Q4 2023 Noble Corp Earnings Call

Operator: Thank you for standing by, and welcome to the Noble Corporation Q4 Earnings call. I would now like to welcome Ian McPherson, Vice President of Investor Relations, to begin the call. Ian, over to you.

Thank you for standing by and welcome to the Noble Corporation Q4 earnings call I would now like to welcome Ian Macpherson, Vice President of Investor Relations to begin the call Ian over to you.

Ian McPherson: Thank you, operator, and welcome, everyone, to Noble Corporation's fourth 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 in the investor relations section of our website. Today's call will feature prepared remarks from our President and CEO, Robert Eifler, as well as our CFO, Richard Barker. Also joining us on the call are Blake Denton, Senior Vice President of Marketing and Contracts, and Joey Gallagher, 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.

Ian Macpherson: Thank you operator, and welcome everyone to Noble Corporation's fourth 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 Noble Corp. Dot Com. This conference call will be accompanied by a slide presentation that you can also find located at the Investor Relations.

Ian Macpherson: <unk> of our website.

Ian Macpherson: Today's call will feature prepared remarks from our president and CEO, Robert Eifler as well as the CFO Richard Barker also joining on the call late Denton Senior Vice President of marketing and contracts and Joey Khawaja Senior Vice President of operations.

Ian Macpherson: During the course of this call we may make certain forward looking statements regarding various matters related to our business that some 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.

Ian McPherson: Such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from these forward-looking statements, and Nobl does not assume any obligation to update these statements. Also, note that we are referencing non-GAAP financial measures on the call today. You can find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation, in our earnings report issued yesterday and filed with the SEC.

Ian Macpherson: Any factors could cause actual results to differ materially from these forward looking statements and noble does not assume any obligation to update. These statements. Also note. We are referencing non-GAAP financial measures on the call. Today, you can find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure.

Ian Macpherson: And the associated reconciliation in our earnings report issued yesterday and filed with the SEC with that I'll now turn the call over to Robert Eifler, President and CEO of noble.

Robert W. Eifler: With that, I'll now turn the call over to Robert Eifler, President and CEO of Nobl. Good morning, welcome everyone, and thank you for joining us on the call today. I'll begin with opening remarks on our results in commercial activity and then provide some market outlet commentary before passing the call to Richard to discuss the financials. After our prepared remarks, we look forward to taking your questions. The team delivered another solid operational quarter with Q4 adjusted EBITDA of $201 million, bringing full-year adjusted EBITDA to the upper end of the guidance range, and Q4 free cash flow of $165 million, excluding asset sale proceeds, which also punctuated a good free cash flow contribution for the full year. These fourth-quarter results were achieved despite later-than-expected contract commencements for both Globetrotter 1 and Intrepid due to delays related to weather and permitting issues.

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

Robert W. Eifler: I'll begin with opening remarks on our results and commercial activity and then provide some market outlook commentary before passing the call to Richard to discuss financials.

Robert W. Eifler: After our prepared remarks, we look forward to taking your questions.

Richard Barker: The team delivered another solid operational quarter with Q4, adjusted EBITDA of $201 million.

Richard Barker: Bringing full year adjusted EBITDA to the upper end of the guidance range in Q4 free cash flow of $165 million, excluding asset sale proceeds, which also punctuated a good free cash flow contribution for the full year.

Richard Barker: These fourth quarter results were achieved despite later than expected contract commencement for both the globetrotter, one and the intrepid due to delays related to weather and permitting issues.

Robert W. Eifler: In other respects, we saw very strong uptime in cost performance across the fleet. The heavy lifting associated with our merger integration is now substantially behind us, and our offshore teams continue to execute at a high level to perform safe and efficient drilling operations for our customers around the world. Our board declared a 40 cent dividend for the first quarter of 2024, consistent with the last quarter, and we also repurchased $15 million of shares in Q4.

Richard Barker: So otherwise we saw very strong uptime and cost performance across the fleet.

Richard Barker: The heavy lifting associated with our merger integration is now substantially behind us.

Richard Barker: Our offshore teams continue to execute at a high level to perform safe and efficient drilling operations for our customers around the world.

Richard Barker: Our board declared a <unk> 48 dividend for the first quarter of 2024, consistent with last quarter, and we also repurchased $15 million of shares in Q4.

Robert W. Eifler: This brings the total capital return to shareholders since the Q4 2022 merger closed through the first quarter of 2024 to $337 million. As previously stated, you can expect Nobl to continue to prioritize the return of the substantial majority of free cash flow to shareholders going forward between dividends and buybacks, which we recognize as a top priority for investors and one of the key pillars of our first choice offshore ambition. Our outlook for our business over the next several years continues to look very promising, especially on the deepwater side, notwithstanding some lingering white space facing a handful of breaks over the near term. Despite a recent short-term downtick in the number of deepwater contract awards industry-wide during the fourth quarter, we have been pleased to announce several contract fixtures since late December that have meaningfully augmented our 2024 backlog. As I list these here in a moment, I'll just say that we consider all of these recent pictures to represent current market prices, although we are only disclosing day rates where customer approvals allow us to do so.

Richard Barker: This brings total capital returned to shareholders since the Q4 2022 merger close during the first quarter of 2000 $24 million to $337 million.

As previously stated you can expect mobile to continue to prioritize the return of the substantial majority of free cash flow to shareholders going forward between dividends and buybacks, which.

Which we recognized as a top priority for investors and one of the key pillars of our first choice offshore ambition.

Our outlook for our business over the next several years continues to look very promising, especially on the deepwater side, notwithstanding some lingering white space confronting a handful of rigs over the near term.

Richard Barker: Despite our recent short term downtick in the number of deepwater contract awards industry wide during the fourth quarter.

Richard Barker: <unk> been pleased to announce several contract fixtures since late December that have meaningfully augmented our 2020 for backlog.

Richard Barker: As I lift these here in a moment.

Richard Barker: I will just say that we consider all of these recent fixtures to represent current market pricing.

Richard Barker: Though we are only disclosing day rates, where customer approvals allow us to do so.

Richard Barker: First the noble discoverer was awarded a 400 day contract with Petrobras in Colombia.

Robert W. Eifler: Discoverer was awarded a 400-day contract with Petrobras in Colombia that's set to commence in Q2 2024 following the RIGS 10-year survey. This contract includes a price option for an additional 390 days. Next, the NOPA Voyager was awarded a one-well contract plus one option well with Petronas and Suriname that commenced earlier this month with an estimated firm duration of 130 days plus a 70-day option. Hence, the Voyager is now firmly booked into June, with the option period extending into August of this year. Next,

Richard Barker: Set to commence in Q2 2024, following the rigs 10 year survey.

Richard Barker: This contract includes a priced option for an additional 390 days.

Richard Barker: Next the Voyager was awarded a one well contract plus one option well with Petro NAS in Suriname that commenced earlier this month with an estimated firm duration of 130 days plus a 70 day option.

Richard Barker: So the Voyager is now firmly booked in June with the option period extending until August of this year.

Next.

Robert W. Eifler: Valiant received a six-month extension from ELLOG in the U.S. Gulf of Mexico, extending that engagement from July into January next year. This day rate remains at $470,000, excluding additional fees for the use of managed pressure drilling. Jerry D'Souza received a nine-month extension with Total Energies in Nigeria, continuing the program out to November 2024. Last, within the floater fleet, both of the Globetrotter drillships' ongoing contracts with Shell in the Gulf of Mexico have been extended into early May. On the jacked-up side, the Noble Intrepid had an option exercised by Harbor Energy for a well intervention program in the UK North Sea, which commenced in January at a daily rate of $120,000. However, this job started a few weeks later than planned due to challenging weather conditions.

Richard Barker: <unk> received a six month extension from log in the U S Gulf of Mexico.

Richard Barker: Extending that engagement from July into January next year.

Richard Barker: This day rate remains at $470000, excluding additional fees for the use of managed pressure drilling.

Richard Barker: Next the noble Jade Sousa received a nine month extension with total energies in Nigeria, continuing the program out to November 2024.

Richard Barker: Flat within the floater fleet both of the Globetrotter Drillships ongoing contracts with shell in the Gulf of Mexico have been extended into early may.

Richard Barker: And then on the Jackup side, the noble Intrepid had an option exercised by hardware energy for our well intervention program in the UK North Sea, which commenced in January at a day rate of $120000. This job started a few weeks later than planned due to challenging weather conditions.

Robert W. Eifler: Also, the noble innovator received a one well extension, estimated 90-day duration from BP at a day rate of $140,000, scheduled to commence in September 2024. BP's subsequent priced options on the Innovator have been restructured into smaller components, which, if fully exercised, would extend into Q2 2026. And finally, the Noble Resolute has recently received an additional 60 days with petrographs at $145,000 per day, scheduled to begin in March 2025, in direct continuation of the RIG's existing backlog. Collectively, these recent fixtures contribute an additional firm backlog value of $515 million, excluding mobilization, MPD revenue, and option periods. Our total backlog currently stands at 4.6 billion dollars, essentially flat versus last quarter.

Richard Barker: Also the noble innovator received a one well extension.

Richard Barker: Estimated 90 day duration from BP at a day rate of $140000 scheduled to commence in September 2024.

Richard Barker: BP subsequent priced options on the innovator had been restructured into smaller components, which if fully exercised.

Richard Barker: Size will extend into Q2 2026.

Richard Barker: And finally, the noble Resolute has recently received an additional 60 days with Petrograd at $145000 per day scheduled to begin in March 2025, indirect continuation of the rigs existing backlog.

Richard Barker: Collectively these recent fixtures contribute an additional firm backlog value of $515 million, excluding mobilization MPD revenue and option periods.

Richard Barker: Our total backlog currently stands at $4 6 billion essentially flat versus last quarter. However, excluding the six rigs we have operating under long term contracts in Guyana in Norway, which don't typically replenish backlog frequently the remaining backlog across our other 23 marketed rigs.

Robert W. Eifler: However, excluding the six rigs we have operating under long-term contracts in Guyana and Norway, which don't typically replenish backlog frequently, the remaining backlog across our other 23 marketed rigs actually increased by 10 percent over the past three months. Richard will go into the guidance in a few minutes, but as a quick preface, 92% of our midpoint 2024 EBITDA expectation is supported by firm backlog currently. As reflected on our new fleet status sheet, the remaining 2024 white space for Nobl's floaters sits mostly now with the two Globetrotter drillships and the six-gen semi-Nobl developed.

