Q2 2023 Diamond Offshore Drilling Inc Earnings Call

August 8, 2023

Okay.

Good day and welcome to the second quarter 2023 Diamond offshore drilling earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press.

SAR one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again.

Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Kevin for dusky senior director of Investor Relations. Please go ahead.

Thank you Abigail and good morning, or afternoon to everyone and thank you for joining us.

With me on the call today are Bernie Wolford, President and Chief Executive Officer, and Dominic SAB Arena, Senior Vice President and Chief Financial Officer.

Before we begin our remarks I remind you that information reported on this call speaks only as of today and therefore time sensitive information may no longer be accurate at the time of any replay of this call.

Some of the information referenced on our call. Today is included in our slide presentation that you can find in the Investor Relations section of our website under calendar of events.

In addition, certain statements made during this call maybe forward looking in nature.

These statements are based on our current expectations and include known and unknown risks and uncertainties.

Many of which we are unable to predict or control.

These risks and uncertainties may cause our actual results or performance to differ materially from any future results or performance expressed or implied by these statements.

These risks and uncertainties include the risk factors disclosed in our 10-K and 10-Q filings with the SEC.

Further we expressly disclaim any obligation to update or revise any forward looking statements.

Refer to the disclosure regarding forward looking statements incorporated in our press release issued yesterday evening and please note that the contents of our call today are covered by that disclosure.

In addition, please note that we will be referencing non-GAAP figures on our call today.

You can find a reconciliation to GAAP financials in our press release issued yesterday.

And now I will turn the call over to Bernie.

Thanks, Kevin and good day to everyone and thank you for your interest in Diamond offshore as we present our results for the second quarter of 2023.

Today, I will cover the financial and operating highlights for the second quarter, our operational outlook for the remainder of 2023.

And our view on the market, including near term fleet opportunities.

I will then turn it over to Dominic to provide a review of our second quarter financials.

As well as guidance for the upcoming quarters and full year.

Let me start by thanking the entire diamond team for delivering strong safety operational and financial results, while securing significant new backlog across multiple geographies and asset classes.

During the quarter, we secured term work for the Blackhawk.

Added a two well contract for the Patriot.

Extended the endeavor about two wells and our customers exercised options for the great what and the Black Rhino.

These wins, which totaled more than $229 million in additional backlog are a testament to our team's performance and provide increased visibility to our 2020 for our revenue stream.

As we enter the second half of the year tightening rig supply improving day rates across multiple asset classes and changing operator procurement behavior are among the signs, indicating the strength and potential duration of this up cycle.

Our results for the quarter reflect growth in both revenue and adjusted EBITDA.

Total revenue and adjusted EBITDA for the quarter or $292 million and $36 million respectively.

The revenue and EBITDA growth were driven primarily by the great what an endeavor operating for the entire quarter and recognition of substantially all of the early termination fee for the Patriot and the second quarter.

Dominic will provide further details on these results in his remarks.

I am pleased to report that our rig crews and operations support team delivered revenue efficiency of 96% across our fleet during the quarter.

This efficiency number is notable having now completed two wells with the great what <unk> successful reactivation and contract startup in late March.

Looking at second quarter operational highlights across the regions in the U K, we received a well based performance bonus on the endeavor.

For its first well following its shipyard period, highlighting the team's project delivery capability and strong execution.

Yes.

Also the Patriot concluded its multi year program with Apache.

During which the rig achieved the highest customer satisfaction scores in the fleet.

I'd like to thank the Apache organization for its long term relationship as we look forward to commencing the Patriots next program with Repsol, which is anticipated to commence by the end of September .

Turning to West Africa, the Blackhawk successfully concluded its year long campaign in southern Cal for Woodside energy.

The rig delivered a 30% reduction in drilling time as compared to plan, while delivering solid HSE performance.

The Black Hawks performance has set the stage for the black Rhino to potentially our future bonuses as it completes these wells.

Following the campaign in Senegal, the Blackhawk arrived in Las Palmas on July 19th.

