Q2 2024 Noble Corp PLC Earnings Call

Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Noble Corporation Second Quarter 2024 Financial Results Conference Call.

Operator: At this time, I would like to welcome everyone to the Noble Corporation 2nd Quarter 2024 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise.

Operator: At this time, I would like to welcome everyone to the Noble Corporation, 2nd Quarter, 2024 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star and 1.

Operator: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again, press star and 1.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, again press star and 1.

Ian Macpherson: I would now like to turn the call over to Ian MacPherson, Vice President of Investor Relations. You may begin.

Ian Macpherson: I would now like to turn the call over to Ian MacPherson, Vice President of Vista Relations. You may begin. Thank you, operator, and welcome, everyone, to Noble Corporation's second quarter 2024 earnings conference call. You can find a copy of our earnings report along with the supporting statements and schedules on our website at noblecorp.com. This conference call will be accompanied by a slide presentation that you can also find in the investor relations section of our website.

Ian Macpherson: Thank you, operator, and welcome everyone to Nobl Corporation's 2nd quarter 2024 earnings conference call. You can find a copy of our earnings report, along with the supporting statements and schedules, on our website at NoblCorp.com. This conference call will be accompanied by a slide presentation that you can also find located at the Investor Relations section.

Ian Macpherson: Today's call will feature prepared remarks from our President and CEO, Robert Eifler, as well as our CFO, Richard Barker. Also joining the call are Blake Denton, Senior Vice President of Marketing and Contracts, and Joey Collagio, Senior Vice President of Operations. During the course of this call, we may make certain forward-looking statements regarding various matters related to our business and companies that are not historical facts. Such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from these forward-looking statements, and NEA does not assume any obligation to update new statements.

Speaker Change: Thank you, operator, and welcome everyone to Noble Corporation's second quarter 2024 earnings conference call.

Ian Macpherson: Today's call will feature prepared remarks from our President and CEO, Robert Eiffler, as well as our CFO, Richard Barker. Also joining on the call are Blake Denton, Senior Vice President of Marketing and Contracts, and Joey Collaggio, Senior Vice President of Operations.

Ian Macpherson: During the course of this call, we may make certain forward-looking statements regarding various matters related to our business and companies that are not historical facts. Such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from these forward-looking statements, and Nobl does not assume any obligation to update these statements.

Ian Macpherson: Also note, we are referencing non-GAAP financial measures on the call today. You can find the required supplemental disclosure for these measures, including the most directly comparable gap measure and associated reconciliation in our earnings report issued yesterday and filed with the SEC.

Robert Eifler: Now I'll turn the call over to Robert Eiffler, President and CEO of Nobl. Welcome everyone, and thank you for joining us on today's call. I'll begin with highlights of our second quarter results in recent contract awards, then provide some perspectives on the market before turning the call over to Richard to discuss the financials.

Robert Eifler: Also note that we are referencing non-GAAP financial measures on the call today. You can find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and associated reconciliation, in our earnings report issued yesterday and filed with the FTC. Now, I'll turn the call over to Robert Eifler, President and CEO of Noble. Welcome, everyone, and thank you for joining us on today's call. I'll begin with highlights of our second quarter results and recent contract awards, then provide some perspectives on the market before turning the call over to Richard to discuss the financials. Finally, before we go to Q&A, I'll wrap up with a brief update on our pending acquisition of Diamond, which we are incredibly excited about.

Robert Eifler: Starting with the Q2 results, we had a solid quarter with adjusted EBITDOF of $271 million, up nearly 50% compared to $183 million in Q1, with a sequential improvement driven by several key contract startups, including the Noble Regina Allen commencing its contract in Argentina in early May, and the Noble Discoverer starting up in Colombia in mid-June. Subsequent to quarter-end, the Noble Faye Kozak commenced its contract in Brazil in mid-July.

Speaker Change: Welcome everyone, and thank you for joining us on today's call. I'll begin with highlights of our second quarter results and recent contract awards, then provide some perspectives on the market before turning the call over to Richard to discuss the financials.

Robert Eifler: Lastly, before we go to Q&A, I'll wrap up with a brief update on our pending acquisition of Diamond, which we are incredibly excited about. Starting with the Q2 results, we had a solid quarter with adjusted EBITDAW of $271 million, up nearly 50% compared to $183 million in Q1, with this sequential improvement driven by several key contract startups, including the Noble Regina Allen, commencing its contract in Argentina in early May, and the Noble Discoverer starting up in Columbia in mid June. Subsequent to quarter in, the Noble fake code Zach has commenced its contract in Brazil in mid July.

Speaker Change: Up nearly 50% compared to $183 million in Q1.

Speaker Change: including the noble Regina Allen commencing its contract in Argentina in early May and the noble discoverer starting up in Colombia in mid-June. Subsequent to quarter-end, the noble Faye Kozak has commenced its contract in Brazil in mid-July.

Robert Eifler: Each of these three rigs entailed significant contract preparation scopes, and I'd like to commend our project's teams on executing these crucial shipyard programs very well. In light of these de-risk contract startups, we are narrowing our EBITDA guidance for this year to a tighter range of $950 million to $1 billion. In June, our Board of Directors announced a 25% dividend increase to 50 cents per share for the third quarter of 2024. This next distribution in September will bring cumulative total capital return to shareholders since our Q4 2022 merger to $470 million and also establishes Noble as the highest dividend payer across all US listed oil field services.

Robert Eifler: Each of these three rigs entailed significant contract preparation scope, and I'd like to commend our project teams on executing these crucial shipyard programs very well. In light of these de-risked contract startups, we are narrowing our EBITDA guidance for this year to a tighter range of $950 million to $1 billion. In June, our Board of Directors announced a 25% dividend increase to $0.50 per share for the third quarter of 2024

Robert Eifler: This next distribution in September will bring cumulative total capital return to shareholders since our Q4 2022 merger to $470 million, and also establishes Nobl as the highest dividend payer across all U.S. listed oil field services. And while this is a good start, we are confident that the free cash flow potential of our business in the years ahead looks demonstrably higher. And we will remain committed to returning essentially all of our free cash flow via dividends and share buybacks as this cash flow inflection develops.

Speaker Change: This next distribution in September will bring cumulative total capital return to shareholders since our Q4 2022 merger to $470 million, and also establishes Noble as the highest dividend payer across all U.S. listed oil field services.

Robert Eifler: And while this is a good start, we are confident that the free cash flow potential of our business in the years ahead looks demonstrably higher. And we will remain committed to returning essentially all of our free cash flow via dividends and share buybacks as this cash flow and flexion develops, as reflected in our updated fleet status report published last night adjacent to our earnings release. Our total backlog stands at $4.2 billion compared to $4.4 billion last quarter. I would remind you that since our backlog does have a high concentration to the long term contracts in Guyana and Norway that do not replenish regularly, this tends to create some noise in our backlog trend line.

Speaker Change: And we will remain committed to returning essentially all of our free cash flow via dividends and share buybacks as this cash flow inflection develops.

Robert Eifler: As reflected in our updated pleat status report, published last night adjacent to our earnings release, our total backlog stands at $4.2 billion, compared to $4.4 billion last quarter. I would remind you that since our backlog does have a high concentration of long-term contracts in Guyana and Norway that do not replenish regularly, this tends to create some noise in our backlog trendline. In the Gulf of Mexico, Noble Stanley LaFosse was extended by Murphy for five additional wells spanning approximately one year, from February 2025 to February 2026, for a total contract value of $177 million.

Speaker Change: As reflected in our updated pleat status report, published last night adjacent to our earnings release, our total backlog stands at $4.2 billion, compared to $4.4 billion last quarter.

Robert Eifler: In the Gulf of Mexico, the noble Stanley LaFos was extended by Murphy for five additional wells spanning approximately one year from February 2025 to February 2026 for a total contract value of $177 million. On the jackup side, the Noble Result has picked up two additional contracts. First, a 45-day well with Central European petroleum offshore Poland followed by a 13-well PNA scope in Spain commencing in Q2 2025 with an estimated duration of about six months. Additionally, the Noble Resilient picked up a short-term intervention job with Harbor in the North Sea that has served as a helpful gap filler this summer between the rigs' other existing programs. And most recently, the Noble Innovator has been extended by BP in the UK North Sea from May through December 2025, the appriest option at $155,000 per day.