Richard Barker: Actually increased by 10% over the past three months.

Richard will go into the guidance in a few minutes, but as a quick preface 92% of our midpoint 2024, EBITDA expectation is supported by firm backlog currently.

Richard Barker: As reflected on our new fleet status sheet. The remaining 2024 white space for Noble's floaters sits mostly now with the two globetrotter drillships and the sixth Gen semi level developer.

These three units are being marketed for both spot work and longer term opportunities. Although practically speaking in the near term opportunity set is more focused around short term spot work.

Robert W. Eifler: These three units are being marketed for both spot work and longer-term opportunities, although practically speaking, the nearer-term opportunity set is more focused around short-term spot work. One additional update that I'd like to call out on the fleet status is the revised timing of the estimated contract commencement for the Noble Fe Cozac in Brazil, which has slipped from a prior estimate of March to a current estimate of July 1. The original driver of this delay was the rig's preceding contract with L-Log in the Gulf of Mexico, running about 30 days longer than initially planned, which impacted our planning and preparation timeline for the Petrobras work. Subsequently, the shipyard program for the Kozak SPS in contract preparation is unfortunately taking longer than planned, primarily due to protracted delivery lead times from some critical equipment shipments.

Richard Barker: One additional update that I would like to call out on the fleet status is the revised timing of the estimated contract commencement for the noble Fei Kozak in Brazil, which had slipped from our prior estimate of March to a current estimate of July one.

Richard Barker: The original driver of this delay with the rigs preceding contract with <unk> in the Gulf of Mexico.

Richard Barker: Running about 30 days longer than initially expected.

Richard Barker: Which impacted our planning and preparation timeline for the Petrobras work.

Richard Barker: Subsequently the shipyard program for the <unk> Sps and contract preparation is unfortunately, taking longer than planned primarily due to protracted delivery lead times from some critical equipment shipments.

Robert W. Eifler: These delays have been exacerbated by the disruption of global shipping channels, but we're doing everything we can to complete this major project and get to work with Petrobras by mid-year. Now turning to the broader industry outlook, I'd like to go through our semi-annual review of the global deepwater market supply and demand picture. Overall, we continue to see very encouraging indicators for continued steady growth in the offshore drilling market. Offshore upstream capex is expected to be up again by a low to mid double-digit percentage this year. And I would mention here that while Noble's 2024 revenue outlook is somewhat more muted than this range, this is due to a heavy slate of scheduled maintenance and contract preparation related to downtime across our fleet, which is more heavily weighted to the first half of the year, whereas we expect to be comping much better on an annual top-line growth rate basis in the second half of this year. Additionally, the various other leading indicators, from subsea treaty orders to offshore FIDs and international license bid rounds, are all flashing green for the 24 to 26 visible horizon.

Richard Barker: These delays have been exacerbated by the disruption of global shipping channels, but we're doing everything we can to complete this major project and get to work with Petrobras by mid year.

Richard Barker: Now turning to the broader industry outlook I'd like to go through our semi annual review of the global deepwater market supply and demand picture.

Richard Barker: Overall, we continue to see very encouraging indicators for continued steady growth in the offshore drilling markets.

Richard Barker: Sure upstream Capex is expected to be up again by a low to mid double digit percentage this year.

Richard Barker: And I would mention here that while <unk> 2020 for revenue outlook is somewhat more muted than this range. This is due to a heavy slate of unscheduled maintenance and contract preparation related to downtime across our fleet, which is more heavily weighted to the first half of the year.

Richard Barker: We expect to be Comping much better on an annual top line growth rate basis in the second half of this year.

Richard Barker: Additionally, the various other leading indicators from subsea tree orders to offshore and.

Richard Barker: In International license bid rounds are all flashing green for the 24 to 26 visible horizon.

Richard Barker: Zooming in on the EDW market 2023 average contracted demand of 91 rigs was up nine rigs or 11% over the 2022 average.

Richard Barker: With current contracted demand of 92 rigs, representing 95% effective utilization of the immediately marketable fleet.

Richard Barker: Following 15 drillship reactivation in 2022 that had been completed or are still underway. There now remains 7% to 10 viable high spec seventh generation Drillships inside line capacity.

Richard Barker: Including cold stacking shipyard assets.

Robert W. Eifler: Zooming in on the UDW market, 2023 average contracted demand of 91 rigs was up 9 rigs or 11% over the 2022 average, with current contracted demand of 92 rigs representing 95% effective utilization of the immediately marketable fleet. Following 15 drillship reactivations since 2022 that have been completed or are still underway, there now remain 7 to 10 viable high-spec seventh-generation drillships in sideline capacity, including cold These sideline rigs have capital requirements of $100 to over $300 million per rig, with minimum one-year reactivation lead times to deploy. We continue to expect the majority of these, including our drill ship, the Meltem, to be pulled into service over the next couple of years based on expected demand levels, at which point high-end UDW capacity would be fully exhausted. Perhaps the most striking statistics that we observed today relate to the sharp inflection and open demand for floaters. The current tally of public tenders and pre-tenders represents 108 years of open floater demand. This figure is up by over 50% compared to last year and is also at a decade high by a wide margin.

Richard Barker: These sideline rigs have capital requirements.

Richard Barker: 100 to over $300 million per rig with minimum one year reactivation lead times to deploy.

Richard Barker: We continue to expect the majority of these including our drillship the melt them.

To be pulled into service over the next couple of years based on expected demand levels.

Richard Barker: At which point I and UW capacity will be fully exhausted.

Richard Barker: Perhaps the most striking statistic that we observe today relate to the sharp inflection in open demand for floaters.

Richard Barker: The current tally of public tenders and pre tenders represents 108 rig years of open floater demand.

Richard Barker: This figure is up by over 50% compared to last year and is also at a decade high by a wide margin. Additionally.

Richard Barker: Additionally, the average duration of each job opportunity within this 108 rig years of open demand is now 18 months.

Richard Barker: Which is up 40% versus a year ago, and 70% higher than the prior five year average.

Richard Barker: These statistics on open demand by the way have been updated since taking the total 10 year drillship job off the board.

Richard Barker: This represents an important step change in longer term visibility for our business I.

I would also mentioned that measurable open demand of public tenders is not by any means a complete picture.

Richard Barker: <unk> specifically in fact, the vast majority of floater backlog that we have booked over the past several years as come via direct awards and extensions rather than from public tenders that these aforementioned stats described.

Richard Barker: Looking out over the next one to two years, we see latent EDW demand growth of 10 or more rigs again similar to the number of remaining rigs in sideline supply.

Robert W. Eifler: Additionally, the average duration of each job opportunity within this 108 rigged years of open demand is now 18 months, which is up 40% versus a year ago and 70% higher than the prior five-year average. These statistics on open demand, by the way, have been updated since taking the total 10-year drillship jobs off the board. This represents an important step change in longer-term visibility for our business. I would also mention that measurable open demand for public tenders is not, by any means, a complete picture.

Richard Barker: However between here and there we do expect the combination of supply constraints and in perfect alignment between rig availability and demand requirements to result in some continued utilization inefficiencies over the near term.

Richard Barker: Overall this results in a generally firm, but balanced market until the sidelines capacity is substantially absorbed as opposed to a scarcity situation.

But certainly with opportunities for situational pricing increases along the way, which.

Richard Barker: Which is similar to the dynamic that we've seen in recent months.

Richard Barker: From a geographic perspective, the fulcrum of demand strength through <unk> rigs continues to be South America and Africa, primarily.

Richard Barker: Starting with South America. There are currently 29, you'd EW floaters under contract in Brazil with a further six units contracted to start up over the course of 2024.

Robert W. Eifler: In Nobl's case specifically, in fact, the vast majority of floater backlog that we have booked over the past several years has come via direct awards and extensions rather than from public tenders that these aforementioned stats describe. Looking out over the next one to two years, we see latent UDW demand growth of 10 or more rigs, again, similar to the number of remaining rigs in sideline supply. However, between here and there, we do expect the combination of supply constraints and imperfect alignment between rig availabilities and demand requirements to result in some continued utilization inefficiencies over the near term. Overall, this results in a generally firm but balanced market until the sideline capacity is substantially absorbed, as opposed to a scarcity situation.

Petrobras currently has opened demand for five rigs on two 5% to three year contracts with 2025 start dates. Although these five tenders appear likely to be more renewals against expiring contracts and incremental units.

Richard Barker: Guyana remains a core market for renewable where activity remains at six CDW rigs, including four of our Drillships of course.

Richard Barker: We have not experienced any change or interruption and operating conditions and Guyana over the past few months following Venezuela territorial challenge over the scuba region nor.

Richard Barker: Nor do we anticipate any likely disruption in.

Richard Barker: In the background.

Richard Barker: It has been encouraging to see a successful bid round in Guyana recently with offers on eight of 14 blocks and contract expected to be finalized soon.

Richard Barker: Which could be supportive of additional activity outside of the sabra field in the years ahead.

Richard Barker: Suriname is vacillating between zero and three deepwater rigs in recent years and has recently increased backlog to one rig with the noble voyagers startup with Petronas.

Robert W. Eifler: But certainly with opportunities for situational pricing increases along the way, which is similar to the dynamic that we've seen in recent months. From a geographic perspective, the fulcrum of demand strength through UDW rigs continues to be South America and Africa, primarily. Starting in South America, there are currently 29 UDW floaters under contract in Brazil, with a further six units contracted to start up over the course of 2024.

Richard Barker: Exploration activity in both the shallow and deepwater could support modest incremental demand in Suriname throughout 24 in 2025.

Richard Barker: Paul for the country. Its first major field development represents an additional demand for two floaters on multi year contracts expected to commence in 2026.

Richard Barker: Columbia will similarly soon be backed up from zero to one deepwater rig with the commencement next quarter Noble discovers 400 day contract.

