Q2 2025 Noble Corp PLC Earnings Call
Corporation second quarter 2025 earnings call all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question Press Star one again. Thank you I would now like to turn the call over to Ian Macpherson Vice President of Investor Relations. Please go ahead.
Thank you operator, and welcome everyone to Noble Corporation's second quarter 2045 earnings Conference call you can find a copy of our earnings report along with the supporting statements and schedules on our website at <unk> Dot com.
We will reference an earnings presentation Thats posted on our Investor Relations page of our website as well.
Today's call will feature prepared remarks from our president and CEO, Robert Eifler as well as our CFO Richard Barker. We will also have with us like Denton Senior Vice president of marketing and contracts and Joe <unk> Senior Vice President of operations.
During the course of this call we may make certain forward looking statements regarding various matters related to our business and companies that are not historical facts such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from these forward looking statements and noble does not assume any obligation to us.
During this time, simply press star, followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again, thank you. I would now like to turn the call over to Ian McPherson, vice president of investor relations. Please go ahead.
These statements.
Also note we are referencing non-GAAP financial measures on the call today, you can find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation in our earnings report issued yesterday and filed with the SEC.
Now I'll turn the call over to Robert Eifler, President and CEO of Marvell.
Thanks, Ian and welcome everyone and thank you for joining us as we present our results for the second quarter.
Today, I'll walk through our financial and operational highlights recent commercial wins, our perspective on the market, including our semiannual outlook on regional deepwater demand and wrap up with our fleet strategy.
I'll hand, it over to Richard to cover the financials before I return with some closing remarks and open the line for Q&A.
Starting with Q2, we delivered strong financial results with adjusted EBITDA of $282 million and free cash flow of $107 million over the.
Last two years, our capital return program has been a key element of our strategy.
A firm that commitment this quarter, returning an additional $80 million to shareholders through our <unk> 50 per share quarterly dividend.
Yesterday, our board declared a <unk> 50 per share dividend for the third quarter now eclipsing $1 $1 billion in capital returns since Q4, 2022 through dividends and share repurchases.
On the integration front.
Approaching the one year anniversary of the Diamond acquisition and I'm pleased to report that we've achieved our $100 million synergy target ahead of schedule.
I want to thank the teams across the organization, who have made our integration efforts. So successful at this point the heavy lifting is behind us and our focus now squarely on optimization.
And I am proud to say that we've already reached a point, where we are truly better than the sum of our parts.
Turning to commercial activity or contracting momentum continued this quarter building on the transformative awards that we announced in April we have subsequently secured six new contracts since the last earnings call as detailed in our fleet status report published yesterday.
First on the deepwater front.
Novo Stanley Lafalce was extended by its current customer in the U S. Gulf for five additional wells, adding approximately 14 months and keeping the rig contracted through August 2027.
There is an option for an additional five wells and mutually agreed rates.
Next the Novo Viking received a one well contract with total in Papa New Guinea scheduled to commence in Q4 in direct continuation of its Brunei campaign.
This estimated 47 day program is valued at $34 million, including mobilization demobilization, and MPD usage, but excluding a modest performance bonus.
This will be the first drillship to operate and Papa New Guinea in over 30 years, and the first ever ultra deepwater rig to do so.
We're honored that total has entrusted us with this high impact exploration well, which includes options for three additional wells in the region.
And finally on the deepwater side the noble Globetrotter, one having recently completed its campaign in the U S Gulf.
Secured a two well contract with <unk> in the Black Sea.
This contract is planned to begin in Q4 with estimated duration of approximately four months and a total contract value of approximately $82 million.
Including a day rate of $450000, plus mobilization and demobilization fees.
The rigs unique design provides a distinct advantage for transit into and out of the Black Sea.
As a reminder, this black sea program is there a specific niche market opportunity, but we have otherwise remove the globetrotters from competitive bidding into drilling programs globally.
In addition to these deepwater awards. We also secured several recent contracts in our Jackup fleet that highlight the versatility of our harsh environment rigs and our ability to support both traditional and energy transition projects.
The novel Innovator was awarded a six well contract with BP for the northern endurance partnership carbon capture and storage project in the UK North Sea.
Program is expected to commence in Q3, 2026, and direct continuation of our current contract with BP.
Day rate of $150000 with a minimum firm term AV 387 days plus two optional wells.
Subsequently the noble Intrepid was awarded a two well program with BP for additional northern endurance partnership Ccs Wells also at $150000 per day.
Intrepid contract is scheduled to commence in April 2026 for an estimated duration of 160 days plus options.
We're very proud to support BP with this critical infrastructure project that underpins the uk's carbon storage ambitions.
Lastly, the Novo resilient secured a 92 day accommodation services contract at the Inchcape offshore wind farm in the UK North Sea.
This contract is scheduled to commence within the next few weeks and is valued at approximately $6 $5 million for the firm 92 days term with options to extend.
Year to date, we have now secured new contracts with total contract value of $2 8 billion and our total backlog as of August 5th stands at $6 9 billion.
As a reminder, our backlog position assumes 40% of available performance revenue realized on a combined basis under our recent long term contracts with shell in hotel.
We continue to pursue a number of promising opportunities to build on this recent momentum and look forward to sharing further updates as they materialize.
Before we move to the market outlook I'd like to highlight two key contract startups in southeast Asia, and the Americas that required significant planning and coordination to execute safely and on time.
I want to thank the teams involved for their hard work and bringing these projects online first in the Philippines. The noble Viking commenced a critical three well program for Prime energy in June to extend the life of a key gas field, an important part of the country's broader push for energy security and independence.
Following the recent award with hotel the Viking could remain active through most of the first quarter next year. If options are exercised with a robust pipeline of future opportunities in the region thereafter.
Next in Suriname, the Novo developer recently kicked off an important three well development campaign for Petronas in July.
Returning to a region with a growing pipeline of development activity for this class of rig.
Now onto the market outlook, including our semi annual review of key deepwater geographic markets amid.
Amid significant macro uncertainty and upheaval this year.
Tariffs middle East conflict, and Brent crude prices that have range between the low <unk> in the low $80 per barrel.
The demand characteristics for offshore drilling has stayed comparatively on trend.
While we have seen intensifying pressure on 2025 upstream capex, resulting in incrementally more near term gaps for rigs. We have also seen a crystallization of firming conditions by age to 2026 and into 2027.
On the UW demand side, the global contracted rig count currently stands at 97 rigs, which is roughly flat compared to recent quarters, but down from the recent peak of 105 to 106 during 2023 2024.
We will still probably see a few more idle units over the next few quarters that scheduled rollovers are likely to outstrip visible contract starts and extensions in this near term slack in the market continues to pressure day rates, which are now generally in the low to mid four hundreds per day for tier one drillships.
Geographically the recent deepwater demand trend has been shaped by continuing strength in South America contrasted with softness in West Africa.
However, visibility for a potential rebound in West Africa, it's promising and hopefully drawing near.
Turning first to South America, we're contracted UW demand stands at 43 total units, including 35 rigs in Brazil, five in Guyana, and Suriname and one in Colombia. This.
This is a highly important region for marvell as we have two rigs working in Brazil, and seven out of the eight rigs contracted across Guyana, Suriname in Colombia.
Visibility throughout the region remains highly encouraging starting with Petrobras in Brazil, a strong outlook is supported by recent tenders covering existing development drilling throughout Louisiana marrow and <unk> as well as potential for new frontier exploration activity and the recently licensed falls the Amazonas basin further to the north.
These combined with Shell's recent.
Gateau Damato Ecuador's recent drillship tender very significant recent exploration success from BP announced just this week plus miscellaneous demand from one or more smaller operators collectively all frame a very exciting outlook for Brazil for years ahead elsewhere.
Elsewhere throughout South America, we're tracking potential floater program throughout Suriname, Trinidad, Colombia, Uruguay, and the Falklands with varying probability and timing factors.
Overall, the deepwater market in South America continues to show extraordinary depth and breadth of demand, which should keep the region and growth mode.
U S. Gulf has softened recently with 'twenty, one contracted you DW rigs today down from 22 to 24 rigs last year.
