Q2 2025 Transocean Ltd Earnings Call
Please stand by your program is about to begin.
Operator: Good day, everyone, and welcome to today's Q2 2025 Transocean's earning call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing star one on your touchtone phone. You may withdraw yourself from the queue by pressing star two. Please note this call may be recorded. I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Alison Johnson, Director of Investor Relations. Please go ahead.
Good day, everyone and welcome to today's Q2, 2025 Trans Ocean earning call.
Hey, at this time, all participants are in a listen-only mode later. You will have the opportunity to ask questions during the question and answer session.
You may register to ask a question at any time by pressing star 1 on your touchtone phone.
You may withdraw yourself from the queue by pressing star 2.
Please note, this call may be recorded and I'll be standing by. Should you need any assistance?
Alison Johnson: Thank you, Stephanie. Good morning and welcome to Transocean's second quarter 2025 earnings conference call. A copy of our press release covering financial results, along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures, are posted on our website at deepwater.com. Joining me on this morning's call are Keelan Adamson, President and Chief Executive Officer; Thaddeus Vayda, Executive Vice President and Chief Financial Officer; Roddie Mackenzie, Executive Vice President and Chief Commercial Officer. During the course of this call, Transocean management may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts. Such statements are based upon current expectations and certain assumptions, and therefore are subject to certain risks and uncertainties. Many factors could cause actual results to differ materially.
It is now my pleasure to turn the conference over to Alison Johnson, director of investor relations. Please go ahead
Thank you Stephanie good morning and welcome to transition second quarter 2025 earnings conference. Call a copy of our press release covering Financial results along with supporting statements and schedules including reconciliations and disclosures regarding non-gaap Financial measures are posted on our website at deepwater.com.
Joining me on this morning's call or q and Adamson president and chief executive officer sad. VA exe, Executive, Vice President and Chief Financial Officer.
Rody McKenzie, Executive Vice, President and chief commercial officer.
During the course of this call Trans Ocean management may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts.
Such statements are based upon current expectations and certain assumptions and therefore are subject to certain risks, and uncertainties.
Alison Johnson: Please refer to our SEC filings for our forward-looking statements and for more information regarding certain risks and uncertainties that could impact our future results. Also, please note that the company undertakes no duty to update or revise forward-looking statements. Following Keelan and Thaddeus' prepared comments, we will conduct a question and answer session with our team. During this time, to give more participants an opportunity to speak, please limit yourself to one initial question and one follow-up. Thank you very much. I'll now turn the call over to Keelan.
Many factors could cause actual results to differ materially.
Please refer to our FCC filings for our forward-looking statements and for more information regarding certain risks and uncertainties that could impact our future results.
Also, please note that the company undertakes, no duty to update or revise for looking statements.
Following keelin and fabbs prepared comments, we will conduct a question and answer session with our team.
Keelan Adamson: Thanks, Alison, and welcome, everyone, to our second quarter conference call. As always, we greatly appreciate your interest in Transocean. I want to open today's call by sharing a few of Transocean's key priorities. We are intently focused on several interrelated objectives with outcomes that are entirely within our control, and we are addressing them with urgency and agility. First, and foundational for everything we do, is delivering best-in-class services for our customers. Transocean is the partner of choice for operators requiring expertise in the most technically challenging, ultra-deep water, and harsh environment regions of the world, and we are committed to providing the safest, most reliable, and efficient operations everywhere, all the time. Next, we will continue to manage our portfolio of high-spec rigs in a disciplined and selective manner, endeavoring to extract the greatest value possible from our unique fleet.
Much, I'll now turn the call over to keelin.
Thanks Alison and welcome everyone to our second quarter of conference call. As always, we greatly appreciate your interest in transition.
I want to open today's call by sharing a few of transactions, key priorities.
We are intently focused on several interrelated objectives with outcomes that are entirely within our control, and we are addressing them with urgency and Agility.
First and foundational for everything. We do is delivering best-in-class services for our customers.
Transition is the partner of choice for operators. Requiring expertise in the most technically challenging Ultra deep water and harsh environment regions of the world. And we are committed to providing safest most reliable and efficient operations everywhere all the time.
Keelan Adamson: Lastly, but also of paramount importance, we will continue to improve our overall financial flexibility. To do this, we will achieve and maintain the most efficient cost structure possible. We will reduce total debt as rapidly as we can, minimize interest expense, and ultimately simplify our balance sheet. Transocean is differentiated from the competition by both its people and its assets, and our customers trust us to deliver in the world's most technically demanding environments. Operators select Transocean because of the exceptional synergies created by our people and our assets, leveraging our technology and innovations to drive consistently high performance. This powerful combination is our value proposition, differentiating our product for both customers and investors. We take exceptional pride in being the preferred offshore drilling provider and being recognized for delivering the highest quality and most efficient solutions.
Next we will continue to manage our portfolio of high-spec rigs in a disciplined and selective manner endeavoring to extract. The greatest value possible from our unique Fleet.
And lastly but also of Paramount importance, we will continue to improve our overall Financial flexibility to do this. We will achieve and maintain the most efficient cost structure possible. We will reduce total debt as rapidly as we can minimize interest expense and ultimately simplify our balance sheet.
Transaction is differentiated from the competition by both its people and its assets. And our customers trust us to deliver in the world's most technically demanding environments, operators, select transition because of the exceptional synergies created by our people. And our assets, leveraging, our technology and Innovations to drive consistently high performance. This powerful, this powerful combination is our value proposition differentiating. Our product for both customers and investors
Keelan Adamson: Just last week, Beacon Offshore Energy announced it commenced production from the Shenandoah field, which was drilled by one of our two eighth-generation 20,000 PSI drill ships, the Deepwater Atlas. This is the second 20,000 PSI reservoir to come online using Transocean's ships. We are excited to be part of this achievement and thank Beacon for placing its trust in Transocean to accomplish this important milestone. Our high-specification, ultra-deep water, and harsh environment fleet is unmatched, attracting an industry-leading backlog of approximately $7 billion. Under all market conditions, our fleet has maintained higher average utilization and premium day rates. We believe that we have a very effective and successful commercial strategy. We are continually evaluating market dynamics from a supply and demand perspective, carefully assessing individual opportunities to ensure we are deploying each asset into the right project at the right time.
We take exceptional pride in being the preferred offshore drilling provider and being recognized for delivering the highest quality and most efficient solutions.
Just last week, Beacon offshore energy announced a commencement production from the shenandoa field, which was drilled by 1 of our 2, 8th generation, 20,000 PSI drill ships. The deep water Atlas
This is the second 20,000 PSI Reservoir to come online using transitions ships.
We are excited to be part of this achievement and thanked, Beacon for placing its trust in transition to accomplish this important milestone.
Our high specification Ultra deep water and harsh environment Fleet is unmatched. Attracting an industry-leading backlog of approximately 7 billion dollars.
Under all market conditions, our fleet has maintained higher average utilization and premium day rates.