To undergo a five year special periodic survey, our Sps and certain regulatory and customer required upgrades, including the installation of our managed pressure drilling system our MPD.

On completion of the shipyard scope, we will mobilize to the U S. Gulf of Mexico for our next customer with contract commencement anticipated in November .

Also in West Africa further options on the Black Rhino, where exercise we expect our rig will conclude Woodside energy Senegal program late in the second quarter of 2024.

During the quarter, we proactively made the decision to procure an MPD system for the Black Rhino, which we expect to install following the conclusion of its current contract.

This decision reflects our continued commitment to provide best in class Drillships for work at the top end of the market.

With this upgrade all of our black ships will be equipped with identical MPD systems, and therefore, ideally position to maintain high utilization, while learning leading edge dayrates.

Turning our attention to the operational outlook for the remainder of 2023.

The apex recently completed its shipyard scope in Singapore and is in transit to its next well location in Australia.

We expect contract commencement with Woodside before the end of August .

The apex is firmly committed to a number of clients through the first quarter of 2025.

With the potential for options that extend well into the third quarter.

The Onyx remain stacked and has yet to secure an opportunity that meets our reactivation investment criteria.

We will remain disciplined in our approach to securing a contract for the Onyx.

Assuring that we can recover our reactivation costs and deliver meaningful cash flow and EBITDA and SaaS contract.

In Brazil, the courage is scheduled to mobilize to a shipyard in September following the conclusion of its current contract.

While there it will undergo a five year, Sps and certain regulatory and customer related upgrades before starting its four year campaign with Petrobras late in the fourth quarter of 2023.

In the North Sea, we look forward to the Patriot gone back on contract in late September with Repsol. However, the opportunity. Following this work that we discussed on our previous call did not materialize due to the operator's decision to postpone that campaign.

At the conclusion of 2023.

Six out of 10 of our actively marketed rigs will have completed their five year spss and the last 18 months.

Looking forward, we have only two rigs with surveys due in 2020 for the black Chrono and Black Hornet.

As a result next year, we will spend significantly less time in the yard and more time, earning higher day rates.

Sure.

During the quarter, we bolstered our sustainability reporting to better measure and assess our operational footprint.

We recently published our 'twenty two sustainability report highlighting our ESG progress in accordance with recognized industry standards and paving the way for improved ESG transparency for our many stakeholders.

Turning to the market outlook, the continuing pivot to offshore basins as a source of incremental supply is driving improvements in the market with increasing momentum.

Recent activity continues to support our view that we're in a longer duration of cycle supported by persistent strong commodity pricing.

Continued <unk> growth.

Significant subsea infrastructure commitments and positive day rate trends not seen since 2013.

In particular <unk>.

Subsea tree awards have historically been a key indicator of future activity.

In 2020 to 348 subsea trees were awarded the most since 2013 when the offshore floating rig count was about twice what it is today.

This positive trend is stage to continue with analysts estimating more than 350 subsea trees being ordered in 2023.

The large number of these orders indicate a long tail of future deepwater drilling activity.

Sure.

Since our last call. The demand picture continues to improve as operators are contracting rigs for more term and with longer lead times, several with 2025 and 2026 start dates.

These longer terms and lead times correlate with upcycle behaviors by our clients and May signal their concern is to rig availability for programs two or more years out.

Average duration and lead times for floater contracts signed are approaching one year, which is on par with 2022 and at a level not seen since 2013.

Very recently additional multi rig multi year tenders have been released for West Africa and Brazil.

We anticipate that in the near term offshore drillers will announce a number of drillship contract awards for long term jobs with effective day rates in the low to mid $400000 range.

These four work with longer durations and mobilization provisions supportive of reactivation investments.

Following these awards, we anticipate only a handful of competitive seventh generation stranded rigs will remain contracted.

Beyond these contract awards increasingly visible demand coupled with a tightening rig supply picture will likely put further upward pressure on day rates, resulting in contract awards that are likely to cross the $500 per day Mark.