Robert W. Eifler: Petrobras currently has open demand for five rigs on two-and-a-half to three-year contracts with 2025 start dates, although these five tenders appear likely to be more renewals against expiring contracts than incremental units. Guyana remains a core market for Noble, where activity remains at six UDW rigs, including four of our drill ships. We have not experienced any change or interruption in operating conditions in Guyana over the past few months following Venezuela's territorial challenge over the Eskibo region, nor do we anticipate any likely disruptions in the background.

Richard Barker: And Theres, a handful of additional potential exploration wells with other operators that could materialize for an additional unit of demand in Colombia over the next one to two years.

Richard Barker: Moving to West Africa utilization is 100% on 18 regionally marketed floaters, including seven in Angola, and Namibia and three in Nigeria.

Richard Barker: West Africa is a region with particularly strong demand visibility with current tenders and pre tenders, representing 20 rig years of demand, including for unique multi year rig requirements with late 2024 through 2025 targeted start dates.

Richard Barker: All of this again is net of the total 10 year job.

Richard Barker: Recently come off the board.

Richard Barker: Overall, we believe West Africa could grow to 21% to 22 floaters over the next year.

Robert W. Eifler: It has been encouraging to see a successful bid round in Guyana recently with offers on 8 of 14 blocks and contracts expected to be finalized and announced soon, which could be supportive of additional activity outside of the Stahlberg field in the years ahead. Suriname has vacillated between zero and three deepwater rigs in recent years and has recently increased back up to one rig with the Noble Voyagers startup with Petronas. Exploration activity in both shallow and deep waters could support modest incremental demand in Suriname throughout 2024 and 2025, while FID for the country's first major field development represents an additional demand for two floaters on multi-year contracts expected to commence in 2026. Columbia will similarly soon be backed up from zero to one deepwater rig with the commencement next quarter of Noble Discoverer's 400-day contract. And there are a handful of additional potential exploration wells with other operators that could materialize for an additional unit of demand in Columbia over the next one to two years. Moving to West Africa

Richard Barker: This does not factor in any potential rig adds in Mozambique, which could represent two to three additional units of multiyear demand from 2025 and 2026.

Richard Barker: In the Gulf of Mexico, including the U S and Mexico deepwater demand has ranged between 22% to 25 rigs over the past couple of years and currently stands at 24%.

Richard Barker: With three Idaho marketed rigs, resulting in 89% utilization.

Richard Barker: Near term demand is expected to remain approximately flat with some short term variability around contract rollovers. So this is where we are seeing somewhat more white space, particularly among a few of the <unk> units.

Richard Barker: We are optimistic about some opportunities to add additional work this year for all of our Gulf of Mexico rigs. However, the globetrotter drillships and the developer are likely to experience lower utilization than the rest of our floaters.

Outside the Golden Triangle.

Richard Barker: In the Mediterranean and Black Sea are showing a positive uptick in activity with 10 contracted floaters currently up from six throughout the first half of 2023 and.

Richard Barker: And regionally utilization at 100%.

Richard Barker: With continuing demand strength from Egypt, the Black Sea and Olivia activity in this region is expected to range between 10 to 12 floaters throughout $2024 25.

Robert W. Eifler: Utilization is 100% on 18 regionally marketed floaters, including seven in Angola, four in Namibia, and three in Nigeria. West Africa is a region with particularly strong demand visibility, with current tenders and pre-tenders representing 20 rig years of demand, including four unique multi-year rig requirements with late 2024 through 2025 targeted start dates. All of this, again, is net of the total 10-year job that has just recently come off the board. Overall, we believe West Africa could grow to 21 to 22 floaters over the next year. This does not factor in any potential rig ads in Mozambique, which could represent two to three additional units of multi-year demand from 2025 and 2026.

Richard Barker: India has three UW drillships currently although two of these are wrapping up contracts soon and are expected to leave the region.

Richard Barker: Despite India shedding a couple of rigs in the near term the government recently announced aggressive five year investment plan of $67 billion to develop its natural gas resources appears more likely than not to support the revival and floater activity over the next few years.

Richard Barker: And then finally, the Asia Pac and Australia region has four units of demand, 100% utilization and a healthy number of short medium and long term programs on the horizon for late 2024 through 2026, which suggest the potential upward bias to the region.

Richard Barker: So tying all this together we remain quite optimistic about the upward trajectory of the deepwater market.

Richard Barker: Demand growth won't be linear it never is.

Supply constraint is a governing factor as well.

Robert W. Eifler: In the Gulf of Mexico, including the U.S. and Mexico, deepwater demand has ranged between 22 to 25 rigs over the past couple of years and currently stands at 24, with three idle marketed rigs resulting in 89 percent utilization. Near-term demand is expected to remain approximately flat with some short-term variability around contract roll-ups. So this is where we are seeing somewhat more white space, particularly among a few of the 6G units We're optimistic about some opportunities to add additional work this year for all of our Gulf of Mexico region. However, the Globetrotter drill ships and the developer are likely to experience lower utilization than the rest of our floaters, outside the Golden Triangle. The Mediterranean and Black Sea are showing a positive uptick in activity with 10 contracted floaters currently, up from six throughout the first half of 2023, and regional utilization at 100%. With continuing demand strength from Egypt, the Black Sea, and Libya, activity in this region is expected to range between 10 to 12 floaters throughout 2024 and 2025. India has three UDW drillships currently, although two of these are wrapping up contracts soon and are expected to leave the region.

Richard Barker: But overall this is a market that should see continued upward pressure on day rates as demand grind higher and as the last several units of high end sideline capacity get absorbed.

Richard Barker: There will absolutely continue to be bifurcated pricing between the top and existing rigs in the market first the rigs that are being reactivated from sideline into multiyear contracts, that's well established and economically predictable, but overall the trend for both day rates and contract duration is upward.

Richard Barker: Now on the Jackups.

Richard Barker: Although this is still a smaller percentage of our earnings mix the picture for our non Norway harsh jackups continues to quietly improve especially for mid 2024, all once the Regina Allen and resilient and get back to work in fact the <unk>.

Any improvement in market balances in day rates in the North sea over the past couple of years has been quite a positive and still developing story.

Richard Barker: Demand in the non Norway, North Sea has range between 18% and 22 jackups over the past two years and currently stands at 22.

Richard Barker: Three idle rigs, resulting in utilization of 88%.

Richard Barker: Two of these three idle units are hours de Novo Highlander and level interceptor, both of which have limited 2024 work visibility at this time.

Richard Barker: But with the overall market firming up from the demand side drilling day rates in the North Sea have improved to the 130 to $150000 per day range up from 100 to $135000 per day, a year ago, and as long as 70% to $90000 a day a few years ago.

Robert W. Eifler: However, despite India shedding a couple of rigs in the near term, the government's recently announced aggressive five-year investment plan of 67 billion dollars to develop its natural gas resources appears more likely than not to support a revival in floater activity over the next few years. And then finally, the Asia-Pacific and Australia region has four units of demand, 100% utilization, and a healthy number of short, medium, and long-term programs on the horizon for late 2024 through 2026, which suggests a potential upward bias for the region. So tying all this together, we remain quite optimistic about the upward trajectory of the deepwater market. Demand growth won't be linear, it never is, and supply constraints are a governing factor as well.

Richard Barker: We have decent visibility towards signing up additional backlog at healthy rates this year.

Richard Barker: Looking out past 2024, there's interesting demand optionality from additional Ccs activity, which has just begun in 'twenty three with our involvement in project Green team.

Richard Barker: The Norway Jackup market remains subdued for 2024 with eight rigs of demand compared with the historically normalized demand of 11% to 12 Jackups.

Richard Barker: The noble integrator and noble Invincible continues to perform extremely well for acre BP.

Richard Barker: We do not envision redeploying a third CJ 70 rig into Norway before 2025.

Robert W. Eifler: But overall, this is a market that should see continued upward pressure and day rates as demand grinds higher and as the last several units of high-end sideline capacity get absorbed. There will absolutely continue to be bifurcated pricing between the top-end existing rigs in the market versus the rigs that are being reactivated from the sidelines into multi-year contracts. That's well-established and economically predictable. But overall, the trend for both day rates and contract duration is upward. Now on to Jack.

Richard Barker: Although customer dialogue for next year is more constructive than it has been in Ohio.

Richard Barker: So we will see how that develops but we'll certainly be ready and well positioned with the right assets and team when the demand improvement does materialize.

Richard Barker: So that's it for the market overview I would like to turn it to Richard to discuss the financials.

Richard Barker: Thank you Robert and good morning, or good afternoon, all and my remarks today I will briefly review the highlights of our fourth quarter and full year 2023 results before touching on our outlook for 2024.

Richard Barker: Contract drilling services revenue for the fourth quarter totaled $609 million down from $671 million in the third quarter.

Richard Barker: Adjusted EBITDA was $201 million in Q4 down from $283 million in Q3.

Robert W. Eifler: Although this is still a smaller percentage of our earnings mix, the picture for our non-Norway harsh jackups continues to quietly improve, especially from mid-2024 on, once the Regina Allen and Resilient get back to work. In fact, the steady improvement in market balances and day rates in the North Sea over the past couple of years has been quite a positive and still developing story. Demand in the non-Norway North Sea has ranged between 18 and 22 jackups over the past two years and currently stands at 22, with three idle rigs resulting in an utilization of 88 percent. Two of these three idle units are ours, the Noble Highlander and Noble Interceptor, both of which have limited 2024 work visibility at this time. But with the overall market firming up from the demand side, drilling day rates in the North Sea have improved to the $130,000 to $150,000 per day range, up from $100,000 to $135,000 per day a year ago and as low as $70,000 to $90,000 per day a few years ago.

Richard Barker: Cash flow from operations was $287 million capital expenditures were $141 million and free cash flow was $165 million.

Richard Barker: Our full year 2023 results came in towards the high end of our guidance range with full year revenue of $2 6 billion and adjusted EBITDA of $810 million.

Richard Barker: Turning back to the fourth quarter as anticipated revenue and adjusted EBITDA decrease from third quarter levels due primarily to lower utilization of our floater fleet the market utilization decreased to 75% in the fourth quarter down from 92% in the third quarter.

Richard Barker: Scheduled contract gaps with the <unk> and the noble Voyager a delayed start for the noble Globetrotter, one and commercial white space for renewable developer were primary contributors to the sequential downtick, which more than offset an increase in average floater day rates.