Robert Eifler: On the jack-up side, the Noble Resolve has picked up two additional contracts. First, a 45-day well with Central European Petroleum offshore Poland, followed by a 13-well PNA scope in Spain, commencing in Q2 2025, with an estimated duration of about six months. Additionally, the Nobl Resilient picked up a short-term intervention job with Harbor in the North Sea that has served as a helpful gap filler this summer between the RIGS other existing programs.

Speaker Change: On the Jackup side, the Noble Resolve has picked up two additional contracts.

Speaker Change: First, a 45-day well with Central European Petroleum offshore Poland, followed by a 13-well PNA scope in Spain, commencing in Q2 2025, with an estimated duration of about 6 months.

Speaker Change: Additionally, the Noble Resilient picked up a short-term intervention job with Harbor in the North Sea that has served as a helpful gap filler this summer between the rig's other existing programs.

Robert Eifler: And most recently, the Noble Innovator has been extended by BP in the UK North Sea from May through December 2025 via a priced option at $155,000 per day. Collectively, these contract fixtures represent approximately $275 million in total contract value, including mobilization. Now I'd like to turn to a broader outlook with our semi-annual review of current and expected deep water activity levels across the key geographic segments. The contracted rig count of UDW floaters with 7500 feet or greater water depth rating currently stands at 105 rigs, up one from last quarter and representing 94% utilization of the marketed fleet, excluding sideline capacity.

Speaker Change: And most recently, the Noble Innovator has been extended by BP in the UK North Sea from May through December 2025 via priced option at $155,000 per day.

Robert Eifler: Collectively, these contract fixtures represent approximately $275 million in total contract value, including mobilization payments.

Speaker Change: Collectively, these contract fixtures represent approximately $275 million in total contract value, including mobilization payments.

Robert Eifler: Now I'd like to turn to a broader outlook with our semi-annual review of current and expected deep water activity levels across the key geographic segments. The contracted rig count of UDW floaters with 7,500 feet or greater water depth ratings currently stands at 105 rigs, up one from last quarter and representing 94% utilization of the marketed fleet, excluding sideline capacity. This level has been fairly constant over the past year as industry expectations for the next leg higher in activity have been constrained somewhat, both by tight rig capacity, as well as by lengthening cycle times for certain long-term tenders to convert into contract awards.

Speaker Change: up one from last quarter, and representing 94% utilization of the marketed fleet, excluding sideline capacity.

Robert Eifler: This level has been fairly constant over the past year, as industry expectations for the next leg higher in activity have been constrained somewhat, both by tight rig capacity and by lengthening cycle times for certain long-term tenders to convert into contract awards. However, despite lower activity recently, the forward indicators for further growth through the cycle remain firmly intact. This includes a strong pipeline of FIDs and extremely robust subsea orbs. And this looks likely to continue into 2025, led foremost by Brazil, which has now increased to 34 rigs, up from 27 a year ago, with Petrobras comprising 30 of the 34 UDW rigs in Brazil. The combined U.S. and Mexican Gulf of Mexico should remain approximately flat compared to current levels.

Robert Eifler: However, despite flatter activity recently, the forward indicators for further growth through the cycle remain firmly intact. This includes a strong pipeline of FIDs and extremely robust subsea orders, as well as customer tenders and direct dialogue regarding future drilling plans. Hans. The historically high level of open demand that we've cited over the past couple of quarters has recently increased further to over 110 rig years now. That's not surprising at all, given the relatively low proportion of tenders that have converted to contract fixtures recently. We recognize that there's a growing amnesian curiosity about what's causing this slower pace of awards of late.

Robert Eifler: And while there's not a single uniform answer, we believe that there are a few contributing factors at play with various parts of the customer base, including first, capital discipline, and stakeholder alignment complexities that are causing contracts to take longer to execute, including partner approvals, permits, etc. Second, field development supply chain pinch points, resulting from the sharp rising global project backlogs over the past few years. And third, short-term after-effects resulting from upstream consolidation transactions, which has definitely been a factor at play in the Gulf of Mexico recently. Although there is generally no indication or expectation of drilling programs being structurally deferred, the recent slower cadence of rig contract awards does factor into the persisting utilization headwind confronting the sixth gen and lower end segment of the market, which appears likely to drag into 2025.

Speaker Change: Second, field development supply chain pinch points resulting from the sharp rise in global project backlogs over the past few years.

Speaker Change: Although there is generally no indication or expectation of drilling programs being structurally deferred,

Speaker Change: The recent slower cadence of rig contract awards does factor into the persisting utilization headwind confronting the 6th gen and lower end segment of the market, which appears likely to drag into 2025, more than we would have assumed earlier this year.

Robert Eifler: More than we would have assumed earlier this year. Another way to frame this dynamic is to look at how industry backlog has progressed over the past few years. Whether measuring backlog by either contract links or in terms of absolute dollars, the industry UDW fleet witnessed a 40-50% backlog expansion between early 2022 and the first half of 2023. Since then, however, total backlog for the industry deep water fleet has been generally flat. And this looks likely to continue into 2025. While this slowdown has lasted longer than we had expected, all of the leading indicators for increased activity remain highly compelling.

Speaker Change: Another way to frame this dynamic is to look at how industry backlog has progressed over the past few years.

Robert Eifler: And taking all of this into consideration, we expect the next move higher in industry backlog is likely to come into view sometime next year.

Speaker Change: All of the leading indicators for increased activity remain highly compelling. In taking all of this into consideration, we expect the next move higher in industry backlog is likely to come into view sometime next year.

Robert Eifler: With that, let me now turn to the bottoms-up market outlook. The golden triangle of South America, the Gulf of Mexico, and West Africa comprises over 75% of the global UDW market, led foremost by Brazil, which has now increased to 34 rigs, up from 27 a year ago, with Petrobras comprising 30 of the 34 UDW rigs in Brazil. Elsewhere in South America, Guyana is at five rigs, Colombia at one, and Suriname is currently at zero. Looking out to 2026, this region appears capable of expanding from 40 rigs currently to up to 45, based on visible customer needs.

Speaker Change: With that, let me now turn to the bottoms-up market outlook.

Speaker Change: Led foremost by Brazil, which has now increased to 34 rigs, up from 27 a year ago, with Petrobras comprising 30 of the 34 UDW rigs in Brazil.

Robert Eifler: Next, in the Gulf of Mexico, UDW demand currently stands at 24 and has been fairly stable in the 23 to 25 unit range over the past year. The US Gulf of Mexico has actually been steady to up slightly since early 2023, while the Mexican side has fallen off from three to four rigs of normalized demand to just one unit current. Lee. The inconsistency of activity in Mexico has been one of the contributing downside factors to the region's market balances recently. The U.S. goal, despite digesting a short-term impact from EMP consolidation, has been steady, as predicted, with current activity of 23 deepwater rigs.

Speaker Change: Next, in the Gulf of Mexico, UDW demand currently stands at 24 and has been fairly stable in the 23 to 25 unit range over the past year.

Speaker Change: The inconsistency of activity in Mexico has been one of the contributing downside factors to the region's market balances recently.

Speaker Change: The U.S. Gulf, despite digesting a short-term impact from EMP consolidation, has been steady, as predicted, with current activity of 23 deepwater rigs.

Robert Eifler: There remains a relatively thin spot market over the next few months for the five or so units with near-term availability. However, customer demand indicates that the combined U.S. and Mexican Gulf of Mexico should remain approximately flat compared to current levels. West Africa currently has 18 contracted U.D.W. rigs down slightly from 19 to 20 last year, and Golo leads the region with seven rigs, with other activity spread broadly across various other countries. Notably, Namibia is currently at a low with just one active rig compared to three to four rigs last year. There is a clear line of sight to Namibia maturing into at least a three to five rig market structurally by 2026, as development plans get underway.

