Q3 2025 Noble Corp PLC Earnings Call

<unk> 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 Investor Relations. Please go ahead.

Thank you operator, and welcome everyone to Noble Corporation's third quarter 2025 earnings Conference call you can find the copy of our earnings report along with the supporting statements and schedules on our website at <unk> Dot com.

Speaker #2: Thank you for standing by . My name is Carly and I will be your conference operator today . At this time , I would like to welcome everyone to the Noble Corporation .

Speaker #2: Third quarter 2020 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 .

Bill referenced an earnings presentation Thats posted on the Investor Relations page of our website.

Today's call will feature prepared remarks from our president and CEO, Robert Eifler as well as the CFO Richard Barker. We also have with US Blake Denton Senior Vice president of marketing and contracts substantially larger senior Vice president of operations.

Speaker #2: If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad.

Speaker #2: 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 , Investor Relations .

During the course of this call we may make certain forward looking statements regarding various matters related to our business from companies that are not historical facts such statements are based upon current expectations and assumptions of management and therefore are 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.

Speaker #2: Please go ahead .

Speaker #3: Thank you . Operator and welcome everyone to Noble Corporation's Third Quarter 2020 earnings Conference call . You can find a copy of our earnings report , along with the supporting statements and schedules on our website at Noble Corp plc .

The obligation to update these statements.

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 associated reconciliation in our earnings report issued yesterday and filed with the SEC.

Speaker #3: Com . We will reference an earnings presentation that's posted on the Investor Relations page of our website . Today's call will feature prepared remarks from our president and CEO , Robert Eifler , as well as our CFO , Richard Barker .

Speaker #3: We also have with us Blake Denton , Senior Vice President of Marketing and Contracts , and Julie Khawaja , senior vice president of operations .

Now I will turn the call over to Robert Eifler, President and CEO of noble.

Thanks Ian.

Welcome everyone and thank you for joining us on the call today.

Speaker #3: 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 .

Ill open with a brief summary of our Q3 highlights and recent contract awards didn't provide some perspective on the market outlook, Richard who will provide more detail on the financials before I wrap up with closing remarks and move on to Q&A.

Speaker #3: Such statements are based upon current expectations and assumptions of management and therefore are 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 update these statements .

During the third quarter, we earned adjusted EBITDA of $254 million generated free cash flow of $139 million and received an additional $87 million and net disposal proceeds.

Speaker #3: Also note that we are referencing non-GAAP financial measures on the call today. You can find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation, in our earnings report issued yesterday and filed with the SEC.

We again distributed $80 million to shareholders through our 50 cent quarterly dividend.

Speaker #3: Now , I'll turn the call over to Robert Eifler , president and CEO of Noble .

And yesterday, our board declared a <unk> 50 per share dividend for the fourth quarter, bringing total 2025 capital return to $340 million.

Speaker #4: Thanks , Ian . Welcome , everyone , and thank you for joining us on the call today . I'll open with a brief summary of our Q3 highlights and recent contract awards .

The highly competitive cash yield on our stock continues to be a critical component of our story because rates reverse this mid cycle for our industry.

Speaker #4: Then provide some perspective on the market outlook . Richard will provide more detail on the financials . Before I wrap up with closing remarks and move on to Q&A .

Before we discuss the market I'd like to commend and thank our crews and operating teams for achieving excellent operational uptime and HSE performance aided.

Speaker #4: During the third quarter , we earned adjusted EBITDA of $254 million , generated free cash flow of $139 million , and received an additional $87 million in net disposal proceeds .

Aided by tools like our norms horizon 56, and operations performance platforms. Our teams have continued to push the envelope and technically challenging well construction and completion activities.

Speaker #4: We again distributed $80 million to shareholders through our 50 cent quarterly dividend . And yesterday , our board declared a 50 cent per share dividend for the fourth quarter , bringing total 2025 .

In Guyana, our Drillships continue to post record setting results within the Wells Alliance.

We have now constructed over 200 wells in the basin delivering 60% of the most recent 25 wells in under 35 days.

Speaker #4: Capital returned to $340 million . The highly competitive cash yield on our stock continues to be a critical component of our story , as we traverse this midcycle lull for our industry .

In the U S Gulf the Novo Black owned it set a new benchmark in deepwater drilling operations, earning high praise from the customer for outstanding execution of MPD influx management on a complex exploration well nearby the Novo Black Lion recently performed the longest step out yet for BP in the Gulf.

Speaker #4: Before we discuss the market , I'd like to commend and thank our crews and operating teams for achieving excellent operational uptime and HSC performance , aided by tools like our norms , horizon 56 and Operations Performance Platforms .

Off at over 12500 feet, which was also delivered well ahead of ASC.

Speaker #4: Our teams have continued to push the envelope in technically challenging well construction and completion activities in Guyana. Our drillships continue to post record-setting results within the Wells Alliance.

