Q3 2022 Noble Corporation PLC Earnings Call

November 3, 2022

Robert Eifler: Speaking today on behalf of our newly combined company, and also remind the audience that next quarter's Q4 results will be our first quarter as a combined reporting entity. Like many of our senior leadership team, I've spent much of the past month since we closed the merger, visiting with our teams and crews across the globe. I have been incredibly galvanized by these interactions and by having an opportunity to observe firsthand the value and the power of our complementary cultures and capabilities. When we defined the strategic rationale for this combination, among the critical components was the importance of creating the necessary scale with which to forge deep customer relationships and a platform for leadership in innovation and sustainability. We view these factors as essential to maintaining first choice status amongst our blue-chip customer base.

Spine company and also remind the audience that next quarters Q4 results will be our first quarter as a combined reporting entity.

Like many of our senior leadership team I've spent much of the past month since we closed the merger visiting with our teams and crews across the globe and I have been incredibly galvanized by these interactions and by having an opportunity to observe firsthand the value and the power of our complementary cultures and capabilities.

When we define the strategic rationale for this combination.

The critical components was the importance of creating the necessary scale with which to forge deep customer relationships and a platform for leadership in innovation and sustainability.

We view these factors is essential to maintaining first choice status amongst our blue chip customer base. These.

Robert Eifler: These collaborative long-term commitments with some of the largest and most influential operators in our relevant markets are foundational to our business, both in terms of the high-quality revenue backlog that they provide, as well as the opportunity to drive efficiency and improvement through the drilling and completions lifecycle with our customers. Integrating a combination of this size and complexity is a monumental undertaking, and we are well underway. As a reminder, we are targeting at least $125 million of annual cost synergies to be realized within two years. Meanwhile, the internal team at our newly formed Offshore Impact Center is monitoring our integration efforts and filtering actions for our rig crews so that they can stay focused on our operations and safely removed from the noise of integration. Our entire company is laser-focused on business continuity and ensuring seamless service delivery for our customers.

These collaborative long term commitments with some of the largest and most influential operators in our relevant markets are foundational to our business. Both in terms of the high quality revenue backlog that they provide as well as the opportunity to drive efficiency and improvement through the drilling and completions lifecycle with our customers.

Integrating a combination of this size and complexity is a monumental undertaking and we are well underway.

As a reminder, we are targeting at least $125 million of annual cost synergies to be realized within two years.

Meanwhile, the internal team and our newly formed offshore impact centre is monitoring our integration efforts and filtering actions for our rig crews. So that they can stay focused on our operations and safely removed from the noise of integration.

Our entire company is laser focused on business continuity and ensuring seamless service delivery for our customers.

Robert Eifler: Next, we're very excited to announce today the authorization of a $400 million share repurchase program, which is a key first step of a capital allocation framework, which establishes our priorities for use of cash. Richard will give more detail on that in a moment. Providing a significant and sustainable capital return program has been a key rationale for the merger, and our financial profile is highly complementary with this rationale. We believe that our equity represents an excellent investment opportunity, and therefore, buying back shares represents an attractive return for our shareholders. As we assess the forward outlook for our business, of course, extraordinary uncertainty and risks abound with respect to inflation, recession, interest rates, and geopolitical unrest. However, the macro backdrop for oil and gas remains comparatively more straightforward.

Next we're very excited to announce today the authorization of a $400 million share repurchase program, which is a key first step of our capital allocation framework, which establishes our priorities for use of cash.

Richard we will give more detail on that in a moment.

Providing a significant and sustainable capital return program has been a key rationale for the merger.

And our financial profile is highly complementary with this rationale.

We believe that our equity represents an excellent investment opportunity and therefore buying back shares represents an attractive return for our shareholders.

As we assess the forward outlook for our business of course extraordinary uncertainty and risks abound with respect to inflation recession interest rates and geopolitical unrest. However.

However, the Mac the macro backdrop for oil and gas remains comparatively more straightforward.

Robert Eifler: Arresting runaway global inflation will be difficult, if not impossible, to achieve without significantly higher investment in upstream oil and gas, period. Even as our biggest IOC customers continue to solve for the right balance between their long-term energy transition objectives and responding to the current supply crunch, we remain confident that oil barrels with the lowest lifting cost and lowest carbon profile will be structurally advantaged over the long run. The strategic positioning of our new fleet toward the deep water and harsh environment shallow water markets is, in fact, a very purposeful reflection of that view, particularly with the Golden Triangle and Norway ranking very favorably in the global supply stack on both economic and CO2 metrics. Our customers' 2023 spending budgets are currently under development against the backdrop of a healthy, albeit still significantly backwardated crude price strip.

Arresting runaway global inflation will be difficult, if not impossible to achieve without significantly higher investment in upstream oil and gas period.