Turning our attention to upcoming prospects for our fleet, the increasing demand for top tier top tier drillship is frankly exciting as we evaluate our opportunities for our drillships up for repricing in 2024.

The Black Rhino is currently working offshore Senegal with availability commencing in the third quarter of 2004.

We are currently pursuing multiple opportunities for the rig across the Golden triangle.

Thanks to the constrained supply of ready to work rigs the highest specification of the black Rhino and our recent MPD commitment, we have a great pipeline of opportunities to pursue.

Following that we will be the black line currently working for BP in the U S Gulf of Mexico with availability commencing in the fourth quarter of 'twenty. Four. Similarly, this high specification MPD equipped rig is well positioned for multiple opportunities.

In the North Sea, we continue to pursue short term programs for the Patriot. This year and early next and more importantly to longer term opportunities in the UK North sea with commencement commencement in 2024 and 2025.

Demand for DP harsh environment semis outside the North Sea region has resulted in an exodus of rigs while pushing rates for the most capable semis into the mid $400 per day range.

These fixtures support our positive outlook for the ocean, great what with availability as early as the second quarter of 2024.

Our subject to options exercised as late as early 2025.

Growing demand for high specification semis in Norway, coupled with demand in Canada, West Africa, and Australia have positive implications for the balance of our harsh environment semi submersible fleet as this segment of the market begins to tighten.

Wrapping up <unk>.

Excluding our cold stacked rigs, we now have almost 70% of 2024 marketed capacity contracted.

We include priced options that number grows to 80%.

As this market continues to gain momentum, we like the prospects for our fleet and the opportunity for significant EBITDA improvement beginning in Q4 2023.

I'll now turn the call over to Dominic before returning with some concluding remarks.

Thanks, Bernie and good morning or afternoon to everyone.

In my prepared remarks. This morning, I'll provide a recap of our results for the second quarter disc.

Discuss our outlook for the third and fourth quarters of 2023, including an update to our full year guidance for 2023.

As well as a preview of some key data points for 2024.

And as Kevin alluded to in his opening remarks, we have a presentation on our website that includes some of the financial information I will refer to today.

For the second quarter, we reported net income of $239 million or $2 29 per diluted share.

The reported income consists of a net loss before tax of $4 million and a recorded tax benefit of $243 million.

Similar to the first quarter the tax benefit recorded in the second quarter is based on the computation and application of the Companys annual effective tax rate in accordance with U S. GAAP accounting standards adjusted for discrete items.

As I mentioned last quarter taxes will continue to fluctuate quarter to quarter as our projected earnings before tax moved from a net loss position to a net profit position over the course of the year.

But despite these fluctuations the total cash outlay for income tax this year net of tax refunds is expected to be below $5 million.

Excluding reimbursable revenue revenue for the second quarter was $265 million up from $214 million in the prior quarter, primarily as a result of the endeavor and great white being on contract for the full quarter, partially offset by the apex spending the quarter in the shipyard <unk>.

<unk>, its Sps and upgrades.

Our revenue exceeded prior guidance of $240 million to $250 million largely due to the accelerated recognition of the majority of the termination fee for the Patriot.

Yes.

The results for the second quarter included a reported adjusted EBITDA of $36 million as compared to adjusted EBITDA of $22 million reported in the first quarter.

The $36 million of adjusted EBITDA was also above our guidance for the quarter of 20% to $25 million again due to the timing of the recognition of the Patriot termination fee.

Contract drilling expense increased to $213 million for the quarter compared to $173 million for the prior quarter, primarily as a result of higher costs associated with the apex being in the shipyard for the full quarter and higher charter expenses for our two managed rigs due to being on.

Contracts for the full quarter and at higher day rates.

We generated approximately $20 million in operating cash for the quarter with negative free cash flow of $9 million after considering capital expenditures of $29 million.

In contrast, our first quarter negative free cash flow of $41 million was largely a result of working capital swings in the other direction.

