Noble Corporation

Ladies and gentlemen, thank you for standing by and welcome to the Noble Corporation PLC Second Quarter 2020 results. At this time, all participants are in a listen-only mode. If you require any further assistance, please press star zero. I would now like to turn the conference over to your speaker for today, Mr. Craig Meerhead, Vice President of Investor Relations and Treasurer.

Thank you and welcome everyone to Noble Corporation's second quarter 2020 earnings conference call. We appreciate your continued interest in the company. You can find a copy of Noble's earnings report issued yesterday evening along with the supporting statements and schedules on our website at noblecorp.com. For today's call, we will not have a question and answer session at the end of the prepared remarks. Before I turn the call over to Robert Eifler, I'd like to remind everyone that we may make statements about our Chapter 11 filing restructuring, activities or plans, operations, opportunities, plans, operational or financial performance, the drilling business, or other matters that are not historical fact and are forward-looking statements that are subject to certain risks and uncertainties. Our filings with the U.S. Securities and Exchange Commission, which are posted on our website, discuss the risks and uncertainties in our business and industry and the various factors that could keep outcomes of any forward-looking statement from being realized, including Resolution of our Chapter 11 cases, our ability to consummate our restructuring as contemplated, the impact of COVID-19 pandemic on Noble's operations, the price of oil and gas, customer demand, operational and other risks. Our actual results could differ materially from these forward-looking statements and Noble does not assume any obligation to update these statements. Also note, we are referencing non-GAP financial measures on the call today. You will find the required supplemental disclosure for these measures including the most directly comparable gap measures and an associated reconciliation on our website. And with that, I'll now turn the call over to Robert Eifler, President and Chief Executive Officer of Noble.