Speaker Change: There remains a relatively thin spot market over the next few months for the five or so units with near-term availability. However, customer demand indicates

Speaker Change: West Africa currently has 18 contracted UDW rigs down slightly from 19 to 20 last year. Angola leads the region with seven rigs with other activity spread broadly across various other countries.

Speaker Change: Notably, Namibia is currently at a lull with just one active rig compared to three to four rigs last year. There is a clear line of sight to Namibia maturing into at least a three to five rig market structurally by 2026 as development plans get underway.

Robert Eifler: There is a clear line of sight to Namibia maturing into at least a three to five rig market structurally by 2026 as development plans get underway. We also continue to pursue intervention work with the Globetrotters, which we are hopeful will begin to show some initial wins fairly soon, albeit with minimal contribution before late 2024 or early 2025, and 6G rates will likely soften slightly until the slack comes out of the lower end of the market.

Robert Eifler: Coupled with the likely commencement of gas development in Mozambique, the combined West and East Africa market could drive incremental U.D.W. rig demand of five or more units by 2026. The Mediterranean and Black Sea region currently support eight units of demand, which we expect to be flat to down one unit over the next one to two years. The Far East market, including India and Australia, represents seven units of U.D.W. demand currently, and Indonesia is expected to drive an incremental demand for a couple more rigs starting from late 2025 or 2026. And then finally, we expect the harsh environment markets of Norway, UK, and Canada to remain steady plus or minus.

Speaker Change: And then finally, we expect the harsh environment markets of Norway, UK, and Canada to remain steady, plus or minus.

Robert Eifler: Tying all of this together, the market does feel more flat or up only slightly, at least through the first half of 2025. So we are maintaining a patient and disciplined approach in the meantime. We also continue to pursue intervention work with the glove shutters, which we are hopeful will begin to show some initial wins fairly soon. I'll be it with minimal contribution before late 2024 or early 2025. Against this demand backdrop, we expect day rates to remain in the high 400,000 to low 500,000s range for tier one drill ships over the near term, excluding stacked rigs bidding into multi-year programs at customary discounts.

Speaker Change: We also continue to pursue intervention work with the Globetrotters, which we are hopeful will begin to show some initial wins fairly soon, albeit with minimal contribution before late 2024 or early 2025.

Robert Eifler: And 6G rates will likely soften slightly until the flat comes out of the lower end of the market. However, assuming the next leg up and demand materializes as envisioned by 2026, a further increase in day rates is very probable.

Richard Barker: So, with that, I'll pause here and pass it to Richard to cover the financial highlights. Thank you, Robert, and good morning or good afternoon, all. In my remarks today, I will briefly review the highlights of our second quarter and then touch on the outlook for the remainder of the year. Contract drilling services revenue for the second quarter totaled 661 million, up 8% from 612 million in the first quarter. Carter. Adjusted EBITDA was 271 million in Q2, up from 183 million in Q1. Our adjusted EBITDA margin on total revenue improved to 39% in Q2. Cash flow from operations was 107 million, capital expenditures were 133 million, and free cash flow was negative 26 million.

Robert Eifler: So with that, I'll pause here and pass it to Richard to cover the financial highlights. Contract drilling services revenue for the second quarter totaled $661 million, up 8% from $612 million in the first quarter. Cash flow from operations was $107 million, capital expenditures were $133 million, and free cash flow was negative $26 million.

Speaker Change: So with that, I'll pause here and pass it to Richard to cover the financial highlights.

Richard: Thank you, Robert, and good morning or good afternoon all. In my remarks today, I will briefly review the highlights of our second quarter and then touch on the outlook for the remainder of the year.

Richard: Our adjusted EBITDA margin on total revenue improved to 39% in Q2.

Richard: Cash flow from operations was $107 million, capital expenditures were $133 million and free cash flow was negative $26 million.

Richard Barker: The sequential improvement in the financial results was driven by stronger utilization across the fleet, including contract startups for the Noble Discoverer, Noble Resilient, and Noble Regina Allen, as well as the abatement of contract preparation and startup costs that burdened contract willing expense more heavily in the first quarter. Our 16 marketers' floaters were 78% utilizing Q2, up from 76% in the first quarter, and our 13 marketed jackups were used like 77% in the second quarter, up from 67% in the first quarter. Average earned A8 in Q2 were 436,000 per day for floaters, and 156,000 per day for jackups.

Richard: including contract startups for the Noble Discoverer, Noble Resilient, and Noble Regina Allen, as well as the abatement of contract preparation and startup costs that burdened contract drilling expense more heavily in the first quarter.

Richard Barker: As summarized on page 5 of the earnings presentation slides, a total backlog as of July 31 stands at 4.2 billion, which includes 1.2 billion that is scheduled for revenue conversion in the second half of this year and 1.7 billion that is scheduled for 2025. As a reminder, this backlog does not include the inverseable revenue or revenue from ancillary services.

Richard Barker: Referring to page 9 of the earnings slides, we were updating our full-year 2024 guidance as follows. Firstly, total revenue increases and nowers to a range of 2.65 billion to 2.75 billion. The slight increase in the range is driven by higher reimbursable revenue and revenue from ancillary services. Secondly, adjusted Abidar nowers to a range of between 950 million and 1 billion. The narrowing of the adjusted Abidar range around our previous midpoint was driven by strong operational performance in Q2, offset by lingering white space in the second half for several floaters, as well as the couple of weeks of additional acceptance testing preceding the noble FAQs at contract commencement in mid-July.

Richard: Referring to page 9 of the earnings slides, we are updating our full year 2024 guidance as follows.

Richard: Firstly, total revenue increases and narrows to a range of $2.65 billion to $2.75 billion.

Richard Barker: The narrowing of the adjusted EBITDA range around our previous midpoints was driven by strong operational performance in Q2, offset by lingering white space in the second half for several floaters, as well as the couple of weeks of additional acceptance testing preceding the Noble-Fay-Kozak contract commencement in mid-July. I would now like to touch briefly on our free cash flow program. Q2 was additionally impacted by the working capital impact associated with the Noble-Regina-Halland incident in late 2020. With the Q2 cash flow deficit, we did draw down $35 million on the revolver in June.

Richard Barker: Thirdly, we are maintaining our guidance range of 400 to 440 million for capital additions, excluding the available capex. We expect the available capex to be approximately 30 million in 2024, with 17 million spent in the first half of the year. Looking forward to the third quarter, Abidar is currently tracking slightly lower versus Q2, with sequential revenue tailwinds from the Noble FAQs Act and a few other rigs offset by greater anticipated white space on the globe trodders and the Noble Voyager.

Richard: We expect Revealable CapEx to be approximately $30 million in 2024, with $17 million spent in the first half of the year.

Richard: Looking forward to the third quarter, EBITDA is currently tracking slightly lower versus Q2, with sequential revenue tailwinds from the Noble Fay-Kozak and a few other rigs offset by greater anticipated white space on the Globetrotters and the Noble Voyager.

Richard Barker: I would like to now touch briefly on our free cash flow profile. As we have previously stated, this year's free cash flow is expected to be heavily second half weighted, driven by higher capex in the first half and the key contract startups previously mentioned. Q2 was additionally impacted by the working capital impact associated with the Noble Voyager, Helen incident, in late 2020. 42. Due to the timing of some expected insurance proceeds potentially pushing into 2025, fully a 2024 cash flow in the aggregate could be negatively impacted by around 50 million dollars. With the Q2 cash flow deficit, we did draw down 35 million on the revolver in June.

Richard: I would like to now touch briefly on our free cash flow profile.

Richard: Due to the timing of some expected insurance proceeds potentially pushing into 2025, full year 2024 cash flow in the aggregate could be negatively impacted by around $50 million.

Richard: With the Q2 cash flow deficit, we did draw down $35 million on the revolver in June . We expect this to be repaid in the near future.

