Q4 2021 Noble Corp (Cayman Island) Earnings Call

February 17, 2022

Craig Muirhead: You can find a copy of Noble's earnings report issued yesterday evening, along with the supporting statements and schedules on our website at noblecorp.com. Joining me today are Robert Eifler, President and Chief Executive Officer, and Richard Barker, Senior Vice President and Chief Financial Officer. Also joining are Blake Denton, Vice President, Marketing and Contracts, and Joey Kawaja, Vice President of Operations. For today's call, we will begin with prepared remarks, followed by a question-and-answer session. During the course of this call, we may make certain forward-looking statements regarding various matters related to our business and companies that are not historical facts. Such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from these forward-looking statements, and Noble does not assume any obligation to update these statements.

Issued yesterday evening, along with the supporting statements and schedules on our website at <unk> Dot com.

Joining me today are Robert Eifler, President and Chief Executive Officer, and Richard Barker, Senior Vice President and Chief Financial Officer.

Also joining are Blake Denton, Vice president marketing and contracts and Joel <unk> Vice President of operations.

For today's call, we will begin with prepared remarks, followed by a question and answer session. During.

During the course of this call we may make certain forward looking statements regarding various matters related to our business and companies that are not historical facts such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties.

Any factors could cause actual results to differ materially from these forward looking statements and noble does not assume any obligation to update these statements.

Craig Muirhead: Please refer to our SEC filings for more information regarding our forward-looking statements, including the risks and uncertainties that could impact our future results, including risks and uncertainties associated with our previously announced business combination with Maersk Drilling. Investors should carefully read our previous and ongoing disclosure with respect to such business combination, including in our press release issued yesterday and in our upcoming annual report on Form 10-K that will be filed with the SEC. Also note, we are referencing non-GAAP financial measures in the call today. You will find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation on our website. With that, I'll now turn the call over to Robert Eifler, President and Chief Executive Officer of Noble.

Please refer to our SEC filings for more information regarding our forward looking statements, including the risks and uncertainties that could impact our future results, including risks and uncertainties associated with our previously announced business combination with Maersk drilling.

Investors should carefully read our previous and ongoing disclosure with respect to such business combination, including in our press release issued yesterday and in our upcoming annual report on Form 10-K that will be filed with the SEC.

Also note we are referencing non-GAAP financial measures in the call today, you will find the required supplemental disclosure for these measures, including most recently comparable GAAP measure and an associated reconciliation on our website.

And with that I'll now turn the call over to Robert Eifler, President and Chief Executive Officer of Noble.

Robert Eifler: Thanks, Greg, and thanks to everyone joining us on the call today. I'll kick off today with a recap of the key strategic milestones we achieved in 2021, followed by some commentary on our global operations in the rig market before turning the call over to Richard to review our financial results for the quarter. The last year has been transformative for Noble. I'm proud to be a part of an organization that can execute a high-paced and challenging strategic plan, such as the one we delivered in 2021. In February, Noble emerged from restructuring and quickly closed our acquisition of Pacific Drilling. Our stock was relisted on the New York Stock Exchange in early June, while the management team and board explored various strategic growth opportunities.

Thanks, Craig and thanks to everyone joining us on the call today.

Kick off today with a recap of the key strategic milestones we achieved in 2021, followed by some commentary on our global operations in the rig market before turning the call over to Richard to review, our financial results for the quarter.

The last year has been transformative for noble I'm proud to be part of an organization that can execute our high paced and challenging strategic plan such as the one we delivered in 2021 and.

In February <unk> emerged from restructuring and quickly closed our acquisition of Pacific drilling.

Our stock was re listed on the New York Stock Exchange in early June while the management team and board explored various strategic growth opportunities.

Robert Eifler: In H2, our operations team successfully entered Norway concurrent with the divestiture of four jackups in Saudi Arabia. To cap off 2021, we announced an historic agreement to combine Noble Corporation with Maersk Drilling, which is on track to close mid-2022. This combination will create a world-class offshore driller with the youngest and highest spec fleet and a combined track record of industry-leading utilization. Together, our complementary cultures with unwavering commitments to safety, operational excellence, and customer satisfaction will allow us to better serve our customers. We expect to realize $125 million in annual run rate synergies within the first two years after closing, which makes this combination accretive to both sets of shareholders.

In the second half of the year, our operations team successfully entered Norway concurrent with the divestiture of four Jackups in Saudi Arabia.

To cap off 2021, we announced an historic agreement to combine Noble Corporation with Maersk drilling, which is on track to close mid 2022.

This combination will create a world class offshore driller.

With the youngest and highest spec fleet and.

And a combined track record of industry, leading utilization.

Whether our complementary cultures with unwavering commitment to safety operational excellence and customer satisfaction will allow us to better serve our customers.

We expect to realize $125 million in annual run rate synergies within the first two years after closing, which makes this combination accretive to both sets of shareholders.

Robert Eifler: As a combined company, we will have a robust balance sheet to serve our best-in-class fleet, creating a strong platform for cash flow generation in today's offshore market and even further as the recovery continues. Beyond Noble, the broader offshore rig market made a remarkable recovery in 2021. After being written off for dead during the depths of the pandemic, ultra-deepwater market rates grew by over 50% in just the last three quarters of 2021, led primarily by fixtures in the US Gulf of Mexico. Commodity prices obviously supported the demand growth, and we expect offshore rig demand to improve going forward in all market segments. On the back of strong cash flows, our customers' drilling budgets are generally up by double digits in 2022 versus 2021, and project sanctioning in 2023 is on pace to be beyond pre-pandemic expectations.

As a combined company, we will have a robust balance sheet to serve our best in class fleet, creating a strong platform for cash flow generation in today's offshore market and even further as the recovery continues.

Beyond noble the broader offshore rig market made a remarkable recovery in 2021.

After being written off for dead during the depths of the pandemic ultra deepwater market rates grew by over 50% in just the last three quarters of 2021 led primarily by fixtures in the U S Gulf of Mexico.