Keelan Adamson: You should expect us to continue to be disciplined and strategic in applying this portfolio approach to the management of our fleet to maximize EBITDA and cash flow. Regarding our efforts to improve our financial flexibility, recall that last quarter we announced a plan to sustainably reduce our cash costs by about $100 million in each of 2025 and 2026. This reduction is primarily from our fleet operating and maintenance expense, and we are on track to deliver these savings. As should be the case, we strive for continuous improvement, and accordingly, we have taken additional steps to improve the efficiency of our shore-based organization and expect to reduce these costs by approximately $50 million on an annual basis beginning in 2026. Importantly, these actions will not in any way compromise safety, customer service, or the reliability of our rigs.
We believe that we have a very effective and successful commercial strategy. We are continually evaluating market dynamics from a supply, and demand perspective, carefully, assessing individual opportunities to ensure we are deploying each asset into the right project at the right time. You should expect us to continue to be disciplined and strategic. In applying this portfolio, approach to the management of our Fleet to Maxim maximize ibida, and cash flow.
Regarding our efforts to improve our financial flexibility recall. That last quarter. We announced a plan to sustainably reduce our cash costs by about 100 million in each of 2025 and 2026.
This reduction is primarily from our Fleet operating and maintenance expense, and we are on track to deliver these savings.
Keelan Adamson: We understand the importance of financial resilience to effectively weather the inevitable cycles in this business and generate appropriate returns for our shareholders. We have a clear path to deliver significantly over the next few years, addressing our debt obligations by efficiently converting our industry-leading backlog to revenue and maximizing cash flow to equity. We remain on track to reduce debt by more than $700 million this year. We will continue to take a disciplined approach to managing our balance sheet, carefully assessing how each action fits into our long-term financial strategy. Moving now to our outlook for the global market, with an active fleet mostly contracted through the middle of next year, we are actively working on opportunities for the second half of 2026.
I should be the case we strive for continuous Improvement and accordingly. We have taken additional steps to improve the efficiency of our shore. Base organization and expect to reduce these costs by approximately 50 million on an annual basis. Beginning. In 2026 importantly, these actions will not in any way compromise. Safety customer service or the reliability of our rigs.
We understand the importance of financial resilience to effectively whether the inevitable Cycles in this business and generate appropriate returns for our shareholders.
We have a clear path to deliver significantly over the next few years. Addressing our debt obligations by efficiently, converting our industry-leading backlog to revenue and maximizing cash flow to equity.
We remain on track to reduce debt by more than $700 million. This year, we will continue to take a disciplined approach to managing our balance sheet carefully, assessing how each action fits into our long-term financial strategy.
Keelan Adamson: While the pace of contracting activity has been measured since the middle of last year, all projections suggest we are nearing the end of this temporary slowdown. Indeed, we are engaged in multiple conversations with customers on attractive opportunities for work well into the future and have a line of sight to a number of forthcoming tenders, which I will discuss after a brief recap of our recent fixtures. In June, we issued a press release disclosing that a two-well option was exercised on the Transocean Spitsbergen. The option, which was struck at a rate of $395,000 per day, ensures the rig has continuous work through August 2027. Next, in Brazil, the Deepwater Mykonos was awarded a 60-day contract extension. The agreement also includes multiple options, which, if exercised, would keep the rig working into next year. Finally, in the Ivory Coast, Murphy awarded the Deepwater Skyros a three-well contract.
moving now to our outlook for the global market with an active Fleet mostly contracted through the middle of next year, we are actively working on opportunities for the second half of 2026.
Engaged in multiple conversations with customers on attractive opportunities for work, well, into the future and have a line of sight to a number of forthcoming tenders which I will discuss after a brief recap of our recent fixtures.
In June, we issued a press release disclosing that a 2. Well, option was exercised on the transition, spitsbergen the option, which was struck at a rate of 395,000 per day. Ensures. The rig has continuous work through August 2027.
Next. In Brazil, the deep water mkosz was awarded a 60-day contract extension. The agreement also includes multiple options, which if exercised would keep the work, the rig working into next year.
Keelan Adamson: The program is expected to commence late this year and includes a one-well option that, if exercised, would keep the rig working into the second quarter next year. We continue to expect the market to tighten by late 2026 and into early 2027, at which point we expect the global active ultra-deep water fleet will once again approach utilization exceeding 90%. This should result in upward pressure on day rates. Third-party analyst data supports our view. Wood Mackenzie's latest analysis shows deep water and ultra-deep water development CapEx rising from $64 billion in 2025 to $79 billion in 2027, a 23% increase. In their latest commentary, both Fernleys Offshore and Westwood Global Energy Group noted that commencement dates for pent-up demand have firmed up and, for the most part, stopped sliding to the right.
And finally in the Ivory Coast Murphy awarded, the deep water ski. Ross at 3 world contract. The program is expected to commence late this year and includes a 1. Well, option that if exercise would keep the rig working into the second quarter next year.
We continue to expect the market to tighten by late 2026 and into early 2027 at which point we expect the global active Ultra deep water. Fleet, will once again approached? Utilization exceeding, 90%
This should result in upward pressure on day rates.
Third party analyst data supports. Our view would McKenzie's latest analysis, shows deep water and Ultra deep water development. Capex. Rising from 64 billion in 2025 to 79 billion in 2027 a 23% increase.
Keelan Adamson: For the ultra-deep water drill ship market, the primary source of incremental demand is still expected to come from Africa, the Mediterranean Sea, and Asia. If known programs materialize as currently projected, there could be an incremental four drill ships working in Africa in 2027 and an additional two in the Mediterranean. We are optimistic that commencement windows for these programs will continue to remain generally stable as many of them are progressing through the tender process. For example, of the three multi-year opportunities set to commence in Mozambique in 2027, one has been released, one is in the RFI stage, and one is pending release, which is expected by the end of September.
And in their latest commentary, both fernley's offshore and Westwood Global Energy Group noted that commencement dates for pent up demand have firmed up. And for the most part stopped sliding to the right.
For the ultra deep border. Drill ship Market. The primary source of incremental demand is still expected to come from Africa, the Mediterranean Sea and Asia,
If known programs materialize as currently projected, there could be an incremental 4 drill ships, working in Africa, in 2027 and an additional 2 in the Mediterranean.
We are optimistic that commencement windows for these programs will continue to remain generally stable, as many of them are progressing through the tender process.
Keelan Adamson: Moving east to the Asia-Pacific region, current tenders indicate up to four incremental drill ships will be required in the next two years, including the Chevron Gorgon prospect in Australia, which is expected to commence in the first quarter of 2027. This will be the first time in seven years a drill ship has operated in-country. Demand in India also points to one additional drill ship as ONGC, Reliance, and Cairn each have programs in this timeframe. Finally, tenders for the remainder of Asia will likely require the rig count to move up from three active drillships today to five in 2027. Activity levels in the U.S. Gulf, Latin America, and Brazil are expected to remain relatively stable.
For example of the 3 multi set to commence in Mosen Beek in 2027 1 has been released 1 is in the RFI stage and 1 is pending release, which is expected by the end of September.
