Q3 2023 Noble Corp PLC Earnings Call

Thank you for standing by my name is Bailey and I will be your conference operator today.

At this time I would like to welcome everyone to the Noble Corporation Q3 earnings call.

Oh life has been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session.

Please limit your question to one initial and one follow up question.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question again press start and one.

And I would now like to turn the call over to Ian Macpherson, Vice President of Investor Relations.

Thank you operator and welcome every once in a notebook corporations third quarter of 2023 earnings conference call.

Can find a copy of our earnings report along with the supporting statements and schedules on our website.

Dot com.

Conference call will be accompanied by a slide presentation, but you can also find located at the Investor Relations section of our website.

Today's call will feature prepared remarks from our president and CEO, Robert Eisler, as well as our C. F O. Richard Parker also joining on the call or Blake Vinton Senior Vice President of marketing and contracts and would you like to watch a senior vice president of operations.

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 manufacturers could cause the actual results to differ materially from these forward looking statements and noble does.

Not assume any obligation to update these statements.

Also note we are referencing non-GAAP financial measures on the call today you.

You can find the required supplemental disclosure for these measures.

Putting the most directly comparable gap measure and then associated reconciliation in our earnings report issued yesterday and filed with the SEC.

With that I'll turn the call over to Robert Eisler, President and C E O of noble.

Good morning, welcome everyone and thank you for joining us on the call today.

I'll begin with some opening remarks on our quarterly results and provide some comments on the market outlook and commercial activity before turning the call over to Richard to cover the financials.

Following Richards financial overview, I'll wrap up with some additional highlights on technology innovation underway here in.

And the strong progress we've made with our merger integration and after that we'll look forward to taking your questions.

First we have reported a solid third quarter with total revenue of $679 million and adjusted EBITDA of $283 million on.

On these metrics this was our strongest quarters since the noble mare swelling combination closed a year ago.

These results reflect an exceptional collective effort by our employees around the world who have leaned into this merger and executed simultaneously both the integration and the day to day business, So well done and thank you all.

Next we're pleased to announce an increase of our quarterly dividend to 40 cents per share this quarter, which represents a 33 per cent increase and demonstrates our continued commitment to maximizing value for shareholders via a return of capital.

Following the dividend initiation last quarter, we assign additional contracts to bring our 2024 scheduled backlog to $1.8 billion currently with near term visibility to additional bookings that could increase 28, 24, a backlog to over $2 billion.

So we have taken the decision to make this upward revision just one quarter after the dividend initiation.

You should not expect us to continue to adjust the dividend each quarter, we will remain focused on maximizing free cash flow generation and as previously stated returning the significant majority of free cash via dividends and buybacks.

Turning now to the market outlook offshore drilling fundamentals remain robust with a marketed utilization rate for ultra deepwater rigs and the 90 per cent and leading edge day rates for working high spec drillships in the mid to high $400000.

Bleeding edge fixtures for harsh jackups outside of Norway had been in the 130 to $150000 per day range.

During the third quarter, the drillship noble Valiant was awarded a six month contract with al log in the U S. Gulf of Mexico at a day rate of $470000, excluding potential additional revenue for Npd's services.

This program is scheduled to commence in early January indirect continuation of the balance current contract.

Also in the Gulf of Mexico, both of the Globetrotter Drillships have recently been awarded additional contract scopes from shell.

Expected to keep both of these units working into March of next year at extension rates just below $400000 per day.

On the Jack upside.

King forward to the redeployment of the noble Regina Ellen with a three well program for total energy in Argentina, that's scheduled to commence in mid 2024 at a day rate of $150000 excluding mobilization.

The Phoenix field provides a significant source of domestic natural gas for Argentina, and this program of lines very well with the J U 3000 rigs technical capabilities and well established operational track record in this unique harsh environment location.

So we're very excited to be participating in the revival of Argentina's offshore upstream activity with a Regina Ellen next year, which will mark noble drilling campaign in the country with a J U 3000 jack-up.

In the North Sea. The noble resilient has been awarded a 120 day contract with Petra grass at $133000 per day that scheduled to come in next summer.

Of note the resilience sustained damages while in port two weeks ago, when a floating protection vessel experienced a morning failure and a lighted with our rig which was stationary position near quayside.

There were no reported injuries.

An investigation and damage assessment is underway and.

And we expect damages to be covered by the liable party or our own insurance.

Two applicable terms and limits.

The timeline for required repairs could impact the extent of the resilience availability for additional work before the Petro gas contract next summer. However, we do not expect the timing of the petrol gas contract to be impacted.

Moving on also in the North Sea.

Jakob noble reach or has been extended by 15 months with hotel energies via exercise are priced options.

Sending the rig to mid 2025 with one year of priced options remaining.

These are legacy priced options. So the day rates for the retreat will remain materially below the more recent leading edge fixtures.

These recent Jakob contract awards have significantly firmed up 2024 visibility for our non Norway sleep, which has been a positive development.

Within Norway, the timing of demand recovery continues to be hard to predict.

At this point, we remain generally cautious on the outlook for this market through 2024.

Our Idol C. J 70, jack-up Naval Interceptor is still confronted with a limited opportunity set.

You can find the summarize schedule of our backlog on page five of today's earnings slide presentation.

As shown our backlog stands at $4.7 billion currently down slightly from $5 billion as of last quarter. However, excluding our long term commitments from Exxon Mobil in Guyana, and Ocker B P. In Norway, our backlog was essentially flat quarter over quarter.

Accordingly.

We're much more focused on the quality of backlog additions rather than the absolute dollars total as we progress through time and we remain overall quite constructive on the re contracting opportunities confronting are available Riggs.

Two of the defining features of our floater backlogs are that it is both more in step with current market pricing than most of our competitors and also more exposed to near term rollovers than average.

Putting numbers to it or average day right in floater backlog is $408000.

And 62 per cent of 2024 available days across are marketed floater sleep are currently exposed to market repricing.

Approximately one third of this 2024 repricing exposure relates to the C E a rigs in Guyana and.

And two thirds relates to Uncontracted rig days across the balance of the U D. W fleet.

We think this is clearly an advantageous exposure to hold and a strong and improving day rate environment.

And it also provides a measure of flexibility in how we approach shorter and longer term contracts opportunities as they arise.

There is a partially offsetting negative effects from the utilization inefficiency there was bolts from the turn of shorter term contracts.

Within this context as previously discussed we continue to see more white space impacting our sixth generation floaters over the near to medium term specifically.

Specifically, the two globetrotters and the developer and discover.

That said, we still see a good pipeline to follow on opportunities next year, and we do hope to announce some additional fixtures here in the fourth quarter, which would resolve some of the near term rollovers in our fleet so stay tuned.

Overall, the supply demand situation and outlook for both deep water and horse Jackups remains very similar to what we described last quarter.

The contracted you DW rig count has hovered in the low nineties since early this year.

With utilization of the marketed fleet of 99 rigs stable in the low nineties per cent.

During the third quarter 22, right gears of you DW floater contracts were awarded worldwide.

Which was consistent with the average quarterly volume of awards over the preceding two and a half years.

Recent leading edge fixtures have priced in the mid to high 400000 per day for working tier one rigs.

Step lower in the low 400000 for contracts awarded two rigs that are being reactivated.

And made 300 thousands to mid 400000 for sixth generation rings.

Although contracting activity and utilization rates have remained firm throughout this year. We recognize there has been some concern in the market recently over the lack of apparent demand growth over the past few quarters as indicated by the contracted you DW rig count.

We've seen nothing to indicate any type of underlying problem with demand growth.

Although it has been slightly slower to materialize in the short term.

Over the past few years, we've seen a similar pattern of seasonality and which volume of total you DW contracts in a given year has been slightly weighted towards the first half of the year and this appears to be playing out similarly this year.

Additionally.

Eight of the 14 longterm contracts that have already been awarded this year have gone to non active rigs that are being reactivated it discounted pricing.

