Q1 2024 Valaris Ltd Earnings Call

Operator: Good day, and welcome to the Valaris First Quarter 2024 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touchtone phone, and to withdraw your question, please press star, then 2. Please note that this event is being recorded. I would now like to turn the conference over to Nick Georges, Vice President, Treasurer, and Investor Relations. Please go ahead.

Good day and welcome to the Valores first quarter 'twenty 'twenty four results conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Operator: After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone and to withdraw your question. Please press Star then two.

Operator: Please note this event is being recorded.

Operator: I would now like to turn the conference over to Nick Georges Vice President Treasurer, and Investor Relations. Please go ahead.

Nick Georges: Welcome everyone to the <unk> first quarter 2024 conference call with me today are president and CEO and Tom Davis, Senior Vice President and CFO, Chris Weber Senior Vice President and C. C O Matt line and other members of our executive management team.

Nick Georges: Welcome everyone to the Valaris first quarter 2024 conference call. With me today are President and CEO Anton Dibowitz. Senior Vice President and CFO, Chris Weber, Senior Vice President and CCO, Matt Lyne, and other members of our Executive Management Team. We issued our press release, which is available on our website at Valaris.com. Any comments we make today about expectations are forward-looking statements and are subject to risks and uncertainties. Many factors could cause actual results to differ materially from our expectations.

Nick Georges: We issued our press release, which is available on our website at Valores dotcom.

Nick Georges: Any comments, we make today about expectations are forward looking statements and are subject to risks and uncertainties.

Nick Georges: Many factors could cause actual results to differ materially from our expectations.

Nick Georges: Please refer to our press release and SEC filings on our website that define forward-looking statements and list risk factors and other events that could impact future results. Also, please note that the company undertakes no duty to update forward-looking statements. During this call, we will refer to GAAP and non-GAAP financial measures. Please see the press release on our website for additional information and required reconciliations. As a reminder, earlier this week, we issued our most recent fleet status report, which provides details on contracts across our rig fleet. An updated investor presentation will be available on our website after the call. Now, I'll turn the call over to Anton Dibowitz, President and CEO.

Nick Georges: Please refer to our press release and SEC filings on our website. The defined forward looking statements and list risk factors and other events that could impact future results.

Nick Georges: Also please note that the company undertakes no duty to update forward looking statements.

Anton Dibowitz: During this call, we will refer to GAAP and non-GAAP financial measures.

Anton Dibowitz: Please see the press release on our website for additional information and required reconciliations as a reminder, earlier. This week, we issued our most recent fleet status report, which provides details on contracts across our rig fleet and updated investor presentation will be available on our website after the call.

Anton Dibowitz: Now I'll turn the call over to Anton <unk>, President and CEO.

Anton Dibowitz: Thanks, Nick, and good morning and afternoon to everyone. During today's call, I'll begin with an overview of our performance during the quarter and provide an update on the offshore drilling market. I'll then hand the call over to Matt to discuss the floater and jackup markets in more detail and provide some additional color on recent contract awards as well as our contracting outlook. After that, Chris will discuss our financial results and guidance, before I finish with some closing comments. To begin, I want to highlight some key points about our business that we will cover in more detail during this call.

Anton Dibowitz: Thanks, Nick and good morning, and afternoon to everyone.

Anton Dibowitz: During today's call I'll begin with an overview of our performance during the quarter and provide an update on the offshore drilling market.

Anton Dibowitz: I'll, then hand, the call over to Matt to discuss the floater and Jackup markets in more detail and provide some additional color on recent contract awards as well as our contracting outlook.

Anton Dibowitz: After that Chris will discuss our financial results and guidance before I finish with some closing comments.

Anton Dibowitz: To begin I want to highlight some key points about our business that we will cover in more detail during this call.

Anton Dibowitz: First, I'm very pleased with our start to 2024. Thanks to the efforts and focus of the entire Valaris team, we delivered strong safety, operational, and financial performance and a great first quarter. Second, we continue to make progress towards underwriting our earnings growth by securing new contracts at higher day rates and consistently building our contract backlog. This past quarter marks the sixth consecutive increase in our backlog, which now totals more than $4 billion.

Anton Dibowitz: First I'm very pleased with our start to 'twenty 'twenty four.

Anton Dibowitz: Thanks to the efforts and focus of the entire Polaris team, we delivered strong safety operational and financial performance and a great first quarter.

Anton Dibowitz: Second we continue to make progress towards underwriting our earnings growth by securing new contracts at higher Dayrates and consistently building our contract backlog. This past quarter marks the sixth consecutive increase in our backlog, which now totals more than $4 billion.

Anton Dibowitz: And finally, we expect that the levels of customer demand we are seeing, particularly for work that is expected to commence in 2025 and 2026, will continue to support our anticipated earnings and cash flow growth over the next few years. And we intend to return all future free cash flow to shareholders unless there is a better or more value-accretive use for it.

Anton Dibowitz: And finally, we expect that the levels of customer demand, we are seeing particularly for work that is expected to commence in 'twenty to 'twenty five and 'twenty twenty-six will continue to support our anticipated earnings and cash flow growth over the next few years and we intend to return all future free cash flow to shareholders unless there is a better more value.

Anton Dibowitz: Accretive use for it from a safety and operations perspective, our performance during the first three months of the year was excellent. We finished the quarter with no lost time incidents and fleet wide revenue efficiency of 97% a great achievement by the entire Polaris team, both offshore and onshore.

Anton Dibowitz: From a safety and operations perspective, our performance during the first three months of the year was excellent. We finished the quarter with no lost time incidents and fleet-wide revenue efficiency of 97%, a great achievement by the entire Valaris team, both offshore and onshore. Several rigs celebrated safety milestones during the quarter, and I'd like to congratulate in particular the Valaris 75 for reaching five years without a recordable incident as well as the Valaris 110 and 120 for each reaching three years without a recordable incident. Well done to everyone involved.

Anton Dibowitz: With several rigs celebrates safety milestones during the quarter and I'd like to congratulate in particular, the Polaris <unk> 75 for reaching five years without a recordable incident as well as the Valero is 110 and 124, each reaching three years without a recordable incident, well done to everyone involved I also want to.

Anton Dibowitz: I also want to congratulate the crews of Valaris DS8 for achieving a successful audit from ANP, the oil and gas regulatory body in Brazil, with positive feedback on the rig condition, safety culture, and maintenance processes following the rig's reactivation, allowing for a smooth contract start-up ahead of schedule. DS-8 is the fifth drill ship that we have reactivated over the past two years. We are proud of our industry-leading track record of executing reactivation projects, and we remain highly focused on delivering another successful startup for DS-7, which is due to commence a multi-year contract offshore West Africa later this quarter following its reactivation.

Anton Dibowitz: Congratulate the crews of Polaris D S. Eight for achieving a successful audit from a N P. The oil and gas regulatory body in Brazil with positive feedback on the rig condition safety culture and maintenance processes. Following the rigs reactivation, allowing for a smooth contract start up ahead of schedule.

Anton Dibowitz: D. S. Eight is the fifth drillship that we have reactivated over the past two years, we are proud of our industry, leading track record of executing reactivation projects and we remain highly focused on delivering another successful startup for DS seven which is due to commence a multi year contract offshore West Africa later this quarter following its.

Anton Dibowitz: Reactivation.

Anton Dibowitz: Importantly, our strong safety and operational performance during the first quarter helped us deliver better than expected financial results.

Anton Dibowitz: Importantly, our strong safety and operational performance during the first quarter helped us deliver better than expected financial results. In the first quarter, Adjusted EBITDA was $54 million, and Adjusted EBITDA, after adding back one-time reactivation costs, was $84 million.

Anton Dibowitz: In the first quarter, adjusted EBITDA was $54 million and adjusted EBITDAR, adding back one time reactivation costs was $84 million. These results were better than our guidance, primarily due to the high levels of revenue efficiency that our team delivered during the quarter.

Anton Dibowitz: Chris will provide further details on our financial results and guidance a little later.

Anton Dibowitz: These results were better than our guidance, primarily due to the high levels of revenue efficiency that our team delivered during the quarter. Chris will provide further details on our financial results and guidance a little later. Turning now to the broader offshore drilling market, oil prices have increased since the beginning of the year, driven by demand growth, heightened geopolitical tensions, and an extension of OPEC Plus production cuts. The combination of these factors has led to the prospect of a tighter supply-demand balance through the rest of the year.

Anton Dibowitz: Turning now to the broader offshore drilling market.

Anton Dibowitz: Oil prices have increased since the beginning of the year driven by demand growth heightened geopolitical tensions and an extension of OPEC plus production cuts. The combination of these factors has led to the prospect of a tighter supply demand balance through the rest of the year.

Anton Dibowitz: Looking further, the five-year Brent crude price is above $70 per barrel, a level at which more than 90% of undeveloped offshore reserves are expected to be profitable. As a result, commodity prices remain very supportive of continued investment in long-cycle offshore projects. We see positive signs from the leading indicators of offshore rig demand, with global upstream CAPEX and offshore FIDs both expected to see strong growth through 2026. The floater market continues to improve, with the contracted Benign Environment floater count increasing to its highest point since late 2016.

Anton Dibowitz: Looking at further the five year, Brent Ford price is above $70 per barrel, a level at which more than 90% of undeveloped offshore reserves are expected to be profitable as.

Anton Dibowitz: As a result commodity prices remain very supportive for continued investment in long cycle offshore projects.

Anton Dibowitz: We see positive signs from the leading indicators of offshore rig demand with global upstream Capex in offshore F. <unk>, both expected to see strong growth through 2026.

Anton Dibowitz: The Florida market continues to improve with the contracted benign environment float accounts, increasing to its highest point since late 2016.

Anton Dibowitz: We are also seeing increased contract durations, with new drill fixtures signed so far this year averaging more than two years of term for the first time since 2014. The growth in opportunities with longer durations as well as increased lead times between contract award and commencement are both supportive of a sustained upcycle. While we expect to see some gaps in rig schedules this year, and certain programs have pushed to 2025, leading-edge day rates continue to gradually move higher, and we have recently seen an increasing number of day rate fixtures in the high 400s and some in the low 500,000.

Anton Dibowitz: We are also seeing increased contract durations with neutrals fixtures signed so far this year, averaging more than two years of term for the first time since 2014.

Anton Dibowitz: The growth in opportunities with longer durations as well as increased lead times between contract award and commencement of both supportive of a sustained up cycle.

Anton Dibowitz: While we expect to see some gaps in rig schedules this year and certain programs have pushed to 'twenty twenty-five leading edge day rates continue to gradually move higher and we have recently seen an increasing number of day rate fixtures in the high four hundreds and some in the low 500 thousands.