And even as our biggest IOC customers continue to solve for the right balance between their long term energy transition objectives and responding to the current supply crunch, we remain confident that oil barrels with the lowest lifting cost and lowest carbon profile will be structurally advantaged over the long run.

The strategic positioning of our new fleet towards the deepwater and harsh environment shallow water markets is in fact, a very purposeful reflection of that view.

Particularly with the Golden Triangle, and Norway ranking very favorably in the global supply stack on both economic and <unk> metrics.

Our customers' 2023 spending budgets are currently underdevelopment against the backdrop of a healthy, albeit still significantly backward dated crude price strip.

Robert Eifler: With Brent futures prices tapering from the mid-$90s per barrel current spot price down to the mid-$70s per barrel through 2024-2025 timeframe, which is relevant to the planning cycle for offshore rig demand. Meanwhile, Brent prices have averaged close to $100 per barrel year to date. Even though the shape of the strip will likely serve to temper the rate of spending growth over the near term, it's also very important to keep in perspective that 80% of the offshore projects in the FID queue have estimated break-even thresholds at or below $40 per barrel. Additionally, all of our internal and external commercial intelligence clearly indicates a higher level of deepwater rig demand next year relative to current levels, which are still recovering from a multi-year stretch of underinvestment.

With Brent futures prices tapering from the mid <unk> per barrel current spot price down to the mid <unk> per barrel through 2024 25 timeframe.

Which is the relevant which is relevant to the planning cycle for offshore rig demand.

Meanwhile, Brent prices have averaged close to $100 per barrel year to date.

But even though the shape of the strip will likely serve to temper the rate of spending growth over the near term. It's also very important to keep in perspective that 80% of the offshore projects in the queue I've estimated breakeven thresholds at or below $40 per barrel.

Additionally, all of our internal and external commercial intelligence clearly indicates a higher level of deepwater rig demand next year relative to current levels, which are still recovering from a multi year stretch of underinvestment.

Robert Eifler: We remain confident that we are in the early stages of a multi-year upturn in offshore drilling. With deepwater day rates already well into low to mid $400,000 per day, and with limited inventory of stacked rigs that can come back into the market, we believe the underlying fundamentals for our business are extremely promising. The supply-demand fundamentals for deepwater rigs are pretty straightforward. The current utilization rate on 100 or so marketed UDW rigs remains around 85%, where it has been for the past 6 to 8 months. The fulcrum of pricing power, however, has been at the high end of the market, where mid-90s% utilization of the 46 dual BOP drillships has driven day rates into the low to mid $400,000 per day range.

We remain confident that we are in the early stages of a multiyear upturn in offshore drilling.

And with deepwater day rates already well into low to mid $400000 per day.

And with limited inventory of stacked rigs that can come back into the market. We believe the underlying fundamentals for our business are extremely promising.

The supply demand fundamentals for deepwater rigs are pretty straightforward.

The current utilization rate on 100, or so marketed <unk> rigs remains around 85%, where it has been for the past six to eight months.

The fulcrum of pricing power. However has been at the high end of the market, where mid 90%, 90% utilization of the 46 dual <unk> Drillships has driven day rates into the low to mid $400 per day range.

Robert Eifler: Our marketing intelligence indicates a likely demand increase for deepwater next year, which should exert further upward pressure on an already tight market. We had several new contract fixtures in Q3 on the legacy Maersk Drilling side of the fleet that I'd like to highlight. First, the drillship Noble Viking received a contract extension from Shell in Malaysia for an additional 8 wells at a day rate of $408,000 per day, including MPD services. That contract extension is expected to run from November 2023 to August 2024. As a reminder, this rig does have about 5 months of downtime scheduled ahead of this new program, which includes a special periodic survey.

Our marketing intelligence indicates a likely demand increase for deepwater next year, which should exert further upward pressure on an already tight market.

We had several new contract fixtures in the third quarter on the legacy Maersk drilling side of the fleet that I'd like to highlight.

First the drillship noble Viking received a contract extension from shell in Malaysia for an additional eight wells at a day rate of $408000 per day, including MPD services.

That contract extension is expected to run from November 2023 to August 2024.

As a reminder, this rig does have about five months of downtime scheduled ahead of this new program, which includes a special periodic survey.

Robert Eifler: Next, the drillship Noble Voyager had a six-month option taken up by Shell with the base operating day rate increasing from $295,000 on the current contract up to $422,000 starting in April 2023 with a drilling program in Mexico. Among our deepwater semis, the Noble Developer was awarded a one-well contract with Shell in Brazil at $411,000 per day, including mobilization, which commits that rig into the middle of next year. The drillship Noble Jerry De Souza has the next contract rollover in our deepwater fleet later this quarter, and we hope to communicate with you again soon with positive news regarding that rig's next engagement, which could commence in the Q1 of next year.

