Noble Corporation

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Noble Corporation's 4th quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press the pound key or the star two. Thank you. I would now like to turn the call over to Ian McPherson, Vice President of Investor Relations. Please go ahead.

Thank you, Kelvin, and welcome everyone to Noble Corporation's fourth 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. 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 Eisler, as well as our CFO, Richard Barker. Also joining on the call is 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 those 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 in our earnings report issued yesterday and filed with the SEC. Now, I'll turn the call over to Robert Eisler, President and CEO of Noble.

Thanks, Ian. Good day, everyone, and thank you for joining us. Today, we have three main topics that we will address in our prepared remarks before we wrap up and go to Q&A. First, a summary of our Q4 results, capital return program, and integration progress. Second, our industry market outlook, including our semi-annual review of global deepwater demand, as well as important fleet status highlights for Noble. Third, Richard will discuss our results in 2025 guidance. Following all of this, I'll wrap up with a few concluding remarks. 2024 was another pivotal year for Noble. We completed the highly strategic acquisition of Diamond Offshore, bolstering our strong position in Deepwater, and advancing our value proposition for customers and shareholders. We just passed the 150-day integration mark, and we are well on our way to achieving our previously stated synergies of $100 million, approximately half of which have already been realized as of today. I am immensely proud of our global offshore and shore-based teams who have ensured that the initial and most critical phase of this integration has gone tremendously well. Thank you to all our employees. Your commitment has been crucial as we prioritize our customers' needs throughout this integration and continue to deliver safe and efficient operational outcomes. The fourth quarter was our first full quarter with Diamond, and we had a solid result with Q4 adjusted EBITDA of $319 million. We continue to make major progress with our return of capital program. During the quarter, we paid $80 million in dividends and repurchased $50 million of shares, bringing our full year 2024 return of capital to over $575 million. Yesterday, our board declared a 50-cent dividend for the first quarter of 2025, consistent with past practices. And I'm pleased to highlight that we have now surpassed $900 million in combined dividends and buybacks since Q4 2022, including this quarter's announced dividend. We've also had a nice string of contract wins recently, comprising over $500 million in firm commitments, excluding options, which have augmented our 2025 and 2026 contract coverage. These are detailed in our earnings release and fleet status report, and confirmed that recent day rate fixtures for Tier 1 drill ships have held firm in the mid to high 400s per day. Now turning to the broader industry outlook, including our semi-annual global review of deepwater demand. Overall, we remain encouraged by a variety of positive indicators for deepwater activity over the coming years, both from a macro perspective in terms of the expected rising call on deepwater production, FIDs, and subsea order books, et cetera, and also from the specific dialogue with our customers and the visibility into their future drilling plans. That said, we have seen, of course, the emergence of a mid-cycle lull beginning in the second half of last year, which is carrying through into 2025, in step with the global trend of upstream capital discipline and a comfortably supplied oil market. Consequently, Contracted deepwater demand has dipped from about 105 rigs and 94% marketed utilization as of last summer to 100 rigs and 89% marketed utilization currently. With this downward revision versus how the market was previously trending, we are continuously evaluating the range of scenarios against which to manage and plan our business. We expect UDW contracted demand to bottom slightly lower this year and then to ultimately eclipse recent highs, perhaps 105 to 110 or more rigs by late 26 or 27. However, recent experience with demand generally slipping to the right also compels us to consider more tempered scenarios as well, with commodity prices and macroeconomic drivers obviously playing a key role in these potential outcomes. Regardless of whether demand lands at 95, 100, or 110 UDW rigs over the near term, we see a diminished call on reactivations of idle capacity for at least the next two to three years. Hence, our recent decision to permanently retire the cold stack to drill ships Meltem and Sirocco. In total, we have now effectively removed six rigs from the lower end of our floater fleet, including the Ocean Onyx and Ocean Valiant, which have been scrapped, as well as the Globetrotter 1 and 2, which we are no longer bidding into the drilling market except for in highly specific niche situations where their unique design features have advantages, for example, the Black Sea. Given the oversupply of rigs in today's market, we strongly believe that the rational course is to scrap stacked rigs or sell them into alternative use, rather than selling them as drilling units to secondary competitors. Nonetheless, these retirements will be cash flow accretive, regardless of disposal proceeds. as we expect to shed upwards of $20 million in annualized stacking costs. Throughout our growth journey of the past few years, sideline capacity has never been Noble's brand. We're focused on operating a leading high spec and highly utilized fleet, which we believe is ultimately how we can truly deliver value for our customers and shareholders. And again, based on the recent recalibration of the market, the option value of sideline capacity in this industry has eroded. Now onto the regional demand highlights. The Golden Triangle of the Americas in West Africa continues to shoulder over 75% of global deepwater demand. While the U.S. Gulf and South America have remained strong, West Africa has been the primary locus of weaker than expected activity recently. That said, the tangible pipeline of additional rig requirements in the region, which have been delayed by around a year on average, still provides good visibility for a rebound over the next two to three years. Current demand in West Africa is 13 UDW rigs, down from a range of 17 to 20 that prevailed throughout 2023 and the first half of 2024. The keystone markets here are Angola with six units currently and Namibia with four. Open demand in the region includes, among numerous other smaller programs, five multi-year tenders with contemplated start dates throughout 2026 and into 2027. This is in addition to several multi-year tenders with similar timing in Mozambique that appear to be approaching imminent FID. Namibia remains a crucial exploration and development play, although we have recently seen the expected FID for the Venus project probably slip from 2025 out to 2026. So overall, while West Africa has been a surprising laggard region over the past year, This looks very much like a transient air pocket ahead of what should be a meaningful and durable uptrend in the years ahead. South America continues to be very strong and a very important region for Noble, with eight of our deepwater rigs presently contracted throughout Guyana, Brazil, Columbia, and Suriname. Total UDW demand in the region is now up to 42 rigs, which is a current cycle high and up significantly from 35 rigs a year ago. Baseload demand from Brazil 35 rigs looks stable going forward with positive optionality arising from Brazil and other areas such as Columbia where there's been recent exploration success as well as Suriname with its first field development commencing in 2026. The U.S. has as expected remained stable with 23 contracted UDW rigs today in line with the normal 22 to 24 rig range of the past couple of years. It's also another highly scaled market for Noble, with seven of our deepwater units contracted domestically, including the Black Rhino, which has recently returned from West Africa. Although there is likely to be some additional gap time between contracts in 2025, we expect demand levels to ultimately stabilize around current levels. Now turning outside the Golden Triangle, the Mediterranean and Black Sea have been another stable deepwater market, with nine units contracted currently. in line with the 8 to 10 range of the past couple of years. Activity in the region is led primarily by Turkey and Egypt with a fair amount of current and future planned activity also stemming from Cyprus, Israel, Spain, Libya, and the Black Sea. The Asia Pacific region after West Africa has been the other notably softer market over the past six months and is currently down to five UDW units compared to normalized demand of 8 to 10 earlier this cycle. These five units do not include an additional four sixth-gen semis in Australia that are not technically UDW rated. The outlook in this region is somewhat mixed. On the favorable side, there is open demand for at least one to two incremental units in India from late 25 and into 26, in addition to an expected incremental drill ship program in Malaysia. On the other hand, most of the bigger programs in Australia are further out into the 2027 to 2028 timeframe, according to current plans. Finally, the harsh environment North Sea and Norway market currently represents seven units of UDW demand and 20 units of total floater demand, including midwater, both of which are a few units lower presently compared to 2023 to 2024 levels. There's a fairly high degree of political influence that governs capital deployment in this region, which always complicates forecasting a bit. However, separate from the fiscal and regulatory factors, there are underlying realities surrounding European energy resilience and competitiveness that could eventually support a more predictable upstream investment landscape compared to the current status quo. However, in the meantime, I would also add that the intervention in P&A opportunity set in the North Sea remains a relative bright spot in terms of our fleet positioning. All together, incorporating all these regional dynamics, we believe the global deepwater market could potentially see a net demand improvement of up to 10 or more units versus the current 100 contracted rigs by late 26 or 27. But again, there's always timing variability to consider. But how does this translate for our deepwater fleet status and outlook? Starting with our 14 Tier 1 drill ships, which are the core earnings engine of Noble, comprising approximately 75% of expected total company EBITDA this year, we currently have one unit available, the Noble Voyager, and another three units that have contract rollovers throughout this year. Our recent pictures for Tier 1 drill ships have been in the mid to high 400s per day, and we have a clear line of sight to potentially securing full future contract coverage across these 14 rigs by later this year. with programs commencing in 2025 and 2026. Next, our three D-Class 6th Gen semis similarly have a promising outlook, with the developer and discoverer now well-contracted in the Americas and the recently idle deliverer also well-positioned, we believe, for work commencing in 2026. Our two Globetrotter drill ships are being bid toward a number of opportunities in the intervention market. Depending on the outcome of these bids, we'll evaluate whether to remove one of these units from the marketed fleet. And then, as you look at the remaining semis from the legacy diamond fleet, we've obviously picked up some additional backlog on a few of those units recently. And we will continue to evaluate their longer-term marketability on a case-by-case basis, particularly as SPS and recontracting thresholds dictate. Now on the jackups. In the traditional North Sea and Norway market, current demand is 27 jackups, and marketed utilization is 93%. We have also had some recent success in deploying our harsh jackups in less traditional markets, such as Argentina, Poland, and Spain. When expanding the harsh jackup realm to include these niche markets, the total demand picture is 31 rigs with marketed utilization of 94%. So the overall fundamentals are in good shape, despite the disappointing fact that the Norway jackup market remains relatively subdued, which is holding back the potential earnings of our CJ70 rigs. And we do have active and encouraging conversations behind all of our jackups with near-term rollovers, including the Intrepid, Resilient, and Regina Allen. So I'm going to pause there and turn it over to Richard now to discuss the financials and 2025 guidance.

Good morning or good afternoon all. In my prepared remarks today, I will briefly review the highlights of our fourth quarter and full year 2024 results, provide an update on our synergy progress, and then touch on our outlook for 2025. Starting with our quarterly results, the fourth quarter was our first full quarter as a combined company with Diamond. As such, the type of prior period comparisons we usually reference have less relevance. so I will forego the prior period comps for the purposes of this review. Contract drilling services revenue for the fourth quarter totaled $882 million. Adjusted EBITDA was $319 million, and adjusted EBITDA margin was 34%. Adjusted EBITDA was positively impacted by approximately $40 million related to the early termination of the noble deliverer. but was also adversely impacted by approximately six weeks of idle time on the Jerry D'Souza at the end of the year between contract scopes. Q4 cash flow from operations was $136 million, net capital expenditures were $134 million, and free cash flow was $2 million, which was burdened with transaction costs related to Diamond, as well as a temporary increase in net working capital, which we expect to reverse in early 2025. For the full year 2024, we generated $3.1 billion in revenue and $1.1 billion in adjusted EBITDA. As summarized on page five of the earnings presentation slide, our total backlog as of February the 17th stands at $5.8 billion. Current backlog includes approximately $2.4 billion that is scheduled for revenue conversion during the remainder of 2025. As a reminder, our backlog excludes reimbursable revenue as well as revenue from ancillary services. Before walking through our 2025 guidance, I would like to provide a brief update on our integration activities related to the diamond acquisition. We are pleased with how the integration is progressing and the level of buy-in we are seeing across all levels of the organization. And as Robert mentioned, we are making significant strides in realizing our previously announced synergies of 100 billion, with just over half on a run rate basis realized to date. We have a high degree of confidence that the remainder of the synergies will be realized by the end of the year, and we'll have updates on our progress over the next couple of quarters. Referring to page 10 of the earnings slide, we're providing full year 2025 guidance as follows. Total revenue within a range of 3.25 to 3.45 billion, which includes approximately 150 million in other or reimbursable revenue, adjusted EBITDA between 1.05 to 1.15 billion, and capital expenditures, which excludes customer reimbursements of between 375 and 425 million. The midpoint of this revenue range is approximately 90% supported by Q1 to date revenues, but firm backlog and options for the remainder of the year. Based on current visibility and contract sequencing, we anticipate Q1 adjusted EBITDA tracking marginally down by around approximately 5% quarter on quarter when excluding the Q4 impact of the contract termination. For full year 2025, we anticipate our jackups to contribute approximately 10% to 15% of our adjusted EBITDA. Some other elements for 2025 to consider are as follows. We expect cash taxes to be approximately 12% of adjusted EBITDA, and we expect costs to achieve the remaining synergies related to the diamond transaction to be approximately $40 million for the full year 2025. Also, we will incur $26 million in BOP lease payments in 2025, although I would like to note that we are currently evaluating terminating these leases when they expire in 2026. Our guidance reflects inflation rates in the range on average of 3% to 4% across various cost components. As it relates to potential tariffs, it's clearly a very fluid situation. Our supply chain team is proactively working with our vendors to mitigate the impacts of any potential tariffs and some small level of price increases is assumed in our 2025 inflation outlook that underpins our guidance. Despite a more muted near-term outlook, we still expect 2025 to represent a nice step up in free cash flow compared to last year, facilitated in part by lower CapEx following the peak of the five-year SPS cycle in 2023 and 2024 for both the legacy Diamond and Noble fleets. And consistent with our past practice, we will look to deploy excess free cash flow after the dividends to share buybacks. With that, I'll pass the call back to Robert for closing remarks.

Thank you, Richard. In conclusion, we remain laser focused on safe and efficient drilling for our customers while navigating what we expect to be transitory demand softness over the near term. Despite some pockets of utilization gaps, We see high-end UDW day rates holding firm in the mid to high 400s with a realistic path to higher levels based on plausible demand scenarios over the next couple of years. Fundamental drivers for our business are durable in nature, and therefore, this recent contracting law that has pushed things out to the right by a year or two is very likely to be self-correcting before long. And just to state it, nothing has changed in our medium and long-term view about the demand for our services. Regardless, we feel extremely excited about what Noble is capable of producing, either in a flatter world such as we're confronted with today or in a more galvanized up cycle like we hope to see in 26 and 27 and beyond. Now, I'd just like to wrap up with a word of thanks to our employees. It's always a proud moment to see those closest to the wellhead earn recognition directly from our customers. So hats off to the crews of the Mick O'Brien who recently earned rig of the quarter for their outstanding performance for Qatar Energy LNG, and also to the crews of the Noble Valiant, who brought home Deepwater Rig of the Year from Total Energies. These awards are a testament to the strong commitment to safety and performance demonstrated by the men and women on not just these, but all of our rigs each and every day. So thank you to all. Be proud of what you do. The future is bright at Noble. We're ready to now go to questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. As we enter the Q&A session, we ask that you please limit your input to one question and one follow-up. And at this time, I would like to remind everyone in order to ask a question, press the star button followed by the number one on your telephone keypad. We will pause just for a moment to compile the Q&A roster. One moment please for your first question. Your first question comes from the line of Aaron J. Arum of JP Morgan. Please go ahead.

Good morning, gentlemen. My first question is on the Tier 1 drill ship market. You highlighted, Robert, that you have some good prospects to get all of your Tier 1 drill ships contracted maybe later this year, early 26. Can you maybe provide a little bit more detail on some of the opportunities for the Black Rhino Voyager and Valiant?

Sure, yeah. Thanks for the question. I guess we won't go into specifics as far as customers or tenders, of course, but I would say that we have a few different programs. I would say there are more with 26 starts than 25 starts, but with 25... with some opportunities in 25. And those opportunities really, I would say, cover or are kind of across the golden triangle that we referenced. And so, some of those are tenders included in some of the tender stats we've given in the past. Others are direct negotiations. But there is, I would say, an abundance of work out there that's being discussed.

Fair enough. And in the release, you highlighted how kind of leading-edge rates for 6-gen rigs is across a fairly wide band, low 300s to low 400s. Help us think about what kind of governs the lower versus the upper end of that band, and how do you expect the market to play out maybe later this year where we're all dealing with a bit of an air pocket until you get to longer-term programs in 2026?

Yeah, sure. I think part of it depends on specific opportunities and the technical needs for specific opportunities, so giving an example. our D-class semi-submersibles, which we classify as sixth-generation rigs, when competing against a drill ship, are going to need to bid at, I'd say, a higher discount to seventh generation than when they're needed more specifically, which they are in several instances, actually, that we're discussing right now, where that discount shrinks. So... You know, sixth gen, I would say, of course, there's so many definitions now, but, you know, sixth gen, I would say, is probably also encompasses a slightly wider band of capabilities in terms of the assets in that class, which is part of the reason for that range. And they're always, you know, where seventh gen is preferred, you're going to have higher discounts. And to the second part of your question, we see softness the rest of this year. And generally speaking, like we've seen in times past, I'd say that the asset quality is the differentiator here when customers have options among a couple of classes of rigs.

Great. Thanks a lot. Thank you.

The next question comes from the line of Eddie Kim of Barclays. Please go ahead.

Hi, good morning. Just wanted to ask if you could kind of walk through the thought process for us on the decision to retire the Meltem specifically, which I think caught many by surprise. But, you know, by all accounts, this was a very high spec 7G drill ship. And while I understand it's not free to stack the rig, at the same time, we have seen some multi-year contracts announced over the past several years, which does seem to pay for that reactivation expense. and maybe some of the stacking costs within that initial term of the contract. So just curious if you could just expand a bit more for us on the thought process related to that decision.

Yeah, sure, Eddie. Happy to. So, you know, we watch everything closely, and we continuously run numbers on everything. And I think on the Meltem contract, A couple things stand out. One, I certainly recognize that on paper it's easy enough to craft a scenario where that rig could be in the money and that call it the option value of continuing to pay the stack costs could work. However, as we said in the script, we see a diminished call in the near term on stack capacity. I mean, UDW numbers are down around 10 rigs here as we move through this year. And so as we look forward, we think that whatever collar there would be on the Meltem has been pushed out several years, at least two or three years. And admittedly, that rig as well has actually... had never drilled well for a customer. It had been activated twice and then deactivated before it had actually drilled. And so we failed to see a likely scenario where that rig, where it would make sense for us to bid that rig, especially considering that the contract durations that we see today and that we think we'll continue to see for a little bit now given the softness are short enough where in effectively any situation where we would bid that rig, we would be bidding it against available active fleet within our own fleet. And so we took the decision, which we think is the right decision, to go ahead and move on.

Understood. Understood. That's very helpful. Just my follow-up is maybe just another one on regular retirements. You've taken kind of a market, you know, leadership role here in reactive, in retiring the meltdown. Do you think others might start to see the market in a similar way, others with 7G cold-stacked drill ship capacity and might start to retire their own drill ships? Or maybe ask it in a different way. I guess maybe over the next three years, let's say. What's your estimate of how many 7G drill ships reactivations we could see over that time period? I would imagine it's not anywhere in the four to five range. Is it one to two? Or could it possibly even be zero?

Yeah.

That's kind of a million dollar question. It requires, of course, a crystal ball. I think I would say if we use the numbers that we used in our prepared remarks, you know, we're going to need another year to year and a half to kind of get back to where we wanted to be a year ago. And then from there, of course, there are a lot of macro factors that will determine where we go. I mentioned in my script, and I would repeat it, that when we look at all of this, that we have a lot of cause for optimism in that late 26 and 27 and on period. But we've got to work through a lot of active supply before we get to these stacked rigs. And that's why we chose our words carefully, saying that we think the call on those rigs has been...

um greatly diminished here recently got it understood thanks for that color rob i'll turn it back your next question comes from the line of frederick steen of clarkson securities please go ahead hey robert and team hope you are well and thank you for you know good color in the prepared remarks as always i wanted to touch a bit on 2025 guidance and in a way, I guess it relates still also to fleet optimization. I think Richard, you said around 90% of the EDTA midpoint would be secured by current contracts and options and potentially some extensions if I heard it correctly. But on the backlog slide, you say that for 2025, you have 55% of available days contracted. So obviously there's not going to be full utilization on all units as we move through 2025. So you have taken out some of the cold tax assets now. What are your thinking on taking out or stacking some of your warm assets? And as a side question to that, we'd be interested to hear Around the Globetrotters 1 and 2, you are saying that they are not being bid into the drilling markets going forward. Can you view those as effectively out of the drilling market forever, or do you think they can eventually return? Thank you. Sure.

There's a lot of questions in there, Frederick. Starting on the climate side, so you were right. So basically, you know, approximately, it's actually just over 90% of our top line at the midpoint is impactful today, right? And so the 65%, I think, that you're referencing, I think that includes, that does include kind of our cold stack assets as well. And so as we look forward to 2025, you know, we're basically saying that we've got, you know, just under relevant to that as well to the extent that we don't find that work um you know I'll note that if you go back to 2024 and 2023 um you think we're in similar kind of range ranges if you will from a contract coverage perspective I think both both years we managed to actually hit or raise that guidance as well so I think we feel good about our guidance obviously we've got work to go again in 2025 You know, there's obviously some meaningful amount of kind of white space assumed, especially in our seventh-gen assets. In 2025, I think that's maybe why, you know, it's lower than where kind of consensus was. But I think the key drive is around the kind of 2025 guidance.

And I can speak to the globetrotters. So, you know, we've been saying for a while that we've been chasing the intervention market, and we continue to believe those rigs are well-suited for that market, and we also believe that that market will be a strong and growing market going forward. So in the near term, you know, we've got several open, I'd say, conversations for multi-year work that actually could use both of the Globetrotters. That's in the intervention market. We mentioned in the script that There's a couple little exceptions there, Black Sea, et cetera, where we would consider drilling with those rigs. And I think the standard there is that it wouldn't be cannibalizing our other drilling rigs. But we do not see ourselves outside of those exceptions chasing the drilling market with the globetrotters. We'll look to see how the results of this work that we're chasing. And if for some reason we're having trouble contracting into that market, then later in the year we'll make a decision about whether to further reduce costs on one of those units.

this is uh very helpful thank you very much and uh as always you know we always try to wrap five questions into one so that's why a lot of words at the start there we're only allowed one question so i appreciate you answering my one question of course so thank you and have a good day your next question comes from the line of criticality of benchmark please go ahead

hey good morning everybody hey thanks as always for uh for the the color um so robert you mentioned that you know you uh you think you know there's gonna be a uh rebound in demand you know coming off this low in 2025 which is good to which is good to hear um i'm kind of curious then if you're gonna try to connect the dots right so you reference that You know, one of your competitors also referenced that this morning. So it seems like, you know, this is definitely the discussions are definitely happening with, you know, the incremental net demand coming. Do you expect there? What kind of pricing improvement would you expect off of 2025 levels on contracts that you are looking to sign in, say, 2026?

Yeah, great question. So I think my guess is that most people see what we see in terms of this demand. And I'm sure that everyone sees what we see around things getting slightly, just a tiny bit worse before they get better. But I think that uh, the, the underlying call admit to long-term drivers still remain, uh, quite strong. And so, uh, you know, we, we gave, I guess some, some, uh, a couple of, of, uh, uh, facts around where we've seen recent fixtures in the mid to high four hundreds. Uh, so I, you know, I think that that defines the market right now. Um, and, um, You know, I don't know where we go from here, but I do think that the reality is that there is a fair amount of work out there that is pretty evident starting mainly in 2026. So we see, you know, we kind of think about 25 as maybe being just kind of maybe stepping back to 2023 or some sort of analogy like that where, the optimism remains just after a slight dip slash flat period rather than the linear up into the run.

Okay. Fair enough. And look, I know you referenced that, you know, the jack up business is going to represent somewhere between 10% to 15% of EBITDA as you go into 2025. Some recent things that I've seen coming out of Norway would suggest, you know, a desire, you know, to increase, you know, drilling-related activity. I know it's kind of a two-rate type market, right, jackup and harsh environment semis. So what are you seeing in Norway as it relates to the prospect to, you know, to get some tailwinds in the van for, you know, for your jackup assets there?

Yeah, so obviously we saw that as well. And we do think that the potential for an additional unit or two of demand on the jack-up side in Norway is better now than it's been in several years. So I guess I would say we're hopeful. I would say that that market for us has remained, I would say, almost surprisingly stable considering the political headwinds that everybody faces in a couple of different countries over there, Norway and the UK, and really others as well. So, you know, we've effectively maintained utilization here in the 90% kind of range. And we're hopeful that we're over the hump in terms of the worst regulatory headwinds, and that we can perhaps improve that from here.

That's great. I really appreciate it. Thank you.

Thanks, Kurt. The next question comes from the line of Noel Parks of Tubi Brothers. Please go ahead.

Hi. Good morning. So I was wondering, you know, as this era of strength in pricing, call it post-COVID, you know, has continued on, is sort of the relatively lower visibility that results from, you new contracts in place that were going to give you a big bump up in day rate, say from the 200s into the 400s or something. As there are sort of fewer of those highly visible increases in the hopper, is that sort of influential in you getting just a bit more conservative on your program moving forward?

Yeah, well, look, I think rates have been relatively flat for quite some time now in the high 400s. We had some low 500s. And so maybe they're more mid to high 400s now. But I don't know that that's necessarily changed our outlook dramatically. You know, I continue to reference uh work that's that's being you know discussed being contracted that's under negotiation a lot of direct negotiations out there um and and still a fair number of public tenders um so i think you know if if there were a program short-term program that came up with for 2025 work you know you know i think it's pretty obvious that that people might be aggressive for something like that given that that uh assuming people see what we see But I think what I said previously holds true, that there is a fair amount of work out there that's on the horizon and I think remains supportive of certainly the Tier 1 market.

Great, thanks. And I was just wondering, from the producer's standpoint, It sort of seems that by sort of taking the risk that when they decide to move forward with Wells, that they will be able to get the equipment they want without price inflation that's too dramatic. In other words, there seems to be confidence that not everyone is going to be rushing through the door at exactly the same time. I just wonder, it seems to me that also means that they are comfortable sort of assuming that the macro situation in pricing is going to be strong enough that they don't feel much urgency to sort of bring value forward by being active now, maybe at better rates than they could get a couple years from now. So is there sort of some embedded... macro confidence you see for the longer term as opposed to the near term that you see from operators when you talk with them?

Well, there is. I mean, I guess there's kind of competing realities a little bit. One reality is that spot pricing today is down $15 or $20 from where it was a year, 18 months ago. And the kind of middle part of the curve is down as well. On the other hand, most of what has been taken to FID or what is being contemplated to go to FID has been profitable at levels well below any of the middle part of the curve. And so, you know, in my mind, there is, and one of the reasons we have so much optimism, in my mind, there's plenty of work that is profitable at where the curve currently sits. And I think we're seeing that play through with all this tendering activity that we're talking about, negotiating activity that we're talking about. However, like we said in past calls, there is no rush really to make that final commitment just given, like we mentioned in the script, a pretty comfortably supplied market right now. And so it's this balance of the work being there and we believe being profitable balanced with a catalyst to actually go ahead and commit the dollars and move forward with everything. And I agree with you to your point that the general availability, especially on the drilling side, there's some other categories that are a little bit different on supply, but on the drilling side, there's supply. So there isn't really a catalyst on supply constraint right now. And so we think that for 2025 that mood of discipline certainly will continue to govern most of the decisions.

Got it. Thanks a lot. Thank you.

Your next question comes from the line of Josh Jane of Daniel Energy Partners. Please go ahead.

Thanks. Good morning. I wanted to go back to the Globetrotter rigs a bit. You talked about potentially removing one from the marketed fleet, and it sounds like over the next six to nine months, we'll sort of have an answer on that, and based on the number of opportunities you're going to bid those into. My question is, are there any modifications that you potentially may need to make to one of those assets to make them more competitive in the intervention space? And if so, could you speak to that, just if you're thinking about that over the medium to long term?

No, I think anything. Really, the GT2 has NPD, which is really more of a drilling tool. Other than that, you know, most of the intervention equipment is transferable. And really, the vast bulk of that package comes from service companies instead of our side.

