilling process
‒ Equipment reliability
‒ Better productivity from our operations
• Our scale provides us with the ability to economically develop and deploy new technologies across a wide asset base and geographic footprint
Strategy
Equipment Maintenance
Placing Jackups on Location• Proprietary technologies create significant cost
savings for customers by optimizing jackup moves and reducing downtime spent waiting on weather
• Technology available on several jackups currently operating
• Management systems increase operational uptime and decrease lifecycle costs by optimizing asset usage and maintenance activities
• Currently deploying systems across the fleet that leverage best practices from legacy companies
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 31 of 42
32
Global Reach and Geographic Diversity
DrillshipsSemisubmersibles
Heavy Duty Ultra-Harsh Environment JackupsHeavy Duty Harsh Environment JackupsHeavy Duty Modern Jackups
Standard Duty Modern JackupsStandard Duty Legacy Jackups
• Presence in virtually all major offshore regions
• Critical mass of highest-specification drillships well positioned to serve major deepwater basins of West Africa, South America and Gulf of Mexico
• Versatile semisubmersible fleet capable of meeting a wide range of customer requirements including strong presence offshore Australia
• Leading provider of shallow-water jackup services in the Middle East and North Sea
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 32 of 42
33
Large and Diversified Customer Base
$2.3 Billion Contracted Revenue Backlog1
46%
24%
30%Major
Independent
National OilCompany
27%
25%19%
12%
7%6%
Europe
Middle East
Africa
U.S. Gulf & Mexico
Asia Pacific
Central & SouthAmerica
Note: Includes certain customers that may not currently have backlog1Contracted revenue backlog as of September 30, 2019
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 33 of 42
34
Significant Efficiencies From Merger and Cost Reduction Initiatives
Progress to DateSynergies & Cost Savings• More than 80% of integration-related
activities completed– Staffing reductions
– Houston and Aberdeen regional office and warehouse consolidation
– Major ERP conversion
• $135 million of annual run rate synergies expected to be achieved by the end of 2019
• $265 million of annual runrate synergies and cost savings as compared to pre-merger levels– G&A and other support costs
– Regional office consolidation
– Procurement and supply chain improvements
– Compensation standardization
– Other organizational optimization
• Expect to achieve $235 million by the end of 2020, and more than $265 million by the end of second quarter 2021
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 34 of 42
36
Global Rig Fleet
Source: IHS Markit RigPoint as of January 20201Includes rigs >30 years of age that are idle without follow-on work or have contracts expiring before year-end 2020 without follow-on work and rigs 15 to 30 years of age that have been idle for more than two years and without follow-on work
• ~30 floaters1 could be candidates for retirement based on age and contract expirations
• ~150 jackups1 could be retired as expiring contracts and survey costs lead to the removal of older rigs from drilling supply
• Uncontracted newbuilds expected to be delayed further
Floaters JackupsDelivered RigsUnder Contract 124 349Future Contract 28 39Idle / Stacked 43 67
Marketed Fleet 195 455Non-Marketed 40 70
Total Fleet 235 525
Marketed Utilization 78% 85%Total Utilization 65% 74%
Newbuild RigsContracted 1 4Uncontracted 25 47
Total Newbuilds 26 51
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 36 of 42
37
CurrentTotal
Supply
IllustrativeTotal
Supply
IllustrativeMarketedSupply
Retirements Expected to Lead to Future Supply Contraction
CurrentTotal
Supply
IllustrativeTotal
Supply
IllustrativeMarketedSupply
Illustrative Jackup Supply
Illustrative Floater Supply
4235
22 -17-13
-3 228 26
202Build in Brazil
Newbuilds
Other Newbuilds
>30yrs idle w/o future contract
>30yrs rolling off
contract by YE2020
15-30yrs idle for
over 2yrs Non-marketed
36525
15 -87
-62
-6 421 14 407
Chinese Newbuilds
OtherNewbuilds
>30yrs idle w/o future contract >30yrs
rolling off contract by
YE2020
15-30yrs idle for
over 2yrs
Non-marketed
135 floaters retired since 3Q14
100 jackups retired since 3Q14
• Further floater retirements expected to offset newbuilddeliveries– Excluding another 26 floaters that
are not currently marketed, illustrative marketed supply of 202 compares to contracted floater count of 152
• When adjusting for likely retirements and newbuilds, the jackup count could decline by ~100 rigs or nearly 20%– Excluding another 14 jackups that
are not currently marketed, illustrative marketed supply of 407 compares to contracted jackupcount of 388
Source: IHS Markit RigPoint as of January 2020
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 37 of 42
Rowan Companies Inc.