Next the drillship noble Voyager had a six month option taken up by shell with the base operating day rate increasing from $295000 on the current contract up to $422000. Starting in April 2023, with a drilling program in Mexico.

Among our deepwater semis the noble developer was awarded a one well contract with shell in Brazil, and $411000 per day, including mobilization, which commit that rig into the middle of next year.

The drillship noble Jerry to Sousa has the next contract rollover in our deepwater fleet later this quarter and we hope to communicate with you again soon with positive news regarding that rigs next engagement, which could commence in the first quarter of next year.

Robert Eifler: Given the timing of contract roll-off for a couple of our deepwater semis, the Noble Discoverer and Noble Developer, we do expect gaps in between contracts for one or both of those rigs in 2023. Now on to the jackup side of the business. The harsh and ultra-harsh environment markets where Noble's jackup presence is now heavily focused are witnessing steady demand and utilization above 90%, with day rate traction remaining comparatively more moderate thus far. With European markets responding to rising energy supply challenges, license and permitting indicators for jackup activity in the region are constructive. We nonetheless continue to see the upturn for our jackup business developing on a lag compared to the dynamics in the deepwater segment.

Given the timing of contract roll off for a couple of our deepwater semi the noble discoverer and noble developer, we do expect gaps in between contracts for one or both of those rigs in 2023.

Now on to the Jackup side of the business.

Harsh and ultra harsh environment markets, where noble's Jackup presence is now heavily focused are witnessing steady demand and utilization above 90%.

With day rate traction remaining comparatively more moderate thus far.

With European markets, responding to rising energy supply challenges license and permitting indicators for jackup activity in the region are constructed but we nonetheless continue to see the upturn for our Jackup business developing on a lag compared to the dynamics in the deepwater segment.

Robert Eifler: With the combination of Noble and Maersk Drilling, we are now the market leader in the CJ70 class of jackups, which are the top-spec jackups in the world and the workhorse of the Norwegian Continental Shelf. As a reminder, 2 of our 5 CJ70s, the Noble Invincible and the Noble Integrator, will soon commence under a renewed 5-year framework agreement with Aker BP that extends through 2027. This framework encompasses up to $1 billion of total potential work scope over the 5-year period. There is some variability around the scheduling of this activity, and we have highlighted on our fleet status report the near-term windows in which the work scopes are not yet defined. We have shown these as option periods for Aker BP.

With the combination of <unk> and Maersk drilling we are now the market leader in the CJ 70 class of Jackups, which are the top spec jackups in the world and the workhorse of the Norwegian Continental shelf.

As a reminder, two of our five CJ <unk> Invincible and the noble integrator will soon commence under a renewed five year frame agreement with acre BP that extends through 2027.

This framework encompasses up to $1 billion of total potential work scope over the next over the five year period.

There is some variability around the scheduling of this activity and we have highlighted on our fleet status report the near term windows in which the work scopes are not yet defined.

We've shown these as option periods for acre BP.

Robert Eifler: Our current expectation is that we will partially but not entirely fill these windows in 2023, while the activity schedule for these rigs beyond 2023 remains extensive and should keep both of these rigs very well-utilized over the next five years. Across our entire CJ70 fleet, we continue to expect a firmer NCS market to materialize by mid-2024. Outside of Norway, we are increasingly encouraged by strong activity levels in an improving pricing environment that's evident across the UK and other areas of the North Sea. Although several of the most recent contract fixtures and exercise options across our harsh environment jackup fleet have reflected legacy pricing with day rates below $100,000, we do have visibility into leading-edge fixtures improving to the $120,000 to $130,000 per day range for programs commencing in 2023.

Our current expectation is that we will partially but not entirely fill these windows in 2023.

While the activity schedule for these rigs beyond 2023 remains extensive and should keep both of these rigs very well utilized over the next five years.

And across our entire CJ 70 fleet, we continue to expect a firmer NCS market to materialize by mid 2024.

Outside of Norway, we are increasingly encouraged by strong activity levels, and an improving pricing environment that is evident across the UK and other areas of the north sea.

Although several of the most recent contract fixtures and exercise of options across our harsh environment Jackup fleet have reflected legacy pricing with day rates below $100000.

We do have visibility into leading edge fixtures improving to the 120 to $130000 per day range for programs commencing in 2023.

Robert Eifler: This improvement in the harsh environment segment is consistent with the direction of the broader offshore drilling market cycle, and we view this as a leading indicator of the later recovery that we see developing in the ultra-harsh segment as well. The takeaway here is that we would earmark the mid-cycle earnings potential of our jackup fleet as optional upside to what we expect to realize in 2023. That concludes my opening remarks, and now I'll pass it on to Richard to provide his commentary on the financials.