<unk> hundred 4000 per day in Q3 up to 437000 per day in Q4.

Richard Barker: Our 13 marketed Jackups, we utilized 61% in the fourth quarter consistent with the third quarter with the average day rate improving to 148000 in the fourth quarter up from 141000 per day in the third quarter.

Robert W. Eifler: We have decent visibility toward signing up additional backlog and healthy rates this year, and looking out past 2024, there's interesting demand optionality from additional CCS activity, which has just begun in 23 with our involvement in project Green. The Norway jackup market remains subdued for 2024 with 8 rigs of demand compared with historically normalized demand of 11 to 12 jacks. Integrator and Nobl Invincible continue to perform extremely well for AukerBP.

Richard Barker: During the fourth quarter, we received cash proceeds of $21 million in the form of a deposit for the sale of the noble explorer, which essentially represents the net proceeds to noble from the sale.

Richard Barker: We expect to close the sale later in Q1 or Q2 of this year.

Richard Barker: As summarized on page five of the earnings presentation slides.

Richard Barker: Total backlog as of February 23rd stands at $4 6 billion.

Richard Barker: Current backlog includes approximately $1 94 billion that is scheduled for revenue conversion during 2024.

Robert W. Eifler: We do not anticipate redeploying a third CJ70 rig into Norway before 2025, although customer dialogue for next year is more constructive than it has been in a while. So we will see how that develops, but we'll certainly be ready and well positioned with the right assets and team when the demand improvement does materialize. So that's it for the market overview; now I'd like to turn it over to Richard to discuss the financials. Thank you, Robert, and good morning or good afternoon.

Richard Barker: A reminder, our backlog excludes reimbursable revenue as well as revenue from ancillary services.

Richard Barker: We are firmly into the final stages of our integration. We currently have realized nearly $115 million of run rate synergies and are raising our total synergy target from $125 million to a $150 million.

Richard Barker: Both the quantum and the pace of synergy realization have exceeded expectations.

Richard Barker: Referring to page nine of the earnings Slide we are providing full year 2024 guidance as follows.

Richard Barker: Total revenue within a range of $2 55 to $2 7 billion, which include a little over $100 million in other revenues, such as Reimbursable and contract intangibles amortization.

Richard Barker: In my remarks today, I will briefly review the highlights of our fourth quarter and full year 2023 results before touching on our outlook for 2020. Contract drilling services revenue for the fourth quarter totaled $609 million, down from $671 million in the third quarter. Adjusted EBITDA was $201 million in Q4, down from $283 million in Q3. Cash flow from operations was $287 million, capital expenditures were $141 million, and free cash flow was $165 million.

Richard Barker: Adjusted EBITDA between $925 million and one point <unk> 5 billion in capital additions, which excludes reimbursement between 400 and $440 million.

Richard Barker: The midpoint of this revenue range is currently 92% supported by Q1 to date revenues correct.

Richard Barker: Backlog for the remainder of the year excluding options.

We currently estimate that a little over 60% of full year adjusted EBITDA will be weighted to the second half of this year.

Richard Barker: Jackup contribution is expected to increase in 2024 going from approximately 10% of our gross margin in 2023 to approximately 15% of our gross margin in 2024.

Richard Barker: So I think a key contract startups are expected to drive an increase in EBITDA starting in the third quarter, notably the <unk> comes back in Brazil, the noble discoverer in Colombia, and the noble Regina Allen in Argentina.

Richard Barker: Our full year 2023 results came in towards the high end of our guidance, with full year revenue of £2.6 billion and adjusted EBITDA of £810 million. Turning back to the fourth quarter, as anticipated, revenue and adjusted EBITDA decreased from third-quarter levels, due primarily to lower utilization of our floater fleet; market utilization decreased to 75% in the fourth quarter, down from 92% in the third quarter. Scheduled contract gaps for the Noble Fae Cossack and the Noble Voyager, the delayed start for the Noble Globe Trotter 1, and commercial white space for the Noble Developer will primarily contribute to this sequential downtick, which more than offsets an increase in average floated day rates from 404,000 per day in Q3 up to 437,000 per day in Q4.

Richard Barker: A key variable to our fourth quarter EBITDA exit rate will be the contribution from the $3 60 rigs that are currently showing white space on athletes status report.

Richard Barker: We currently have active conversations behind each of these available 60 rigs.

Richard Barker: And showing up work for these rigs would translate to an annualized adjusted EBITDA exit rate for 2024 between one three and $1 4 billion assuming out other model assumptions hold.

As a reminder, our 2020 for Capex budget reflects both a peak year for 10 USPS is a major projects across athletes as well as the contract preparation expenditures for the mobile Bay Kodak and Theyre both discovery.

Richard Barker: The scheduling of this year's major projects currently indicates that just over half of our capex will be weighted to the first half of the year.

Richard Barker: Some other elements for 2024 to consider are as follows we expect cash taxes in the range of 10% to 12% of adjusted EBITDA and cost to achieve the final synergies related to the transaction is expected to taper off approximately $30 million in 2024.

Richard Barker: Our 13 marketed jackups were utilized 61% in the fourth quarter, consistent with the third quarter, with the average day rate improving to $148,000 in the fourth quarter, up from $141,000 per day in the third quarter. During the fourth quarter, we received cash proceeds of $21 million in the form of a deposit for the sale of the Noble Explorer, which essentially represents the net proceeds to Noble from the sale.

Richard Barker: Additionally, our guidance reflects mid single digit percentage inflation rates in 2024 on average across our total cost structure, including Opex and Capex.

And then finally, we would expect that.

Richard Barker: Net working capital build in 2024, driven by both topline growth and a robust slips and favorable net working capital movements experienced in the fourth quarter.

Richard Barker: We do expect to see an increase in free cash flow for full year 2024 through 2023.

Richard Barker: Due to the aforementioned factors, we expect to be modestly free cash flow positive in the first half of 2024 prior to any capital return to shareholders with nearly all of the free cash flow for the year weighted to the second half.

Richard Barker: We expect to close the sale later in Q1 or Q2 of this year. As summarized on page 5 of the earnings presentation slides, our total backlog as of February 23rd stands at $4.6 billion. Current backlog includes approximately $1.94 billion that is scheduled for revenue conversion during 2024. As a reminder, our backlog excludes reimbursable revenue as well as revenue from ancillary services.

Richard Barker: As we have said before we would look to retain a substantial majority of our free cash flow to shareholders.

Richard Barker: With that I'll pass the call back to Robert for closing remarks.

Robert W. Eifler: Thank you Richard.

Robert W. Eifler: I'd just like to wrap up here with a tremendous thank you de novo employees worldwide, who have worked so hard to get the company to the enviable position in which we find ourselves today.

Robert W. Eifler: We had a sizable but ultimately an overwhelmingly successful integration effort last year.

Richard Barker: We are firmly into the final stages of our integration. We currently have realized nearly 115 million of run-rate synergies and are raising our total synergy target from 125 million to 150 million. Both the quantum and the pace of synergy realisation have exceeded expectations. Referring to page 9 of the earnings slide, we are providing full year 2024 guidance as follows: total revenue within a range of $2.55 to $2.7 billion, which includes a little over $100 million in other revenues, such as reimbursables and contract intangibles amortization, adjusted EBITDA between $925 million and $1.025 billion, and capital additions, which excludes reimbursements, are between $400 and $440 million.

Robert W. Eifler: Not only have we exceeded our synergy targets both in terms of pace and size.

Robert W. Eifler: But also we have done so while continuing to deliver outstanding and safe operations for our customers and strong financial results for investors.

Robert W. Eifler: The next time, we talk to you the book will be closed on integration.

Robert W. Eifler: Finally.

Robert W. Eifler: I will reiterate that the multi year outlook for our business remains highly encouraging.

Robert W. Eifler: Especially considering the recent inflection in open floater demand visibility for $2025 to 2026.

Robert W. Eifler: As well as the continuing strong momentum in deepwater.

Robert W. Eifler: Which underpinned longer term drilling demand.

Robert W. Eifler: And the supportive demand signals are juxtaposed against the diminishing pool of spare rig capacity.

Robert W. Eifler: For noble the shape of the year ahead is reminiscent of the past couple of years as we expect to ramp into a meaningful increase in EBITDA from the first half to the second half of this year based on the sequencing of contracts.

Richard Barker: The midpoint of this revenue range is currently 92% supported by Q1-to-date revenues plus firm backlog for the remainder of the year, excluding options. We currently estimate that a little over 60% of full-year adjusted EBITDA will be weighted to the second half of this year. Our jack-up contribution is expected to increase in 2024, going from approximately 10% of our gross margin in 2023 to approximately 15% of our gross margin in 2024. Certain key contract startups are expected to drive an increase in EBITDA starting in the third quarter, notably the Noble Faye Kozak in Brazil, the Noble Discover in Colombia, and the Noble Regina Allen in Argentina. A key variable to our fourth-quarter EBIDTA exit rate will be the contribution from the three 6G rigs that are currently showing white space on athlete status.

Robert W. Eifler: This anticipated ramp in EBITDA and free cash flow materializes, you can look for noble to continue to demonstrate industry leadership with growing capital returns to shareholders, which we see it's core to our value proposition for investors.

Speaker Change: With that operator, we're ready now to open up the call for Q&A.

Speaker Change: The floor is now open for your questions to ask a question. This time simply press star followed by the number one on your telephone keypad. We ask that you. Please limit yourself to one question and one follow up question, we'll now take a moment to Kabbalah roster.

Speaker Change: Our first question comes from the line of Greg Lewis with <unk>. Please go ahead.

Gregory Robert Lewis: Yes, Thank you and good morning, everybody and thanks for taking my questions.

Gregory Robert Lewis: Robert.

Gregory Robert Lewis: Clearly there's been some fits and starts in this market.

Richard Barker: We currently have active conversations behind each of these available 6G rigs, and shoring up work for these rigs would translate to an annualized adjusted EBITDA exit rate for 2024 of between $1.3 and $1.4 billion, assuming our other model assumptions hold. As a reminder, our 2024 CAPEX budget reflects both the peak year for 10 new SPSs and major projects across athletes, as well as the contract preparation expenditures for the Nobel Phase Codes Act and Nobel Discovery. The scheduling of this year's major projects currently indicates that just over half of our CAPEX will be weighted towards the first half of next year. Some other elements for 2024 to consider are as follows. We expect cash taxes in the range of 10% to 12% of adjusted EBITDA, and costs to achieve the final synergies related to the MERS transaction are expected to taper off to approximately $30 million in 2024.

