Q2 2023 Transocean Ltd Earnings Call
Speaker 1: You
Speaker 2: To all sites on hold, we do appreciate your patience and ask that you please continue to stand by.
Speaker 3: Please stand by. Your program is about to begin.
Speaker 3: Good day everyone and welcome to today's Q2 2023 Transocean Earnings Call. At this time all participants are in a listen-only mode.
Speaker 3: Later, you'll have the opportunity to ask questions during the question and answer session.
Speaker 3: You may register to ask a question at any time by pressing star one on your touch-tone phone.
Speaker 3: Please note this call may be recorded. It is now my pleasure to turn today's program over to Allison Johnson, Director of Investor Relations. Please go ahead.
Speaker 4: Thank you, Corliss. Good morning and welcome to Transocean's second quarter 2023 earnings conference call. A copy of our press release covering financial results resulting along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures are posted on our website at Deepwater.com.
Speaker 4: Joining me on this morning's call are Jeremy Sigpen, Chief Executive Officer, Mark May, Executive Vice President and Chief Financial Officer, and Roddy McKenzie, Executive Vice President and Chief Commercial Officer. During the course of this call, Transocean Management may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts.
Speaker 4: Such statements are based upon current expectations and certain assumptions and, therefore, are subject to certain risks and uncertainties.
Speaker 4: Many factors could cause actual results to differ materially. Please refer to our SEC filings for our forward-looking statements and for more information regarding certain risks and uncertainties that could impact our future results.
Speaker 4: Also, please note that the company undertakes no duty to update or revise for looking statements.
Speaker 4: Following Jeremy and Mark's prepared comments, we will conduct a question and answer session with our team. During this time, to give more participants an opportunity to speak, please limit yourself to one initial question and one follow-up. Thank you very much. I will now turn the call over to Jeremy.
Speaker 5: Thank you, Allison, and welcome to our employees, customers, investors, and analysts participating on today's call. As you saw in our latest Fleet Staffs Report, over the past several months we added $1.2 billion of backlog for a total backlog of $9.2 billion as of July 19th. This is the fifth consecutive quarter during which we have added more backlog than we consumed.
Speaker 5: Importantly, our ultra-deepwater fleet average day rate increased significantly over the same time period.
Speaker 5: Per our fleet status reports, in the second quarter of 2023, our average day rate was approximately $363,000 per day versus $312,000 per day in the second quarter of 2022. And, based on existing backlog, by the second quarter of 2024, we expect it to approximate $433,000 per day.
Speaker 5: Needless to say, it's been an exciting start to the year. Not only have we increased average day rates for our ultra-deep water fleet, we've also experienced a rapid tightening of the high-specification, harsh-environment, semi-submersible market.
Speaker 5: As recently confirmed by Westwood Global Energy Group, this asset class is now effectively sold out with committed utilization at 100% for the first time since 2014.
Speaker 5: We first highlighted the emergence of new harsh environment regions on our third quarter 2022 earnings call. At that time we predicted that the exodus of high-specification semi-submersibles from Norway would leave the Norwegian market undersupplied in 2024.
Speaker 5: Even so, we underestimated the speed and magnitude of this migration.
Speaker 5: Since then, three of our rigs, the Transocean Barents, the Transocean Equinox, and the Transocean Endurance, have moved or are preparing to move to new markets including Australia and Lebanon.
Speaker 5: And we see more movement on the horizon as opportunities for these assets continue to develop, deepening our conviction that this market will remain tight for the foreseeable future.
Speaker 5: Compounding these supply constraints, expected demand for the Norwegian market may be nearly 20 rigs by 2025. If this work materializes, Norway will be significantly short of supply as only 12 high-specification harsh environment semi-submersibles are anticipated to remain in-country through this period.
Speaker 5: As a natural consequence, day rates for harsh environment semi-submersibles have meaningfully increased since the beginning of the year and are now rapidly approaching $500,000 per day for firm work, with certain price options already above this threshold.
Speaker 5: With that context, I'll now transition to our recent fixtures, many of which contributed to this rapid improvement in the harsh environment market.