Now I would like to shift to a discussion of our third and fourth quarter outlook.

Looking ahead to the third quarter, we expect contract drilling revenue, excluding reimbursable of $205 million to $215 million the reduction in revenue compared to the second quarter is largely activity driven with the black Hawk courage and Patriot being off contract as they prepare for their next contracts.

Combined with these rigs transitioning to new contracts and the timing of the Patriot termination fee. We have four nonrecurring discrete events that impact our projected third quarter results relative to our prior expectations.

First the APAC spending more days in the shipyard than anticipated, resulting in additional costs less revenue, earning days in the quarter as well as the shift of higher revenue, earning days from 2023 into 2024.

Next the expectation that the courage will complete its current contract and begin its new contract preparation activities earlier in the quarter than originally anticipated.

In addition, nonproductive time for the two managed rigs, resulting in the loss of a portion of our managed rig margin and finally, just over two weeks of nonproductive time for the Black line that concluded in July .

As a result, our EBITDA for the third quarter is anticipated to be just above breakeven.

All of these discrete events have transpired or will transpire during the third quarter such that there should be no material impacts from these events on the fourth quarter of this year or any carryover into 2024.

As you can see we have significant amount of transition taking place with rigs depart the shipyard and commencing higher day rate contracts, namely the apex to part of the shipyard in July and transitions to its higher day rate contract. Later this month and the Blackhawk encourage will be returning to work in mid to late fourth quarter.

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These new contracts provide the basis for our fleets future higher average day rates that will result in substantial quarter over quarter increases in EBITDA, beginning in the fourth quarter and accelerating into 2024.

Looking at the fourth quarter more specifically, we are anticipating quarterly EBITDA in line with prior expectations of $50 million to $60 million on revenue of $260 million to $270 million.

This ramp up in the fourth quarter is driven by the Blackhawk encourage beginning their higher day rate contracts in the quarter and the Patriot being on contract again for the majority of the quarter.

It is worth noting that this level of quarterly EBITDA contribution would be our highest reported quarterly EBITDA since mid 2018.

When combined with our actual results for the first half of 2023, our estimated full year revenue is expected to be $950 to $960 million at the low end of our prior guidance range with EBITDA for the full year 2023 expected to be 105 to 120.

Yeah.

Our full year Capex guidance remains the same at $120 million to $135 million, albeit most likely in the upper half of the range.

Turning now to some commentary on our 2020 for outlook.

The increasing day rates, we have secured coupled with the investments we have made in our fleet has positioned us to deliver strong and consistent financial performance and 2024.

The average day rate in our 2020 for backlog is $321000 per day.

This compares favorably with the $285000 per day average day rate earned year to date in 2023.

A large contributor to the overall increase in average day rate is the Blackhawk contract, we recently secured.

The increase in day rate combined with the operating cost reduction from working in the Gulf of Mexico.

Will result in rig level EBITDA for the Black Hawk of approximately $100 million in 2024 as compared to less than $10 million in EBITDA in 2023.

With upside potential from two drillships and semi submersibles with re contracting opportunities in 2024.

Further with only two planned out of service periods for Sps as in 2024 as compared to our five shipyard stays during 2023, we expect only 100 days out of service in 2024 versus almost 450 days out of service in 2023.

This operational continuity gives us the foundation for stronger and more consistent financial performance and 2024.

This concludes my prepared remarks, I will now hand, it back to Bernie <unk> for some closing comments before we move into Q&A.

Thank you Dominic.

As the apex Blackhawk encourage roll to higher day rates in the back half of 2023 and with significantly less shipyard days in 2024, we look forward to improving financial results in Q4, and a further leg up in financial performance as.

As we roll into 2024, we appreciate your interest in Diamond offshore I will now open the call for questions.

Thank you at this time, we will conduct a question and answer session.

A reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

One moment for our next our first question.

Our first question comes from Eddie Kim with Barclays. Your line is open.

Hi, good morning.