Commodity prices, obviously supported the demand growth and we expect offshore rig demand to improve going forward in all market segments.

On the back of strong cash flows our customers' drilling budgets are generally up by double digits in 2022 versus 2021.

And project sanctioning in 2023 is on pace to be beyond pre pandemic expectations.

Robert Eifler: We expect 2022 to bring continued day rate improvement across market segments, as well as an increase in longer duration programs in the UDW segment. With that as a backdrop, we will transition to some perspective on the global market, highlighting Noble's activities in each region along the way. The US Gulf of Mexico continues to lead the floater recovery in utilization and rate appreciation. Also, driven by elevated ultra-deepwater demand and limited rig availability, we have seen an increased operator preference to direct negotiate their programs as opposed to running open tenders. With respect to our activities, Noble currently operates four drillships in the US Gulf of Mexico, and we are very pleased to announce the continued relationship with Murphy on the Noble Stanley Lafosse through the exercise of two optional wells at $300,000 per day.

We expect 2022 to bring continued day rate improvement across market segments.

As well as an increase in longer duration programs in the <unk> segment.

With that as a backdrop, we will transition to some perspective on the global market highlighting noble's activities in each region along the way.

The U S. Gulf of Mexico continues to lead the floater recovery and utilization and rate appreciation also driven by elevated ultra deepwater demand and limited rig availability, we have seen an increased operator preference to direct negotiated programs as opposed to running a contenders.

With respect to our activities Noble currently operates four drillships in the U S. Gulf of Mexico, and we are very pleased to announce that continued relationship with Murphy on the noble Stanley lafosse through the exercise of two optional wells to $300000 per day.

Robert Eifler: We also look forward to commencing work for QuarterNorth Energy with the Noble Faye Kozack in the very near future. The US Gulf of Mexico's continued strength presents a number of additional opportunities for us, and we are encouraged by ongoing discussions with customers around their forward plans in the basin. Dropping down to South America, the deepwater demand is largely located in two key regions, Guyana, Suriname, and Brazil. Let's visit Guyana and Suriname first. As many of you know, Noble has four drillships operating in Guyana under a commercial enabling agreement or CEA with ExxonMobil. We've recently received a conditional award of 7.4 rig years under that agreement, which continues to build on the collective value achieved through close collaboration between our two organizations.

We also look forward to commencing work for quarter, North energy with a noble Fei kozak in the very near future.

The U S. Gulf of Mexico's continued strength presents a number of additional opportunities for us and we are encouraged by ongoing discussions with customers around their forward plans in the basin.

Dropping down to South America. The deepwater demand is largely located in two key regions, Guyana, Suriname in Brazil.

Let's see I think Guyana, and Suriname first as many of you know noble has four drillships operating in Guyana under a commercial enabling agreement or <unk> with Exxonmobil.

We've recently received a conditional award of seven four rig years under that agreement.

Which continues to build on the collective value achieved through close collaboration collaboration between our two organizations.

Robert Eifler: This value is further evidenced by the positive impact to the local community, where Noble employs nearly 300 Guyanese nationals as one of several initiatives underway to benefit the communities in which we operate. To provide supporting detail, the award specifies the additional rig years are subject to government approvals and final project sanctions for the Yellowtail project and also reallocates the existing term evenly across all 4 rigs. Once the conditions are satisfied, the extended CEA will provide utilization visibility into Q4 2025. As mentioned on previous calls, this agreement includes a periodic pricing adjustment mechanism that keeps day rates in line with current market conditions.

This value is further evidenced by the positive impact of the local community where noble employees nearly 300 Guyanese nationals is one of several initiatives underway to benefit the communities in which we operate.

To provide supporting detail the award specifies the additional rig gears are subject to government approvals and final project sanctions for the yellow yellow tail project and also reallocate the existing term evenly across all four rigs once the conditions are satisfied the extended CEO , who will provide utilization.

<unk> visibility into the fourth quarter of 2025.

As mentioned on previous calls this agreement includes a periodic pricing adjustment mechanism that keeps day rates in line with current market conditions.

Robert Eifler: In addition to the 4 CEA rigs for ExxonMobil, the Noble Gerry de Souza is preparing to mobilize to Suriname for its contract with APA Corp, where the work history between our two companies in the basin is expected to deliver exceptional drilling results. This legacy Pacific Drilling rig has been upgraded with a second BOP and an MPD system, enhancing both its capabilities for this contract and its competitiveness against seventh-generation drillships for future drilling programs. Finally, as depicted in yesterday's fleet status report, we are grateful for the opportunity to drill a well in Guyana starting in Q2 for Repsol using our jackup, the Noble Regina Allen, which recently concluded its contract in neighboring Trinidad and Tobago for BHP. Further south, Brazil continues to play an important role in the deepwater segment with significant potential for demand growth.

In addition to the <unk> rigs for Exxonmobil, the noble Jerry to Susan is preparing to mobilize to Suriname for its contract with <unk> Corp, where the work history between our two companies in the basin is expected to deliver exceptional drilling results.

This legacy Pacific drilling rig has been upgraded with a second DLP and an MPD system enhancing both its capabilities for this contract and its competitiveness against seventh generation Drillships for future drilling programs.

Finally as depicted in yesterday's fleet status report, we are grateful for the opportunity to drill a well in Guyana, starting in the second quarter for Repsol using our Jackup the noble Regina Allen, which recently concluded its contract in neighboring Trinidad and Tobago for BHP.

Further south Brazil continues to play an important role in the deepwater segment with significant potential for demand growth.