Pending on how the spot market plays out we may see activity dropped slightly further in the back of this year.
Although current indications from customers suggest that the rig count could normalize back toward around 'twenty, you DW rigs next year.
That said demand on the U S Gulf tends to be a bit more dictated by spot market drivers and a sensitive in that regard to commodity prices as well.
Our primary marketing priority in the Gulf is it novel Black Rhino, which will finish its current contract in the next month or so.
We are constructive on the rigs long term outlook in 2026 based on direct conversations we are having with clients, but we would not be surprised to see the Reagan counter some near term white space in the meantime.
Next on to West Africa, where current UW demand as 12 rigs similar to recent quarters, but materially below the 17% to 20 range that prevailed throughout 2023, and the first half of 2024.
And Golar remains steady at six rigs on the maybe on Nigeria had declined to just one and zero rigs respectively, representing a combined decrease of six rigs compared to last year.
Although current indications from customers suggest that the rig count could normalize back toward around 20, UW rigs next year.
The good news is that visibility for resumed growth in the region is increasingly tangible.
West Africa in Mozambique comprised only 12% of total deepwater rig count today the regions corresponding share of open demand is two times that level at over 25%.
Several prominent IOC tenders appear to be progressing towards the contract awards with 26 and 27 start dates.
These anticipated fixtures should be supportive of a ubw rig count back towards the mid to high teens or conceivably higher if and when maybe eventually regains momentum.
Namibia from now does not factor is permanently in the near term open demand picture as other areas like Nigeria, Ghana, Cote d'ivoire and Mozambique.
But it should ultimately progress back toward a more consistent multi rig basin in the fullness of time.
The good news is that visibility for resume growth in the region is increasingly tangible.
Additionally, we are seeing potential incremental exploration activity and adjacent south African blocks, which could materialize as early as 2026.
The Mediterranean and Black Sea have remained steady with eight to nine new DW rigs. However, the big positive surprise in this region recently has been Turkish Petroleum's acquisition of two more drillships from sideline capacity, which will increase their captive fleet from 4% to six drillships and add two more units of long term captive demand.
These anticipated fixtures should be supportive of a udw rig count, back toward the mid to high teens or conceivably higher. If and when Namibia eventually regains momentum,
In the region of.
Of in demand throughout the med appears otherwise supportive of stable activity levels, excluding the oscillations in the black sea and the structurally upsized demand from Turkey.
Namibia from Now, does not Factor as prominently in the near-term, open demand picture as other areas. Like, Nigeria, Ghana kitava, and mosm Beek.
Asia Pacific plus India has remained muted and is now down to four <unk> units compared to five earlier this year and 7% to eight rigs last year. Despite.
But it should ultimately progress back toward a more consistent multi-. Rig Basin in the fullness of time.
Despite the recent decline open demand for multiple rigs across India, Southeast Asia, and Australia suggests a modest upward bias in activity over the next one to two years.
Additionally, we are seeing potential incremental, expiration activity in adjacent, South African blocks, which could materialize as early as 2026.
Although some of the incremental rig needs are likely to be satisfied by lower spec equipment.
Lastly, the harsh environment in North Sea and Norway market. Currently represents six units of UW demand and 19 units of total floater demand, including mid water both of which are down by one rig compared to earlier this year.
The Mediterranean and Black Sea, have remained steady with 8, to 9 udw rigs. However, the big positive surprise in this region, recently has been Turkish, petroleum's, acquisition of 2, more drill ships. From sideline capacity, which will increase their captive. Fleet from 4 to 6, drill ships, and add 2 more units of long-term captive demand in the region.
Two of our North Sea semis, the great white in the endeavor of rolled off contract recently with no visible work opportunities for the balance of this year.
open demand throughout the med appears, otherwise supportive of stable activity levels, excluding the oscillations in the Black Sea and the structurally upsized demand from Turkey,
Upstream customer consolidation policy and fiscal headwinds continue to suppress spending and there has also been some incremental deferral of P&A and intervention programs since earlier this year.
Asia-pacific plus India has remained muted and is now down to 4 udw units, compared to 5 earlier this year and 7 to 8 rigs last year.
That said most of the North Sea and Norway Floater fleet is copyist contracted into 2027 and beyond Moreover.
Despite the recent decline open demand for multiple rigs across India southeast Asia, and Australia suggests a modest upward bias in activity over the next 1 to 2 years.
Although some of the incremental rigs are likely to be satisfied by lower spec equipment.
Moreover, there is potential for one harsh semi requirement in Canada, which is currently inactive market.
So tying all this together although the next several quarters continue to be characterized by a variety of pluses and minuses on the demand side, which appear to shake out to a roughly flat market.
Here.
We continue to believe that the bottoms up view supports promising upside by late 2026 or 2027.
2 of our North Sea semis. The Great White and the Endeavor have rolled off contract recently with no visible work opportunities for the balance of this year.
Including a very credible path back toward a contracted UW rig count of around 105.
Assuming reasonably stable macro conditions.
Upstream customer consolidation policy and fiscal headwinds continue to suppress spending. And there has also been some incremental, deferral of PNA and intervention programs since earlier this year.
As we have seen over the past 12 months to 18 months timing risk really continues to be the key wildcard as many <unk> in rig awards have been drifting to the right.
That said most of the North Sea and Norway. Floater Fleet is copiously contracted into 20227 and Beyond
Hence our focus on judiciously, managing our costs and active fleet posture based on current market realities.
Moreover, there is potential for 1 harsh. Semi requirement in Canada which is currently an inactive Market.
Now I'll comment briefly on our contract position and objectives.
We've made very good headway towards contracting our <unk> high end Drillships were now principally focused on the black Rhino Viking and Jerry to Souza as key remaining priorities all three of which have very robust opportunities under discussion with customers for programs commencing in 2026.
So tying all this together, although the next several quarters continue to be characterized by a variety of pluses and minuses on the demand side which appear to shake out to a roughly flat Market.
We continue to believe that the bottoms up view supports promising upside by late 2026 or 2027.
Including a very credible path. Back toward a contracted udw, rig count of around 105.
Moving down the fleet with the decision to dispose of the Globetrotter II. The globetrotter one still remains in consideration for several multiyear well intervention scopes, which could potentially follow the rigs black sea drilling program.
Assuming reasonably stable, macro conditions.
as we have seen over the past 12 to 18 months, timing risk really continues to be the key wild card as many fids and rig Awards, have been drifting to the right
None of these intervention opportunities comes to fruition, then we will likely move to dispose the globetrotter one as well.
Hence, our focus on judiciously managing, our costs and active Fleet posture based on current market realities.
Four of our eight semi submersibles are well contracted next year.
Now, I'll comment briefly on our contract position in objectives.
While the deliver great White endeavor are currently idle and apex Rolling next month.
We're pursuing active leads for all four of these units around the world with expected starts bearing throughout 2026 and 2027 and.
And each is subject to individual's stacking plans over the interim term.
We've made very good Headway toward Contracting, our 15 High drill ships. We are now principally focused on the black. Rhino Viking and Jerry duza. As key remaining priorities, all 3 of which have very robust opportunities under discussion with customers for programs commencing in 2026.
We will continue to carefully evaluate stacking costs vis a vis the opportunity set, especially with the older rigs.
Now on the Jackups.
And our harsh environment Northern Europe market current demand is 28 Jackups. This demand level has fallen off by about three rigs compared to last year and forward visibility for 2026 continues to be clouded by fiscal and regulatory headwinds.
Moving down the fleet with a decision to dispose of the globe Trotter 2. The Globe Trotter 1 Still Remains in consideration for several multi-year. Well, intervention, Scopes, which could potentially follow the rig's Black Sea, drilling program.
If none of these intervention opportunities comes to fruition, then we will likely move to dispose the globe Trotter 1 as well.
We are happy with several of our recent contract wins, including additional Ccs and wind farm construction support activity in the U K.
4 of our 8 Semoran.
In addition to expanding our customer book in Norway with the Intrepid DNO contract.
