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RIG Transocean

Participants
Bradley Alexander Transocean Ltd.
Jeremy D. Thigpen Transocean Ltd.
Mark Mey Transocean Ltd.
Roddie Mackenzie Transocean Ltd.
Angie Sedita UBS Securities LLC
Gregory Lewis Credit Suisse Securities (NYSE:USA) LLC
K. Blake Hancock Scotia Howard Weil
Ian Macpherson Simmons & Company International
Scott A. Gruber Citigroup Global Markets, Inc.
Haithum Nokta Clarksons Platou Securities, Inc.
Kurt Hallead RBC Capital Markets LLC
Waqar Syed Goldman Sachs & Co. LLC
Eduardo B. Royes Jefferies LLC
J.B. Lowe Bank of America Merrill Lynch
Call transcript
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Operator

Good day, and welcome to the Third Quarter 2017 Transocean Earnings Call. Today's conference is being recorded. And at this time, I'd like to turn the conference over to Bradley Alexander, Vice President of Investor Relations. Please go ahead, sir.

Bradley Alexander

Thank you, Levi. to quarter welcome call. earnings and morning, Transocean's XXXX third conference Good disclosures measures, copy covering website and supporting and release the at schedules, non-GAAP financial reconciliations A press with deepwater.com. our of the posted are on results, along including regarding company's financial statements

Executive Chief of Joining on Financial Roddie Vice President Chief Officer; and call Mey, Contracts. Executive Thigpen, President are and me Mark Jeremy Vice Marketing morning's and this Officer; President and Mackenzie,

and and that revise results. the forward-looking including or our our we company certain materially. note facts. of Many our forward-looking statements. SEC update of that to call, question-and-answer very the follow-up future this participants Please call, risks please and to are make matters company to question When Also, opportunity management the regarding get please question. your management subject over give questions turn During initial based one Thank an limit therefore and regarding filings and you the for related assumptions the uncertainties more statements factors to forward-looking may actual now uncertainties. cause no to information much. our of to the to that course risks statements, Jeremy. I'll undertakes speak, duty call certain more differ various segment refer are one Such upon certain to and business expectations could not could our to current historical statements impact are to results

Jeremy D. Thigpen

in today's Brad. investors employees, warm analysts Thank participating customers, And to our a you, welcome call. and

today. Mackenzie like to to the quarter, our and introduce Before I'd welcome delving Roddie call into

Marketing Roddie, role has Industry me effort Vice recently Bonno, time Community her Senior help place, and sustainability. into of President operational Transocean, Relations, marketing around newly Marketing during for another President among Vice I'd Mark operational served results. of Senior Transocean to know, Contracts, who thanking of our As portion call. entire quarter the she and and lead many things, nearly will corporate over tenure President of you today's I assumed role roles In and support technical, team Terry his created to XX-year by of Contracts where, other the delivering begin of in and with question-and-answer the will numerous Vice of moved the has strong long of Transocean's now like and

of unwavering reported quarter and by revenue solid EBITDA resulting in million million the As cost of adjusted earnings adjusted aspect reflect operating high our third our the maximizing workplace, results time margin incident-free this as with of realizing efficiencies enterprise, an strong they improvement our doing well, performance, required results These $XXX company $XXX yesterday's pleased construct uptime evidenced continuous normalized driven in commitment grading in quarter, fleet, reducing on every margin XX%. a for our to all were a our normalized to across continued third performance revenue, the normalized XX.X% of with of adjusted say, creating for EBITDA by customers, EBITDA to quarter, we're the release, again Needless in of uptime the and as including control. combination a while generated efficiency business. and consistent in performance our

this second lost International to your of of and the which approaching Transocean a XX the single quarters for consecutive time Let's Because first was, team incident. focused I'd efforts, continue in we improve months our to without achieving year. is Contractors, the start already Association industry-leading safety. Drilling according what entire safety both with recognize to of like the performance, now