Summary Corporate Structure
38
Valaris plc1
Ensco Jersey Finance Ltd.
Ensco International
Inc.
Pride International
LLC
1 Guarantor of debt issued by Ensco Jersey Finance Ltd., Ensco International Inc. and Pride International LLC; 2 Guarantor of debt issued by Rowan Companies Inc.
I
I
I
IG
I
G Guarantor
Issuer
Indirect Ownership
Before Internal Reorganization After Internal Reorganization
Rowan Companies
Ltd.2
G
IRowan
Companies LLC
Valaris plc1,2
Ensco Jersey Finance Ltd.1
Ensco International
Inc.1
Pride International
LLC1
I
I
I
IG
I
G Guarantor
Issuer
Indirect Ownership
Rowan Companies Ltd.
1 Guarantor of debt issued by Ensco Jersey Finance Ltd., Ensco International Inc. and Pride International LLC; 2 Debt previously issued by Rowan Companies Inc. assumed by Valaris plc
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 38 of 42
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EBITDA Reconciliations
Source: Annual and Quarterly FilingsNote: Ensco/Valaris reflects Ensco plc for the six months ended March 31, 2019, plus Valaris plc for the six months ended September 30, 2019; Rowan reflects Rowan Companies plc for the six months ended March 31, 2019
$ MillionsEnsco/ Valaris Rowan
Pro Forma Valaris
Net income (loss) (163)$ (144)$ (307)$ Add (subtract):Income tax expense 102 (49) 52 Interest expense 363 57 421 Other (income) expense (888) (4) (892)
Operating loss (586) (140) (726) Add (subtract):Depreciation expense 568 187 756 Loss on impairment 131 - 131 Equity in earnings of ARO 3 (14) (11) (Gain) loss on asset disposals 5 (58) (54) Transaction costs 82 11 93 Recovery of certain legal costs (3) - (3) General & adminstrative expense 109 41 150 Operations support costs 76 46 122
Rig-level EBITDA 386$ 73$ 459$
Twelve Months Ended September 30, 2019
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 39 of 42
40
EBITDA Reconciliations
Source: Annual and Quarterly FilingsNote: EBITDA reflects net income, adjusted for interest, taxes, depreciation and impairment charges from Ensco plc, Rowan Companies plc and Atwood Oceanics, Inc. annual filings; Atwood Oceanics, Inc. 2017 results reflect the 9 months ended June 30, 2017 from their quarterly filing
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) 251$ 785$ 368$ 1,403$ Less: (Income) loss from discontinued operations, net - (36) (39) (75)
Income (loss) from continuing operations 251 749 328 1,328 Add (subtract):Income tax expense 46 179 119 344 Other (income) expense 2 (9) 7 -
Operating income (loss) 298 919 454 1,671 Add (subtract):Depreciation 35 183 124 342 Loss on impairment - - - -
EBITDA 334$ 1,102$ 578$ 2,013$
Financial Year 2009
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) 257$ 586$ 280$ 1,123$ Less: (Income) loss from discontinued operations, net - (29) (12) (41)
Income (loss) from continuing operations 257 557 268 1,082 Add (subtract):Income tax expense 63 97 92 252 Other (income) expense 2 (18) 19 3
Operating income (loss) 322 636 378 1,337 Add (subtract):Depreciation 37 210 138 386 Loss on impairment - - - -
EBITDA 359$ 846$ 517$ 1,722$
Financial Year 2010
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) 272$ 606$ 737$ 1,614$ Less: (Income) loss from discontinued operations, net - 2 (601) (599)
Income (loss) from continuing operations 272 608 136 1,015 Add (subtract):Income tax expense 53 115 (6) 163 Other (income) expense 4 58 20 81
Operating income (loss) 329 781 150 1,259 Add (subtract):Depreciation 44 409 184 636 Loss on impairment - - - -
EBITDA 372$ 1,190$ 333$ 1,896$
Financial Year 2011
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) 272$ 1,177$ 181$ 1,629$ Less: (Income) loss from discontinued operations, net - 46 23 68