Moving East to the asia-pacific region. Current tenders. Indicate up to 4 in Jill, ships will be required in the next 2 years, including the Chevron Gorgon Prospect in Australia, which is expected to commence. In the first quarter of 2027, this will be the first time in 7 years. A drill ship has operated in country
Demand in India also points to 1 additional drill ship as ongc, Reliance and Karen. Each have programs in this time frame.
and finally tenderers for the remainder of Asia will likely require the rig count to move up from 3 active drill ships today to 5 in 2027,
Keelan Adamson: Since our first quarter 2025 earnings calls, bids were submitted for Petrobras's Busios program, and Petrobras released the tender for its Mero project, which is a firm duration of nearly four years, expected to commence in the first half of 2027 for at least one rig. With respect to the previously mentioned Busios tender, it is possible that four rigs could now be awarded rather than up to the three originally anticipated. Additionally, Shell is currently evaluating bids for the Gadol Dimada development, and Equinor released an RFI for a one-year program with commencement likely in the first half of 2026. Furthermore, just this week, BP announced their biggest discovery in 25 years at the Boomerang Block in the Santos Basin and indicated its intention to perform additional appraisal activities. The projected demand for harsh environment semi-submersibles remains strong in Norway and elsewhere internationally.
Activity levels in the US Gulf. Latin America and Brazil are expected to remain relatively stable since our first quarter 2025 earnings calls bid bid bids were submitted for petros's, busy us program and petrol brass released the tender for its meal project, which is a firm duration of nearly 4 years expected to commence in the first half of 2027 for at least 1 rig.
With respect to the previously previously, mentioned booze off tender, it is possible that 4 rigs could now be awarded rather than up to the 3.
Additionally, shell is currently evaluating bags for the Gallo de matter development and equinor released an RFI for a 1 year program with commencement likely in the first half of 2026.
Furthermore, just this week, BP announced their biggest Discovery in 25 years at the boomerang Block in the Santas Basin and indicated, its intention to perform additional appraisal activities.
Keelan Adamson: As a reminder, our four rigs in Norway, the Transocean Spitsbergen, Transocean Norgay, Transocean Encourage, and Transocean Enabler, are fully committed into 2027. In the U.K., on top of BP West of Shetland, Itaca is also looking for one rig for its Camvo development, a 900-day program that starts in the same timeframe. In the Orange Basin, meaning Namibia and South Africa, operators will soon begin the development phases of their discoveries, which will require at least one additional harsh environment semi-submersible. We expect a tighter global market to develop in the next two years. However, at this time, we do not see a compelling case for reactivation of cold stack units. Hence, our decision in the second quarter to remove four lower specification rigs from our fleet.
The projected demand for Harsh environment, semi-submersible remains strong in Norway and elsewhere. International
as a reminder, our 4 rigs in Norway, the Trans Ocean spitzberg and Trans Ocean Norway, transition encouraged and transition enabler are fully committed into 2027.
In the UK, on top of BP, west of Shetland, the attacker is also looking for 1, for its Campbell development and 900 Day program that starts in the same time frame.
In the orange, Basin, meaning, Namibia and South Africa operators. Will soon begin the development phases of their discoveries, which will require at least 1 additional harsh environment semi-submersible
Keelan Adamson: We continuously assess the option value of our cold stack rigs to ensure we maintain the best and most competitive fleet to meet our customers' requirements. All else being equal, supply rationalization structurally improves industry dynamics. Including four of our own, a total of 11 rigs have been retired from the global fleet this year, and we believe it is reasonable to expect additional attrition in the near term. Industry consolidation could help facilitate further reduction in rig supply, which would contribute to a more balanced industry. With that, I will now hand it over to Thaddeus Vayda to discuss our results and guidance. Thaddeus?
To remove 4, lower, specification rigs from our Fleet we continuously assess the option. Value of our cold stack, rigs to ensure we maintain the best and most competitive Fleet to meet our customers requirements.
All else being equal Supply. Rationalization structurally, improves industry Dynamics.
Including 4 of our own, a total of 11 rigs have been retired from the global Fleet this year and we believe it is reasonable to expect additional attrition in the near term.
Industry. Consolidation could help facilitate further reduction in Rig Supply which would contribute to a a more balanced industry.
Thaddeus Vayda: Thanks, Keelan, and good day to everyone. During today's call, I will briefly recap our Q2 results, provide guidance for the Q3, and conclude with an update of our expectations for the full year. During the Q2, we delivered contract drilling revenues of $988 million, in line with our guidance, at an average daily revenue of approximately $459,000. At $599 million, our operating and maintenance expense in the Q2 was below our guidance, primarily due to lower costs resulting from delays in in-service maintenance across the fleet and lower than expected costs for out-of-service projects on Transocean Endurance and Deepwater Invictus. G&A expense in the Q2 was $49 million, again in line with our expectations, and we ended the quarter with total liquidity of approximately $1.3 billion.
With that. I will now hand it over to sad to discuss our results and guidance sad.
Thank you and good day to everyone.
During today's call, I will briefly recap. Our second quarter results, provide guidance for the third quarter, and conclude with an update of our expectations, for the full year,
during the second quarter, we delivered contract drilling revenues of 988 million in line with our guidance at an average daily revenue of approximately 459,000
$599 million in operating maintenance expense in the second quarter was below our guidance, primarily due to lower costs resulting from delays in in-service maintenance across the fleet and lower than expected costs for out-of-service projects on Transition Endurance and Deepwater Invictus.
Thaddeus Vayda: This includes unrestricted cash and cash equivalents of $377 million, $395 million of restricted cash, the majority of which is reserved for debt service, and $510 million of liquidity from our undrawn credit facility. I will now provide guidance ranges for the Q3 and an update on our expectations for the full year. For the Q3, we expect contract drilling revenues to be between $1 billion and $1.02 billion, based upon an average fleet-wide revenue efficiency of 96.5% on our working rigs. As you know, revenue efficiency is affected by uptime performance, weather, and other factors. This revenue estimate also includes between $60 million and $70 million of additional services and reimbursable expenses, which tend to carry low single-digit margins.
G&A expense in the second quarter was 49 million again in line with our expectations. And we ended the quarter with total liquidity of approximately 1.3 billion.
This includes unrestricted cash and cash equivalents of 377 million 395 million of restricted cash. The majority of which is reserved for Debt Service and 510 million of liquidity from our undrawn credit facility,
I'll now provide guidance ranges with a third quarter and an update on our expectations for the full year.
For the third quarter. We expect contract drilling revenues to be between 1 billion and 1.02 billion dollars. Based upon an average fleetwide revenue efficiency of 96.5% on our working rigs.
as you know, Revenue efficiency is affected by uptime performance, whether and other factors
Thaddeus Vayda: The expected sequential increase in contract drilling revenues is primarily due to additional in-service days for the Transocean Spitsbergen, as it completed its 15-year SPS in June and one additional calendar day in the Q3. These are partially offset by lower projected activity for the Deepwater Skyros and Deepwater Conqueror in the period. We expect Q3 O&M expense to be within a range of $600 million to $620 million. This slight quarter-over-quarter increase is primarily due to the timing of in-service maintenance across the fleet, partially offset by completion of Transocean Spitsbergen's 15-year SPS in the Q2. We expect G&A expense for the Q3 to fall within a range of $50 million to $55 million. Net cash interest expense for the third quarter is forecasted to be approximately $136 million, comprising interest expense and interest income of about $143 million and approximately $7 million, respectively.