Anton Dibowitz: We believe that rates will continue to move higher as demand increases, average contract durations grow, and sideline capacity is absorbed into the market. We continue to focus on maximizing the profitability of our fleet by keeping our active rigs highly utilized and securing the best contract economics possible in each unique bidding situation. We anticipate contract awards for the programs currently being managed will pick up pace over the remainder of the year. We believe that 2-3 year programs are likely to be awarded at or close to leading edge rates.

Anton Dibowitz: We believe that rates will continue to move higher as demand increases average contract durations grow and sideline capacity is absorbed into the market.

Anton Dibowitz: We continue to focus on maximizing the profitability of our fleet by keeping our active rigs highly utilized and securing the best contract economics possible in each unique bidding situation.

Anton Dibowitz: We anticipate contract awards for the programs currently being tended will pick up pace over the remainder of the year will.

Anton Dibowitz: We believe that two to three year programs are likely to be awarded at or close to leading edge rates.

Anton Dibowitz: Beyond these, we may see a range of rates for shorter-term jobs, whether for gap filled jobs to avoid idle time or opportunistic pricing for rigs in the right place at the right time. We continue to see customer interest in our stack 7th generation drillships, Valaris DS11, DS13, and DS14. These rigs are the highest specification assets remaining on the sidelines, and we are in active discussions with customers to put these rigs to work. However, we will only reactivate these rigs for opportunities that we expect will provide a meaningful return on the reactivation costs over the firm contract term. Moving to shallow water.

Anton Dibowitz: Beyond these we may see a range of rates for shorter term jobs, whether for gap fill jobs to avoid idle time or opportunistic pricing for rigs in the right place at the right time.

Anton Dibowitz: We continue to see customer interest in our stack seventh generation Drillships Polaris T. S 11 D. S 13, and D. S 14.

Anton Dibowitz: These rigs are the highest specification assets remaining on the sidelines.

Anton Dibowitz: And we are in active discussions with customers to put these rigs to work.

Anton Dibowitz: We will only reactivate these rigs for opportunities that we expect will provide a meaningful return on the reactivation costs over the firm contract term.

Anton Dibowitz: Moving to shallow water.

Anton Dibowitz: The global jack-up market remains tight. Marketed utilization is nearly 95%, and the contracted rig count ended the first quarter at its highest level in nearly ten years. On our fourth-quarter call, we discussed the announcement from Saudi Arabia that the Kingdom was delaying plans to increase its maximum sustainable capacity. As expected, the direct impact on our business has been minimal, with Arrow receiving a contract suspension notice for just one of its 19 rigs. Valaris 143, which Valaris leases to Arrow.

Anton Dibowitz: The global Jackup market remains tight.

Anton Dibowitz: Marketed utilization is nearly 95% and the contracted rig count ended the first quarter at its highest level in nearly a decade.

Anton Dibowitz: On our fourth quarter call, we discussed the announcement from Saudi Arabia that the Kingdom was delaying plans to increase its maximum sustainable capacity.

Anton Dibowitz: As expected the direct impact on our business has been minimal with arrow, receiving a contract suspension notice for just one of its 19 rigs.

Anton Dibowitz: [noise] flares, $1, 43, which Polaris leases to arrow.

Anton Dibowitz: Valaris 143 is a highly capable modern jackup, and we see opportunities to work the rig outside of Saudi. As such, we made the decision to terminate the contract rather than accept a 12-month suspension, resulting in the loss of $4 million of backlog. The rig will be delivered back to Valaris in the coming weeks. We are actively pursuing contracting opportunities in other markets and will be patient to find the right job for the rig. More broadly, offshore drilling contractors have announced Sardia-Ramco contract suspensions on a total of 22 rigs.

Anton Dibowitz: Valero is 143 is a highly capable modern jackup and we see opportunities to work the rig outside of Saudi.

Anton Dibowitz: As such we made the decision to terminate the contract rather than accepting a 12 months suspension.

Anton Dibowitz: <unk> and the loss of $4 million of backlog.

Anton Dibowitz: The rig will be delivered back to Valero in the coming weeks, we're actively pursuing contracting opportunities in other markets and we will be patient to find the right job for the rig.

Anton Dibowitz: More broadly offshore drilling contractors have announced Saudi Aramco contract suspensions for a total of 22 rigs.

Anton Dibowitz: We believe that approximately half of these rigs are likely to be competitive in other high-specification benign environment markets, such as Southeast Asia, West Africa, and the broader Middle East. While it is not clear how many of these suspended rigs may ultimately leave Saudi Arabia, we expect there to be sufficient incremental demand to absorb them in an orderly fashion. In terms of the harsh environment market, the supply-demand balance in the North Sea improved meaningfully in the latter half of 2023, and fundamentals have remained positive since then. Marketed utilization in this region is currently 91%.

Anton Dibowitz: We believe that approximately half of these rigs are likely to be competitive in other high specification benign environment markets, such as Southeast Asia, West Africa, and the broader middle East.

Anton Dibowitz: While it's not clear how many of the suspended rigs may ultimately leave Saudi Arabia, we expect there to be sufficient incremental demand to absorb them in an orderly fashion.

Anton Dibowitz: In terms of the harsh environment market the supply demand balance in the North sea improved meaningfully in the latter half of 'twenty twenty-three and fundamentals have remained positive since then.

Anton Dibowitz: Marketed utilization in this region is currently 91%.

Anton Dibowitz: Our rigs are fully contracted for 2024, and we see robust customer interest for programs that line up well with our 2025 availability. Before I finish, I'd like to briefly comment on our capital return program. Last year, we returned $200 million to shareholders through our share repurchase program. Earlier this year, the board increased our repurchase authorization to $600 million from $300 million, and we intend to use it opportunistically. Looking ahead, we expect to generate meaningful and sustained free cash flow in 2025 and beyond, and we intend to return all future free cash flow to shareholders unless there is a better or more value-accretive use for it. Now, I'll hand the call over to Matt to discuss the floater and jackup markets in more detail and to provide an overview of our recent contracting success and our contracting outlook.

Anton Dibowitz: Our rigs are fully contracted for 'twenty 'twenty, four and we see robust customer interest for programs at lineup well without 'twenty twenty-five availability.

Matt: Before I finish I'd like to briefly comment on our capital return program.

Matt: Last year, we returned $200 million to shareholders through our share repurchase program.

Matt: Earlier this year the board increased our repurchase authorization to $600 million from $300 million and we intend to use it opportunistically.

Matt: Looking ahead, we expect to generate meaningful and sustained free cash flow in 2020 five and beyond and we intend to return all future free cash flow to shareholders unless there is a better or more value accretive use for it.

Anton Dibowitz: Now I'll hand, the call over to Matt to discuss the floater and Jackup markets in more detail and to provide an overview of our recent contracting success in a contracting outlook.

Matthew Lyne: Thanks Anton, and good morning and afternoon everyone. Since the beginning of the first quarter, we have secured new contracts and extensions with associated contract backlog of more than 520 million dollars. These awards have increased our total backlog to more than 4 billion dollars, a 43 percent increase over the past 12 months and our sixth consecutive quarter of backlog growth. Recent awards include a multi-year contract offshore Angola for the Valaris 144 at a leading-edge day rate for a benign environment jackup along with three-year extensions for Mad Dog and Thunder Horse, which we manage on behalf of BP in the U.S. Gulf of

Matt: Thanks, Anton and good morning, and afternoon everyone.

Matthew Lyne: Since the beginning of the first quarter, we have secured new contracts and extensions with associated contract backlog of more than $520 million. These awards.

Matthew Lyne: We have increased our total backlog to more than $4 billion, representing 43% increase over the past 12 months and our sixth consecutive quarter of backlog growth recent.

Matthew Lyne: Our recent awards include a multi year contract offshore Angola for the Polaris 144 at a leading edge day rate for a benign environment Jackup, along with three year extensions for Mad Dog and Thunder horse, which we manage on behalf of BP in the U S Gulf of Mexico.

Matthew Lyne: For floaters, we saw priced options exercised on Valaris DS9 with Exxon Offshore Angola and the DS17 with Equinor Offshore Brazil, the latter of which was a day rate of $497,000. The exercise of these options extends the firm programs for these rigs into mid-2025, as well as our partnerships with these important customers in key deepwater basins. Moving now to an overview of the major markets, starting with floaters.

Matthew Lyne: For floaters, we saw priced options exercised on Flores D. S nine with Exxon offshore Angola, and the D. S 17, with Ecuador offshore, Brazil, the latter of which was a day rate of $497000.

Matthew Lyne: The exercise of these options extends the firm programs for these rigs into mid 2025 as well as our partnerships with these important customers and key deepwater basins.

Matthew Lyne: Moving now to an overview of the major markets, starting with floaters, the contracted benign environment floater count increased to 127 rigs during the first quarter. Its highest point since late 2016, an increase of 26 contracted rigs since the lows reached in early 2021 we can.

Matthew Lyne: The contracted benign environment floater count increased to 127 rigs during the first quarter, its highest point since late 2016, an increase of 26 rigs since the lows reached in early 2021. We continue to see a strong customer preference for high-spec 7th generation drillships, which comprise 12 of the 13 drillships in the Valaris fleet. Marketed utilization for this class of assets stands at 92% globally and has exceeded 90% since early 2023.

Matthew Lyne: Continued to see strong customer preference for high specification seventh generation Drillships, which comprised 12 of the 13 drillships in the Valores fleet marketed utilization for this class of asset stands at 92% globally and has exceeded 90% since early 2023.

Matthew Lyne: These high levels of utilization have resulted in a continued improvement in average day rates for new contracts, which increased from approximately $450,000 in the second half of 2023 to approximately $480,000 through the first four months of 2024. Looking at expected future demand and ongoing tenders, we continue to see Brazil, Africa, and the Mediterranean combined accounting for more than 60% of the roughly 30 floater opportunities we are tracking with durations of at least one year.

Matthew Lyne: These high levels of utilization have resulted in a continued improvement in average day rates for new contracts, which have increased from approximately $450000 in the second half of 2023 to approximately $480000 through the first four months of 'twenty 'twenty four.

Matthew Lyne: Looking at expected future demand and ongoing tenders, we continue to see Brazil Africa, and the Mediterranean combined accounting for more than 60% of the roughly 30 floater opportunities. We are tracking with durations of at least one year.

