Q3 2020 Noble Corporation PLC Earnings Call

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Senior Vice President and Chief Financial Officer.

For today's call, we will not be hosting a question and answer session at the end of the prepared remarks before.

Before I turn the call over to Robert I'd like to remind everyone that we may make statements about our chapter 11 filing restructuring activities are plans operations opportunities plans operational or financial performance the drilling business or other matters that are not historical facts and are forward looking statements that are subject to certain risks and uncertainties.

Affected by Covid shutdowns in certain jurisdictions, we maintain our target of emerging priority here and or soon thereafter.

Our decision to pursue a comprehensive restructuring was reached after a thorough review of several potential alternatives.

We believe that this path will best position noble to navigate what remains a very challenging environment and we are grateful for the broad support we have received from our creditors customers vendors and employees.

Due to the ongoing court process and related activities, we will not be holding a question and answer session on today's call.

Richard will give some more details on our restructuring in a moment.

But first I would like to give an operational update.

Our industry continues to endure one of the most difficult environments, we have seen in decades.

Timing of any industry recovery remains entirely uncertain.

Cruise an operation support team still faced significant quarantine and travel restrictions that have become an unfortunate part of our business and the time of COVID-19.

Despite the challenges the noble team continues to deliver safe and efficient operations to our customers around the world.

We announced a contract with Ecuador, which will take the noble Lloyd noble to Norway in 2021.

The Lloyd noble as one of the most technologically advanced jackup rigs in the world and has been performing very well for Akron or on the Mariner platform.

For for our Jackups, we've been awarded a contract extension on the Noble makeup, Brian which will keep it in Qatar with its current customer into August 2021.

The noble Regina Allen has commenced its contract with BHP in Trinidad and Tobago and in Australia. The noble Tom Prosser is currently warm stacked, but chasing several opportunities for work starting in 2021.

Overall, the drilling market continues to suffer from over supply.

At the end of Q3 worldwide floater demand stood at 99 rigs versus a total supply including rigs and shipyards of 249 units for a total utilization of 40%. This is not sustainable.

Of the Uncontacted floaters, there are 48, cold stacked rigs, which will require significant additional investment in order to bring them back to the market.

On the Jack upside the numbers are different but the story is the same.

Even cold stacked rigs required daily cost to maintain and with the widely held expectations of a delayed recovery. It is becoming harder for the industry to justify even modest costs uncalled stacked rigs.

The market outlook and company's financial positions no longer support the cost of maintaining currently uncompetitive rigs for option value.

Year to date in 2000, 2037 rigs had been retired from service, which already exceeds the full year 2019 nutrition.

We expect further retirements is drilling contractors' continue to update their expectations of future cash flows based on market conditions restart.

Restructuring activities at a number of drilling contractors' may facilitate further attrition.

And noble we have taken a hard look at our fleet as well, hence our recent announcement to dispose of our five cold stacked rigs.

These rig retirements further high grade are already high spec fleet and bolster our efforts towards cost efficiency.

I will now turn the call over to Richard to give an update on our financial results and more details on our restructuring process.

Thank you Robert.

Good morning, everyone I would also like to welcome each of you on today's call I will start my comments with some brief highlights of our third quarter results and then give an overview of where we are with our restructuring process.

As announced yesterday noble generated total revenue of $242 million in the third quarter, which translated into a net loss to the company of 51.

Or 20 cents per diluted share.

5 million.

This increase over the prior quarter is primarily related to the receipt of cash tax refunds of $153 million. We received in July as a result of the Kazakh provisions as well as the closures of certain prior year tax audits.

We still anticipate collecting approximately 18 million in additional cares act refunds in the near future.

Our capital expenditure estimate for the full year Twentytwenty is now expected to range between 150, and 160 million of which we anticipate reimbursements from our customers of between $45 million and 55 million.

While we expect to spend this amount it is possible that some of this spending could push into 2020 one as the timing of projects is adjusted towards the end of the year.

Additional documentation and approval by the court.

A confirmation hearing is scheduled for later this month on November the 20th.

If I restructuring plan is approved at this hearing we will move as quickly as possible towards emergence as a restructured company.

As Robert mentioned, we are grateful to have the support of our creditors customers suppliers and employees in a consensual restructuring.

The comprehensive deal we have structured without stakeholders will provide significantly would use leverage and corresponding interest expense and enhance liquidity position and improved cash flow off to financing costs, which will create a sustainable capital structure for us as we navigate the covid market conditions.

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