From Fixtures to Values: Where the Jackup Recovery Is Already Being Priced

Esgian rig values suggest that the market has already started to move. Average premium jackup values declined through 2025, stabilised toward the end of the year, and have recovered gradually into 2026. The path is visible, but the move remains measured. In other words, the rig market is no longer pricing deterioration, yet it is not yet pricing a full revaluation of the premium jackup fleet. That distinction is important, because it places the current market in a recovery phase rather than a fully repriced one.

The main signal sits in the relationship between implied values and ERV. In mid-2025, Pareto’s implied values for Borr Drilling and Valaris were broadly aligned with Esgian rig values. By May 2026, that relationship had changed significantly. Borr’s implied value had risen from $95 million per rig to $133 million, while ERV stood at $86.8 million. Valaris had moved even further, from $77 million to $140 million, against an ERV of $71.3 million. The1 gap is consequently not between a weak rig market and a strong equity market in simple terms, but between a composite valuation structure and one of its inputs, implied values, which is currently repricing much faster than the rest.

ERV reflects observable rig-level asset pricing and tends to adjust when stronger fixtures are repeated often enough, and broadly enough, to support firmer assumptions around backlog, earnings visibility, and ultimately rig values. It is not enough for dayrates to improve at the top end of the range. What matters is whether those rates become repeatable across a broader share of the premium fleet and sustain themselves for long enough to support a more stable repricing of the core assets. The gradual recovery in ERV suggests that this process has started but not yet reached the point where the market can justify a considerably higher asset base across the segment.

Implied values capture something different. They represent what the market is willing to pay today for exposure to a stronger operating backdrop, before that view is fully validated through observable rig market pricing. The premium now visible in Borr and Valaris is therefore less a comment on where rigs would transact today than on how investors are valuing current sentiment around earnings normalization, stronger contract coverage, and reduced downside risk. Therefore, the market is not waiting for the asset side to fully catch up before assigning higher value to selected companies. It is already doing so now.

This is also consistent with how the cycle is expected to develop. Esgian’s forecasts indicate that premium jackup dayrates are expected to peak before rig values do, with pricing strengthening first and rig values reaching their high point later as those conditions feed through into backlog and cash-flow visibility. The lag between the two is therefore not a contradiction; it is part of the mechanics of the cycle. Dayrates move first, asset values follow with a delay, and equity-implied values can move ahead of both when pricing and contract activity provide enough visibility on earnings to support a stronger valuation.

The recovery in jackups is thus not best understood through any single metric in isolation. Dayrates show that market conditions have improved. ERV shows that rig values have already started to recover, but only gradually. The more important signal sits in the widening premium between implied values and rig values, which suggests that the market is already assigning substantially higher value to Borr Drilling and Valaris today than the fundamental rig values currently supports. That is where the repricing is happening first, and that is also why the current phase of the cycle is better described as an incomplete transmission from fixtures into rig values rather than as a disconnect between them.