Matthew Lyne: We anticipate the 10 to 15 of these opportunities will need to be met by either incremental reactivation of stacked board newbuild rigs or active rigs moving regions in Brazil. Petrobras currently has 31 contracted floaters, including six rigs that have yet to commence contracts.

Matthew Lyne: We anticipate that 10 to 15 of these opportunities will need to be met by either incremental reactivations of stacked or new-built rigs or active rigs moving regions. In Brazil, Petrobras currently has 31 contracted floaters, including six rigs that have yet to commence contracts. Petrobras has two ongoing tenders, Hancador and Sepia, with the potential for another tender to be launched later this year.

Matthew Lyne: <unk> has two ongoing tenders hunker door and SAP yeah.

Matthew Lyne: With the potential for another tender to be launched later this year I O sees are also evaluating potential programs in Brazil, and the combination of these may result in incremental rigs needed to meet demand in the market. We are currently tracking more than a dozen opportunities offshore Africa and in the Mediterranean.

Matthew Lyne: IOCs are also evaluating potential programs in Brazil, and the combination of these may result in incremental rigs needed to meet demand in the market. We are currently tracking more than a dozen opportunities offshore Africa and in the Mediterranean, with up to half of these requiring incremental rigs. We anticipate that the floater count in this region could rise to nearly 30 rigs over the next few years. We are excited about the prospect of increased activity in this region, with several large IOCs expected to add rigs over the next few years, including some long-term programs that may be attractive opportunities for our active fleet, along with the DS-11, DS-13, and DS-14.

Matthew Lyne: With up to half of these requiring incremental rigs.

Matthew Lyne: And we anticipate that the floater count in this region could rise to nearly 30 rigs over the next few years.

Matthew Lyne: We are excited about the prospect of increased activity in this region with several large IOC is expected to add rigs over the next few years, including some long term programs that may be attractive opportunities for our active fleet along with the D. S 11 D. S 13, and D. S 14th in the Gulf of Mexico, We see several long term opportune.

Matthew Lyne: In the Gulf of Mexico, we see several long-term opportunities on the radar and expect this market to remain balanced, with customer demand largely met by existing supply in the region. A more recent indicator of the strength of the floater market has been the uptick in demand in Southeast Asia, with several operators looking at opportunities that could require incremental rigs in the region. On the jackup side of the business, marketed utilization for jackups is approaching 95 percent, with leading-edge day rates in the mid-to-high $100,000 in several regions.

Matthew Lyne: <unk> on the radar and expect this market to remain balanced with customer demand largely met by existing supply in the region.

Matthew Lyne: Our more recent indicator of the strength of the floater market has been the uptick in demand in southeast Asia with several operators looking at opportunities that could require incremental rigs in the region on.

Matthew Lyne: On the Jackup side of the business marketed utilization for Jackups is approaching 95%.

Matthew Lyne: With leading edge day rates in the mid to high $100000 in several regions. However, if contracts for each of the 22 rigs suspended by Aramco were terminated global marketed jackup utilization would decline by approximately 5%.

Matthew Lyne: However, if contracts for each of the 22 rigs suspended by Aramco were terminated, global marketed jackup utilization would decline by approximately 5%. While this may lead to some pressure on day rates in the near term, we do not think that the rates announced on the two recent contracts for rigs relocating from Saudi are indicative of the broader market. As Anton mentioned, we have seen an improvement in the North Sea market, and customer interest remains strong, particularly for programs commencing in the second half of 2025. We are also encouraged by the increasing number of longer-term new energy and plug and abandonment programs that could result in incremental demand in this region.

Matthew Lyne: While this may lead to some pressure on day rates in the near term, we do not think that the rates announced on the two recent contracts for rigs relocating from Saudi are indicative of the broader market.

Matthew Lyne: As Anton mentioned, we have seen an improvement in the north sea market and customer interest remains strong, particularly for programs commencing in the second half of 2025. We're also encouraged by the increasing number of longer term, new energy and plug and abandonment programs that could result in incremental demand in this region.

Matthew Lyne: In terms of our immediate contracting priorities, we have near term availability on just two of our 13 active floaters Valores D. S 10, and the D. P. S. Five.

Matthew Lyne: In terms of our immediate contracting priorities, we have near-term availability on just two of our 13 active floaters, Valaris DS10 and the DPS5. DS10 is now expected to continue its existing contract with Shell Offshore Nigeria until late May, with the potential to continue into June based on well timing. We continue to believe the rig is well placed for long-term opportunities that are expected to start in 2025, and in the interim, we are actively pursuing short-term opportunities that could fill some of the expected gap.

Matthew Lyne: D. S. 10 is now expected to continue its existing contract with shell offshore Nigeria until late may with the potential to continue into June based on well timing.

Matthew Lyne: We continue to believe the rig is well placed for long term opportunities that are expected to start in 2025 and in the interim we are actively pursuing short term opportunities that could fill some of the expected gap.

Matthew Lyne: DPS5 is expected to complete its current program with E&I Offshore Mexico late in the second quarter. While some of the programs we were initially targeting for the rig have pushed into 2025, we remain in discussions with customers for work in the second half of the year. In addition, DS12 began its campaign with Offshore Egypt during the first quarter.

Matthew Lyne: D. P. S. Five is expected to complete its current program with Eni offshore Mexico late in the second quarter, while some of the programs. We were initially targeting for the rig have pushed into 2025, we remain in discussions with customers for work in the second half of the year.

Matthew Lyne: In addition.

Matthew Lyne: D. S 12 began its campaign offshore Egypt during the first quarter. The firm term of this contract concludes in the fourth quarter. There is potential the customers well program extends to the end of the year and the rig is well positioned for future opportunities in the Mediterranean and offshore Africa.

Matthew Lyne: The firm term of this contract concludes in the fourth quarter, but there is potential that the customer's well program will extend to the end of the year, and the rig is well positioned for future opportunities in the Mediterranean and offshore Africa. Looking ahead to 2025 floater availability, two of our rigs have priced options, one of which is at a legacy rate, and we expect both to be exercised. We are in active discussions for the remaining rigs with either the existing customer or other operators with work programs that are expected to commence next year.

Matthew Lyne: Looking ahead to 2025 floater availability two of our rigs have priced options one of which is our legacy rate and we expect both will be exercised we are in active discussions for the remaining briggs with either the existing customer or other operators with work programs that are expected to commence next year.

Matthew Lyne: On the Jackup side with the Polaris 144 recently contracted our only rig with meaningful contract availability in 'twenty 'twenty four is the Polaris 143.

Matthew Lyne: On the jack-up side, with the Velaris 144 recently contracted, our only rig with meaningful contract availability in 2024 is the Velaris 143, and we are pursuing opportunities for the rig outside of Saudi Arabia. Our active North Sea Fleet is sold out for 2024. Excluding rigs with pricey options, we have four rigs with available days in 2025 and are in active discussions regarding programs that would keep these rigs busy through next year.

Matthew Lyne: And we are pursuing opportunities for the rig outside of Saudi Arabia.

Matthew Lyne: Our active North Sea fleet is sold out for 2024, excluding rigs with priced options. We have four rigs with available days in 2025 and are in active discussions regarding programs that would keep these rigs busy through next year.

Matthew Lyne: This includes Valaris 92, which has been efficiently executing its customer's work scope and is now expected to complete this work in the first quarter of 2025, one year earlier than previously anticipated. We are already in discussions with other operators about alternative programs for the rig and feel confident we will replace this backlog soon. In summary, we are focused on capitalizing on the attractive opportunities we see in the market, building contract backlog through new contracts at significantly higher day rates, and are laser focused on filling our uncontracted days in 2024 and securing work commencing in 2025 and beyond. And now, I will hand over the call to Chris to take you through the financials.

Matthew Lyne: This includes Floris ninety-two, which has been efficiently executing its customers work scope and is now expected to complete this work in the first quarter of 2025, one year earlier than previously anticipated. We are already in discussions with other operators about alternative programs for the rig and feel confident we will replace this backlog soon.

Chris: In summary, we are focused on capitalizing on the attractive opportunities we see in the market Bill.

Chris: Building contract backlog through new contracts at significantly higher day rates and.

Matthew Lyne: And are laser focused on filling our own contracted days in 2024, and securing work commencing in 2025 and beyond and now I will hand over the call to Chris to take you through the financials.

Chris: Thanks, Matt and good morning, and afternoon everyone.

Christopher T. Weber: Thanks Matt, and good morning and afternoon everyone. In my prepared remarks, I will provide an overview of the first quarter results, our outlook for the second quarter, and I will also provide an update on our guidance for the full year. Starting with our first quarter results, revenue was $525 million, up from $484 million in the prior quarter, and adjusted EBITDA was $54 million, down from $58 million in the prior quarter. Adjusted EBITDAR, which adds back reactivation expense, was $84 million, down from $96 million in the prior quarter.

Christopher T. Weber: As expected, adjusted EBITDA decreased primarily due to lower revenues and higher costs for the jackup fleet associated with planned out-of-service time for rigs undergoing special periodic surveys and contract preparation work. This was partially offset by more operating days for the floater fleet. In the first quarter, jackup revenues decreased primarily due to fewer operating days for several rigs, including Valaris 107, 123, and 247. Valaris 107 was idle for most of the first quarter between completion of its previous contract Offshore New Zealand and its current program Offshore Australia.

Christopher T. Weber: In my prepared remarks, I will provide an overview of the first quarter result, our outlook for the second quarter and I also will provide an update on our guidance for the full year.

Christopher T. Weber: While Valaris 123 and 247 underwent planned SPS and contract preparation work ahead of new contracts that are expected to commence in the second quarter, contract drilling expenses for the jackup fleet also increased due to contract preparation costs for Valaris Stavanger, which is expected to start a new contract this month. These items were partially offset by an increase in EBITDA for the floater fleet, primarily due to Valaris DS8 starting its contract with Petrobras late last year following reactivation and higher revenue efficiency in the first quarter compared to the prior quarter.

Christopher T. Weber: Starting with our first quarter results revenue was $525 million up from $484 million in the prior quarter and adjusted EBITDA was $54 million down from $58 million in the prior quarter adjusted.

Christopher T. Weber: Adjusted EBITDAR, which adds back reactivation expense was $84 million down from $96 million in the prior quarter.

Christopher T. Weber: As expected adjusted EBITDA decreased primarily due to lower revenues and higher costs for the Jackup fleet associated with planned out of service time for rigs undergoing special periodic surveys and contract preparation work.

Christopher T. Weber: This was partially offset by more operating days for the floater fleet.

Christopher T. Weber: In the first quarter Jackup revenues decreased primarily due to fewer operating days for several rigs, including the layers 1071, 23 and 247.