As I look at the fleet, obviously theres a lot of them.

Gregory Robert Lewis: Options attached to.

Speaker Change: A handful of these rigs.

Speaker Change: As we think about some of those options any kind of color you can give us in terms of.

Speaker Change: Yes.

Speaker Change: When those options when do we find out if those options will be exercised and then also any kind of rough guidance on how we should be thinking about.

Speaker Change: At least the priced options what type of step up if any there is on some of those options.

Speaker Change: Yes sure.

Speaker Change: So the options are tied.

Speaker Change: Two different things I think in the contracts, but I think generally speaking.

We try to provide something like 90 days.

Before the end of a contract.

Speaker Change: When will understand option pricing.

Speaker Change: More than that and sometimes we're able to get it sometimes they are tied to.

Richard Barker: Additionally, our guidance reflects mid-single-digit percentage inflation rates in 2024 on average across our total cost structure, including OPEX and CAPEX. And then, finally, we would expect the measure of net working capital to increase in 2024, driven by both top line growth and a reversal of some favorable net working capital movements experienced in the fourth quarter. We do expect to see an increase in pre-cash flow for full year 2024 versus 2023. However, due to the aforementioned factors, we expect to be modestly free cash flow positive in the first half of 2024, prior to any capital returns of shareholders, with nearly all of the free cash flow for the year weighted to the second half. As we have said before, we would look to return the substantial majority of our free cash flow to shareholders. With that, I'll pass the call back to Robert for closing remarks. Thank you, Richard.

Reaching.

Speaker Change: <unk> special target, sometimes they are tied to end up well.

Speaker Change: And sometimes they're just tied to.

Speaker Change: So timing so kind of hard to give an exact answer.

Speaker Change: Yeah.

Speaker Change: We have and of course, we are giving fewer and fewer priced options.

Speaker Change: And we have.

Speaker Change: A couple I think probably the highest profile you should think about maintaining kind of similar market market price levels.

Speaker Change: And the option period, although theres a couple that have a step up as well.

Speaker Change: Okay, Great and then just as I think about as I think about.

Speaker Change: The North sea market.

Speaker Change: We're kind of.

Speaker Change: We're kind of in like a transition period on the floater side, we've seen.

Robert W. Eifler: I'd just like to wrap up here with a tremendous thank you to Nobl employees worldwide who have worked so hard to get the company to the enviable position in which we find ourselves today. We had a sizable, but ultimately an overwhelmingly successful, integration effort last year. Not only have we exceeded our synergy targets, both in terms of pace and size, but we have done so while continuing to deliver outstanding and safe operations for our customers and strong financial results for investors. The next time we talk to you, the book on integration will be closed.

Speaker Change: Some rigs actually exit that market, which looks to be tightening.

That market.

Speaker Change: Realizing that.

Speaker Change: CJ 70, as our purpose built really for the north sea harsh environments.

Speaker Change: <unk> Super spec rigs, maybe theres not a lot of opportunities for those elsewhere.

Speaker Change: That being said are we starting to see any opportunities for potential rigs super spec rigs that could be outside the north sea that could start to tighten that market.

Robert W. Eifler: Finally, I will reiterate that the multi-year outlook for our business remains highly encouraging, especially considering the recent inflection in open floater demand visibility for 2025 to 2026, as well as the continuing strong momentum in deepwater FIDs, which underpin longer-term drilling demand. And these supportive demand signals are juxtaposed against a diminishing pool of spare rig capacity. For Nobl, the shape of the year ahead is reminiscent of the past couple of years, as we expect to ramp up a meaningful increase in EBITDA from the first half to the second half of this year based on the sequencing of contracts.

Speaker Change: Yes.

Speaker Change: Well there is.

Speaker Change: There are two rigs that are leaving the north sea.

Speaker Change: I think it's a question kind of has two answers, whether youre talking about Norway or non Norway.

Speaker Change: We have seen.

Speaker Change: <unk> excuse me, we've seen Norway leaves, Norway rigs leave and go to non Norway, North sea and back and forth. So thats been Ben.

The trend a little bit.

Speaker Change: We have not seen Norway rigs leave the North Sea and go elsewhere in the World and I think that's a less likely scenario for a couple of different reasons and then in the non Norway rest of the North Sea. There are a couple of rigs that are leaving.

Operator: As this anticipated ramp-up in EBITDA and free cash flow materializes, you can look for Nobl to continue to demonstrate industry leadership with growing capital returns to shareholders, which we see as core to our value proposition for investors. With that, Operator, we're ready now to open up the call for Q&A. The floor is now open to your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad.

Speaker Change: This year and I do think that those rigs are likely to leave or come back to the north sea to balanced markets.

With rest of world.

Speaker Change: Okay, great. Thanks for the time.

Speaker Change: Our next question.

Our next question comes from the line of Eddie Kim with Barclays. Please go ahead.

Eddie Kim: Hi, Good morning, just wanted to ask about what's embedded in your full year guide as it relates to contracting for the developer and the two globetrotters this year, which I assume is the biggest swing factor that gets you to the high end or low end of your guide depending on what happens there, but does the midpoint of your guidance to 900.

Operator: We ask that you please limit yourself to one question and one follow-up question. We'll now take a moment to compile our roster. Our first question comes from the line of Greg Lewis with BTIG. Please go ahead. Yeah, thank you. And good morning, everybody.

Eddie Kim: $75 million EBITDA assume maybe 40% utilization across those three rigs this year or how should we think about that.

Gregory Robert Lewis: And thanks for taking my questions. You know, Robert, clearly, there's, you know, there's been some fits and starts in this market. As I look at the fleet, obviously, there are a lot of Eifler, Gregory Lewis, David Smith, Nobl. When those options are exercised, when do we find out if those options will be exercised, and then also any kind of rough guidance on how we should be thinking about, you know, at least the price options, what type of step up, if any, there is on some of those options. Yeah, sure. So the options are tied to different things, I think, in the contracts, but, generally speaking, we try to provide something like 90 days before the end of a contract when we'll understand option pricing. Ideally, we'd like more than that, and sometimes we're able to get it.

Speaker Change: Yes, it's a very good question.

Speaker Change: I think the way to think about it is obviously we expect.

Speaker Change: We are white space for each of those rigs in the ship.

Speaker Change: But we do have active dialogue behind each of them.

Speaker Change: So I think you should think about mid point of our guidance assuming that there is incremental work for each of those rigs in 2024.

Speaker Change: And I think that as you think about our earnings profile.

2024 and into next year, obviously with contribution from those rigs.

Speaker Change: We'll be looking at an exit EBITDA run rate of call. It $1 three to $1 4 billion of EBITDA.

Speaker Change: Okay. Okay got it thank you.

Speaker Change: And my follow up is just on the <unk>.

The announcement several weeks ago, you only have one jackup in the middle East coming Qatar. So exposure is very limited.

Robert W. Eifler: Sometimes they're tied to reaching geospatial targets. Sometimes they're tied to end up well, and sometimes they're just tied to timing. So, kind of hard to give an exact answer. We have, and of course we are giving fewer and fewer priced options. And we have a couple, I think probably the highest profile. You should think about maintaining kind of similar market price levels in the option period, although there's a couple that have a step up. Okay, great. And then just, as I think about, as I think about the, you know, the North Sea market, you know, we're kind of, you know, we're kind of in like a transition period on the floater side, we've seen, you know, some rigs actually exit that market, which, which looks to be tightening that market, you know, realizing that CJ 70s are, you know, purpose built really for the North Sea, harsh environment, super spec rigs, you know, maybe there's not a lot of opportunities for those elsewhere.

Speaker Change: I wanted to get your thoughts on how you see kind of the middle East Jackup market playing out in in 'twenty, five and 'twenty six.

Speaker Change: Chooses not to renew some of their some of their job.

Speaker Change: Jack ups could we see rigs moving out of Saudi into other countries like Qatar or the UAE or even outside the middle East region entirely just would be great to get some thoughts there.

Speaker Change: Sure and again, where we are.

Speaker Change: <unk>.

Speaker Change: A bit of an outsider right now on the whole situation, but.

Speaker Change: My assumption is that the rig count is going to stay relatively flat.

Speaker Change: I think probably.

Some some anticipated multi rig tenders.

Speaker Change: That we're potentially going to come out.

Speaker Change: People throw around 40 rig tender type type quantum's.

Speaker Change: Of course, not going to happen at this point seemingly.

Speaker Change:

Speaker Change: <unk> can move out.

Speaker Change: And we'll move around the region as needed.

Speaker Change: But remember also there is a high cost of entry back in.

Robert W. Eifler: That being said, are we starting to see any opportunities for potential rigs, you know, super-spec rigs that could be outside the North Sea that could start to tighten that market? Well, there are two rigs that are leaving the North Sea, and I think the question kind of has two answers, whether you're talking about Norway or non-Norway. We have seen Norwegian rigs leave and go to the non-Norway North Sea and back and forth, so that's been a trend a little bit. We have not seen Norwegian rigs leave the North Sea and go elsewhere in the world, and I think that's a less likely scenario for a couple of different reasons.

Speaker Change: Saudi Arabia, because of some of the contract requirements.

Speaker Change: So it's.

Speaker Change: It's not a decision I would think to be taken lightly to move a rig out.

Speaker Change: And then because you don't know when you might get it back and then ultimately.

Speaker Change: Someone has to pay for that reentry costs for the contract upgrades and unless you are lucky enough to get the exact same rig back so.

Mike.

Robert W. Eifler: And then in the non-Norway rest of the North Sea, there are a couple of rigs that are leaving this year, and I do think that those rigs are likely to leave or come back to the North Sea to balance markets with the rest of the world. Okay, great. Thanks for the time.

Speaker Change: Rigs are mobile theyre always going to move around regionally to fill demand.

Speaker Change: But I think.

Speaker Change: Our best guess is that things stay relatively flat.

Speaker Change: Okay got it. Thank you thanks for all that color I'll turn it back.