Just taking a look at your fleet, which is very well contracted at this point is not too much white space over the next call. It six to 12 months and I believe you mentioned that 70% of your marketed capacity next year is contracted so just in that context curious if you'd be open to purchasing.

<unk> Newbuild.

The shipyard or maybe purchasing an existing rig in the fleet.

Just any color on thoughts to potentially adding rig availability in this rising day rate environment would be great.

Thanks for your question Eddy.

I mean, we have certainly looked at that both from a short term and long term perspectives and we obviously have an interesting growing the fleet.

There are a lot of considerations involved in considering acquiring one of those rigs obviously, there's the cost.

That's financed through bond equity or otherwise.

As for working capital implications and theirs.

Simply a matter of focus for the company.

I would consider a plan for the company to stay the course with our current assets as we transition to 2025, 100% of our rig fleet will have move too.

Current market rates, and our EBITDA and cash flow potential.

At that stage is pretty incredible we will continue to look at these stranded assets as potential plays.

But that would be a secondary option for us.

Okay. Okay got it thank you.

And just my follow up is on the ocean great White.

And the rigs opportunities going forward.

We've seen the fluid contract announcements.

The loss environment semi market you just laid out in a strong market outlook.

Net clients, especially with the exit of the rigs that in Norway.

And now the rig has seven priced option wells. After the contract ends in April any sense from the customer fee if they intend to exercise.

All of the options on this rig.

And just general thoughts on.

If you see opportunities for this rig to move back to Australia, even or work in Norway or parts of eastern med.

Just any thoughts on the future opportunities for this rig.

Sure Eddie.

So.

As you mentioned the rig has seven remaining priced options at 60 days anticipated well durations each those options get exercised as we finish a well the next option becomes eligible for exercise by the clat, we anticipate the client will exercise most if not all of these options.

We don't have any assurance of that at this stage, we feel very confident about the next four and reasonably confident about the full seven.

Okay with regard.

To opportunities.

Obviously.

We would look to the west of Shetlands area in the UK North sea sector, but more recently, we fielded inquiries for our potential opportunities in West Africa, as well as Canada, and so we would definitely.

Per those opportunities to those closer to home in the North sea today and target the rig for the highest EBITDA potential that would be available to us.

Okay got it great. Thanks for that color Bernie I'll turn it back.

One moment our next question.

Okay.

Our next question comes from Fredrik Stene with Clarksons Securities. Your line is open.

Hey, Bernie and team I hope, you're all well and thanks for taking my question.

I have two questions actually.

So let's start with the first one.

Going back to your general market commentary here in the.

Prepared.

Remarks, I think at least according to kind of our own analysis on Howard just.

Seeing and fixture showing up.

Absolutely.

That trend with longer duration work for.

Filters.

So.

I would ask for a bit more color, if you're able to give on how your discussions with.

Clients have.

Developed.

Since we last spoke on the Q1 call our U.

How's the frequency.

Opportunities are you getting.

Incoming calls for this out.

Volume declined.

Looking forward, our rig et cetera. So is there any kind of additional color you can get on that.

I think it would be helpful for us I believe.

Longer lead times and longer contract is what's going to be needed for our multiple expansionary pricing wise on equities.

Okay.

Thank you Fredrik.

You'll be aware of at least one and potentially two longer term contracts that are out in the market today with commencements in 2026.

In addition to that we've had.

Private conversations with a number of clients that are looking at longer term contracts as we roll into 2020 late 2025 and 2026.

To further their programs for the long term. So there are a number of conversations where the clients are already thinking about their rollovers that occur within that timeframe and our plans for contracting going forward.

We're currently tracking 53 discrete opportunities and by discrete I mean, where there is an RF on our discussion with an operator of which 29 of those are drillships and 24 are for semis.

We count approximately 46 units.

Now and the end of 2024 with four or more months of availability.

Of these 26, our drillships in 'twenty or semis.

So clearly between the number of opportunities we are tracking and the availability out there. There is some additional scope for rigs to be delivered from stranded assets are cold stacked.