Robert Eifler: The potential demand is estimated to require as many as 10 incremental floaters in Brazil over the next several years, representing almost a 50% increase to the 21 floaters under contract there now. In West Africa, the deepwater market recovery lags the Americas as this key offshore basin was particularly impacted by the downturn. West Africa's active drillship supply slid from over 25 in 2014 to as low as 5 in 2020. Indications of a demand recovery are emerging there too. The tendering activity increased through the Q4 with the bulk of opportunities in Ghana and Nigeria. Noble, both directly and through Legacy Pacific Drilling, possesses significant operational history on the continent and are actively competing there today. I would like to now offer a few thoughts on the harsh environment jackup market, starting with the Norwegian continental shelf.

The potential demand is estimated to require as many as 10 incremental floaters in Brazil over the next several years, representing almost a 50% increase to the 21 floaters under contract there now.

In West Africa, the deepwater market recovery lags the Americas as this key offshore basin was particularly impacted by the downturn West Africa's active drillship supply slid from over 25% in 2014 to as low as 5% in 2020, but indications of a demand recovery or emerging there too.

Entering activity increased through the fourth quarter with a bulk of opportunities in Ghana and Nigeria.

Noble both directly and through legacy Pacific drilling possesses significant operational history on the continent and are actively competing there today.

I would like to now offer a few thoughts on the harsh environment Jackup market, starting with the Norwegian Continental shelf, Norway, and the customers and suppliers operating there are at the forefront of technology and policy innovation to build a sustainable energy future and oil and gas.

Robert Eifler: Norway and the customers and suppliers operating there are at the forefront of technology and policy innovation to build a sustainable energy future in oil and gas. Going forward globally, the barrels with the lowest carbon intensity and lifting costs will be produced, and Norway's are among the lowest on Earth, making this a new and important part of Noble's future. The Noble Lloyd Noble, a CJ70-design jackup, began its first well in Norway for Equinor in Q4. This design of jackup is the largest, most efficient, and operationally capable in the world. We expect our customers in Norway to continue to prefer these ultra-harsh jackups for shallow water projects and even competing in the transition zone between shallow and midwater.

Going forward globally, the barrels with the lowest carbon intensity and lifting costs will be produced and Norway's are among the lowest on earth, making this a new and important part of <unk> future.

The noble Lloyd Noble of CJ 70 design Jackup began its first well in Norway for <unk> in the fourth quarter.

This design of Jackup is the largest most efficient and operationally capable in the world. We expect our customers in Norway to continue to prefer these ultra harsh jackups for shallow water projects and even competing in the transition zone between shallow and mid water.

Robert Eifler: These rigs are more comparable to drillships than jackups on several financial dimensions, including new build costs, maintenance, and operating costs, as well as premium day rates. As we signaled in previous quarters, we acknowledge that 2022 will be a transitional year for demand in Norway as the activity lull created by the pandemic works through the pipeline of projects. However, the exercise options on the Noble Lloyd Noble keep the rig working into 2023, and recent market announcements only bolster confidence in the Norway market long-term. We look forward to serving Equinor and new customers there as activity normalizes over the coming years. Elsewhere in the North Sea, such as the UK, Danish, and Dutch sectors, rig demand remains steady. This region is highly competitive at present, with many drillers working hard to string together continuous work.

These rigs are more comparable to drillships and jackups on several financial dimensions, including Newbuild cost maintenance and operating costs as well as premium day rates.

As we've signaled in previous quarters, we acknowledged that 2022 will be a transitional year for demand in Norway as the activity lull created by the pandemic works through the pipeline of projects.

However, the exercised options on the noble Lloyd noble keep the rig working into 2023 and recent market announcements only bolster our confidence in the Norway market long term.

We look forward to serving Ecuador, and new customers there is activity normalizes over the coming years.

We're in the North sea, such as the U K, Danish and Dutch sectors rig demand remained steady.

This region is highly competitive at present with many drillers working hard to string together continuous work.

Robert Eifler: Noble has four jackups currently located in the region, and we expect some idle time this year on the two uncontracted rigs. For the rest of the globe, Noble currently has operations in Australia and the Middle East. The Noble Tom Prosser continues to operate in Australia for our client, Santos, who has now exercised 3 of its 9 one-well options, keeping the rig busy into Q4 of this year. We also remain hopeful to secure additional work in the Middle East on the Noble Mick O'Brien, which has spent the last 3.5 years working for Qatargas. Lastly, in a challenging Southeast Asia deepwater market, the Noble Clyde Boudreaux has concluded its contract with Premier and mobilized to Malaysia.

Noble has four Jackups currently located in the region and we expect some idle time this year on the two unconstructed rigs.

For the rest of the Globe Noble currently has operations in Australia, and the Middle East.

The noble Tom Prosser continues to operate in Australia for our client Santos, who has now exercised three of its nine one well options keeping the rig busy into the fourth quarter of this year.

We also remain hopeful to secure additional work in the middle East on the noble Mick O'brien, which has spent the last three and a half years working for Qatar gas.

Lastly, in a challenging southeast Asia deepwater market. The noble Clyde Boudreaux has concluded its contract with premier and mobilized to Malaysia.

Robert Eifler: Despite the rig's great operational history, the inconsistent utilization and depressed rate environment prompt us to divest of the asset, and we are currently making plans to do so. In summary, market movements over the quarter are clear and strong indications of recovery, and we expect continued demand improvement across all market segments. Noble is focusing on executing on our strategic priorities and is well-positioned to benefit from the recovery. I'll now turn the call over to Richard to provide an overview of our financial results and guidance.

Despite the rigs great operational history, the inconsistent utilization and depressed rate environment prompt us to divert divest of the asset and we are currently making plans to do so.

In summary market movements over the quarter, a clear and strong indications of recovery and we expect continued demand improvement across all market segments.

<unk> is focusing on executing on our strategic priorities and is well positioned to benefit from the recovery.

I'll now turn the call over to Richard to provide an overview of our financial results and guidance.