Operator: Our next question comes from the line of Eddie Kim with Barclays. Please go ahead. Hi, good morning.

Speaker Change: Our next question comes from the line of Fredrik Stene with Clarksons <unk> Securities. Please go ahead.

Fredrik Stene: Hey, guys hopefully you can hear me.

Eddie Kim: Just wanted to ask about what's embedded in your four-year guide as it relates to contracting for the developer and the two Globetrotters this year, which I assume is the biggest kind of swing factor that gets you to the high end or low end of your guide, depending on what happens there. But does the midpoint of your guide, so it's $975 million in EBITDA, assume maybe 40% utilization across those three rigs this year? Or how should we think about that? Yeah, Eddie, it's a very good question.

Fredrik Stene: Alright, thanks for the comprehensive color both on the market.

Fredrik Stene: Also for 2024.

Fredrik Stene: Wanted to touch a bit upon your.

Fredrik Stene: Pete.

Fredrik Stene: One of your competitors.

Fredrik Stene: Tom reported already mined.

Fredrik Stene: My impression is that <unk> asset there are now more and more opportunities.

Fredrik Stene: Could make reactivation more sensible.

Fredrik Stene: <unk> done before so my first question relates to just how are you now thinking about you are too.

Fredrik Stene: Secular ships are you, beating them more actively or are you.

Richard Barker: I think the way to think about it is obviously we expect real white space for each of those rigs this year, but we do have active dialogue behind each of them. So, you know, I think you should think about that midpoint of our guidance, assuming that there is incremental work for each of those rigs here in 2024. You know, I think that as you think about our earnings profile through 2024 and into next year, obviously with the contribution from those rigs, we'll be looking at an exit EBITDA run rate of call it 1.3 to 1.4 billion of EBITDA. Okay. Okay, guys.

Looking at the Milton for now or potentially both.

Fredrik Stene: And second.

Fredrik Stene: You said.

Fredrik Stene: That's.

Fredrik Stene: The next time, we speak the Mercy acquisition is going to be the books is going to be closed on that one so.

Fredrik Stene: Are you planning any more major M&A steps when that's done thanks.

Fredrik Stene: Yes sure. Thanks, Patrick first of all on the on the Drillships.

Fredrik Stene: <unk> will be first that's the one that we've selectively maher.

Fredrik Stene: Marketed.

Fredrik Stene: And I would not say that we've really changed our approach in marketing that rig we're still looking for a full return on on the reactivation costs, which are around $125 million and take them a year, maybe slightly longer to carryout so that.

Eddie Kim: Thank you. And my follow-up is just on the Saudi announcement several weeks ago. You only have one jackup in the Middle East coming, Qatar, so exposure is very limited.

Fredrik Stene: And that continues to be a smaller subset of opportunities.

Robert W. Eifler: But still wanted to get your thoughts on how you see kind of the Middle East jackup market playing out in 25 and 26. If Saudi chooses not to renew some of their jackups, could we see rigs moving out of Saudi Arabia into other countries like Qatar, or the UAE, or even outside the Middle East region entirely? It would be great to get some thoughts there.

Fredrik Stene: And I think.

Fredrik Stene: We'll continue to market into the into those opportunities.

Fredrik Stene: If you just.

Fredrik Stene: Look at the publicly available information through Petrobras or whatever I think so far we've been less willing to provide substantial discounts off of market for that rig.

Robert W. Eifler: Sure. And again, we are a bit of an outsider right now in the whole situation. But my assumption is that their rig count is going to stay relatively flat. I think probably some anticipated multi-rig tenders that were potentially going to come out, you know, people who are around 40-rig tender type quantums are, of course, not going to happen at this point. Rigs can move out and will move around the region as needed. But also, there is a high cost of entry back into Saudi Arabia because of some of the contract requirements. And so it's not a decision I would think to be taken lightly to move a rig out because you don't know when you might get it back, and then ultimately someone has to pay for that re-entry cost for the contract upgrades, unless you're lucky enough to get the exact same rig back. Rigs are mobile.

Fredrik Stene: And I don't see that we're necessarily.

Fredrik Stene: Are you going to change our approach of selectively marketing it.

Fredrik Stene: And the opportunities.

Fredrik Stene: That fit the criteria for reactivation.

Fredrik Stene: And we will make we would not market the stroke until the Milton <unk> found a job.

Fredrik Stene: We'll just have to see I mean.

Fredrik Stene: It's a little bit hard to predict when that right job emergence for the Melton.

Fredrik Stene: But we do anticipate that rig going back into the marketplace at some point.

Speaker Change: On the on your other question.

Speaker Change: We've said from the very beginning of the announcement of the merger with Maersk drilling that this was going to be a transformational.

Speaker Change: Merger for both companies and I think that that is absolutely proven out to be the case, but we're extremely pleased with.

Robert W. Eifler: They're always going to move around regionally to fill demand, but I think our best guess is that things stay relatively flat. Okay, got it. Thank you. Thanks a lot, Colin. I'll turn it back. Our next question comes from the line of Frederick Steen with Clarkson Securities. Please go ahead.

Speaker Change: With where we sit today.

Speaker Change: Think our 23 results in the midst of some of the.

Speaker Change: Really the bulk of the integration work.

Speaker Change: Really speaks to the Oregon as the combined organization.

Frederick Steen: Hey guys, hopefully you can hear me alright and thanks for the comprehensive color both on the market and... I'll look for 2024. I wanted to touch a bit on your fleet and one of your competitors that have reported already. My impression is that for stacked assets, there are now more and more opportunities that could make reactivations more sensible than before. My first question relates to just that. How are you now thinking about your two stacked drillships? Are you bidding them more actively? Are you only looking at the Melton for now, or potentially both?

Speaker Change: And everyone's willingness to lean into this and.

Speaker Change: And create a.

Some that is greater than the parts. So we just couldnt be more pleased.

Speaker Change: We have also said that that was going to be our transformational merger in from here.

Speaker Change: We will be selective.

Speaker Change: I think it's obvious that the combined platform.

Robert W. Eifler: And second, you said that the next time we speak, the Maersk acquisition is going to be closed on that one. Are you planning any more major M&A steps when that's done? Thanks. Yes, sure. Thanks, Frederick. First of all, on the drill ship, Meltem will be first.

Speaker Change: Could be a candidate for additional M&A in but we.

Speaker Change: We are going to be picky.

Speaker Change: Always with a mind to our customers.

Speaker Change: Our investors and what we look at.

Speaker Change: Thank you that's very helpful. Just a follow up on the cold start tendering and reactivation.

Robert W. Eifler: That's the one that we've selectively marketed, and I would not say that we've really changed our approach to marketing that rig. We're still looking for a full return on the reactivation costs, which are around $125 million and take a year, maybe slightly longer to carry out. So, that continues to be a smaller subset of opportunities, and I think we will continue to market into those opportunities. If you just look at the publicly available information through Petrobras or whatever, I think so far we've been less willing to provide substantial discounts off the market price for that rig. And I don't see that we're necessarily going to change our approach of selectively marketing it into opportunities that fit the criteria for reactivation. And we won't make, we would not market this ROCO until the Meltoms found a job. So we'll just have to see.

Speaker Change: <unk>.

Speaker Change: I think you said in your.

For our prepared.

Speaker Change: Prepared remarks overtime.

Speaker Change: <unk>.

Speaker Change: For now at least there is some supply constraints in some myths mismatches in terms of where rigs are and we are.

Speaker Change: We are.

Speaker Change: Work is that could make this a relatively balanced market.

Speaker Change: You are trending upwards.

Sideline capacities.

Speaker Change: But both you and your peers are predicting I think double digit number of months.

Speaker Change: Those rigs needed over the next few years.

Speaker Change: So if that's.

Speaker Change: Market is going to be balanced.

Speaker Change: You need a client.

Speaker Change: Sophie.

Speaker Change: How many do you have any idea of how many rig.

Speaker Change: <unk> can be brought back from the sidelines per year just to see is there a chance that.

Speaker Change: You will have demand outpacing.

The incremental supply that can be brought back just the Qualcomm.

Robert W. Eifler: I mean, you know, it's a little bit hard to predict when the right job will emerge for the Meltom, but we do anticipate that rig going back into the marketplace at some point. On your other question, we said from the very beginning of the announcement of the merger with Marist Drilling that this was going to be a transformational merger for both companies, and I think that that has absolutely proven to be the case. We're extremely pleased with where we sit today. I think our 23 results, in the midst of some of the really bulk of the integration work, really speak to the combined organization and everyone's willingness to lean into this and create a sum that is greater than the parts. So we just couldn't be more pleased.

Speaker Change: Sure.

Speaker Change: Constraints long lead items et cetera.

Speaker Change: Seems to be.

Speaker Change: No.

Speaker Change: Delayed or be more difficult to procure at this point than before.

Yes, it's a good question I mean, we're going to see plus I think six this year five or six this year.

Speaker Change: We've seen plus.

Speaker Change: Plus 15, I believe from the very beginning of this upturn.

Speaker Change: And so I think the numbers have come through in that kind of 567 at the most per year range, if I'm remembering correctly.

Speaker Change: That seems sustainable it also kind of matches.

Speaker Change: There were.

Speaker Change: Where we see increased demand incremental demand excuse me coming.

Speaker Change:

Speaker Change: I would say.

A lot of it depends on.

On the specific contracts.

Speaker Change: There are a couple of more reactivation that are going to occur in our contract startups from re activations that are going to occur in 2024 than we were predicting in early 2023.

Robert W. Eifler: We have also said that that was going to be our transformational merger, and from here on, we will be selective. I think it's obvious that the combined platform could be a candidate for additional M&A, but we are going to be picky, always with a mind to our customers and our investors in what we look at. Thank you, that's very helpful.

And that's partly because some of the tenders.

Speaker Change: Extended their start date to allow time for reactivation, so to the extent that the programs that are out there.

Speaker Change: Our two plus years.

Speaker Change: That the operators of those programs.