There is obvious trend for stranded assets and cold stacked rigs to target the longest term opportunities take available or the mobilization payments or other financial incentives that may be available there to defray some of the reactivation of our purchase cost and then subsequently take a.

<unk> lower market day rate lower than market day rate for the term of the contract as they recover their initial investment. So I think you'll definitely see some of that going forward and that will be more targeted towards these longer term contracts.

And then as we get closer to 2025, you'll see a number of contracts that are currently long term rollover and youll see another leg up in pricing and scarcity of supply as those rollover to replacement long term contracts.

Thank you Super helpful. And then just a quick follow up on that one are you to larger degree now.

In that E&ps are we linked to contracted capacity and beyond.

All needs to be on.

On their drilling programs just to make sure that they have capacity.

Yes, it would be a general answer to that would I would further comment on that yes by saying that.

Visibility for an operator.

Confused the term I mean, they have well defined development prospects out there that may or may not be fully <unk> date, but they have clearer visibility. They know how many rigs are going to need to execute those programs and they have a strategy that is aligned with executing those programs.

Over the next multiple years and so although they are prepared to commit for work that they don't have a specific well identified far out into the longer timeframe. They certainly know which fields what money what returns those rigs would be linked with.

Okay.

Perfect.

Switching gears a bit just wanted to touch quickly on your cap stack as well several of your peers have been.

Also in the market I think some of them have been opened the market also before.

The Q1 call our largest yesterday testing our second lien notes. So I was wondering are you kind of compared to where we were in Q1 have you.

Maiden and your thoughts about what you think an optimized.

Balance sheet would look like are you happy with what you have today or are you.

Working on trying to streamline it.

Maybe with Rcs conventional bonds any color you can give us on what you think is appropriate.

And appropriate.

Leverage level for you guys as well it would be good to have on the deal yes sure Frederic. Thanks. Thanks for the question.

Obviously the market is therefore for offshore drilling to issue new papers. So thats certainly something that we continue to look at as I mentioned in our call last quarter, we certainly.

Are looking at that possibility, we have the luxury of time.

We don't have any maturities until 'twenty, six and 27% so.

It is not something that is urgent for us, but but certainly moving into a regular way.

Financing structure would be attractive.

The restrictions and the covenants and limits that we have on our post emergence.

Our CF would certainly be a benefit to remove those so we continue to be.

Active and looking at it talking with advisors.

Doing what we need to do to prepare for something along those lines, we're going to be opportunistic about it and to the extent that we can extend our time to maturity as well as reduce our cost of capital that is something that we would definitely definitely be interested in undertaking.

Okay.

Just seeing an event that you do read your balance sheet that at some point I guess.

It's going to be a trigger as well for it.

Potential shareholder returns like given your change in financial performance next year and onwards.

Yes, yes that certainly could be could be a trigger as well.

Having having sustained positive free cash flow.

We will certainly contribute to that as our rigs roll off particularly.

Particularly our two black ship opportunities next year, and we re contract those it at what we would be considered to be leading edge day rates are certainly gives us that that longer term perspective, and the visibility into sustained positive free cash flow. So the combination of those two would be.

It would be triggers that would put us in a position to be able to return money to shareholders certainly.

The board has not authorized that at this point, but once we emerge through 2024 and into early 2025, and we expect to have those conversations.

Great. Thank you so much for taking I guess my question, but I really appreciate it.

Thank you.

Thank you as a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced one moment. Our next question.

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

Hey, good morning, Thank you for taking my question.

Good morning, Dave.

Sorry, if I missed it but did you all discussed the three and a half year tender that Petrobras issued for a moored semi.

And whether you expect to compete in that.

We didn't discuss it during our prepared remarks, Dave certainly, it's an opportunity for diamond that we'll be looking at.

An area, where we have an existing operation in a lot of operational experience and clearly.

We have the assets that would fit that specification.

I appreciate it and Im curious if youre seeing any other.

Opportunities with any kind of turned duration for mortgage lending is outside of the north sea or Australia.