We're pursuing active leads for All 4 of these units around the world, with expected starts, varying throughout 2026 and 2027.
Overall, however, we expect muted market conditions throughout the region to linger until policy driven impediments are removed, particularly in the U K.
And each is subject to individual stacking plans over the interim term.
That said, our Jackup earnings contribution is disproportionately weighted to our well contracted units.
We'll continue to carefully evaluate, stacking costs, Visa Visa opportunity, set, especially with older rigs.
now, on to Jack UPS,
And we do not anticipate material earnings erosion from the overall Jackup fleet segment compared to current levels.
Wrapping up on the supply side, we have recently closed the disposals of the cold stacked drillships specifics through Alco and melt them.
In our harsh environment. In northern Europe Market, current demand is 28 Jack UPS. This demand level has fallen off by about 3 rigs compared to last year, in forward visibility for 2026 continues to be clouded by fiscal and Regulatory headwinds
We're moving those units from the drilling market.
We are now moving forward with the disposal of the noble Globetrotter. Two in addition to the Jackup noble Highlander for which we have entered into a definitive agreement to sell for $65 million and the Jackup noble richer, which is also now held for sale.
We are happy with several of our recent contract wins including additional ccs and wind farm construction support activity in the UK.
In addition to expanding our customer book, in Norway with the intrepid's dno contract.
For additional context, the richer as the lowest capability jackup and not fleet, having worked exclusively in a combination mode for the past few years and the rig would require meaningful capital to be drilling ready again.
Overall, however, we expect muted market conditions throughout the region, to linger until policy driven impediments are removed, particularly in the UK.
That said our jacked up earnings contribution is disproportionately weighted to our well, contracted units.
These actions reflect our continued focus on maintaining a high spec competitive fleet and managing our costs and active capacity as judiciously as possible in order to maximize cash flow for our shareholders.
And we do not anticipate material earnings, erosion from the overall jacked up Fleet segment compared to current levels.
Wrapping up on the supply side, we have recently closed the disposal of the cold stack, drill ships Pacific throughout Co in Milton permanently removing those units from the drilling Market.
To underscore this point while.
While we don't know with exact precision our best estimate is that the current combined run rate costs for Idaho Flash sacking time across the largest drilling contractors is likely approaching $800 million to $1 billion on an annualized basis.
We are now moving forward with the disposal of the noble Globe, Charter 2, in addition to the jack up Noble, Highlander for which we have entered into a definitive agreement to sell for 65 million and the jack up Noble Reacher, which is also now held for sale.
By these estimates idle costs for floaters alone represent a surcharge of around 30% to $35000 per day on average across every one of the working floater rigs in the global fleet.
For additional context. The reacher is the lowest capability jack up in our Fleet having worked exclusively in accommodation mode for the past few years and the rig would require meaningful Capital to be drilling ready again.
With our focus on cash flow maximization, and returning capital to shareholders, we're taking aggressive action to reduce <unk> exposure to this surplus cost burden.
In other words, our recent and pending capacity rationalizations are instantly accretive as these units have not contributed positive economics in recent years.
These actions, reflect our continued, focus on maintaining a high-spec competitive Fleet, and managing our costs and active capacity as judiciously as possible. In order to maximize cash flow for our shareholders.
And as we look ahead to a near term flat market with promising upside optionality in the years ahead.
We are optimally positioning the fleet for either a flat market or growth market with effectively no relevant earnings attrition.
On an annualized basis.
With that I'll pause here and turn it over to Richard now to discuss the financials.
Good morning, or good afternoon.
In my prepared remarks today I will review our second quarter results provide a brief update on our integration progress and then discuss our outlook for the remainder of the year as well as some high level perspectives around 2020.
By these estimates Idol costs for floaters alone. Represent a surcharge of around 30 to 35,000 per day on average across every 1 of The Working floater rigs in the global Fleet.
With our focus on cash flow, maximization and returning Capital to shareholders. We are taking aggressive action to reduce Noble's exposure. To this Surplus cost burden.
Starting with our quarterly results contract drilling services revenue for the second quarter totaled $812 million adjusted EBITDA.
$282 million and adjusted EBITDA margin was 33%.
In other words, our recent impending capacity, rationalization are instantly. Accretive as these units have not contributed positive economics in recent years.
As expected Q2 revenue and adjusted EBITDA was sequentially lower primarily due to planned out of service time for the noble Sam Croft, Sps and rigs rolling off contract during the quarter into a softer spot market.
And as we look ahead to a near-term flat Market with promising, upside optionality, in the years ahead.
We are optimally positioning the fleet for either a flat Market or growth Market with effectively, no relevant, earnings attrition.
Q2 cash flow from operations with $216 million net capital expenditures were $110 million and free cash flow was $107 million.
With that, I'll pause here and turn it over to Richard. Now, to discuss the financials
Included in the Q2 free cash flow is approximately $16 million from the closing of the spoke yourself.
The Melton sale closed in early Q3 with the cash proceeds of approximately 25 million.
good morning or good afternoon. All in my prepared remarks today, I will review our second quarter results. Provide a brief update on our integration program and then discuss our outlook for the remainder of the year, as well as some high-level perspectives around 2026.
As summarized on page five of the earnings presentation slides, our total backlog as of August a bit stands at $6 9 billion, which includes $1 1 billion scheduled for revenue conversion for the remainder of the year with $2 3 billion and $1 6 billion scheduled for conversion in 2026 and 2027, respectively.
Starting with that quarterly results contract drilling Services revenue. For the second quarter totaled, 812 million adjusted debit, car was 282 million and adjusted debit, our margin was 33%.
As a reminder, these figures exclude reimbursable revenue and revenue from ancillary services.
As expected, Q2 Revenue adjusted. Abidar was sequentially, lower primarily due to planned out of service time for the noble, Sam, cross SPS and Riggs rolling off contract during the quarter into a softer spot Market.
We're very pleased with the progress of the Diamond integration and have now achieved our stated synergy cost target of a 100 million.
Q2 cash flow from operations was $216 million. Net capital expenditures were $110 million in free cash flow, resulting in a total of $107 million.
Like to Echo Robert earlier comments and thank our employees for their great work in achieving this milestone ahead of schedule.
Included in the Q2 free cash flow is approximately 16 million from the closing of this QR code sale.
On fleet management, the moves outlined by Rob, but around the globe to the Highlander and highlights our commitment to managing the business to maximize cash flow.
The Melton sale closed in early, Q3 for the cash proceeds of approximately 25 million.
While these decisions are not taken lightly we can no longer justify keeping the rig fleet when weighing the ongoing stacking costs and reactivation capital against the opportunities that.
Referring to page 10 of the earnings slides, we're updating our full year 2025 guidance as follows.
Total revenue was lowered to a range of $3 2 billion to $3 3 billion.
This update aligns with our commentary on the prior call around trending to the lower end of the initial range as we see white space in the second half of the year.
We're very pleased with the progress of the diamond integration and have now achieved our stated Synergy cost Target of 100 million.
Specifically on rates, we previously thought with some option exercises that did not materialize.
I'd like to Echo Robert's earlier comments and thank our employees, for the great work in achieving this Milestone ahead of schedule.
Second the guidance range for adjusted EBITDA narrowed to the upper end of the previous range now standing at one <unk> seven 5 billion to $1 one five.
On Fleet Management, the moves outlined by Robert around the globe, quarter 2, the Highlander, and the reacher highlight our commitment to managing the business to maximize cash flow.
This is driven by decent first half result, and strong cost management across the business.
The lower half of this revised range is effectively fully contracted based on year to date results and remaining 2025 backhaul.
While these decisions are not taken lightly, we can no longer justify keeping these rigs in athlete when weighing the ongoing stacking costs and reactivation Capital against the opportunity set
Referring to page 10 of the earnings slides. We're updating our full year 2025 guidance as follows.
Third we are increasing capital expenditure, excluding customer reimbursements to a range of $400 million to $450 million.
First total revenue is lower to a range of 3.2 billion to 3.3 billion.
The increase reflects capital tied to the recent long term awards.
The available Capex for 2025 is expected to total approximately $25 million $10 million incurred in the first half.