This Revenue estimate also includes between 60 million and 70 million dollars of additional services and reimbursable expenses, which tend to carry low single-digit margins.
The expected sequential increase in contract, drilling revenues is primarily due to additional in-service days for the transition Spitzer. And as it completed, its 15-year SPS, in June and 1 additional calendar day in the third quarter.
These are partially offset by lower projected activity for the deep water skiers, and deep water conqueror in the period.
We expect third quarter O&M expenses to be within a range of $600 million to $620 million.
This slight quarter-over-quarter increase is primarily due to the timing of in-service maintenance across the fleet, partially offset by the completion of transitions, Pittsburgh, and the 15-year SPS in the second quarter.
We expect G&A expense for the third quarter to fall within a range of 50 million to 555 million.
Thaddeus Vayda: Capital expenditures for the third quarter are expected to fall between $25 million and $30 million, and cash taxes to be paid are expected to be approximately $16 million. For the full year of 2025, contract drilling revenues are now expected to fall between $3.9 billion and $3.95 billion, primarily reflecting potential variances in revenue efficiency. Our guidance also includes between $255 million and $265 million of additional services and reimbursable expenses. We expect our full year O&M expense to be between $2.375 billion and $2.425 billion. This is somewhat higher than our previous guidance, primarily due to increased reimbursables and the effects of foreign exchange. Both of these expenses are offset by increases in revenue. G&A costs in 2025 are expected to be between $190 million and $200 million, slightly higher than previously forecast, primarily due to certain performance-related accruals.
Net cash, interest expense for the third quarter is forecasted to be approximately 136 million comprising, interest expense and interest income of about 143 million and approximately 7 million dollars, respectively.
Capital expenditures for the third quarter are expected to fall between 25 million and 30 million. And cash taxes to be paid, are expected to be approximately 16 million dollars.
For the full year, 2025 contract, drilling revenues are now expected to fall between 3.9 billion and 3.95 billion primarily reflecting potential variances in Revenue efficiency.
Our guidance also includes between 255 million and 2655 million of additional services and reimbursable expenses.
We expect a full year onm, expense to be be between 2.375 billion and 2.425 billion.
This is somewhat higher than our previous guidance primarily due to increased reimbursable and the effects of Foreign Exchange, both of these expenses are offset by increases in Revenue.
GNA costs in 2025 are expected to be between $190 million and $200 million.
Thaddeus Vayda: For the full year, we are anticipating net cash interest expense between $540 million and $545 million, comprising interest expense and interest income of about $575 million and between $30 million and $35 million, respectively. This excludes any impact from the bifurcated exchange feature of our 2029 exchangeable bonds. Cash taxes for the full year are forecasted to be between $70 million and $75 million. We now expect 2025 capital expenditures to be approximately $120 million, slightly above our prior guidance due to customer upgrades that are fully reimbursed. Of this, approximately $55 million is related to customer-required capital upgrades for upcoming projects and capital spares at approximately $65 million of sustaining capital investment. Our liquidity at year-end is forecasted to be between $1.45 billion and $1.55 billion, consistent with my prior guidance.
Slightly higher than previously forecast. Primarily due to certain performance related across
The full year, we are anticipating net cash interest expense between 540 million and 545 million comprising interest expense and interest income of about 575 million and between 30 and 35 million respectively.
This excludes any impact from the bifurcated exchange feature of our 2029 exchangeable bonds.
Without expect 2025 Capital expenditures to be approximately 120 million slightly above our prior guidance, due to customer upgrades that are fully reimbursed.
Of this approximately 559 is related to customer required Capital upgrades.
For upcoming projects and capital spares at approximately 65 million of sustaining capital investment.
Thaddeus Vayda: This reflects our revenue, cost, and capital expenditure expectations and includes the impact of our cost savings initiative, our undrawn revolving credit facility, and restricted cash of approximately $440 million. In late June, we announced we had entered into separate agreements with certain holders of our 4% senior exchangeable bonds due in December of this year to exchange an aggregate principal amount of $157 million. Upon completion of these transactions, 59.4 million shares were issued. Approximately $77 million in aggregate principal amount of the bonds remains outstanding. Our liquidity forecast currently assumes convertible instruments are equitized at maturity, but as the remaining 25 EBs are out of the money, we will evaluate the various options available to us to address this.
Our liquidity at year end is forecasted to be between 1.45 billion and 1.555 billion dollars consistent with my prior guidance.
This reflects our Revenue cost and capital expenditure expectations, and includes the impact of our cost savings initiative. Our undrawn revolving credit facility and restricted cash of approximately 440 million.
In late June, we announced. We had entered into separate agreements with certain holders of our 4%. Senior exchangeable bonds due. In December of this year, to exchange, an aggregate principal amount of 157 million,
Upon completion of these transactions, 59.4 million shares were issued.
Thaddeus Vayda: With respect to tariffs, we continue to monitor the fluid situation and have not included any potential impact in our guidance because we currently do not expect the impact of either direct or indirect tariffs to be material. This concludes my prepared remarks, and I will now turn the call back to Keelan for his final comments before we begin Q&A.
Approximately 77 million in aggregate, principal amount of the bonds remains outstanding, our liquidity forecast currently assumes convertible. Instruments are Equitable that maturity, but as the remaining 25 EVS are out of the money, we will evaluate the various options available to us to address this stuff.
With respect to tasks, we continue to monitor the fluid situation, and Have Not Included any potential impact, on our guidance, because we currently do not expect the impact of either direct or indirect tariffs to be material.
This concludes my prepared remarks and I'll turn the call back to keelin for his final comments before we begin Q&A.
Keelan Adamson: Thanks, Thad. Before opening up the line for questions, I want to reiterate that we are focused on addressing several key priorities with urgency and agility. Our team is committed to best-in-class services for our customers. We worked hard to earn their trust, and we intend to keep it. Our asset portfolio is unrivaled. We will continue to take a long-term view on the market and remain disciplined as we consider future contract opportunities. As you can tell from today's comments, our outlook for late 2026 and beyond is very constructive. Lastly, we are strengthening our balance sheet and improving our capital structure. We have high confidence in our ability to add to our backlog, and we intend to efficiently convert it into revenue, maximizing cash flow to reduce our debt as quickly as possible. In conclusion, we are deeply committed to delivering for our customers and shareholders.
Thanks Todd.
Before opening up the line for questions, I want to reiterate that we are focused on addressing several key priorities with urgency and agility.
Our team is committed to best-in-class services for our customers. We worked hard to earn their trust and we intend to keep it.
Our asset portfolio is unrivaled. We will continue to take a long-term view on the market and remain disciplined as we consider future contract opportunities.
As you can tell, from today's comments, our outlook for late 2026 and Beyond is very constructive.
Lastly, we are strengthening our balance sheet and improving our capital structure. We have high confidence in our ability, to add to our backlog. And we intend to efficiently, convert it into Revenue, maximizing cash, flow to reduce our debt as quickly as possible.