This improvement in the harsh environment segment, it's consistent with the direction of the broader offshore drilling market cycle and we view this as a leading indicator of the later recovery that we see developing in the ultra harsh segment as well.

So the takeaway here is that we would earmark the mid cycle earnings potential of our Jackup fleet is optional upside to what we expect to realize in 2023.

That concludes my opening remarks, and now I'll pass it onto Richard to provide his commentary on the financials.

Richard Barker: Thank you, Robert, and good morning or good afternoon, everyone. In my remarks today, I will provide some brief highlights of our Q3 results, discuss our capital structure, as well as our outlook for the remainder of the year. However, I'd like to start by discussing our share repurchase program, which is a key component of our broader capital allocation priorities. Today, Noble has a scaled platform and a conservative balance sheet that is well-positioned to generate cash through the cycle. Our ordered priorities as it relates to the use of cash are as follows. Firstly, to maintain a conservative through-cycle balance sheet coupled with significant liquidity. Secondly, to invest in the maintenance and maximum potential of our existing working fleet. Thirdly, to return at least 50% of our free cash flow to shareholders through share repurchases and/or dividends. Lastly, to target disciplined and accretive investment opportunities.

Thank you Robert and good morning, or good afternoon, everyone. In my remarks today I will provide some brief highlights of our third quarter results discuss our capital structure as well as our outlook for the remainder of the year.

However, I'd like to start by discussing our share repurchase program, which is a key component of our broader capital allocation priorities.

Today Noble has a scaled platform and a conservative balance sheet that is well positioned to generate cash through the cycle.

Our order of priorities as it relates to the use of cash are as follows.

Firstly to maintain a conservative through cycle balance sheet, coupled with significant liquidity.

Secondly to invest in the maintenance and maximum potential of our existing working fleet.

Thirdly to return at least 50% of our free cash flow to shareholders through share repurchases.

Dividends and.

And lastly to target disciplined and accretive investment opportunities.

Richard Barker: Returning capital to shareholders is a key rationale for the merger, and we are pleased to be able to announce this $400 million buyback program. Turning now to our quarterly results. Given the merger closed on 3 October, after the end of the quarter, Noble's Q3 results reflect legacy Noble Corporation prior to the business combination. Contract drilling services revenue for the Q3 totaled $289 million, versus $262 million for the Q2 2022. This quarter's revenue was positively impacted by a full quarter of operating days for the Noble Regina Allen, the commencement of operations for the Noble Houston Colbert and the Noble Sam Hartley, and a day rate increase on 1 September for the 4 rigs operating in Guyana under the CEA.

Returning capital to shareholders is a key rationale for the merger and we are pleased to be able to announce this 400 million buyback program.

Turning now to our quarterly results given the merger closed on October 3rd after the end of the quarter Noble's third quarter results reflect legacy Noble Corporation prior to the business combination.

Contract drilling services revenue for the third quarter totaled $289 million versus $262 million for the second quarter of 2022.

This quarters revenue was positively impacted by full quarter of operating days for the noble Regina Allen the commencement of operations for the noble Houston Colbert and.

The noble Sam Hartley and the day rate increase in September the first for the four rigs operating in Guyana under the Cei.

Richard Barker: Adjusted EBITDA for Q3 was $97 million, compared to $84 million in the previous quarter. This translates to an adjusted EBITDA margin of approximately 32% for the quarter. Capital expenditures totaled $41 million in the quarter. Free cash flow in Q3 was $44 million. As disclosed in our press release, revenue and adjusted EBITDA for legacy Maersk Drilling in Q3 were $283 million and $63 million respectively. Capital expenditures were $35 million. Noble's revenue backlog stood at $3.9 billion as of November 2. This revenue backlog does not include additional non-drilling services that we expect to provide as part of existing contracts.

Adjusted EBITDA for the third quarter was $97 million compared to $84 million in the previous quarter.

This translates to an adjusted EBITDA margin of approximately 32% for the quarter.

Capital expenditures totaled $41 million in the quarter.

Free cash flow in the third quarter was 44 million.

As disclosed as disclosed in our press release revenue and adjusted EBITDA for legacy Musk drilling in the third quarter with $283 million and $63 million respectively.

Capital expenditures were $35 million.

<unk> revenue backlog stood at $3 9 billion as of November the second.

This revenue backlog does not include additional non drilling substance that we expect to provide as part of existing contracts.

Richard Barker: Our balance sheet remains extremely robust, with net debt as of September 30, adjusted for the closing of the business combination and the sale of the Remedy Rigs of approximately $190 million. We will have a cash need in Q4 of up to $185 million for the compulsory purchase, which is essentially the squeeze-out of the remaining Maersk Drilling shares. This maximum cash amount assumes that all the Maersk Drilling shares that are subject to the squeeze-out, approximately 10% of legacy Maersk shares, are settled for cash as opposed to settled for Noble shares. Any shares settled for cash is a share buyback at a previously set price of approximately $29 per Noble share. As a reminder, whether to settle for cash or shares is the decision of each individual shareholder.