Robert W. Eifler: Just to follow up on the cold stack and the reactivation thinking, I think you said in your prepared remarks, Robert, that, for now at least, there's some supply constraints or some mismatches in terms of where rigs are and where work is that could, you know, make this a relatively balanced market, slightly trending upwards until the sideline capacity is absorbed. Both you and your peers are projecting a double-digit number of incremental rigs needed over the next few years. So, you know, if that market is going to be balanced, and you need that kind of capacity, how many do you have any idea of how many?

Speaker Change: Decided to actively include reactivated rig timeline that supports reactivated rigs I would anticipate as we said in the script that many of the 7% to 10 additional rigs.

Speaker Change: Are set up to take discounts to current market I think this trend probably continues until most of them if not all of them, but most of them are back back into the marketplace. So.

Speaker Change: I could easily see and Thats kind of why we've called for a balanced Maher.

Speaker Change: Market over the next year or so I could easily see the bulk of those seven to 10 getting announced through say mid next year I mean, just picking picking a date out of thin air but.

Speaker Change: It's not at all.

Robert W. Eifler: Riggs can be brought back from the sidelines per year, just to see if there is a chance that you will have them all outpacing the incremental supply that can be brought back just because of supply constraints, long-lived items, etc. That seems to be, you know, delayed or more difficult to procure at this point than before. Yeah, it's a good question.

Speaker Change: Impossible that we see a majority of those reactivation is getting announced.

Speaker Change: The one thing I would say is we've been a little bit flat on as an industry on.

Speaker Change: On UW rates over the last six months or so.

Speaker Change: But.

Speaker Change: There the rates have also kind of.

Speaker Change: Ticked upward, even as reactivation as have been announced and occurring.

Robert W. Eifler: I mean, we're going to see plus, I think, six this year, five or six this year. And we've seen plus 15, I believe, from the very beginning of this upturn. And so I think the numbers have come through in that kind of five, six, seven at the most per year range, if I'm remembering correctly. And that that seems sustainable. It also kind of matches where we see incremental demand, excuse me, coming from. You know, I would say, A lot of it depends on the specific contract.

Speaker Change: And I think that the flatness over the last six months.

Speaker Change: Is.

Speaker Change: Not necessarily attributable to all of these reactivation.

Speaker Change: It's a confluence of factors and all of that is to say that we still do think that there is likely to be rate appreciation through that same period maybe.

Speaker Change: Maybe not at the same slope that we saw early on in this upturn, but we do think that there will be continued rate appreciation.

Speaker Change: Okay. Thank you that's it.

Speaker Change: Very comprehensive I'm very helpful.

Robert W. Eifler: There are a couple of more reactivations that are going to occur in our contract startups from reactivations that are going to occur in 2024 than we were predicting in early 2023. And that's partly because some of the tenders extended their start dates to allow time for reactivation. So, to the extent that the programs that are out there, that are two plus years from when the operators of those programs decide to actively include reactivated rigs, a timeline that supports reactivated rigs. I would anticipate, as we said in the script, that many of the seven to ten additional rigs are set up to take discounts from the current market. I think this trend will probably continue until most of them, if not all of them, but most of them, are back in the marketplace.

Speaker Change: And then for me. Thank you very much and have a good day.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line Kurt Hall lead with benchmark. Please go ahead.

Kurt Hall: Hey, good morning, everybody.

Kurt Hall: Hey, Kurt.

Kurt Hall: I just wanted to maybe extend the conversation off that off.

Kurt Hall: Your prior answer there right so.

Kurt Hall: We've heard quite a bit that there's increasing duration as you referenced and others have referenced that longer duration contract period.

Kurt Hall: Yes.

Kurt Hall: I guess also translated in terms of a longer negotiation period.

Kurt Hall: Finalized contracts so taking.

What you said about pricing.

Kurt Hall: What's going on with respect to longer negotiation periods I'm just kind of curious.

Kurt Hall: How much of that.

Kurt Hall: This longer negotiation period is related to a bid.

Kurt Hall: Bid ask spread on pricing.

Speaker Change: Oh gosh.

Speaker Change: Well actually I think what what's happened here is in 2024, you had the dynamic I just mentioned were.

Robert W. Eifler: So, I could easily see, and that's kind of why we've called for a balance, market over the next year or so. I could easily see the bulk of those 7 to 10 getting announced through, say, mid next year. I mean, just picking a date out of thin air, but it's not at all impossible that we see a majority of those reactivations getting announced.

Speaker Change: Some programs start dates were pushed back to allow for some reactivation.

Speaker Change: And we actually thought some of those programs were going to go to existing <unk>.

Speaker Change: Supply and then at the same time.

Speaker Change: I think <unk>.

Speaker Change: Several operators have recognize the discount in the market for longer term contracts and decided to try to pull together their various different programs into grouped contracts. So that they can go out for more term.

Robert W. Eifler: The one thing I would say is that we've been a little bit flat as an industry in UDW rates over the last six months or so, but the rates have also kind of picked upward even as reactivations have been announced and occurring. And I think that the flatness over the last six months is not necessarily attributable to all of these reactivations; I think it's a confluence of factors. And all that's to say that we still do think that there will be rate appreciation through that same period. Maybe not at the same rate that we saw early on in this upturn, but we do think that there will be continued rate appreciation. Thank you. That's very comprehensive and very helpful. That's it for me. Thank you very much, and have a good day.

Speaker Change: So a few wells that may otherwise have been drilled in 2024, perhaps got pushed to 'twenty five or later in order to group here for some term and that's created a little bit of this white space in 2024.

Speaker Change: And also the perceived.

Speaker Change: Kind of longer negotiation period is a piece of that as well.

Speaker Change: I don't know that its.

Operator: Thank you. Our next question comes from the line of Kurt Holley with Benchmark. Please go ahead. Hey, good morning, everybody. Hey, Kurt.

Speaker Change: Significant.

Speaker Change: I'd ask as much as the dynamics there.

Speaker Change: I've just described.

Speaker Change: That's great.

Speaker Change: Great color I appreciate that.

Kurt Holley: I just wanted to maybe extend the conversation on that, off your prior answer there, right? So, we've heard quite a bit that, you know, there's increasing duration, as you referenced, and others have referenced, and that longer duration contract period, which I guess also translated in terms of a longer negotiation period, you know, to finalize those contracts. So, I don't know, taking what you said about pricing, taking what's going on with respect to longer negotiation periods, I'm just kind of curious. How much of that, uh, you know, this longer negotiation period is related to, you know, a bid-ask spread on pricing? Oh, gosh.

Speaker Change: Alright, my follow up is on the synergies.

Speaker Change: Curious.

Speaker Change: Where those synergies are going to land that can be mostly opex or GE or some or G&A or some combination.

Speaker Change: Yes, it's going to be both candidly I would say from a G&A perspective, most of that was holding was realized in 2023 I think going forward.

Speaker Change: Obviously.

Speaker Change: Increase the target from 125 $250 million I think you should think about those incremental synergies sitting more in opex.

Speaker Change: Okay. That's great and then if I squeeze one more in you mentioned supply chain bottleneck. So Robert when when do you see those supply chain bottlenecks easing or.

Robert W. Eifler: Well, actually, I think what happened here is that in 2024, you had the dynamic I just mentioned where some programs' start dates were pushed back to allow for some reactivations, and we actually thought some of those programs were going to go to existing supply. And then at the same time, I think several operators have recognized the discounts in the market for longer-term contracts and decided to try to pull together their various different programs into grouped contracts so that they can go out for longer terms.

Speaker Change: Or not getting any worse.

Robert W. Eifler: Well I mean, I think the same.

Robert W. Eifler: I mentioned the numbers of reactivation that we're going through.

Robert W. Eifler: On top of that last year and this year for the industry, our peak Sps years, and it starts to slow down a little bit next year and then more substantially in 2026. So I would anticipate that were probably at peak bottleneck on the equipment side, but there is theres strikes in Europe and obvious.

<unk> shipping issues and.

Robert W. Eifler: And so a few wells that may otherwise have been drilled in 2024 perhaps got pushed to 25 or later in order to group here for some term, and that's created a little bit of this white space in 2024, and also the perceived kind of longer negotiation period is a piece of that as well. You know, I don't know that it's a significant bid ask as much as the dynamics that I've just described. That's great! No, that's a great color.

Robert W. Eifler: So there is some some complicating factors as well I think that are affecting 2024, and our specific situation right now.

Robert W. Eifler: <unk> that are out with just just normal manufacturing supply chain issues.

Got it thank you.

Robert W. Eifler: Thanks.

Robert W. Eifler: Our next question comes from the line of David Smith with Pickering Energy Partners. Please go ahead.

David Christopher Smith: Okay. Thank you and good morning.

David Christopher Smith: Good morning, David Good morning.

David Christopher Smith: I know a decent chunk of Norwegian semi work in the past have taken place in depth. The CJ 70 could address and with with all of the centers that have left Norway I wanted to ask if youre seeing an operator interest for our programs in the next year or two that might otherwise want a semi but we will take a jackup because.

David Christopher Smith: What's available.

Richard Barker: Appreciate that. My follow-up question is on the synergies. I'm just kind of curious where those synergies are going to land. That could be mostly OpEx or GA or some combination of the two.

Speaker Change: Yes, yes.

Speaker Change: Good question, David There I would characterize it as there is absolutely interest there is no.

Speaker Change: Tangible demand right now.

Robert W. Eifler: Yeah, Kurt, it's going to be both. You know, I would say from a GNA perspective, most of that was probably realized in 2023. I think going forward, you know, we've obviously increased the target from 125 to 150 million. I think you should think about those incremental synergies fitting more in our OPEC. Okay, that's great.

Speaker Change: We have done a lot of work on using the CJ 70 over subsea template.

And we are hoping to get to showcase some of that at some point soon.

Speaker Change: But it's a little bit too early to claim claims.

Speaker Change: Claim success in some of the work that we've done right now but for sure we have conversations all throughout the country.

Kurt Holley: And if I squeeze one more in, you mentioned supply chain bottlenecks. So, Robert, when do you see those supply chain bottlenecks easing or or not getting any worse? Well, I mean, I think the same.

Speaker Change: And there is interest.

Speaker Change: In.

Speaker Change: And exploring that going forward one thing I will say is.

Speaker Change: Is that the floater the harsh floater tightness has been known for quite some time.