Speaker 5: The customer subsequently exercised the first option well for work in the East Mediterranean Sea at a rate of $370,000 per day, extending the firm duration to an estimated 167 days. There are two additional options remaining at rates between $350,000 per day and $390,000 per day, depending upon the location in which the work takes place. In Australia, the Transocean Equinox was awarded a five-well contract by a major operator at a rate of $455,000 per day, excluding mobilization and demobilization.
Speaker 5: The contract is expected to start in the first quarter of 2024 and provides for one option well at the end of the firm turn. The Equinox was also awarded a 16-well contract in Australia at a rate of $485,000 per day, excluding mobilisation and demobilisation.
Speaker 5: which is expected to commence in direct continuation of the RIG's initial contract in Australia.
Speaker 5: The new contract provides for 21 one-well options at rates between $485,000 per day and $540,000 per day.
Speaker 5: As a reminder, the equinox is the second of our CAT-D semi-submersibles that will begin operating in Australia in the first quarter of 2024.
Speaker 5: As we announce in late March, the Trans-Ocean Endurance will start in January at a rate of $380,000 per day. The Trans-Ocean Endurance will start in January at a rate of $380,000 per day.
Speaker 5: I'd like to pause and take this opportunity to highlight that in just three months, Transotion was able to increase rates for harsh environment semi submersibles in Australia by over $100,000 per day, along with a materially increase in duration.
Speaker 5: In Norway, Wintershall DEA exercised a one well option on the Transocean Norga at a rate of $365,000 per day and three one well options at a rate of $420,000 per day.
Speaker 5: This work eliminates the majority of previously anticipated idle time during the contract period. And as we indicated in our fleet status report, the customer has agreed to pay a reduced day rate for any remaining idle time on the rig. Also in Norway, six one-well options were exercised on the Transocean and Courage at a rate of $464,000 per day.
The added duration extends the firm term an additional 370 days to February 2026.
As for our Ultra Deepwater rigs, following the release of our latest fleet status report, an operator in the U.S. Gulf of Mexico awarded the Deepwater Invictus an estimated 20-day P&A well at a rate of $440,000 per day. The well will commence a direct continuation of the rig's current program.
And finally, in the Mexican Gulf of Mexico, an independent operator awarded a 1080 day contract for one of three of our high specification, seventh generation, ultra-devoid drill ships, at a rate of $480,000 per day.
We will select the rig from among the Deepwater Invictus, Deepwater Colossa, and Deepwater Proteus.
The contract, which does not include any additional services, is expected to commence between the fourth quarter of 2025 and the second quarter of 2026, and provides us with considerable flexibility to optimize our asset portfolio as we maintain the ability to designate the RIG up to one year prior to the commencement window.
Additionally, the contract includes a semiannual cost adjustment mechanism that provides margin protection from cost inflation. This picture also highlights a trend we observed in our discussions over the past several months, more customers expressing strong interest in securing rigs for longer-term projects starting further in the future.
This interest is now progressing into action as multiple operators intend to commit to multi-year projects starting, as illustrated by our recent award in Mexico, as late as 2026. We believe this signals our customers' recognition of the scarcity of capable high-specification assets and clearly demonstrates their strength and commitment to offshore projects.
Further validating that we are in an upcycle that would be of significant longevity.
Contract durations are linked materially. In fact, year-to-date 2023, the average contract length of a drill ship award has increased to 495 days versus 310 days in 2022, representing a year-over-year increase of nearly 60%.
Additionally, the average duration of semi-submersible fixtures increased approximately 18% over the same time period and nearly 150% from 2020. Nearly 15,000 drill ship days have been awarded in 2023 to date, a 134% increase when compared to the same period in 2022. Similarly, nearly 8,500 harsh environment semi-submersible days have been awarded this year.
a 72% increase when compared to the same period last year. Globally, we see approximately 81 rig years of work to be awarded across 80 floater programs, suggesting an average duration per program of approximately one year.
This is up from just between 7 and 8 months, just 18 months ago.
Of note, more than a quarter of these programs are designated for exploration and appraisal wells.