Results like these continue to be a defining success story for the deepwater industry and are leading the way in bringing deepwater sharply down the cost curve and thereby structurally increasing the size of the prize.

Speaker #4: We have now constructed over 200 wells in the basin , delivering 60% of the most recent 25 wells in under 35 days in the US Gulf .

Also had another solid quarter on the commercial front with backlog increasing to $7 billion currently on the back of several key contract awards.

Speaker #4: The noble Black Hornet set a new benchmark in deepwater drilling operations , earning high praise from the customer for outstanding execution of MPD .

First the Novo Black line and <unk> have both been extended by an additional two years by BP in the U S. Gulf.

Speaker #4: Influx management on a complex exploration . Well nearby . The noble Black Lion recently performed the longest step out yet for BP in the Gulf at over 12,500ft , which was also delivered well ahead of AF .

Extending the rigs into September 2028, and February 2029, respectively.

These extensions are valued at $310 million per rig, excluding NPV services and both come with an additional one year priced option.

Speaker #4: Results like these continue to be a defining success story for the deepwater industry , and are leading the way in bringing deepwater sharply down .

These contract extensions further amplified the merits of the Diamond acquisition, which has materially over delivered on our original accretion expectations as.

Speaker #4: The cost curve and thereby structurally increasing the size of the prize . We've also had another solid quarter on the commercial front , with backlog increasing to $7 billion .

As the legacy Diamond rigs continued to perform and re contract at very high levels. We.

Speaker #4: Currently on the back of several key contract awards . First , the noble Black Lion and Noble Black Hornet have both been extended by an additional two years by BP in the US Gulf , extending the rigs into September 2028 .

We are thrilled to continue the black line in Black Hornets long term assignments, which will now be approaching one decade in tenure.

These long duration engagements demonstrate the power of the deeply collaborative service posture that we have been working hard to cultivate over the past several years in order to drive value for our customers and earn their repeat work through dependable performance.

Speaker #4: And February 2029 , respectively . These extensions are valued at $310 million per rig , excluding NPD services . In both come with an additional one year priced option .

Next.

The Jackup noble Resolute has been awarded a one year contract with Eni in the Dutch North Sea at a day rate of $125000. This.

Speaker #4: These contract extensions further amplify the merits of the Diamond acquisition , which has materially overdelivered on our original accretion expectations . As the legacy diamond rigs continue to perform in recontract at very high levels .

This contract is expected to commence later this quarter.

And the noble interceptor has booked a five months accommodation contract with Arthur BP in Norway, which is scheduled to start next August.

Speaker #4: We are thrilled to continue the black line and Black Hornets long term assignments , which will now be approaching one decade in tenure .

Lastly, the <unk> mobile developer has had an option exercise by Petronas for an additional well early next year.

Speaker #4: These long engagements demonstrate the duration power of the deeply collaborative service posture that we've been working hard to cultivate past several years in order to drive value for our customers and earn their repeat work through dependable performance .

On the drillship noble venture was awarded a one well contract from omni in Ghana.

Speaker #4: over the Before the rig mobilizes to the US Gulf for long term work commencing in late 2027 . Beyond these specific contract awards , the broader contracting and utilization trends in deepwater are showing gradual signs of stabilization and improvement .

The rate of $450000.

This well is scheduled to follow in direct continuation of the ongoing Tullow work in Ghana, which is expected to resume in the second phase within the next several days before the rig mobilized to the U S. Gulf for long term work commencing in late 2027.

Speaker #4: Next , the Jackup noble resolute has been awarded a one year contract with Eni in the Dutch North Sea at a day rate of $125,000 .

Speaker #4: This contract is expected to commence later this quarter , and the noble Interceptor has booked a five month accommodation contract with Aker BP in Norway , which is scheduled to start next August .

Beyond these specific contract awards, the broader contracting and utilization trends in deepwater are showing gradual signs of stabilization and improvement.

The committed UW rig count of approximately 100 rigs and low 90% marketed utilization is in fact up slightly compared to recent quarters. Despite some lingering near term availability across several units with longer dated contracts starts. Additionally.

Speaker #4: Lastly , the six G Semi mobile developer has had an option exercised by Petronas for an additional well early next year in the drillship , noble Venturer was awarded a one well contract from Omni in Ghana at a rate of $450,000 .

Additionally, deepwater contracting momentum is on an uptrend with an average of 18 UW rig years per quarter fixed in Q2, and Q3 this year up 10% compared to the preceding two years. These.

Speaker #4: This well is scheduled to follow in direct continuation of the ongoing Tullow work in Ghana , which is expected to resume in its second phase within the next several days .

These are encouraging indicators and there remains a significant number of additional fixtures anticipated over the next few months.

Noble's backlog picture is summarized on page five of the earnings presentation slides.

Speaker #4: The committed US rig count of approximately 100 rigs and low 90% marketed utilization is in fact up slightly compared to recent quarters . Despite some lingering near-term availability across several units with longer dated contract starts .