This update aligns with our commentary on the prior, call around trending to the lower end of the initial range, as we see white space persist in the second half of the Year, specifically on rigs. We previously thought would see option exercises that did not materialize.
Looking towards 2026, we currently would expect 2026 Catholic expenditures to be in the ballpark of around $450 million, which includes the capital required for the recent long term awards.
Second.
As we look ahead, we anticipate adjusted EBITDA to decline sequentially in Q3, primarily due to contract rollovers and planned downtime because the noble Ventura.
The guidance range for adjusted eidar is now to the upper end of the previous range. Now, standing at 1.075 billion to 1.15 billion. This is driven by decent first half, results, and strong cost management across the business.
These impacts will be partially offset by the noble development contract startup into an app on the noble Sam Croft.
The lower half of this revised range is effectively fully contracted based on year-to-date results and remaining 2025 backlog.
Holding her Q2.
If we zoom out and bring 2026 interview, we remain constructive on the long term market. Despite white space that is expected to persist well into 2020.
Third, we are increasing, Capital expenditures, excluding customer reimbursements, who arranged a 400 to 450 million.
The increase reflects Capital, tied to the recent long-term Awards.
Given this we expect quarterly EBITDA to trend lower over the next four quarters relative to the first half of 2025.
Revvable capex for 2025 is expected to Total approximately 25 million with 10 million incurred in the first half.
But expect the material rebound starting in the second half of 2026.
By the start up of new long term contracts in parallel with rising deepwater demand levels.
Looking to 2026. We currently would expect 2026 Catholic expenditures to be in the ballpark of around 450 million, which includes the capital acquired for the recent long-term Awards.
In the meantime, we are taking a disciplined approach to managing our business that is calibrated to the realities of a neighbor to flattish demand environment.
As we look ahead, we anticipate adjusted every data to decline sequentially in Q3 primarily due to contract rollovers and plan, downtime for the noble venture.
With that I'll hand, it back to Robert for closing remarks.
Thank you Richard.
To reiterate we're seeing signs that the deepwater market could firm up nicely by the second half of 2026 or 2027, but in the meantime, we are managing the business from a cost and cash flow disciplined perspective for the flatter market presently at hand.
These impacts will be, partially offset by the noble developer contract. Startup in Suriname and the noble Soundcraft working following her due to SPS.
Well, into 2026.
We remain committed to and confident in our staple dividend thus.
Given this, we expect quarterly EBITDA to trend lower over the next four quarters relative to the first half of 2025.
Thus shareholders and noble has the unique benefit of being paid to wait for the next leg up in the cycle.
While late 2026 is still a ways out and with perennial macro uncertainties and volatility continuing to shape upstream spending.
But expect a material rebound. Starting in the second, half of 2026 supported by the startup of new long-term contracts in parallel with Rising, deported demand levels.
Current backlog coupled with the active dialogue, we're having with customers on a global basis gives us confidence and soon substantially derisking and annualized free cash flow run rate of $400 million to $500 million by the second half of next year, even in a scenario where current trough levels of demand.
In the meantime, we are taking a disciplined approach to managing our business that is calibrated to the realities of a near-term flat demand environment.
With that, I'll hand it back to Robert for closing remarks.
Thank you, Richard.
Reiterate, we're seeing signs of the Deep Water Market could firm up nicely by the second half of 2026 or 2027.
Linger past 2026.
Today, we are keenly focused on securing the very small handful of key remaining contracts that would be necessary to complete that picture, while continuing to deliver the service integrity and value every single day that our customers expect and require from noble.
But in the meantime, we are managing the business from a cost and cash flow discipline perspective, for the flatter Market presently at hand.
We remain committed to in confident in a stable dividend.
Thus, shareholders and Noble have the unique benefits of being paid to wait for the next leg up in the cycle.
With that operator, we're now ready to go to questions.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Erin <unk> with J P. Morgan. Your line is now open.
While late 2026 is still a ways out and with perennial macro, uncertainties and volatility continuing to shape Upstream spending our current backlog, coupled with the active dialogue. We're having with customers on a global basis gives us confidence. In soon. Substantially de-risking an annualized free cash flow. Run rate of 400 to 500 million dollars by the second half of next year, even in a scenario where current trough levels.
Of demand linger past 2026.
Yeah. Good morning, gentlemen, I was wondering if we could unpack a little bit about around the guidance update.
You're lowering your topline guidance by about 3%.
But tweaking.
Your EBITDA guide by about 1%.
Today we are keenly focused on securing, the very small, handful of key remaining contracts, that would be necessary to complete that picture. While continuing to deliver the service integrity and value every single day, that our customers expect and require from Noble.
So maybe you could just help us unpack kind of the moving pieces there.
With that operator, we're now ready to go to questions.
I think I'll move on.
I think we.
<unk> designs.
Revenue base.
At this time, I would like to remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad will pause for just a moment to compile the Q&A roster.
Yes.
Unfortunately not.
A couple of months.
No.
The vision.
Your first question comes from the line of Aaron jaram with JP Morgan. Your line is open.
So.
There's one.
Thank you.
Thank you.
Kaufman.
Most of the board.
You.
You may begin.
Yeah, good morning gentlemen. I was wondering if we could unpack a little bit about around the guidance update. You're you're lowering your your Topline guidance by about 3%.
Yes.
All right.
Got it got it so cost management the driver of that got it got it okay, great and then maybe for Robert you highlighted the.
But uh tweaking a higher your your ebit dog guide by about 1%. Uh so so maybe you could just help us unpack kind of the moving pieces of their
The organization's focus from a marketing perspective on the black Rhino Viking and Jerry to Suez.
so I think on the last conference call, um, I think we we
Obviously, the outlook, which is kind of consistent with your peers is for.
But a broader set of opportunities kind of emerging later in 'twenty six 'twenty seven so talk to us about kind of your strategy around those those three rigs because that can be a decent swing factor as we think about your your earnings power next year.
Yes sure.
That's right.
Softly Guide to the low end of Revenue range. Um, and um, you know, I think unfortunately we've had a couple of options or specific options oversight doesn't happen through this year. Um, it's mainly that talks why they the, the top line is down. I think on some of the data perspective, um, I need to strong customer management, the, the cross the board. I think this is coming through. So I think, I think that is connected with, which is why the top point a little bit. And it's a bit when the, the website
The three I mentioned.
Paired remarks.
We think we can get run rate.
Having.
<unk> re contracted is that is the key part of that.
What I would say is we have very strong one conversation behind all three of those rigs.
And I think that that is in <unk>.
We've had perhaps slightly more muted.
On the outlook on the market outlook.
We do see that.
<unk> projects going through definitively and we are extremely encouraged by the level of conversations we're having around bigger projects in.
Got it got it so cost management the driver of that got it got it. Okay great and and then maybe for Robert you you highlighted you know the organization's Focus from marketing perspective on the black, rhino Viking and and Jerry duza. You know, obviously the Outlook which is kind of consistent with what your peers is for a a broader set of opportunities, kind of emerging, you know, later in 26 and 27. So talk to us about kind of your strategy around those those 3 rigs cuz that that can be a decent swing Factor as we think about, you know, your your earnings power next year.
In search of the higher quality rigs. So I think what we've seen is the question that I think what we've seen here, especially in the last three months.
Is a little bit of.
Sure.
Disappointing level of demand at the lower end spectrum of rigs globally.
Yeah, sure. And and that's right. We're highly focused on those 3. Uh, I mentioned at the end of my prepared remarks uh where we think we can get run rate, um, and you know, having probably 2 of those 3 Contracting. Is that it's a key part of that. Um,
With very little change on demand for the higher end rigs.
What I would say is we have a very strong line of conversations behind all three of those rigs.
Great. Thanks, a lot gentlemen.
Thanks Helane.
Your next question comes from the line of Fredrik Stene with Clarksons Securities. Your line is open.
Hey, Robert and team I Hope you are having a nice they so far.
Alright.
Wanted to.
Touch a bit first a bit more specifically.