Keelan Adamson: We have a strong team focused on executing a clear plan to create long-term value. Alison, please open the line for questions.
In conclusion, we are deeply committed to delivering for our customers and shareholders. We have a strong team focused on executing a clear plan to create long-term value.
Alison Johnson: Thanks, Keelan. Stephanie, we are now ready to take questions. As a reminder to the participants, please limit yourself to one initial question and one follow-up question.
Allison. Please open the line for questions.
Thanks, Keelan and Stephanie. We are now ready to take questions. And as a reminder to the participants, please limit yourself to one initial question and one follow-up question.
Operator: Thank you. At this time, we will open the floor for questions. If you would like to ask a question, please press star one on your touchtone phone now. You may remove yourself from the queue by pressing star two. Again, that is star one to ask a question. Our first question will come from Eddie Kim with Barclays.
Thank you. At this time. We will open the floor for questions if you'd like to ask a question. Please press star 1 on your touchtone phone now.
You may remove yourself from the queue by pressing star 2 again. That is star 1 to ask a question.
Eddie Kim: Good morning. Just wanted to ask about your expectation on the trajectory of leading-edge day rates here. We have been in the mid to high $400s for some time now, but have recently seen a moderation into the low $400s level. You provided a very constructive market outlook and mentioned in your prepared remarks you do see utilization of drill ships reaching 90% by, I think, late next year. Is it fair to say you expect leading-edge day rates to return back to that mid to high $400s level by the end of next year? Just curious on your thoughts on the trajectory there.
In our first question will come from Eddie Kim with Barclays.
Hey, good morning. Um just wanted to ask about your uh expectation on on the trajectory of of Leading Edge day rates here. We we've been in sort of the mid to high 400s for some time now but but have recently seen a moderation into into the the low 400s level you provided a, a very constructive Market Outlook and and mentioned in your prepared remarks. You, you, you do see utilization of drill ships, reaching 90%, but I think, uh, late next year. So, um, fair to say, you expect Leading Edge day rates to
Keelan Adamson: Good morning, Eddie, and thanks for your question. As you know, we have a history of being very judicious in how we apply and select and deploy our assets into whichever project. I think what you are seeing today is some of the white space that we all anticipated. It is no surprise to us that we were there, that some of those rates are probably a little bit lower than what we have seen in the past. I think what we are going to see going forward is that capacity being absorbed. The future projections for activity are very, very positive. We are going to see more of the active fleet being contracted. As we move out into the end of this year and into 2026, we are going to see a lot more contracting activity and tendering activity for the out years of 2026 and beyond.
Uh return uh back to that mid to high 400s level um by end of next year or just curious uh on your thoughts on the trajectory there.
Uh, good morning Eden. Thanks for your question. Um,
as, you know, we uh,
We we have a history of being um very judicious in in how we apply? Uh and and select.
Uh and deploy our assets into whichever project. And um I think what you're seeing today is um some of the white space that we we all anticipated. It's no surprise to us that we were there. Um that's some of those rates are probably a little bit lower than what we've seen in the past.
And and it and I think what we're going to see going forward is that capacity being absorbed the future projections for for activity is very, very positive.
Keelan Adamson: As it pertains to rates, I will let Roddie Mackenzie express his view on where the rates we think will go right now.
Activity, and and tendering activity, for the out years of 26 and Beyond as it pertains to rates. I'll I'll let Rudy, um, pertain. Uh, let him Express his view on on, where the rates we think will go right now.
Roddie Mackenzie: Hey, Eddie. Yes, just to follow up on Keelan's comments there. As we think about the utilization, as you mentioned, we dip down a little bit here. We are actually expecting that the bottom of this V is practically speaking upon us. We think that utilization is going to bottom out somewhere in the mid-80s as a percentage, which is only for a relatively short period of time. I think if you look at all the projections and certainly a lot of the things that Keelan touched on, we would expect things to recover from there. One of the things that we mentioned about day rates is not just being very disciplined on what we are bidding, but it is the overall economic package on these tenders that we are evaluating.
Roddie Mackenzie: We have a very robust process between our various groups, our engineering group, our operations group, and several other departments of the company. It is very important to us that we take the holistic view, that we look at all of the expenses that are associated with these tenders. Typically, the bottom of the V is when the worst deals are made. We apologize for not making as many long-term deals right now. We are much more focused on gap fillers at the moment. Certainly, to drive long-term value for the company, we do not think now is the time to aggressively pursue long-term deals, especially those you have seen some recently announced that had a very significant amount of upgrades required. Rest assured, we will remain disciplined in that regard and make sure that we are very aware of all of the expenses associated with projects and upgrades.
Hey Eddie. Um, yes, so just, uh, follow up on kean's comments there. Um, so as we think about the utilization, as you mentioned, um, you know, we, we dip down a little bit here. Um, we're actually expecting the the bottom of this V is is practically speaking upon us. Um, so we think that uh, utilization is going to bottom out somewhere in the mid 80s as a percentage, um, which is only for a relatively short period of time and I think if you look at all the projections and you know, certainly a lot of the things that kill and touched on we would expect things to to, to recover from there. Um, you know, 1 of the things that we mentioned about. Um, day rates is not just being very disciplined on, you know, what we're bidding. But it's the overall economic package on, uh, on these, uh, tenders that we are that we're evaluating, we have a very robust process, you know, between um, our various groups, our Engineering Group, our operations group, and, and several other Departments of the company, but it's very important to us that. Um, we take the holistic view that we are looking.
Keelan Adamson: Yeah, maybe just to add to that, Eddie, as you rightly point out, a utilization needs to bridge about the 90% mark, maybe a little below that, before we start seeing good pressure on day rates. As we move through the year and the contracting continues, you should expect the rates to improve. Certainly, from our side, we'll be looking at it strategically from a term and location and a customer perspective to drive the best value that we can get from our unique fleet.
At, um, all of the expenses that are associated with it, with the, with these tenders and typically the bottom of the V is when the worst deals are made. So, um, we we apologize for not making as many long-term deals right now. Uh, we're we're much more focused on Gap fillers at the moment, but certainly to drive long-term value for the company. Um, we don't think now is the time to, to, to aggressively pursue long-term deals. Especially those, you've seen some recently announced that had a very significant amount of upgrades required. Um, but, uh, rest assured, we will, will remain disciplined in that regard and make sure that we're very aware of all of the expenses associated with, uh, projects and upgrades.
Yeah. Maybe maybe just to add to that. Eddie. As you rightly point out, um, utilization needs to bridge about 90% Mark. Um, and maybe a little below that before we start seeing, um, a good pressure on day rate. So as as we move through the year and the Contracting continues, um, you should expect the rates to improve uh certainly from our side. We'll be looking at it for strategically from a term and location and the customer perspective to drive the best value.
Eddie Kim: Got it. Thank you for that, Color. My follow-up is just on the Proteus and the Conqueror, two of the drillships that are currently in the Gulf of Mexico and set to come off contract kind of mid to late next year. We have seen a handful of multi-year contracts signed by your peers in the Gulf of Mexico recently. Just based on your outlook for that region to be kind of stable going forward, do you expect it is likely that those rigs will stay in the Gulf, or could they move elsewhere?