fleet to continue in of we our of and into quality fleet. including In an seven improvements In safety, agreement its floaters, to new we entered semisubmersibles. harsh improve environment, Cat-D August, high-specification Songa overall continuous to also addition the four Offshore acquire

reminder, rigs Statoil not with important fleet, a currently to designed are $X to billion and could backlog total this Statoil Cat-D backlog an the XXXX. extends contracted $X in note options, As collaboration these billion, that include follow-on with does in incremental It's which multi-year were into excited add a the work of four adding approximately Offshore with which to XX and each target harsh Transocean. years while to of combination also strategic we welcome assets for Since the will to market to new industry-leading the environment backlog, add a to of transaction rigs. finalize customer, four are a Songa our our in

continue individual evaluate asset is keeping our corporate busy, purchases. upgrade to fleet acquisition opportunities us through to both Offshore Songa additional the and we While M&A

to However, the prospect. as transaction, and Offshore carefully liquidity stated consider to capability when we any by and as continue will rig both impact Songa assessing near evidenced previously term the

contract Pontus a Gulf Poseidon years. next of the Mexico with two will and has contract acquisitions, XX-year addition with The she Mexico, our where rigs. The just in Deepwater the year. the on Deepwater coming in fleet operations the newly constructed past recently are In Poseidon in Deepwater in to fourth delivered delivery the Of our we newbuild of early high she XX-year fifth the with to will Gulf Shell of grade her continue note, too contract-backed commenced to fleet the arrived arrive and Shell. where months, begin drillships the Deepwater Pontus

four With Songa with total builds contracted and these operators a of at nine that have extending of for we Cat-D five fleet, become the will the investment grade of through addition an end new assets read will least part load. the you of terms Report we Subsidiary Jurong focus our SembCorp Status rigs two Marine's soon with the as with agreed and that hook Shipyard, our on as enhance to industry-best newbuild remaining Fleet drillships fleet, far have XXXX. latest our million pound in XXXX our may X Continuing

heaviest rigs over-pull spare while maintaining running upgrades will load necessitate future As These many capacity. capable in the strings also other for the big the be excellent in These Mexico capacities. hook heavy know, to these you only rigs rigs be which in XXK plays wells the higher around very of position world, of strings, and deepwater Gulf some the of two industry require conversions. candidates casing turn

While certainly acquisitions, vital some industry. as upgrades, assembling strongest remains to in our purging not the or as the newbuilds, assets older fleet exciting of

start announced will retired to to assets, quarter, during As additional fleet, deemed remove the third such, XX. fleet total to ultra-deepwater the our assets from we six since we five This which intent the of downturn from number be our challenged. including our the of rigs bring

demonstrated, we to recovers. struggle believe, continue As our rigs assets, will that, to objectively compete evaluate recycle previously we will the market we continue to will and as

and completion of Songa either remaining two of or XX XX transaction these environment in XX retirements floaters XX%, As XXXX. delivery of be ultra-deepwater and the our drillships the or of will upon a with about of result shipyard, being our harsh those delivered the assets, since

the and to X including assets capable fleet, own are Additionally our Transocean assets, at XX we in will world. world. customers maximizing own for in when time construct further of the for high Through X grading harsh XX our of most the most required of at our a ultra-deepwater improvement, And the we drillships performance this reducing looking well. assets, capable we the uptime positioning better will when specifically looking environment

continue uptime deliver we ranging XX%. to XX% between excellent performance, and consistently uptime, Regarding

know we we there's However, that do. still that can more

improving common uptime of over Rolls the that life repair rigs; of our extension two and on on one contract of targeting uptime and thrusters. the our performance down entered the now recently by in care BOPs, represent to and XX we drive agreements roughnecks, core top the reducing floaters. asset. reduction fourth cost maximize and and care in total cost dynamically the uptime other critical our the improving us predictability, equipment, place These agreements supplied such, agreements: additional over by These and have on simultaneously Berg Royce around long-term the cover and supplied while floor risers, We agreements components, normalizing focused into (XX:XX) period. ensure align top drives some with the MH and the we've maintenance frequency thrusters of As draw-works of now and designed equipment-related including of fifth driving that thus of our the positioned life nine ownership drill iron on of number executed overhauls, the suppliers, objective