On Brazil.
so I think what we've seen question, but I think what we've seen here, especially over the last 3 months,
Clearly you have as you said in your prepared remarks.
Quite.
These exposure to South America in general.
Right now there are several several or tenders that are going on down in Brazil, Bcl's Mero, two pay et cetera.
Is a little bit of, um, of a, a disappointing level demand at the lower end spectrum of rigs globally. Uh, but with very little change, uh, on demand for the higher end rigs,
Great. Thanks. A lot gentlemen.
Thank you.
I think one rig rolling off in late 2006, one in early 2027.
How do you think about the re contracting opportunities for those units.
Your next question comes from the line of Frederick Stein with Clarkson. Security's, your line is open.
And in particular the.
Are you planning to keeping them down in Brazil.
Hey, Robert and team. Hope you are having a nice day so far.
Yes.
We think about the deal is.
At worst flat and more likely probably.
So I uh wanted to um to touch a bit first, a bit more specifically uh on uh on on Brazil. Um, clearly you know you you have basic said, in your prepared remarks
Or two on re demand.
Obviously with 30 of the 35 rigs in country Petrobras will be the ones who are determined that.
Been there.
From them is positive.
Uh, quite these exposure to South American in general. But right now, there are several, um, several or standards that are going on, uh, down in Brazil, busy osmo 2p, Etc.
Got the videos tender right now and there arent a lot of moving parts.
They firmed up a handful of rigs already but the way they kind of shape that we're in.
We move forward from there very important and it's just a little bit too early to speak to him.
You guys have I think 1 Rigg rolling off in late 26 1 in early 2027? Um, how do you think about the the recontracting opportunities for, for those units, uh, in, in, in particular? And uh, are you planning to to keeping them down in, in, in Brazil?
Kind of I guess, a factual opinion on where they go but.
yeah, so I think we think about Brazil as um,
We're we're planning for.
Petrobras to effectively be flat on rig count.
At worst flat and more likely, uh, probably up a rig or 2 on rig demand.
At a time and then with some small side as I mentioned outside of Petrobras in Brazil.
We're pretty and then obviously further north.
There is an immense amount of activity in the core region for us.
So we think South America right now is certainly a bright spot in the on the demand side.
Okay I'm sorry.
Augustly with 30 of the 35 Briggs in country Petra, brass will be the the 1 who determines that, uh, then there. I think, you know, the narrative from them is positive, you've got the videos Tinder right now. Um and there are a lot of moving Parts uh they they they firmed up a handful of groups already uh but uh the the way they
Helpful and then turning to <unk>.
Supply.
Three rigs announced today that you're.
Holding for sale, one being in the definitive agreement already and the two others.
Maybe you said it in the prepared remarks, but are those targeted to be.
Tired from the drilling fleet or are you potentially selling too.
Courts competitors or niche markets, where you don't have any presence I'm, not saying that bumped it up.
You also talked about.
Right the senior fleet now, having both individuals talking pounds etcetera there is.
Kind of shape that Tinder and then move forward from there is very important and it's just a little bit too early. I think to have uh, um, of of, of kind of the I guess of of factual opinion on on where they go. But uh, we're we're planning for um, patrol brass to effectively be flat on recount uh through time. And then, with some some upside, as we mentioned uh outside of potential brass in Brazil. So we're we're pretty. And then obviously if if further north um there's an an immense amount of activity at the core region for us. And uh so we think South America right now is is certainly a bright spot in the on the demand side.
If there's a prolonged downtime, but if you don't find opportunities for some of those rigs can you identify potential further.
Okay, I think that’s very helpful. Um, and then turning to Supply, uh, you have 3 rigs announced today that your...
Further retirement candidates also beyond the Gulf Coast.
As you mentioned.
Thanks.
Yes.
Holding for sale, uh, one being, you know, in the definitive agreement already. Um, the two others, uh,
So the Highlander well go to a drilling project.
In.
We don't have a conclusion on the reach or the GT two but we would not anticipate those are sold.
I, uh, maybe you, you said it in the prepared remarks, but are those targeted to be uh, you know, retired from the the drilling Fleet or are you? You potentially selling to
We're drilling purposes. So we would anticipate that the regional or the Globetrotter then we would be competing against those later with the Highlander well.
We will go to drilling.
I would reiterate on the second part of your question.
What we've done already.
With the melt amendments.
<unk>.
We mentioned that the globetrotter as those are effectively.
You know, called competitors or Niche markets, where you don't have any presence. And and as an add on to that um you also talked about you know rigs in your Fleet now having called individuals stacking pounds, Etc. If there's uh if there's uh prolonged uh downtime, but if you don't find opportunities for for some of those rigs, can you identify potential further? Uh, further retirement candidates also beyond the Glo 1 as you mentioned,
Competing for intervention work with the sole exception of one or two places in the world that really lead the growth on our capabilities for drilling new lines of IC.
Thanks.
Yeah, um, so the Highlander will go to a drilling project.
And then <unk>.
Rational on the Jackup side as well.
We're just big believers that.
The option value of hoping for a better.
Better market.
It is more expensive than it has been in times past.
Um, and uh, we we don't have the conclusion on the reacher or the GT2, but we would not anticipate that those are sold, um, for for drilling purposes. So we would not anticipate that, the reason why we will try to that, we would be competing against those later. With the Highlander will, will go to Drilling,
um,
And we've said for years that we're running this company to generate cash.
I I would reiterate on on the second part of your question. Um,
In our fleet rationalization.
Policy has been has been really in keeping with that.
So well.
Wells could be out there we mentioned the GT one.
But I see from there.
We've done.
What we've done already uh with the meltin and the soroko. Um and then we mentioned that with the Globe Trotters. Those are effectively um competing for intervention work with the the sole exception of of 1 or 2 places in the world that really need the glove counter capabilities for drilling like the Black Sea.
Well, what we think we need to do.
Obviously, we can be.
We will continue to be rational.
um, and then and then I think being rational on the jacked up side as well, um, we're we're just big Believers that,
And we will continue to look forward and what we see and the others.
Specific opportunities.
So we're getting ready.
Value of hoping for a better uh, a better Market, uh, at present, is more expensive than it has been at times past.
We made decisions and we continue to be rational.
As we move forward.
Alright. Thank you so much I'll leave it there thanks.
Sure.
Thank you.
Um and we've said for years that we're running uh this company to generate cash uh in our Fleet rationalization. Uh uh policy has been has been really in keeping with that.
Your next question comes from the line of Eddie Kim with Barclays. Your line is open.
So, uh, what else could be out? There we mentioned the GT1.
Hi, Good morning, So you provided a very constructive medium term outlook and you walk through the regions, but indicated some near term softness here, we've seen leading edge day rates on recent military contract.
Uh, but I think from there, uh, I think we've done.
In the low 400 <unk>.
Curious on your expectation on.
What what we think we need to do. Um obviously we can be um we'll continue to be rational uh and we'll continue to look forward and what we see and the offer.
That pricing could go.
Coming contract later this year do you think the rates kind of hold firm here in the low four hundreds or or could they.
Specific opportunity Set, uh, for a given rig, uh, and make decisions and continue to be rational um, as as we move forward.
Even see a downtick.
All right.
Thank you so much.
We're just just given that the near term softness we're seeing right now just curious.
Have a good day.
Curious on your thoughts there.
You too.
Yes.
Yes.
Thanks, Andy I think low to mid four hundreds like you said.
Your next question comes from the line of Eddie Kim with Barclays. Your line is open.
There has to my knowledge there hasn't been a single example of a <unk> tier one rig.
Below that range.
Our outlook is that there should be some incremental rig.
A brief demand by late 2006.
Hopefully.
And.
I can't imagine someone.
Dropping rates with that outlook.
And do you think you have because you've got a little bit on the timing.
There are a.
Hi, good morning. Um, so you provided a very constructive medium-term Outlook, Inn in your walk through the regions, but, but indicated some near-term, uh, softness here. We've seen Leading Edge data rates on on recent multi contracts, uh, in the low 400s, just curious on your expectation on on, uh, where that pricing could go for for upcoming contracts later this year. Uh, do you think rates kind of hold firm here in the low 400s? Or or could they um even see a downtick lower? Just just given the the near-term softness. Uh, we're seeing right now just uh, Curious on your software.