In West Africa.

And the med in particular, we're seeing a number of opportunities for moored assets that are on the fairly near term horizon today.

I appreciate it and.

Most of my other questions have been answered but.

Al.

A little bigger picture.

We've had several deepwater rigs added to the market.

Our marketed fleet in the past year, whether reactivation or stranded newbuild purchases.

It looks like there.

Probably a few more soon.

And it doesn't take a lot of extrapolation to look out two or three years you can see.

Pretty limited.

Potential incremental supply on the deepwater side. So what I was going to ask is is there.

Held for sale decision on the Ocean monarch, a final decision or is there any potential that that could be reached.

Consider this.

Given the dwindling number of.

Back in standard Newbuild that could be added to the market.

Yes.

Well there is no.

As you see our accounting rule that would prevent us from change in our mind as far as that goes for our held for sale asset.

From a strict perspective.

As we look at our fleet.

Certainly the Onyx is a higher priority rigs into monarch, given the reactivation cost differential between the two.

And so the monarch remains held for sale today, and we continue to look at opportunities.

That would bring more revenues to the company than simply scrapping that rig.

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It's all a matter of deciding where we want to deploy our capital and how soon we recover the capital right now we don't see opportunities that would justify bringing the monarch back to the market.

Makes sense I appreciate it.

Thank you Dave.

Thank you that concludes the question and answer session. At this time I would like to turn it back to Bernie Wolford CEO for closing remarks.

Thanks, all for your interest in Diamond offshore today look forward to speaking to you between now and the next quarter or at the next quarterly call have a good day.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

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Telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again please.

Please be advised that today's conference is being recorded.

I would now like to hand, the conference over to your speaker today, Kevin for dusky senior director of Investor Relations. Please go ahead.

Thank you Abigail and good morning, or afternoon to everyone and thank you for joining us.

With me on the call today are Bernie Wolford, President and Chief Executive Officer, and Dominic Savarino, Senior Vice President and Chief Financial Officer.

Some of the information referenced on our call. Today is included in our slide presentation that you can find in the Investor Relations section of our website under calendar of events.

In addition, certain statements made during this call may be forward looking in nature.

These statements are based on our current expectations and include known and unknown risks and uncertainties.

Many of which we are unable to predict or control.

These risks and uncertainties may cause our actual results or performance to differ materially from any future results or performance expressed or implied by these statements.

These risks and uncertainties include the risk factors disclosed in our 10-K and 10-Q filings with the SEC.

Further we expressly disclaim any obligation to update or revise any forward looking statements.

In addition, please note that we will be referencing non-GAAP figures on our call today.

You can find a reconciliation to GAAP financials in our press release issued yesterday.

And now I will turn the call over to Bernie.

Thanks, Kevin and good day to everyone and thank you for your interest in Diamond offshore as we present our results for the second quarter of 2023.

Today, I will cover the financial and operating highlights for the second quarter, our operational outlook for the remainder of 2023.

And our view on the market, including near term fleet opportunities.

I will then turn it over to Dominic to provide a review of our second quarter financials.

As well as guidance for the upcoming quarters and full year.

Let me start by thanking the entire diamond team for delivering strong safety operational and financial results, while securing significant new backlog across multiple geographies and asset classes.

During the quarter, we secured term work for the Black Hawk.

Added a two well contract for the Patriot.

Extended the endeavor about two wells and our customers exercised options for the great what and the Black Rhino.

These wins, which totaled more than $229 million in additional backlog are a testament to our team's performance and provide increased visibility to our 2020 for revenue stream.

Our results for the quarter reflect growth in both revenue and adjusted EBITDA.

Total revenue and adjusted EBITDA for the quarter or $292 million and $36 million respectively.

Dominic will provide further details on these results in his remarks.

I am pleased to report that our rig crews and operations support team delivered revenue efficiency of 96% across our fleet during the quarter.

This efficiency number is notable having now completed two wells with the great what sensex successful reactivation and contract startup in late March.