Income (loss) from continuing operations 272 1,222 203 1,698 Add (subtract):Income tax expense 41 244 (20) 266 Other (income) expense 6 99 72 176
Operating income (loss) 319 1,565 255 2,140 Add (subtract):Depreciation 71 559 248 877 Loss on impairment - - 8 8
EBITDA 390$ 2,124$ 511$ 3,025$
Financial Year 2012
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) 350$ 1,428$ 253$ 2,031$ Less: (Income) loss from discontinued operations, net - 5 - 5
Income (loss) from continuing operations 350 1,433 253 2,036 Add (subtract):Income tax expense 55 226 9 289 Other (income) expense 25 100 70 195
Operating income (loss) 430 1,759 332 2,520 Add (subtract):Depreciation 118 612 271 1,000 Loss on impairment - - 5 5
EBITDA 547$ 2,371$ 607$ 3,525$
Financial Year 2013
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) 341$ (3,889)$ (115)$ (3,663)$ Less: (Income) loss from discontinued operations, net - 1,199 (4) 1,195
Income (loss) from continuing operations 341 (2,689) (119) (2,467) Add (subtract):Income tax expense 57 141 (151) 46 Other (income) expense 42 148 103 292
Operating income (loss) 439 (2,401) (167) (2,129) Add (subtract):Depreciation 147 538 323 1,008 Loss on impairment - 4,219 574 4,793
EBITDA 586$ 2,356$ 730$ 3,672$
Financial Year 2014
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 40 of 42
41
EBITDA Reconciliations
Source: Annual and Quarterly FilingsNote: EBITDA reflects net income, adjusted for interest, taxes, depreciation and impairment charges from Ensco plc, Rowan Companies plc and Atwood Oceanics, Inc. annual filings; Atwood Oceanics, Inc. 2017 results reflect the 9 months ended June 30, 2017 from their quarterly filing
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) 433$ (1,586)$ 93$ (1,060)$ Less: (Income) loss from discontinued operations, net - 129 - 129
Income (loss) from continuing operations 433 (1,457) 93 (931) Add (subtract):Income tax expense 46 (14) 64 97 Other (income) expense 53 228 149 430
Operating income (loss) 531 (1,244) 307 (405) Add (subtract):Depreciation 172 573 391 1,136 Loss on impairment 61 2,746 330 3,137
EBITDA 764$ 2,075$ 1,028$ 3,868$
Financial Year 2015
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) 265$ 897$ 321$ 1,483$ Less: (Income) loss from discontinued operations, net - (8) - (8)
Income (loss) from continuing operations 265 889 321 1,475 Add (subtract):Income tax expense 48 109 5 161 Other (income) expense (19) (68) 191 105
Operating income (loss) 294 929 517 1,740 Add (subtract):Depreciation 166 445 403 1,014 Loss on impairment 104 - 34 138
EBITDA 564$ 1,375$ 954$ 2,892$
Financial Year 2016
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) (24)$ (304)$ 73$ (255)$ Less: (Income) loss from discontinued operations, net - (1) - (1)
Income (loss) from continuing operations (24) (305) 73 (256) Add (subtract):Income tax expense 7 109 27 142 Other (income) expense 43 64 139 246
Operating income (loss) 26 (132) 238 132 Add (subtract):Depreciation 122 445 404 970 Loss on impairment 59 183 - 242
EBITDA 207$ 496$ 642$ 1,344$
Financial Year 2017
$ Millions Atwood Ensco RowanPro Forma
ValarisNet income (loss) -$ (637)$ (347)$ (984)$ Less: (Income) loss from discontinued operations, net - 8 - 8
Income (loss) from continuing operations - (629) (347) (976) Add (subtract):Income tax expense - 90 (52) 38 Other (income) expense - 303 111 414
Operating income (loss) - (236) (288) (523) Add (subtract):Depreciation - 479 389 868 Loss on impairment - 40 - 40
EBITDA -$ 284$ 101$ 385$
Financial Year 2018
Case 20-34114 Document 1367-1 Filed in TXSB on 08/30/21 Page 41 of 42
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ADVERSARY COMPLAINT FOR INJUNCTIVE RELIEF, CIVIL PENALTIES, RESTITUTION, AND OTHER EQUITABLE RELIEF
EXHIBIT C
Case 20-34114 Document 1367-2 Filed in TXSB on 08/30/21 Page 1 of 1