A number of big projects coming on in late 2007, with probably a drop in demand in the interim.
People like to talk about gap filler work that kind of stuff.
I think you can have some some lower rates, but I think I don't I don't think Thats representative.
I think, uh, uh, thanks Eddie, I think, you know, REITs are loaded with 400. Like you said, uh, they're, they're having to my knowledge there hasn't been a single example, of a 2 B. Op, you know, Tier 1 rig, uh, below that range. Um,
Of the broadband market.
Our view with you.
This is pull in late 'twenty six 'twenty seven.
Earnings potential.
Got it.
Helpful color. Thank you my follow up is somewhat related I think you said in prepared remarks.
You know, our Outlook is that there should be some incremental rig, uh, uh, rigged Demand by by late 26. Um, hopefully. Um, and you know, I, I can't imagine someone
There's a very credible path back to EDW rig count.
Up to 105, I think towards the back half of next year, assuming stable macro conditions.
Fair to say.
There is also a very credible path back to leading edge day rates sort of in that mid to high four hundreds a level on contract announcements, we might see in the back half of next year.
It's a great question I wish I knew the answer.
I think.
Dropping rates with that Outlook. Uh, but but who knows? I, I do think you have because of the, you've got a little bit of a funny Dynamic where there's a number of big projects coming on in late 26 and 27 with uh, probably a drop in demand in the interim. So, you know, people like to talk about Gap filler. Weren't that kind of stuff, who knows. I think you could have some, some lower rates but I think I don't I don't think that's representative of uh of a broader Market. Um of view if you if you if you pull in late 26 and 27 um uh earnings potential.
But the way I think the way we view it as that.
We're in a little bit of lull that's been created by a lot of macro noise right now so you want to.
I would make the claim that if were now just just below 100 working rigs on the floater side.
Got it? That's that's very helpful caller. Thank you. Uh, my follow-up is is, is somewhat related. I think you said in prepared remarks, that there's a very credible path, uh, back to udw, rig count, uh, back up to 105. I think towards the back half of next year, assuming stable, macro condition,
At this time.
And that perhaps.
Just take the Brent curve that perhaps kind of the normalized.
Demand level with current Brent curve, which should be 100 to 105 that kind of range.
Fair to say that there is also a very credible path back to leading edge day rates, sort of in the mid to high $400s level on contract announcements. We might see this in the back half of next year.
Some of the projects and I think see a path to the higher end of that range.
So yes, I think that is at a minimum stabilization in there is absolutely a path.
A great question. I wish I knew the answer. Um, I think, uh,
look, I the way I, I think the way we view it, is that
Yes.
Ticked back up from here.
We're going to have to wait and see what happens in the interim you can you can map now relatively.
Large slice of the demand through big projects.
We're we're in a little bit of a lull that's been created by a lot of macro noise right now. So if you want to, if you want to, I would make the claim that if we're. We're now just just below 100 working rigs on the floater side. We need W side.
But there is always just enough other out there.
They make these things pretty pretty hard to predict.
That perhaps with just take the Bren curve that perhaps comes in normalized.
As I mentioned it earlier on around the lower spend.
The demand lower spec assets, but in my opinion is the other that's created softer market here.
Uh, demand level with current rent curve which should be 100 to 105 that kind of range. Um and we've kind of counted up projects and I think see a path to the higher end of that range.
<unk>.
I think in anticipating so it's a little early for these predictions.
We're certainly hopeful here that we get back to a much more normalized level.
Um, so yes, I think that is at a minimum of the stabilization and, uh, and there is absolutely a path where rates, um, kick back up from here.
um,
But by the end of next year.
And then I guess I would add on the path that we kind of made in the prepared remarks.
We just feel very strongly that with R. R.
Our current contracts that and then pretty limited.
um, large slice of the demand through big projects
Need for additional contracts.
And then we can set ourselves up for some pretty meaningful cash flow. We mentioned 100 to 500 in the prepared remarks with effectively a flat market from here.
But there is always just enough other out there. Uh, that makes makes these things pretty pretty hard to predict, and I kind of mentioned it earlier on around the lower spent
Even maybe day rates down on a small tick but effectively.
What we see now is the new reality, we still think that we can generate meaningful cash flow for our for our investors and we've given a lot of that out for <unk>.
Cause for optimism that we would actually be up.
The, the demand required in lower assets, but in, in my opinion, it's the other that's created a software Market here, uh, recently, um, and I think anyone was anticipating, so it's, it's a little early for these predictions, but, uh, we're certainly hopeful here that we get back to a much more normalized level, uh, uh, by by the end of next year.
So.
Got it great.
Thank you I'll turn it back.
Your next question comes from the line of Greg Lewis with <unk> your.
Your line is now open.
Yes, Thank you and thanks for taking my questions.
I feel like I ask this.
Once a year, but could you kind of remind us.
The timing of the.
Probably the Exxon rig resets and maybe how we should be thinking about that I believe it's in October how we.
Should be thinking about that versus say, where it was when it was first set I guess a few months ago.
Um, and then I, I guess I would add on the thought that we kind of made in the prepared remarks, but we just feel very strongly that with, our Fleet, our current contract set and then a pretty limited need for additional contracts. That that in, in that, we can set ourselves up here for some pretty meaningful cash flow, we mentioned 400 and 500 in the prepared remarks with effectively, a flat Market from here. Uh, even maybe they reached down a small tip. But but effectively, if if, if what we see now is the new reality, we still think that uh we can generate meaningful cash flow uh, for our for our investors. And we've given a lot of data out for for for, for costs for optimism, that we would actually be up up from that so
Yes. It is.
First in September 1st are the days that the new rates go into effect.
Got it. Great, thank you. I'll turn it back.
Those rates are respectively.
Your next question comes from the line of Greg, Lewis with btig. Your line is open.
Three to five months.
Prior.
When they go into event.
I would say in that mechanism has worked extremely well.
And it has tracked the market.
Yeah, thank you. Um, and thanks for taking my questions. Um, I I feel like I asked this um like once a year but um could you kind of remind us um, the timing of the um,
Since since we came up with the CEO of <unk>.
In.
And so when you're talking about.
As of September rates will go into effect that we've sent two or three months ago.
Of the, the Exxon rig reset. And, and maybe how we should be thinking about that. I, I believe it's in October, how we should be thinking about that versus say where it was when it was reset. I guess a few months ago,
And so we don't want to give you right now but honestly.
There is honestly.
Yes.
And I think that that mechanism there is really a market very closely.
And then I felt like Robert you mentioned kind of Dolby O P, which is what those are so is it safe to assume that excludes kind of.
Yes. It's it's March 1st and September 1st are the the the the dates that the new rates? Go go, uh, into effect. And so those rates are, you know, respectively set.
Or like a like.
It definitely sounds like it excludes sixth gen rigs, but maybe even lower in the seventh Gen rigs.
3 to 5 months, uh, prior, uh, to to, when they go into effect, um, I would say in that that mechanism has worked extremely well.
Jesper <unk>.
Okay, great. Thank you for that and then I did have a broader question.
Obviously, there were some big news yesterday with some consolidation in the Jackup market.
<unk> co.
Clearly.
They acquire or has not historically operated in the North sea.
Uh, and it has tracked the market uh, since since we, we came up with the cea. And, um, and so we were talking about a, a, you know, a September rate that will go into effect that was sent 2 or 3 months ago. Um, and so, you know, we don't we don't get the
Brace out. But you know, honestly,
There is honestly awful ties.
This does this M&A, sometimes good for our sector, sometimes bad there's any kind of view on how this impacts the jackup market, realizing you're you've been scaling down your jackup fleet over the last couple of years, but any kind of view any kind of view how does this do anything to change how youre thinking about Jack.
And uh, and I think that that mechanism is really attractive Market very closely.
Your Jackup fleet post that M&A deal.