Although our contracting strategy may necessitate short periods of inactivity on key rigs as we maximize our long-term EBITDA on margins,
We expect the rig market will remain tight, particularly for the highest specification, ultra-deep water drillships, and harsh environment semi-submersibles.
According to Wood-McKinsey analysis and as recently echoed by Schlumberger, approximately 85% of the nearly $500 billion of investment in oil and gas between 2022 and 2025 generate favorable returns at oil prices below $50 per barrel.
Of this, approximately $200 billion is expected to be invested in deepwater projects.
As you well know, commodity prices have remained comfortably above the $50 per barrel level for more than two years and remained stable in the mid-70 to mid-80 dollar per barrel range.
As the majority of offshore breakevens are significantly below this threshold, and many are below $50 per barrel, we expect our customers' programs to receive approvals to move ahead.
As further evidence of market strength, a number of operators are evaluating and increasingly pursuing long-term rig contracts that are not yet tied to specific projects or may not yet have the approval of all project partners.
We have not seen this type of market behavior in some time, and it is perhaps one of the more exciting and encouraging market developments to date.
Since we've already discussed the various harsh environment markets, let's take a closer look at each ultra-deepwater region.
In the U.S. Gulf of Mexico, direct negotiations continue to be the preferred contracting strategy for our customers.
Many of the conversations we are having involve multi-year opportunities, in some cases up to five years.
These include programs in fields that require 20,000 PSI completions, a capability that only the Deepwater Titan and Deepwater Atlas currently possess.
With the Titan contracted through the first quarter of 2028, the Atlas will be the only rig available with this capability following the completion of its current contract in August 2024.
In Brazil, the petrobreast pulled two tenders in its final stages, with petrobreasts recently announcing the winning bids, including the deepwater keeler.
We expect the full award to be finalized by the end of August .
Additionally, the much anticipated petrobrath buzios tender is well underway.
The two tenders combined could absorb up to seven rigs in the next 15 months, three of which we believe would need to come from outside the region.
The momentum in the region is expected to continue as just last week, Petrobras issued another tender for up to three rigs with the commencement of mid-2025.
Additionally, Equinor has issued a request for information for its BMC-33 block offshore Brazil for approximately two years starting the second or third quarter of 2026.
In West Africa and the Mediterranean Sea, there are numerous multi-year opportunities expected to commence within the next 18 months.
Several operators seek rigs for projects that could be greater than five years in duration.
We also see multi-year opportunities spread across the region including Shell Nigeria, Azul Energy's two-year tender in Angola, and OMB's tender in the Romanian Black Sea.
And finally, in India, ONGC's tender is nearing completion and we believe an award for one rig for up to 21 months is imminent.
We also expect to see demand for one or two additional rigs in the next 12 months.
Taking a closer look at our fleet. During the second quarter, the Deepwater Titan started its first contract with Chevron on the Anchor Project in the U.S. Gulf of Mexico.
And just last week the Titan's 20K BOP was deployed using a third installed robotic riser system in our fleet, which further improves operational efficiency and crew safety through automation.
The Titan joins its sister ship, the Deepwater Atlas, as one of only two 8th generation ultra-deepwater drill ships in the global fleet.
The rig's 3.4 million pound hoisting systems are capable of running heavier casing strength than any other floating drilling rigs.
This can shorten weld time as well as potentially preserve a larger borehole for our customers' follow-on production activities.
The rig's 20,000 PSI well control equipment enables completion of higher pressure reservoirs, thereby unlocking projects that were previously inaccessible.
The increased hook load and higher pressure equipment provide important advantages for both drilling and completions and make the rigs highly desirable for both activities.
Also during the quarter, we committed to the sale of two harsh environment floaters, the Paul B. Lloyd Jr. and the transition leader.
These lower specification assets are best suited to the UK North Sea, and further demonstrate our strategy to focus on our high-specification floating fleet that is in high demand in other jurisdictions.
Once the sale closes, we will have a fleet of 28 ultra-deepwater floaters and 8 harsh environment floaters, in addition to our non-controlling ownership interest in Laquila Ventures, which is currently building the deepwater Aquila.