Richard Barker: Thank you, Robert, and good morning, all. Contract drilling services revenue for Q4 totaled $192 million versus $231 million for Q3. The decrease in revenue was largely due to the sale of our four jackups working in Saudi Arabia in November, the Noble Gerry de Souza completing its contract and mobilizing to the shipyard for upgrades, shipyard time on the Noble Hans Deul, and the impact of Hurricane Ida on the Noble Globetrotter II. This decrease in contract drilling services revenue was partially offset by the start of the Noble Lloyd Noble contract in Norway in late October. Our contract drilling costs were $183 million in Q4 and were down slightly compared to Q3, largely due to the removal of OpEx on the Saudi jackups.

Alright, Thank you Robert and good morning, all.

Okay.

Contract drilling services revenue for the fourth quarter totaled 192 million versus 231 million for the third quarter. The decrease in revenue was largely due to the sale of our four jackups working in Saudi Arabia in November the noble Jerry D'souza, completing its contract in mobilizing to the shipyard for upgrades shipyard time on the <unk>.

<unk> dual and the impact of Hurricane Ida on the noble Globetrotter II.

This decrease in contract drilling services revenue was partially offset by the start of the noble Lloyd noble contract in Norway in late October .

Our contract drilling costs were $183 million in the fourth quarter and were down slightly compared to third quarter largely due to the removal of opex on the Saudi Jackups.

Richard Barker: We included a lot of information in our press release around the impact to our Q4 and full year results of the Noble Globetrotter II and the Noble Hans Deul incidents. Instead of repeating all the detail, I will share what we think are the two key takeaways. Firstly, the incidents had a combined negative impact on our Q4 adjusted EBITDA of approximately -$20 million. This includes reduced revenue associated with both rigs and the repair-related expenses on the Noble Hans Deul. Secondly, both rigs were back operational in December. We have a few minor loose ends to tie up, but the impact is really limited to 2021. These events had no impact on our 2022 guidance. Adjusted EBITDA for the Q4 was $12 million, down from $47 million in the Q3.

We included a lot of information in our press release around the impact to our fourth quarter and full year results of the noble Globetrotter, II and noble Hans Jewel incidents instead.

Instead of repeating all the detail I will share what we think are the two key takeaways.

Firstly, the incidents had a combined negative impact on our fourth quarter adjusted EBITDA of approximately $20 million. This.

This includes reduced revenue associated with both rigs and the repair related expenses on the noble Hans dual.

Secondly, both rigs were back operational in December .

We have a few minor loose ends to tie up but the impact is really limited to 2021.

These events had no impact on our 2022 guidance.

Adjusted EBITDA for the fourth quarter was $12 million down from $47 million in the third quarter. Our full year 2021, adjusted EBITDA was $97 million, which is towards the low end of the previously guided range.

Richard Barker: Our full year 2021 adjusted EBITDA was $97 million, which is towards the low end of the previously guided range. Capital expenditures for the full year 2021 were $170 million. This is slightly below our previous guidance range as certain projects totaling about $15 million were delayed into 2022. I'll discuss our 2022 guidance in a moment. In early November, we closed on the sale of our Saudi jackups, which generated approximately $290 million in cash, net of transaction fees, expenses, and settlement of working capital. We also received the remaining portion of the CARES Act tax refund of approximately $17 million in December. This additional cash inflow allowed us to pay down the full amount borrowed under our revolving credit facility.

Capital expenditures for the full year 2021 $170 million. This is slightly below our previous guidance range as certain projects totaling about $15 million were delayed into 2022.

Ill discuss our 2022 guidance in a moment.

In early November we closed on the sale of our Saudi Jackups, which generated approximately $219 million in cash net of transaction fees expenses and settlement of working capital. We also received the remaining portion of the cares Act tax refund of approximately $17 million in December .

This additional cash inflow allowed us to pay down the full amount borrowed under our revolving credit facility.

Richard Barker: At the end of the year, we had net debt of $22 million, comprised of cash of $194 million, and debt in the form of second lien notes of $216 million. Our revenue backlog at the end of the year stood at $1.2 billion. This backlog number does not include the conditional award of 7.4 years of contract term with ExxonMobil in Guyana. Turning now to full year 2022 guidance. We maintain our previously announced ranges for adjusted revenue of $1.05 to 1.125 billion, and for adjusted EBITDA of $300 to 335 million. Importantly, we expect meaningful sequential improvements in our financials as we move through both Q1 and Q2 of 2022. The first quarter improvement is driven by three main drivers.

At the end of the year, we had net debt of $22 million comprised of cash of $194 million and debt in the form of second lien notes of $216 million.

Our revenue backlog at the end of the year stood at $1 2 billion.

This backlog number does not include the conditional award of seven four years of contract with Exxonmobil in Guyana.

Turning now to full year 2022 guidance, we maintain our previously announced ranges for adjusted revenue of 1.05 billion to $1 <unk> 5 billion and adjusted EBITDA of $300 million to $335 million importantly, we expect meaningful sequential improvements in our financials as we move.

Move through both the first and second quarters of 2022.

The first quarter improvement is driven by three main drivers.

Richard Barker: Firstly, a return to operations and a full quarter contribution from the Noble Globetrotter II and the Noble Hans Deul. Secondly, a full quarter contribution from the Noble Lloyd Noble and the Noble Faye Kozack. Thirdly, the impact of improving ultra-deepwater day rates, which will be directly reflected in our rigs operating in Guyana as those rigs reprice on 1 March per the CEA. These improvements will be partially offset by the Q4 contract completions for the Noble Clyde Boudreaux and the Noble Sam Hartley. As we move into the Q2, the biggest drivers of the sequential improvement are expected to be a full quarter contribution of the improved day rates for the rigs operating in Guyana, as well as improved day rates for the Noble Faye Kozack and Noble Stanley Lafosse. Additionally, we expect a full quarter contribution from the Noble Gerry de Souza.

Firstly overturned operations and a full quarter contribution from the noble Globetrotter II and the noble Hans dual.

Secondly, a full quarter contribution from the noble Lloyd noble and noble Fei Kozak.