Richard Barker: We expect this to be repaid in the near future. We believe that we have now reached an inflection of free cash flow. We continue to expect Fully a free cash flow to be very slightly year on year and exiting at a very healthy one rate in the second half. As we look towards 2025, we remain constructive on the market outlook. However, we do recognise that until we see a pickup in the pace of contract awards to where total flow to rig demand increases more materially, we are likely to see lower utilization for our currently uncontracted 60 rigs well into 2025.

Richard Barker: We expect this to be repaid in the near term. However, we do recognize that until we see a pickup in the pace of contract awards to where total floater rig demand increases more materially, we are likely to see lower utilization for our currently uncontracted 6G rigs well into 2025. Thank you, Richard.

Richard Barker: As it relates to capital allocation and as Robert has mentioned, with the material step-up in free cash flow expected in the second half of the year, we expect to get back into the market and start executing again on our share purchase programme as we look to return essentially all of our free cash flow to shareholders.

Robert Eifler: With that, I'll turn the call back over to Robert.

Richard: With that, I'll turn the call back over to Robert.

Robert Eifler: Thank you, Richard. Before we turn to Q&A, I'd just like to provide a quick update on the diamond transaction. As disclosed last week, the HSR waiting period has expired, and the definitive proxy has been filed. Completion of the transaction is subject to the satisfaction of the remaining customary closing conditions, including diamonds, shareholder vote, which is scheduled for August 27th, and regulatory clearance in Australia. We are maintaining our expectation for closing by Q1 2025, although there are potential paths for closing this year. Not only are we incredibly excited about this highly complementary and a creative combination, but also it has been equally encouraging to see the market's positive response to the transaction.

Robert Eifler: Before we turn to Q&A, I'd just like to provide a quick update on the Diamond transaction. Completion of the transaction is subject to the satisfaction of the remaining customary closing conditions, including Diamond's shareholder vote, which is scheduled for August 27th, and regulatory clearance in Australia. We are maintaining our expectation for closing by Q1 2025, although there are potential paths for closing this year. I'm extremely proud and appreciative that our men and women, onshore and offshore, have established such a strong track record, not only as drillers but also as highly effective innovators and integrators.

Robert: We are maintaining our expectation for closing by Q1 2025, although there are potential paths for closing this year.

Robert: Not only are we incredibly excited about this highly complimentary and accretive combination,

Robert: But also, it has been equally encouraging to see the market's positive response to the transaction.

Robert Eifler: As the leading consolidator in the industry, we believe Noble has demonstrated a clear and powerful value proposition to customers, employees, and shareholders by leveraging scale and delivering seamless integration results for all stakeholders. I'm extremely proud and appreciative that our men and women onshore and offshore have established such a strong track record, not only as drillers, but also as highly effective innovators and integrators.

Nobl: As the leading consolidator in the industry, we believe Nobl has demonstrated a clear and powerful value proposition to customers, employees, and shareholders by leveraging scale and delivering seamless integration results for all stakeholders.

Speaker Change: I'm extremely proud and appreciative that our men and women onshore and offshore have established such a strong track record, not only as drillers, but also as highly effective innovators and integrators.

Robert Eifler: This has been a huge factor in what we're trying to achieve and become, and I'm quite confident that bringing in diamonds, world-class assets and people will provide another opportunity for us to shine together.

Operator: And I'm quite confident that bringing in Diamond's world-class assets and people will provide another opportunity for us to shine together. With that, operator, we're now ready to turn the call to Q&A. At this time, I would like to remind everyone that in order to ask a question, press star and then the number 1 on the telephone keypad.

Operator: With that operator, we're now ready to turn the call to Q&A. At this time, I would like to remind everyone that in order to ask a question, press star and then the number one on the telephone keypad.

Speaker Change: At this time I would like to remind everyone in order to ask a question press star and then the number one on the telephone keypad

Scott Gruber: Your first question comes from the line of Scott Gruber with City. Your line is open.

Speaker Change: Your first question comes from the line of Scott Gruber with Citi. Your line is open.

Robert Eifler: Yes, good morning and solid quarter. Thanks, Scott. I want to start on the macro, and I appreciate all the color around this. This pause we're seeing. I guess I wanted to ask about the backdrop here. You know, we've really seen a transition, you know, from the infrastructure-driven development focus post-pandemic to a better balance between Greenfield and tieback. It just strikes me that success in New Frontier such as Namibia is great to the industry. But does that contribute to a kind of temporary slowdown and contracting as operators process new prospects and think about resetting their future workflows.

Scott: Thanks, Scott.

Scott Gruber: I wanted to start on the macro, and I appreciate all the color around this, this pause we're seeing.

Scott Gruber: I guess I wanted to ask about the backdrop here, you know, are we really seeing a transition, you know, from the infrastructure-driven, development-focused post-pandemic to a better balance between greenfield and tieback? It just strikes me that...

Robert Eifler: Yeah, it's a great question. I think it's kind of central to how we think about the medium term. There are some data that suggests that Greenfield is taking up. And I'll say in our own fleet drilling today, we're seeing effectively the same percentage of the fleet deployed around exploration as we have for the past couple of years. But then there's some other third-party data out there that, as I mentioned, suggests that that Greenfield is improving here. Certainly, I guess a little bit differently. But certainly the FID, the uptick and FIDs that we see and that we've been predicting will lead to a higher use of drillships worldwide, is driven by Greenfield.

Scott: for the past couple of years.

Speaker Change: But then there's some other third-party data out there that, as I mentioned, suggests that Greenfield is improving here. Certainly, and of course you can define it, I guess, a little bit differently, but certainly the FID, the uptick in FIDs

Robert Eifler: And so we're pretty bullish about where this is headed here late 2526. Got it.

Speaker Change: And so we're pretty bullish about where this is headed here late 25-26.

Robert Eifler: And then just to the Globetrotters, you mentioned finding intervention work for them. Does that mean you're likely to tend to focus on the Gulf of Mexico for those rigs, or would you be willing to lose those rigs out, even if you had to pay for it? And just to kind of overall thoughts on how consistent the intervention work could be for those assets here for the next year or so. No, I think those rigs could work anywhere. We've actually pursued some intervention work well outside of the US Gulf on a number of occasions. I would say that I guess the good news is that the lead time to booking intervention work is typically a lot shorter than drilling work.

Speaker Change: I got it.

Speaker Change: The lead time to booking intervention work is typically a lot shorter than drilling work.

Scott Gruber: But I'd also say that that's probably more the case in the US, where things can move more quickly, and there's obviously all the infrastructure and everything right there. Then elsewhere in the world where I'd say, on average, even for intervention work, there's probably a slightly longer contracting lead time elsewhere. But we're bidding it all over and have some interesting opportunities in places outside of the US. Great. I appreciate it. I'll turn it back. Thanks.

Scott: But I'd also say that that's...

Scott: More the case in the U.S. where things can move more quickly and there's obviously all the infrastructure and everything right there.

Greg Lewis: Thanks, Scott. Your next question comes from the line of Greg Lewis.

Greg Lewis: Your line is open. Yeah, I thank you, and good morning, everybody. And thanks for taking my question. Robert, I was hoping you could talk a little bit more about what we're seeing in the ultra deep water market. If you kind of like look. Good. It looks like we're really where we're seeing the uplift in pricing is more in 2026 as opposed to, you know, rigs kind of being contracted for work, you know, starting in kind of the front half of 25. You know, realizing your prepare remarks, you mentioned the Mivia and Mosey and Beak. Is that really, you think, what's driving that, or could there be a few other things?

Unidentified Speaker: But I'd also say that that's probably more the case in the U.S., where things can move more quickly, and there's obviously all the infrastructure and everything right there than elsewhere in the world, where I'd say, on average, even for intervention work, there's probably a slightly longer contracting lead time elsewhere. But we're bidding it all over and have some interesting opportunities in places outside of the U.S. Yeah, I thank you, and good morning everybody, and thanks for taking my question.

