Valaris returned to profit in the second quarter as it prepared to complete its $5.8 billion merger with Transocean before the end of the year.

The Bermudian-domiciled offshore drilling firm reported net income of $47 million for the three months to June 30, reversing an $18 million loss in the first quarter.

Revenue totalled $539 million, while adjusted earnings before interest, taxes, depreciation and amortisation rose to $97 million from $67 million.

However, the quarterly profit included a $38 million gain from asset sales. Valaris sold two long-term stacked jackup rigs in June and July for combined cash proceeds of $74 million.

The company also incurred $11 million in merger and integration expenses, mainly professional fees connected with its planned combination with Transocean.

Anton Dibowitz, president and chief executive of Valaris, said: “We are also excited about the pending business combination with Transocean, which is on track to close in the fourth quarter of 2026.

“The combination is expected to deliver meaningful value to our shareholders through anticipated synergies and the enhanced capabilities of the combined company.”

Valaris announced the transaction with Transocean in February.

The merger will create an offshore drilling business with a fleet of more than 60 rigs. Valaris said it did not intend to hold more earnings conference calls or update its financial guidance while the transaction was pending.

Its second-quarter results were thanks to the successful return of two drillships to work. Revenue efficiency, which measures how closely actual revenue matched the maximum available under drilling contracts, was 98 per cent.

The company expects two more drillships to begin new contracts before the end of the year.

Mr Dibowitz said the pipeline of deepwater contract opportunities is strong due to demand for high-specification drilling assets.

However, conflicts in the Middle East reduced adjusted earnings by about $30 million during the quarter, compared with an $8 million impact during the first three months of the year.

Valaris said the increase was partly caused by a full quarter of higher premiums for insurance against war-related risks for jackup rigs operating in the region.

Project delays affecting two rigs undergoing maintenance and contract-preparation work in Middle Eastern shipyards also contributed.

The company expects those costs to ease during the second half. It said war-risk insurance premiums should fall after it secured longer-term coverage and sold one of the affected rigs.

Valaris had $541 million in cash and cash equivalents at the end of June, down from $578 million three months earlier. Its contract backlog stood at about $4.59 billion as of July 30.