Within our portfolio, we have 10 of the 14 highest hook load drillships in the global fleet.
We also have 11 cold stacked loaders including 10 ultra deep water rigs and one harsh environment semi-submersible.
With our active fleet near full utilization, we are actively bidding these stacked assets into open tenders and direct negotiation opportunities.
Our Stacks Fleet provides us with the most operational leverage of our peer group.
There are just 12 cold stacked 6th and 7th generation drill ships remaining and 8 of these are owned by Transocean.
as compared to a coal stack reactivation estimates of $75 to $125 million. And for those of you who may be wondering, we do not believe we will see any new bills commissioned for many years. And in the extremely unlikely event that we do, the timeline to completion would likely be between three to five years, and the capital required could exceed $1 billion. In short, we believe the transition will remain the supplier of choice for incremental ultra-deepwater rig capacity, and we will continue to demonstrate extreme discipline when considering contract renewals and reactivations.
As we continue to benefit from the rapidly improving offshore market, the cash flow generating ability of our fleet becomes increasingly strong. Utilizing free cash flow from operations, we intend to prioritize capital allocation during the next several years starting, as we previously said, with a focus on deleveraging our balance sheet.
This remains an imperative and will be carefully balanced and coordinated with our other priorities, including maintaining our active fleet, reactivating stacked assets to specific customer contracts, and
and deploying some of the new technologies that we have successfully developed and tested over the past several years, all with the ultimate goal of maximizing value for our shareholders.
As we have demonstrated, we will generate that cash flow by maximizing the value of our active fleet and remaining disciplined when it comes to reactivating our stack fleet.
For the past several years we have taken the approach, quite effectively, of emphasizing day rates overutilization using several of our highest specification rigs.
As an example, our recent contract for the Deepwater Invictus at a rate of $480,000 per day is $220,000 per day higher than we contracted the Invictus just two years ago, an increase that is the direct result of our contracting strategy. In some circumstances, given our strong backlog position, we were able to take the tactical decision to trade utilization in pursuit of higher-
In summary, we are undoubtedly in what appears to be a multi-year upcycle. Our customers are both demonstrating their confidence and commitment to their projects and acknowledging the tightness of the supply for the highest specification floaters by securing rigs well in advance of their programs and locking them up for multiple years. Since Transocean owns and operates the industry's highest specification fleet of ultra-deep water and harsh environment floaters, and also owns the majority of the sixth and seventh generation cold stack rigs, we believe that we are best positioned to capitalize on this upcycle through increasing day rates on our active fleet and remaining disciplined with our stacked fleet.
Over the past year, we have demonstrated that we can achieve both leading edge rates and maximize term and still grow our backlog. And through the flawless execution of our operations, we will efficiently convert that industry-leading backlog to cash, which we will then use to quickly deliver the balance sheet and create sustainable value for our shareholders. And I'll turn the call over to Mark. Mark? Thank you, Jeremy, and good day to all. During today's call, I will briefly recap our second quarter results, then provide guidance for the third quarter and update on our expectations for the full year 2023.
Lastly, I will provide an update on our liquidity forecast through the end of 2023. As reported in our press release, which includes additional detail on our results, for the second quarter of 2023, we reported a net loss attributable to controlling interest of $165 million, or 22 cents per share. After certain adjustments, as stated in yesterday's press release, we reported an adjusted net loss of $110 million. For more information, visit our website.
And the harsh in vitamin sector. So that definitely both sectors are showing a deficit of rigs going forwards from 24 and that really puts the emphasis on our customers to act quickly because as we said before it's going to take probably 12 months, maybe a little bit more to reactivate these cold stacked rigs and so we need to see we need to see contract signed soon if we're going to meet this demand that's coming up in 'twenty one.
Five and 'twenty six.
That's great. Thanks for the color I appreciate it.
And we will go next.
To Eddie Kim with Barclays. Your line is open.
Yeah.
Hi, Good morning. So my question is on the fixed priced options.
And escalating nature of these options that have been secured in recent months for your fleet. The one that stands out is obviously the equinox with those options as high as 540000, a day by mid 2027.