We had originally anticipated some of these programs to go to working rigs, which combined with normal blips here and there was certain programs slipping to the right.

As a resulted in a slightly more moderate slope of appreciation and the you DW market in 2023 compared to 2022.

So we're approaching the 500000 dollar day rate threshold a bit more slowly than we had previously expected.

If you scratch a little deeper what you'd find does that to you DW market is still in fact heightening due to the steady absorption of the sideline capacity.

Looking ahead throughout 2024, we continue to expect a double digit increase and you DW rigged demand globally, driven primarily by incremental requirements throughout the Americas in West Africa.

Brazil continues to be a major fulcrum of demand growth and despite customary delays with their award process petrol process total floater fleet.

To expand from twenty-four contracted rigs currently two approximately 30 ratings over the next year based on recent impending awards.

Additionally, major projects in Namibia turned him are poised to drive incremental requirements and established EDW basins, such as Angola, and Nigeria continued to trend higher.

The methodical absorption of sideline capacity Masada bifurcating effect on their rates over the short term how.

However, we believe the structural trend with day rates will continue to correlate positively with demand growth over time, which.

Which in fact is one of the key reasons why we are beginning to see the emergence of more longterm tenders and the market is the inventory a sideline capacity continues to dwindle and the economics for new reconstruction, alright, such a dramatically higher plane as we discussed in detail during last quarters call.

And just to reiterate that point, we believe that the economic threshold to support new drillship construction would be something along the lines of a 10 year contract at or above $650000 per day with a three to four year delivery time preceding contract commencement.

Given these fairly straightforward supply and demand parameters and with mounting evidence that our customers are reengaging and their long life offshore resource portfolios in a more deliberate way than we've seen in over a decade.

We believe the outlook for our business is very encouraging.

Now, let me turn the call over to Richard to discuss the financials.

Thank you Robert and good morning, or good afternoon <unk>.

My remarks today I will briefly review the highlights by third quarter results as well as our outlook for the remainder of the year.

Contract willing services revenue for the third quarter totaled $671 million up from 606 million in the second quarter. Adjusted EBITDA was 283 million in Q3 up from 188 million and Q2.

Diluted earnings per share was one dollar nine cents and adjusted diluted EPS with 87 cents.

Cash flow from operations with $139 million capital expenditures with $99 million in free cash flow was fortunate yeah.

As anticipated revenue and adjusted EBITDA improved from second quarter levels with higher day rate being the primary driver.

I was 16, Mark the Flotus with 92 per cent utilized in the third quarter.

From 90% in the second quarter with average day rates, increasing to 404000 per day in Q3.

363000 per day and Q2.

I was 13 marketed jackups with 61% utilized with an average day rate of 141000 in the third quarter compared to 59% 129000 per day in the second quarter.

I have summarized on page five of the audience presentation slides I was total backlog as of October 31st signs of 4.7 billion plus is 5 billion as of July 31st.

It's important to recognize that our unique longterm commitment with Exxon Mobil, and Diana and with active B P. In Norway have an outsize impact on that total back low profile.

As such the sequential decreasing backlog this quarter is really attributable to the six weeks operating under the Exxon Mobil C D. A and the active B P programs, which do not take on additional backlog bookings over the past three months.

Coming back logged includes approximately 1.8 billion that is scheduled for revenue conversion in 2024.

Bailey: Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the noble corporation to three earnings call.

Bailey: All lines have been placed on mute to prevent any background noise. After the speakers are marks, there will be a question and answer session. Please eliminate your question to one initial and one follow up question. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and one.

Important to note that a backlog excludes reimburse move Avenue as well as <unk> services.

Last month, we celebrated the one year anniversary of that business combination with Australia and integration activities continue to progressed extremely well I.

I was cinergy realization is ahead of plan.

Within one year of closing we have realised <unk> of approximately $100 million, which represents 80 per cent of 125 million target.

This is well ahead of what we communicate either upon the trend faction announcements and is a testament to how the two legacy companies have come together to create value for both our shareholders and customers.

Ian Macpherson: And I would now like to turn the call over to Ian MacPherson vice president of investor relations. Thank you operator and welcome everyone to noble corporations third quarter 2023 earnings conference call. You can find a copy of our earnings report along with the supporting statements and schedules on our website at noblecorp.com. This conference call will be accompanied by a slide presentation that you can also find located at the investor relations section of our web site.

Referring to page nine of the lightning slides, we're adjusting I fully 2023 guidance for revenue adjusted EBITDA.

A total of Avenue, we now expect a range of 2.5 to 2.6 billion.

The prior range of 2.35 to 2.55 billion I could just do that <unk> I'm expected range is $775 million to 825 million, which is the top half of the prior range in about a 3% increase in the mid point.

Ian Macpherson: Today's call will feature prepared remarks from our president and CEO Robert Eiffler, as well as our CFO Richard Barker. Also joining on the call are Blake Denton, senior vice president of marketing contracts and Joe Ekawaja, senior vice president of operations. 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.

Ian Macpherson: And are therefore subject to certain risks and uncertain 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. Also, note we are referencing non-gap financial measures on the call today.

These improvements and guidance ranges I'll do it by a strong results yet today with revenue also benefiting from higher than expected to be a basketball revenue.

Julia guidance of capital expenditures remains unchanged at a range between 325 and $365 million, excluding customer who <unk> capex.

Rapids reimburse double Capex is total $13 million through the first nine months.

Notwithstanding the enhanced ouya expectation for just the debit golf.

Ian Macpherson: You can find the required supplemental disclosure for these measures, including the most directly comparable gap measure and an associated reconciliation in our earnings report issued yesterday and filed with the SEC.

Upwardly revised range still implies a sequentially level of fourth quarter compared to the third quarter. This is consistent without prior direction will be primarily reflects grader anticipated downtime for various weeks in the fourth quarter.

Ian Macpherson: With that, I'll turn the call over to Robert Eiffler, president and CEO of Noble.

Robert Eifler: Good morning. Welcome, everyone. And thank you for joining us on the call today. I'll begin with some opening remarks on our quarterly results, and then provide some comments on the market outlook and commercial activity before turning the call over to Richard to cover the financials. Following Richard's financial overview, I'll wrap up with some additional highlights on technology innovation underway here at Noble, and the strong progress we've made with our merger integration.

The primary drive is include the Nobel fake <unk>, which has recently finished a contract in the Gulf of Mexico.

Preparing for its next contract in Brazil that is expected to start in March.

Developer, which finished at <unk> in late September and the noble Voyager, which is about to finish its covered in west coast Mueller Tamia.

Looking beyond 2023 at a high level, we continue to expect a nice step up and adjusted EBITDA free cash flow and 2024 of us in 2023, and also envision <unk> 2024, <unk> and the second half of next year compared to the first half.

Robert Eifler: And after that, we'll look for more into taking your questions. First, we've reported a solid third quarter, with total revenue of $679 million, and adjusted to EBIT DOP of $283 million. On these metrics, this was our strongest quarter since the Noble mayor's drilling combination closed a year ago. And these results reflect an exceptional collective effort by our employees around the world who have leaned into this merger and executed simultaneously on both the integrated integration and the day-to-day business.

As previously discussed 2024 will be the peak you have 10 U S. P. S is a major projects across athletes and as such we continue to expect a moderate increase in Capex next year compared to this year.

Additionally, we continue to see persisting inflationary trends across that cost structure that are very consistent with the type of industry upcycle that would come on you're experiencing.

Robert Eifler: So, well done and thank you all. Next, we're pleased to announce an increase of our quarterly dividend to $0.40 per share this quarter, which represents a 33% increase, and demonstrates our continued commitment to maximizing value for shareholders via return of capital. Following the dividend initiation last quarter, we have signed additional contracts to bring our 2024 scheduled backlog to $1.8 billion currently, with near-term visibility to additional bookings that could increase 2024 backlog to over $2 billion.