Thirdly, the impact of improving ultra deepwater day rates, which will be directly reflected in our rigs operating in Guyana as those rigs reprice on March 1st by the CEO .

These improvements will be partially offset by the fourth quarter contract completions for the noble Clyde Boudreaux and noble Sam Hartley.

As we move into the second quarter. The biggest drivers of the sequential improvement are expected to be a full quarter contribution of the improved day rates for the rigs operating in Guyana as well as improved day rates for the noble Kozak and noble Stanley Lafalce.

Additionally, we expect a full quarter contribution from the Novo Joey to Susan.

Richard Barker: Across our fleet, we currently project 87% of our calendar days to be operating days in 2022. This excludes our cold stacked rigs, the Pacific Meltem, the Pacific Scirocco, and the Noble Clyde Boudreaux. Of these operating days, we currently have 77% under firm contract. The remaining assumed operating days are made up of options or ongoing customer discussions. Our updated 2022 capital expenditure guidance, net of client reimbursables, is $130 to 145 million. This increase is related to approximately $15 million of capital that rolled over from Q4 2021. Excluded from this range is approximately $25 million of capital for new projects that are directly requested by our customers and will be reimbursed by our customers.

Across our fleet, we currently project, 87% of our calendar days to be operating days in 2022.

This excludes our cold stacked rigs the mountain <unk> and the noble Clyde Boudreaux.

All of these operating days, we currently have 77% under firm contract.

The remaining assumed operating days are made up of options or ongoing customer discussions.

Our updated 2022 capital expenditure guidance net of client Reimbursable is $130 million to $145 million. This.

This increase is related to approximately $15 million of capital that rolled over from the fourth quarter of 2021.

Excluded from this range is approximately $25 million of capital for new projects that are directly requested by our customers and we will be reimbursed by our customers.

Richard Barker: Including this reimbursable capital, our total capital expenditures for 2022 is expected to be $155 to 170 million. In 2022, we expect stock-based compensation of approximately $27 million. Our adjusted EBITDA guidance includes stock-based compensation expense. Additionally, we expect cash taxes of approximately $40 million in 2022. We continue to remain focused on controlling costs and exercising strict discipline when making capital-related decisions. To that end, we have decided to scrap the Noble Clyde Boudreaux. The go-forward economics for this rig are extremely challenged when factoring in its opportunity set for new work in Southeast Asia versus its stacking costs and required upcoming capital investment. Inflation clearly remains a concern for most industries moving into 2022. We are seeing increased inflationary pressures in various areas of our global business, especially in North and South America.

Including this reimbursable capital our total capital expenditures for 2022 is expected to be $155 million to $170 million.

In 2022, we expect stock based compensation of approximately $27 million.

Our adjusted EBITDA guidance includes stock based compensation expense.

Additionally, we expect cash taxes of approximately $40 million in 2022.

We continue to remain focused on controlling costs and exercising strict discipline, we're making capital related decisions.

And we have decided to scrap the noble Clyde boudreaux the.

Go forward economics for this rig are extremely challenged when factoring in its opportunity set for new work in southeast Asia versus its stacking costs and required upcoming capital investment.

Inflation clearly remains a concern for most industries moving into 2022.

We are seeing increased inflationary pressures in various areas of our global business, especially in North and South America.

Richard Barker: On the labor side, we are experiencing the familiar demand-driven challenges associated with a cyclical industry in addition to the well-publicized broader labor market challenges. A large component of our workforce is international, which hasn't yet seen the magnitude of the inflationary pressures that we are starting to experience in the Americas. From a supply chain perspective, we are starting to see inflationary pressure, and we expect that to increase through 2022. We continue to aggressively manage our business and our costs in this inflationary market. 2022 is expected to be a pivotal year for Noble from a financial perspective. Through a combination of strong cost control, smart economic and capital-related decisions, and improving market dynamics, we expect to generate an attractive level of free cash flow. That concludes my prepared remarks, and I'll now turn it back to Robert.

On the labor side, we are experiencing the familiar demand driven challenges associated with the cyclical industry. In addition to the well publicized broader labor market challenges.

A large component of our Workforces international which hasnt yet seen the magnitude of the inflationary pressures that we are starting to experience in the Americas.

From a supply chain perspective, we are starting to see inflationary pressure and we expect that to increase through 2022.

We continue to aggressively manage our business and our costs in this inflationary market.

2022 is expected to be a pivotal year for <unk> from a financial perspective.

So a combination of strong cost control smart economic and capital related decisions on improving market dynamics, we expect to generate an attractive level of free cash flow.

That concludes my prepared remarks, and I'll now turn it back to Robert.

Robert Eifler: Thanks, Richard. Before we close and move to Q&A, I want to reiterate how transformative 2021 was for Noble. We completed our restructuring, relisted on the New York Stock Exchange, closed two strategic transactions, and announced our historic plans to combine with Maersk Drilling in mid-2022. The whole Noble organization remains focused on drilling safely and efficiently for our customers and creating value for our shareholders. In addition, we've taken a number of steps to reduce the environmental footprint of our fleet. For example, recent investments in the Noble Lloyd Noble have reduced NOx emissions by over 90%. Additionally, we have several initiatives that use automation and digital technologies to improve the safety and efficiency of operations on the rigs across the fleet. We will continue to do our part to be responsible in the decisions we make to protect the environment.

Thanks Richard.

Before we close and move to Q&A I want to reiterate how transformative 2021 was for noble we completed our restructuring re listed on the New York Stock Exchange closed two strategic transactions and announced our historic plans to combine with Maersk drilling in mid 2020 to.

The whole noble organization remains focused on drilling safely and efficiently for our customers and creating value for our shareholders and.

In addition, we have taken a number of steps to reduce the environmental footprint of our fleet. For example, recent investments and the noble Lloyd noble hazardous Nox emissions by over 90%.

Additionally, we have several initiatives that use automation and digital technologies to improve the safety and efficiency of operations on the rigs across the fleet.