Certificate Of CompletionEnvelope Id: 962649675E474490A0F14CD9C2B4EDA7 Status: CompletedSubject: Please DocuSign: Miralles vs Valaris - Pro Se Adversary Proceeding.pdfSource Envelope: Document Pages: 133 Signatures: 1 Envelope Originator: Certificate Pages: 1 Initials: 0 Sebastian MirallesAutoNav: EnabledEnvelopeId Stamping: EnabledTime Zone: (UTC-06:00) Guadalajara, Mexico City, Monterrey
Sudermann 139 apt 5Col. PolancoCiudad de Mexico, Ciudad de México 11560smiralles@tempestcapital.comIP Address: 187.191.37.217
Record TrackingStatus: Original August 29, 2021 | 23:49
Holder: Sebastian Miralles smiralles@tempestcapital.com
Location: DocuSign
Signer Events Signature TimestampSebastian Mirallessmiralles@tempestcapital.comManaging PartnerTempest CapitalSecurity Level: Email, Account Authentication (None)
Signature Adoption: Pre-selected StyleUsing IP Address: 187.191.37.217
Sent: August 29, 2021 | 23:49Viewed: August 29, 2021 | 23:49 Signed: August 29, 2021 | 23:50Freeform Signing
Electronic Record and Signature Disclosure: Not Offered via DocuSign
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status TimestampsEnvelope Sent Hashed/Encrypted August 29, 2021 | 23:49Certified Delivered Security Checked August 29, 2021 | 23:49Signing Complete Security Checked August 29, 2021 | 23:50Completed Security Checked August 29, 2021 | 23:50
Payment Events Status Timestamps
Case 20-34114 Document 1367-3 Filed in TXSB on 08/30/21 Page 1 of 1
B1040 (FORM 1040) (12/15)
ADVERSARY PROCEEDING COVER SHEET(Instructions on Reverse)
ADVERSARY PROCEEDING NUMBER(Court Use Only)
PLAINTIFFS DEFENDANTS
ATTORNEYS (Firm Name, Address, and Telephone No.) ATTORNEYS (If Known)
PARTY (Check One Box Only)Trustee/Bankruptcy Admin
x
PARTY (Check One Box Only)x Debtor U.S. Trustee/Bankruptcy AdminCreditor Otherx Trustee
CAUSE OF ACTION (WRITEABRIEFSTATEMENTOFCAUSEOFACTION, INCLUDINGALLU.S. STATUTES INVOLVED)
NATURE OF SUIT(Number up to five (5) boxes starting with lead cause of action as 1, first alternative cause as 2, second alternative cause as 3, etc.)
FRBP 7001(1) – Recovery of Money/Property11-Recovery of money/property - §542 turnover of property12-Recovery of money/property - §547 preference13-Recovery of money/property - §548 fraudulent transfer14-Recovery of money/property - other
FRBP 7001(2) – Validity, Priority or Extent of Lien21-Validity, priority or extent of lien or other interest in property
FRBP 7001(3) – Approval of Sale of Property31-Approval of sale of property of estate and of a co-owner - §363(h)
FRBP 7001(4) – Objection/Revocation of Discharge41-Objection / revocation of discharge - §727(c),(d),(e)
FRBP 7001(5) – Revocation of Confirmation51-Revocation of confirmation
FRBP 7001(6) – Dischargeability66-Dischargeability - §523(a)(1),(14),(14A) priority tax claims62-Dischargeability - §523(a)(2), false pretenses, false representation,
actual fraud67-Dischargeability - §523(a)(4), fraud as fiduciary, embezzlement, larceny
(continued next column)
FRBP 7001(6) – Dischargeability (continued)61-Dischargeability - §523(a)(5), domestic support68-Dischargeability - §523(a)(6), willful and malicious injury63-Dischargeability - §523(a)(8), student loan64-Dischargeability - §523(a)(15), divorce or separation obligation(other than domestic support)
65-Dischargeability - other
FRBP 7001(7) – Injunctive Relief71-Injunctive relief – imposition of stay72-Injunctive relief – other
FRBP 7001(8) Subordination of Claim or Interest81-Subordination of claim or interest
FRBP 7001(9) Declaratory Judgment91-Declaratory judgment
FRBP 7001(10) Determination of Removed Action01-Determination of removed claim or cause
OtherSS-SIPA Case – 15 U.S.C. §§78aaa et.seq.02-Other (e.g. other actions that would have been brought in state court