from to with to continue at pleased are we XXX% fleet, average the our efficiency, Across indicators. dashboards. drilling of performance be Moving operating established of we performance key impact reliability previously of an our our

the As a reminder, targets, of we top established quartile our construction well represented process KPIs time, established each phase performance wide. and at fleet which for benchmark the

previously focus, result majority as of construction our the quartile. now the Now, outperforming improved are such what fleet is the reduction we of visibility was vast that well a and times top in experiencing

that it the an should that we facilitate further operations. more far, While find our the things the in continue as app by the global are thus and upon extremely of driving drive summary, within to recovery, across customers' our as results well performance our to standpoint, investment add well there to do operational and of offshore is drilling. In the which ways to additional encouraged future improve will those of consistency to we await times leveraging delivery, of construction cost functionality from can we continue control, ultimately and market compressed down help we

at two-year last have cost $XX few we the a of end seeing the around the high are to become continue many our view over the last reaching market. quarter deepwater the improvement. tout a signs again world, prices both the the of of oil or Candidly, at Brent market, breakeven and customers have Speaking of we over more favorable long-term to mark, basins below With constructive a in continuing barrel already week. with the near third $XX months,

today approximately XXXX outlook last XX ago. stated year's last total have is our XX%. awarded Floating to-date optimistic quarter, by more was fixtures months in As it far already market than exceeded

in activity. experienced over deepwater quarters with have drilling floater operators multiple Adding we two assets for our years. the projects in the fact to ultra-deepwater In optimism, increasing now first seen industry multi-year time contracting six contracting has for basins consecutive

the any with and which we four and Invictus, rate in in changes this additional of options the three adjustments evidence years two-year BHP a five. new operating one-year including Deepwater adjustment dayrate As includes for escalating phenomenon, market recently location, dayrates, announced contract with for

see locking in not is customers to contracts. multi-year would it suggest bold under as the is that assets demonstrating so conviction we ultra-deepwater encouraging up more While by recovery, to high-specification market full be

could addition the program and with with in be report between Nautilus, awarded disclosed securing we In KGX, should the Invictus, depending end work fleet for have We're three-well that contract starts last the the week pleased contracts Loyd, in days the year. another a new Woodside last several close we to on the Deepwater for exercise Myanmar May status the secured which B. the Paul XXX of Deepwater to in campaign for to the and before options. other firm options. of This XXX on programs also are

across look handful Mexico see the of we in the opportunities Gulf a near-term of the independents. As globe, driven we by

As Nevertheless, they and bid. you to towards for most long-term are eventual short expect, next could to help as the of these an opportunities are market gap be we recovery. the to likely medium-term bridge opportunity competitively work durations very might to

where We Mexico, anticipate blocks occur includes as also Trinidad, December, as see some for to deepwater round course second Suriname, Brazil. opportunities Guyana, in throughout Colombia, and the licensing of Latin well which America, we

late we which the local tendering projects Focusing on reduction projects in and in volume levels drive which interest legislation, per we XXXX content XXXX. and customs of reserve, favorable a for majors then requirements below large break-even of $XX believe and a sizable most both barrel a regime, includes on independents, in the and and XXXX undeveloped the reduction special seeing in will Brazil, with extension from activity its in XXXX Brazil increase commencing are growing in

and the demand in Moving assets. to and Hemisphere, environment harsh continue UK strengthening midwater Norway, more specifically see to we for Eastern the for