Robert W. Eifler: I mentioned the numbers of reactivations that we're going through. On top of that, last year and this year are peak SPS years for the industry, and it starts to slow down a little bit next year and then more substantially in 2026. So I would anticipate that we're probably at peak bottleneck on the equipment side, but there are strikes in Europe and obviously shipping issues. And so there are some complicating factors as well, I think, that are affecting 2024 and our specific situation right now with the fake Kozaks that are out with just normal manufacturing supply chain issues.

Speaker Change: So I think there's been also a push by operators, they're not well to fill any white space. They can with with with the rigs they have under contract so as not to lose a rig to us so to the extent that perhaps we had an opportunity to go.

Speaker Change: Showcases CJ 70 in some of this transition zone.

Speaker Change: Probably missed out on a couple of those because operators wanted to make sure. They didn't lose access to preferred harsh floaters. So it's a continuing although kind of yet to launch story I think for the C. J C J, <unk>, but but but but we remain hopeful.

Operator: Thank you. Thank you. Our next question comes from the line of David Smith with Pickering Energy Partners. Please go ahead. Thank you and good morning. Morning, David. I know a decent chunk of Norwegian simi work, with all of that, I wanted to ask.

Speaker Change: I appreciate that color.

Speaker Change: And the follow up I guess.

Speaker Change: Some media reports that the operator, using the bulfinch wear off.

Speaker Change: Ghana might might want to release that early.

Speaker Change: Wanted to ask if you could tell us anything about what kind of a termination fee that contract might have and whether an early release is contemplated in the guidance provided.

Speaker Change: Sure.

Speaker Change: The customer they're announced.

<unk>.

David Christopher Smith: Yeah, it's a good question, David. I would characterize it as absolutely no tangible demand right now. We have done a lot of work on using a CJ-70 over a subsea template, and we are hoping to showcase some of that at some point soon, but it's a little bit too early to claim success in some of the work that we've done right now.

Speaker Change: Breaking their drilling plans, which is what you're referring to.

Speaker Change: For us it is of course, a kind of a classic story of the double edge nature of of our top performing contractor because we've drilled ourselves out of a job.

Speaker Change: So to speak.

Speaker Change: But to be clear. Despite my last statement Theres been no contract termination announcement of course, we would we would put that out.

Robert W. Eifler: But for sure, we have conversations all throughout the country, and there is interest in exploring that going forward. One thing I will say is that the harsh floater tightness has been known for quite some time, and so I think there's also been a push by operators there to fill any white space they can with the rigs they have under contract so as not to lose a rig to use. So to the extent that perhaps we had an opportunity to showcase the CJ-70 in some of this transition zone, we probably missed out on a couple of those because operators wanted to make sure they didn't lose access to preferred harsh floaters.

Speaker Change: And so what I would say, it's too early really to give definitive.

Speaker Change: Answer to what the the customer plans to do their they have announced drilling break.

Speaker Change: Can give the color that that mark that contract was signed in a in a substantially lesser market and then we find ourselves today. So the termination clause kind of follows with commercials there.

Speaker Change: But on the flip side of it the rig has performed tremendously well, which is which is why we've kind of finished some of the plans up early.

Robert W. Eifler: So it's a continuing, although kind of..., yet to launch story, I think, for the CJ70s, but we remain hopeful. I appreciate it. And the follow-up, I guess there's been some media coverage. Arthur, and Ken McConnaughey might want to add.

Speaker Change: And.

Speaker Change: There is the customer we understand does have more work.

Speaker Change: And it's.

Speaker Change: It's a contract signed at a different period of time so.

Speaker Change: We will have to really kind of wait to see what what the customer decides to do there.

Robert W. Eifler: Weigel, Gregory Lewis, David Smith, Nobl, Gregory Lewis, David Smith, Nobl, Gregory Lewis, David, contract. Sure. The customer there announced a break in their drilling plans, which is what you're referring to. For us, it is, of course, kind of a classic story of the double-edged nature of a top-performing contractor because we've drilled ourselves out of a job, so to speak. But to be clear, despite my last statement, there's been no contract termination announcement. Of course, we would put that out.

Speaker Change: If in fact, we find ourselves marketing that rig the.

Speaker Change: The good news is that the revenue makeup what happened relatively quickly because the market substantially higher today than than the rates on that rig under firm contracts.

Speaker Change: Yes, absolutely.

Speaker Change: I appreciate that color. Thank you.

Speaker Change: Our final question comes from the line of Noel Parks with Tuohy Brothers go ahead. Please.

Speaker Change: Yeah.

Noel Parks: Hi, good morning.

Robert W. Eifler: And so what I would say is it's too early, really, to give a definitive answer to what the customer plans to do there. They have announced a drilling break. But I can give you color that that contract was signed in a substantially less competitive market than we find ourselves today, so the termination clause kind of follows commercials there.

Noel Parks: Couple of quick ones I apologize if you touched on this already but.

Noel Parks: It was encouraging to hear about the expected improvement in gross margins on Jackups I think you said, 15% from about 10. So just interested to hear what you think about that.

Noel Parks: That stands as a trend going forward.

Robert W. Eifler: On the flip side of it, the rig has performed tremendously well, which is why we've kind of finished some of the plans early. There is, the customer, we understand does have more work, and it's, you know, it's a contract signed at a different time. So, we'll have to really kind of wait to see what the customer decides to do there. If, in fact, we find ourselves marketing that rig, the good news is that the revenue makeup would happen relatively quickly because the market's substantially higher today than the rates on that rig under firm contract. Yes. I appreciate that, Colin. Our final question comes from the line by Noel Parks with the Tui Brothers. Go ahead. Hi, good morning. Just a couple of quick ones.

Noel Parks: Okay.

Speaker Change: So yes.

Speaker Change: In 2023, obviously that was a trough year for us for Jackup Coke contribution if you will to earnings.

Speaker Change: Obviously.

As we see improvements in the North sea more broadly that's why the 10% increase increasing to 15%.

Speaker Change: We're also not providing anything around 2025 at this stage, but I think we would expect to see that contribution continued to increase from 15% upwards once we get into 2025.

Great.

Speaker Change: <unk>.

Speaker Change: Hi.

Speaker Change: So as I mentioned earlier on the call that.

Speaker Change: That.

Speaker Change: Sorry about the white with slashing green on all sorts of fronts, including.

Speaker Change: Some optimism on the supply chain I think maybe <unk> mentioned.

Noel Parks: I apologize if you touched on these already, but it was encouraging to hear about the expected improvement in gross margins on jackups. I think you said 15 percent from about 10. So just interested to hear what you think about that, where that stands as a trend going forward. So yeah, so in 2023, obviously, that was a trough year for us for the JACA contribution, if you will, to earnings. You know, so obviously, as we see improvements in the North Sea more broadly, you know, that's why, you know, 10% increasing to 15%. You know, I think that we're obviously not providing anything around 2025 at this stage, but I think we would expect to see that contribution continue to increase, you know, from 15% upwards once we get into 2025. And Also,

Speaker Change: But I think in a recent question.

Speaker Change: Another reference to supply chain. So just wondering if you could maybe just characterize what youre seeing on that side is that.

Speaker Change: Lessening as a factor in your in your planning.

Speaker Change: We're still a bit of a challenge.

Speaker Change: Sure Yeah, so the reference to supply chain in relation to the <unk> and some of our other Sps as was around some delays we've seen really just in the Fei Kozak, we've seen around.

Speaker Change: Procuring some of the long lead items, which is delaying our start ultimately in Brazil, and that's a function of shipping delays and strikes and everything I've mentioned as well as.

Speaker Change: The number of Sps is happening globally across the.

Speaker Change: The Jackup and deepwater fleet right now that is that is separate from my referenced in the script, two subsea trees, which we consider one of the leading indicators, particularly well for deep for deepwater work.

Richard Barker: I thought there was a mention earlier in the call that the light was flashing green on all sorts of fronts, including some optimism on the supply chain. I think maybe trees were mentioned. But I think in a recent question, there was another reference to the supply chain. So I was wondering if you could maybe just characterize what you're seeing on that side. Is that lessening as a factor in your planning, or still a bit of a challenge?

Speaker Change: We're a customer typically orders trees, which is a long lead item for four drilling producing wells before they go into development projects. So if you look at tree orders typically you can anticipate that one perhaps maybe closer to two years after that.

Robert W. Eifler: Sure, yeah. So the reference to the supply chain in relation to the FECOZAC and some of our other SPSs was around some delays we've seen really just in the FECOZAC. We've seen delays in procuring some of the long-lead items, which is delaying our start ultimately in Brazil. And that's a function of shipping delays and strikes and everything I've mentioned, as well as the number of SPSs happening globally across the jackup and deepwater fleet right now. That is separate from my reference in the script to subsea trees, which we consider one of the leading indicators, particularly well, for deepwater work, where a customer typically orders trees, which is a long lead item for drilling and producing wells before they go into development projects.

Speaker Change: Demand for our services would follow and so we are seeing.

The green flashing green is around leading indicators.

Speaker Change: On the procurement side the only one we mentioned was trees, but then also <unk>.

Speaker Change: And then just just straight up opex budgets for our customers excuse me capex budgets for our customers are all up and are all positive and supportive of a multiyear upturn here.

Great. Thanks, a lot.

Speaker Change: Thanks.

Robert W. Eifler: So if you look at tree orders, typically, you can anticipate that one, perhaps, maybe closer to two years after that, demand for our services would follow. And so we're seeing the green, flashing green is around leading indicators. On the procurement side, the only one we mentioned was trees, but then also FIDs, and then just straight up OPEX budgets for our customers. Excuse me, CAPEX budgets for our customers are all up, and they are all positive and supportive of a multi-year upturn here.

Speaker Change: I would now like to turn the call over to Ian Macpherson for closing remarks.

Okay.

Ian Macpherson: Thank you everyone for joining us today, and we look forward to speaking with you again next quarter have a good day.

Speaker Change: This concludes today's call you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Ian McPherson: Great. Thanks a lot. Thanks, Noble. I would now like to turn the call over to Ian McPherson for closing remarks. Thank you everyone for joining us today and we look forward to speaking with you again next quarter. Have a good day. This concludes today's call. You may now disconnect.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Yes.

Speaker Change: Okay.

[music].

Speaker Change: Yes.

Speaker Change: [music].