Noble Corporation

Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the Noble Corporation second quarter 2025 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 star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Ian McPherson, Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and welcome everyone to Noble Corporation's second quarter 2025 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 their investor relations page of our website as well. Today's call will feature prepared remarks from our president and CEO, Robert Eifler, as well as our CFO, Richard Barker. We will also have with us 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 NOBL 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 Eichler, President and CEO of Noble.

Thanks, Ian. Welcome, everyone, and thank you for joining us as we present our results for the second quarter. Today, I'll walk through our financial and operational highlights, recent commercial wins, our perspective on the market, including our semiannual outlook on regional deepwater demand, and wrap up with our fleet strategy. Then I'll hand it over to Richard to cover the financials before I return with some closing remarks and open the line for Q&A. Starting with Q2, we delivered strong financial results with adjusted EBITDA of $282 million and free cash flow of $107 million. Over the past two years, our capital return program has been a key element of our strategy. We affirmed that commitment this quarter, returning an additional $80 million to shareholders through our 50 cent per share quarterly dividend. Yesterday, our board declared a 50 cent per share dividend for the third quarter, now eclipsing $1.1 billion in capital returns since Q4 2022 through dividends and share repurchases. On the integration front, We're approaching the one-year anniversary of the Diamond acquisition, and I'm pleased to report that we've achieved our $100 million synergy target ahead of schedule. I want to thank the teams across the organization who have made our integration efforts so successful. At this point, the heavy lifting is behind us, and our focus now is squarely on optimization. And I'm proud to say that we've already reached a point where we are truly better than the sum of our parts. Turning to commercial activity, our contracting momentum continued this quarter. Building on the transformative awards that we announced in April, we have subsequently secured six new contracts since the last earnings call, as detailed in our fleet status report published yesterday. First, on the deepwater front, the Noble Stanley LaFosse was extended by its current customer in the U.S. Gulf for five additional wells, spanning approximately 14 months and keeping the rig contracted through August 2027. There is an option for an additional five wells at mutually agreed rates. Next, the Nobel Viking received a one-well contract with Total in Papua New Guinea, scheduled to commence in Q4 in direct continuation of its Brunei campaign. This estimated 47-day program is valued at $34 million, including mobilization, demobilization, and MPD usage. but excluding a modest performance bonus. This will be the first drill ship to operate in Papua New Guinea in over 30 years, and the first ever ultra-deepwater rig to do so. We're honored that Total has entrusted us with this high-impact exploration well, which includes options for three additional wells in the region. And finally, on the deepwater side, the novel Globetrotter 1, having recently completed its campaign in the U.S. Gulf, secured a two-well contract with OMV in the Black Sea. This contract is planned to begin in Q4 with estimated duration of approximately four months and a total contract value of approximately $82 million, including a day rate of $450,000 plus mobilization and demobilization fees. The rig's unique design provides a distinct advantage for transit into and out of the Black Sea. As a reminder, This Black Sea program is a specific niche market opportunity, but we have otherwise removed the globetrotters from competitive bidding into drilling programs globally. In addition to these deepwater awards, we also secured several recent contracts in our jacked up fleet that highlight the versatility of our harsh environment rigs and our ability to support both traditional and energy transition projects. First, the Novel Innovator was awarded a six-well contract with BP the northern endurance partnership carbon capture and storage project in the uk north sea the program is expected to commence in q3 2026 in direct continuation of our current contract with bp at a day rate of 150 000 with a minimum firm term of 387 days plus two optional wells subsequently the noble intrepid was awarded a two-well program with bp for additional Northern Endurance Partnership CCS wells, also at $150,000 per day. Intrepid's contract is scheduled to commence in April 2026 for an estimated duration of 160 days plus options. We're very proud to support BP with this critical infrastructure project that underpins the UK's carbon storage ambitions. Lastly, the noble resilience secured a 92-day accommodation services contract at the Inch Cape Offshore Wind Farm in the UK North Sea. This contract is scheduled to commence within the next few weeks and is valued at approximately $6.5 million for the firm 92-day term, with options to extend. Year to date, we have now secured new contracts with total contract value of $2.8 billion, and our total backlog as of August 5th stands at $6.9 billion. As a reminder, our backlog position assumes 40% of available performance revenue realized on a combined basis under our recent long-term contracts with Shell and Total. We continue to pursue a number of promising opportunities to build on this recent momentum and look forward to sharing further updates as they materialize. Before we move to the market outlook, I'd like to highlight two key contract startups in Southeast Asia and the Americas, that required significant planning and coordination to execute safely and