Our balance sheet remains extremely robust with net debt as of September 30th adjusted for the closing of the business combination and the setup the remedy rigs of approximately $190 million.

We will have a cash need in the fourth quarter of up to $185 million for the compulsory purchase which is essentially the squeeze out of the remaining must drilling shares.

Maximum cash amount assumes that all of the Maersk drilling shares that are subject to the squeeze out approximately 10% of legacy masks shares I'll settle for cash as opposed to settle for noble shares.

Any shares settled the cash is the share buyback at a previously set price of approximately $29 <unk>.

As a reminder, whether to settle for cash or shares is the decision that each individual shareholder.

Richard Barker: As disclosed at closing, we have received preliminary commitments from a group of banks to refinance the existing Maersk Drilling credit group debt with a new three-year, $350 million bank term loan and a three-year, $150 million facility with a sole lender. The current Maersk Drilling revolving credit facility will be terminated, and we will use balance sheet cash to pay off a portion of the existing debt of the Maersk Drilling credit group in order to achieve this proposed capital structure. We are targeting to complete the refinancing after closing of the squeeze-out in mid-November. As of 30 September, we had $220 million borrowed under the Noble credit facility.

As disclosed the closing we have received preliminary commitments from a group of banks to refinance the existing most drilling credit group debt with a new three year $350 million bank term loan and a three year $150 million facility with the sole lender.

The co administrating revolving credit facility will be terminated and we will use balance sheet cash to pay off a portion of the existing debt of the Maersk drilling credit group in order to achieve this proposed capital structure.

We are targeting to complete the refinancing after closing of this squeeze out in mid November .

As of September 30, we had $220 million borrowed under the <unk> credit facility.

Richard Barker: Driving this is a provision in Noble's credit facility that if we sell a collateral rig, we must either reduce commitments in the amount of net cash proceeds or, within a certain period of time, reinvest those proceeds in new collateral. In September, in order to satisfy this provision relating to the sale of our Saudi fleet in 2021, the Noble Group acquired the Noble Jerry De Souza from the unrestricted Pac-D subsidiary. This $220 million drawn amount was paid down on 6 October with cash proceeds received from the sale of the remedy rigs, and as of today, there are no borrowings under our $670 million facility. In the near term, we will manage the business with two separate credit groups, the legacy Noble Group and the legacy Maersk Drilling group.

Driving this is a provision in noble's credit facility as we sell a collateral rig we must either reduced commitments in the amount of net cash proceeds or within a certain period of time reinvest those proceeds into new collateral.

In September in order to satisfy this provision related to the sale of our Saudi fleet in 2021, the noble group of cloud the noble Jerry D'souza from the unrestricted pack the subsidiary.

Great.

This $220 million drawn amount was paid down on October six with cash proceeds received from the sale of the remedy rig and as of today. There are no borrowings under our $670 million facility.

In the near term, we will manage the business with two separate credit groups. The legacy Noble group and the legacy Maersk drilling group.

Richard Barker: Both groups will be extremely well collateralized and have significant available liquidity. Ultimately, we will look to collapse them into one credit group. The currently contemplated refinancing of the Maersk Drilling Group, which has a three-year term, affords us significant flexibility to pick the optimal time to get the right and appropriate financing for Noble. I'd now like to discuss our guidance for Q4. We project Adjusted EBITDA between $155 and $175 million, and capital expenditures of between $65 and $85 million. We remain encouraged by the outlook for our business as we look towards 2023. On the floater side, excluding the two cold stacked rigs, we currently have over 60% of our available days contracted for 2023. Ongoing customer conversations give us confidence into further awards before the end of the year.

Both groups will be extremely well collateralized and have significant available liquidity.

Ultimately, we will look to collapse them into one credit group.

Any contemplated refinancing of the Maersk drilling group, which has a three year term affords us significant flexibility to pick the optimal time to get the right and appropriate financing for noble.

I would now like to discuss our guidance for the fourth quarter.

We project adjusted EBITDA of between 155 $175 million and capital expenditures of between 65% to $85 million.

As we look towards 2023, we remain encouraged by the outlook for our business on the floater side, excluding the two cold stacked rigs. We currently have over 60% of available days contracted for 2023.

Ongoing customer conversations give us confidence into further awards before the end of the year.