That we can get from our unique Fleet.
Got it. Thank. Thank you for that caller. Uh, my follow-up is is just on the, the Proteus and and the Conqueror to 2 of your drill ships uh that are currently in the Gulf of Mexico uh and set to come off contract uh kind of mid to to late next year. We've seen a handful of uh multi-year contracts signed by
Appears in the Gulf of Mexico recently. Um, and just based on your, your outlook for that region to to be kind of stable. Uh, going forward, do you expect? Uh, it's likely that those those rigs will will stay in the Gulf or, or, or could they could they move elsewhere?
Keelan Adamson: I think Roddie's jumping at that one.
Roddie Mackenzie: We do expect them to stay in the Gulf of Mexico. We have customers who are quite interested in that class of asset, and we are pursuing a couple of different things at the moment. We are cautiously optimistic that those rigs will be extended right where they are.
Keelan Adamson: To add to that, Eddie, you are talking about two of our highest spec units in the fleet and in the world's industry. The Conqueror is right at the top, right behind our eighth-generation units, and the Proteus has obviously been performing really well for our customers. Our crews, our operation from those rigs is stellar, and I am sure there will be a significant demand for those two assets.
I think Rowdy Rod is jumping at that 1. Yes, we yeah, we do expect them to stay in the Gulf of Mexico. Um, we have, uh, customers who are quite interested in that class of asset, um, and we're pursuing a couple of different things at the moment. So we are cautiously optimistic, that, uh, those rigs will be extended right where they are.
Eddie Kim: Great. Thank you very much. I'll turn it back.
And maybe and maybe just add add to that. Eddie you're talking about 2 of our highest spec units in the fleet. And in the world's industry, the Conqueror was right at the top right behind our eighth generation units and the produce is obviously been performing and really well for our customers. So our our crews, our operation from those rigs is stellar and um I I'm sure they'll be a significant demand for those 2 uh things.
Great, thank you very much. I'll turn it back.
Operator: Thank you. Our next question will come from Doug Becker with Capital One.
Thank you. Our next question will come from Doug Becker with capital 1.
Doug Becker: Thank you. Maybe a couple for Thaddeus Vayda. Just curious on potential proceeds from some of the rigs that are slated for disposal. Just what are the assumptions embedded in the liquidity expectations that were laid out?
Thank you. Maybe a couple for sad. Uh, just curious on potential proceeds from some of the some of the rigs that are slave for disposal. Just what are the assumptions embedded in the liquidity expectations that were laid out?
Thaddeus Vayda: Doug, we do have some nominal amount included in the liquidity forecast. I do not think we have disclosed the total amount for the rigs, but generally speaking, when rigs go to recycling, it is about a cash break even type of a transaction. So in a ballpark of probably $8 million to $12 million per asset, generally speaking. Certainly, if we have an opportunity to transact and to dispose of those assets into alternative functions, those numbers could be higher, but we would announce that as and when that would happen.
So hey Doug we uh we do have some nominal amount included in the liquidity forecast. I don't think we've disclosed the total amount for the rigs but generally speaking when rigs go to recycling um it's about cash break even type of a transaction so in the ballpark of probably 8 to 12 million dollars per asset. Generally speaking
Doug Becker: Got it. So, don't assume anything beyond kind of break even at this point.
certainly if we have an opportunity to transact and to dispose of those assets into alternative functions, those numbers could be higher but we would announce that as and when that would happen,
Thaddeus Vayda: That's correct.
Doug Becker: In the past, you have given some color on when we might get to 3.5 times net debt to EBITDA. Just any update on those assumptions? Certainly appreciate it has been an uncertain market.
That's correct.
Thaddeus Vayda: No change. The objective is to achieve that metric as soon as possible so that we have the option to consider distribution to shareholders. Generally speaking, I think we're probably still in the late 2026 timeframe for that.
In the past, you've given, uh, some color on when we might get to 3 and a half times, net debt to IBA just any update on those assumptions and certainly appreciate, it's been been an uncertain Market.
Yeah, no change. Um the objective is to achieve that metric as soon as possible so that we have the option to consider distributions to shareholders. Uh generally speaking I think we're probably still in the late 2026 time frame for that.
Doug Becker: Fair enough. Thank you.
Fair enough. Thank you.
Operator: Thank you. Our next question will come from Greg Lewis with BTIG.
Thaddeus Vayda: Yeah, hi. Thank you, and good morning, and thanks for taking my question. I wanted to pivot a little bit about this. I am kind of curious on your views. I want to go back a couple of years ago when you contributed that, I believe it was the Olympia for deep sea mining. I am kind of curious, just given what we are reading in the news more lately over the last couple of months, where is that, is that something that Transocean is still involved in? If so, could you provide some updates around that?
Thank you. Our next question will come from Greg Lewis with BTIG.
Yeah. Hi. Thank you. And and good morning and and thanks for taking my question. Um, I I wanted to Pivot a little bit about this, um, you know, kind of curious on your views. I I I I want to go back a couple of years ago when um you contributed that they that. Well I believe it was the Olympia for uh deep sea mining. Um kind of curious you know just giving what we're reading in the news more freely over the last couple months. Um
You know, like, where does that stand? Is that something that transition is still involved in? And if so, maybe could you provide some updates around that?
Keelan Adamson: Yeah, thanks, Greg. We're obviously, as you picked up, the Olympia is still in that arrangement that we have. We're seeing a lot of press, as you are, on deep sea minerals and potentially the U.S. administration pushing to advance their agenda in that regard. I'll push it over to Roddie here if he's responsible in that area, and we'll answer your question.
Roddie Mackenzie: We continue to pursue our technical solutions for doing this kind of recovery. Having that asset in the JV is very useful for us. It also gives us that optionality. These things do take a little bit of time. We have to be honest about that. We are excited to at least have that adjacency available to us. Should it take off, if it does, then there is the possibility of additional vessels going in there. Typically, they would be our kind of lower specification drilling rigs that are actually perfectly adequate and actually quite well specified for this kind of adventure should it take off at some point in the future.
Yeah, thanks Greg. Um, yeah. We're we're obviously, as you picked up the Olympia is still, uh, in that Arrangement that we have. We're, we're seeing a lot of press as you are on on deep sea minerals, and potentially, um, the US Administration pushing pushing to advance their agenda in that regard. Um, I'll, I'll push it over to Rody here. He's a, he's responsible in that area and will
Uh, will answer your question. Yeah, so so we can continue to um, to to uh pursue our Technical Solutions for for doing uh, this kind of recovery. But yeah, having that asset in the
the um,
The the JV is, uh, you know, very useful for us. Um, uh also gives us that optionality. Um, but you know, these things do take a little bit of time. We have to be honest about that. But um, we are excited for at least have that Jason say available to us and should it take off? And it does, then there is the possibility of additional. Um,
Keelan Adamson: Yeah, and I think, Greg, as Roddie indicated, obviously, it's a fairly elongated process, and it has to go through a lot of regulations. So when you look at our core business and you see what the drilling activity looks like it's projected to do in the next couple of years, you know, we're very focused on the core business and maximizing our opportunities in that.