on time. I want to thank the teams involved for their hard work in bringing these projects online. First, in the Philippines, the Nobel Viking commenced a critical three-well program for prime energy in June to extend the life of a key gas field, an important part of the country's broader push for energy security and independence. Following the recent award with Total, the Viking could remain active through most of the first quarter next year if options are exercised, with a robust pipeline of future opportunities in the region thereafter. Next, in Suriname, the noble developer recently kicked off an important three-well development campaign for Petronas in July, returning to a region with a growing pipeline of development activity for this class of rig. Now on to the market outlook. including our semiannual review of key deepwater geographic markets. Amidst significant macro uncertainty and upheaval this year between tariffs, Middle East conflict, and Brent crude prices that have ranged between the low 60s and the low 80s per barrel, the demand characteristics for offshore drilling have stayed comparatively on trend. While we have seen intensifying pressure on 2025 upstream CapEx, resulting in incrementally more near-term gaps for rigs, We have also seen a crystallization of firming conditions by H2 2026 and into 2027. On the UDW demand side, the global contracted rig count currently stands at 97 rigs, which is roughly flat compared to recent quarters, but down from the recent peak of 105 to 106 during 2023-2024. We will still probably see a few more aisle units over the next few quarters as scheduled rollovers are likely to outstrip visible contract starts and extensions. And this near-term slack in the market continues to pressure day rates, which are now generally in the low to mid 400s per day for Tier 1 drill ships. Geographically, the recent deepwater demand trend has been shaped by continuing strength in South America, contrasted with softness in West Africa. However, Visibility for a potential rebound in West Africa is promising and hopefully drawing nearer. Starting first in South America, where contracted UDW demand stands at 43 total units, including 35 rigs in Brazil, five in Guyana, two in Suriname, and one in Columbia. This is a highly important region for Noble, as we have two rigs working in Brazil and seven out of the eight rigs contracted across Guyana, Suriname, and Columbia. Visibility throughout the region remains highly encouraging. Starting with Petrobras in Brazil, a strong outlook is supported by recent tenders covering existing development drilling throughout Búzios, Miro, and Tupi, as well as potential for new frontier exploration activity in the recently licensed Falls Dome Amazonas Basin further to the north. These, combined with Shell's recent FID at Gato de Mato, Equinor's recent drill ship tender, very significant recent exploration success from BP announced just this week, plus miscellaneous demand from one or more smaller operators collectively all frame a very exciting outlook for Brazil for years ahead. Elsewhere throughout South America, we are tracking potential floater programs throughout Suriname, Trinidad, Columbia, Uruguay, and the Falklands with varying probability and timing factors. So overall, the deepwater market in South America continues to show extraordinary depths and breadth of demand which should keep the region in growth mode. The U.S. Gulf has softened recently with 21 contracted UDW rigs today, down from 22 to 24 rigs last year. Depending on how the spot market plays out, we may see activity drop slightly further in the back of this year, although current indications from customers suggest that the rig count could normalize back toward around 20 UDW rigs next year. That said, Demand on the U.S. Gulf tends to be a bit more dictated by spot market drivers and is sensitive in that regard to commodity prices as well. Our primary marketing priority in the Gulf is the noble black rhino, which will finish its current contract in the next month or so. We are constructive on the rig's long-term outlook in 2026 based on direct conversations we are having with clients, but we would not be surprised to see the rig encounter some near-term white space in the meantime. Next, on to West Africa, where current UDW demand is 12 rigs, similar to recent quarters, but materially below the 17 to 20 range that prevailed throughout 2023 and the first half of 2024. Angola remains steady at six rigs, while Namibia and Nigeria have declined to just one and zero rigs respectively, representing a combined decrease of six rigs compared to last year. The good news is that visibility for resumed growth in the region is increasingly tangible. While West Africa and Mozambique comprise only 12% of total deepwater rig count today, the region's corresponding share of open demand is two times that level at over 25%. Several prominent IOC tenders appear to be progressing towards contract awards with 26 and 27 start dates. These anticipated fixtures should be supportive of a UDW rig count back toward the mid to high teens. or conceivably higher if and when Namibia eventually regains momentum. Namibia for now does not factor as prominently in the near-term open demand picture as other areas like Nigeria, Ghana, Cote d'Ivoire, and Mozambique. But it should ultimately progress back toward a more consistent multi-rig basin in the fullness of time. Additionally, we are seeing potential incremental exploration activity in adjacent South African blocs which could materialize as early as 2026. The Mediterranean and Black Sea have remained steady with eight to nine UDW rigs. However, the big positive surprise in this region recently has been Turkish Petroleum's acquisition of two more drill ships from sideline capacity, which will increase their captive fleet from four to six drill ships and add two more units of long-term captive demand in the region. Open demand throughout the MED appears otherwise supportive of stable activity levels, excluding