Christopher T. Weber: The Polaris 107 was idle for most of the first quarter between completion of its previous contract offshore New Zealand and its current program offshore Australia.

Christopher T. Weber: While the Laris 123, and $2 47 underwent planned S. P. S and contract preparation work ahead of new contracts that are expected to commence in the second quarter.

Christopher T. Weber: Contract drilling expense for the Jackup fleet also increased due to contract preparation costs for Valero, Steve anchor, which is expected to start a new contract this month.

Christopher T. Weber: These items were partially offset by an increase in EBITDA for the floater fleet, primarily due to Valero D. S. Eight starting its contract with Petrobras late last year, following reactivation and higher revenue efficiency in the first quarter compared to the prior quarter.

Christopher T. Weber: Our first quarter results came in better than our guidance, primarily due to higher revenues, resulting from strong revenue efficiency.

Christopher T. Weber: Our first quarter results came in better than our guidance, primarily due to higher revenues resulting from strong revenue efficiency. We had cash and cash equivalents of $509 million at the end of the quarter. Cash declined by $127 million during the quarter, primarily due to capital expenditures of $151 million, partially offset by cash generated from operations of $26 million. Our $375 million revolving credit facility remains fully available, providing total liquidity of $884 million at the end of the quarter.

Christopher T. Weber: We had cash and cash equivalents of $509 million at the end of the quarter.

Christopher T. Weber: Cash declined by $127 million during the quarter, primarily due to capital expenditures of $151 million, partially offset by cash generated from operations of $26 million.

Christopher T. Weber: Our $375 million revolving credit facility remains fully available providing total liquidity of $884 million at the end of the quarter.

Christopher T. Weber: Moving now to our second quarter outlook, we expect total revenues in the range of $580 million to $600 million compared to $525 million in the first quarter.

Christopher T. Weber: Moving now to our second quarter outlook, we expect total revenues in the range of $580 to $600 million compared to $525 million in the first quarter. Floater revenues are expected to increase due to more operating days for Valaris DS12 and DPS5, both of which commence new contracts during the first quarter, as well as Valaris DS7, which is expected to commence its contract offshore West Africa in June following its reactivation. In addition, Valaris DS15 and DS16 will roll to higher day rate contracts during the second quarter.

Christopher T. Weber: Floater revenues are expected to increase due to more operating days for Valero D. S 12, and D. P. S. Five both of which commenced new contracts during the first quarter as well as Valero D. S. Seven which is expected to commence its contract offshore West Africa in June following its reactivation.

Christopher T. Weber: In addition, Polaris D. S 15 N D. S 16 will roll to higher day rate contracts during the second quarter.

Christopher T. Weber: [noise] Jackup revenues are also expected to increase due to more operating days for rigs that recently commenced new contracts or are expected to start new contracts during the second quarter.

Christopher T. Weber: Jackup revenues are also expected to increase due to more operating days for rigs that recently started new contracts or are expected to start new contracts during the second quarter. We expect that contract drilling expenses will be $460 to $470 million, up from $445 million in the first quarter. This is due to the addition of operating costs for several rigs following the contract startups that I just mentioned, along with costs for Valaris DS-13 and DS-14, which arrived in Las Palmas during the first quarter and are being stacked. These items are expected to be partially offset by lower reactivation.

Christopher T. Weber: We expect that contract drilling expense will be $460 million to $470 million up from $445 million in the first quarter.

Christopher T. Weber: This is due to the addition of operating costs for several rigs following the contract startups that I just mentioned along with cost for Valero D. S 13, India's 14, which arrived in Las Palmas during the first quarter and are being stacked.

Christopher T. Weber: These items are expected to be partially offset by lower reactivation expense.

Christopher T. Weber: General and administrative expense is expected to be approximately $30 million, compared to $27 million in the first quarter. We expect an adjusted EBITDA of $85 to $105 million, including approximately $10 million of reactivation expenses for Valaris DS7. Capital expenditure in the second quarter is expected to be $100 to $110 million. Maintenance and upgrade capital expenditure is expected to be approximately $75 million, including upgrades to Valaris 76 ahead of its long-term bareboat charter to Aero.

Christopher T. Weber: General and administrative expense is expected to be approximately $30 million compared to $27 million in the first quarter.

Christopher T. Weber: We expect adjusted EBITDA of $85 million to $105 million, including approximately $10 million of reactivation expense for Polaris D. S. Seven.

Christopher T. Weber: Capex in the second quarter is expected to be $100 million to $110 million maintenance and upgrade capex is expected to be approximately $75 million, including upgrades to Valero 76 ahead of its long term bareboat charter to arrow.

Christopher T. Weber: Reactivation and associated contract-specific CAPEX is expected to be approximately $25 million, and new-build CAPEX is expected to be approximately $5 million, primarily related to trailing mobilization costs for Valaris DS-13 and DS-14. Our second quarter outlook is largely in line with what we expected at the beginning of the year.

Christopher T. Weber: [noise] reactivation and associated contract specific capex is expected to be approximately $25 million and Newbuild capex is expected to be approximately $5 million primarily related to trailing mobilization cost for Polaris D. S 13 N D. S 14.

Christopher T. Weber: Our second quarter outlook is largely in line with what we expected at the beginning of the year.

Christopher T. Weber: Turning to full-year guidance, our revenue for 2024 is almost entirely contracted except for the DS-10 and DPS-5. While our full-year EBIDA guidance range of $500 to $600 million contemplates some uncontracted time for these rigs in the second half of the year, we need to secure some incremental work for both rigs to be able to achieve the midpoint of the range. We are in active discussions with customers and remain laser-focused on securing the work.

Christopher T. Weber: Turning to full year guidance, our revenue for 'twenty 'twenty four is almost entirely contracted except from the D. S 10 and D. P. S. Five.

Christopher T. Weber: While our full year EBITDA guidance range of 500 or $600 million contemplates. Some uncontrolled time for these rigs in the second half of the year.

Christopher T. Weber: We need to secure some incremental work for both rigs to be able to achieve the midpoint of the range.

Christopher T. Weber: We are in active discussions with customers and remain laser focused on securing the work.

Christopher T. Weber: As we look to the second half of the year, revenues and EBITDA are expected to increase meaningfully compared to the first half for both our floaters and jackup fleets. Floater results are expected to increase due to Valaris DS-7 commencing a contract following its reactivation and the impact of DS-16 rolling to a higher day rate contract. Jackup results are expected to increase due to higher utilization and day rates for the North Sea Fleet and contract commencements offshore Australia for Valaris 107 and 247 during the first half of the year.

Christopher T. Weber: As we look to the second half of the year revenues and EBITDA are expected to increase meaningfully compared to the first half for both our floater and Jackup fleets.

Christopher T. Weber: Floater results are expected to increase due to Valero D. S. Seven commencing a contract following its reactivation and the impact of D. S 16, rolling to a higher day rate contract.

Christopher T. Weber: [noise] Jackup results are expected to increase due to higher utilization and day rates for the North Sea fleet and contract commencement offshore Australia for Polaris, one of seven and 247 during the first half of the year.

Christopher T. Weber: Full year 2024 capital expenditures are expected to total $420 to $460 million. This is $30 million higher than our prior guidance range, with the increase due to contract preparation and survey costs for Valaris 144 ahead of its recently announced multi-year contract offshore in Gola that is expected to commence early next year. This incremental capex is expected to be incurred in the fourth quarter. As a reminder, we expect that approximately $55 million of our full year 2024 capex will be reimbursed through upfront customer payments. That concludes my review of our financial results and guidance. I will now hand the call back to Anton for some closing remarks.

Christopher T. Weber: Full year 'twenty 'twenty four capital expenditures are expected to total $420 million to $460 million.

Anton Dibowitz: This is $30 million higher than our prior guidance range with the increase due to contract preparation and survey cost for lawyers $1 44.

Anton Dibowitz: Head of its recently announced multi year contract offshore Angola that is expected to commence early next year.

Anton Dibowitz: This incremental capex is expected to be incurred in the fourth quarter.

Anton Dibowitz: As a reminder, we expect that approximately $55 million of our full year 'twenty 'twenty four capex will be reimbursed through upfront customer payments.

Christopher T. Weber: That concludes my review of our financial results and guidance I'll now hand, the call back to Anton for some closing remarks.

Anton Dibowitz: Thanks Chris. I'll conclude by reiterating some of the key points from our prepared remarks. First, I'm very pleased with our start to 2024, as we have delivered strong safety, operational, and financial performance. Congratulations to the entire Valaris team on an excellent start to the year. Second, we continue to execute on the commercial front, and we are making progress towards underwriting our earnings growth by securing new contracts at higher day rates and consistently building our backlog.

Anton Dibowitz: Thanks, Chris I'll conclude by reiterating some of the key points from our prepared remarks.

Anton Dibowitz: First I'm very pleased with our start to 'twenty 'twenty four as we have delivered strong safety operational and financial performance congratulations to the entire Valero team on an excellent start to the year.

Anton Dibowitz: Second we continue to execute on the commercial front, and we're making progress towards underwriting our earnings growth by securing new contracts at higher Dayrates and consistently building our backlog.

Anton Dibowitz: And finally, we see strong customer demand for work that is expected to commence in 2025 and 2026 that will continue to support our anticipated earnings and cash flow growth over the next few years. We believe the future is strong for Valaris, and we thank our employees, customers, and investors for their support. We've now reached the end of our prepared remarks. Operator, please open the line for questions. Thank you.

Anton Dibowitz: And finally, we see strong customer demand for work that is expected to commence in 'twenty 'twenty five and 'twenty 'twenty six that will continue to support our anticipated earnings and cash flow growth over the next few years.

Anton Dibowitz: We believe the future is strong for Polaris and we thank our employees customers and investors for their support we've now reached the end of our prepared remarks operator. Please open the line for questions.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, you may press star, then two. At this time, we will pause momentarily to assemble our roster. Today's first question comes from Greg Lewis with BTIG. Please go ahead. Yes, thank you, and good morning.

Speaker Change: Thank you we will now begin the question and answer session.

Operator: Ask a question you May press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw. Your question you May Press Star then two.

Gregory Robert Lewis: At this time, we will pause momentarily to assemble our roster.

Operator: Today's first question comes from Greg Lewis with BTG. Please go ahead.

