Noble Corporation

Thank you for standing by. My name is Carrie and I'll be your conference operator today. At this time, I would like to welcome everyone to the Noble Corporation fourth quarter 2025 earnings conference 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'd 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, please press star 1 again. Thank you. I would now like to turn the call over to Mr. Ian McPherson. You may begin.

Thank you, operator, and welcome everyone to Noble Corporation's fourth 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 in the investor relations page of our website. Today's call will feature prepared remarks from our President and CEO, Robert Eifler, as well as our CFO, Richard Barker. We also have with us Blake Denton, Senior Vice President of Marketing and Contracts, and Julie Kawaja, Senior Vice President of Operations. During the course of this fall, we may make certain forward-looking statements regarding various matters relating 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. Any 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 in our earnings report issued yesterday and filed with the SEC. Now, I'll turn the call over to Robert Eifler, President and CEO of Noble.

Robert Eifler Thanks, Ian. Welcome, everyone, and thank you for joining us. Today I'll walk through our financial and operational highlights, recent commercial wins, market outlook, including our semiannual review of deepwater rig demand around the world, and a brief update on our fleet strategy. Richard will then provide a financial overview, and I'll wrap up with closing remarks before we go to Q&A. Starting with Q4, we reported adjusted EBITDA of $232 million and free cash flow of $35 million. bringing adjusted EBITDA for the full year 2025 slightly above the $1.1 billion midpoint of our original guidance. We have maintained our return of capital program, returning an additional $80 million to shareholders through our 50 cent per share quarterly dividend in Q4. Yesterday, our board declared a 50 cent per share dividend for the current quarter. Turning to the commercial highlights, we've continued to see strong booking levels across our fleet, with backlog increasing to $7.5 billion. First, the noble Great White has been awarded a three-year contract with Akra BP in Norway, valued at $473 million, including mobilization but excluding additional fees for integrated services and bonus potential. This marks the Great White's first campaign in Norway and represents a significant step in expanding our presence on the Norwegian continental shelf. and deepening our important relationship with OCRA BP. We expect capex of approximately $160 million for the RIGS reactivation, Norwegian certification, and contract preparation. This is a highly strategic investment with a compelling return profile as we anticipate total EBITDA potential of approximately $240 million over the three-year contract period, essentially targeting a recovery of the capital in the first two years of the program. and positioning the Great White very well for the future as one of the most technically capable units in the Norway floater market. And of course, the access to the Norway market should result in a structural enhancement to the long-term earnings profile and NAV of the rig. Next, the Noble Jays D'Souza was awarded a two-year contract with Exxon in Nigeria. This contract, valued at $292 million, is scheduled to start around the middle of this year and is followed by three one-year options. We're looking forward to redeploying the D'Souza in Nigeria following the rig's previous campaign there from 2023 to 2025. In the U.S. Gulf, the NOAA Black Rhino has recently been awarded one well plus one option well with Beacon. The firm well is an estimated 50-day workover set to start in March, and the option well is for an estimated 100 days of drilling work. The noble developer received a 3 well contract with BP in Trinidad that's scheduled to commence in early 2027. At a day rate of 375,000 dollars. With estimated duration of 240 days plus 3 option wells with similar duration. As a side note, the developer has been made available for this contract. as the previously announced long-term contract with Total and Suriname, scheduled to start later this year, has been reassigned to the Noble Discoverer. Perhaps somewhat counterintuitively, our sixth generation D-class semis actually began to realize an earlier demand recovery than some of the higher spec seventh gen rigs, with both the Developer and Discoverer now booked out for a combined total of nearly five rig years. Additionally, the deliverer looks well positioned for a good amount of work that's expected to start next year. Hopefully, we will have some positive news to report on the deliverer before too long. Staying in South America, the Noble Endeavor has been awarded an 11-well contract with an undisclosed operator that's expected to commence late this year with estimated duration of 18 months at a rate of $300,000 per day, plus mobilization and demobilization fees. and potential for performance bonus. And finally, in Southeast Asia, we have firmed up contracts for an additional five to six months of work this year through the expansion of existing work scopes plus one additional option well. So we now expect the biking to be solid through July with additional opportunities under discussion that would carry term for the rig through this year and beyond. Now onto the market outlook. Despite the ongoing abundance of macro uncertainties and Brent prices hovering around five-year lows in recent months, between $60 and $70 per barrel, floater contracting activity has been resilient, underscoring our customers' multi-year planning horizon for their highly strategic deepwater assets. Including our recent contract awards, the contracted UDW rig count has now bounced back up to 105, up from a recent low of 97 early last year, and is closing in on the 2024 high water mark of 107 contracted UDW rigs. On this basis, the contracted utilization rate of the marketed fleet is 95%. That said, these figures all reflect the gross number of contracted rigs, including those which are currently idle but have contracts starting in the future. Alternatively, the number of UDW rigs currently working under contract today is 90. which represents marketed utilization of 82% on a present basis. And of course, gives rise to the soft day rates we've seen recently. These divergent utilization statistics tell us a couple of things. First, the industry fleet has added backlog depth, but hasn't yet fully worked through the prompt white space overhang. And second, the foundation has been set for a steadily improving activity level as we progress through this year and into 2027. Of note, six of the 14 rigs that sit idle today with future contracts in hand are Noble rigs. The Noble Black Rhino, Voyager, Valiant, Great White, Cherry D'Souza, and Endeavor. We believe this is a strong indicator of improving utilization on the come for the industry fleet, and especially the Noble fleet. More on this later. Focusing on the near term, there are