the oscillations in the Black Sea and the structurally upsized demand from Turkey. Asia Pacific plus India has remained muted and is now down to four UDW units compared to five earlier this year and seven to eight rigs last year. Despite the recent decline, open demand for multiple rigs across India, Southeast Asia, and Australia suggests a modest upward bias in activity over the next one to two years. although some of the incremental rig needs are likely to be satisfied by lower spec equipment. Lastly, the harsh environment North Sea and Norway market currently represents six units of UDW demand and 19 units of total floater demand, including midwater, both of which are down by one rig compared to earlier this year. Two of our North Sea semis, the Great White and the Endeavor, have rolled off contract recently with no visible work opportunities for the balance of this year. Upstream customer consolidation policy and fiscal headwinds continue to suppress spending, and there has also been some incremental deferral of P&A and intervention programs since earlier this year. That said, most of the North Sea and Norway floater fleet is copiously contracted into 2027 and beyond. Moreover, there is potential for one harsh semi-requirement in Canada, which is currently an inactive market. So tying all this together, although the next several quarters continue to be characterized by a variety of pluses and minuses on the demand side, which appear to shake out to a roughly flat market, we continue to believe that the bottoms-up view supports promising upside by late 2026 or 2027, including a very credible path back toward a contracted UDW rig count of around 105, assuming reasonably stable macro conditions. As we have seen over the past 12 to 18 months, timing risk really continues to be the key wildcard as many FIDs and RIG awards have been drifting to the right. Hence, our focus on judiciously managing our costs and active fleet posture based on current market realities. Now, I'll comment briefly on our contract position and objectives. We've made very good headway toward contracting our 15 high-end drill ships We are now principally focused on the Black Rhino, Viking, and Jerry D'Souza as key remaining priorities, all three of which have very robust opportunities under discussion with customers for programs commencing in 2026. Moving down the fleet with a decision to dispose of the Globetrotter 2, the Globetrotter 1 still remains in consideration for several multi-year well intervention scopes, which could potentially follow the RIGS Black Sea Drilling Program. If none of these intervention opportunities comes to fruition, then we will likely move to dispose the Globetrotter 1 as well. Four of our eight semi-submersibles are well contracted next year, while the Deliverer, Great White, Endeavor are currently idle and Apex rolling next month. We're pursuing active leads for all four of these units around the world with expected starts varying throughout 2026 and 2027. and each is subject to individual stacking plans over the interim term. We'll continue to carefully evaluate stacking costs vis-a-vis the opportunity set, especially with older rigs. Now on the jackups. In our harsh environment northern Europe market, current demand is 28 jackups. This demand level has fallen off by about three rigs compared to last year, and forward visibility for 2026 continues to be clouded by fiscal and regulatory headwinds. We are happy with several of our recent contract wins, including additional CCS and wind farm construction support activity in the UK, in addition to expanding our customer book in Norway with the Intrepid's DNO contract. Overall, however, we expect muted market conditions throughout the region to linger until policy driven impediments are removed, particularly in the UK. That said, Our jacked-up earnings contribution is disproportionately weighted to our well-contracted units, and we do not anticipate material earnings erosion from the overall jacked-up fleet segment compared to current levels. Wrapping up, on the supply side, we have recently closed the disposals of the cold-stack drill ships Pacific Scirocco and Meltem, permanently removing those units from the drilling market. We are now moving forward with the disposal of the Noble Globetrotter II, in addition to the jack-up Noble Highlander, for which we have entered into a definitive agreement to sell for $65 million, and the jack-up Noble Reacher, which is also now held for sale. For additional context, the Reacher is the lowest capability jack-up in our fleet, having worked exclusively in accommodation mode for the past few years, and the rig would require meaningful capital to be drilling ready again. These actions reflect our continued focus on maintaining a high spec competitive fleet and managing our costs and active capacity as judiciously as possible in order to maximize cash flow for our shareholders. To underscore this point, while we don't know with exact precision, our best estimate is that the current combined run rate costs are idle slash stacking time across the largest drilling contractors is likely approaching $800 million to $1 billion on an annualized basis. By these estimates, idle costs for floaters alone represent a surcharge of around $30,000 to $35,000 per day on average across every one of the working floater rigs in the global fleet. With our focus on cash flow maximization and returning capital to shareholders, we are taking aggressive action to reduce Noble's exposure to this surplus cost burden. In other words, our recent impending capacity rationalizations are instantly accretive as these units have not contributed positive economics in recent years. And as we look ahead to a near-term flat market with promising upside optionality in the years ahead, we are optimally positioning the fleet for either a flat market or growth market with effectively no relevant earnings attrition. With that, I'll pause here and turn it over to Richard now to discuss the financials.