Q3 2024 Noble Corp PLC Earnings Call
Good morning and welcome to the Noble Corporation, 3rd quarter 2024, our news conference call.
All Lions have been placed on mute to prevent any background noise.
After the speakers remarks, there will be a question and answer session if you'd like to ask a question during that time, press star 1 on your telephone keypad. If you'd like to withdraw yourself, press star 1 again. I will now hand today's call over to Ian MacPherson. Please go ahead sir.
The End
Ian Macpherson: Thank you, operator and welcome everyone to Noble Corporation's start 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 located at the Investor Relations section of our website.
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 on the call or Blake Denton, Senior Vice President of Marketing and Contracts, Angelic Collage, 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.
Ian Macpherson: Many factors could cause actual results to differ materially from these forward-looking statements, and NOBLE does not assume any obligation to update these statements.
Also note we are referencing non-GAAP financial measures on the call today.
Ian Macpherson: You can find the required supplemental disclosure for these measures, including the most directly comparable gap measure and an associated reconciliation and earnings report issued yesterday and filed with the SEC. Now, I'll turn the call over to Robert Eifler, President and CEO of Noble.
Robert Eifler: Thanks Ian. Good day everyone and thank you for joining us on today's call. I'll begin with a brief update on our acquisition of Diamond Offshore, followed by highlights of our capital return program, third quarter results, recent commercial and operational activities, and some Market Outlook color.
Robert Eifler: Richard will then discuss our financial results and provide guidance for the fourth quarter. Finally, I will wrap up with closing remarks and open the floor for questions.
Robert Eifler: As most of you know, we closed the acquisition of Diamond Offshore on September 4, combining two great companies with incredibly rich legacies and leading deepwater capabilities.
Robert Eifler: I want to extend my appreciation to everyone across both organizations who worked tirelessly to close this transaction in just under three months.
Robert Eifler: This highly synergistic combination brings together over 150 years of combined experience creating a fleet of 41 rigs, including the largest fleet of seventh generation dual BOP drill ships in the industry.
Robert Eifler: while also adding $2 billion of well-priced backlog.
Robert Eifler: As we pass the 60 day integration mark, we are excited to share some early wins, including meaningful synergies realized that have us on track to achieve our stated targets.
Robert Eifler: Diener Management has visited legacy diamond rigs and customers around the globe, while prioritizing a focused commitment to business continuity through safe and efficient operations.
Robert Eifler: Thus far everything is proceeding very smoothly according to our well-practiced integration playbook.
Robert Eifler: Next, I'd like to highlight additional progress with our Return of Capital program.
Robert Eifler: Following the execution of 250 million dollars of share repurchases in the third quarter, we have completed 360 million dollars of repurchases under our original 400 million dollar authorization.
Robert Eifler: and our Board of Directors has recently approved a second $400 million authorization.
Robert Eifler: while also maintaining our quarterly dividend here in the fourth quarter at 50 cents per share.
Robert Eifler: We recognize that our differentiated return of capital program is a critical factor for investors.
Robert Eifler: And I'm pleased to highlight that we have now eclipsed $800 million in combined dividends and buybacks since we closed the Mares-Trillian combination in Q4 2022, inclusive of this quarter's announced dividend.
Robert Eifler: Moving to our financial highlights, in the third quarter we delivered strong results with continued EBITDA and cash flow expansion.
Robert Eifler: On a consolidated basis, we achieved adjusted EBITDA of $291 million, compared to $271 million in Q2, and free cash flow for the quarter was strong at $165 million.
Robert Eifler: These results include approximately four weeks of contribution from the diamond acquisition in September.
Robert Eifler: Richard will have additional color on the combined results in a moment.
Robert Eifler: But suffice it to say that the diamond acquisition further enhances our free cash flow profile with significant and immediate accretion. This marks a great start for our combined company.
Robert Eifler: Shifting now to our commercial and operational highlights. First, during the third quarter we were awarded 4.8 rig years of additional backlog for the four drill ships working under the commercial enabling agreement with Exxon Mobil in Guyana.
Robert Eifler: further validating the successful commercial and operational model and extending our visibility in the country through August 2028.