Thank you, Craig. As previously announced, on July 31st, Noble filed for Chapter 11 protection under the U.S. Bankruptcy Code. This was not a decision we made lightly or without evaluating a number of potential alternatives. We ultimately determined that a comprehensive restructuring path best positioned at Noble to meet the challenges we face in the current environment and to create a strong and appropriate financial foundation to support our industry-leading operations. We have signed a restructuring support agreement with several of our largest bondholders that plans to convert our bonds into equity in the reorganized company. And those bondholders have committed to invest an additional $200 million in the company. Additionally, a steering committee of our existing bank lenders has agreed in principle to a new $675 million revolving credit facility with our existing bank group. We also have had discussions with the Paragon Litigation Trust, which we think is the right path to get to a resolution of this case, hopefully soon. While there is clearly work that remains to be completed before we emerge, We are very pleased to have obtained this consensual deal and are optimistic we will navigate through the court process in a relatively expeditious manner. Given the status of our having filed for Chapter 11 and the related activities, we will not be holding a question and answer session on today's call, and I hope you understand our position there. It is important to stress that we remain absolutely committed to delivering operational excellence for our customers. It is our balance sheet that needs to be fixed, not the company. We plan to pay all of our employees and vendors in full while our day-to-day operations continue uninterrupted. Our legacy was built through operational excellence and customer satisfaction. While this is a significant event in our company's history, we will not lose focus on our core competencies or change the way we do business with our customers. Richard will address our restructuring again in just a moment. But first, I would like to give you an update on our operations and the good work the Noble team is doing and will continue to do around the world. As everyone knows, our industry is dealing with one of the most difficult environments we have endured in decades. I've heard the current market described as perfect storm or a double black swan event. Whatever the label, we have seen a significant disruption in our business. During the COVID-19 pandemic, our primary focus has been on keeping our workforce safe and maintaining the high operational standards that our customers have come to expect from Noble. Travel restrictions have created a challenge for crew changes, with 14-day quarantine before travel to many regions or outright travel restrictions in some cases. This is difficult on our crews and their families who have had to endure much longer hitches and more time away from home. We've organized quarantine procedures for the most difficult regions that allow us to crew change regularly, but the time away from home is still difficult for our crews. Our COVID-19 response team has done a great job of organizing the very complicated logistics and our offshore crews has stepped up to the challenge and done an incredible job of keeping our rigs running. I could not be prouder of the men and women of Noble and would like to offer my thanks and appreciation for the many individual efforts that have collectively allowed us to continue operating our rigs during this most challenging of times. Far from the green shoots we were seeing as 2020 began, operator drilling plans have been slashed across the board and we expect the depressed activity level to persist well into 2021. Tender activity in the second quarter was down 50% from Q1, and offshore rig contractors have lost $1.3 billion of backlog since March due to contracts being early terminated or canceled prior to start. While the scope of the recovery remains unclear, offshore exploration and development remains a key component in the supply of global oil. With a growing number of rigs coming out of the global rig fleet, We believe the supply-demand dynamics will be more favorable coming out of this downturn than the previous downturn. And, during the trough, the best properties will still be drilled, such as those in the Guyana-Cernan Basin, where another significant discovery was announced last week. Despite the very challenging backdrop, Noble has continued to outperform the market with respect to marketed utilization. In our floating fleet, the drill ship Noble Sam Croft is currently working on a very successful program for Apache and Suriname, and we will complete our contract there in the fourth quarter. I'm excited to announce that earlier this week, ExxonMobil awarded the Noble Sam Croft a new six-month contract to drill offshore Guyana, with operations commencing in the fourth quarter of 2020 after the rig finishes its current program. This contract was awarded under the previously announced commercial enabling agreement established with ExxonMobil earlier this year. We did experience a temporary pause on the Noble Tom Madden due to COVID-related travel restrictions, but returned to full day rate in early June. So, with this award, all four of Noble's high-specification HHI drillships will now be contracted to ExxonMobil in Guyana, expanding our relationship with a valued client in one of the world's most exciting deepwater basins and deepening our footprint in this emerging region. Gulf of Mexico drill ship utilization has dropped by about 20% as contracts roll over with few new opportunities, but still has a stable base of long-term contracts. Also, while rates are trending downward, early indications reveal they are holding up better than 2016-2017 lows. Our two rigs in the region, the Noble Globetrotter 1 and Globetrotter 2, remain on contract with Shell into 2022 and 2023 respectively. The Noble Clyde Boudreau has been impacted by the market conditions with the cancellation of its previously announced contract in Vietnam. We are bidding into multiple opportunities now, but the rig will see some downtime and is currently mobilizing to Malaysia for warm stacking. Five of our floaters are currently cold stacked and not marketed. We are evaluating options for these units, including selling or scrapping, and will closely manage any spending related to our cold-stacked rigs. Turning to our jackups, in the North Sea, outside of Norway, the spending outlook has dropped 21% this year as operators review, cancel, or defer their work scopes. Four of our jackups rolled off contract between March and April, which was a challenging time to be looking for work. The Noble Hans Dual and Noble Houston Culvert remain warm-stacked, but the Noble Sam Hartley and the Noble Sam Turner received two of only four contract awards outside of Norway since the conclusion of the first quarter. These contracts position the rigs very well for follow-on work in the region. The Norwegian market has gotten a boost through a recently passed tax relief package by the government. Projects sanctioned before the end of 2022 will benefit from the new tax measures resulting in meaningful improvement to project economics and we expect new projects to be fast-tracked on the Norwegian and the continental shelf over the next two years. The Noble-Lloyd-Noble has performed extremely well on the Mariner platform in the UK sector, supporting our discussions for follow-on work. The rig is one of the most technologically advanced in the world and we remain hopeful that we will be able to secure incremental work following its current contracts. In Australia, jack-up demand fell to one rig in the quarter. Fortunately for us, it was the noble Tom Prosser, which did experience a period of COVID-related standby time, but went back on full day rate in mid-July. We are currently chasing several opportunities for follow-on work in the country. Our last fleet status report disclosed an extension for the Mick O'Brien in Qatar until November. We are hopeful the exceptional operational performance will lead to additional work in the country. Saudi Aramco has suspended the Noble Scott Marks, which began its one-year standby period on May 10th. This suspension is not a reflection on the rig's performance, but rather Aramco's global response to the change in oil prices. We have also agreed to a day rate reduction on the Noble Roger Lewis, which will put the day rate at $139,000 per day, effective from April 1st, 2020 through the end of 2021. The day rates for the Noble Johnny Woodstein and Noble Joe Knight remain unchanged. Despite the challenges, we continue to perform very well for Aramco. Earlier this year, the Noble Roger Lewis received recognition from Aramco for successfully delivering a well 64 days ahead of schedule and with the lowest recorded lost time percentage of 2.95%. We are pleased to deliver this type of performance to a valued long-standing client in Saudi Aramco. The Regina Ellen is finishing its program in Canada and will move to Trinidad and Tobago to start work there in September. We expect the efficiencies of the JU3000N design to compete well in the Trinidadian market, providing an opportunity for follow-on work in the region with broader market recovery. I'll now turn the call over to Richard to give an update on our financial results and more details on our restructuring process.