And, and then and and I felt like Robert, you, you mentioned kind of dual Bop, which is what those are. So that so is it safe to assume that excludes kind of the, the, you know, like a like a, it definitely sounds like it, excludes 6, gen rigs, but maybe even lower end. 7th gen rings.
That's correct.
Okay.
No not really honestly.
We have.
The three rigs outside of the North Sea.
Marketing aggressively.
And then yes, there is obviously some.
Yeah.
Some overlap with the North Sea, an M&A deal.
But we're.
No it doesn't change our our demand.
But.
Honestly it doesn't do a whole lot.
Sure.
And to change our views on anything.
Yes.
The company's in.
It was probably a great win win.
Okay, great. Thank you for that and then and then I did have a broader question. Um, you know, obviously there was some big news yesterday with some consolidation in the jack up Market. Um, you know, clearly you know the the the the the acquire has not historically operated in in the North Sea. Um, does does, does this, you know m&a sometimes good for a sector sometimes? Bad does any kind of view on how this impacts the jack up Market at at you know and realizing you you've been scaling down your jack up Fleet over the last couple of years. But but any kind of view, any kind of view had? Does this do anything to change? How how you're thinking about Jack that you you're a jack up, Fleet post that m&a deal.
But it doesn't really I don't think it spurs action from our side necessarily.
Okay Super helpful. Thank you very much.
Thank you.
Your next question comes from the line of Doug Becker with capital One Securities. Your line is open.
No, not really. Honestly I mean we have the 3 RS outside of the North Sea uh that we're marketing. Um aggressively
um, and then yeah, there there's obviously some um,
Thank you Robert.
Uh, there is some overlap with the North Sea and this M&A deal.
Weighed out that tier one drill ships are still in the low $400 to mid 400 range.
with, uh, but we're
Any material changes to some of the other factors that can affect economics like mobile Demoed Feeser capital reimbursements I was just trying to look a little deeper in terms of the economics in the current environment.
You know, it doesn't change our our demand. I mean, I'm sorry, it may not look but it doesn't do a whole lot. Um,
Yes.
In terms of effectively correlated with day rates.
Um, but doesn't doesn't really, I don't think it Spurs action from our side necessarily.
However, I would say.
Okay, super helpful. Thank you very much.
Then if you're talking about.
Thank you.
A wider spectrum of potential day rate so.
The all four years.
Your next question comes from the line of Doug Becker with Capital 1 Security. Your line is open.
Had to handle them all the way up to.
Kind of some world with five handles where there is where there is a true shortage of rigs I don't think the change between high 400 and low four hundreds.
Particularly meaningful on the broader contract terms scale so.
Yes, there will be a bit of economic leakage, probably today versus when we were not been on the 500 door.
Thank you, Robert, you've laid out that q1. Joe ships are still in the low 400 to Mid 400 range. Have you seen any material changes to some of the other factors that can affect economics like mob or DMO fees or Capital reimbursements? Just trying to look a little deeper in terms of the economics and the current environment.
But I don't think that some meaningful change.
Yeah, I mean look, contract terms are effectively correlated with day rates. Um,
So far.
however, I would say
Sure Nelson.
You've touched on this a little bit but just on some of the options that are outstanding just any.
General commentary in terms of option exercises, we think about.
Those rigs going forward.
Yeah.
I think the major assumption for two or three years, then all options will be exercised.
And I think today.
We will make the assumption that I.
I have no idea and I'm, just going to throw out to 75% are exercised.
That if you're talking about the a wider spectrum of of potential day rates. So uh, the awful years uh, that had 2 handles on them all the way over to uh kind of some world with 5 handles where there is where there is a a true shortage of brakes. I don't think the change between high 400s and low 400s is particularly meaningful on on on the broader contract terms of scale. So, uh, yeah, there will be a bit of economic leakage probably, uh, today versus when we were not in the
And hopefully towards the higher end of that but maybe another way to put that is that there is there's definitely going to be if you look across the full industry spectrum of options, there's going to be.
On the 500 door. Uh but I I don't think that the meetings will change. Um, so far
Yes.
Non negligible number that constantly or non noninterest side, we suffered from that a little bit on our 2025 numbers were.
Sure Nelson. You've touched on this a little bit but just on some of the options that are that are outstanding just any, you know, General commentary in terms of option exercises, we think about
Uh, those rigs going forward.
Mid to late last year, we weren't quite certain that youre comfortable with them would be option would be exercised.
Absolutely phenomenon.
Got it thank you.
Yeah. Um, I think we made it assumption for 2 or 3 years that all options would be exercised. Um, and I think today
Your next question comes from the line of David Smith, with Pickering Energy Partners. Your line is open.
Hey, good morning, and thanks for taking my questions.
Okay.
So a lot of mine have been answered.
Setback with just a little bigger picture question.
In past cycles.
Typically in soft floater contract lead times move in tandem with utilization and backlog.
The past few months we have.
will make the assumption that I'm just, I have no idea. I'm just going to throw out half to 75% or our exercise, uh, and hopefully towards the higher end of that. But, uh, maybe another way to put that is that there? There's a there's definitely going to be, uh, if you would cross the, the full industry spectrum of options. There's going to be, uh, you know, a, a non-negligible number that probably are not, not exercised. We've suffered from that a little bit on our 2025 numbers, where, um,
<unk> seen operators locking that in multi year contracts with 12 months to 24 month lead times.
Even as near term demand look softer than the rig count trends lower.
mid to late last year, we were quite certain that a couple of them would be option, would be exercised and ultimately Burnin
got it. Thank you.
It's creating a multi quarter gaps between.
Contracts for some rigs dynamic that seems fairly uncommon compared to prior cycles I.
Your next question comes from the line of David Smith with Pickering Energy Partners. Your line is open.
I was curious if this.
Sorry zero is unusual and if you have any thoughts on what is driving that you're contracting behavior.
Hey, good morning and thanks for taking my questions.
Yes.
Great observation days, and we agree with you mentioned.
I mentioned earlier, a little bit, but it is kind of a unique because we were asked about day rates.
Is it a little bit of a unique situation, where I think whether you are talking to a drilling contractor or a service company everybody see.
Some demand on the horizon here.
627.
There's been a disconnect between some long lead providers in the National service providers for some time and so it is creating kind of a.
So a lot of my have been answered, um I'm going to sit back with this a little bigger picture question and and pass Cycles. We typically saw floater contract lead times, move in tandem with utilization and, and backlog. In the past few months, we've seen operators locking in multi-year contracts with, you know, 12 to 24 month, lead times, even as near-term demand looks softer in the rig count Trends lower,
it's, you know, creating multi-quarter gaps between
A different situation than we're accustomed to.
You know, contracts for some rigs have a dynamic that seems fairly uncommon compared to prior cycles.
Hi.
I think that.
Part of this is Lee.
I was curious if this, you know, strikes you as unusual and and if you have any thoughts on what is driving that out to your Contracting Behavior,
Our understanding is that.
Are these all of the projects that are being sanctioned and moving forward. Obviously, the math works here in the sixties range for for Brent. So I think youre seeing that dynamic play out as major projects.
Yeah, I I said great observation day and and we agree with you.
Sure.
And I think youre seeing that on the back in so much noise.
Noise.
And also.
Persisting commitment to capital discipline for our customers.
That is creating this.
I mentioned earlier a little bit that it is kind of a unique because we were asked about day rates and it is a little bit of a unique situation where I think whether you're talking to a drilling contractor or a Service Company, everybody sees um some Demand on the horizon here, uh in late, 26 and 27. And, you know, there's there's been this disconnect between some long leads providers and and then actual service providers for some time and so it is creating kind of a a different situation than we're in customs who
um,
Slightly different dynamic than what we're used to in the quarter and Youre right. The correlation on lead time.
you know, I
I, I think that, uh,
And it's kind of fallen apart here.
Part of this is look.
Our understanding is that?
We take all of that is a good sign and we went through the global view.
We are optimistic that we can get back to what I would call a more normal level four.
A more normal level of activity.
Turning to 105 working rigs.
I appreciate it and a follow up if I may.
Kind of relates to Ed's question earlier put for.
But the rigs that are facing multi quarter gaps between firm term contracts.