Richard Barker: On the jackup side, we currently have over 50% of our available days contracted for 2023, and we are also encouraged by the current level of customer dialogue. With the delayed recovery in day rates for jackups versus what we've experienced for floaters, as well as the expected softness in the Norwegian jackup market for 2023, we do not expect to realize the true earnings power of our jackup fleet until beyond 2023. We are managing the inflationary pressures that are prevalent across all industries. We continue to expect our total rig-level expenses to increase in the high single-digit range in H2 of this year as compared to H2 of 2021. While it is clearly a dynamic macro market, we currently expect to come under similar inflationary type pressures in 2023.

On the Jackup side, we currently have over 50% of our available days contracted for 2023, and we are also encouraged by the current level of customer dialogue.

With the delayed recovery in day rates for Jackups versus what we've experienced with Lotus as well as the expected softness in the Norwegian Jackup market for 2023, we do not expect to realize the true earnings power of our Jackup fleet until beyond 2023.

We are managing inflation.

Is that a prevailing across all industries, we continue to expect our total rig level expenses to increase in the high single digit range in the second half of this year as compared to the second half of 2021.

While it is clearly a dynamic macro market. We currently expect to come under similar inflationary type pressures in 2023.

Richard Barker: Our integration activities are well underway as we work towards realizing $125 million in cost synergies. We expect to have realized over 70% of these savings on a run rate basis during Q4 of next year. As previously disclosed, we expect the full synergy total to be realized within two years. We expect the cost to achieve these synergies to be consistent with precedent transactions of this nature, which is expected to be within a range of a one-time cost of $1 to $1.25 for every $1 of annual synergies realized. This excludes typical deal advisor fees. I'm candidly excited about our financial position, which has been transformed over the last couple of years, and I look forward to discussing the results of the consolidated company on the next earnings call.

Our integration activities are well underway as we work towards realizing $125 million in cost synergies.

We expect to realize over 70% of these savings on a run rate basis during the fourth quarter of next year.

As previously disclosed we expect the full synergy totaled to be realized within two years.

We expect the cost to achieve these synergies to be consistent with precedent transactions of this nature, which is expected to be within a range of a one time cost of $1 to $1 25 for every $1 of annual synergies realized this excludes typical deal adviser fees.

And candidly excited about our financial position, which has been transformed over the last couple of years and I look forward to discussing the results of the consolidated company on the next earnings call.

Richard Barker: That concludes my prepared remarks, and I'll now hand the call back to Robert.

That concludes my prepared remarks, and I'll now hand, the call back to Robert.

Robert Eifler: Thank you, Richard. It has been a long journey since November 2021 when we announced our business combination with Maersk Drilling, but it has been more than worth the wait. I'd like to extend a huge thank you to all of our employees worldwide who have worked so tirelessly to get us to this exciting launch point in Noble's next chapter, including our offshore crews who have stayed focused on safety and operational efficiency throughout. As I said earlier, we are vigilant about the risks in the global economy, as well as the varying slopes of improvement across the different parts of our fleet here at Noble, and we do not take lightly the burden of execution that we need to achieve throughout this crucially important business integration.

Thank you Richard.

It has been a long journey since November 2021, when we announced our business combination with Maersk drilling.

Then more than worth the wait.

I'd like to extend a huge thank you to all of our employees worldwide, who have worked so tirelessly to get us to this exciting launch point <unk> next chapter, including our offshore crews who have stayed focused on safety and operational efficiency throughout.

As I said earlier, we are vigilant about the risks in the global economy as well as the varying slopes of improvement across the different parts of our fleet here at noble.

And we do not take lightly the burden of execution that we need to achieve throughout this crucially important business integration.

Robert Eifler: Getting this integration right is absolutely prerequisite to everything we want to achieve, and our organization is laser-focused on the job at hand. Ultimately, though, the outlook for our industry, and especially the outlook for Noble as both a drilling contractor of choice and as an investment proposition, is extremely promising from our perspective.

Getting this integration rate is absolutely predicate to everything we want to achieve.

Our organization is laser focused on the job at hand.

Ultimately, though the outlook for our industry and especially the outlook for noble as both a drilling contractor of choice and as an investment proposition is extremely promising from our perspective.

Robert Eifler: With that, we're excited to be leading our offshore drilling peer group in the generation of free cash flow and returning significant capital to shareholders. Operator, now to move on to Q&A.

With that were exciting we are excited to be leading our offshore drilling peer group and the generation of free cash flow and returning significant capital to shareholders.

Operator, we're ready now to move on to Q&A.

Operator: At this time, I would like to remind everyone, in order to ask a question, press star and then the number one on your telephone keypad. Our first question comes from Fredrik Stene. I am sorry, Mr. Stene has retracted his question. I am sorry, he has retracted it again. Mr. Stene, your line is open.

At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Our first question comes from Fredrik.

Hi, I'm sorry, Mr. Stem has retracted his question.

I am sorry, yes, we tried to.

Again, Mr. <unk> Your line is open.