We will continue to do our part to be responsible in the decisions we make to protect the environment I'm proud of the noble team and excited about the year ahead, and 2022 will truly be a pivotal year for noble.

Robert Eifler: I'm proud of the Noble team and excited about the year ahead. 2022 will truly be a pivotal year for Noble. As the market recovery continues, our company, combined with Maersk Drilling, will be the platform to invest in offshore drilling. The combined Noble will have one of the youngest and most technically advanced fleets, driven by a culture of safe and efficient operations, unrivaled customer service, and sustainability. The company will also benefit from attractive diversification across customers, assets, and geographies. All of these serve to create a platform that has tremendous upside and significant cash flow potential. As shown in the presentation given on the announcement of the deal, the combined company would generate well over $1 billion in EBITDA under an illustrative scenario that now seems quite plausible.

As the market recovery continues our combined.

Excuse me our.

Our company combined with Maersk drilling will be the platform to invest in offshore drilling.

The combined noble will have one of the youngest and most technically advanced fleets driven by a culture of safe and efficient operations unrivaled customer service and sustainability.

The company will also benefit from attractive diversification across customers assets and geographies.

All of these serve to create a platform that has tremendous upside and significant cash flow potential.

As shown in the presentation given on the announcement of the deal.

The combined company will generate well over $1 billion in EBITDA under an illustrative scenario, then now seems quite plausible.

Robert Eifler: I believe strongly that offshore oil and gas will continue to be an important component of global energy supply for years to come, and Noble will be an industry leader in serving our part of exploring for and developing these critical resources. That concludes our prepared remarks. Thank you for participating in our call today, and I'll now turn it back for Q&A.

I believe strongly that offshore oil and gas will continue to be an important component of global energy supply for years to come the noble will be an industry leader in serving our part of exploring for and developing these critical resources.

That concludes our prepared remarks, thank you for participating in our call today and I'll now turn it back for Q&A.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star followed by the number one on your telephone keypad. Your first question comes from the line of Greg Lewis with BTIG. Your line is open.

At this time I would like to remind everyone in order to ask a question press star followed by the number one on your telephone keypad.

Yes.

Your first question comes from the line of Greg Lewis with <unk>. Your line is open.

Greg Lewis: Hey, thank you. Thank you, and good morning, everybody.

Okay. Thank you. Thank you and good morning, everybody.

Robert Eifler: Morning, Greg.

Greg Lewis: Robert, I was hoping, realizing that the rigs pricing in Guyana doesn't reset for a couple weeks. Kind of curious if you could give us any color how we should be thinking about that. Clearly, you know, one of your competitors recently announced some, you know, $300+ thousand a day rates in Gulf of Mexico. Is this something where we should kinda just be looking at broker estimates and averaging? Any kind of color you could give us around there because, you know, since it's just such a big driver of future revenue and then there's that reset coming up in September also. Just kinda curious how you're thinking about that.

Good morning, Greg.

Robert I was hoping realizing that the rig pricing.

It doesn't reset for a couple of weeks.

Kind of curious if you could give us any color how we should be thinking about that clearly one of your competitors recently announced some 300 plus thousand dollar a day rates in the Gulf.

Mexico.

Is this something where we should kind of just be looking at broker.

The average unit any kind of color you could give us around there because.

So it's just such a big driver.

Future revenue.

And then there's that reset coming up in September also just kind of curious how youre thinking about.

Robert Eifler: Sure, Greg. It's a good and fair question. We've agreed with our customer there not to disclose rates. I guess a couple of things. First, we've got our revenue guidance and tried to make that tight to help out with that because we've got, as you said, such a big driver there. Secondly, I guess just to remind that those rates are set kind of five or six months prior to when they kick in, generally. When they're set, are intended to be a rate that a prudent contractor would contract under at that time for work in Guyana. It's a fast-moving market, which is a good thing.

Sure Greg It's a good and fair question. So we've agreed with our customer they are not to disclose rates.

And so I guess a couple of things.

First we've got we've got our revenue guidance and tried to make that tight to help out with that because we've got as you said such a big driver there.

Secondly, I guess just to remind.

That those rates are.

Our set.

Five or six months prior to when they kick in generally.

And.

When theyre set are intended to be.

Right that are prudent contractor would contract under.

At that time for work in Guyana.

And so.

It's a fast moving market, which is a good thing.

Robert Eifler: I think, you know, to your point, kinda looking at curves and some of the information out there, I think is a fine way to look at it. I'm sorry we're not gonna disclose more specific information on it.

And I think.

To your point.

Kind of looking at.

At curves and some of the information out there I think is a fine way to look at it I'm sorry, we're not going to disclose more specific information on it.

Greg Lewis: Right.

But.

Robert Eifler: I do think it's, you know, it follows a market curve that's applicable at the time of negotiation.

But I do think I do think it's.

It follows a market curve that.

Thats applicable at the time of negotiation.

Greg Lewis: Really not to focus on this too much, but basically, you know, based on those comments, it sounds like the bigger step-up should be. Is it fair to say that there's probably a bigger step-up in September than there is in March?

And really not not to not to focus on this too much but basically based on those comments it sounds like the bigger step up should be is it fair to say that there's probably a bigger step up in September then there is a more.

Robert Eifler: We hadn't negotiated September yet.

We had negotiated September yet.

Greg Lewis: Oh, okay.

Robert Eifler: And, um-

Greg Lewis: I thought you said six months. That's fine. That's fine. Okay, then just-

Okay.

You said six months and if that's fine that's fine okay, yes.

Robert Eifler: Yeah, 4 to 6 months, kind of that range. That hadn't been done. You know, in Richard's comments, you know, he made some comments about the step-ups we see in Q1 and Q2 this year, you know, that are driven by the entire fleet, of course. Yeah, we'll start to see some step-up early H1 this year.

Four to six months is kind of that range.

And so that hadn't been done in <unk>.