Could you just provide us with a little more insight into the recent negotiations on these fixed price options in the past the day rate on these options were typically lower than the firm contract, but this seems to have clearly shifted in recent months any color here would be great.
Yeah sure. So look one of the key things is once once the rigs are in place and working steady state.
The cost for the operators to switch to perhaps a cheaper alternative is fairly substantial so.
You get this phenomenon that typically extensions at that point are going to be.
Higher in day rate when you're in this multiyear upcycle.
To kind of underline that the number of rigs available to go do this work and that will actually be in position to do the work is kind of the primary driver where you've got this feat of missing out a formal that there is no present amongst many of the operators.
That you know.
If it has to do the work than best to get a.
A binding option on a rig even if that happens to be at a market leading rate because I think by the time, we get to the timeframe that that has executed that will not be the market leading rig I think those guys will have proven to.
To benefit by moving quickly and getting those options on the table first so.
I think this is the tip of the iceberg I think you see many many more of these contracts come out this way I think we're in this phase of higher for longer.
And as you said before that the the feet are missing is real because that the available supply in the market is just substantially less than it was in the last up cycle.
Yeah.
Got it got it that's.
That's great to hear and just on the fixed price option. So it looks like based on your fleet status report and most of your fixed price options are on the harsh environment fleet.
Has it been more difficult to secure these options on your drillship fleet or is that something we should expect to see more of with new contracts signed in the coming months.
Yes, you probably will see motive it but one of the things in an up cycle.
If if if if you really have the feeling that things are going to continue to move then putting fixed price options on rigs is perhaps not to our advantage unless those those prices are.
Really substantially higher than where they are today so.
Not sure Youll see a lot more of that and I actually think that's going to be a positive for us this market gets tighter and tighter.
Yeah, we were pretty flexible on that but we certainly try to keep our powder dry on our very best assets.
Got it got it understood that makes sense.
If I could just squeeze one more question.
Question is on the Invictus and it's clear that as one of the highest quality drill ships in your fleet and in the global fleet.
Otherwise it wouldn't have been selected as one of the rigs for that three year contract you just signed in Mexico.
That commences in.
In late 2025.
At the same time the rig is currently idle since coming off contract in July or was idle I should say until you just announced that 20 day P&A work.
In prepared remarks, but could you just provide some more insight here given the significant near term available availability of the rig has.
Is it just you got enough incremental near term demand in the U S.
The Gulf of Mexico or is the decision to keep availability on the rig morven intentional one.
Yeah. So.
Our intention on this rig.
As being one of the highest specifications, we do want to keep time available on her as we kind of had demonstrated and Jeremy alluded to it in his comments.
Using the highest spec assets to kind of move to the next tier of the Dayrates is essentially the bed.
The strategy that we played out over the past 18 months.
So with the rest of our <unk>.
High specification fleet in the Gulf of Mexico spoken for and.
Again several options in place that that means really the invictus is the only rig that we have available at that specification level.
So as we pointed out yes, we just picked up another.
Contract on her no so that was actually in direct continuation of the previous one.
And without giving away all our cards, we are in extended discussions with other operators for similar events. So we're quite comfortable to have her on <unk>.
Kind of shorter term basis at the moment and that's actually what allowed us to secure that $480000 a day three year contract.
Based on the fact that she was available. So it's really all part of that strategy that we described but making sure. We have some of the best assets available to take advantage of this rapidly improving market and at the same time, you offset that with the fleet as a whole we've had we have more rigs on long term contracts than that than anybody else.
So we're kind of in a luxurious position to be able to do that.
Got it great. Thank you Roger I'll turn it back.
We will go next go to Greg Lewis with <unk>. Your line is open.
Yes, hi, Thank you everybody and thank you for taking my questions. Mark I was hoping you could talk a little bit more.
Around.
Costs.
Realizing world, where we're ramping rigs, where we're spending money to get some rigs where they need to be before they go on contracts.
Is there kind of any way to think about.
Normal beyond just the regular cost inflation of a couple of percent a year is there any kind of way to think about how we should think about it on an ongoing basis about whats maybe like a normalized number without realizing you're probably gonna be activating.