Gregory Robert Lewis: Yes, thank you, and good morning everybody, and thanks for taking my questions. I guess my first question is, I was hoping to get some more color around the 144 jack-up. Clearly, that was a good contract. Just some kind of high-level questions around the all-in rate, kind of roughly how much does it cost to maybe mobilize a rig like that from base to the base? And really, when, kind of timing-wise, did those... Contract negotiations kind of get to the finish line, just, you know, there's been some questions around, you know, with all the noise, all the, I guess, volatility out of Saudi Arabia, what that's doing for rates, just, you know, just given the, you know, that was a pretty healthy day rate on that rig.

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

Gregory Robert Lewis: I guess my first question is I was hoping to get some more color around that that the $1 44, a jackup clearly that was a good contract.

Gregory Robert Lewis: Just some kind of high level questions around you know the all in rate of kind of roughly how much does it cost that may be mobilize a rig like that from basin to basin.

Gregory Robert Lewis: And really what Wayne kind of timing wise did those.

Gregory Robert Lewis: In our contract negotiations caught kind of get to the finish line. Just you know there's been some questions around you know with all the noise of all the I guess volatility out of Saudi Arabia, what that's doing for rates. Just you know just given the you know that that was a pretty healthy day rate on that rig.

Speaker Change: Hi, Greg.

Matt: Matt Matt here.

Matthew Lyne: Matt here. So thanks for the questions on 144. Maybe start with the timing first.

Gregory Robert Lewis:

Speaker Change: So thanks for the questions on a 144, so maybe hit with the timing first.

Matthew Lyne: Discussions are.

Matthew Lyne: The discussions were ongoing during the late half of 23, but the contract was signed on March 24, after we had learned about Sati Ramko's challenges or intention to suspend 22 rigs. We're not able to disclose the daily rate based on the agreement with the customer, but what I can tell you is that from a cost of mobilization, we're assuming a little bit less than $10 million to move the rig. So you can make some assumptions based on the TCV that we've provided for the

Matt: Were ongoing during the late half of 'twenty three but the contract was signed in March of 24. After we had learned about Saudi Aramco.

Matthew Lyne: <unk> is our intention to two to suspend 22 rigs.

Matthew Lyne: From a we're not able to disclose the day rate based on the agreement with the customer, but what I can tell you is that from a from a cost of mobilization, we're assuming a little bit less than $10 million to move the rig. So you can you can make some assumptions based on the T. <unk> that we've provided for the range.

Matthew Lyne: Program.

Speaker Change: Okay, No that's great.

Anton Dibowitz: Okay, yeah, that's great. This is Anton.

Speaker Change: I'll just reiterate I mean, the contract came together around the same time, you know that Saudi announcement was in January the contract was signed in March.

Anton Dibowitz: I'll just reiterate. The contract came together around the same time, you know, that Saudi Arabian announcement was in January, and the contract was signed in March. But I would reiterate Matt's comments during his prepared remarks that, you know, there have been some fixtures out in the market, but we don't believe that those are indicative of the broader market for jackups and where it will be going forward. And this is a great contract. And we're really excited about moving the 144 to West Africa and commencing that contract. Yeah, no, no, absolutely.

Anton Dibowitz: But I would reiterate matts comments on during his prepared remarks that you know there have been some some fixtures.

Anton Dibowitz: Fixtures out in the market, but we don't believe that those are indicative of the broader market for jackups and where it will be going forward and this is a great contract and we're really excited about about moving the $1 44 to West Africa, and commencing that contract with.

Matthew Lyne: And then you kind of talked about the, You know, you kind of lumped West Africa Med or Africa and Med together. And, you know, I guess a couple of questions around that are, you know, you talk about the potential for 30 rigs in the region. So, you know, as we think about that base and really, you know, or that, I guess, area, I guess, is probably the better word, a couple of questions around, you know, where is that market currently in terms of versus the 30 you're thinking about?

Speaker Change: Yeah, absolutely and then you kind of talked about the.

Matthew Lyne: You kind of lumped in West Africa, Mad are our Africa, and Mad together and you know I guess a couple of questions around that is.

Matthew Lyne: You talk about the potential for 30 rigs in the region. So.

Matthew Lyne: As we think about that basin, where L a or that area I guess, it's probably the better word.

Matthew Lyne: A couple of questions around you know where is that market currently in terms of versus the 30 youre thinking about.

Matthew Lyne: You know, really, does that include any opportunities in East Africa or kind of and then and then really, as you're looking at these opportunities, you know, any kind of sense for realizing it's probably, you know, multiple types of opportunities, any kind of sense on the durations of these, a lot of this work, these kind of, you know, shorter term, longer term on average type contract durations that that kind of are going to start absorbing rigs into this region.

Matthew Lyne: You know it really does that include any opportunities and in east Africa or are kind of.

Matthew Lyne: And then and then really as Youre looking at these opportunities.

Matthew Lyne: You know any kind of sense for realizing it's probably.

Matthew Lyne: Multiple.

Matthew Lyne: Types of opportunities any kind of sense on the durations of these a lot of this work at these kind of.

Matthew Lyne: Shorter term longer term on average type contract durations that that kind of are going to start absorbing rigs in this region.

Matthew Lyne: Sure, so let's start with timing. On the indicative numbers we're sharing, more than 30 across those regions. They're based on opportunities greater than one year, starting in 25 and 26. Okay, if you look at the number 30, if you use that as the assumption basis for Africa Med, you're close to about half of those represented in that. So that gives you an idea of the quantum of the potential growth of that area.

Matthew Lyne: Sure.

Matthew Lyne: So let's start with with timing.

Matthew Lyne: The.

Matthew Lyne: Indicative numbers were sharing that more than 30 across those regions.

Matthew Lyne: They're based on opportunities greater than one year.

Matthew Lyne: Starting in 'twenty five 'twenty six okay.

Matthew Lyne: If you look at that number 30, if you use that as the assumption basis.

Matthew Lyne: <unk> Africa med.

Matthew Lyne: We're close to about half of those represented in that region.

Matthew Lyne: So that gives you an idea of quantum of the potential growth.

Matthew Lyne: That area.

Matthew Lyne: And if you, you know, we often take a look at using RISDAD to model the CAPEX process across multiple years. And so, you know, some of the growth we're seeing when you look at, say, if you ran from 20, 22 to 30 versus now 24 to 30, we're seeing an increase in CAPEX spend across that period of 26% on a comparative basis from 22 to 24. And what's interesting is that in the top two of that, one of those is Africa, where we see a potential increase in CAPEX of up to 52%, which is quite evenly split between shallow and deep water.

Matthew Lyne: You know, we often take a look at the.

Matthew Lyne: Using <unk> to model the capex process across multiple years, and so you know some.

Matthew Lyne: Some of the growth we're seeing when you look at say if your rent. If you ran from 2022 to 30 versus now 24 to 30, we're seeing an increase in capex spend across that period of 26% on a comparative basis from 'twenty two to 'twenty four.

Matthew Lyne: What's interesting is.

Matthew Lyne: In the top two.

Matthew Lyne: Of that.

Matthew Lyne: One of those is Africa, which we see a potential increase in capex of up to 52%, which is quite evenly split between shallow and deepwater.

Matthew Lyne: So, so, you know, indicative of the work for for 144 moving to West Africa, and then the opportunities that we see both known and, and, and future potential prospects make it look quite a bright area. And, you know, yes, within there, there are some opportunities in East Africa, particularly if you're referring to Mozambique, which does provide some of the supply to that area and demand to that area. Let me just take a look.

Matthew Lyne: So so you know indicative of that.

Matthew Lyne: Work for 144, moving to West Africa, and then the opportunities that we see both known and and and future potential prospects.

Matthew Lyne: Makes it look quite a bright area.

Matthew Lyne: Yes within there there are some opportunities in East Africa, particularly if you're referring to Mozambique does provide some of the supply to that area demand to that area.

Matthew Lyne: Let me just take it back a second. So we're going from potential incremental demand in Africa, which we're generally really excited about. We're talking about numbers from the low 20s to the 30 number that Matt talked about. So potentially, incremental assets that need to serve Africa broadly around.

Matthew Lyne: Let me just take back a second so we've gone from the potential incremental demand in Africa generally we're really excited about when we're talking about numbers from the low Twenty's 22, the 30 number that Matt talked about so potentially incremental assets that need to serve Africa broadly around seven.

Speaker Change: Okay well.

Anton Dibowitz: Thank you very much. It's super helpful.

Speaker Change: Thank you very much super helpful. Certainly a bright spot in the market.

Anton Dibowitz: Thank you. The next question is from Eddie Kim with Barclays. Please go ahead.

Sungeun Kim: Thank you. The next question is from Eddie Kim with Barclays. Please go ahead.

Sungeun Kim: Hi, Good morning, I, just wanted to dig deeper into the the outlook on the Jackup market. The 22 suspended jackups in Saudi you alluded to some potential pressure on day rates in the near term leading edge recently benign market has been around that 160 to 170000 level.

Sungeun Kim: Hi, good morning. I just wanted to dig deeper into the outlook for the jackup market. So there are 22 suspended jackups in Saudi. You alluded to some potential pressure on day rates in the near term. You know, the leading edge recently for the benign market has been around that, you know, 160,000 to 170,000 level. Is it reasonable to assume that that leading edge could fall to maybe, I don't know, 130,000 to 140,000? I'm just curious as to the potential magnitude of the pricing pressure that you highlighted.

Sungeun Kim: Is it reasonable to assume that that leading edge could fall to Navy I don't know 130 to 140.

Sungeun Kim: Just curious on your thoughts as to the potential magnitude of the pricing pressure that you highlighted.

Matthew Lyne: Sure Eddie, maybe I'll jump in first and then Chris and Anton can add some color. So of the 22, we see about half, and I think Anton mentioned that in his prepared remarks. And he also mentioned that the jacket utilization for high-spec units is at 95%. So, there's sufficient demand based on the current utilization to absorb those rigs. Will there be some near-term rate pressure for those contractors who want to fix rigs sooner?

Speaker Change: Sure and maybe I'll, maybe I'll jump in first and then Chris and Tom can add some color.

Matthew Lyne:

Matthew Lyne: So yes, the 'twenty two we see about half and I think and Tom mentioned that in his prepared remarks.

Matthew Lyne: Okay.

Matthew Lyne: And we also mentioned that.

Matthew Lyne: The jackup utilization for high spec units is at 95% so.

Matthew Lyne: So.

Matthew Lyne: There is sufficient demand based on the current utilization to absorb those rigs will there be some near term rate pressure for those contractors, who want to fix rigs sooner there may be as we've seen through a couple of fixtures, but we don't think thats indicative of a longer term trend so feel.

Matthew Lyne: There may be, as we've seen through a couple of fixtures, but we don't think that's indicative of a longer-term trend. So we feel as though there's sufficient demand, tying back to some of the topics I just mentioned around capex growth, where we see a strong market in the future. We may not see all of those rigs come back into the competitive international benign environment market as quickly as those first two.