Fredrik Stene: Hey, guys.

Hey, guys.

Increasing.

Three.

Thank you Jason.

Okay.

As you move through.

Robert Eifler: Hey, Fredrik. I'm sorry to interrupt you. We've got a bad connection here and we can't really hear you.

Hey, Fredrik, we've got I'm, sorry to interrupt you. We've got we've got a bad connection here and we can't really hear you.

Fredrik Stene: Okay. Can you hear me now?

Okay can you can you hear me now.

Robert Eifler: Yeah, that's much better. Good afternoon.

Yes, that's much better.

Fredrik Stene: Okay, cool. Good afternoon. My question, I think what I said, congratulations on a nice quarter here. I think the headline news for me was the share buybacks. I guess the merger has kind of allowed you to move forward on something on the shareholder return slide. I wanted to kind of frame a question around that. Two things. You talked briefly about it, but, you know, you've grown $220 million on your credit facilities. Is that targeted towards any debt buyback? Because I want you to just kind of refresh us on the dividend and share repurchase restrictions on your current debt.

Okay, Okay cool.

Good afternoon.

My question.

Congratulations on that.

A nice quarter here I think the headline news for me was the share buybacks and I guess the merger has kind of allowed you to move forward on something.

Shareholder return side. So it was I wanted to kind of a framework question on their own around that.

Two things you have grown 200.

Briefly about the good strong $220 million on your credits.

Facilities is.

Is that targeted towards any buybacks because I wanted to just kind of refresh us on the dividend and share repurchase restrictions on your current debt.

Fredrik Stene: You know, one thing is having the program in place, but are you know, can you go out today and buy back shares or what's kinda left to see that happen?

One thing is having a program in place with our U can you go out today and buy back shares or what's kind of left to placebo.

Richard Barker: Yeah, it's a good question. You know, we have significant flexibility within our credit agreements today to be able to go buy back shares. That's not a concern for us. You know, the reason we had $220 million drawn on the facility is a provision in the facility as it relates to reinvestment of proceeds from asset sales. When we sold the Saudi fleet last year, we had a period of time to reinvest that capital. Essentially we did that during Q3. That's why we had $220 million drawn. Now that we've received the cash proceeds from the Remedy Rig sale, that's now being paid back down again.

Yes.

Good question.

We have significant flexibility within our credit agreements today to be able to go buyback shares so thats not a concern for us.

The reason, we had $220 million drawn on the facility was is a provision in the facility as it relates to the reinvestment of proceeds from asset sales. So when we sold the Saudi fleet last year, we had a period of time to reinvest that capital.

And so essentially we did that during the third quarter and so thats why we had $220 million drawn we've actually once we know that we received the cash proceeds from the remedy rig sale. That's now being paid back down again, so as we sit here today, we don't have anything anything outstanding under our Lcs.

Richard Barker: As we sit here today, we don't have anything outstanding under our RCF.

Fredrik Stene: Okay. No, that's good to know and good to get clarification on your ability to actually repurchase those shares. I have one rig-specific question as well before I retire from the queue. You have the Gary DeSouza rig that's rolling off now according to the fleet status towards the year end. I think, or at least, you know, on our newsfeed, I think that rig has been mentioned as a potential front runner for a contract with TotalEnergies in Nigeria, which makes sense since it's the current operator as well.

Okay.

Good to know and good to get clarification on your ability to actually repurchase those shares.

I have one specific question as well before I retire.

From the queue.

Do you have.

Gary This was our rig that's rolling off now according to the feed schedules towards the year and then I think or can you.

In an hour.

And you see it I think that to rig as Ken mentioned that the potential from their port Periploca contract wins, So Paulo energies in Nigeria, which makes some sense at the current operator as well.

Fredrik Stene: You know, without going into kind of specific opportunities, and things that you find kind of sensitive in nature, but what are the chances do you think of follow-up for that rig and what would be a fair assumption on downtime before it commences any new work?

Without going into kind of specific opportunities.

And things that you find sensitive in nature, but what are the chances do you think a colo corporate about Greg and what could be a fair assumption downtime before it commences in the New York.

Robert Eifler: Yeah. It's a little bit too early for us to talk conclusively about follow-on work for that. We are. I'm not losing sleep. We're confident that rig gets a follow-on contract and start for that, you know, we think is Q1 next year.

Yes so.

Little bit too early for us to talk conclusively about about follow on work for that but we are not.

I am not losing sleep, we're confident that that.

Rig gets a follow on contract and.

And start for that.

I think first quarter of next year.

Yes.

Fredrik Stene: Thank you very much. I think I had a partly bad connection there as well. All right. That's all from me, guys. Again, nice to see progress here. Actually one thing. Dividends, is that something you're considering as well or only share buybacks for now?