Unidentified Speaker: It looks like we're really where we're seeing the uplift in pricing. I think a lot of people, I wouldn't say everyone, but I think a whole lot of people see continuing tightness, particularly in the 7G market. So I think that's part of it.

Speaker Change: It looks like we're really where we're seeing the uplift in pricing.

Speaker Change: as opposed to, you know, Riggs kind of being contracted for work.

Speaker Change: You know, starting in kind of the front half of 25, you know, realizing in your prepared remarks You mentioned Namibia and Mozambique It is is that really you think what's driving that or could there be a few other things?

Robert Eifler: The yards that are still looking for their main contracts being gobbled up by then or just kind of hoping you can elaborate more on, you know, your thoughts around why we're seeing those higher price scenes, you know, I guess, you know, 12 to 18 months out. Yeah, well, I guess a couple of thoughts. First of all, I think a lot of people, I wouldn't say everyone, but I think a whole lot of people see continuing tightness, particularly in the 7G market. And so, you know, there's an expectation that even with some of these shipyard rigs coming in, that the market's going to be tight.

Speaker Change: Yeah, well, I guess a couple of thoughts.

Speaker Change: First of all, I think...

Robert Eifler: We've used the word balanced a bunch in the past, which kind of stand by, but balanced for sure gives rise to increasing day rates, as like we've seen for the past two years now. So, I think that's part of it. We, you know, as we said in the remarks, the next year or so is flatish. And so, when you think through that, you know, there's perhaps a tendency to provide a slight discount for near-term work. But I don't think that that's a major dynamic right now, frankly, among the highest in rigs. I think generally, people see all these various forward indicators that we've described a few different times and are quite confident, as we are, that demand is going to materialize out of that.

Unidentified Speaker: We, you know, as we said in the remarks, the, you know, the next. And so, when you think through that, you know, there's perhaps a tendency to provide slight discounts for near-term work. But I don't think that that's a major dynamic right now, frankly, among the highest-end rigs. I think generally people see this, all these various forward indicators that we've described a few different times and are quite confident, as we are, that demand is going to materialize out of that. Okay, great. And then, um...

Speaker Change: We, you know, as we said in the remarks, the, you know, the next

Speaker Change: But I don't think that that's...

Speaker Change: and are quite confident as we are that demand is going to materialize out of that.

Blake Denton: Okay, great. And then I was hoping that you could provide some thoughts around the Voyager at that, you know, contract that wrapped up in Suriname, you know, just kind of, you know, you've been calling out. You know, I guess the bifurcation in the 6G market versus the 7G market, you know, for at least the last few quarters, you know, that's a 7G end, double POP rig. So, you know, any kind of thoughts around, you know, potential opportunities for that as we kind of look out over the next, I don't know, six to 12 months. Yeah, I'll let Blake give some color on kind of where and when we're seeing opportunities.

Blake Denton: I was hoping maybe you could provide some thoughts around the Voyager, it had that, you know, contractor wrapped up in Suriname, you know, just kind of, you know, you've, you know, been calling out, you know, I guess the bifurcation in the 6G market versus the 7G market, you know, for at least the last few quarters. You know, that's a 7th gen dual POP So, you know, any kind of thoughts around potential opportunities for that as we kind of look out over the next few years? Yeah, sure. Thanks, Greg. This is Blake.

Speaker Change: I was hoping maybe you could provide some thoughts around the Voyager that, you know, contractor wrapped up in Suriname.

Speaker Change: You know, I guess the bifurcation in the 6G market versus the 7G market, you know, for at least the last few quarters, you know, that's a 7th gen dual POP rig. So, you know, any kind of thoughts around, you know, potential opportunities for that as we kind of look out over the next, I don't know.

Speaker Change: Yeah, I'll let Blake give some color on kind of where and when we're seeing opportunities. But you know, there's always a couple of 7G rigs available and Voyager happens to be right now and we've got a bunch of conversations behind it.

Blake Denton: But, you know, there's always a couple of 7G rigs available in Voyager. Happens to be right now, and we've got a bunch of conversations behind it, but all. Yeah, sure, thanks, Greg. This is Blake. So, the Voyager did conclude its contract now. It'll be performing SPS Go for the next couple of months and then be available later in the year. We're bidding it all over the world, really. It's some good, encouraging customer conversation. I think when we look at the likelihood of picking up the next contract, those conversations turning into firm awards, we're looking more like first half of...

Blake Denton: So the Voyager did conclude its contract. Now it'll be performing SPS tasks for the next couple of months and then be available later in the year. We're bidding it all over the world, really. Some good, encouraging customer conversations. I think when we look at the likelihood of picking up the next contract, those conversations turning into firm awards, we're looking more like the first half of May. Hey, good morning, everybody. Morning, Kurt.

Speaker Change: Yeah, sure. Thanks, Greg. This is Blake. So the Voyager did conclude its contract. Now it'll be performing SPS scope for the next couple of months and then be available later in the year. We're bidding it all over the world, really.

Greg Lewis: Next year. Super helpful. Thank you for the answers.

Speaker Change: Super helpful. Thank you for the answers.

Kurt Hallead: Your next call or your next caller comes from the line of Kurt Hallead with the Benchmark Company. Your line is open. Hey, good morning everybody. Morning, Kurt. I always appreciate the insights and the color on the market dynamics. So if I were to probably summarize your summary, right? It looks like you guys are looking for potentially, you know, a range of 10 rigs of incremental demand. And once we get out into the second half of 25 and into 2026, with half of that effectively coming from Brazil, the other half from Africa. I just wanted to make sure that I'm not misinterpreting anything that you said or misinterpreting it.

Speaker Change: Your next caller comes from the line of Kurt Hallead with the Benchmark Company. Your line is open.

Unidentified Speaker: I got it. Thank you. All clear. Just my follow up is on the Meltem. You've been very disciplined with reactivating this rig.

Kurt Hallead: Hey, good morning, everybody.

Speaker Change: Good morning, Kurt.

Kurt Hallead: broadly summarize your summary, right? It looks like you guys are looking for potentially, you know, range of 10 rigs of incremental demand once we get out into the second half of 25 and into into 2026.

Robert Eifler: If you're your numbers that you put forth so far. No, that's it. I mean, I would, I guess I would qualify that we're probably five to ten total. You've just, you've repeated our description of where the 10 come from. If you get a few rolling off in the meantime, maybe the total incremental comes down a little bit from there, but, you know, probably a little too early to tell, but, but that's right.

Speaker Change: No, that's it. I mean, I would, I guess I would qualify that we're probably five to ten total.

Speaker Change: You've just, you've repeated our description of where the 10 come from. If you get a few rolling off in the meantime, maybe the total incremental comes down a little bit from there. But, you know, probably a little too early to tell, but, but that's right.

Richard Barker: Okay. And then, you know, maybe, you know, I know you guys, you know, haven't stepped out and said anything about 2025 standalone yet. And obviously, that will all change once you get diamond under your belt. But I would, I would just venture to say that given what you've kind of mapped out right now. So, you know, the second half progression on EBITDA and free cash flow probably stows over into the first half of 2025, barring any black swan events. Is that a fair way to look at things right now? Yeah, I think that's a very good way to think about 2025.

Speaker Change: But I would just venture to say that given what you've kind of mapped out right now, the second half progression on EBITDA and free cash flow probably spills over into the first half of 2025, barring any.

Speaker Change: Black Swan events. Is that a fair way to look at things right now?

Richard Barker: Obviously, we're kind of seeing a flatish EBITDA here in the second half of the year. You know, what one element is it relates to free cash flow. I do want to point out is that we do expect, you know, capex next year to come down nicely. Right. So, we've always said that 23 and 24 was kind of peak capex. And so, as you think about free cash flow in the context of 2025, that number is expected to be down nicely versus 24. Okay. That's great. Right.

Speaker Change: And so as you think about free cash flow in the context of 2025, you know, that number is expected to be down nicely versus 24.

Kurt Hallead: Well, turn it over. Thank you, guys.

Kurt Hallead: Thanks for.