Matthew Lyne: So there is sufficient demand.

Matthew Lyne: Tying back to some of the topics I just mentioned around Capex growth, where where we see a strong market in the future and we may not see all of those rigs come back into the competitive international benign environment market as quickly as those first two.

Matthew Lyne: So to scope it, roughly half of those 22 are even competitive in the international market. We think they can be absorbed by the market in an orderly fashion.

Matthew Lyne: So to scope it roughly half of those 22 or even competitive in the international market. We think they can be absorbed in the market in an orderly fashion from our perspective, we have 19 rigs outside of those that we have operating in Saudi.

Christopher T. Weber: From our perspective, we have 19 rigs outside of those that we have operating in Saudi. The majority of those 15 are in the North Sea, Trinidad, and Australia, which leaves us with four. Three of those are on long-term contracts, so we think there's plenty of capacity given given the utilization levels in the international market. There's strong demand for those rigs that may come out of Saudi for those who choose not to wait or maybe take them back to their owners' home market, like China or Egypt, for those rigs to be absorbed in an orderly fashion. And I said on the one forty three, we think they're great opportunities for that rate. We'll be patient, and we'll find the right job.

Christopher T. Weber: The majority of those 15 are in the North Sea, Trinidad and Australia, which leaves us with four three of those are on long term contracts.

Christopher T. Weber: So we think there's plenty of capacity given given the utilization levels in the international market.

Christopher T. Weber: There is strong demand that those those rigs that may come out of Saudi for those who choose not to wait or maybe take them back to their owners home market like China or Egypt for those rigs to be absorbed in a in an orderly fashion as said on the on the $1 43, we think there are great opportunities for that rig will be patient and we'll find the right job for it.

Speaker Change: Got it got it thanks for that color and just shifting over to the floater market here and Tom in your prepared remarks, you said you expected.

Sungeun Kim: Got it. Got it. Thanks for that color.

Sungeun Kim: Two to three year contracts to be awarded at or close to leading edge rates with which is great to hear but I assume that the comment is more in reference to hot rigs currently working how much of a discount do you expect we could see for sideline rigs winning some of that longer term work.

Sungeun Kim: Just shifting over to the floater market here, Anton, in your prepared remarks, you said you expected these two to three-year contracts to be awarded at or close to leading edge rates, which is great to hear. But I assume that that comment is more in reference to hot rigs currently working. How much of a discount do you expect we could see for sideline rigs winning some of that longer-term work? I don't

Anton Dibowitz: I don't think we can expect to see a discount for sideline rigs. I can't talk about what other people do, but personally, how we view the market, the 11, the 13, and the 14 are the highest specification assets available on the market, two BOPs. We've seen the market for seventh-generation rigs, and we see strong demand for them over the next few years. So I don't think, yes, leading edge rates, and when we're talking kind of term two to three year contracts, which are in that mid to high 400s range with potential, continue to gradually move higher, as we've said, with average day rates, you know, moving from the mid 400s to the 480s in the first four months of the year. And we think they'll continue to move higher as the supply-demand balance increases because there And we're looking forward to finding the right opportunities for the 11, 13, and 14.

Sungeun Kim: I don't think we can expect to see a discount for sideline greg's.

Anton Dibowitz: Can't talk for what other people do but but personally how we view the market.

Anton Dibowitz: The 11 to 13 on the 14 are the highest specification assets available in the market to be O PS.

Anton Dibowitz: Seen the Mark of seventh generation rigs, we see strong demand for them over the over the next few years.

Anton Dibowitz: So I don't think yes, leading edge rates and when we were talking about kind of taro them two to three year contracts or are in that.

Anton Dibowitz: That mid to high four hundreds range with potential and we've seen that it's great.

Anton Dibowitz: Continue to gradually move higher as we've said with average day rates and you know moving from the mid four hundreds to the four hate for <unk> in the first four months of the year and we think they'll continue to move higher as the supply demand balance increases because there's more incremental demand coming out and we're looking forward to finding the right opportunities.

Anton Dibowitz: All the 11 13 and 14.

Speaker Change: Got it great.

Anton Dibowitz: Great. Thank you, Anton. I'll turn it back.

Speaker Change: Great. Thank you Anton I'll turn it back.

David Christopher Smith: Thank you. The next question is from David Smith with Heikkinen Energy Advisors. Please go ahead.

Anton Dibowitz: Thank you. The next question is from David Smith with Heikkinen Energy Advisors. Please go ahead.

David Christopher Smith: Hey, Thank you had some technical difficulty so hopefully I'm not asking the same question someone else did but a question for Chris just circling back to the guidance I wanted to make sure I understood correctly.

David Christopher Smith: Hey, thank you. I had some technical difficulties, so hopefully, I'm not asking the same question someone else did already. But question for Chris, just circling back to the guidance, I wanted to make sure I understood correctly that, you know, 24 EBITDA guidance is maintained at that 500 to 600 range but would need incremental work for the DS-10 and the DPS-5 to get to the midpoint. So I wanted to make sure I understood that correctly, but also wanted to ask about your comfort level with the low end of guidance, you know, if minimal incremental work for those Yeah, David.

David Christopher Smith: For EBITDA guidance is maintained.

David Christopher Smith: That 500 to 600 range, but would need incremental work for the D and the Dps five to get to the midpoint. So I want to make sure I heard that correctly, but also wanted to ask about your comfort level for the low end of guidance.

David Christopher Smith: Minimal incremental work for those rigs materializes.

Christopher T. Weber: Yeah, David, exactly right. We're maintaining our guidance range of $500 to $600 million. To get to the midpoint of that range, we need to do some incremental work on the $10 and the $5. We do assume a lot of work. Unknown Speaker We need some incremental work to get to the midpoint of that range. So that's what we're focused on, you know, Matt and his team, and the whole organization is laser focused on securing that work, and we have active discussions with customers about

David Christopher Smith: Yes, David it's exactly right, we're maintaining our guidance range $500 million to $600 million.

Christopher T. Weber: To get to the midpoint of that range, we need to get some incremental work on the 10 and the five.

Christopher T. Weber: We do assume.

Christopher T. Weber: But we need some incremental work to get to the midpoint of that range.

Christopher T. Weber: So that's what we're focused on you know match.

Christopher T. Weber: Matt and his team and the whole organization is laser focused on securing that work and we're active discussions with customers for it.

Christopher T. Weber: Okay.

Christopher T. Weber: If Mexico work doesn't materialize in the second half for the Dps by <unk>, whether you look at that rig is a candidate for U S Gulf well intervention and P&A work.

David Christopher Smith: Okay. If Mexico work doesn't materialize in the second half for the DPS-5, would you look at that rig as a candidate for U.S. Gulf, you know, well intervention and P&A work? Not a lot of rigs in the region are good candidates for midwater work, so I thought that might be an opportunity.

David Christopher Smith: Not a lot of rigs in the region are good candidates for mid water work. So.

David Christopher Smith: It'd be an opportunity.

Christopher T. Weber: I'll let Matt talk about the capability of the rig because it is a great asset, and then maybe I'll come back to your question.

Speaker Change: I'll, let that let Matt talk about the capability of the rig that is a great asset and then maybe I'll come back on your question. Thanks for the excellent leading question I think for the Dps fights bulk moored and DP capable so.

Matthew Lyne: Thanks for the excellent leading question. I think, you know, for the DPS5, it's both moored and DP capable. So it broadens the market opportunities for that rig, both in the US and Mexican Gulf. The program it's working on right now with E&I, it's doing one well in moored capability and the other one in DP.

Matthew Lyne: Rod and the market opportunities for that rig both in U S and Mexican golf the program. It's working on right now with Eni doing one while in moored capability and the other one in D. T. So it provides quite a flexible opportunity on the there are a number of opportunities on the well intervention side, so that that market is.

Matthew Lyne: So it provides quite a flexible opportunity. There are a number of opportunities on the well intervention side. So that that market is proving to be quite interesting in the US Gulf. There are also continued opportunities with P&A and traditional drilling. And I think you will look at our track record; similar to last year, we've been able to fill those opportunities that keep the rig fully active through the year. The next key is what's next.

Matthew Lyne: Proving to be quite interesting in the U S. Gulf. There also continued opportunities with P&A and traditional drilling.

Matthew Lyne: And I think you will look at our track record similar situation to last year.

Matthew Lyne: <unk> been able to fill those opportunities that keep the rig fully active through the year.

Anton Dibowitz: So there are longer-term opportunities in the Gulf of Mexico region. There were some longer-term opportunities that shifted from 24 to 25 that we had our focus on, that are likely to return, that are attractive, but we're also marketing the rig internationally. So there are a number of longer-term opportunities across the Atlantic that are quite attractive that provide us with revenue visibility for that rig on a long-term and lower cost basis.

Matthew Lyne: The next key is whats next so there's longer term opportunities in the Gulf of Mexico region.

Anton Dibowitz: Were some longer term opportunities that shifted from 'twenty four 'twenty five.

Anton Dibowitz: Our focus on that are likely to return that are attractive, but we're also marketing the rig internationally. So theres a number of longer term opportunities exist across the Atlantic that are quite attractive that provide us.

Anton Dibowitz: Our revenue visibility.

Anton Dibowitz: For that rig on a long term and lower cost basis.

Anton Dibowitz: So I mean 24 to <unk> 24 is 97% underwritten from a revenue perspective, clearly we have work to do on the on the D. S stand and also the Dps five, but we'll remind we werent exactly the same position with the P. P. S. Five last year at this time and Matt and the team did a great job.

Anton Dibowitz: I mean, 24, 24 is 97% underwritten from a revenue perspective. Clearly, we have work to do on the DS10 and also the DPS5. But we'll remind you, we were in exactly the same position with the DPS5 last year at this time, and Matt and the team did a great job of stringing together work, near constant work in the second half of the year, and delivering on those rigs. So we're just going to have to see, have some pieces fall in place, and see what we can do. We are modeling some idle time on those rigs. But we clearly have some work to do, as Chris said, to deliver the midpoint of our guidance.

Anton Dibowitz: Screening together work.

Anton Dibowitz: Constant work and are in the second half of the year and delivering on those rigs.

Anton Dibowitz: So we're just going to have to see how have some pieces fall in place and see what we can do we are modeling some idle time on those rigs.

Anton Dibowitz: We clearly have some some work to do as Chris said to deliver the midpoint of our guidance.

David Christopher Smith: I appreciate the color. Thank you. I'll circle back.