It seems like the market is probably you'll be able to activate a couple of rigs here in the next call. It two to three years with each of those I mean ballpark, maybe what adding $50 million to $60 million in annual.
Yes.
Contra Opex is that like any kind of color on normalization.
Yes, Greg.
That's not an easy number to give you because I think this is widely.
Argument's sake, the cocoa voted in the <unk> as they go between contracts in Brazil.
I was supposed to come out of service, we have to go and clean the house and then move them back into the operating environment, that's only going to cost US a couple of million dollars. That's not a big number and then you bring a rig into Brazil.
For the first time, you are looking at that $50 million to $60 million. So there really isn't a normalize that can vary widely between those levels.
Liberals and as Jeremy mentioned in his prepared comments, we've estimated a reactivation on the cold stacked rigs to be $75 million to $125 million. So now your range is $2 million $225 million. So if I give you a normalized number it's really going to be just a bad forecast. So I think you have to.
Listen and watch and see if we reactivated rigs and we'll give you guidance then as to what we're going to be spending on that but I don't want to give you a normalized number.
Okay, Great and then as I think about.
Would you guys have done in tightening the semi market and the north sea has been pretty constructive.
You know curious the U K government. Realizing your rigs are your studies are higher and so you don't have a lot of UK exposure.
But it seems like strength in the U K could filter into Norway.
In the central North Sea.
Could you talk a little bit about.
The potential impact for that announcement and really as we look ahead as is this should this start.
So up in 24 or is it more kind of back half decade kind of pickup in demand from the UK news about.
I guess theyre trying to incentivize more oil and gas drilling.
Sooner rather than later.
Yeah, I'll take that look I mean that the issue with the U K, but I was getting into politics is is really simply a windfall tax.
Is not constructive for taking FID decisions. So.
In the U K, where you have somewhat of an uncertain tax regime.
With regards to oil and gas the announcement of increased lease sales.
Does it actually solve the current problem.
You know unknown or bidding taxation so we.
We don't expect.
Our customers to rapidly increase activity in the U K, but certainly new licensing is welcome it says that.
The government recognizes that oil and gas is going to be a very strong part of the energy balance as we move forwards.
In terms of how it has a knock on effect.
You're right to observe that are typically the highest specification rigs.
Good in Norway and in other places and that's certainly what we're seeing.
Going forwards here, but I think in general the harsh environment market.
<unk> is 100% sold out for the high spec assets.
And that does not look like it's going to change anytime soon and in fact, most projections show that we are going to be sharp several rigs so.
Given jeremy's comments about what it would take to bring a new build to the market.
We actually don't see that.
Deficit being solved anytime soon so I think youre going to see very strong harsh environment fixtures for the foreseeable future.
And arguably.
That's kind of the key marker for the the lungs long cycle thinking that's in place now so.
Yeah.
No not really held onto the U K, but reality.
And Ryan just since you brought it up I mean, the lead time between ordering and a new build in today's market and slotting.
Slotting that spot at a shipyard.
I imagine that's 345 years does that is that yeah, probably probably closer to five if not more.
Sorry for a semi complicated.
Understood. Okay. Thank you for the color.
We will take our last question from critics journey with Clarksons Securities. Your line is open.
Hey, Jeremy and team Hope you are well and you've got a nice summer.
So I want to.
Maintenance states with a few follow ups on themes that have been partially discussed on we can start with the harsh environment market as I said initially there is.
They seem to be a shortage here and I agree the pace at which these semis have less Malawi has been.
Pounding them away.
I can imagine that there are a few.
<unk> operators in Norway, and all that.
Maybe you have the greatest formal alcohol so I was.
Wondering kind of yeah.
Compared to have those discussions were back in the third quarter.
Last year.
How are you.
Are they holding you.
Every day asking for capacity.
How are they.
The discussions have been.
Changed over this a lot.
Six to nine months, and then I guess kind of finally, what if you can give us a number what's the day rate that you would require to bring a rig back into more of a way to help all ecmo around that in.