Rose, 57% contract coverage across our entire fleet in 2026, when zooming into our 15 high spec Drillships. We are now 70% booked for available days in 2026, excluding options.

However, we have active conversations behind all of our available rigs in 2026, including the Jerry to Susa biking, and black Rhino and.

Speaker #4: Additionally , Deepwater contracting momentum is on an uptrend , with an average of 18 US rig years per quarter fixed in Q2 and Q3 .

While we are also tracking the number of contract opportunities across the balance of the fleet the Jackups and floaters.

Speaker #4: This year , up 10% compared to the preceding two years . These are encouraging indicators , and there remains a significant number of additional fixtures anticipated over the next few months .

Securing additional work for these three Drillships is a key priority and our objective is to obtain 90% to 100% contract coverage across our 15 high spec drillships by the second half of next year.

Speaker #4: Noble's backlog picture is summarized on page five of the earnings presentation slides . Shows 57% contract coverage across our entire fleet in 2026 .

On the Jackup side activity in the harsh environment, Northern Europe market has been stable at 28 rigs and marketed utilization at 90% flat with last quarter with leading edge day rates for drilling programs in the southern North Sea holding flattish.

Speaker #4: When zooming in on our 15 high-spec drill ships, we are now 70% booked for available days in 2026, excluding options.

Speaker #4: However , we have active conversations behind all of our rigs in 2026 , including the Jerry D'Souza , Viking and Black Rhino . And while we are also tracking a number of contract opportunities across the balance of the fleet , both jack ups and floaters , securing additional work for these three drillships is a key priority in our objective is to obtain 90 to 100% contract coverage across our 15 high spec drill ships by the second half of next year .

Although the contracting environment has remained relatively subdued we do have line of sight towards several opportunities that we hope to be able to book relatively soon.

What's the interceptors pending reactivation, we now have improving contract coverage for all five of our ultra harsh CJ 70, Jackup as we progress through next year.

While our six harsh rigs presently have limited contract coverage in 2026, we do expect this picture to improve based on several bidding opportunities currently in process.

Speaker #4: On the Jackup side , activity in the harsh environment in Northern Europe market has been stable at 28 rigs and marketed utilization at 90% .

So overall, we are encouraged by the shape of things and the opportunity set at hand, which includes a broad range of UW requirements throughout the Golden Triangle Asia Pacific, Mozambique, Mediterranean and harsh environment basins.

Speaker #4: Flat was last quarter , with leading edge day rates for drilling programs in the southern North Sea holding flattish . Although the contracting environment has remained relatively subdued .

The pipeline for early 2026th jobs is still significantly more limited compared to late 2006 in early 2007.

Speaker #4: We do have line of sight towards several opportunities that we hope to be able to book relatively soon with the interceptors pending reactivation .

This point, we are not seeing indications of additional project or procurement deferrals.

Speaker #4: We now have improving contract coverage for all five of our ultra harsh CJ 70 jack ups as we progress through next year . While our six harsh rigs presently have limited contract coverage in 2026 .

Assuming reasonably stable oil prices the path toward a methodically tightening floater market with deeper backlog appears to be on track.

Speaker #4: We do expect this picture to improve based on several bidding opportunities currently in process . So overall , we are encouraged by the shape of things and the opportunity set in hand , which includes a broad range of UW requirements throughout the Golden Triangle , Asia Pacific , Mozambique , Mediterranean and the harsh environment basins .

Now I'll pass it over to Richard to discuss the financials.

Good morning, or good afternoon.

In my prepared remarks today I will review, our third quarter results and then discuss our outlook for the remainder of the year as well as some additional high level perspectives on 2026.

Starting with our quarterly results contract drilling services revenue for the third quarter totaled $798 million adjusted EBITDA was $254 million and adjusted EBITDA margin was 32%.

Speaker #4: The pipeline for early 2026 jobs is still significantly more limited compared to late 26 and early 27 , but at this point , we are not seeing indications of additional project or procurement deferrals .

As expected Q3 revenue and adjusted EBITDA were sequentially lower primarily due to a number of rigs rolling off contract during the third quarter.

Speaker #4: Assuming reasonably stable oil prices , the path toward a methodically tightening flutter market with deeper backlog appears to be on track . Now I'll pass it over to Richard to discuss the financials .

Pre cash flow of $139 million in Q3 excluded an additional $87 million in disposal proceeds.

Speaker #5: Good morning or good afternoon . All . In my prepared remarks today , I will review our third quarter results . And then discuss our outlook for the remainder of the year , as well as some additional high level perspectives on 2026 .

By the sale of the Pacific Melton I know the Highlander.

Thus, we ended the quarter with a cash balance of $478 million, which is up $114 million compared to last quarter.

Subsequently in October we completed the sale of the noble reach our full time to the used outside the drilling market the $27 5 million.

