Noble Corporation

followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 a second time. Thank you. And I would now like to turn the conference over to Ian McPherson, Vice President of Investor Relations. You may begin.

Thank you, Operator, and welcome everyone to Noble Corporation's first quarter 2024 earnings conference call. You can find a copy of our earnings report along with the supporting statements and schedules on our website at noblecorp.com. This conference call will be accompanied by a slide presentation that you can also find located at the Investor Relations section of our website. Today's call will feature prepared remarks from our President and CEO, Robert Eifler, as well as our CFO, Richard Barker. Also joining on the call are Blake Denton, Senior Vice President of Marketing and Contracts, and Joey Kawaja, 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 the obligation to update these statements. 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 associated reconciliation in our earnings report issued yesterday with the SEC. Now I'll turn the call over to Robert Eifler, President and CEO of Noble.

Good morning. Welcome, everyone, and thank you for joining us on the call today. I'll begin with opening remarks on our first quarter results in recent commercial activity. A brief word on the markets. and then hand it over to Richard to cover the financials. As usual, following our prepared remarks, we look forward to taking your questions. Our first quarter adjusted EBITDA of $183 million was up 32% year on year and reflected solid operational uptime during the quarter and a slight sequential increase in marketed utilization. While costs were up from last quarter, this was primarily timing related. and resulted in a modest sequential decrease in EBITDA. As we mentioned last quarter, we do expect quarter one to represent just a starting point for EBITDA this year, followed by progressive improvement throughout the year. Importantly, all of our major projects and contract preparation activities are progressing well, with timing consistent with what we provided last quarter. Thus, we are excited to be commencing significant new contracts for several RIGs over the next few months. including the Noble Discoverer, the Noble Fay Kozak, and the Noble Regina Allen, all of which will underpin this earnings ramp. The Discoverer has completed its SPS and contract prep and is undergoing acceptance testing for its Petrobras contract in Colombia. The Fay Kozak has arrived in Brazil and has also commenced acceptance testing ahead of its two-and-a-half-year Petrobras contract. And lastly, the Regina Allen has also completed its shipyard stay and has arrived in Argentina ready to commence its contract with Total in the next few weeks. While there's still work to be done, some of which is out of our control, we're tracking well against the completion timeline for those major projects which are critical to our earnings ramp this year. The Board of Directors declared a 40-cent dividend for the second quarter of 2024, consistent with last quarter. This will bring cumulative total capital return to shareholders since our Q4 2022 merger to $400 million. As we outlined on last quarter's call, we expect full year free cash flow to increase in 2024 versus 2023 and to be materially back half-weighted. With this progression, we plan to continue to deliver on returning the significant majority of free cash flow via dividends and buybacks as cash flow inflects to a higher plane later this year and especially into next year. The market outlook for offshore drilling remains encouraging, both from a top-down macro perspective, as well as from the steady drumbeat of positive contract signings and indications of open demand from our customers, all of which point to enduring tightness and healthy commercial opportunities over the foreseeable horizon. Leading-edge drill ship day rates have approached and eclipsed $500,000 at the high end, and significant multi-year contract terms designed to hedge against these higher day rates have also arrived. We view both of these complementary developments as positive for the visibility of our business. We've had several nice contract signings since our last report at the end of February. First, the Noble Viking was awarded a contract for three firm wells with prime energy in the Philippines at a day rate of $499,000, excluding additional fees for MPD services mobilization, and demobilization. This contract also features one additional option well at $549,000 that would keep the rig booked through most of 2025. Next, Petronoff exercised an option for an additional 60-day well with the Noble Voyager in Suriname at $470,000 per day, which extends this campaign into mid-August and keeps the Voyager well-positioned for additional future opportunities in this exciting growth region. where Noble has established a very strong presence. And then finally, within the UDW fleet, we've been happy to announce a couple of new engagements recently for the Noble Venturer in West Africa, which have effectively eliminated the potential downside arising from Tullow's early release of the rig, which, as a reminder, resulted in part from the rig's outstanding drilling efficiency. We now expect Tullow to finish with the rig in Ghana within the next several weeks, at which time we will mobilize for a three-well contract