Therefore, we do expect something in the range of mid single digits type percentage inflation rates on average from 2023 2024 across Apple cost structure.

Finally, I would like to provide a call me no cash flow past few code. The ZIP showed the quarterly variability of working capital and create some short term swings in free cash flow.

During the third quarter, we generated 40 million of free cash flow. Despite over a 100 million bill will need working capital.

Well some of this is a function of a growing top line. We do expect the portion of this bill two of us in queue for.

Robert Eifler: First. So, we have taken the decision to make this upward or vision just one quarter after the dividend initiation. While you should not expect us to continue to adjust the dividend each quarter, we will remain focused on maximizing free cash flow generation and as previously stated, returning the significant majority of free cash via dividends and buybacks. Turning now to the market outlook, offshore drilling fundamentals remain robust with the marketed utilization rate for ultra deep water rigs and the 90s percent and leading edge day rates for working high spec drill ships in the mid to high $400,000.

His wallet stated we remain committed to returning the significant majority of free cash flow to shareholders or the time by Chevy purchases and dividends.

We continue to believe that maintaining a conservative recycled balance sheet in support of a high free cash flow payout is the appropriate capital allocation formula for our business and therefore, you can expect notebook to abide by destroying book going forward.

Robert Eifler: Leading edge fixtures for harsh jackups outside of Norway have been in the $130,000 to $150,000 per day range. During the third quarter, the drill ship noble valiant was awarded a six month contract with L log in the US Gulf of Mexico at a day rate of $470,000, excluding potential additional revenue for MPD services.

That concludes my remarks, and now I'd like to pass the call back to Roberts at closing comments.

Thanks Richard.

Before we moved to Q&A I'd like to close here with a couple of important highlights first and exciting new technology that we're developing and second a few reflections on the one year anniversary of our merger.

On the technology side I'm very excited to highlight horizon 56, a software platform that we've developed to promote the digitalization of well planning and execution.

Robert Eifler: This program is scheduled to commence in early January and direct continuation of the valiant's current contract. Also in the Gulf of Mexico, both of the globe-trotter drill ships have recently been awarded additional contract scopes from Shell that are expected to keep both of these units working into March of next year at extension rates just below $400,000 per day. On the jackup side, looking forward to the redeployment of the noble Regina Allen with a 3-well program for total energies in Argentina that's scheduled to commence in mid 2024 at a day rate of $150,000, excluding mobilization.

Benefits of Digitalizing work streams in closing the gap between our customers well programs and our drilling crews are far reaching impacts.

Impacting safety drilling speed management of change elevation of lessons learned and overall risk management.

We believe the digitalization enhancements provided by Horizon 56 can ultimately drive drilling efficiency gains, which obviously translates into very significant value uplift for customers, including but not limited to well cost and emission factors.

Overall, we feel fortunate to have this very talented horizon 56 team noble a group that came to us by way of the marriage drilling combination as one of the many outstanding aspects of <unk> human capital and technology Sweet.

Robert Eifler: The Phoenix Field provides a significant source of domestic natural gas for Argentina, and this program aligns very well with the JU 3000 rigs technical capabilities and well-established operational track record in this unique harsh environment location. So we're very excited to be participating in the revival of Argentina's offshore upstream activity with the Regina Allen next year, which will mark noble third drilling campaign in the country with the JU 3000 jackup. In the North Sea, the noble resilient has been awarded a 120-day contract with Petra Grass at $133,000 per day that's scheduled to commence next summer.

We talked frequently about the new industry landscape in which we aspire to be as we say first choice off shore.

That ambition can only be realized with two major prerequisite, which are inexorably linked a scale N b, a culture of tireless innovation and service posture.

Both of which we have very purposefully promoted as part of the industrial logic behind our strategic actions of the past few years.

Accordingly, we remain keen to invest in and focus on areas like Horizon 56, four noble can drive incremental value for our customers.

Robert Eifler: Of note, the resilient sustained damages while in port two weeks ago when a floating protection vessel experienced a mooring failure and a lighted with our rig, which was stationary in position near key side. There were no reported injuries, an investigation and damage assessment is underway, and we expect damages to be covered by the liable party or our own insurance subject to applicable terms and limits. The timeline for required repairs could impact the extent of the resilience availability for additional work before the Petra Gas contract next summer.

Finally, a brief reflection on the state of the company as we approach 2024 <unk>.

<unk> recently celebrated the one year anniversary of our business combination with mashed drilling and we could not have asked for a better integration effort than we've seen so far.

Within the first six months of clothes, we achieved operational stability and a true culture of one noble that proved critical to our first year success.

All while exceeding synergy targets and consistently executing for our customers.

Robert Eifler: However, we do not expect the timing of the Petra Gas contract to be impacted. Moving on, also in the North Sea, the jackup, Noble Reacher has been extended by 15 months with total energies via exercise of priced options, extending the rig to mid 2025. With one year of priced options remained.

Year to date or operational uptime of 97% has been outstanding, especially for your one of an integration of this scale and.

And ultimately I believe the company's third quarter results are a very clear demonstration of the power of this combination.

So I would just like to conclude here with a special offering of gratitude and congratulations to our fantastic employees around the world for your tremendous efforts and for the great results that you're producing on behalf of noble.

Robert Eifler: Tony. These are legacy priced options, so the day rates for the reach will remain materially below the more recent leading edge fixtures. These recent jack up contract awards have significantly firmed up 2024 visibility for our non-Norweg fleet, which has been a positive development.

We're off to a great start together and the best is yet to come.

With that we'll pause here and opened up the call for Q&A.

Robert Eifler: Within Norway, the timing of demand recovery continues to be hard to predict. At this point we remain generally cautious on the outlook for this market through 2024. Thus, our idle CJ70 jack up noble interceptor is still confronted with a limited opportunity set.

At this time I would like to remind everyone in order to to ask a question press start with a number one on your telephone keypad.

Please repeat your question to one initial and one follow up question.

And your first question comes from the lineup Eddie Canvasback. Please your line is open.

Robert Eifler: You can find a summarized schedule of our backlog on page 5 of today's earnings presentation. As shown, our backlog stands at $4.7 billion currently, down slightly from $5 billion as of last quarter. However, excluding our long-term commitments from Exxon Mobile and Guyana in Ocar B.P, and Norway, our backlog was essentially flat quarter over quarter. Accordingly, we're much more focused on the quality of backlog additions rather than the absolute dollar total as we progress through time, and we remain overall quite constructive on the re-contracting opportunities confronting our available rigs.

Hi, Good morning my.

My question. The first question is just on what feels like a pause in contracting activity over the past two two to three months at least compared to what we were seeing through kind of July or August this year.

Just in terms of the number of contracts and multiyear durations. We were seeing should we view. This is really more of a temporary pause. It seems like it's based on your <unk> based on your prepared remarks. It feels like we should and when do you expect will see multi year contract announced.

<unk> start to pick up again.

Robert Eifler: Two of the defining features of our floater backlog are that it is both more in step with current market pricing than most of our competitors, and also more exposed to near-term rollovers than average. Putting numbers to it, our average day rate in floater backlog is $408,000, and 62% of 2024 available days across our marketed floater fleet are currently exposed to market repricing. Approximately one-third of this 2024 repricing exposure relates to the uncontracted rig days across the balance of the UDW fleet.

Yeah, Thanks, Eddie Yeah.

Yeah. So it is very much a temporary phenomenon.

If you look back through time at just contract awards per quarter. This is not unusual at all I think it's great gain you know it had it had a lot of attention understandably, but they they ebb and flow and as I mentioned in the remarks, the second half of the year you know sometimes traditionally I guess is is a <unk>.

Little lower volume than the first half of the year and I think that's related just to normal budget cycles for for our customers.

<unk>, you're gonna see you're gonna see the working rig count increase next year, and we believe that you're gonna see duration increase as well to your question.