Speaker #5: Starting with our quarterly results . Contract drilling services revenue for the third quarter totaled 798 million . Adjusted EBITDA was 254 million and adjusted EBITDA margin was 32% .

As a reminder, the reach has not worked in drilling mode for several years, having recently completed a long term and low margin accommodation contract.

Speaker #5: As expected , Q3 revenue and adjusted EBITDA were sequentially lower , primarily due to a number of rigs rolling off contract during the third quarter .

The rig would have required a significant amount of capital to return to drilling mode again.

Speaker #5: Free cash flow of 139 million in Q3 excluded an additional 87 million in disposal proceeds , driven by the sale of the Pacific .

As such the region with an outlier.

As summarized on page five of the earnings presentation slides, our total backlog as of October 27th stands at $7 billion, which includes approximately half a billion dollars that is scheduled for revenue conversion for the remaining two plus months of this year and $2 4 billion and $1 9 billion scheduled for <unk>.

Speaker #5: Meltem and Noble Highlander . Thus , we ended the quarter with a cash balance of 478 million , which is up 140 million compared to last quarter .

Speaker #5: Subsequently , in October , we have completed the sale of the Noble for alternative use outside the drilling market for 27.5 million . As a reminder , the writer has not worked in drilling mode for several years , having recently completed a long term and low margin accommodation contract .

And in 2026 and 2027, respectively.

As a reminder, these figures exclude reimbursable revenue and revenue from ancillary services.

Referring to page 10 of the earnings slides, we are narrowing the range for a full year 2025 guidance for adjusted EBITDA to one one to one <unk> 5 billion.

Speaker #5: The rig would have required a significant amount of capital to return to drilling mode again , and as such the Reacher was an outlier within athlete .

The midpoint of this range implies Q4 adjusted EBITDA It is marginally lower versus Q3.

Speaker #5: As summarized on page five of the earnings presentation , slides , our total backlog as of October the 27th stands at 7 billion , which includes approximately half $1 billion .

I would point out that the exact start date of the globetrotter one contract in the Black Sea, which we currently estimate in mid December is the key sensitivity for Q4 revenue due to the relatively compressed duration of the total contract value including mobilization.

Speaker #5: That is scheduled for revenue conversion for the remaining two months of this year and 2.4 billion and 1.9 billion scheduled for conversion in 2026 and 2027 , respectively .

We have now guidance for full year 2025, Capex net of customer reimbursable to a range of $425 million to $450 million.

Speaker #5: As a reminder , these figures exclude reimbursable revenue and revenue from ancillary services . Referring to page ten of the earnings slides , we are narrowing the range for our full year 2025 guidance for adjusted EBITDA to 1.1 to 1.125 billion .

Reimbursable Capex is expected to be approximately $25 million this year, including approximately $20 million year to date through Q3.

We plan to provide 2026 guidance on next quarter that in school and direction with terms I would say that the shape of our current fleet status report would indicate an EBITDA trough in the half of 2026 that would be somewhat below second half 2025 levels as well as lower results on a full year basis for 2026 versus 2025.

However, based on current and anticipated backlog, we are tracking toward a material inflection from late 2026 onward, which we will look to define more sharply next quarter as the next slug of foundational contracts are expected to come into backlog.

Speaker #5: have narrowed guidance for full year 2025 CapEx , net of customer reimbursables , to a range of 425 to 450 million , reimbursable CapEx is expected to be approximately 25 million this year , including approximately 20 million year to date through Q3 .

We continue to anticipate approximately $450 million in Capex net of customer Reimbursable next year based on our current contract status.

However, this estimate may be subject to increase to the extent that additional contracts supported opportunity arise with compelling accretion.

The capital to reactivate the noble interceptor will be reimbursed through an upfront mobilization payment.

Additionally, we are likely to incur additional outlays totaling up to approximately $175 million associated with the termination of the <unk> fabric from new contracts on the legacy Diamondback ships.

During the third quarter, we delivered a termination for convenience notice.

Service agreements.

Currently in discussions around the lease agreement.

We would expect an approximate $35 million of cash outlay. During Q4, 2025, which is expected to flow through Opex and Capex and then the remainder during 2026.

These amounts are not included in the aforementioned guidance ranges.

As a reminder, this cash outlay would be offset by annual savings of approximately $45 million across opex and lease payments on the agreements on a combined basis.

We are focused on building cash here in the last quarter of this year in anticipation of next year's capital requirements, including the potential DRP related payments.

We are also committed to maintaining a robust return of capital program in a prudent balance sheet position.

Based on existing backlog and code customer dialogue, we would expect a healthy EBITDA and cash flow inflection late next year.

That concludes my remarks, and with that I'll hand, it back to Robert.

Thanks, Richard to wrap up we're continuing to see a number of positive signs of increased deepwater activity. After the anticipated troughs over the next few quarters.