Robert Eifler: We have also recently booked an additional 130 days for the Ocean Endeavor, working for Shell in the UK North Sea, between March and July 2025, plus options.
Robert Eifler: As of today, our total backlog currently stands at $6.2 billion.
Robert Eifler: In addition to these most recent fixtures, in July, the black rhino was awarded a six-month contract with Beacon Offshore Energy in the Gulf of Mexico at a day rate slightly below $500,000.
Robert Eifler: This program is slated to commence in the first quarter of 2025 following the RIGS SPS and MPD upgrade that are underway.
Robert Eifler: Following the Black Rhinos NPD upgrade, we will have 15 rigs equipped with NPD, enhancing our dominant position in this increasingly essential technical domain.
Robert Eifler: In South America, the Fay-Kozak successfully commenced its contract with Petrobras in Brazil and set a new pre-salt drilling record on its first well.
Robert Eifler: Hats off to the crews of the Fay-Kozak on this impressive accomplishment right out of the gate.
Robert Eifler: In Columbia, the Discoverer has successfully drilled its first well for petrobras, and we look forward to continuing to work on this important gas development for the region.
Robert Eifler: In the UK, Ocean Great White resumed its contract with BP in early July following equipment repairs, and the contract is now expected to continue through April 2025, with priced options following that firm's quote.
Robert Eifler: And finally, the Black Lion in the Gulf of Mexico and the Deliverer in Australia both moved to substantially higher day rate contracts in the mid to high 400s during the quarter.
Robert Eifler: Now I'd like to share a brief word on the market.
Robert Eifler: The core fundamentals of our business remain structurally sound, global energy demand is increasing, energy security remains a global priority, and offshore supply represents a highly strategic and advantaged resource priority for the upstream industry.
Robert Eifler: Also, over the last several quarters, open demand for floaters continues to track at a historically high level of above 100 rig years of demand from tenders and pre-tenders in the public domain.
Robert Eifler: excluding the substantial additional volume of work that stemmed separately from direct awards.
Robert Eifler: Against this backdrop, recent contracting activity for deepwater rigs has shown an encouraging uptick.
Robert Eifler: After a slowdown in the second quarter, the industry saw an improvement in backlog booked, with 26 ultra deepwater rig years contracted in Q3, marking a 20% increase over Q2, and in line with the strong contracting levels seen in 2022 and 23.
Robert Eifler: While the majority of these recent pictures have contract start dates in late 2025 or later, leaving the white space of the first half of 2025 unaddressed, we do believe that these are the first of many signs supporting a demand uptick in late 2025 and early 2026.
Robert Eifler: As you can see on our backlog slide on page 5 of the earnings presentation, we currently have 56% of our total marketed fleet committed for 2025.
Robert Eifler: As you drill a little further into the mix, our marketed floaters are 59% contracted next year, and our Tier 1 drill ships are slightly above 75% committed for 2025.
Robert Eifler: Our higher-end units with near-term availability are the Voyager Valiant, Jerry DeSouza, and Venturer.
Robert Eifler: And I would say that today, we have active conversations and leads behind all of these units.
Robert Eifler: in our 6th Gen fleet. We currently have more active conversations on the Discover and the Deliver than we have had at any time since we acquired these units.
Robert Eifler: So the contracting outlook there is promising.
Robert Eifler: Meanwhile, the Globetrotters, similarly, have a number of active leads for 2025 work, almost exclusively for intervention programs as we have previously indicated.
Robert Eifler: The timing associated with these opportunities collectively supports a potentially meaningful ramp in utilization and run rate EBITDA compared to our current level by the second half of 2025, although there's obviously still some work to be done to convert these opportunities to firm backlog.
Robert Eifler: I would also say that the nature of the discussions and negotiations with our customers over the past few weeks has been increasingly active and constructive as 2025 customer budget allocations are beginning to take shape.
Robert Eifler: If the next several months plays out as we currently envision, then we should see a backlog in utilization inflection next year.
Robert Eifler: Given the abundance of active opportunities, we have elected not to stack any rigs at this time. However, if demand does not materialize as expected, then we will move decisively to stack one or more 6G units, as the market dictates.