with Trident Energy in Equatorial Guinea for an estimated 150 days. And then next on to Namibia for a two-well contract plus options with Rhino Resources. The Trident contract is effectively a derivative of the Legacy Tullow contract that was signed several years ago in a very different market. And then, as some of you may recall from trade press coverage several months ago, The Rhino contract priced at $410,000 derived from an LOI that actually originated from the 6G semi-Noble developer. And then it became more efficient and attractive for both Noble and Rhino to assign this job to the Venturer after its availability status changed. So that's a very relevant context behind these new fixtures looking somewhat lower than other leading-edge day rates for 7G drill ships. which, as previously mentioned, are now in the high 400s to low 500s. On the Jackup side, the Noble Innovator had an additional option exercised by BP in the UK North Sea at $145,000 per day, extending from December 2024 into April 2025. Not yet reflected on our fleet status or in our backlog is an additional scope of work for the Jackup Noble Resolve, which is pending contract execution within the next few days. We will update the market with this news as soon as we get it over the finish line. Collectively, these recent fixtures, excluding the pending contract for the resolve, contribute an additional firm backlog value of approximately $210 million, excluding mobilization, MPD revenue, and option periods. With these bookings and net of the shortened TOLO backlog for the Noble Venturer, our total backlog currently stands at $4.4 billion. From a higher-level industry perspective, both contracting momentum and open demand remain constructive. UDW utilization remains around 95% on the marketed fleet. And after a short-term lull in the fourth quarter last year, the first quarter of 2024 saw 26 rig years of UDW capacity contracted, which was back on par with the very healthy 2021 to 2023 trend lines. We also continue to observe open demand for floaters exceeding 100 rig years in the pool of public tenders and pre-tenders, which represents a decade high and provides a strong basis of visibility for additional contracting strength in the months and years ahead. There's clearly an ongoing transition back toward longer-term planning and procurement strategy amongst some of the biggest IOC and NOC customers. as evidenced both by some of the long-term deals that have recently been signed, as well as many others still in the commercial pipeline. The execution of these longer-term commitments represents a threshold backlog catalyst for our industry, as well as an opportunity for customers to lock in acceptable long-term rig pricing to de-risk their capital planning. Over the near term, we still have some white space to fill on three of our sixth-gen rigs, both Globetrotter drill ships and the semi-noble developer. These three units remain a commercial priority and also account for most of the sensitivity range between the high and low ends of our EBITDA guidance for this year. We're continuing to pursue work for these rigs and will update their future status as it progresses. With the six-gen floaters comprising the lion's share of open capacity industry-wide over the near term, we expect the utilization and day rate bifurcation for these units to continue for some time. And just to zoom in a little bit on that dynamic, if you look at total utilization of UDW floaters today with 7,500 feet or greater water depth ratings, there are currently 104 rigs with contracts and seven marketable warm or hot rigs without contracts, all seven of which are 6GIN units, including two of ours. And then, looking at the UDW rigs that are scheduled to roll off contract over the balance of this year without follow-on contracts as of today, there are nine additional units, five of which are 6-gen. The steady rise in 7-gen day rates combined with this 6-gen utilization profile clearly underlines the swing supply nature of the lower-tier assets, which is reflective of a firm and orderly market rather than a scarcity situation. And there certainly is work coming for most of these lower-tier rigs, but it's just more likely to be more patchwork than seamless, at least over the near term. That's the main point. The jack-up market, while also in the mid-90s percents in terms of marketed utilization, is obviously digesting the effects of the Saudi reset, which has impacted 22 rigs or 5% of global demand. Despite some recent evidence of day rate softness resulting from rigs leaving the kingdom for alternative work, we haven't seen nor do we anticipate any impact to market balances or day rates in the harsh and ultra-harsh segments where our jacked-up fleet is predominantly focused. This is mostly a matter of rig specs. Day rates in the non-Norway North Sea are still in the $130,000 to $150,000 range. Or above this range, for instance, is requiring more premium rig specs such as the CJ-70. In Norway, the most recently observed CJ-70 fixture was in the $240,000 to $250,000 range. For both of our jackups rolling off contracts later this year in the Southern North Sea, the Noble Resilient and the Noble Resolve, we are tracking opportunities for follow-on work, albeit potentially with some gaps between work in the second half of this year. So I'll pause here and pass the call to Richard to cover the financials.