of assets per to Africa. East Africa. in demand we've and in potential we seen to region, expect Guinea, short, an In see increase several from Equatorial As customer assets represented Sunangol market, for And In environment in its Malaysia in higher-specification different d'Ivoire, encouraged in multiple dayrates activity to taking by for different pursue to resources. a tightening we Ghana, be legal more year levels to market, ago. in to see midwater operators a months. in rising Norway, about markets future they available over we support In Australia. XX the the increased opportunities demand, the and than In where $XX were almost the multi-year Côte continue break-even dayrates multiple development leading limited barrel number would expect Angola, of several in this testament improve we we environment the are high-specification we the believe see witnessing the have awards and conclusion, India, and region longer-term harsh we the driven Myanmar, petroleum next Asia-Pacific three Africa, to With units and they improvement. harsh of anticipating harsh where for contract And gas Africa in of which we're are opportunities to from is XX% were awards a first to in what for a floater improve. tightening framework ongoing Nigeria, natural and West as asset, is steps demand UK natural excited awards generally dayrate some years. environment to and supply In further in Angola's the XX

are encouraged for by time the To other clear, Asia-Pacific in Triangle. we're region. of and pressure in remain under years, parts deepwater awards of are surfacing the that in extreme in first Golden today. opportunities actually the markets Australia seeing multi-year be We And the the three some dayrates

However, machines, especially to those fully efficient tighter, begins dayrate improvement over see for more becomes we drilling as to expect asset availability time. up and activity tick higher-specification,

than While the downturn. trajectory actions we of price today's more precise the position it still are is still Transocean. XX recovery best a to outlook And and of – the that encouraging timing necessary uncertain, is we continue since ago, the to in months we midst take eventual recognize certainly was

we runway. we market levers due XXXX. and debt, Mark discuss in the unsecured opportunistically we priority liquidity effectively before bond and extend $XXX unsecured that can month, example, all we continue have accessed as moment, as issued addressed just to of last an million our maturities As other will which coming just will pull a And

the again, for would Before thank turning the I like so over Mark, Transocean entire once just efforts to call year. team this your to, far

fleet. improved quality overall of our significantly the have We

making creating incident-free an are We substantial workplace. strides in

are of XXX% closer to our We moving goal uptime.

We efficiently are our for customers more delivering before. wells ever than

strong teams, operating our by consistent the because adjusted invest you. we despite legal and uncertain liquidity finance work we by normalized to ever our and margins, more our the conditions. people and thank evidenced of performance business our Mark? our And than have As assets and done continue in challenging the our EBITDA are great efficiently before. managing and and market to efficient Well

Mark Mey

to day good and Jeremy you, Thank all.

and XXXX call, provide guidance, will discuss update our forecast. recap at an and early liquidity today's expectations I'll liquidity I quarter balance our results During position. third sheet our and discuss an also cost our XXXX to our look

Finally, the I update on Songa will acquisition. provide Offshore an

$X.XX third diluted we billion to the attributable $X.XX XXXX, reported interest net controlling quarter For or per loss of share.

$X.XX floaters. to release, detailed third items the press results announced net quarter As our related on included principally earnings unfavorable of our previously six retirement billion in impairment

consistent at $X.XX a stellar revenue per We've efficiency into XX.X%. better in performance XX Excluding the flow. was last our has net of $XX income of of successful operating results uptime Contributing to revenue these unfavorable another for million, This items, or delivered was our or diluted quarter XX adjusted net quarters. industry-leading the share. enabled cash trend backlog efficiency conversion XX% now

be very As margin impressive. $X.X billion, this quarter our the and quarter, $X are billion was to the for adjusted excess the to mentioned senior the revolving million debt fourth successfully XXXX net secured earlier, Approximately we facility. a with downturn, $XXX proceeds receiving of used We EBITDA maturity, the proceeds acquisition. XXXX our early this Recognizing net in (sic) is with expected In unchanged will of notes million October, million. liquidity issuing priority are (XX:XX) normalized of Songa industry that and year our $XXX now meet of maturities. undrawn accessed year. proceeds the these for sequentially XX% of credit ended we $XXX third The including markets, [unsecured] guaranteed be XXXX debt used for

to take debt enhance to near-term continue address maturities. liquidity of strategically opportunities mid-term and and advantage will We our our