Vessels going in there. Typically, they would be our kind of lower specification drilling rigs that are actually, uh, perfectly adequate and, uh, actually quite well specified for this kind of venture, should it take off at some point in the future?
Thaddeus Vayda: Okay, great. Thank you for that. Realizing your fleet's very well contracted, there does seem to be, I guess it's not maybe a specific question to Transocean, but maybe about the market, which is kind of indicative of maybe where we're headed. Could you maybe talk about, as you look out over the next two, three quarters, any things we're seeing in terms of spot activity? Are there certain pockets? Is it certain types of customers? Is it exploration? If there are any kind of spot tenders or spot, not tenders, they're not even tenders, right? Spot jobs you're tracking, what's kind of the makeup of those?
Yeah. And I, I think like the as as ratty indicated obviously it's a, it's a fairly elongated process. Um, and it has to go through a lot of Regulation. So, um, in when you look at our Core Business, um and you see what what uh the drilling activity looks like it's projected to do in the next couple of years. You know, we're we're very focused on on the core business and maximizing our opportunities in that.
Okay, great, thank. Thank you for that. And then just, you know, realizing, you know, you you your fleet's very well contracted. Um, but you know, I I guess there does seem to be so I mean, I guess it's not maybe a specific question to transition, but maybe about the market, which is kind of indicative of maybe where we're headed. Um, could could you maybe talk about, you know, as as you look out over the next 2, 3 quarters, um, you know, any things we're seeing in terms of spot activity and and you know, are are there certain pockets? Is there certain types of customers? Is it exploration? Just kind of if there are any kind of spot tenders you or or spot, not 10, they're not even tenders right spot jobs, you're tracking. Um you know, you know what, what's kind of the makeup of those.
Roddie Mackenzie: I will take that one. There are a number of spot jobs, and you would have seen that we picked up a couple of them, basically an extension on one of the rigs in Brazil and also picking up the Murphy work in the Ivory Coast. As we look at that kind of stuff, there have been several in the Gulf of Mexico that we think are just kind of add-in wells. Typically, when you have a mature basin that has a lot of prospects, a lot of development there, there is often work that comes up to kind of do remedial work on wells or re-completions, that kind of stuff, or stimulations to increase production. We have seen plenty of those happen over the past couple of years.
Roddie Mackenzie: We know that there are several others in places like West Africa, which in general is actually looking really positive at the moment. We have just kind of four tenders coming up for Nigeria, or I think one of them has been awarded already, but Mozambique has got three and Ivory Coast has got two and Ghana has got two. So there seems to be quite a lot of stuff there in terms of decent long-term activity. We are seeing a number of these kind of six-month opportunities, just like the one we just signed, that pop up in places like that. It makes a lot of sense for rigs that either have those longer-term contracts available to them or are kind of rolling off hot rigs at that timeframe.
that's going to force handers, coming up for Nigeria or uh,
One of them has been awarded already, but, um, you know, more than Bees got 3 and Ivory Coast got 2, and Ghana's got 2. So there seems to be quite a lot of stuff there in terms of...
Roddie Mackenzie: Then it is kind of a win-win between the contractors and the operators to pick up an operational hot rig that is doing well and punch out a few wells.
Keelan Adamson: Thank you very much.
Decent long-term activity. And we are seeing a number of these kind of uh 6-month opportunities. Just like the 1. We we just signed that that pop up in places like that. So makes a lot of sense for rigs that either have those longer term contracts available to them or are kind of rolling off. Hot rigs at that time frame. Then it's uh, uh, kind of a win-win between the contractors and The Operators to pick up an operational. Hot rig, that's doing well and punch out a few Wells.
Thank you very much.
Operator: Thank you. Take our final question from Noel Parks with Tuohy Brothers.
Thank you. Take care of our final question from no Parks. What do we Brothers?
Noel Parks: Hi, good morning. I was just thinking about compared with where things stood heading into 2024 when we had such bullishness around prices and hitting new hurdles on the upside for day rates, and where we are now, where you see good visibility to 2026 being hopefully the wrap-up of this slowdown. Sir, with the benefit of hindsight, would you say this sort of slower couple or three quarters is more typical of a service driller business cycle, or would you say it was more kind of like a ripple effect of sort of flow-through from the dislocations of the pandemic? Just curious to your thoughts on that.
Hi, good morning. Um, you know I was just thinking about uh compared with
Uh where things stood heading into 2024. When uh, we had such bullishness uh around prices and hitting new hurdles, um, on the upside for, for day rates and um, where we are now, where you see good visibility to uh, 2026 uh, being hopefully, the the wrap up of this slowdown. Uh, so with the benefit of hindsight would, would you say this this
you know, just sort of slower a couple or 3 quarters
Keelan Adamson: Thanks, Noel. No, I wouldn't characterize it as conventional cyclical activity in our business, I don't think. You have to look at the rates and what was set, and we're nowhere near those rates that we were in the pandemic period or even before then. The rates are very, very solid, albeit a little less than what we saw in the last couple of years, and that's simply because we have a little white space. There are some rigs rolling off. There's opportunity. I think there's been a lot of capital discipline based on volatility in the market space, whether it's related to tariffs or related to OPEC or related to oil production and needs. No, not at all. I think, as a reminder, the deepwater game is a long play. The reserves are big. The investment is large.
Is more typical of, um, of a, a service, you know, driller business cycle, or would you say it was more kind of like a, a ripple effect of sort of, you know, flow through from the, the dislocations of the pandemic. Uh, just curious your thoughts on that.
Yeah, thanks, Noel. I know. I wouldn't characterize it as, as...
Keelan Adamson: The lead times for the work and approval process is quite extensive. I think the projections are all pointing towards our operators, our customers are starting to get back into the FID process. They look at it with a long view on oil price and what the world's demand for hydrocarbons looks like. All of those are positive indicators for continued constructive growth right now. Roddie, do you have anything?
Conventional cyclical activity in our business. I don't think. Um, I mean, you have to look at the rates and what was set and and um, you know, we're we're nowhere near those rates that we were in the, in the pandemic period or or even before then um, the rates are very, very solid, albeit, uh, a little less than what we saw in the last couple of years and that's simply because we have a little white space, there's some rigs rolling off, there's opportunity. Um, I think, I think, since there's been a lot of capital discipline based on volatility in the market space, whether it's related to tariffs or related to OPEC, or related to oil production and needs. So, um, no, not at all. I think, I think as a reminder, the deep water game is a Long play. Uh, the reserves are big. The investment is large, um, and the lead times for for the work and approval, processes is quite extensive. Uh, and so I think, you know, the the projections are all pointing towards.
Thaddeus Vayda: Yeah, I think I would just add to that to say, from the operator's point of view, there is a significant amount of turmoil and shop in the commodity price these days. So it is a relatively simple decision to push out non-critical investments, another quarter, another two quarters, just to wait and see what happens. But the one thing that that does is it kind of adds to that pent-up demand. So it kind of puts you in an interesting spot because you have the possibility of a number of the rigs that have white space ahead of them, particularly if they are a little lower specification, then there is a real chance there that those rigs may be retired.