Robert Eifler: We think this is clearly an advantageous exposure to hold in a strong and improving day rate environment, and it also provides a measure of flexibility in how we approach shorter and longer-term contract opportunities as they arise. There is a partially offsetting negative effect from the utilization inefficiency that results from the turn of shorter-term contracts.

I think one of the potential drivers for this current pause.

It is that.

Certain operators not not all but certain of the operators some of whom are some of the the bigger players.

Robert Eifler: Within this context, as previously discussed, we continue to see more white space impacting our six generation floaters over the near-to-medium term, specifically the two globe trotters and the developer and discoverer. That said, we still see a good pipeline of follow-on opportunities next year, and we do hope to announce some additional fixtures here in the fourth quarter, which would resolve some of the near-term rollovers in our fleet to stay tuned.

Have been regrouping and connecting some of their programs together, so that rather than going out to tender for one or two wells, which has been the norm for the last couple of years, they're they're pooling those together in in probably going out to tender for some longer duration type contracts. So.

No hard evidence to that yet that's our belief and I think that's what you're you're gonna see as we move into 2024.

Robert Eifler: Overall, the supply-demand situation and outlook for both deep water and horse jackups remains very similar to what we described last quarter. The contracted UDW rig count has hovered in the low 90s since early this year, with utilization of the marketed fleet of 99 rigs stable in the low 90s percent. During the third quarter, 22 rig years of UDW floater contracts were awarded worldwide, which was consistent with the average quarterly volume of awards over the proceeding to in a half year.

Okay got a great to hear and thanks for that color cause my follow up is on the comments around cost inflation next year. I believe you said, we should expect kind of a mid to high single digits level <unk> could you just expand upon that a little bit more.

In what areas do use the concentration to be highest next year as a labor spare parts and equipment costs of S. P. S is just any additional color here would be great.

Robert Eifler: Lewis. Recent leading-edge fixtures have priced in the mid to high 400,000 per day for working-tier-one rigs. A step lower in the low 400,000s for contracts awarded to rigs that are being re-activated, and mid 300,000s to mid 400,000s for six-generation rigs.

Sure Eddie Yeah, we we said bid single digit type inflation next year is that expectation that as we sit here today and obviously that that that's an average right and so as you know do you know some elements of the cost structure is going to be higher than others.

I would say on the Labour side of Gulf of Mexico.

Robert Eifler: Although contracting activity and utilization rates have remained firm throughout this year, we recognize there has been some concern in the market recently over the lack of apparent demand growth over the past few quarters as indicated by the contracted UDW rig count. We see nothing to indicate any type of underlying problem with demand growth, although it has been slightly slower to materialize in the short term. Over the past few years, we've seen a similar pattern of seasonality in which volume of total UDW contracts in a given year has been slightly weighted towards the first half of the year, and this appears to be playing out similarly this year.

David Beckham.

So it's very very regional very regional dependent as well. So you know it's hard to get maybe more more specificity than that but but I think on average I would think about it as a kind of mid single digit type level next year.

Okay understood.

Thank you very much for the comments will turn it back.

Thanks <unk>.

Your next question comes from the line and that's <unk>. Thank you Frank Your line is nothing.

Hey, good morning, everybody.

<unk>.

Okay I appreciate that I appreciate the color so.

Robert Eifler: Additionally, eight of the 14 long-term contracts that have already been awarded this year have gone to non-active rigs that are being re-activated at discounted pricing. We had originally anticipated some of these programs to go to working rigs, which combined with normal blips here and there with certain programs slipping to the right has resulted in a slightly more moderate slope of appreciation in the UDW market in 2023 compared to 2022. So we're approaching the $500,000 day rate threshold a bit more slowly than we had previously expected, but if you scratch a little deeper, what you find is that the UDW market is still in fact tightening due to the steady absorption of the sideline capacity.

There.

As in in the context of you know with the progression on on headline day right and then the fact that we haven't quite yet breached the 500 K per day, Mark I think.

I wanted to get your perspective right it.

How how important is date rape or is the total contract value right cause at the end of the day to day rate is making up his own.

Logged or 100 per cent of the contract value because there's a lot of upfront costs that are being paid so low fees and so on and so forth right.

So it seems like investors or or just so intently focused on the headline day rate that they're missing the bigger picture that the total cash value of these contracts are growing up so I just wanted to get your perspective on that and.

Robert Eifler: Looking ahead throughout 2024, we continue to expect a double-digit increase in UDW rig demand globally, driven primarily by incremental requirements throughout the Americas and West Africa. Brazil continues to be a major full-chrome of demand growth, and despite customary delays with their award process, Petrobras' total flow to fleet is poised to expand from 24 contracted rigs currently to approximately 30 rigs over the next year based on recent impending awards. Additionally, major projects in Namibia and Suriname are poised to drive incremental rig requirements and established UDW basins such as Angola and Nigeria continue to trend higher. The methodical absorption of sideline capacity has had a bifurcating effect on day rates over the short term.

In and see if it really yeah. It was important for you guys about the day right or is it more important for you to maximize the cash value of the contract.

It's a good question and your your spot on that there seems to have been and almost myopic focus on the 500 number here recently and understandably, it's a it's a visible threshold.

You know we're headed there we've said that before you know timing, so maybe a little bit behind but but to your point there. There's a couple of other things that go on one.

Between contract contribution inefficiency does matter.

So <unk> cetera matter I I would I would say, we're probably somewhere mid cycle ish on that component. So you you're seeing seeing obviously <unk>. We're we're a ways away from 10, a full full revenue type moebs in India.

Robert Eifler: However, we believe the structural trend with day rates will continue to correlate positively with demand growth over time, which in fact is one of the key reasons why we are beginning to see the emergence of more long-term tenders in the market as the inventory of sideline capacity continues to dwindle and the economics for new rig construction are at such a dramatically higher plane as we discussed in detail during last quarter's call. In just a reiterate that point, we believe that the economic threshold to support new drill ship construction would be something along the lines of a 10-year contract at or above $650,000 per day with a three to four-year delivery time preceding contract commencement.

<unk> at this stage in the cycle and that's a point that we reached last cycles, you'll remember, but also just within contract drilling margins. There is a there is a variation between contracts regions types of rigs et cetera.

And so we're very much focused on maximizing our margins in our cash flow and I think we've got some places where where you know where where where we're very proud to have what we think is a good a good combination right now and is is one of the things that.

Robert Eifler: Given these fairly straightforward supply and demand parameters and with mounting evidence that our customers are re-engaging in their long-life offshore resource portfolios in a more deliberate way than we've seen in over a decade, we believe the outlook for our business is very encouraged.

It's driving our our cash flow right now.

Okay. I appreciate that color now you guys reference you know the prospect of thing you know increase duration, obviously, one of your competitors yesterday indicated that they've been saying the same dynamic.

Richard Barker: Thank you, Robert and good morning or good afternoon all. In my remarks today, I will briefly review the highlights of our third quarter results as well as our outlook for the remainder of the year. Contract drilling services revenue for the third quarter total 671 million up from 606 million in the second quarter. Adjusted EBITDA was 283 million in Q3 up from 188 million in Q2. Diluted earnings per share was $1.09 and adjusted diluted EPS was 87 cents.

So maybe give us some perspective on what I should look out in potential contract awards that.

Will come forth in 2024.

What what sort of duration or are we talking about and relative to what we've seen so far like you are we seeing now uhm, a greater propensity of three to five year term or are we seeing a greater propensity you know to your curves.

It's the ladder, but I think I think what you're going to see that if I recall. So I'm signing this correctly. If you if you exclude the Petra brass contracts or average contracted you DW tournaments, like 11, or 12 months right now and so we would anticipate that that statistic would go up.