in net have unsecured we aware, XXXX, options financing almost $X.X $X billion. are our secured the billion, by available RCF. June our have of maintaining update balance of reduced XX% you to aforementioned for we a an more now Since both fourth XXXX. cash addition to quarter of As position and debt to provide consistently healthy while or will our financial than I us expectations

million remaining third have which approximately the newbuild Our Nautilus, guidance due fourth revenue of quarter range fees $XX XXXX. O&M of latest and commencement year full revenue costs prior and announced long-term a maintenance $XX early and to for XXXX These Discoverer includes preparation prior advantage. termination competitive Driller expense quarter's in to million. and with operations termination of we costs market, announced reactivations planned the reactivation Deepwater approximately decisions change efficiency strong won quarter's is quarters, no Fourth revenue Leader. the XX%. rig drillship, will for over I on the timing is expected cost quarter have they bring remains back O&M of to $XXX associated $XXX $XX represent recycling the where million recognized believe, on approximately associated quarter be from Other previously reimbursables the the rig increase mainly related million, this the strategic new into and with million contract Pontus, assets contracts, fourth Development to at certain Deepwater is recent our represents retirements. be rig This primarily The Clear to guidance. of XXXX customer between previously The our expected

due is Fourth quarter certain and quarter fourth costs including timing to million, the our and interest interest enhancements be system with transactions. capitalized fourth corporate associated $XXX expected for million, which increase to debt excludes This expense sequential quarter be expense We amount acquisition. approximately reflecting the IT interest expenses be approximately expect is million. costs, The support. G&A $XX Songa to expected net includes income. to $XXX is approximately Depreciation of recent XXXX

earnings expenditures, $X expect for with our shipyard million maintenance and payments We quarter. Capital are our and for to interest portion Poseidon $XXX be fourth the of attributable including $XX other be non-controlling to consolidated associated on million. fourth of expenditures. newbuilds, Deepwater million for approximately the interest approximately capitalized $XXX a million including XXXX, expected capital to quarter final

exclude The of Offshore Australia and XXXX including DDX. our to XXXX's of guidance, on updated is of of and late the ultra-deepwater preparation Now operations Songa offset for and the completion February expected X% for XXXX year O&M consistent estimates of with days. to close we an cost call. which lower early costs These and Songa, Operating by guidance which percentage We'll projections. in activity earnings that of be to reduced month in operating approximately Deepwater are commence contract (XX:XX) ultra-deepwater includes provide semisubmersibles are the transaction. Poseidon, first acquisition XXXX are at look operations fleet. costs cost remainder the Pontus, full in reduction XXXX, yet full maintenance XXXX than Deepwater the newbuilds last to mobilization expectations, our year-on-year of across These expected our savings year commenced operations the quarter as

XXXX million transactions expectations. capitalized capitalized net to million. approximately income $XX includes be our expense million million be G&A and is our interest. approximately of reflecting million. in XXXX interest and in $XXX for in are in in This CapEx $XXX expected interest expect $XX Capital This expenditures XXXX to recent anticipated and includes approximately of our approximately XXXX expenses CapEx. We capital $XX with maintenance newbuild interest market $XX reduction be to Full year line million,

liquidity projected XXXX. December to XX, as now Turning of

our extended year estimated is billion. mid assumption end the for revolving XXXX, expiring range and $X.X debt $X any Songa liquidity of Excluding our both new a facility replace RCF transaction XXXX forma to credit pro between October current for to billion and issuance

on billion CapEx strong we XXXX XXXX As split we call, Also our maturing remains I similar XXXX expect and would which XXXX. prior complete expect executed XXXX. to and approximately Conqueror, to between total CapEx. expect or of renewing note additional Pontus $XXX Proteus evenly Deepwater to retire CapEx both to be secure to CapEx to newbuild with during that use estimated the $X.X maintenance prior In I a million, guidance if liquidity plan previous for This mentioned combined secured primarily well reactivations. in contract secured a utilize even Poseidon the rig RCF financing. Consistent more financings, position us positions very proceeds extending backlog, the our speculative our any with to years. debt industry-leading we exclude we Deepwater financings few Thalassa, our and priority, downturn future, lasts and to