Speaker Change: I appreciate the color. Thank you I'll circle back.

David Christopher Smith: Thanks. Thank you. The next question comes from Fredrik Stene with Clarksons Plateau Securities. Please go ahead.

Fredrik Stene: Thank you. The next question comes from Fredrik Stene with Clarkson's Plateau Securities. Please go ahead.

Fredrik Stene: And Don and team.

Fredrik Stene: Anton and team, hope all is well. I have two questions for you today and I just want to follow up a bit on what David asked about the guidance. Anton, you said that 97% of the revenue was underwritten. Is that correct? On the low end of the revenue guidance of 2.97% of $2.3 billion. Just wanted to get the details correctly. At the midpoint, at the midpoint. Okay, great help.

Fredrik Stene: It's well I have two questions for you today and I just want to.

Fredrik Stene: Two.

Fredrik Stene: Follow up a bit on what David asked about the guidance.

Fredrik Stene: Anthony you said that 97% of the revenue was underwritten and stopped.

Fredrik Stene: On the low end of the revenue guidance of $2 97 per cent of $2 3 billion just wanted to get the details correctly at the midpoint.

Fredrik Stene: At the midpoint, okay. So palpable.

Fredrik Stene: Are you, when you think about DPS5, DS10 and in relation to the comments around, or in your prepared remarks about the rates potentially being, Unknown Speaker 1. Maybe a bit more volatile for short-term work, how are you, you know, balancing that when you're bidding these two rigs forward? Should we expect to see rates that would, you know, be deemed materially below leading edge rates? Or should we see something that's, at least for the DS10, still in the 400s? I'll go back to my comments.

Fredrik Stene: Are you.

Fredrik Stene: When you think about the Dps.

Fredrik Stene: DS 10.

Fredrik Stene: Relation to the comments around <unk>.

Fredrik Stene: In your prepared remarks about <unk> potentially being.

Fredrik Stene: Maybe a bit more volatile for short term work how are you.

Fredrik Stene: One thing that when you're bidding. These two rigs are forward should we expect to see rates that would be deemed materially below leading edge rates are or should we see something that's something for the DS 10 billion and the four hundreds.

Anton Dibowitz: I go back to my comments, and this is more a general market comment, but I think it applies broadly, including to us. You know, term programs, and we talk about term programs, two to three years, you know, in the mid to high 400s into the 500s for the right opportunity. I think where you see that range is more, look, we look at getting the highest daily rate we can to get the best economics on every job that we go after.

Fredrik Stene: I'd go back to my comments and this is more general market comment, but I think it applies broadly and including to US you know Tom programs and when you talk about term program two to three years.

Anton Dibowitz: In the mid to high four hundreds into the five hundreds for the right opportunity I think way, where you see that that range is is more look when we look at getting the highest day rate we can to get the best economics on every job that we go after but I think what you can see is is you know if youre talking about gap fill.

Anton Dibowitz: And I think what you can see is, you know, if you're talking about gap filling bridging, we're focused on getting the right program and fixing rigs long term where we can. And then you work backwards from that and talk about the gap filling that you may be looking for. And I think that's where you may see, you know, more variety, and it may make, you know, economic sense for you to take a bridge program and look at what economics you can achieve on that. That's how we think about it.

Anton Dibowitz: We're aging we're focused on getting the right program in fixing rigs long term, where we can and then you work backwards from that and talk about the gap fill that you may be looking for and I think that's why you may see more of a variety and it may make economic sense for you to take a a bridge program and and look at what economics, you can achieve on that.

Anton Dibowitz: That's how we think about it.

Anton Dibowitz: Mr. <unk> your line and you hear me.

Fredrik Stene: Okay, perfect. Sorry Anton, I dropped out actually when you started your answer, so I'll look at that in the transcript. We can follow up with you offline.

Speaker Change: Okay perfect Alright.

Speaker Change: Okay. Let me start with your answer so I'll look at back at the transcript.

Speaker Change: We got caught up with you offline.

Anton Dibowitz: Yes, yes, okay great.

Speaker Change: Just one more in terms of contracting.

Fredrik Stene: Contracting.

Speaker Change: Got it.

Fredrik Stene: Think about rates going forward and I totally understand that you might not want to reveal your strategy, but in general.

Speaker Change: We have some sideband capacity youre mentioning that the S. 11, 13, four key and there are some other rigs that have been taken out.

Speaker Change: From the yard so clearly there is a.

Fredrik Stene: There is new and higher spec quality it won't think they'll get into the market here in terms of high spec assets versus lower risk.

Fredrik Stene: Assets you could either argued that there will be a discrepancy in rates just because of that.

Fredrik Stene: Specs or that they will tend to walk towards each other.

Fredrik Stene: As the market tightens.

Fredrik Stene: Customers just won't have any choice in terms of.

Speaker Change: Choosing the best rigs how are you thinking about that and I'm asking particularly in FY 'twenty four 'twenty five more than in the long term.

Fredrik Stene: Although I can't I can't talk for others, but I can tell you you know what our philosophy is and I did allude to it on a on an earlier question 12 about 13 ships of seventh generation and that's a great position to be on.

Fredrik Stene: Look, I can't talk for others, but I can tell you, you know, what our philosophy is. And I did allude to it in an earlier question.

Anton Dibowitz: 12 of our 13 ships are 7th generation, and that's a great position to be in, including, you know, the 11, the 13, and 14. These are the highest-spec rigs that are on the sidelines, and we can deploy them for the right opportunity. We see a strong pipeline of customer demand, especially for 25 and 26, and we will maximize the economics that we can work those rigs on as we see the opportunity.

Anton Dibowitz: Including the.

Anton Dibowitz: The 11 13 and 14. These are the highest spec rigs that are that are on the sidelines and we can deploy for the right opportunity, we see strong pipeline customer demand, especially in <unk> 25, and 26, and we will maximize the economics that we can work those rigs on.

Anton Dibowitz: As as we see the opportunities.

Speaker Change: Perfect and finally any thinking around any of your other stacked assets <unk> three.

Anton Dibowitz: Perfect. And finally, any new thinking around any of your other stacked assets, DPS 3, DPS 6, any of the jackups, or are they going to be assets for now?

Anton Dibowitz: The jackups or.

Anton Dibowitz: Are they going to be assets are now.

Speaker Change: Well as it is now there there is a preference in the market right now from our customers for high specification assets from a capital allocation perspective, its made more sense for us to deploy capital towards our high spec drillship fleets. That's what we've been focused on over the last couple of years.

Anton Dibowitz: Look, as it is now, there is a preference in the market right now from our customers for high-specification assets. From a capital allocation perspective, it makes more sense for us to deploy capital towards our high-spectral ship fleet. That's what we've been focused on over the last couple of years. Our focus is on the 11, 13, and 14. But as the supply-demand balance continues to tighten over the next few years, what we may see is that there are only 10, as we see it, effective reactivation candidates sitting on the sidelines and high-specification assets. As that market continues to tighten over the next few years, we could likely see more opportunities for semis to come back to the market. But right now, our focus is

Fredrik Stene: Perfect. Thank you very much for taking my questions, and have a good day.

Fredrik Stene: You know our focus is on the 11 13 and 14, but as the supply demand balance continues to tighten over the next few years.

Fredrik Stene: You know what what we May see there only 10 as as we see it effective reactivation candidates sitting on the sidelines in the high specification assets as as that market continues to tighten over the next few years, we could likely see more opportunities.

Fredrik Stene: Four four semis to come back to the market, but right now our focus is on the Drillships.

Fredrik Stene: Perfect. Thank you very much for taking my questions and have a good day.

Kurt Kevin Hallead: Absolutely. Thanks, Fred.

Speaker Change: Absolutely Thanks, Rick.

Kurt Kevin Hallead: Thank you. The next question is from Kurt Hallead with Benchmark. Please go ahead. Hey, good.

Fredrik Stene: Thank you. The next question is from Kurt Pallet with benchmark. Please go ahead.

Kurt Kevin Hallead: Hey, good morning, everybody. Morning, Kurt. Good morning.

Kurt Kevin Hallead: Hey, good morning, everybody.

Kurt Kevin Hallead: Good morning, Kurt.

Anton Dibowitz: Hey Anton, I wanted to follow up. You referenced the prospect of an increase in the cadence of contract awards as we go into the second half of this year. Just wondering if you can maybe give some additional context around that in terms of maybe, how do you quantify that? Is it 20, 10, 15, 20% increase? Just some context around how you're looking at it.

Kurt Kevin Hallead: Morning.

Kurt Kevin Hallead: So I thought I wanted to follow up you referenced the prospect of an increase in the cadence of contract awards as we go into the second half of this year.

Anton Dibowitz: Wondering if you can maybe give some additional context.

Anton Dibowitz: Around that in terms of maybe how do you quantify that in 2010 15, 20% increase.

Anton Dibowitz: Context around how you're how you're looking at it.

Anton Dibowitz: I don't know if we can quantify in percentage terms I mean, you know they've been you know.

Anton Dibowitz: I don't know if we can quantify in percentage terms. I mean, you know, there have been some talks about seasonality and pace of contracting. What I can say is that the pace of contracting, and the number of tenders that are out there, are really solid for 24. You know, you may see fewer awards in a certain quarter. And given that, we expect there to be a good number of awards, which points to when we look at the tenders that are out there, an increase in pace because people are looking for rigs in the second half of the year.

Anton Dibowitz: Some talk about seasonality and pace of contracting or what I can say is that the pace of contracting the number of tenders that are out there are really solid for 'twenty for.

Anton Dibowitz: You know you you may see fewer awards and in a certain quarter and given that we expect there to be a good number of awards you know points too when we look at the tenders that are out there.

Anton Dibowitz: An increase of pace because people are looking for rigs in the second half of the year and part of that is driven by.

Anton Dibowitz: And part of that's driven by, you know, these are a good number of long-term programs. Some of them are in multiple jurisdictions, which means the operator of the program needs to get, you know, partner approvals in a number of countries, and longer-duration programs with more complexity take a longer time to process. The award can move forwards and backwards by quarter depending on how they make progress, but clearly based on the number of tenders that we see that are active that are out there that we expect to be completed. We expect the pace of tendering award activity to increase over the remainder of the year.

Anton Dibowitz: These all have.

Anton Dibowitz: Good number of long term programs some of them are in multiple jurisdictions, which means the operator of the program needs to get partner approvals in a number of countries and longer duration programs with more complexity take a longer time to process.

Anton Dibowitz: Program.