Richard Barker: Cash flow from operations was 139 million capital expenditures were 99 million and pre cash flow was 14 million. As anticipated, revenue and adjusted EBITDA improved from second quarter levels with higher day rates being the primary driver. Our 16 marketed floaters were 92% utilized in the third quarter up from 90% in the second quarter with average day rates increasing to 404,000 per day in Q3 up from 363,000 per day in Q2. Our 13 marketed jackups were 61% utilized with an average day rate of 141,000 in the third quarter compared to 59% and 129,000 per day in the second quarter.

Fairly dramatically next year, because we think as I mentioned that there are a few companies that are moving away from one and two well contracts and into you know one to three year contracts, which kinda would kind of covers your your to your example.

Okay. Great. So is is the just an extension of that question right. So we're seeing you know all kinds of information is suggesting that the man four seven.

Seven Jen ultra deep ordered drillships or can they see exceeds supply you know 24 and 25.

And prior cycle periods, that's tended to.

Richard Barker: As summarized on page 5 of the earnings presentation slide, our total backlog as of October 31st stands at $4.7 billion versus $5 billion as of July 31st. It's important to recognize that our unique long term commitments with XMobile and Guyana and with AFTP in Norway have an outsized impact on our total backlog profile. As such, the sequential decreasing backlog this quarter is really attributable to the six weeks operating under the XMobile CDA and the AFTP programs which did not take on additional backlog bookings over the past three months.

<unk> the amount of the oil companies about Hey, am I gonna get what I need when I need it and therefore I need the basically reached further into the future and book it for a longer period of time.

Based on your commentary, there's some movement toward that but it doesn't seem like it's to the same extent.

So what what why are required oil companies not willing to.

Maybe book three years versus two years, what's it say again I'd also theoretical question, but I just wanted to get it transferred you got what kind of pushback or what kind of color you're getting in your conversations with the oil companies.

Sure Yeah. I mean, you know my view is that the market is pretty well balanced right now and that it will continue to be pretty well balanced going forward. We've had it's eight or 10 rig reactivations announced this year. So that's new <unk>, new supply coming into the market and there's a few small handful left <unk>.

Richard Barker: Current backlog includes approximately 1.8 billion that is scheduled for revenue conversion in 2024. It is important to note that our backlog includes reimbursement revenue as well as revenue from ancillary services. Last month we celebrated the one year anniversary of our business combination with Merst drilling and integration activities continue to progress extremely well. Our synergy realization is ahead of plan. Within one year of closing, we have realized run rate synergies of approximately 100 million which represents 80% of the 125 million target.

<unk> that we anticipate would come into the market just broadly across the industry continue to come into the market is 324 and 25.

All companies have as I mentioned in this kind of briefly but but but they have been selectively pushing some of the programs to the right.

Richard Barker: This is well ahead of what we communicated upon the transaction announcement and in the testament to how the two legacy companies have come together to create values for both our shareholders and customers. Referring to page nine of the earnings slides, we are adjusting our full year 2023 guidance for revenue adjusted EBITDA. For total revenue, we now expect a range of 2.5 to 2.6 billion versus the prior range of 2.35 to 2.55 billion.

And I think some of that is in a couple of instances, it's I think Ben to avoid headline rate, perhaps and but I think more broadly. It's it's trying to pull together programs as I mentioned earlier to to to to get some term to tender for some term I think it's part of once.

Richard Barker: And for adjusted EBITDA, our expected range is 775 million to 825 million which is the top half of the prior range and about a 3% increase in the midst. Point. These improvements in guidance ranges are due to my strong results year-to-date with revenue also benefiting from higher than expected reimbursable revenue. Full year guidance for capital expenditures remains unchanged at a range between 325 and 365 million, excluding customer reimbursable capital. The reference reimbursable capital has total 13 million through the first nine months.

Creating this air pocket it takes a little longer to pull together multiple wells in just one or two wells and go to tender on all of it I don't.

I I I don't know whether.

<unk> I'm not calling for the last upcycle level of urgency in the near term I see this as a relatively balanced market with with upward movement on day rates as we move through next year and into 2025.

That's great Robert Thanks, I appreciate that.

And your next question comes from gradually Gregory Louise E. T. I G. Your line is open.

Thanks, and good morning, everybody and thanks for taking my questions.

<unk> Hey.

Richard Barker: Notwithstanding the enhanced full year expectation for adjusted EBIGAR, the upwardly revised range still implies a sequentially lower fourth quarter compared to the third quarter. This is consistent with our prior directional view and primarily reflects greater anticipated downtime for various rigs in the fourth quarter. The primary drivers include the Noble Fakos Max, which has recently finished a contract in the Gulf of Mexico, and is preparing for its next contract in Brazil that is expected to start in March.

Hey, Robert you know realize the the the inks not even drawing in a lot still has to happen before.

You know Chevron can can can buy has but you know just given you know has this position in Guiana with them with Exxon.

You have any kind of broad thoughts on on what that does it or does that change anything or accelerated anything just kind of as you think about you know that that change you know a partner <unk>.

Richard Barker: The Noble developer, which finished its work scope in Brazil in late September, and the Noble Voyager, which is about to finish its covered work scope in Mauritania. Looking beyond 2023 at a high level, we continue to expect a nice step up and adjusted EBIGAR and free cash flow in 2024 versus 2023, and also envision a higher weight in the 2024 EBIGAR in the second half of next year compared to the first half.

Kind of curious if you have any thoughts around that.

Sure I mean, I think I'll have the most interesting answers are you obviously have to come from from <unk> and has but <unk> from our view.

We we feel we had an excellent relationship with with <unk>, we have regular contact there and and.

So we hope that that translates over and we would hope to continue that.

Richard Barker: As previously discussed, 2024 will be the peak year of 10 year SPF is a major project across athlete, and as such, we continue to expect a moderate increase in CAPEX next year compared to this year. Additionally, we continue to see persisting inflationary trends across our cost structure that are very consistent with the type of industry upcycle that would come on the experiencing. Therefore, we do expect something in the range of mid-single digit type of percentage inflation rates on average from 2023 into 2024 across our cost structure.

Uhm it looking a little bit outside of that we we of course talk a lot about down and it's very important to us and we've put a whole lot of focus on that operation and I think the results very much speak for themselves. There's there's data that demonstrates our our efficiency there and and we think we've got.

But it's really really great performance from the rigs down there so hopefully.

<unk> the the Chevron as as the new owner of that will will see our performance and that's a customer that you know we haven't done as much work for so I see it as a potential opportunity someone who will get Ah Ah Ah firsthand look into into a into what we're doing.

Richard Barker: Finally, I would like to provide a comment on cash flow. As a past few quarters have shown, the quarterly variability of working capital can create some short-term swings in free cash flow. During the third quarter, we generated 40 million of free cash flow despite over a 100 million building working capital. While some of this is a function of a growing top line, we do expect the portion of this bill to reverse in Q4.

Okay, Okay, great and then well congratulations on getting that bowl phone work on the Globetrotter Riggs yeah, but it was it was a good update to say [laughter], but you know it's kind of we look out in 24, and and and really all signs point to you know.

Richard Barker: As Robert stated, we remain committed to returning the significant majority of free cash flow to shareholder's overtime by a sharey purchases and dividends. We continue to believe that maintaining a conservative through-cycle balance sheet in support of a high free cash flow payout is the appropriate capital allocation formula for our business, and therefore, you can expect noble to abide by this framework going forward.

Pick up an acceleration, but maybe some of the work that's kind of being out there doesn't start up until mid 24, any kind of any kind of rough way to think about or maybe a handicap as as as we see some <unk> rigs roelof contract over the next one two quarters.

Any kind of rough way to think about you know idle time in between contracts I'm kind of curious if you have any thoughts around the.

Richard Barker: That concludes my remarks, and now I'd like to pass the call back to Robert for closing comments. Thanks, Richard.

Yeah. Thanks, Greg its its Blake so maybe the best way would be to to walk through a couple of the rollovers and so if I if I start with the the floaters and you look at the the rigs that have options. The the same with force here in the Gulf of Mexico working for Murphy, we feel good about the prospect of continuing to serve serve their drilling needs.