Richard's comments and he made he made some comments about the step ups we see.

In Q2, Q1 and Q2.

This year.

That are driven by the entire fleet of course, but.

But yes, we'll start to see some step up.

Greg Lewis: Yeah. Okay, great. Just as I think about, you know, the Globetrotter I in the Gulf of Mexico, I mean, clearly that rig is coming up for renewal this summer. You know, Gulf of Mexico seems to be an extremely tight market, any which way you look at it. Do we kinda have any sense for, you know, or should I say, do we think that rig kinda goes into the spot market, or are we kinda seeing signs that maybe this rig could continue to be extended?

Early first half of this year.

Okay, Great and then just because I think about.

The globetrotter one in the Gulf of Mexico.

Clearly that that that rig is coming up for renewal this summer.

Gulf of Mexico seems to be an extremely tight market.

Any which way you look at it.

Do we kind of have any sense for.

Or should I say do we think that rig count it goes into the spot market or are we kind of seen signs that maybe with this rate could continue to be extended.

Robert Eifler: Yeah. That rig is gonna go into the spot market. We are bidding it both in the Gulf of Mexico, the US and Mexico side, as well as some other places around the globe where it's, you know, uniquely capable. We have a number of conversations on it. I feel pretty good about continuing work for that rig, but it is gonna go into the spot market.

Yes, so that rig is going to go into the spot market.

We are.

Bidding it both in the Gulf of Mexico, The U S and Mexico side.

As well as some other places around the globe, where it's uniquely capable.

So we have a number of conversations on it.

And I feel pretty good about.

About continuing work for that rig.

But it is going to go into the into the spot market.

Greg Lewis: Okay, great. Just one more for me. I mean, you announced the retirement of the Noble Clyde Boudreaux. I mean, you know, realizing that the Maersk transaction hasn't closed, they obviously have a semi over in Australia. As you think about the footprint, right? I mean, clearly we're building a golden triangle plus Norway fleet. You know, how important is the rest of the world? I mean, Robert, as you view it, like, how do you think about that? Really what I'm trying to understand is, you know, given where the rigs positioned are, it would seem like, you know, you might wanna. Is there any thoughts about maybe buying into any of these markets, i.e., Asia, just, you know, given our footprint where it is today?

Okay, Great and then just one more for me I mean, you announced.

The retirement of the client Clyde Boudreaux.

Realizing that the Maersk.

Transaction Hasnt closed they obviously have a semi over in Australia. As you think about as you think about the footprint right I mean, clearly we're building a.

Golden Triangle, Slash plus Norway fleet.

How important is the rest of the world I mean, Robert as you view it like how do you think about that and really what I'm trying to understand is.

<unk>.

Given where the rigs positioned it would seem like.

You might want to.

Is there any thoughts about maybe buying into any of these markets.

E Asia, just given our footprint where it is today.

Robert Eifler: Yeah, it's a good question. You know, I guess I'd say we think about asset classes probably before regions in some ways. There's obviously close communication between those two. You know, we're focused on really high-quality assets and making sure, very importantly, that we can maintain utilization on those assets. That was the thesis with Pacific Drilling, and we put those rigs to work. Of course, both Maersk Drilling and Noble enjoy you know, industry-leading utilization with our two fleets. You know, I'd kind of beat this drum a lot internally, but it's an asset-intensive business. You have to keep the rigs working. That's really what generates cash flow.

Yes, it's a good question.

<unk>.

I guess I'd say, we think about asset classes probably.

Four regions in some ways and.

And there is obviously close communication between those two but but.

We're focused on on really high quality asset.

And making sure very importantly that we can that we can maintain utilization on those assets that was the thesis with Pacific drilling and we put those rigs to work and of course, best Maersk drilling and noble enjoy <unk>.

Industry, leading utilization among.

Our two fleets.

So.

I kind of beat this drove a lot internally, but it is an asset intensive business you have to keep the rigs working.

That's really what generates cash flow and so dodging your question a little bit, but I would say we're focused on.

Robert Eifler: dodging your question a little bit, but I would say, you know, we're focused on both asset types and basins where we feel confident around the utilization.

Both asset types and basins.

Where we feel confident around around the utilization.

Greg Lewis: Okay, perfect for that. Hey, thank you very much.

Okay perfect. Thank you very much.

Operator: Again, if you would like to ask a question, press star followed by the number one on your telephone keypad. Your next question comes from the line of Fredrik Stene with Clarksons Platou Securities. Your line is open.

Again, if you would like to ask a question press star followed by the number one on your telephone keypad.

Your next question comes from the line of.

<unk> was Clarksons Plateau Securities. Your line is open.

Fredrik Stene: Hey, guys. Nice to have you on again. I have a few questions regarding your COVID legacy Pacific assets, the Meltem and the Scirocco. I was wondering, given how we've seen, and I think I asked the same question actually last time, have you come across any opportunities or any counterparties that would be willing to, you know, pay up for those assets to get them back into the working fleet? Or are they still not really a part of your active bidding fleet? That's the first one for me.

Hey, guys.

Nice.

So have you gone again.

I have a few questions regarding your.

Your.

Alright legacy Pacific assets, the meltdown in the skin Rocco I was one range given how we've seen.

I think I'll ask the same question I actually lost time.

How do you come across any opportunities or any counterparties that.

We'd be willing to pay.

Pay up for.

For those assets to get them back into the <unk>.

Working fleet or are they still not really a part of your.

Active bidding fleet, that's the first one for me.

Robert Eifler: Okay. Yeah. Thanks, Fredrik. They're, you know, the short answer is they're not a part of our active bidding fleet right now. We, you know, said previously that we would look to recoup our entire investment within some firm contract if we were going to be willing to reactivate anything. That includes a return on the investment in almost any conceivable scenario other than some very, very possible, a small possible exception. That, you know, there's a lot involved in achieving that hurdle and obviously the rate, but also term. I would argue that right now, term associated with rate doesn't support reactivation.