Anton Dibowitz: Bert can move forwards and backwards by by quarter, depending on how they make progress, but clearly based on the number of tenders that we see that are active that are out there that we expect to be completed we expect the pace of tendering award activity to increase over the remainder of the year.

Speaker Change: Okay. I appreciate that color follow up I have then is on the 11 13 and 14.

Anton Dibowitz: Okay, appreciate that that color follow-up I have then is on the DS 1113 and 14, and there are a couple parts to the question, right? First one is, you know, in the context of those three, can you just remind us which one might be the one more likely to go first? And then the second dynamic is, you know, given elements related to shipyard capacity, labor, and supply chain dynamics. What's the feasible number of rigs in a given year? You got three, so how many of those could you feasibly activate in a given year?

Anton Dibowitz: Couple of parts to the question right. The first one is you know in the context of those three can you just remind US you know, which one might.

Anton Dibowitz: It might be the one more likely to go to go first and then second dynamic is given elements related to shipyard capacity labor.

Anton Dibowitz: Supply chain dynamics.

Anton Dibowitz: And what what's the.

Anton Dibowitz: Feasible number.

Anton Dibowitz: Rigs in a given year you got three so how many of those could you feasibly activate in a given year.

Anton Dibowitz: I mean, 11, 13, and 14 are all fantastic assets. They're all, they're, you know, almost interchangeable.

Anton Dibowitz: 11, 13, and 14 are all fantastic assets that all that.

Anton Dibowitz: Almost interchangeable the customer decides what what else that they want you know one customer may prefer a rig like the 11 that that has a track record and it's worked before and some customers prefer you.

Anton Dibowitz: You know, the customer decides what asset they want. You know, one customer may prefer a rig like the 11 that has a track record and has worked before. And some customers, you know, prefer, you know, a new shiny car right off the lot, right? The 13 and the 14.

Anton Dibowitz: You know.

Anton Dibowitz: Our new shiny car right right off the lot right, the 13th and 14th so.

Anton Dibowitz: So, you know, for us, they're somewhat fungible, but we will focus on getting all three of them to work. As far as capacity is concerned, we've done four floater reactivations in parallel before and done them very successfully. You know, one of the true strengths of this organization is our ability to execute complex projects and reactivation projects, leading the industry, as you've seen on the DS8, and I fully expect the team will deliver the DS7 in the same way. So we feel very comfortable with our ability to effectively reactivate those rigs when we find the right opportunities, whether it's serially or in parallel.

Anton Dibowitz: For us there somewhat fungible.

Anton Dibowitz: But we will focus on on on getting all three of them to work as far as capacity, we've done four floater reactivation in parallel before and done it very successfully.

Anton Dibowitz: You know one of the true strength of this organization is our ability to execute complex projects and reactivation projects.

Anton Dibowitz: Leading the industry as you've seen on the D. S H and I fully expect the team will deliver that D. S. Seven in the same way. So we feel very comfortable with our ability to to effectively reactivate those rigs when we find the right opportunities, whether it's serially or or in parallel.

Kurt Kevin Hallead: Okay, great. I appreciate that. Thanks.

Speaker Change: Okay, great I appreciate that thanks.

Kurt Kevin Hallead: Thank you. The next question is from Doug Becker with capital one. Please go ahead.

Doug Becker: Thank you. The next question is from Doug Becker with Capital One. Please go ahead.

Doug Becker: Thank you. Just following along the same tenor of questions, how would you frame the likelihood of hearing about a contract for one or more of those rigs this year and the particular potential for a JV with an operator for one of these rigs?

Doug Becker: Thank you.

Doug Becker: Just following along the same.

Doug Becker: Center of questions, how would you frame the likelihood of hearing about a contract for one or more of those rigs this year and particular potential for a JV with an operator for <unk>.

Doug Becker: One six.

Speaker Change: Oh, I'm not I'm not going to get into speculation of percentages I mean, what I would say is.

Anton Dibowitz: I'm not I'm not going to get into speculation of percentages. I mean, what I would say is, we will look at traditional or non-traditional ventures if it is accretive and makes economic sense for our shareholders. You know, we have a critical mass of rigs working. We've got three attractive assets in a growing and increasing demand market that we can deploy on the right contract with the right customer at the right time.

Anton Dibowitz: We will look at traditional or non traditional ventures. If it is accretive and makes economic sense for our shareholders. We have a critical mass of rigs working we've got three attractive assets in a growing and increasing demand market.

Anton Dibowitz: That we can deploy on the right contract with the right customer at the right time, and we're going to be very focused on finding given what we see.

Anton Dibowitz: And we're going to be very focused on finding, given what we see with the demand profile over the next couple of years, the right jobs for those assets, if that comes. We're in active discussions on all three of those assets, you know, right now. If it makes economic sense, and we've been very clear about having meaningful returns on reactivation costs, and it makes sense for us, And our shareholders absolutely will execute on this, but we're also willing to be patient and wait for the right opportunity to put those assets back to work because they are the best assets available on the sidelines.

Anton Dibowitz: With the demand profile over the next couple of years.

Anton Dibowitz: Finding the right job for those those assets if that comes we're in active discussions on all three of those assets right now.

Anton Dibowitz: If it makes economic sense and we've been very clear on having meaningful returns on reactivation costs and it makes sense for us and our shareholders absolutely we will execute on but we're also willing to be patient and wait for the right opportunity to put those assets back to work because they all have the best assets available on the sidelines.

Anton Dibowitz: Yeah, and our criteria is the same as it always has been. I mean, a meaningful return on the reactivation costs over that initial firm contract. So that's the same. Thank you all for attending, as we've looked at everything else.

Anton Dibowitz: Our criteria is the same as it's always been a meaningful return on on the reactivation cost over that initial firm contract. So that's the same level.

Anton Dibowitz: Meaning as we've looked at everything else.

Speaker Change: Alright, well that all makes sense and very consistent.

Doug Becker: No, that all makes sense and is very consistent. Maybe switching to QQ, revenue efficiency was very strong in the first quarter. Is this strong performance continuing this quarter? And maybe some of the parameters that are baked into the QQ revenue guidance for revenue efficiency.

Doug Becker: Switching to QQ revenue efficiency was very strong in the first quarter.

Doug Becker: This strong performance continuing this quarter and just maybe some of the parameters that are baked into the two key revenue guidance for revenue efficiency.

Doug Becker: Revenue efficiency solid and in the second quarter I think I'm not sure. If this is the question you're alluding to but but you know our EBITDA guidance for the second quarter is in line with what we expected at the beginning of the year I think some people you know and obviously, we don't know what's in your.

Christopher T. Weber: Revenue efficiency was solid in the second quarter. I think, I'm not sure if this is the question you're alluding to, but our EBITDA guidance for the second quarter is in line with what we expected at the beginning of the year. I think some people, and obviously we don't know what's in your models, I think some people model kind of a linear growth of our revenue and earnings through the year, where we had a lot of rigs that were transitioning between contracts, doing SPSs, moving locations. We look at the 247 going all the way to Australia, plus the DS7 coming to work in the middle of the year.

Christopher T. Weber: Your models I think some people model kind of a linear growth of all of our revenue and earnings through the year.

Christopher T. Weber: Where you know we had a lot of rigs that were.

Christopher T. Weber: Transitioning between contracts do in Sps is moving locations. When you look at the $2 47 going going all the way to Australia, plus the D. S seven coming to work middle of the year, So for us Theres more.

Christopher T. Weber: So for us, there's more a ramp towards the third quarter and the fourth quarter versus a linear progression when you compare kind of quarter to quarter guidance versus what we've given for the full year. Yeah, and when we think about Q2 versus Q1, the kind of big drivers of revenue growth are more operating days on the floater fleet. So we'll have, particularly the DS7 starting up in June, and then just more days on the DPS5 and DS12 since they started contracts in the first quarter.

Christopher T. Weber: A ramp towards in the third quarter and the fourth quarter versus the linear progression. When you when you compare kind of quarter to quarter guidance versus what we've given for the full year and when we think Q2 versus Q1 kind of big drivers of the revenue growth or more operating days on the floater fleet. So we'll have the particularly the DSM.

Christopher T. Weber: Starting up.

Christopher T. Weber: In June and then just more days on the Dps five and DS 12, since they started contracts in the first quarter.

Christopher T. Weber: And then we've got a couple a couple of ships on a roll to higher rates in the second quarter and then all of these jackups that have really a drag in the first quarter.

Christopher T. Weber: And then we've got a couple of ships that are rolled to higher rates in the second quarter. And then all these jackups that had really a drag in the first quarter as it relates to idle time and contract prep and survey work, they're going back to work in the second. And so, you know, we'll see a lift there. So, you know, we're excited about the second quarter.

Christopher T. Weber: As it relates to.

Christopher T. Weber: Idle time and contract Prep and survey work Theyre going back to work in the second quarter.

Christopher T. Weber: So we'll see a lift there. So we're excited about the second quarter, we'll see EBITDA.

Christopher T. Weber: You know, we'll see EBITDA up, you know, based on our guidance, almost 80% relative to the first quarter. So, and then, as Anton mentioned, a big jump in the second half of the year versus the first half with the DS7 online, the impact of the higher DS16 contract, and the North Sea basically kind of working. I mean, everything's working in the North Sea, moving to higher rates, and then we got the contribution from the two jackups in Australia. So, expect a pretty meaningful ramp up across the year.

Christopher T. Weber: Based on our guidance almost 80% relative to the first quarter. So and then as handheld mentioned big jump in second half of the year versus versus first half with the Dia seven online impact of the higher D 16 contract North Sea basically kind of working I mean, everything is working in the North Sea.

Doug Becker: Got it. Thank you very much.

Doug Becker: Moving to some higher rates and then we got the contribution from the two jackups in Australia. So so.

Doug Becker: Pretty meaningful ramp across the year.

Speaker Change: Got it thank you very much.

Doug Becker: Thank you. This concludes our question and answer session I would now like to turn the conference back over to Nick Georgia for any closing remarks.

Nick Georges: Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Nick Georges for any closing remarks.

Nick Georges: Thanks, Thanks, Sanjay and thanks again to everyone on the call for your interest in <unk>. We look forward to speaking with you again, when we report our second quarter 2024 results have a great rest of your day.

Nick Georges: Thanks. Thanks, MJ. And thanks again to everyone on the call for your interest in Valaris. We look forward to speaking with you again when we report our second quarter 2024 results. Have a great rest of your day.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: Yeah.

Operator: [music].

unknown: [inaudible] Weber, Gregory Lewis, David Smith, Kurt Hallead, Sungeun Kim, Anton Dibowitz, Darin Gibbins