Speaker Change: Okay, that's great. All right, I'll turn it over. Thank you, guys.

Eddie Kim: Your next question comes from the line of Eddie Came with Barclays.

Kurt Hallead: Thanks, Kurt.

Eddie Kim: Your line is open. Hi, good morning. Just wanted to ask on your revised EBITDA guidance here for the full year. You raised the low end of the guide from 925 million to 950. You've previously talked about the low end of the guide being a level at which you could end up if you didn't secure more work or incremental work for your IO rigs. So, just curious if that is still a fair assumption today. You could look like you have three idle floaters today in the developer globe trotter 2 and now the Voyager.

Speaker Change: Your next question comes from the line of Eddie Kim with Barclays. Your line is open.

Eddie Kim: Does that low end of the guide assume no incremental work for these rigs this year, or how should we be thinking about that? Yeah, Eddie, it's a very good question. You know, I think I think that's a good way to think about it. We don't need to win when any more work to get to the low end and look, it's a somewhat tight range now. I think there's potential or real potential to get to the mid point of the range without new work as well. I've got it. Thank you all, Claire.

Eddie Kim: Does that low end of the guide assume no incremental work for these rigs this year, or how should we be thinking about that?

Eddie Kim: Just my follow-up is on the on the melting. You've been very disciplined with reactivating this rig, just given the conversations you're having.

Eddie Kim: Got it. Thank you. All clear.

Unidentified Speaker: Just given the conversations you're having, is it likely we'll see a contract announcement for that rig before kind of mid-year next year? Or, given your flat kind of demand outlook in the near term, could the timing of that contract announcement on that rig maybe go beyond that time frame? It's hard to predict on something that's, you know, kind of could be way off, but, you know, I would weight it towards there not being a prediction before mid-year next year.

Eddie Kim: Just my follow-up is on the Meltem. You've been very disciplined with reactivating this rig. Just given the conversations you're having, is it...

Robert Eifler: Is it likely we'll see a contract announcement for that rig before kind of mid year next year, or given your flat kind of demand outlook in the near term, could the timing of that contract announcement on that rig maybe go be on that time. Yeah, look, I think it's always hard to predict on something that's, you know, kind of can, can, could be way off. But, you know, I would wait it towards there not being a prediction before mid-year next year. I think it's more likely that an announcement would come after mid-year next year than before, but there's a lot in the pipeline right now as we've described.

Speaker Change: can could be way off, but

Speaker Change: You know, I would weight it towards...

Unidentified Speaker: In other words, I think it's more likely that an announcement will come after mid-year next year than before. But there's a lot in the pipeline right now, as we've described. Our customers are in budget season right now, and typically, you see a lot of tenders and negotiations that come out of that. And so we're still kind of wondering as well when we're going to see this pipeline materialize. It could be earlier than we kind of described in the call.

Speaker Change: They're not being a prediction before mid-year next year. In other words, I think it's more likely that an announcement would come after mid-year next year than before.

Robert Eifler: Our customers are in budget season right now, and typically you see a lot of tenders and negotiations that come out of that. We're still kind of wondering as well when we're going to see this pipeline materialize. It could be earlier than we kind of described in the call, and of course, like this year, you know, maybe it pushes slightly later than we'd like. But yeah, if I have to answer the question, I'm going to say it's not in the first half of next year.

Speaker Change: But there's there's a lot in the pipeline right now as we've described. Our customers are in budget season right now and typically you see a lot of tenders and negotiations that come out of that.

Unidentified Speaker: And, of course, like this year, maybe it pushes slightly later than we'd like. But, yeah, if I have to answer the question, I'm going to say it's not in the first half of next year.

Eddie Kim: Got it. Great, thanks for the call.

Unidentified Speaker: Got it. Great. Thanks for the call. Robert, you alluded to supply chain pinch points as one of the reasons for the slower pace of awards. I was hoping you'd expand on that, just where exactly are you seeing the bottlenecks that are causing. Yeah, I would I would say that that is a more general statement about, You know, I think, as most people know, coming out of this extended downturn, inventories are very low, and inventory management has been very efficient. And so there are not; there is not as much to just pull from the shelves.

Speaker Change: Got it. Great. Thanks for the call.

Doug Becker: Your next question comes from the line of Doug Becker with Capital One. Your line is open. Yeah, there Doug. Robert, you alluded to supply chain pinch points as one of the reasons for the slower pace of awards; I was hoping you'd expand on that. We're exactly where are you seeing the bottlenecks that's causing this. Yeah, I would say that that is a more general statement about supply chain, kind of coming out of a pretty substantial ramp in activity, and it probably manifests at different points for different customers in different regions. You know I think as most people know coming out of this extended downturn, inventories are very low and inventory management has been very efficient, and so there are not as much to just pull from shelves.

Speaker Change: You know causing this

Speaker Change: Supply Chain kind of coming out of a pretty substantial ramp in activity and it probably manifests at different points for different customers in different regions.

Speaker Change: You know, I think as most people know, coming out of this extended downturn, inventories are very low, and inventory management has been very efficient. And so,

Robert Eifler: And likewise it kind of further down the supply chain should affect us but affects our customers when you get into vessels FPS is more specifically. There's a big backup in the shipyards, and so I think in some instances it may be an FPSO, and another instance it may be a well head, and another one probably slightly less likely, but somewhere else it may be casing.

Unidentified Speaker: And likewise, kind of further down the supply chain, which doesn't affect us but affects our customers. When you get into vessels, FPSOs more specifically, there's a big backup in the shipyards, and so I think in some instances it may be an FPSO, in another instance it may be a wellhead, and another one probably slightly less likely, but somewhere else it may be casing, which, if nothing else, So you're seeing this kind of gentle slide to the right that we've witnessed over the last year has expired, and you're waiting for clearance in Australia.

Speaker Change: There is not as much to just pull from shelves.

Eddie Kim: And likewise, kind of further down the supply chain, which doesn't affect us, but affects

Robert Eifler: That, if nothing else, is making it harder to pull programs earlier, so you're seeing this kind of gentle slide to the right that we've witnessed over the last year. No, it's good context.

Eddie Kim: So you're seeing this kind of gentle slide to the right that we've witnessed over the last year.

Robert Eifler: And then you pointed out that the HSR has expired and you're waiting on clearance in Australia. What's the stance with European regulators? Are there any European regulatory milestones you're waiting for? No, the only remaining regulator is Australia. And I'll add the color. That was, you know, anticipated. And that really drove our original timeline and how we've described the first quarter, or maybe slightly earlier, when we announced this. So really nothing's changed on the total timeline because of that piece. But yeah. Thank you.

Speaker Change: It's good context and then you pointed out that the HSR

Speaker Change: Has expired and you're waiting on clearance in Australia. What's the status with European regulators? Are there any European regulatory milestones you're waiting for?

Speaker Change: No, the only remaining regulator is Australia.

Speaker Change: because of that piece, but yeah.

Robert Eifler: Thanks.

Speaker Change: Got it. Thank you.

Josh James: Your next question comes from the line of Josh James with Daniel Energy Partners.

Speaker Change: Thanks, sir.

Speaker Change: Your next question comes from the line of Josh James with Daniel Energy Partners. Your line is open.

Josh James: Your line is open. Thanks.

Robert Eifler: Good morning. I wanted to switch a little bit and maybe get your global perspective on the jacket market. You talked about in your prepared remarks, sort of Northern European market is characterized by improving demand to visibility in Norway in 25 and more cautious near term outlook in the North Sea from some policy and permitting uncertainty in the UK. Could you expand on both of those thoughts, and then maybe just give us a walk through the global jacket market that I think that would be helpful. Sure. Yeah, I can start, and then Blake jump in. So the UK has long awaited the elections there in implications rising from that.

Josh James: Thanks, good morning. I wanted to switch a little bit and maybe get your global perspective on the jacket market. You talked about in your prepared remarks sort of Northern European market is characterized by improving demand divisibility in Norway in 25 and more cautious.