Um, our operators, our customers are starting to get back into the FID process. They look at it with a long view on oil price and what the world's demand for hydrocarbons looks like, and all of those are positive indicators for continued constructive growth right now.
Riley. Do you have anything? Yeah, I think I just just add to that to see. Um,
Thaddeus Vayda: So I think one of the effects you are going to see is rather than the drilling contractors spending a tremendous amount of money on assets that they are trying to bridge a significant period of time, they are far rather more likely to pull those off the market, retire those rigs, which ultimately is going to help the supply and demand and the balance there when we do get a busier time. But I would say, actually, even looking at the number of tenders that we are answering and we have had our competitors say the same thing, there really is a tremendous amount of potential out there.
you know, from the operator's point of view, there is a significant, uh, you know, amount of, uh, turmoil in shop and and the commodity price these days. Um, so it's a relatively simple decision to, to push out non-critical Investments, you know, another quarter. Another 2 quarters, just the way to see what happens. Um, but the 1 thing that that does is it kind of adds to that pent-up demand. Um, so, uh, it kind of, uh, appreciate an interesting spot because you, you have the possibility of a number of the rigs that have white space ahead of them, particularly at the little lower specification. Then, uh, there's a real chance there that, uh, those rigs may be retired. So I think 1 of the effects, you're you're going to see is, um, rather than, uh, the drilling contractors spending a tremendous amount of money on assets that, uh, they're trying to bridge a significant period of time. They're far, rather, um, more likely to pull those off the market retire. Those rigs, uh, which ultimately is going to help the
Thaddeus Vayda: So again, we reiterate that there is probably a few bargains to be had in the short term, but for long-term work, it makes all the sense in the world that the day rates will be solid going forward. I cannot really see how that would degrade materially. And to Keelan Adamson's point, you.
Stephanie: may have seen a 10%, 15% drop in rates over the last couple of quarters, but already we see some more solid rates that are expected to come out as that 2027 timeframe gets super busy. We expect to see the pickup beginning late 2026, and I think you will see a lot of those tenders answered and announced in late 2025.
Operator: Terrific. Thanks a lot. I am just wondering, with the, we have been seeing these, I do not know if you would call them green shoots of greater exploration activity happening across the industry. You did touch on exploration briefly a bit earlier. I was wondering, with the BP Boomerang find, anything you see as sort of unusual or intriguing about that project? I wondered if, other than the general trend of hopefully exploration picking up, do you see any implications from that success for either industry activity, CapEx levels?
Degrade materially and the keelan's point, um, you know, we may have seen, uh, 10 15%, um, drop in rates over the last couple of quarters, but uh, already, we see some more solid rates are expected to come out. Um, as that 27 time, frame gets super busy expect to see the pickup, beginning late 26. Um, and I think you'll see a lot of those tenders answered and announced, uh, in late, 2 5,
Terrific, thanks a lot. And, um, you know, I just wondering with the um,
Uh, you know, we've been seeing these, uh, I don't know if you call them green, shoots of Greater exploration activity happening across the industry. And, uh, you you did touch on expiration briefly a bit earlier, but I was wondering with, um, the VP Boomerang find, um, anything you see as sort of unusual or intriguing about that, that project and I wondered if if, um, other than the general kind of, hopefully, expiration picking up. Uh, do you see any implications, uh, from that success for either industry activity, capex levels?
Stephanie: Yeah, for sure. If you think about it, just take the Boomerang discovery. It is a big discovery, obviously. BP is saying it is the largest in 25 years. That is a really interesting position that you find Brazil in now. Petrobras is out to tender on several different things, and they have kind of picked up the pace on that. I think that is partially in response to how many opportunities there are with the IOCs. That is a relatively new development in Brazil. We are looking at tenders from Shell at the moment. We are also expecting BP has some additional work that some of it has already been announced, and some will probably come as a result of this latest discovery. As you know, we are currently in the throes of the Búzios tender, and the Miro tender is out now.
Stephanie: I think what is interesting in that is the kind of indications are that there could be maybe one extra rig than originally thought being used for the Búzios tender. Of course, with the Equinor tender that is out just now, that was kind of incremental demand as well. You are kind of seeing these green shoots looking very interesting. To your point about exploration, there is actually a reasonably good increase expected in exploration wells to be drilled in 2026 and 2027, about a 25% increase each year. It appears that as the operators are really shifting their focus back to oil and gas, kind of retooling, if you would, to move into their profitable core business, we are certainly beginning to see those green shoots show up in these kind of prospects.
Yeah, yeah, for sure. And I mean, if you think about just, just take the bomber Discovery. So it's a big Discovery, you know, BP saying it's the largest in 25 years. Um, that's a, you know, um, a really interesting position that you find Brazil in now. So pressure, brass is, you know, is out to Tender, um, on several different things and they've kind of picked up the pace on that. And I think that's partially in response to how many opportunities there are with the ioc's. Um, so that's, it's a relatively new development in Brazil. But, um, you know, we're we're looking at, uh, you know, tenders from Shell at the moment. Um, you know, we're also expecting, um, BP has some additional work that some some of it, uh, is already been announced and some will probably come as a result of this latest Discovery. Um as you know we're uh currently in the throws of the booze tender and the marrow tender is um, I
Now, I think what's interesting in that is the kind of a indications are that there could be, you know, maybe 1 extra rig than originally thought, um, being used for the, uh, Boo's tender and of course, with the Equinox that's out. Just now, that was kind of incremental demand as well, so you're you're kind of seeing these green shoots, um, looking very interesting. There's uh, there there is it to your point about exploration. There is actually, um, a reasonably good
Operator: Yeah. I think exploration activity increasing is great. Success is even more important. Having quite a bit of success recently, BP and some of their exploration activities as are some of our other customers. That only bodes well for absorbing capacity in the market, whether it is in Brazil or Africa or elsewhere around the world. We see it as a big positive.
Increased expected in Exploration Wells to be drilled in 26 and 27 about 25% increase each year. So um it appears that uh as The Operators are really shifting their focus back to oil and gas. Um you know kind of uh retooling if you would to to to move into the profitable Core Business. Um, we're certainly beginning to see those green shoots show up in these kind of uh prospects.
Stephanie: Great. Thanks a lot.
Yeah, and I I think expiration activity, increasing is great success is even more important and um, having having, uh, quite a bit of success recently BP, and some of their exploration activities, as are some of our other customers and, and that only BS, well for absorbing capacity in the market, whether it's in Brazil, or Africa, or elsewhere around the world. And so, yeah, we see it as a big positive.
Great. Thanks a lot.
David Brown: Thank you. This does conclude our question and answer session. I would like to now turn it back to Alison Johnson for any additional or closing remarks.
Thank you. This concludes our question-and-answer session. I would like to now turn it back to Alison Johnson for any additional or closing remarks.
Alison Johnson: Thank you, Stephanie, and thank you, everyone, for your participation on today's call. We look forward to speaking with you again when we report our Q3 2025 results. Have a good day.
Thank you Stephanie and thank you, everyone for your participation on today's call. We look forward to speaking with you. Again when we report our third quarter 2025 results, have a good day,
David Brown: Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect.
Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect.