Noble Corporation

I will now hand today's call over to Ian McPherson. Please go ahead, sir.

Thank you, operator, and welcome everyone to Noble Corporation's third 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 any obligation to update 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 and earnings report issued yesterday and filed with the SEC. Now, I'll turn the call over to Robert Eifler, President and CEO of Noble.

Thanks Ian. Good day everyone and thank you for joining us on today's call. I'll begin with a brief update on our acquisition of Diamond Offshore, followed by highlights of our capital return program, third quarter results, recent commercial and operational activities, and some market outlook color. Richard will then discuss our financial results and provide guidance for the fourth quarter. Finally, I will wrap up with closing remarks and open the floor for questions. As most of you know, we closed the acquisition of Diamond Offshore on September 4th, combining two great companies with incredibly rich legacies and leading deepwater capabilities. I want to extend my appreciation to everyone across both organizations who worked tirelessly to close this transaction in just under three months. This highly synergistic combination brings together over 150 years of combined experience, creating a fleet of 41 rigs, including the largest fleet of seventh-generation dual BOP drill ships in the industry, while also adding $2 billion of well-priced backlog. As we pass the 60-day integration mark, we are excited to share some early wins, including meaningful synergies realized that have us on track to achieve our stated targets. Diener Management has visited legacy diamond rigs and customers around the globe. while prioritizing a focused commitment to business continuity through safe and efficient operations. Thus far, everything is proceeding very smoothly according to our well-practiced integration playbook. Next, I'd like to highlight additional progress with our return of capital program. Following the execution of $250 million of share repurchases in the third quarter, We have completed $360 million of repurchases under our original $400 million authorization. And our board of directors has recently approved a second $400 million authorization, while also maintaining our quarterly dividend here in the fourth quarter at 50 cents per share. We recognize that our differentiated return of capital program is a critical factor for investors. And I'm pleased to highlight that we have now eclipsed $800 million in combined dividends and buybacks since we closed the mayor's trillion combination in Q4 2022, inclusive of this quarter's announced dividend. Moving to our financial highlights, in the third quarter, we delivered strong results with continued EBITDA and cash flow expansion. On a consolidated basis, we achieved adjusted EBITDA of $291 million, compared to $271 million in Q2, and free cash flow for the quarter was strong. at $165 million. These results include approximately four weeks of contribution from the diamond acquisition in September. Richard will have additional color on the combined results in a moment, but suffice it to say that the diamond acquisition further enhances our free cash flow profile with significant and immediate accretion. This marks a great start for our combined company. Shifting now to our commercial and operational highlights, First, during the third quarter, we were awarded 4.8 rig years of additional backlog for the four drill ships working under the commercial enabling agreement with ExxonMobil in Guyana, further validating the successful commercial and operational model and extending our visibility in the country through August 2028. We have also recently booked an additional 130 days for the ocean endeavor working for Shell in the UK North Sea between March and July 2025 plus options. As of today, our total backlog currently stands at $6.2 billion. In addition to these most recent fixtures, in July, the Black Rhino was awarded a six-month contract with Beacon Offshore Energy in the Gulf of Mexico at a day rate slightly below $500,000. This program is slated to commence in the first quarter of 2025 following the rigs SPS and MPD upgrade that are underway. Following the Black Rhinos MPD upgrade, we will have 15 rigs equipped with MPD, enhancing our dominant position in this increasingly essential technical domain. In South America, the Fay Cozac successfully commenced its contract with Petrobras in Brazil and set a new pre-salt drilling record on its first well. Hats off to the crews of the Fay Cozac on this impressive accomplishment right out of the gate. In Colombia, the discoverer has successfully drilled its first well for Petrobras, and we look forward to continuing to work on this important gas development for the region. In the UK, Ocean Great White resumed its contract with BP in early July following equipment repairs, and the contract is now expected to continue through April 2025 with priced options following that firm's quote. And finally, the Black Lion in the Gulf of Mexico and the Deliverer in Australia both moved to substantially higher day rate contracts in the mid to high 400s during the quarter. Now I'd like to share a brief word on the market. The core fundamentals of our business remain structurally sound. Global energy demand is increasing, energy security remains a global priority, and offshore supply represents a highly strategic and advantaged resource priority for the upstream industry. Also, over the last several quarters, open demand for floaters continues to track at a historically high level of above 100 rig years of demand from tenders and pre-tenders in the public domain, excluding the substantial additional volume of work that stems separately from direct awards. Against this backdrop, recent contracting activity for deepwater rigs has shown an encouraging uptake. After a slowdown in the second quarter, the industry saw an improvement in backlog booked, with 26 ultra deepwater rig years contracted in Q3, marking a 20% increase over Q2, and in line with the strong contracting level seen in 2022 and 23. While the majority of these recent fixtures have contract start dates in late 2025 or later, leaving the white space of the first half of 2025 unaddressed, we do believe that these are the first of many signs supporting a demand uptick in late 2025 and early 2026. As you can see on our backlog slide on page five of the earnings presentation, We currently have 56% of our total marketed fleet committed for 2025. As you drill a little further into the mix, our marketed floaters are 59% contracted next year, and our Tier 1 drill ships are slightly above 75% committed for 2025. Our higher-end units with near-term availability are the Voyager, Valiant, Jerry D'Souza, and Venturer. And I would say that today we have active conversations and leads behind all of these units. In our 6th Gen fleet, we currently have more active conversations on the discoverer and the deliverer than we have had at any time since we acquired these units. So the contracting outlook there is promising. Meanwhile, the Globetrotters similarly have a number of active leads for 2025 work, almost exclusively for intervention programs as we have previously indicated. The timing associated with these opportunities collectively supports a potentially meaningful ramp in utilization and run rate EBITDA compared to our current level by the second half of 2025, although there's obviously still some work to be done to convert these opportunities to firm backlog. I would also say that the nature of the discussions and negotiations with our customers over the past few weeks has been increasingly active and constructive as 2025 customer budget allocations are beginning to take shape. If the next several months plays out as we currently envision, then we should see a backlog in utilization inflection next year. Given the abundance of active opportunities, we have elected not to stack any rigs at this time. However, if demand does not materialize as expected, then we will move decisively to stack one or more 6G units as the market dictates. On the jack up side, despite some continuing and more recent NOC headwinds, The market has remained quite resilient, with global demand recently eclipsing 410 rigs and marketed utilization at 93%. Noble's jack-up fleet utilization improved from 77% in Q2 up to 83% in Q3, and we currently have 11 of our 13 rigs contracted at an average day rate of approximately $145,000 per day. North Sea operators have generally taken a tentative approach to capital deployment ahead of last week's budget announcement in the UK, which unsurprisingly introduced incrementally higher taxation on the upstream sector. Amid these fiscal and regulatory crosswinds, we expect the North Sea jack-up market to continue to be characterized by relatively constrained demand visibility. But note that early indications of the market reactions to last week's UK budget news are generally neutral, least not significantly negative and that thus far that market has been more stable over the past couple of years than we might have expected against a consistently difficult contextual backdrop with that i'll now pass the call to richard to cover the financials thank you robert and good morning or good afternoon all in my remarks today i will briefly review the third quarter highlights and then touch on the outlook for the remainder of the year and 2025.