Speaker Change: I need a term outlook in the North Sea from some policy and permitting uncertainty in the UK. Could you expand on both of those thoughts and then maybe just give us a walkthrough of the global jacket market? I think that would be helpful.

Speaker Change: Sure, yeah, I can start and then Blake jump in. So the UK has long awaited the elections there and the implications arising from that. Some changes have already been made. I think that market...

Robert Eifler: Some changes have already been made. I think that market, all things considered, has actually performed pretty well. I think that the changes that have come politically there already since Labor took over were well understood and anticipated. And so obviously not helpful for our business. I think we're right now not seeing any substantial negative change from what we've seen so far. I would remind that we do think that carbon capture could provide some helpful lift in that market. You know, maybe next year, maybe the year after, but generally in the near to medium term going forward.

Blake: All things considered, has actually performed.

Speaker Change: pretty well. I think that the changes that have come politically there already since labor took over were well understood and anticipated. And so, while obviously not helpful for our business, I think we're

Blake: Right now not seeing any substantial negative change from what we've seen so far I would remind that we do think that carbon capture could

Eddie Kim: provides some helpful lists.

Speaker Change: in that market, you know, maybe next year, maybe the year after, but generally in the near to medium term going forward.

Robert Eifler: And in Norway, it's been basically flat, and we think it stays flat for a little while longer, perhaps with an additional unit of demand next year, and then perhaps a leg up from there. More globally, there's obviously a little bit of negative news out of Saudi recently. We are, as you know, not in the mix there, so not close to news flow. But I would say that the global jacket market is quite strong, and it's stayed steady. It moved healthily straight through the more significant Saudi announcement from a few months ago. And we've seen a number of those rigs be redeployed elsewhere in the globe already.

Speaker Change: In Norway, it's been basically flat, and we think it stays flat for a little while longer, perhaps with an additional unit of demand.

Speaker Change: And then perhaps a leg up from there.

Eddie Kim: More globally, there's obviously a little bit of negative news out of Saudi recently. We are, as you know, not in the mix there, so not close to news flow.

Speaker Change: I would say that the global jack-up market is quite strong, and it's stayed steady.

Speaker Change: moved healthily straight through the more significant Saudi announcement from a few months ago, and we've seen a number of those rigs be redeployed elsewhere in the globe already.

Robert Eifler: And so I think I think that market is generally pretty consistently strong.

Speaker Change: And so I think that market is generally pretty consistently strong.

Robert Eifler: And then maybe you could just talk operationally on the cost side. I think your commentary is looking into the first half of 2025 was helpful on deep water side. But over this period of sort of softer utilization for some of the deep water units in your fleet that are available. But you talk about how you're managing them on the cost side today. Maybe that would just be helpful if things you're doing in, you know, in terms of trying to maximize cash flow. So well, you have sort of this low in your contracting activity for some of those assets.

Speaker Change: And then maybe you could just talk operationally on the cost side. I think your commentary looking into the first half of 2025 was helpful on the deepwater side. But over this period of sort of softer utilization for some of the deepwater units in your fleet that are available, could you talk about how you're managing them on the cost side today? Maybe that would just be helpful, things you're doing in

Speaker Change: You know in terms of trying to maximize cash flow Well, you have sort of this this lull in your contracting activity for some of those assets

Robert Eifler: Yeah, it's a good question. We are managing costs very closely. You heard Richard's answer to with some color around our remaining guidance here for 2024. And how a lot of that is within our control on the cost side. We've reduced costs where we have availability on some of the rigs. And obviously, that's something that we have to do when we have availability that looks like it's going to stretch out more than just a short cap. So I think the organization has done a really, really good job. It's been a focus for us this year. And you know, our men and women that are in leadership positions on the rigs have a lot of influence on our handrail numbers.

Speaker Change: It's a good question. We are managing costs very closely. You heard Richard's answer with some color around our remaining guidance here for 2024 and how a lot of that is within our control on the cost side.

Richard: We've reduced costs where we have availability on some of the rigs.

Richard: and obviously we're

Speaker Change: You know, that's something that we have to do when...

Speaker Change: When we have availability that looks like it's going to stretch out more than just a short gap.

Speaker Change: So, I think the organization has done a really, really good job. It's been a focus for us this year and, you know, our men and women that are in leadership positions on the rigs.

Robert Eifler: They're focused, and they've done really a great job of managing their business rig by rig here this year. So very proud of what everyone's done.

David Smith: Okay, thanks.

Speaker Change: Okay, thanks.

David Smith: Your next question comes from the line of David Smith with Pickering Energy Partners. Your line is open. Hey, good morning. Thank you for my questions. Good morning. So I think we have some previously extended new build drill ships that are being pushed into the market. But I wanted to ask if you've seen any signs of increased competition from some of the six chance to me that have been sidelined for a while. I think there were some that previously worked in Mexico, and there, there's some relatively young Chinese to me. And there are Chinese, you know, new builds.

Speaker Change: Your next question comes from the line of David Smith with Pickering Energy Partners. Your line is open.

Unidentified Speaker: What's the status with European regulators? Are there any European regulatory milestones you're waiting for? No, the only remaining regulator is Australia. I'll add some color: that was anticipated and that really drove our original timeline in how we described the first quarter or maybe slightly earlier when we announced this. So really, nothing's changed on the total timeline because of that piece.

Speaker Change: So, I think we have some previously extended new-build drill sheds that are...

Robert Eifler: And whether that contributes to the comments about potential greater theory of qualification or if you're really just talking about pricing softness for the active six chance to me facing facing potential downtime. Yeah, look at all; it kind of all runs together or in sync, I guess. We think we think on the sixth gen side, you know, if you just look at rigs rolling off contract for the remainder of the year. You know, as you describe, we've got some active rigs that have rolled off or are rolling off, and then you got some others that have been off a little longer.

Speaker Change: And whether that contributes to the comment about potential greater theory of bifurcation or if you're really just talking about pricing softness for the active 6th Gen CMEs facing potential downtime.

Blake Denton: So utilization probably dips before it returns to flat here in the very near term on the sixth gen side. And then, as I mentioned earlier, you know, that some of those rigs can go into the shorter lead time type programs. And so, I think there's a chance of a pretty quick recovery as customers come out of budget season, but we're just going to have to wait and see, you know, we just don't really know right now. But it all goes in, in my opinion, it all goes into the kind of a total marketed utilization that affects, you know, bidding behavior.

Speaker Change: Utilization probably dips before it returns to flat here in the very near term on the 6th gen side and and then as I mentioned earlier

Speaker Change: You know that some of those rigs can go into the shorter lead time type programs and so I think there's a chance of a pretty quick recovery as customers come out of budget season but we're just going to have to wait and see you know we just don't really know right now.

Blake Denton: I don't know.

Blake Denton: Yeah, the only other comment I would add to that is when you look at our benign semis, we compete at the very top end of the market. So the drilling efficiencies on our D-class rigs, rival drill ships, and so you see, we compete well with operators that are looking at a really total cost of ownership model and factor in those efficiencies. Where you see the lower spec semis compete is for really rate-focused operators, largely in regional base. I appreciate that.

Speaker Change: You see, we compete well with operators that are looking at a really total cost of ownership model and factor in those efficiencies. Where you see the lower spec semis compete is for really rate-focused operators, largely in regional basins.

Robert Eifler: And that's just a real quick follow-up, following a bunch of questions, specifically the Improving Disability in Norway for 25. My recollection is Norway demand for check-ups tends to have longer visibility, often longer term contracts. So I was curious if that visibility improvement for 25 maybe includes some term work that could help promote visibility past 25. All right, let me, yeah, there's the potential for a little bit of term work. And there is the potential for a little bit of shorter term work there from what we know about. And I guess I would kind of say that a true step up with solid term work probably more of a 26 thing than a 25 thing.

Speaker Change: I appreciate that and that's just a real quick follow-up, following up on Josh's question, you know, specifically the improving visibility in Norway for 25.