Robert Eifler: Noble jackup fleet utilization improved from 77% in Q2 up to 83% in Q3, and we currently have 11 of our 13 rigs contracted at an average day rate of approximately $145,000 per day.
Robert Eifler: North Sea operators have generally taken a tentative approach to capital deployment ahead of last week's budget announcement in the UK, which unsurprisingly introduced incrementally higher taxation on the upstream sector.
Robert Eifler: Amid these fiscal and regulatory crosswinds, we expect the North Sea jack-up market to continue to be characterized by relatively constrained demand visibility.
Robert Eifler: But note that early indications of the market reactions to last week's UK budget news are generally neutral.
Robert Eifler: at least not significantly negative and that thus far that market has been more stable over the past couple of years than we might have expected against a consistently difficult contextual backdrop.
Speaker Change: With that, I'll now pass the call to Richard to cover the financials.
Richard Barker: Thank you Robert and good morning or good afternoon all. In my remarks today I will briefly review the third quarter highlights and then touch on the outlook for the remainder of the year and 2025.
Robert Eifler: Contract drilling services revenue for the third quarter totaled $764 million up from $661 million in the second quarter.
Robert Eifler: Adjusted EBITDA was $291 million in Q3, up from $271 million in Q2. The adjusted EBITDA margin for the third quarter was 36%.
Robert Eifler: Cash flow from operations was $284 million, net capital expenditures were $119 million and free cash flow was $165 million, which was burdened by transaction costs related to the diamond transaction.
Robert Eifler: All of the aforementioned figures reflect the approximate four weeks contribution from Diamond in September.
Robert Eifler: Pre-referenced if Legacy Diamond had been included in our results for the full quarter as opposed to just from closing on September the 4th.
Robert Eifler: Q3 adjusted EBITDA would have illustratively been close to a 350 minutes.
Robert Eifler: As summarized on page 5 of the earnings presentation slides, our total backlog as of November 5th stands at $6.2 billion, which includes approximately $500 million that is scheduled for revenue conversion in the final 8 weeks of this year, and $2.6 billion that is scheduled for 2025.
Robert Eifler: As a reminder, this backlog does not include reimbursable revenue or revenue from ancillary services.
Robert Eifler: The diamond integration is progressing well.
Robert Eifler: We are on the way to capturing the 100 million of announced synergies and continue to expect to have 75% captured within one year of closing.
Robert Eifler: Referring to page 10 of the earnings slides, we are providing guidance for the fourth quarter as follows.
Robert Eifler: Total revenues in the range of $850 million to $890 million, which includes approximately $30 million to $35 million of reimbursable revenue.
Robert Eifler: Adjusted EBITDA between $275 million and $305 million and net capital additions between $105 million and $135 million.
Robert Eifler: The biggest driver to the reduction in fourth quarter revenue and adjusted EBITDA when compared to a Q3 that includes the diamond rigs for the full quarter is the current shipyard project for the Black Rhinos, as well as the Globetrotter One and Voyager finishing up their program.
Robert Eifler: I would note that where we expect full year 2024 adjusted EBITDA to come out, based on the midpoint of this Q4 2024 EBITDA guidance, would correspond very closely to the midpoint of the guidance range that we put out right at the beginning of the year when adjusting for the diamond acquisition.
Robert Eifler: As Robert previously alluded to, we are reasonably and increasingly constructive about a variety of contracting opportunities over the next few months, which could drive an inflection in our total backlog, as well as support a materially higher level of EBITDA potential in the second half of 2025.
Robert Eifler: However, until these opportunities come to fruition, I think it is reasonable to infer that the fourth quarter run rate EBITDA of the combined Noble and Diamond fleets represents an approximate indication of where the business is tracking into the first half of 2025.
Robert Eifler: We will look to put out full year 2025 guidance in conjunction with our year-end 2024 results.
Robert Eifler: As an organization, we remain laser-focused on maximizing capital returns to shareholders.
Robert Eifler: Despite a near-term outlook that has been negatively impacted by various contracting opportunities moving to the right, we still expect 2025 to represent a nice step up in free cash flow.
Robert Eifler: Supporting this 2025 free cash flow step-up is an expected reduction in CAPEX.