This is essentially very similar to how we assess the outlook last quarter, albeit with additional backlog in our books today to help lay the path towards that outcome, but also with a bit more slippage with certain programs start dates which continues to bifurcate. The 2026 for 2027 picture.

We still have some work to do with securing a few more key contracts in order to support our expectation for a meaningful free cash flow inflection by late next year.

But the opportunity set there is highly encouraging and progressing well.

Continue to watch our customers budget announcements closely which of course have an aggregate been less than inspiring at a headline level and which remain the ultimate growth governor for our business, but.

But at the same time. It has also been highly encouraging to see the relative resiliency of rig contracting activity. This year in the face of elevated macroeconomic noise, So I guess oil prices and upstream capital restraint.

Divergent dynamics underscore the strategic long term criticality of deepwater within the global upstream supply stack.

We see this in the renewed emphasis and urgency surrounding upstream reserve replacement metrics.

And in that same vein on the ground here in Houston, there is a palpable growing sense of the capital imperative towards deepwater exploration.

The way that feels different from anything over the past decade.

So I would encourage investors to pay close attention to this important litmus indicator in the months and quarters ahead.

Meanwhile, as we wait for these anticipated demand tailwind to materialize, we continue to manage our costs and marketed capacity to optimize cash flow.

And we remain committed to paying a competitive dividend and maintaining a strong balance sheet through the cycle.

With that let me hand, it back to you operator to go to the Q&A section.

At this time I would like remind everyone in order to ask a question Press Star then the number one on your telephone keypad.

Well pause for just a moment to compile the Q&A roster.

Your first question comes from Erin So Ryan from JP Morgan.

Yeah, Good morning, Robert.

I wanted to maybe start with your thoughts on it.

Improving the utilization for your high spec floater fleet, you've mentioned that you are 70% booked for.

For 2026.

With a target of getting to 90% to 100% by the second half of 2026 talk to us about the opportunity set to get there and kind of how long of a pot using a golf analogy what would it take to get there.

Yeah morning, Thanks, Harry.

So really revolves around the Viking the change as soon as the black Rhino.

And.

Let's see continuing with golf analogy I'd say, it's it's really not a very long I think.

While we didn't have any real new news for you this quarter versus last.

Our advancing conversations around all three of those rigs.

And we hope to have some news for you.

Here in the not too distant future.

So.

Those are those are all very technically capable rigs we're bidding them.

And the discussion is around a couple of areas but.

Do you have line of sight towards parts of work that we're hopeful to win.

Great that's helpful.

And maybe if you guys could maybe just to elaborate on.

The diamond offshore.

Leases I believe those are the agreements on eight of the rigs that you acquired could you just go through maybe the mechanics of that a little bit but it sounds like it's a pretty quick in terms of our cash.

Return payoff.

Given the savings, but maybe you can just go through the numbers a little bit just so we can tighten up our models.

Yeah.

So there's two components here the services agreement and the lease agreement. So we've now terminated the service agreement.

We will have about a $35 million payment on that savings in Q4, okay. So that's $35 million kind of cash out of the door hitting the fourth quarter of this year on the base agreement. We're still we're still working through that there is a cap on that agreements of $85 million.

And that would be payable next year, obviously, there's a few remaining lease payments as well. So if you sum that all up together.

A maximum of $175 million of cash out of the door and then the kind of the annual cash savings. If you will and so that's it's about $45 million for that so it's about three times EBITDA multiple on that.

You will.

Great. Thanks, a lot for those details.

Okay.

Your next question comes from Greg Lewis with <unk>.

Thank you and good morning, everybody and thanks for taking my question Robert.

Robert I was hoping for a little more color.

You kind of touched on it with some of the comments to Arun.

But like as we think about the first half of 'twenty six the Guy you know the kind of the moderately down versus.

What we are going to do in the second half of 'twenty five.

As we kind of look at those drillships some of them all have idle time and the FERC in the second half of 'twenty five it looks like there's going to be some idle time in the first half of 'twenty six.

Is that largely what's driving that or is there other costs as it may be.

Idle time on the Jackup fleet, just kind of if you could kind of help us maybe bridge why were thinking it could be down and what I mean, I'm, assuming the answer to getting that higher would just be some spot work.

Yeah.

It really is largely driven by the by the floaters.

<unk>.

Last quarter, we mentioned trying to get to a run rate.

400 $500 million of cash flow, if you think back half of the year.

Really the driver there.

Greetings I mentioned.

Earlier.

Yeah.

I think.

What I guess also I.

Mentioned, we just we're aiming to get back to effectively market utilization, so low 90 percents.

To hit those numbers and that translates to China two out of the three of those rigs are working at any given time.

And like I said, we have line of sight on different different jobs.

When everything.

That's out there, but we feel pretty confident that as we work through things that the goal of having two out of those three as is very achievable and hopefully.

Outperformed by by finding work for all three of them.

The spot <unk>, you asked about spot work.