if unrelated to bankruptcy case)
Check if this case involves a substantive issue of state law Check if this is asserted to be a class action under FRCP 23trial is demanded in complaint Demand $
Other Relief Sought
20-34114
SEBASTIAN MIRALLES
PRO SE KIRKLAND & ELLIS
VALARIS, PLC et AL
- Motion for Plan Revocation under 11 USC 1144 for Fraud Upon the Court- Equitable relief, compensatory damages, and exemplary damages
- Sua Ponte action as the Court sees Fit
11 U.S. Code § 102(1)(B)(i)(ii), 11 U.S. Code § 105(a), 11 U.S.C. § 1123(a)(4),18 U.S.C. § 152(1), 18 U.S.C. § 152(2), 18 U.S.C. § 152(3), 18 U.S.C. § 152(6),18 U.S.C. § 152 (7), 18 U.S.C. § 152(9), 11 U.S.C. § 1123(a)(4), 11 U.S. Code §1142 (b), 11 U.S.C § 1144, 11 U.S.C. § 1126(b)(1), 11 U.S.C. § 1126(b)(2), 11U.S.C. 1129(b)(2)(B)(ii), 17 C.F.R. § 240.10(b), 18 U.S. Code § 157, 17 C.F.R.§ 240.10(c)
x
x
x
21,648,885.60
Case 20-34114 Document 1367-4 Filed in TXSB on 08/30/21 Page 1 of 2
B1040 (FORM 1040) (12/15)
BANKRUPTCY CASE IN WHICH THIS ADVERSARY PROCEEDING ARISESNAME OF DEBTOR BANKRUPTCY CASE NO.
DISTRICT IN WHICH CASE IS PENDING DIVISION OFFICE NAME OF JUDGE
RELATED ADVERSARY PROCEEDING (IF ANY)PLAINTIFF DEFENDANT ADVERSARY
PROCEEDING NO.
DISTRICT IN WHICH ADVERSARY IS PENDING DIVISION OFFICE NAME OF JUDGE
SIGNATURE OF ATTORNEY (OR PLAINTIFF)
DATE PRINT NAME OF ATTORNEY (OR PLAINTIFF)
INSTRUCTIONS
The filing of a bankruptcy case creates an “estate” under the jurisdiction of the bankruptcy court which consists ofall of the property of the debtor, wherever that property is located. Because the bankruptcy estate is so extensive and thejurisdiction of the court so broad, there may be lawsuits over the property or property rights of the estate. There also may belawsuits concerning the debtor’s discharge. If such a lawsuit is filed in a bankruptcy court, it is called an adversaryproceeding.
A party filing an adversary proceeding must also must complete and file Form 1040, the Adversary ProceedingCover Sheet, unless the party files the adversary proceeding electronically through the court’s Case Management/ElectronicCase Filing system (CM/ECF). (CM/ECF captures the information on Form 1040 as part of the filing process.) Whencompleted, the cover sheet summarizes basic information on the adversary proceeding. The clerk of court needs theinformation to process the adversary proceeding and prepare required statistical reports on court activity.
The cover sheet and the information contained on it do not replace or supplement the filing and service of pleadingsor other papers as required by law, the Bankruptcy Rules, or the local rules of court. The cover sheet, which is largely self-explanatory, must be completed by the plaintiff’s attorney (or by the plaintiff if the plaintiff is not represented by anattorney). A separate cover sheet must be submitted to the clerk for each complaint filed.
Plaintiffs and Defendants. Give the names of the plaintiffs and defendants exactly as they appear on the complaint.
Attorneys. Give the names and addresses of the attorneys, if known.
Party. Check the most appropriate box in the first column for the plaintiffs and the second column for the defendants.
Demand. Enter the dollar amount being demanded in the complaint.
Signature. This cover sheet must be signed by the attorney of record in the box on the second page of the form. If theplaintiff is represented by a law firm, a member of the firm must sign. If the plaintiff is pro se, that is, not represented by anattorney, the plaintiff must sign.
VALARIS, PLC 20-34114
SOUTHERN DISTRICT TEXAS HOUSTON Marvin Isgur
August 29, 2021 PRO SE
Case 20-34114 Document 1367-4 Filed in TXSB on 08/30/21 Page 2 of 2
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