Okay. Okay. Thank you. And then just to follow up on tariffs, I know in your cost guidance, you talked about some level of inflation was assumed. It's obviously a very quickly moving target across a number of geographies, but could you give any more details about maybe upside or downside scenarios for what they could ultimately look like and just how you're thinking about managing that?

Sure, Josh. Obviously, it's a very fluid situation and we can't possible to predict, like, the real impact. You know, it's very likely that tariffs would result in price increases, which are obviously more likely than not to be passed on to us as well. And so, you know, embedded in our guidance is some level of inflation really across the entire cost base in the kind of 3% to 4% type area. You know, we're obviously working as closely as we can with our suppliers around this, but obviously it's an incredibly managing on a daily basis.

Okay. Thank you. I'll turn it back.

Your next question comes from the line of David Smith of Pickering Energy Partners. Please go ahead.

Hey, good morning. Thank you for taking my question. Yeah. I feel like the U.S. Gulf was one of the bright spots in the deep water market last year. We saw increasing lead times and good price momentum. with most of the 7th gen capacity broke through at the end of 25 right by the end of September last year. Contracting really slowed down in Q4. I don't see any contracts for 7th gen rigs signed in the Gulf year to date, and we have some rigs that could be available soon, including I guess the Valiant next month. So I was hoping you could help with some color on what you've seen happen in the US Gulf, you know, going from a run on forward availability last year to having some near-term availability of seven-chain rigs now, and how you're thinking about the Valley and Black Rhino opportunity sets, and if either has been bid outside the Gulf.

Yeah, sure. I mean, so I guess a couple of things. We continue to see the U.S. as kind of flat to current in the mid-term. We think it's obviously going to dip down a little bit, just look at our own fleet. And so we were disappointed around some of the decisions, drilling decisions that affected our own fleet. I think probably the difference between our guidance and consensus is explained largely by the Black Rhino. And that's a place where we're really expecting to continue to work through the year. So I think the U.S., and look, again, you know, these are more, I would say, you know, more independents that are affecting our fleet in the U.S. And I would say that the explanation I gave to the previous question around discipline, current spot pricing, all of what's playing into this, I would say is as pervasive among independents in the U.S. as it is anywhere else in the world. That's a place that can move quickly. There is obvious supply availability, so people can ramp down quickly and ramp up quickly, more quickly in the U.S. than anywhere else in the world, I would argue. And so I think you're seeing that play out here in 25 for the reasons previously stated. I think West Africa, where things can't be ramped down or ramped up as quickly, really provides most of the explanation for where we are today versus where we had hoped to be, call it, a year ago. And the good news is that we see a lot of that coming through. We mentioned in the prepared remarks, we do see a lot of that coming through. And we do see, I think, some of the drivers there being, call it regulatory, but perhaps uh, legitimate, uh, delays rather than, uh, uh, uh, question marks or trying to, trying to, trying to delay just on account of, of, of, of spot pricing. Um, so we kind of went there in the script, so I won't repeat it, but we, we see, uh, we see all of that work, uh, uh, all potentially coming back as we, as we get into 26, which is one of the reasons we're, we're, uh, perhaps more optimistic than you may have expected here. I appreciate it.

If I could ask a quick follow-up, I thought Q4 SG&A was surprisingly low given the first full quarter of including the Diamond Fleet. Is this a good base level to think of going forward, or was there anything one-off contributing to the low Q4 SG&A figure?

Yeah. I think, Dave, I think that's a good Decent estimate going forward, obviously. The majority of the synergies in the diamond transaction are G&A related. As we sit here today, we've realized about 50% of those on a runway basis. And so hopefully as we move forward as well, we see some benefit there as well through 2025, right? And as we sit here today, by the end of 2025, we'd expect to realize 100% of the synergies that deal.

Great. I appreciate it. Thank you.

There are no further questions at this time. With that, I will now turn the call back over to Ian McPherson for final closing remarks. Please go ahead.

Thanks, everyone, for joining us today. We appreciate your interest in Noble, and we'll look forward to speaking with you again next quarter. Have a great day.

Ladies and gentlemen, that concludes our conference call. We thank you for participating and ask you to please disconnect your line.