I think right now it's one of those times in the market is actually more unique time I think than Ive seen previously were.

There is a fair amount of work on the horizon, starting in 2006 and 2007, but there is a definitive gap in between where it's quieter than we've seen in multiple years.

I'm, probably missing some piece of history is that as I reflect on that but I find it somewhat similar in nature and so I think the spot work the gap. So we'll work so to speak is gonna be.

Really separated from.

From the rest of the work that's out there is it prices and as people think through it.

So.

<unk> that'd be a dynamic that plays out through through 2026.

Great Super helpful. And then just the other question I had was around.

I know, it's hard to look at the snapshot in time, but just kind of trying to understand.

I think we all see the work out there, whether it's west Africa or or.

Parts of Asia, but as we look at some of those term jobs that are out there.

Do we get a sense of are those dates kind of remaining firm.

Given some of the macro out there are jobs that maybe three to six months ago. We thought we're going to be in the second half of 2006 still lining up to be in the second half I'm trying to understand if there's been any drift or slippage in some of this work.

You know me and you and a lot of people are waiting to kind of start.

To start early.

Yeah, it's been a mixture I think theres some that upheld.

Firm and then there are some that have moved to the right.

We really haven't seen anything being pulled that forward, that's certainly not the ceiling landscape right now.

But I'm just off the top of my head I can think of a handful of jobs that are that have been pushed by say six months.

I can think of a handful of jobs that are that are right on schedule with our customers eager to start kind of in the middle or the beginning of the start window. So I think it's I think it's a mixture.

Yes.

Okay Super helpful. Thank you very much.

Thanks, Greg.

Your next question comes from <unk>, Kim with Barclays.

Hi, Good morning, just wanted to touch on your expectations for the first half of next year. So you mentioned you expect moderately lower earnings.

Cash flow compared to the second half 'twenty five levels consensus currently has the guys that are around $440 million in EBITDA, which represents about a 10% decline.

What's your guidance implies for second half of this year.

So just curious if you could speak to expectations for first half 'twenty six rollout relative to where consensus is at now and what it would take maybe in terms of some incremental contracting in the spot market from here to to achieve that level of EBITDA or if that level might be a bit too optimistic at this point.

Yeah. So.

Haven't given a quarterly estimates so let me think about how so.

That gives that just said is true directionally that all of that fits with kind of our our narrative in the prepared remarks.

And I think I would focus also on the fact that there.

There's not a whole lot of work.

That we see in the first half of 'twenty six.

There'll be a couple of announcements out there there are some gaps in their work.

I mentioned earlier.

But really I don't think is a lot of room for upside improvement in the first half of the year.

That does change.

Pretty dramatically in the second half of the year and of course, some of Thats noted in contracted and announced for both us and our competitors, but there's other work out there as well that's being negotiated it hasnt been announced.

Industry wide.

So I think we're really focused on.

The timing of that.

Working we've set everything up as we've mentioned to hit this cash flow inflection.

And for Us.

Timing is a little less certain.

Around that back half of the year.

But we certainly we certainly see it closing.

Got it got it understood.

And my follow up was just.

On your on your expectation for that.

You called it the deepwater utilization recovery by late 2006 early 'twenty seven but could you just talk about your confidence level in the industry recovery is it based on the tenders that are out there currently or the tone of your conversations with customers.

Or contracts that you already have in hand.

So if you could just talk to your confidence level.

And that recovery sure, yes, I mean, it's a mixture of both.

We starting with the contracts in the U S and in Suriname.

I think we've kind of baked in.

Somewhat of a floor for ourselves starting in the back half of next year.

And we really see a tightening of the market out there.

Some of us announced and out there some of it is rumors that we understand some of our competitors have gone to work in some of its stuff that we're working on ourselves.

We're cautiously optimistic here.

That day rates had bottomed.

And not to say that there won't be some lower day rates they get announced after I made this statement, but were cautiously optimistic that that.

From here the market is tightening to a point late 'twenty six 'twenty seven.

That.

That we bottomed here so stay tuned.

Great.

Thanks, Rob I'll turn it back.

Thank you. Your next question comes from Patrick <unk> with Clarksons <unk> Securities.

Yeah.

Hey, Robert and team Hope you are.

Hello, and thank you for taking my question.

I think you've you paint the relatively I guess optimistic picture of demand from the second half of the six I'm beyond then you've mentioned a handful of rigs by.

By name.

More specifically I mean, the one thing very good right now.

You seem to be relatively confident that they can get some work on.

I was wondering.

Theres the globetrotter one.

And there's the Nevada for example, do you have any additional color on how we should think about those rigs specifically going into next year.

And then maybe maybe even more so when you open up a one is that also going to be you know at some point the divestment candidate companies.

Or do you think you can kind of get more work.

Okay.

Yes, it's a good question Jay.

<unk> one we continue to chase intervention work as we've as we've mentioned.

