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.