Okay, Yes.

Thanks, Patrick so.

The short answer is there.

Not a part of our active bidding fleet right now.

We.

Said previously that we would look to.

Our entire investment.

<unk>.

Within some firm contract if we were going to be willing to reactivate anything and that includes a return on the investment.

And almost any conceivable scenario other than some very very possible small possible exception, but.

<unk>.

But that there is a lot involved in achieving that hurdle and obviously the rate, but also term and I would argue that right now term associated with rate doesn't doesn't support.

Robert Eifler: You also have to have time between when you sign the contract and when you start it to actually do the work. You have to have contract terms that support and protect that investment. Perhaps most importantly, it has to be the right use of capital at the time you make the decision. I think there's a number of missing components right now from our perspective. You know, the market's moved quickly since we acquired those assets, obviously in a good direction. Right now, I think there's some missing components to putting them back to work.

Reactivation.

But you also have to have time between when you sign the contract and when you started to actually do the work.

And you have to have contract terms that support and protect that investment in <unk>.

<unk> most most importantly SP the right use of capital at the time you make the decision. So I think theres a number missing components right now from our perspective.

And.

The market has moved quickly since we acquired those assets obviously in a good direction.

But right now I think theres, some some missing components to.

Putting them back to work.

Fredrik Stene: That's very helpful. On that kind of matter, you mentioned term there. Obviously the CEA and the 7.4 years there is, at least on an aggregated basis, more term than usually gets signed. To kind of follow up on Greg's question, put it another way. The $1.2 billion that you have in backlog is not including these additional years. Are you able to give us any idea as to, you know, what that backlog would be if you did include it?

That's very helpful.

On though.

That's matter you mentioned term here, obviously, the CAE the 7.4 years there.

As you can on an aggregated basis more term then.

You should get fined.

To kind of follow up on Greg's question put it another way are you able to the $1 2 billion that you have in backlog is not including these additional years.

Able to give us any idea as to.

What that backlog would be if you did <unk>.

Included.

Robert Eifler: Well, you know, we've agreed with the customer, but, you know, we do have various backlog disclosures out there, and we do have to,

Okay.

The way.

Kind of.

Yeah.

We've agreed to the customer but.

We do have various backlog disclosures out there and we do have two.

Richard Barker: When that award becomes concrete and the conditions are met, you know, we will update the backlog numbers then. We make an assumption. Since it's a moving rate under the CEA, we make an assumption, I would say a very conservative assumption, and essentially stretch out rates through the entire term under that one conservative assumption. We don't input a number of rates over that term. We just apply one conservative rate to it when we do announce it.

When that award.

Becomes concrete and the conditions are met we will we will update the backlog numbers then.

Make an assumption, but since it's a moving.

Moving right under the CPA, we make an assumption and we make I would say a very conservative assumption.

And essentially.

Stretch out rates through the through the entire term under under that one.

Conservative assumptions. So we don't we don't put it we don't input a number of rates over that term, we just apply conservative right. So when we do announce it.

Fredrik Stene: Okay then I'll wait for that. Yeah, I tried. Last question from me relates to shareholder returns. I think, you know, before the merger with Maersk was announced, you seemed, to me at least, very vocal about your ambition to return money to shareholders if that was through dividend or share buybacks. You're obviously in a very different liquidity position now, compared to the legacy capital structure, and I understand that there won't be any dividends paid out while the Maersk work is being completed. Is it fair to assume that when that goes through, paying out to shareholders will be a high priority of yours?

Okay.

Wait for that but I tried.

Uh huh.

Okay.

Last question for me relates to shareholder returns.

So I think there'll be further merger with Maersk was announced.

<unk> seem to me at least very vocal about your ambition to return money to shareholders through dividend or share buybacks, you're obviously in a very different liquidity position now compared to the legacy cap structure and I understand that there won't be any dividends paid out while the.

Merce work is being completed but is it fair to assume that.

When that goes through.

Paying ops.

Two shareholders will be a high priority of yours.

Richard Barker: Yeah. I think that's very fair to say. There's obviously, as you noted, certain things that we can't do prior to actually consummating the transaction with Maersk. Obviously, any return of capital policy will be a decision for the new board as well post-closing. Clearly our view at Noble is that returning capital is really important into our, you know, to our sector. I think that obviously will be a keen focus for the pro forma company. You know, we do think that the company is gonna be set up fantastically well to be able to do that, you know, just given all of the benefits of the pro forma company.

Yes, I think that's very fair to say, there's obviously as you noted certain things that we can do prior to actually consummating the transaction with Moscone, obviously on any return of capital policy will be a decision for the new board as well post post closing, but but clearly our view at novo.

Is that returning capital is really important in two out to try to our sector and I think that obviously will be a keen focus for the pro forma company, we do think that the.

The company is going to be setup fantastically well to be able to do that just given given all of the benefits of the pro forma company. So I think there's more to come here and obviously any announcement will be after closing of the deal.

Richard Barker: I think there's more to come here. Obviously, any announcement will be after closing of the deal.

Fredrik Stene: All right. Thank you guys. That's all from me. Looking forward to speaking.

Alright. Thank you that's all from me looking forward to speaking.

Craig Muirhead: Thanks, Fredrik.

Richard Barker: Thanks, Fredrik.

Thanks, Frederic Thanks, Patrick.

Operator: There are no further questions at this time. I will now turn the call back over to Mr. Craig Muirhead.

So there are no further questions at this time I will now turn the call back over to Mr. Craig Muirhead.

Craig Muirhead: Thank you for your participation on today's call and your continued interest in Noble. Brent, we appreciate your time coordinating today's call. Good day, everyone.

Thank you for your participation on today's call and your continued interest in noble Brent. We appreciate your time coordinating today's call good day everyone.

Operator: Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Ladies and gentlemen. This concludes today's conference call you may now disconnect.

[music].

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