And that we continue to believe that that is an interesting market for that asset.

We also have said that it could be.

A divestment candidate so it's a little too early for us to kind of give anything anything firm there.

But I would say that both both of those frankly are around the table if we can't find work.

For the rig and the intervention market then we'll make a decision there.

On the deliver so I would maybe group all of the day rigs together as a bundle it say.

That we we see more work today than we've seen at any point.

Since since at least the naval side, there's a lot of those rigs.

For the last few years.

Our our outlook.

It does not it does not require all three of those rigs to be working.

So I think all finding work for all three would be.

For us.

But we have we think we have pretty good line of sight to at least two working again.

More increase that we've had at.

At any point.

Fair enough very helpful. Thank you.

And a follow up just turning on the mis spoken about a proposal on the floater fleet and maybe more.

And the harsh environment side.

You have the great white the ethics ambient bebber that's currently.

I guess, it's a two part question here one.

On the great work.

Is <unk>.

Originally a U K pop a break.

How do you think more about potentially taking that.

Rig into Norway, getting appropriate fee and I'm trying to come about with a major.

Capex payment if you like to do something like that.

And on the apex on the endeavor, how would you think about the new products in general or do you think Thats, maybe one 2 million makes up our current guide Mumbai no respect harsh environment.

Thanks.

Yeah, So great why we're marketing.

A number of different regions around the world.

Youre right it was not built to.

Our Norwegian specs.

The capital cost to take it into Norway.

That would have to become an option.

So I think we're just a little too early right now.

So it's.

This guidance on where that might end up.

There will be some white space on it and.

We're trying to find the best fit for it.

But at any point in the future there are several different jobs out there in different places around the world.

The apex and the endeavor.

Likewise have.

Opportunities.

And.

No.

With all of our older rigs will continue to have a very sharp pencil and look at all opportunities.

Closely.

And for us any opportunity.

It needs to stand on its own.

Those risks and that's that's pretty firm on our side.

Yeah.

And so those are being marketed and.

And hopefully have some update on direction there.

Perhaps perhaps next quarter, we will see.

Alright.

Very good thank you for all the detail.

I'll hand, it back.

Good day.

Thanks, Brian.

Your next question comes from Doug Becker with capital one.

Thank you.

Robert I was hoping you could expand on the prospects for the Black line on specifically is this likely to be well to well work in U S. Gulf or is it more likely to be term work in the U S. Gulf War or some other region just given that you've talked about line of sight to contracting that rig.

That was the right, yes, that's right.

Yeah, Mike I think we're we're talking to customers about book.

Actually we think we have opportunities both in the golf and outside the Gulf right now.

So.

I wish I had more direction than that.

But we're kind of.

Honestly, we have opportunities that fit in in.

And all three of those categories short term U S long term U S and long term non U S.

So we're gonna have to just see what what comes through for us here.

Fair enough and then maybe circling back to Norway, I was kind of encouraging to see reactivation would be interceptor.

Does this mean that there is a meaningful tightening in that market and really kind of thinking about some of the CJ 70, so they're working outside Norway, the potential of moving back in and let's say 2007 or so.

Yeah.

Yeah.

Look I would say.

I wish I can report that we saw Florida of work coming in Norway for the CJ 70 is I can't claim that right now we do have more opportunities today than we did six months ago or and certainly.

A year or two ago.

And that's driven us to.

To look at reactivating interceptor there.

I'd say that it'll be probably the most marketable rig in the <unk>.

That doesn't have a contract as it rolled out of that combination works. So so we like where it's positioned.

And we're hopeful that that perhaps.

Rig demand takes up by by one or if it's already picked up by one <unk>.

To maintain steady there, but it is it is a little too early to tell.

And if this contract.

Stands on its own.

And.

We're really happy to have it soon.

Got it thank you.

Your next question comes from Noel Parks with Tuohy Brothers.

Hi, good morning.

I just had a couple.

Is it safe to say at this point that price sensitivity is not in the mix in a big way in customer decisions either from sort of a formal perspective.

Maybe urge them to.

Commit sooner rather than later or or sort of from a bargain hunting perspective. So is.

Is it sort of just what we wanted to be conservative on there.

Budget commitments remain drivers at work these days.

Yeah.

Oh, I wish I could say, yes.

I don't I don't think setting Inc.

I see.

Think a customer so as price sensitive as ever.

The macro outlook is obviously variable and uncertain.

There's some.

Downward oil price beliefs.

And.

We will learn more as 2026 budgets.

Start to get announced.

Ah become more clear.

But we were I would say, we're seeing the opposite I'd say, we're seeing extreme price sensitivity.

And our ongoing negotiations.

Okay, Okay, thanks and.

You did mentioned.

And the wrap up of the prepared remarks that in Houston on the ground there.

It feels different.

How it has in terms of sentiment towards the deepwater at.

At any time in the past decade, I wonder if.

You could talk a little bit more about having a business center.