Peter himself here.
Okay I'll take that and then so the first part of the question about how have things changed.
In 12 months, so obviously they've changed substantially I think if you.
If you have to go back and look at our transcripts from previous earnings calls.
The message is loud and clear as we possibly could because we're in a position back then a year ago that we really needed to work for for two.
Two or three for these rigs so.
We message that look if we can't find the working all of it has to go elsewhere. So.
To us it certainly wasn't a surprise.
But.
I realize that that's the case for some that are yeah that that the pace at which that changed substantial so in terms of where you are now.
Bringing rigs back to Norway.
I think youre going to see that.
That's going to have it actually I think almost maybe not quite as quickly, but certainly you you will see a response, which we've already seen in terms of a couple of tenders that were launched in very short order to to pick up rigs for multiple years to bring them back into Norway.
You'll see that who is basically concluded over the next month or two.
And that's going to be at substantially higher day rates with substantially longer term.
And that's basically what it's going to take them. If if I think about the rigs coming coming back it's gonna be theyre going to be paid on day rate to come back.
The all of the expenses will be covered to come back and of course.
You'll be looking to maintain the solid EBITDA margins that you make overseas to make it attractive, but I do think there will be some rigs come back, but it's going to be.
Higher numbers and just just to add to that I mean operationally there is real value in continuity.
That's why we approached our customers in Norway before we decided to move these rigs.
Put another way to new jurisdictions, there is value and continuity and so.
If there if the opportunities remain robust in Australia.
It's going to take a lot to pull those rigs out of Australia at meeting the customers really going to have to pay for not only the <unk>, but a higher day rate and so it's going to be a challenge yeah, Yeah, No really where we've got options on one of the rigs out to 2028, and then on the other rig where with where we are in active discussions to add more time to her so.
Realistically I think for those two cat D. That's going to be a very long cycle before they come back I think this publicly more focus around and the likes of the patents that recently left to see if there is interest in bringing her back.
That's super helpful color.
The second.
Question I was just saying you control two thirds of the stack.
Joseph Nathan what compression all of that.
We could start to see new bikes are reactivating some of those assets as well.
I guess, so far that it's cleared out some of your peers have been.
More aggressive in some of those through Activations, which uplift.
The larger market share of that fleet.
I was wondering now that you're in.
Coaching.
100% market share on the stacked assets or are you, having kind of in academia warm.
Our strategy to wait until they have fleshed out the remaining will bear capacity to be the sole price up there or are you thinking about the time to do that.
Got to bring some of those units back.
No I think we've been pretty consistent on that front, we are going to be paid by the customer in the first contract to reactivate those rigs plus a return.
And so we're going to continue to be disciplined on that front, we feel no urgency to reactivate for the sake of reactivating.
And if our competitors.
That strategy, that's fine with us.
Yeah.
Cool on final short question.
You talked briefly about the invictus on some potentially a short term opportunity out there on the inspiration unless I missed it are there any news there on what can be.
On the <unk>.
On the news for her going forward in terms of New York yet.
Yes. So we are in discussions are a.
And part of tenders on a couple of things for the aspiration, but she is an example of one of our lower specification units. So we'll kind of take a measured approach to that where we're not going to jump on anything just yet or not.
In a particular hurry to do anything there, but there are a couple of interesting things on the horizon. So stay tuned.
Great. Thank you guys for taking all my questions have a good day.
Thanks, you too.
As there are no other questions I will turn the call back to the speakers for any closing comments.
Yeah.
Thank you Carlos and thank you everyone for your participation on today's call. We look forward to talking to you again, when we report our third quarter 2023 earnings.
Have a good day.
Yeah.
Thank you ladies and gentlemen. This concludes today's program you may now disconnect.
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Okay.
Okay.
[music].
Okay.
Okay.
[music].
Okay.
[music].
Okay.
[music].
Hum.
Okay.
Okay.
[music].
Hum.
[music].
Hi, Dan.
Uh-huh.
[music].
Okay.
[music].
Hello, Matt.
Oh.
Uh-huh.
[music].
Oh.
[music].
Hum.