Robert Eifler: Before we move to Q&A, I'd like to close here with a couple important highlights. First, an exciting new technology that we're developing. In second, a few reflections on the one your anniversary of our merger.

Robert Eifler: On the technology side, I'm very excited to highlight Horizon 56, the software platform that we've developed to promote the digitalization of well-planting and execution. The benefits of digitalizing work streams and closing the gap between our customers' well-programs and our drilling crews are far reaching, impacting safety, drilling speed, management of change, elevation of lessons learned, and overall risk management. We believe the digitalization enhancements provided by Horizon 56 can ultimately drive drilling efficiency gains which obviously translates into very significant value uplift for customers, including but not limited to well cost and emission factors.

<unk> not expecting an interruption in service there Jerry D'souza is a similar story there for a total energies in at Nigeria don't Wanna Opine on on what their decision will be around that option, but the election is this quarter. We know they have work there and and we believe we're performing well form so we we'd like our.

We'd like the prospect there as well.

So then when you look you look out toward the Voyager and the Valeant no. Please to announce the contract we got with a log on the Voyager that'll start round about the the turn of the year and then there's the options on the back into that that if exercise would take it through the end of the year. So so feeling pretty good about the Voyager alright, sorry, <unk> feeling pretty good about the value.

Robert Eifler: Overall, we feel fortunate to have this very talented Horizon 56 team at Nobl, a group that came to us by way of the mayor's drilling combination as one of the many outstanding aspects of mayor's human capital and technology suite. We talked frequently about the new industry landscape in which we aspire to be, as we say, first choice offshore.

The the Voyager is available for 2024 is wrapping up a program right now mobilising back to the Americas and I guess, we would expect with the ongoing dialogue. Some some work that would pick up in the first quarter of next year.

The other thing to think about one where when we're looking at that rate classes, there's roughly 30% of the forecasted you D. W. A demand next year that still remains to be contracted so there's some awards we think is Robert.

Robert Eifler: That ambition can only be realized with two major prerequisites which are inexorably linked, A, scale, and B, a culture of tireless innovation and service posture, both of which we have very purposefully promoted as part of the industrial logic behind our strategic actions of the past few years. Accordingly, we remain keen to invest in and focus on areas like Horizon 56, where Nobl can drive incremental value for our customers.

No.

Outlaid in his prepared remarks, some awards, we expect in the fourth quarter that will provide some more visibility.

And we also when we yeah.

Yeah. The the only last point I'd say and it's right again on the back of Roberts prepared comments on the Globetrotters and the D. Riggs.

Robert Eifler: Finally, a brief reflection on the state of the company as we approach 2024. Nobl recently celebrated the one year anniversary of our business combination with mayor's drilling, and we could not have asked for a better integration effort than we've seen so far. Within the first six months of close, we achieved operational stability in a true culture of one Nobl that proves critical to our first year success, all while exceeding synergy targets and consistently executing for our customers.

Robert Eifler: Year-to-date, our operational uptime of 97 percent has been outstanding, especially for year-one of an integration of this scale. And ultimately, I believe the company's third quarter results are a very clear demonstration of the power of this combination.

Robert Eifler: So I would just like to conclude here with a special offering of gratitude and congratulations to our fantastic employees around the world for your tremendous efforts and for the great results that you're producing on behalf of Nobl. We're off to a great start together and the best is yet to come.

Bailey: With that, we'll pause here and open up the call for Q&A. At this time, I would like to remind everyone in order to ask a question, press star in the number one on your telephone keypad. Please limit your question to one initial and one follow-up question.

Eddie Kim: And your first question comes from the line that Eddie can with Bargley's. Your line is open. Hi, good morning.

Robert Eifler: My first question is just on what feels like a pause in contracting activity over the past two to three months, at least compared to what we were seeing through July or August this year, just in terms of a number of contracts and multi-year durations we were seeing. Should we view this as really more of a temporary pause? It seems like based on your prepared remarks, it feels like we should. And when do you expect we'll see multi-year contract announcements start to pick up again.

Robert Eifler: Yeah, thanks, Eddie. Yeah, so it is very much a temporary phenomenon. If you look back through time at just contract awards per quarter, this is not unusual at all. I think it's gained, you know, it's had a lot of attention, understandably, but they have been flowed. As we mentioned in the remarks, the second half of the year, you know, sometimes traditionally, I guess, is a little lower volume than the first half of the year.

Robert Eifler: And I think that's related just to normal budget cycles for our customers. You're going to see, you're going to see the working rig count increase next year. And we believe that you're going to see duration increase as well to your question. I think one of the potential drivers for this current pause is that certain operators, not all, but certain of the operators, some of whom are some of the bigger players have been regrouping and connecting some of their programs together, so that rather than going out to tender for one or two wells, which has been the norm for the last couple of years, they're pooling those together and probably going out to tender for some longer duration type contracts. So no hard evidence to that yet. That's our belief. And I think that's what you're, you're going to see as we move into 2024.

And for our audience. Please standby our speakers are dialing back in thank you so much.

Yeah.

Eddie Kim: Okay, got a great to hear and thanks for that color.

Eddie Kim: Just my follow-up is on the comments around cost inflation next year. I believe you said we should expect kind of a mid to high single digits level of cost inflation. Could you just expand upon that a little bit more in what areas do you expect cost inflation to be highest next year? Is a labor spare parts and equipment and the cost of SPS is just any additional color here would be great.

Hello.

Yes. Thank you.

Okay.

And your next question comes from Pele Bilbo with Clarksons Securities. Your line is open.

Hey, guys. Thank you for taking my my question here and congratulations on a solid quarter I guess most of my questions have been answered already so unless with the final one on my list here and I. Appreciate that you did touch upon this during the prepared remarks as well that my question relates to the North sea market and the particular the harsher.

Eddie Kim: Sure, Eddie. Yeah, what we said mid single digit type inflation next year is our expectation as we see it here today. And obviously that's an average, right? And so as you know, you know, some elements of the cost structure are going to be higher than others. You know, I would say on the labor side, you know, go for Mexico, obviously, you can see. It's very, very regional, very regional dependent as well.

Eddie Kim: So, you know, it's hard to give maybe more, more specificities than that, but, but I think on average, I would think about it as a kind of mid single digit type level next year. Okay, understood. Thank you very much for the comments.

I'm a jackup fleet.

I guess, we touched upon this a topic every single time, we have missed calls, but it would be really great. If you could give some more color on what opportunities you see going forward for the region.

At least on our part where we're sitting here in Norway, We we see some signs with with emphasis on some increasing activity in 'twenty four and some more in 'twenty five.

And additional color on the Orand would be would be really great.

Yeah. Thanks for the question I guess I'll jump right on the back of your last statement in that we do see some signs.

Eddie Kim: I'll turn it back. Thanks, Eddie.

Kurt Hallead: Your next question comes from the line of Kurt Hellhead from benchmark. Your line is open. Hey, hey, good morning, everybody. Appreciate, appreciate the color. So, you know, they're. It's in the context of, you know, the progression on, on headline day rate and then the fact that we haven't quite yet reached the 500k per day mark. Okay, thank you. I want to get your perspective. How important is day rate versus total contract value, right?

Signs of increased activity increased dialogue I think most of those for Norway are more 'twenty twenty-five related in 2024.

I mean, we do believe the the next demand goes to us the C. J seventies are the most well suited to compete in the competition zone. There in Norway. There's also the potential upside of incremental production that can come from infill drilling. If there was any sort of gas shortage, whether is that a regional event or a global event. So there's a little bit of ups.

Syed a I don't think there's firm demand yet to to declared 2025 is.

Kurt Hallead: Because at the end of the day, the day rate is making up is no longer a hundred percent of the contract value because there's a lot of upfront costs that are being paid to mow fees and so on and so forth, right? So it seems like investors are just so intently focused on the headline day rate that they're missing the bigger picture that the total cash value of these contracts are going up.