still about 25 UDW floaters with contracts expiring during the course of this year. For context, This is essentially the same as the fleet's rollover profile in 2025 and does not cause concern. While this churn will still probably continue to result in some idle gaps this year, overall, the fight space across the industry looks to be on the retreat. And if the overall contracting cadence remains on trend, then we would expect to see some convergence between the present and future utilization metrics. Against this firming but not yet decisively tight backdrop, Day rates for Tier 1 drill ships have settled at around $400,000 per day, with lower spec units recently capturing low to high $300,000 per day. Geographically, the recent deepwater demand trend has been characterized by steady strength in South America, a slight decrease in the U.S. Gulf, and upticks throughout other regions, including West Africa, the Med, and Black Sea, and Asia-Pacific. Starting first in South America, where contracted UDW demand stands at 44 total units, including 34 rigs in Brazil. Although Petrobras' budget pressure has emerged as a near-term headwind, resulting in slower contract executions and ongoing blend and extend negotiations with contractors, including ourselves, thus far, this has been offset by increased demand from other operators, both within Brazil and elsewhere throughout the region. Later this year, The Noble Discoverer will wrap up its program in Columbia. It has planned to commence its three-year campaign with Total and Suriname. We remain in constructive dialogue with Petrobras regarding contract extensions for either or both of our two Brazil rigs, the Noble Fay Kozak and Noble Courage. Overall, with Petrobras bearing back activity by a few rigs over the short term, while other operators throughout the region are net adding, we would expect South America to remain roughly flat over the next year relative to today's record high contracted UDW rig count of 44. U.S. Gulf has softened recently, with the noble black rhino's recent contract award bringing the contracted UDW rig count back up to 21, which is one to two rigs below last year's average level. We had predicted this slight pullback in the U.S. Gulf, And it appears now that this has more or less fully played out. Next, on to West Africa, where contracted DDW demand has recently rebounded to 15 rigs with the noble Jerry D'Souza back under contract. This is an uptick from last year's trough demand level of 12, although there is still some variability to demand in this region, with a few rigs contracted into other regions later this year. The pipeline of open demand throughout Africa remains highly promising. including at least five active or pending long-term tenders throughout Angola, Nigeria, Cote d'Ivoire, Ghana, and Namibia, plus the potential for multiple additional rig lines in Mozambique over the next couple of years. So overall, West Africa plus Mozambique region appears poised to grow into a mid to high teens UDW rig count as these various programs come online. The Mediterranean and Black Sea has been a growth pocket. partly due to the continued expansion of Turkish Petroleum's offshore ambitions. The region is now up to 11 rigs, up from an average of seven to nine last year. And this could expand to 12 rigs by the second half of this year, with the commencement of two programs in the MED offsetting the conclusion of the Noble Globetrotter 1's contract in the Black Sea. Visibility beyond this year isn't quite clear yet, with a number of rigs rolling off contract by year end. but the long-term trend has been one of secular UDW demand growth. So from where we stand today, an estimated range of 10 to 12 rigs going forward looks sustainable. Continuing with Eastern Hemisphere strength, the Asia Pacific plus India region is witnessing a significant recovery with contracted UDW activity rebounding over the next year from a trough level of four rigs to eight currently. Additionally, The pipeline of open demand in the region remains robust, with over 30 rig years of active tenders and pre-tenders outstanding, including a variety of requirements throughout Southeast Asia, India, and Australia. All of this indicates a likely upward bias of at least a couple more UDW units through 2027. Rounding out the global picture, the harshly environment North Sea and Norway market currently represents 22 units of total floater demand, seven of which are satisfied by UDW semis, which is up by one to two units compared to a year ago. We are very excited to kick off preparations for the Noble Great White three-year program with Oxford BP starting next year, and the redeployment of both the Great White and the Endeavor points to a tightening market for harsh semis. So the pathway back to 105 total contracted UDW rigs that we described on our earnings call last summer has, in fact, materialized. if anything, faster than we had hoped. This is good momentum, but there's still some work to be done to arrest the recontracting churn. The average Brent crude price of $68 per barrel in 2025 was down by 15% compared to 2024, which I believe makes Noble's 30% year-over-year backlog growth stand out incredibly well by comparison. However, we believe that a broader industry uptrend will necessarily require at least a modicum of positive upstream cash flow momentum. With both spot and long-term Brent futures hovering in the high 60s per barrel, our end markets are for the most part highly economic, whereas our customers' budgets remain relatively inert, which creates friction for significant expansion in drilling activity and day rates. The great news for Noble is that our backlog progresses have already formed a strong foundation for rising utilization EVA DOT and free cash flow without necessarily a great deal of wind at our backs from a macro perspective. This sets us up well toward our goal of maintaining our robust shareholder capital returns through a transitional year in 2026 and supports visibility for a meaningful step up in free cash flow next year, even in a flat world. Before I turn the call over to Richard, I'd like to provide a brief update on our fleet strategy. Last month, we completed the sale of five jackups to board drilling, for $360 million. Additionally, the $64 million sale of a sixth jack-up, Noble Resolve, is expected to close in Q3 upon completion of its current contract. As we continue to sharpen Noble's strategic focus around the high-end deepwater and CJ70 jack-up market, we have in the process unlocked capital available both for fleet reinvestment, in particular the highly strategic reactivation and upgrade of the Great White, as well as for preserving a highly flexible balance sheet and industry-leading shareholder capital returns program. On the jack-up side, we remain fully committed to the CJ70 market in Norway and the North Sea, and we are encouraged to see early indications of the strongest utilization outlook for this fleet in many years. This aligns very nicely with our entry into the NCS floater market with the Great White next year. With that, I'll pause here and pass the call to Richard.