Robert Eifler: For reference, the Illustrative Combined Company's 2024 total CapEx on a full 12-month basis is expected to be approximately $550 million. And looking ahead to next year, we expect this to reduce by approximately 25% to 30%, which will provide another free cash flow tailwind.
Robert Eifler: And, as evidenced by our actions to date, we look forward to returning essentially all of our free cash flow to shelves.
Speaker Change: 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 few closing remarks. First, I'd like to thank our employees for your continued effort and commitment to the highly exacting standards that we hold ourselves to with our First Choice ambition.
Speaker Change: This cuts across HSE, operational excellence, reliability, service posture, integration buy-in, and a culture of supporting one another in making the right decisions day in and day out.
Robert Eifler: Through our journey over the past two years, you have gone much further than just integrating companies and have created an innovative industry leader.
Robert Eifler: At the same time, we have positioned Noble to deliver differentiated cash flow for our shareholders through variable cyclical conditions.
Robert Eifler: And while the slowdown in contracting velocity that we have witnessed over the past year has created a near-term drag on expected earnings growth for the industry,
Robert Eifler: We remain constructive on the multi-year fundamental outlook.
and also optimistic that the next leg up in the cycle will begin to come into focus with contracting developments over the next few months and then build throughout 2025.
Robert Eifler: We will be watching 2025 Upstream Spending Plans closely.
Robert Eifler: But thus far, early indication is that our customers are, on average, planning for higher offshore spending next year.
Robert Eifler: For Noble, we expect the next few quarters to track relatively flat from an EBITDA perspective before an expected step up in the second half of 2025.
Robert Eifler: Through this progression, we will look to deploy surplus free cash flow above the current $2 annualized dividend toward share repurchases going forward.
Robert Eifler: So, I'll wrap up there, Operator. We're ready to open the call for questions.
Speaker Change: At this time, if you would like to ask a question, press star 1 on your telephone keypad. If your question has been answered and you would like to remove yourself from the queue, press star 1 again.
Speaker Change: Your first question is from the line of Eddie Kim, LaBarclays.
Eddie Kim: Good morning. Just wanted to start with your outlook for the first half of next year and some of the white space concerns.
Eddie Kim: You were one of the first to call out white space across the industry.
Eddie Kim: Could you just expand upon the reasons you're seeing for these utilization headwinds in the first half? Some of your peers have talked about customer capital discipline, delayed FPSOs. Is that what you're seeing as well?
Speaker Change: And I guess the concern, which is reflected in the stock prices over the past three to four months, is that this white space could linger.
Speaker Change: into the second half of next year, maybe even into 26. So could you just talk about your confidence level in rigged demand rebounding in 26 after what looks like a pretty big air pocket of demand next year?
Speaker Change: Sure and of course that's that's the question on everybody's mind right now. So I would say you have a little bit of I think opposing forces right now. Eddie you're right there's obviously white space in the first half of next year. I think that
Speaker Change: You listed a couple of reasons and I think those are certainly explanations for different instances of delay. There are other explanations for other instances of delay.
Speaker Change: But overall, there is a general lack of urgency to drill right now, and that is, I think,
Speaker Change: driven by this commitment to capital discipline that you mentioned. And I think that explains the multitude of different individual reasons why a project may get pushed to the right very slightly.
Speaker Change: very large data set of open tenders, of FIDs, of subsea tree orders, a number of different, I call them forward indicators.
Speaker Change: that all suggest that the work is there. Analysis is readily available that shows that the the wells that are planned to be drilled are all FID'd at very low break-even levels.
Speaker Change: And I would say that just behind the scenes, and we mentioned it in the prepared remarks, but behind the scenes,
Speaker Change: I would say the level of conversation has picked up.
Speaker Change: significantly here in the last couple of months.
Speaker Change: certainly in the last month. And so we're seeing a little bit of data we mentioned on the prepared remarks out there around tendering. We're seeing conversations pick up and then of course we've got this
Speaker Change: all these things that would suggest that the work is there and coming. So, we remain positive and hopeful around the late 25 and 26 improvement.