And the inevitability of the capital needs to head offshore relative to onshore opportunities, but just any sort of color you can give for that.

What you're hearing.

Sure.

I think.

Yes.

I think.

Here it feels like.

It's well known that deepwater is going to be an important part of the supply mix.

Going forward.

That is obviously in the context of a vote.

Slowing plateauing.

The Permian, which eventually someday.

Has the decline.

Deep water.

It's obviously long cycle.

Requires forward thinking and investment.

And those investments have to start at some point.

To me that's the most obvious connector between.

The malaise in the macro environment and a world where a lot of people are calling for perhaps lower oil prices in the near term.

With.

The 26% and 20 the opportunity set that we see in 2026 and 2027.

And so I think we see.

More activity.

Then perhaps one would have would have predicted this it's just just given the macro.

Certainty out there today.

And to me that explanation is one possible explanation is is that the understanding that that deepwater is an important part of the energy mix going forward.

Right right.

I'll just add.

We mentioned exploration.

I can't say today that we've seen any uptick in exploration wells.

I have seen an analysis that shows that the entire explanation of the difference in rig count from last market cycle high in 2013 2014 to today is the difference between development and exploration work.

And so I think that's something we've watched very closely.

I don't think it's.

Right on the horizon this as a driver for demand in our business certainly not in 2026.

But I do think that's an important litmus test, which is why we mentioned that.

Because we're running at around 90% utilization today.

On a pretty heavy development load or put a different way I'm pretty low total exploration load.

So we want to watch that very closely and.

And we'll see what happens over the over the next couple of years here.

Great. Thanks, I just wanted to.

Ask one more and that's about I think last quarter you were observing that.

In general in West Africa.

We're a little slower to commit then compared to South America. So I just wanted to.

That's unchanged.

You're talking about oil sands.

It has been surprising to me that there seems to be Jeff.

Just a lack of attention to.

Sustained geopolitical premium in the oil strip these days.

Despite being still quite a few a few hotspots.

Out there to be sure.

Just wondering if there if you saw there.

Concern about.

Future oil prices or oversupply or whatever if you.

Thought playing out more strongly and we're thinking of customers in one region than another.

Yeah sure. So first just on West Africa.

It's a long cycle region takes a lot of planning.

I think last quarter, we mentioned certainly in past, we've mentioned that really a difference between where we at one point, we're hopeful the demand picture would be at around this time and reality here is explained by a lack of west West Africa demand.

We see that starting to play out.

In a number of countries in West Africa, We mentioned SMB too I think.

That comes online in the next couple of years, so as that corrects itself.

I think that.

That's a.

A few units of demand that I think it's going to.

Really help in late 2006 and 2007.

Bring total utilization or excuse me total demand.

Back where we were we're predicting.

Predicting it to be.

On the oil piece I think theres a lot of negative sentiment theirs.

A lot of people hold the belief that it's likely to go down before it goes up.

Hi.

We we struggle to predict obviously.

I will say I guess kind of repeat what I said around what we see on service demand demand for our services, which is encouraging.

And then I always point to kind of the middle part of the Brent curve, which has moved so much less than.

Then.

<unk> pricing and then.

A very volatile sentiments.

And then if you're if you're a deepwater operator, you are obviously, having to take five and 10 year view. So it makes sense that.

What is that middle part moving less.

Net.

That we're seeing.

Planning continue perhaps beyond what.

Otherwise volatile macro would suggest.

Terrific. Thanks, a lot.

Okay, and I think I'd like to ask a question press star one on your telephone keypad.

Your next question comes from Josh Jamie Daniel Energy Partners.

Thanks, Good morning, I just had one I think it was at the end of the prepared remarks, you talked about the balance sheet and some cost rationalization, maybe you could speak to the efforts you're taking on the cost side.

And if you view those as sort of structural or if these are things that youre doing assuming that we have a trough in the first half of next year before recovering maybe just go into more detail on the things that nimble soon thanks.

Sure Yeah, all else equal.

Cost customer down markets, creating that value.

And I think as you think about the Diamond transaction as an example, right. So.

That deal will be we announced 100 million in synergies.

We achieved that.

Uh huh.

I guess in Q2 of this year.

Well all of them.

It was.

Well start with <unk>.

Now, we'll see that's been somewhat materially higher than that.

But it's hard to bifurcate what is the synergy versus the other kind of cost plus work when they commit to doing it in the company. So we haven't put out a kind of an incremental cost savings target, but I think it's fair to say that the way we're realizing.

Kind of incremental cost savings that I, just don't see that as activity slows heading into.

The first half of next year.

Okay. Thank you.

There are no further questions at this time I will now turn the call back over to Ian Macpherson for closing remarks.

Thanks, everyone for joining us today and for your interest and well look forward to speaking with you again next quarter a great day.

Ladies and gentlemen that concludes today's call. Thank you for joining you may now disconnect.