Speaker Change: My recollection is Norway demand for jackups tends to have longer visibility often, longer term contracts. So I was curious if that visibility improvement for 25 maybe includes some term work that could help firm up visibility past 25.

Speaker Change: Yeah, there's the potential for a little bit of term work, and there is the potential for a little bit of shorter term work there from what we know about. And I guess I would kind of say that, you know, there's a lot of potential for a little bit of shorter term work there from what we know about.

David Smith: Great, that's all I have. Thank you very much. Thank you.

Speaker Change: Great. That's all I have. Thank you very much.

Noel Parks: And your next question comes from Noel Parks with Julie Brothers. Your line is open. Hi, good morning. You know, you talked a good bit about sort of what the customers are thinking. And I was wondering around the capital discipline aspect of their pace of decision making. Do you get more an issue of sort of notification or disclosure of their plans that is what's going on, or more actual hesitation, you know, internally and commit to what they might do going forward? Well, yeah, I guess it's a combination of things. One, just capital discipline, as everybody knows, remains paramount for everyone whether you're, whether it's on the MP side or on the services side.

Speaker Change: Thank you.

Speaker Change: And your next question comes from Noel Parks with Tui Brothers. Your line is open.

Unidentified Speaker: Got it. Thank you. Thank you.

Unidentified Speaker: Hey, good morning, and thank you for taking my questions. So I think we have some previously stranded Newbuild drill ships that are being pushed into the market, but I wanted to ask if you're seeing any signs of increased competition from some of the sixth-gen semis that have been sidelined for a while. I think there were some that previously worked in Mexico, and there are some relatively young Chinese semis, or Chinese Newbuilds, and whether that contributes to the comment about potential greater day-rate bifurcation, or if you're really just talking about pricing softness for the active sixth-gen semis facing potential downtime.

Unidentified Speaker: Yeah, like it all runs together or in sync, I guess, you know, that some of those rigs can go into the shorter lead time type programs. And so I think there's a chance of a pretty quick recovery as customers come out of the budget season, but we're just going to have to wait and see, you know. We just don't really know right now. But it all goes, in my opinion, it all goes into the kind of total marketed utilization that affects, you know, bidding behavior. I don't know.

Unidentified Speaker: Yeah, the only other comment I would add to that is when you look at our benign semis, we compete at the very top end of the market. So the drilling efficiencies on our D-class rigs rival drill ships. And so you see, we compete well with operators that are looking at a really total cost of ownership model and factor in those efficiencies. Where you see the lower spec semis compete is with really right-focused operators, largely on a regional basis. Probably more of a 26 thing than a 25.

Unidentified Speaker: Great. That's all I have. Thank you very much. Hi, good morning.

Speaker Change: and commit to what they might do going forward.

Speaker Change: Yeah, I guess it's a combination of things.

Speaker Change: Capital discipline, as everybody knows, remains paramount for everyone, whether it's on the MP side or on the services side, and so I think people are making very conservative investment decisions that just have an obvious effect.

Robert Eifler: And so I think people are making very conservative investment decisions that just has an obvious effect. But another place that perhaps this plays out is that in that kind of aura of conservatism, you have, in any given investment decision, almost always you have various different partners that perhaps have various different capital requirements or views or thresholds. And so we're seeing a number of instances where you're getting kind of two out of three partners that would like to do something, or one out of three, or something that has either disrupted a project or maybe just moved it in more instances.

Speaker Change: In that kind of aura of conservatism, you have, in any given investment decision, almost always you have various different partners.

Unidentified Speaker: You know, that perhaps have various different capital requirements, views, or thresholds. And so we're seeing a number of instances where you get kind of two out of three partners that would like to do something, or one out of three, or something that has either disrupted a project or maybe just moved it in more instances, just pushed it to the right a little bit until, you know, waiting on new information or waiting on whatever it may be.

Speaker Change: Capital Requirements or Views.

Speaker Change: Or thresholds

Robert Eifler: Just push it to the right a little bit until, you know, waiting on new information or waiting on whatever it may be. But we are seeing that as somewhat of a dynamic. I also think as you, you know, we hear our business often kind of seasonal around budget season. We're all kind of waiting to see what gets approved. But I think it plays out in that sense as well, where, you know, in a world that's extremely disciplined, maybe it's less obvious what's going to get approved and not as they go through their own budgeting process.

Unidentified Speaker: But we are seeing that as somewhat of a dynamic. I also think, as you know, here our business is often kind of seasonal around the budget season. We're all kind of waiting to see what gets approved, but I think it plays out in that sense as well, where, you know, in a world that's extremely disciplined, maybe it's less obvious what's going to get approved and not as they go through their own budgeting processes.

Ian Macpherson: Great, thanks a lot, and there are no further questions at this time. Mr. MacPherson, I will turn the call back over to you for closing remarks.

Speaker Change: We're all kind of waiting to see what gets approved. But I think it plays out in that sense as well where

Speaker Change: You know, in a world that's extremely disciplined, maybe it's less obvious what's going to get approved and not as they go through their own budgeting processes.

Robert Eifler: Great. Thanks. And just sort of a related question, you mentioned where there's white space. You know, of course, that's the world to everyone. And I guess I'm thinking from the standpoint of, you know, who's on the far end of the white space. Do you have any sense that customers that maybe kind of lost their, I shouldn't say lost, but are a little bit less worried about schedule slippage? Because I mean, the potential always exists that you can fill the white space, right? And that that could, you know, have some ripple effects. Or the customer's just like, you know, we want the price. We want that, you know, that's kind of our main concern.

Speaker Change: Great, thanks. And just sort of a related question, you mentioned where there's white space, you know, of course that's that's visible to everyone and I guess I'm thinking from the standpoint of

Speaker Change: who's on the far end of the white space. Do you have any sense that...

Speaker Change: that.

Speaker Change: customers that may be kind of lost there. I shouldn't say lost, but are a little bit less worried about schedule slippage because I mean the potential always exists that you can fill the white space right and and that that could

Robert Eifler: And you know, we'll just rule with whatever happens as far as availability. Yeah, I think, I think the mood right now, I mean, everybody sees availability this year. And everybody knows that there's a few rigs that could come in from the sideline, these so-called stranded shipyard rigs. I think the average kind of belief is that there's going to be some availability in 25 and that gets a lot tighter at the end of 25 and going into 26. And so you see that play out with some people who are probably more risk-averse and more concerned about what's coming there.

Speaker Change: I think the mood right now, I mean, everybody sees availability this year and everybody knows that there's a few rigs that could come in from the sideline, these so-called stranded shipyard rigs.

Speaker Change: I think the average kind of

Speaker Change: My belief is that there's going to be some availability in 2025 and that gets a lot tighter at the end of 2025 and going into 2026.

Speaker Change: And so you see that play out with some people who are probably more risk-averse and more concerned about what's coming there, and then some others that have watched the last few years and said, well, I've generally been able...

Robert Eifler: And then some others that have watched the last few years and said, well, I've generally been able to get a rig. And, you know, I, you know, wouldn't know what to describe as balance. And, you know, I may perhaps someone sees it as balance as well. And it's comfortable waiting. But I think, I think you see kind of a variety of different beliefs and approaches.

Speaker Change: To get a rig and, you know, I, you know, wouldn't be able to describe it as balanced and, you know, I may perhaps, someone sees it as balanced as well and is, and is comfortable waiting. But I think, I think you see kind of a variety of different beliefs and approaches.

Robert Eifler: Great, thanks a lot. Thanks.

Operator: And there are no further questions at this time.

Speaker Change: Thanks.

Ian Macpherson: Mr. McPherson, I will turn the call back over to you for closing remarks. Great. Thank you everyone for joining us today, and we'll look forward to speaking with you again next quarter. Goodbye.

Speaker Change: And there are no further questions at this time. Mr. MacPherson, I will turn the call back over to you for closing remarks.

Mr. MacPherson: Great, thank you everyone for joining us today, and we'll look forward to speaking with you again next quarter.

Operator: This concludes today's conference call. You may now disconnect.

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