Speaker Change: Got it. Got it. That's great to hear. Thank you. My follow-up is just on your commentary around potentially stacking rigs. You said that if demand doesn't materialize as you expect, you might elect to stack one or more of your 6G units.
Speaker Change: What are your thoughts at this stage around potentially warm stacking one of your 7G rigs, which we just saw from one of your peers? It sounded like based on your commentary on having active discussions on all your 7G rigs that warm stacking wasn't in your plans for next year at this point, but
Speaker Change: If those conversations don't materialize into contracts, could we potentially see one or maybe two of the 7G rigs potentially warm stacked next year as well?
Speaker Change: So we're back into kind of this sliding scale of definitions around STAC. I would say that we certainly will minimize cost when the Outlook doesn't support them. That's just rational business.
Speaker Change: Got it. Okay, understood. Thanks for that call, Rob. I'll turn it back.
Speaker Change: Thanks, Eddie.
Speaker Change: Your next question is from the line of Kurt Holland with Benchmark.
Kurt Holland: Hey, good morning, everybody.
Speaker Change: Good morning.
Kurt Holland: Hey, thanks for thanks for all that color always appreciate that so just kind of curious right we look out
Kurt Holland: into the back half of next year and into 2026 and things start to look a lot more.
Speaker Change: you know, constructive in terms of, you know, contract timing and so on and so forth. You indicated an inflection, right, in EBITDA in the back half of the year. Just kind of curious as what you think that magnitude might might begin to look like without giving, you know, specifics around guidance.
Speaker Change: Yeah, hey Kurt. It's a good question. Obviously we haven't provided specific guidance here for 2025. We'll look to do that as we normally do with our year-end results.
Speaker Change: Obviously, we've talked about the first half of the year being somewhat flat, if you will, to Q4. I think one interesting data point is Q3, where if you combine Diamond with Noble for the full quarter, EBITDA was closer to $350.
Speaker Change: for the quarter, right? And so there's obviously upside to that as well. So, you know, we're talking about a kind of a flat first half of next year and then the inflection from there on, you know, it could be significant but obviously it's subject to winning some of the work that we're going after right now.
Speaker Change: Let me just add, Kurt, that one of the reasons we considered putting out guidance here, but
Speaker Change: One of the reasons we elected not to and to stick with our kind of normal cadence of putting it out early next year is because we do have
Speaker Change: tremendous amount of work under negotiation right now and it felt like the cost-benefit of waiting on that was worth it given just what you're talking about.
Speaker Change: outcomes on an individual tender, obviously binary for us, and so we think kind of waiting and seeing how some of this plays out is right before we put any more color than we have here on this call out there.
Speaker Change: I appreciate that. So, so maybe just kind of another follow-up here, right? You indicated that incremental cash flow will go back to, you know, share buybacks and you have the $400 million authorization. I'm just kind of curious now on capital allocation, now that you have a little bit more,
Speaker Change: that you know on your balance sheet than you've had prior to prior to the acquisition, you know What what's your thought process in terms of you know cash structure?
Speaker Change: Yeah, we're happy with where we sit today on the cap structure and we, you know, plan to continue.
Speaker Change: obviously a dividend as mentioned and then from there we're looking to supplement with share repurchases as there's excess free cash flow.
Speaker Change: That's great. Appreciate it. Thank you.
Speaker Change: Your next question is from the line of Greg Lewis with JPIJ.
Greg Lewis: Hey guys, thanks and good morning, and hope you're doing well on this fine morning. I did have a question around the jack-up fleet. Clearly, you guys have a very core position in the North Sea with the higher end.
Speaker Change: CJ 70s, CJ 50s, you know, and then you kind of have a couple rigs kind of scattered around.
Speaker Change: you know, the rest of the world. You know, as we think about, you know, the jack-up market, and it seems like, you know, there continue to be buyers, and kind of...
Greg Lewis: you know, companies looking to get more international, migrating from kind of Middle East positions abroad. You know, is that something where we could see, you know, Noble maybe hunker down at its core North Sea market and opportunistically, you know, kind of...
Speaker Change: tear off some of the, you know, hey they're good quality premium jackups but maybe they're non-core to the strategy going forward.