Do you see a risk that bidding strategies.
Dynamics play out as major projects move forward. Um, and I think you're seeing that on the back end of so much noise, uh macro noise uh uh and and and also a a persisting commitment to to Capital discipline, uh for for our customers, uh, that that it's creating this.
More aggressive to fill in those gaps and if so do you think that.
More competitive pricing for short term and near term work.
Influence broader pricing expectations are.
Do you think it's just going to result in a greater bifurcation for short term near term versus longer term work.
Yes.
For sure I think youre going to see gasoline work where people are willing to.
Slightly different Dynamics than what we're used to and and the coral, you're right. The correlation on lead time is has uh has uh kind of Fallen apart here. We take all that as a good sign. I mean, we went through the global view and we're optimistic that we can get back to what I would call a, more normal level for, um, some more normal level of activity. And, you know, it's not 100, 100 100 to 105, uh, working in wigs.
It's taken almost any price or taken to take them.
Discount, maybe a better way.
Is it.
I, just don't think that effect.
Appreciate it and a follow-up. If I may its kind of relates to Eddie's question earlier but for
The broader pricing strategies companies I don't think it will will will affect hours.
And.
Thank you and back to the funding dynamic we have right now everybody sees it and we're one of the last to go on this earnings season, where there is some ability to track our service company everyone's talking about the same dynamic.
I think that is really meaningful and important.
And I think people are going to them.
For the rigs that are facing multi-quarter gaps between, you know, firm term term contracts. Do you see a risk that betting strategies become more aggressive to to fill in those gaps and and if so do you think that you know, more competitive pricing for short-term and near-term? Work, might influence broader pricing expectations? Or you know do you think it's just going to result in a a greater bifurcation for, you know, short-term near-term versus longer term work?
Right.
And as they see the market and people generally see a bit of an uptick here in starting in late 2006.
I think of the gap filler stuff as more noise than I do.
Yeah, I mean for sure I think you're going to see a gap filler work for people who are willing to take it at almost any price or take a discount, maybe to give a better way to say it.
but I don't, I just don't think that affects
It's something that's going to drive rates.
Great really appreciate the color and.
Congrats on the quarter and the better cost outlook.
Thanks, Nick.
Your next question comes from the line of Noel Parks with Tony Brian Your line is open.
Yeah.
Hi, good morning.
I was wondering.
The broader pricing strategies for companies, I don't think it will will will affect ours. Um and um, I think you back to this funny Dynamic. We have right now, everybody sees it, and we're 1 of the last to go on this earnings season. And whether you're talking about filling the tractor or Service Company, everyone's talking about this same Dynamic. And so I think that is really meaningful and important. Um, and uh, I think people are going to
Just given some of your comments about the marketplace so far.
Do you see or have you considered any revisiting of the maintenance and upgrade schedule.
As you look at what's still some near term uncertainty.
Price as, uh, as they see the market. And, and people generally see, uh, a bit of an uptick here, in, in starting in the late 26th. So, I, I think of the Gap filler stuff as more noise than I do, um, of of, of, you know, of
About white space being taken up.
Of something that's going to drive rates.
Balanced against them.
As you pointed out the pretty consistent industry optimism in.
Great. I really appreciate the caller. Uh, congrats on the quarter and the better cost outlook.
Thanks Nick.
26 and 27.
Yes, I think what I would say.
Your next question comes from the line of Noah parks with Tony Brothers. Your line is open
We.
We talked earlier of course about rationalization of the fleet and our view on that.
Hi, good morning. Um
And the carrying cost of some of this quote option value youre asking more specifically about the working rigs and so I would I would say that we.
You know, I was wondering, um, just given some of your comments about the marketplace so far.
Um,
We had we had with revenue down to EBITDA and so we've managed costs very closely.
<unk>.
Do you see or have you considered any revisiting of the maintenance and upgrades schedule? As you look at what's still some near-term uncertainty about, you know, white space being taken up.
We reached this in a previous call. We mentioned that we kind of think you wanted to buy things up between six month readiness.
Balanced against you as you pointed out, the pretty consistent industry activism in uh 26 and 27.
And one new readiness that kind of that kind of you kind of taken a six month readiness on the couple of the units.
Yeah, I think what I would say is, um,
We?
Which we think is a good balance between present cost.
And marketability.
And we feel we feel we've been highly focused on on the engine costs.
And.
In.
We're happy with the decisions we've made around them.
More than flow side on the couple of units that.
That we see workforce, but maybe with a bit of a gap before that more of a science.
We talked earlier of course about rationalization of the fleet in our view on that and and and the carrying costs of some of this this quote option value, you're asking more specifically about the working Rigs and so I would I would say that we've we've you know, we we had we we had we brought Revenue down any dollar up and so we've managed costs very closely and um you know we we we didn't even in the previous call, we mentioned that we kind of take if you want to divide things.
Great. Thanks.
I was just wondering if with Bp's announcement of.
Their big discovery.
Boomerang offshore Brazil.
Do you have any sense of whether that might help sort of.
Firm or accelerate.
What we've seen as well.
Little bit of a positive drift towards exploratory dollars in drilling.
Up between 6-month Readiness, uh, uh, in 1 year Readiness, that kind of, that kind of view. It's kind of taken a 6-month Readiness on a couple of units, uh, which we think is a good balance between uh present costs, uh and uh and marketability. Um and we feel we feel we've been highly focused on uh on the Imaging costs.
And the industry.
Mhm.
Yeah.
All of the discoveries are good for our business and.
Mine.
Longer term view is very firm around the need for oil and gas produced from from offshore wells.
Starts.
There is a gap.
We will eventually get do you have to assume a normal demand obviously, but.
If history is any guide on.
I'm very confident that there is a gap between discovered barrels and needed bear with some from offshore.
We thought that dynamic might start playing out this year. It has been pushed off to the right. There is a lot of macro noise, but I remain extremely confident.
Great. Uh, thanks. And um, I'm just wondering if uh, with BPS announcement of uh, their big Discovery uh, at Boomerang offshore Brazil. Uh, do you have any sense of whether that might help sort of, uh, affirm or accelerate what we've seen as a, a little bit of a positive drift towards um, exploratory dollars and drilling, uh, in the industry.
At.
The need for our services.
Increased offshore production.
Yeah. I mean, uh, all discoveries are good, uh, for our business, and um, you know, my my...
Is eminent and will come in the next few years so.
Are you starting to hear more about reserves reserve life reserve replacement from our customers.
And I think.
<unk> is one of them one of our biggest customers and then highlighting that this is the best exploration year in 10 years I think is another data point.
There is a meaningful shift back offshore globally, that's happening right now.
Great. Thanks, a lot.
Thank you.
At this time there are no further questions I will now turn the call back over to Ian Macpherson for closing remarks.
Thank you everyone for joining us today, we appreciate your interest and we'll look forward to speaking with you again next quarter and good day.
Longer term view is very firm around uh the need for oil and gas, um, produced from from offshore Wells. Uh, there is a gap that we will eventually get to have to assume an oil demand obviously. But, uh, if if history is any guide, I think, uh, you know, I'm very confident that there's a gap between, uh, discovered barrels and needed, barrels coming from offshore and we thought that Dynamic might start playing out this year. It's been pushed off to the, right. There's a lot of macro noise that I remain extremely confident, uh, that, uh, the need for our services to, to increase offshore production. Uh, is is imminent in in, will come in the next.
Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Few years. So uh you're starting to hear more about uh, reserves reserved life Reserve replacement from our customers. Uh, and I think uh, you know, he's 1 of 1 of our biggest customers and then highlighting that this is the best expiration year. In 10 years, I think is is another data point that, uh, that there is a meaningful shift backed offshore globally that's happening right now.
Great. Thanks a lot.
Thank you. At this time. There are no further questions. I will now turn the call back over to Ian McPherson, for closing remarks.
Thank you everyone for joining us today. We appreciate your interest and we'll look forward to speaking with you again. Next quarter, have a good day.
Ladies and gentlemen, that concludes today's call, thank you all for joining. You may now disconnect
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