Alright. Thank you very much I think partly about clinics near as well alright, that's all from me, Chris again nice to see progress here and we're looking forward to.

Actually one thing dividends is that something you're considering as well or only share buybacks for now.

Richard Barker: This authorization is for share buybacks. That's all for now. You know, anything related to dividends would be at some point in the future. We're really pleased with what we've announced here yesterday.

So this authorizations for share buybacks.

So that's all for now.

And so anything related to dividends would be at some point in the future.

But we're really pleased with the with what we've announced here yesterday.

Fredrik Stene: Super. Thank you so much, guys. Have a good one.

Super. Thank you so much guys and good luck.

Operator: Our next question comes from Samantha Hoh with Evercore ISI.

Our next question comes from Samantha Hoh with Evercore ISI.

Samantha Hoh: Hey, guys. Congrats on closing the deal and on the nice quarter and the share purchase program.

Hey, guys congrats on closing the deal and on the nice quarter.

The share purchase program.

Robert Eifler: Thanks.

Samantha Hoh: was kinda curious in terms of just how your customer conversations are going. You know, it was interesting to see that you guys didn't really participate in the Petrobras tender. I just wonder if you're really, you know, spending more time in terms of having more private conversations these days or anything you can share in terms of, you know, the tone of conversations with customers and how they are viewing the Maersk fleet now that you have that in your hands.

Thanks, So kind of curious in terms of just how your customer conversations are that way.

Interesting thank you Eric.

Participating today alright.

Alright.

The Petrobras tender.

Just wondering if youre.

Spending more time in terms of having more private conversation with these days.

Anything you can share in terms of that.

Oh.

Conversations with customers how they are viewing their screen now that you have that in your hands.

Blake Denton: Yeah. Thanks for the question, Samantha. This is Blake. Happy to answer that one and pleased to be on the back of three weeks of steady customer visits between Joe and myself. So it's an appropriately timed question. Yeah, I think the response or the feedback we would say from those conversations is incredibly encouraging. I think we've seen customers recognize the benefits strategically that these two organizations represent on a combined basis. With respect to ongoing, the demand picture looks good and we're well suited with a high-spec young fleet to continue to do well in the market.

Yes. Thanks for the question Samantha This is Blake.

To answer that one and pleased to be on the back of three weeks of steady customer visits Joe and myself.

So.

Appropriately timed question, yes, I think the response or the feedback we would say from those conversations is incredibly encouraging.

I think we would we've seen customers recognize the benefits strategically.

These two these two organizations represent on a combined basis.

With respect to ongoing the demand picture looks good and we're well suited with our high spec young fleet to continue to do well in the market.

Samantha Hoh: Okay, great. Just maybe a question on the CapEx, the $65 to 75 million guidance for Q4. Is that a pretty good run rate going forward, or should we think about more variability?

Okay, Great and then just maybe a question on the Capex the 65.

In.

For Q is that a pretty good run rate going forward.

We think about.

Bearing ability.

Richard Barker: The range of $65 to 85 for Q4. You know, I think when we announced the deal back in November of last year, we talked about a $250 million kind of average over a five-year period. Obviously, inflation since then has impacted everything, so I think it's fair to assume that number is probably higher over a five-year average period. You know, I think we do expect, you know, just given the age of some of the rigs, you know, higher capital in 2023 and 2024. That's part of that five-year average. You know, something obviously we will provide more guidance around here at some point, either later this year or early next year.

Yes.

The range of $65 to 85% for Q4.

I think as you when we announced the deal back in November of last year, we talked about it to $250 million.

Kind of average over a five year period.

Obviously inflation since then.

As impacted everything so I think it's fair to assume that that number is probably higher over a five year average periods I think we do expect.

Just given the age of some of the rigs.

Hi up capital in.

In 2003, and 'twenty four obviously thats part of that five year average and then something obviously, we will provide more guidance around here.

At some point either later this year or early next year.

Samantha Hoh: Okay, great. That does it for me. Thank you, and congrats again on the quarter.

Okay great.

Thank you and congrats again on the corner.

Richard Barker: Thank you.

Thank you.

Operator: There are no further questions at this time. Mr. Macpherson, I turn the call back over to you.

There are no further questions at this time, Mr. Macpherson I'll turn the call back over to you.

Ian Macpherson: Thank you everyone for joining us today. We appreciate your interest, and we'll look forward to speaking with you again next quarter.

Thank you everyone for joining us today, we appreciate your interest and we'll look forward to speaking with you again next quarter.

Operator: This concludes the Noble Corporation Q3 2022 financial results. Thank you for attending today's presentation. You may now disconnect.

This concludes the Noble Corporation third quarter 2022 financial results. Thank you for attending today's presentation you may now disconnect.

Okay.

Yeah.

Yes.

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