Speaker Change: Yeah, look, I think I think we're where we've always been. I would reiterate that while at this point Some of the jackups do seem more scattered globally outside of the North Sea. They're certainly not
Speaker Change: inefficient they're producing cash flow and as you say they're they're good rigs with great crews and in good customer great customers and so
Speaker Change: We have no urgency or motivation to do something, but I think we've shown through history that we're going to make a rational business decision when one comes in front of us there, and so to the extent that
Speaker Change: That is the right thing for our shareholders, then we of course would consider if there's a strategic move there.
Speaker Change: Okay, and then just following up on the questions around, you know, and you, Robert, you mentioned that there's, I guess, the sliding scale of stacking, you know, and obviously, I don't think we're going to cold stack any of the 7th Gen rigs, but, you know, any kind of rough estimates?
Speaker Change: on terms of maybe cost savings around that, i.e., you know, I guess if we were to think about a rig operating, you know, 7th Gen costs maybe $150, $160. You know, if we don't see opportunities for work for, I don't, you know, whatever the number is, it's probably not 90 days, but if it's
Speaker Change: three to four quarters, and you know, I don't need a number maybe on a percentage basis, you know how much can we shave off of that cost just as you know, we think about
Speaker Change: you know, there's opportunities for, you know, there's, you know, not a handful, but there's three or four seven-gen rigs that, you know, may not get work until the back half of the year.
Speaker Change: Yeah, let me do this, Greg. Let me give you a couple of the points on the sliding scale might be helpful. So, you know, you mentioned kind of full working OPEX.
Speaker Change: And I would say that that scale slides down to around $40,000 to $50,000 per day before you need to go into a preservation type stack, a cold stack.
Speaker Change: to reduce costs from there. And so there's, depending on the region, depending on where you can stack the rig, there's a lot of different variables.
Speaker Change: along that, that would kind of determine where you end along that scale, but I think those are probably the end points, if that's helpful.
Speaker Change: Super helpful, thank you very much.
Speaker Change: As a reminder, if you would like to ask a question, press star 1 on your telephone keypad.
Speaker Change: Your next question is from the line of Frederick Steen with Clarkson Securities.
Frederick Steen: Hey Robert and team hope you are well and you know thanks for the detailed prepared remarks
Frederick Steen: I think it's been you know slightly touched upon already but I was
Speaker Change: that you're seeing more and more opportunities in the market and that you have understood particularly over the last month.
Speaker Change: a good chunk of discussions that could end up in more work that would help utilization from the latter part of 2025.
Speaker Change: Are you able to share some additional colour in terms of geography? Where are you seeing these opportunities? Are there any regions that you are particularly optimistic about? And also if you can share some light on...
Speaker Change: key regions, not necessarily only in 2025, but also in 2026 and 2027, to get the perspective of the longevity of it all. Thank you.
Speaker Change: Sure, there's...
Speaker Change: The answer is that there's not a whole lot.
Speaker Change: of interesting color to provide there, there are opportunities globally, there are opportunities
Speaker Change: They are more abundant in the Golden Triangle.
Speaker Change: And honestly, not a whole lot has changed from color we've given previously where the US is definitely more flattish. And then we see
Speaker Change: more growth in South America, particularly CARICOM, and then West Africa, with a smattering of other incremental opportunities outside of the Golden Triangle.
Speaker Change: I think the key regions, honestly, are the same as well. You've got, for 26 and 27 to your question, I mean, you've got Suriname coming online, I think, in earnest.
Speaker Change: you have a number of opportunities up and down the West African coast, eventually Mozambique on the East African coast in that kind of time frame, and I guess I should have called out Namibia more specifically on the West, but
Speaker Change: Not a whole lot of change from what we've seen.
Speaker Change: what we've kind of seen in forecasting.
Speaker Change: So we're probably more focused on
Speaker Change: tracking to make sure that these things actually come through in the timeline that we're hoping, than tracking any meaningful changes in where they might occur.
Speaker Change: That's helpful nonetheless.
Speaker Change: Also, since you're a mixed player with floaters and jackups,
Speaker Change: call it change lately and how you would
Speaker Change: ranked the different segments against each other? Are you more confident about floaters than you currently are about jackets, etc.?
