Transocean Ltd (Switzerland)

Good day, everyone, and welcome to today's third quarter 2024 Transocean earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star and 2. Please note this call is being recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Director of Investor Relations, Allison Johnson.

Thank you, Madison. Good morning, and welcome to Transocean's third quarter 2024 earnings conference call. A copy of our press release covering financial results along with supporting statements and schedules, including reconciliations and disclosures regarding non-GAAP financial measures, are posted on our website at deepwater.com. Joining me on this morning's call are Jeremy Thigpen, Chief Executive Officer, Keelan Adamson, President and Chief Operating Officer, Thad Veda, Executive Vice President and Chief Financial Officer, and Roddy McKenzie, Executive Vice President and Chief Commercial Officer. During the course of this call, Transocean Management may make certain forward-looking statements regarding various matters related to our business and company that are not historical facts. Such statements are based upon current expectations and certain assumptions and therefore are subject to certain risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our SEC filings for our forward-looking statements and for more information regarding certain risks and uncertainties that could impact our future results. Also, please note that the company undertakes no duty to update or revise forward-looking statements. Following Jeremy, Keelan, and Thad's prepared comments, we will conduct a question and answer session with our team. During this time, to give more participants an opportunity to speak, please limit yourself to one initial question and one follow-up. Thank you very much. I'll now turn the call over to Jeremy.

Thank you, Allison, and welcome to our employees, customers, investors, and analysts participating on today's call. As reported in yesterday's earnings release, for the third quarter of 2024, Transocean delivered adjusted EBITDA of $342 million on $948 million of contract drilling revenues. resulting in an adjusted EBITDA margin of approximately 36%. During the quarter, our marketing team was once again exceptionally busy, securing new contracts and extensions across the fleet. With these new contracts, our current pipeline of opportunities, 2024 is shaping up to be a very strong contracting year for Transocean, ensuring excellent fleet utilization for the coming 12 to 18 months. In the U.S. Gulf of Mexico, BP awarded the Deepwater Atlas a one-year contract at a rate of $635,000 per day, with no additional services provided under the contract. The contract is expected to commence in the second quarter of 2028 and includes a one-year option at the same rate. And given our current understanding of the customer's program, we expect that this option will ultimately be exercised. Additionally, the Deepwater Invictus was awarded two contract extensions that are currently expected to keep the rig working into November of this year. With these extensions, our active fleet is now essentially fully contracted in 2024. Lastly, for the Gulf, the Deepwater Conqueror was awarded a one-year contract at a rate of $530,000 per day, including additional services. This program is expected to commence in October of 2025. In India, Reliance Industries awarded the KG1 a six-well contract at a rate of $410,000 per day, excluding additional services. The program is expected to commence in the second quarter of 2026 and includes multiple options into 2029. Moving to the harsh environment fleet, In Norway, Equinor exercised a three-well option on the Transocean Spitsbergen at a current rate of $483,000 per day. Assuming all remaining options are exercised, the current well schedule extends through the fourth quarter of 2017. Equinor also exercised three one-well options on the Transocean Enabler at a current rate of $438,000 per day. The estimated 105 to 150-day extension extends the firm term into the third quarter of 2026. In Australia, Woodside exercised two options for a total of six additional wells at a rate of $390,000 per day. The firm period now runs through August of 2026, and with the remaining options, the rig is expected to remain in Australia through at least October of 2026. As I mentioned, the Transocean fleet is now solidly booked for the vast majority of 2025 and well into 2026. In fact, based on today's backlog, our active fleet utilization for 2025 exceeds 97%. and remains at roughly 86% through the first half of 2026. Through our 23 fixtures awarded so far this year, we have steadily eliminated utilization concerns through next year, successfully avoiding the so-called white space issues that most of our competitors have discussed over the past several months. We believe that our unique position relative to our peer group results from the following. We own and operate the highest capability fleet in the industry. We consistently deliver safe, reliable, and efficient operations for our customers. and we have a comprehensive understanding of the global market and use this advantage to maximize value creation from our portfolio of high specification assets. On my last point, before I hand it over to Keelan, I'd like to spend some time on asset quality. We have gradually but continuously optimized our portfolio of assets since 2014, resulting in a fleet that is technologically differentiated from that of our peers. Through the cycles, owning and operating the highest specification rig fleet has consistently proven to be the winning strategy. As you're well aware, Transocean owns the only two eighth-generation ultra-deepwater drill ships in the world, Deepwater Atlas and the Deepwater Titan. These rigs are equipped with 1,700 short-ton hoisting capability and 20,000 PSI well-control equipment. We also own eight of the 1,200 1,400 short-ton drill ships. Of the remaining four, two are essentially permanently deployed in the Angolan market, one is committed to shell for five years, and one was just awarded a three-year contract with Petrobras. The result of this is that in the medium term, we have the only marketable assets in this sought-after class. As we've discussed in previous calls, hook load is important to customers as it characterizes a rig's capability to run longer and heavier casing strings. This capability permits our customers to optimize their well designs, thereby reducing the number of days required to drill their wells, and if reservoir performance dynamics allow, facilitate greater well productivity due to the preservation of the wellbore diameter. As evidenced by our $1.3 billion in recent contract awards, our now $9.3 billion in total backlog, which, by the way, represents a 7.5% sequential increase from our July 2024 fleet status report, and our 2025 contract coverage relative to our peer group, our portfolio of high specification, ultra-deep water, and harsh environment rigs, all else being equal, seems to be clearly preferred by our customers, leading to higher full cycle utilization and enabling us to fix industry-leading day rates. This has been demonstrated throughout the year by our market-leading contracts across the fleet, including, for example, the recent award for the Deepwater Conqueror. Although the commencement date for this specific program falls within a window during which the fleet utilization of each of our competitors is expected to be below 60%, the rig still commanded a very strong day rate that, even when adjusted for additional services, is in excess of $500,000 per day, a clear indicator that our customers recognize and appreciate the value of Transocean's assets and services. Even in the context of low global floater fleet utilization, we have continually demonstrated that premium assets attract premium day rates as operators consistently elect to contract rigs that afford them the greatest well program efficiency and flexibility. In other words, operators will utilize the most value-adding assets at every point in the cycle. With that, I'll now turn it over to Keelan.