You know, it's going to explode there in Norway, if from a demand perspective, but but the dialogue is encouraging in a non Norway space.

Kurt Hallead: So just want to get a picture perspective on that and see if it really is important for you guys about the day rate or is it more important for you to maximize the cash value of the contract?

A little bit more positive in terms of the the nature of the conversations with our having customers that we're having with our customers there.

<unk> of course, we've got the intrepid.

It'll be locked up all of next year. So the capacity is really limited for 2024 to the the interceptor now and wed like to the capability of the rig if that demand comes to pass or if unexpected demand comes to market.

Robert Eifler: It's a good question and your spot on that there seems to have been an almost myopic focus on the 500 number here recently and understandably it's a visible threshold. We're headed there, we've said that before, you know, timings maybe a little bit behind, but to your point, there's a couple of other things that go on. One, between contract, contribution, and efficiency, does matter, some mobilizations, et cetera matter, I would say we're probably somewhere mid cycleish on that component.

Yeah, Great I think that's basically asked my questions here I think you guys predict Nicole and have a great day.

Thank you.

Your next question comes from David Smith, with Pickering Energy Partners. Your line is open.

Hey, Thank Sir can you hear me okay.

Yeah, we can hear you sorry, there were some technical issues there.

Good deal.

Kudos on the quarter.

Especially the dividend increase as just a great leadership on the shareholder return front.

I.

I did want to revisit.

Wanted to revisit your comments about the sidelined.

Ultra deepwater capacity you referenced the number of rigs added over the past year or whether reactivation of a previously signed a newbuild and we came it can make a very solid returns.

Robert Eifler: So you're seeing obviously mobs and demobes were a ways away from kind of full, full revenue type mobs in demobes at this stage in the cycle, and that's a point that we reached last cycles you'll remember. But also just within contract drilling margins, there is a variation between contracts regions, types of rigs, et cetera. And so we're very much focused on on maximizing our margins and our cash flow, and I think we've got some places where we're very proud to have what we think is a good combination right now and is one of the things that's that's driving our cash flow right now.

With with <unk>.

Term duration as rates.

Rates below leading edge, but I wanted to ask your thoughts about the remaining tideline capacity, maybe how many high spec Drillships you think might still be brought out at rates in that below 400.

Yeah, I mean, I think look there's there's a there's a small handful. It's it's four to six that kind of range.

From there you start to you start to have.

<unk>.

I think.

Some some concessions on marketability.

And you start to get into who is all siding scale here, but you start to get in our opinion, a little bit closer to sixth generation territory.

Kurt Hallead: Appreciate that color now you guys reference you know the prospect of seeing you know increased duration and obviously one of your competitors yesterday indicated that they've been seeing the same dynamic. So maybe give us some perspective on you know as you look out in potential contract awards that will come forth in 2024. Or you know what sort of duration are we talking about and relative to what we've seen so far like are we seeing now a greater propensity of three to five year term or we've seen a greater propensity of you know two year terms.

Where the rigs might be missing one of the critical components defining a seventh generation in certain instances of course.

We don't really know not many of them or most of them are not our rigs but if.

Could could perhaps have some higher reactivation costs.

From from their stacking status et cetera.

Okay.

Kurt Hallead: It's the latter but I think what you're going to see that if I recall if I'm citing this correctly if you if you exclude the patch of brass contracts the average contracted UDW term is like 11 or 12 months right now. And so we would anticipate that that statistic would go up fairly dramatically next year because we think as I mentioned that there are a few companies that are moving away from one and two well contracts and into you know one to three year contracts which kind of would kind of covers your two year example.

We were kind of coming up with with fiber age so really happy to hear your answer.

Thank you chip.

A little bit of a housekeeping question I think you're still managing the former Lloyd noble.

Just wanted to ask us if so.

Maybe how much that contributed to Q3 constant really how much longer you expect noble to manage that rig.

Yeah, Dave too. So I think that was part of that of the B from a top line perspective and in in Q3.

So so we are continuing to you to manage.

The CJ 70 in a in North sea.

Our expectation is that that will continue through kind of mid part of this quarter.

But you're right as well if you if you strip that out I think from a cost perspective, I think it was a very nice beat in Q3 and I also think.

As you look at the operational performance in Q3, and the uptime at being that that was obviously, a big big component of the beat as well.

Kurt Hallead: Okay, great. So is the, just an extension of that question, right? So we're seeing, you know, all kinds of information that's suggesting that the man for, you know, seven gen ultra deepwater drill ships are going to feed, exceed supply, you know, 24 and 25 and prior cycle periods that's tended to, you know, cause some angst among the oil companies about, hey, am I going to get what I need when I need it?

Good deal I appreciate that if I can get greedy and sneak one more and I recognize your ear cinryze arent, our parks environment, but they're certainly very high spec.

Wanted to ask if there's any reason they wouldn't be competitive for some of the regions we've seen.

Norwegian semi is pulled too right outside of the North sea specifically in Namibia.

Kurt Hallead: And therefore, I need to basically reach further into the future and book it for a longer period of time. Based on your commentary, there's some movement toward that, but it doesn't seem like it's to the same extent. So, what, why are, why are oil companies not willing to maybe book three years versus two years? What's this thing? Just again, I know it's a theoretical question, but I just want to get the bench from you guys on what kind of pushback or what kind of color you're getting in your conversations with the oil company.

Can't look those are some of the most capable semis in the world as you said, they're not harsh environment. So they're not trying to go to the extreme cold weather environments.

But in regions, where they can.

Aware of semi is preferred generally they.

They compete they compete very well.

They can get.

And I guess I would offer they they're generally.

Kurt Hallead: Sure, yeah, I mean, you know, my view is that the market is pretty well balanced right now and that it will continue to be pretty well balanced, going forward. We've had eight or 10 re-reactivations announced this year, so that's new, good new supply coming into the market. And there's a few, you know, small handful left, including our melt them that we anticipate would come into the market just broadly across the industry, continue to come into the market through 24 and 25.

Because their moored and DP they can compete down into relatively shallower waters.

Semis many semis.

Our.

Compete a little bit less favorably in the deeper water you get because upwards and in 10000 foot kind of range.

You start to have some some weight limitation center that are.

Specific to semi submersibles and less so to drill ships. So like you know like we said before those rigs when they're operating in their specific niches.

Kurt Hallead: Oil companies have, and I mentioned this kind of briefly, but they have been selectively pushing some of the programs to the right. And I think some of that is in a couple of instances, it's I think been to avoid headline rate perhaps. But I think more broadly, it's trying to pull together programs, as I mentioned earlier, to get some term to tender for some term. I think it's part of what's creating this air pocket takes a little longer to pull together multiple wells and just one or two wells and go to tender on all of it.

Are going to compete very much on our seventh generation level.

And when up against on.

Alternative in a drillship or for whatever other reason they may have.

Some concession on on their operation.

They're going to compete more like a sixth generation rig.

Perfect. Thank you so much.

Thank you.

And there are no further questions at this time, Ian Macpherson I will turn the call back over to you for closing remarks.

Kurt Hallead: I don't know whether, you know, I'm not calling for the last up cycle level of urgency in the near term. I see this as a relatively balanced market with upward movement on day rates as we move through next year and into 2025. That's great.

Thank you everyone for sticking with us through the technical difficulty there and thanks for dialing in today, we look forward to speaking with you again next quarter have a great day.

And this concludes today's conference you may now disconnect.

[music].

Robert Eifler: Robert, thanks. Appreciate that.

Gregory Lewis: And your next question comes from Gregory Lewis with BTIG. Your line is open. Hey, thanks and good morning everybody. Thanks for taking my questions. Hey, Robert, you know, realize the the inks not even dry in a lot still has happened before, you know, you know, Chevron can buy has. But, you know, just given, you know, has his position in Guiana with with axon, you know, do you have any kind of broad thoughts on what that does or does that change anything or accelerate anything? Just kind of as you think about, you know, that that changing of a partner. I'm kind of curious if you any thoughts around that.