Speaker Change: thinking you can provide around how you weigh the two on a relative basis given your market view and market outlook?
Speaker Change: The news cycle has been much more negative around jackups here recently than floaters.
Speaker Change: I don't know if trading has matched that as much, but I would say that there's probably...
Speaker Change: more market concern on the jackup side recently. However, if you look at numbers, numbers have really held up quite well in the jackup space. That may be due to a larger total denominator there.
Speaker Change: But, you know, utilization is still up in the...
Speaker Change: above 90%, 93% I think we quoted and
Speaker Change: And so we're looking closely at reactions to the North Sea. Like I said, we have some kind of early indications, but it's really.
Speaker Change: It's a little too early to tell what direction probably 2025 takes in the North Sea, and so we're watching that very closely. And then we've, of course, said probably all the color we can and have on the floater market where we're hopeful.
Speaker Change: Just a final super quick one. On the integration work with Diamond, you have a target of $100 million, if I remember correctly, 75% done within a year. Do you see at this point chances that you'll actually get more synergies out of it than the $100 million you're budgeting?
Speaker Change: Yeah, Frederick, you know, there's, you know, obviously a good chance that that's the case. Obviously in the MERS transaction we announced 125 and then increased that after about a year to 150. So I would say that integration is progressing as expected and there's definitely opportunities to increase, to achieve more than 100 million total synergies here.
Frederick Steen: Perfect. That's all from me. Thank you and have a good day.
Speaker Change: Thank you.
Speaker Change: Your next question is from the line of David Smith with Pickerton Energy Partners.
David Smith: Hey, good morning. Thank you for taking my questions.
Speaker Change: Morning.
David Smith: I was glad to hear about the active conversations for the Discoverer.
Speaker Change: and the deliverer. I'm curious about the developer though, which I think last worked in September of 23. Could you talk about your outlook for that rig and what the operating costs look like during this extended idle period? I'm guessing that could be lower than an idle 7-chin drill ship.
Speaker Change: Yeah, so we've, and y'all fill in, we have moved to, you know, to minimize costs on there, and I would say as well that
Speaker Change: We kind of lump all of the D rigs into the same outlook and and so I think we've
Speaker Change: We've got a number of leads. We will continue. We will obviously have quite, we have had quite space and that will continue and no change around the color we've given around first half of 2025. But, but from there, there seem to be a number of additional opportunities starting in late 25 and then probably
Speaker Change: also later in 26. Yeah, and Dave, from a cost perspective right now, think about that kind of in the $100,000 a day kind of range from an OPEX perspective.
Speaker Change: I'm sorry, for the developer.
Speaker Change: that operating cost per day is, okay. Well, yeah, sorry. Yeah, so essentially think about, you know, the scale from fully operating, I'd call it close to 150, down to the more kind of one. Okay, yes, yes, thank you.
Speaker Change: and a quick follow-up if I may. Just wanted to circle back to your comments about the Globetrotter rigs being in active conversations for well intervention work. I wanted to make sure I understood correctly. Are you seeing potential demand to keep both rigs working and 25 and would you expect those to stay in the Gulf?
Speaker Change: Yeah, so there's work globally. I would say there's probably a higher focus in the U.S. Gulf right now.
Speaker Change: Yes, that we're talking about both rigs. Again, we're not talking about first half-25, but we are talking about active conversations to the extent that in
Speaker Change: Historically, intervention in PNA tends to be more susceptible to moving to the right even than drilling, which has been obviously shown a propensity for that here recently, but that said, you know, if
Speaker Change: If it becomes obvious that that's more of a one-rig market than two, then we've said in the prepared remarks that we'll take appropriate action quickly.
Speaker Change: Great, that's all I got, thank you.
Speaker Change: At this time, there are no further questions. I will now hand today's call back over to the presenters for any closing remarks.
Speaker Change: Thanks everyone for joining us today, and we will look forward to speaking with you again next quarter. Have a good day. Thank you
Speaker Change: This concludes today's call. Thank you for joining. You may now disconnect your lines.
Speaker Change: [inaudible]
Speaker Change: [music]