Robert Eifler: Sure. I mean, I think all of the most interesting answers are obviously have to come from Chevron and Hess. But from our view, we feel we had an excellent relationship with Hess. We have regular contact there. And so we hope that that translates over and would hope to continue that. Looking a little bit outside of that, we of course talk a lot about Ghana. It's very important to us. And we've put a whole lot of focus on that operation.

Robert Eifler: And I think the results very much speak for themselves. There's data that demonstrates our efficiency there. And we think we've got really, really great performance from the rigs down there. So hopefully the Chevron is a new owner of that. We'll see our performance. And that's a customer that we haven't done as much work for. So I see it as a potential opportunity. Someone who will get a first hand look into what we're doing.

Gregory Lewis: Okay. Great. And then congratulations on getting that bolt on work on the globe, try to rig. It was a good update to say. But it's kind of we look out in 24 and really all signs point to, you know, it definitely pick up an acceleration. But maybe some of the work that's kind of being out there doesn't start up until mid 24. Any kind of rough way to think about or maybe handicap as we see some rigs roll off contract over the next one, two quarters.

Gregory Lewis: Any kind of rough way to think about, you know, idle time in between contracts. Kind of curious if you any thoughts around that. Yeah. Thanks, Greg. It's Blake. So maybe the best way would be to walk through a couple of the roll overs. And so if I, if I start with the, the floaters and you look at the rigs that have options, the stainless floss here in the Gulf of Mexico, working for Murphy, we feel good about the prospect of continuing to serve their drilling needs.

Gregory Lewis: So not expecting an interruption and service there. Jerry D'Souza is a similar story there for total energies in Nigeria. Don't want to opine on what their decision will be around that option. But the election is this quarter. We know they have work there and we believe we're performing well form. So we like our, we like the prospect there as well. So then when you look, you look out toward the Voyager and the valiant, you know, please to announce the contract we got with Elog on the Voyager that will start round about the turn of the year.

Gregory Lewis: And then there's options on the back end of that that effector size would take it through the end of the year. So feeling pretty good about the Voyager. Sorry, feeling pretty good about the valiant. The Voyager is available for 2024. It's wrapping up a program right now, mobilizing back to the Americas. And I guess we would expect with the ongoing dialogue, some work that would pick up in the first quarter of next year.

Gregory Lewis: The other thing to think about when we're, when we're looking at debt read classes, there's roughly 30% of the forecasted UDW demand next year that still remains to be contracted. So there's some awards we think as Robert, you know, outlaid in his prepared remarks, some awards we expect in the fourth quarter that will provide some more visibility. The last point I would say, and it's right again on the back of Robert's prepared comments on the Globetrotters and the D rigs.

Blake Denton: You You Yes, thank you.

Robert Eifler: And your next question comes from Paley Bilbo with Clarkson Securities. Your line is open. Hi guys. Thank you for taking my question here and congratulations on a still a quarter. I guess most of my questions have been answered already, so I'm less with the final one on my this year. And I appreciate that you did touch upon this during the prepared remarks as well. That my question relates to the North Sea market and the particular, the harsh environment, jack up fleet.

Robert Eifler: I guess we touch upon this topic every single time we have missed calls, but it would be really great if you could give some more color on what opportunities you see going forward for the region. At least our part where we're sitting here in Norway, we see some signs with emphasis on some of increasing activity in 24 and some more in 25, but an additional color on your end would be really great.

Robert Eifler: Thanks for the question. I guess I'll jump right on the back of your last statement and that we do see some signs of increased activity, increased dialogue. I think most of those for Norway are more 2025 related than 2024. We do believe the next demand goes to us, the CJ 70s are the most well suited to competing the competition zone there in Norway. There's also the potential upside of incremental production that could come from infill drilling if there was any sort of gas shortage, whether that's a regional event or a global event.

Robert Eifler: There's a little bit of upside. I don't think there's firm demand yet to declare 2025 is, you know, it's going to explode there in Norway from a demand perspective, but the dialogue is encouraging in the non Norway space, a little bit more positive in terms of the nature of the conversations with our having customers that we're having with our customers there. And of course, we've got the intrepid that'll be locked up all of next year. So the capacity is really limited for 2024 to the interceptor now. And we like the capability of the rig if that demand comes to pass or if unexpected demand comes to the market.

Robert Eifler: Great.

Robert Eifler: I think that's basically answering my questions here. Thank you guys for taking the call and another great day.

David Smith: Thank you.

David Smith: Your next question comes from David Smith with Pickering Energy Partners. Your line is open. Hey, thanks. Can you hear me? Okay. Yeah, we can hear you. Sorry, there was some technical issues there. Good deal. Kudos on the quarter. And especially the dividend increase. It's just a great leadership on the shareholder return front. I didn't want to revisit. I wanted to read that you're your comments about the sideline ultra-duborder capacity. You referenced a number of very excited over the past year, whether reactivations are previously stranded in a build.

David Smith: And we've seen they can make a very solid return with term duration at rage below lead and edge. But I wanted to ask your thoughts about the remaining sidelines capacity. Maybe how many. Yeah, I expect dealerships you think might still be brought out at rates in the below 400. I mean, I think there's a small handful. It's four to six, that kind of range.

Robert Eifler: From there, you start to have, I think, some concessions on marketability, and you start to get into, is all a fighting scale here, but you start to get, in our opinion, a little bit closer to six-generation territory, where the rigs might be missing one of the critical components defining a seven-generation, and certain instances, of course, we don't really know, not many of them are most of them, are not our rigs, but, you know, could perhaps have some higher reactivation costs from their stacking status, etc. We were kind of coming up with five rigs, so really happy to hear your answer.

David Smith: Just a little bit of a housekeeping question, I think you're still managing, the former Lloyd Noble, and just wanted to ask if so, maybe how much that contributed to Q3 costs, and really how much longer do you expect Nobl to manage that rig? Yeah, Dave, so I think that was part of the beat for the top-line perspective in Q3, so we are continuing to manage the CJ70 in North Sea. I think our expectation is that that will continue through kind of mid-part of this quarter, but you write as well.

David Smith: If you strip that out, I think from a cost perspective, I think it was a very nice beat in Q3, and I also think as you look at the operational performance in Q3 and in the uptime, I think that that was obviously a big, big component of the beat as well. Good deal. I appreciate that. If I can get greedy and sneak one more in, I recognize your surveys aren't a harsh environment, but they're certainly very high spec.

David Smith: I wanted to ask if there's any reason they wouldn't be competitive for some of the regions we've seen, the Norwegian semi-it's pulled to right outside of the North Sea, specifically in Namibia. Look, those are some of the most capable semi-as-in-the-world as you said, they're not harsh environments, so they're not going to go to the extreme cold weather environments, but in regions where they can, where a semi-as-prefered generally, they compete, they compete very well.

David Smith: They can get, you know, I guess I would offer they're generally because they're more to NDP, they can compete down into relatively shallower waters, semi-as-many semi-as-are compete a little bit less favorably in the deeper water you get, because upwards in 10,000 foot kind of range, you start to have some weight limitations that are specific to semi-submersibles and less so to drill ships. So, look, like we've said before, those rigs, when they're operating in their specific niches, are going to compete very much on a seventh-generation level, and when up against an alternative in a drill ship, or for whatever other reason, they may have some concession on their operation, they're going to compete more like a section. Thank you so much. Thank you. And there are no further questions at this time.

Ian Macpherson: Ian MacPherson, I will turn the call back over to you for closing remarks. Thank you everyone for speaking with us through the technical difficulty there. And thanks for dialing in today. We look forward to speaking with you again next quarter. Have a great day. This concludes today's conference.

Ian Macpherson: You may now disconnect, you