conclude, reviewed regulatory all connection without proxy in Before we authorities SEC internal as a comments like In SX both These I any Offshore. these to the antitrust required I'd with filed of due Songa we've transactions. U.S. brief diligence Statement the a for received Registration completed from We findings. an statement. the acquisition and make few preliminary by approvals were of process process, material customary October, types filings is regarding and our

the in to our are and Meeting most coming process anticipate concludes before the over expect advanced now previously and discussed XXXX. is approval This to we close transaction we the we synergies of We occurring final the which mid-December shortly Brad. planning turn SEC of enabling plan full integration likely my realization hold Meanwhile Subsequently, expect to comments. thereafter. well I'll the in to comments, General year-end. call in Extraordinary prepared days responding in

Bradley Alexander

as a to to the reminder we're ready and limit And please Thanks, questions question now. follow-up. to participants, one Mark. yourself take Levi, one

Operator

first you. question Sedita our Thank And Angie from we'll with UBS. take

Angie Sedita

morning, good Hi, guys.

Jeremy D. Thigpen

Hey, Angie.

Angie Sedita

Jeremy. Hi,

tighten general will about And into bit or you're market. is could you on be – about then, little part categories that we you're talk that two start North other hearing before as mean, other forward markets think as side moving or rig far going be if could we on the of tight what there of bit world, market certainly the to the XXXX? dayrate become what regions forward I the talk a it's a can So a and you thinking Sea, little where

a basis, that you the see specific be on So think either eventually power? to do we through if start would a basis some or dayrate could rig and where think we region tightening specific next segment

Jeremy D. Thigpen

Thanks, Roddie answer that going Angie. I'm to for let us.

Roddie Mackenzie

question. for Hi, the Thanks Angie.

first the around and Okay, was Sea so your question Norway. North

what So can tell would what dayrates, while we I specifically bid, to certainly we recently. you on speculate happened so can't

So what we've was – had units. rates that mark the QX, (XX:XX). latest at in around saw high-specification that's the And in to we XXX for (XX:XX) the increased QX fixture, XXX

increase QX? of the will see simply seeing high-specification And regions We So world, tightening tightened. we an in about one believe units. around you will a as of is because think availability other then, the we you're the which the

where So, more specific see that the type of you're very requiring we markets, thing the rig. is niche different a first

year, for one, rig moored and places we increase in tighten ones think where increase up alluded marked we're require activity. as in have seeing being DP overall in you, niche I made tighten, first. a first all certainly markets that Australia so will to general to example, you but Jeremy go. a a last markets begin then and to the are the We're after fixtures seeing think just to, like what So, compared that, a tendering And will

Angie Sedita

Okay.

now this to we're That's been see need millisecond then there there see Brent, not we've Brent? into And it's to much in pickup change behavior. the E&Ps? we any before I duration any has been some level in of conversations that you. Okay. with moving we seen change your tone the know But conversations or helpful. Thank $XX been a that that in Has change with and

Roddie Mackenzie

Yes, there has.

that in now particularly delivering XXs, up the things economic talking years how and viable them thresholds their being and ex-E&P So attractive and their And offshore to, themselves the mark. Jeremy better so have to discussing I space, have what we're that are of headlines $XX I the seeing of you and many is last much see gotten do through our them lower you'll of certainly, drilling about them two where essentially over think at all do how operators investment I and the we're KPIs the business higher are overall you the XXs costs been particularly from in costs, (XX:XX) make value. alluded anywhere many think the $XX also or seeing below, think an that on investment make rigs, like efficiencies spread the

seeing that going So right direction. we're the in certainly

Angie Sedita

Okay, over. thanks, guys. I'll turn it

Jeremy D. Thigpen

Thanks, Angie.

Operator

from Gregory Credit question thanks, Lewis and Lewis next guys. our take Suisse. with Gregory Securities good Credit Suisse LLC - (USA) we'll And Hey, morning,

Jeremy D. Thigpen

morning, just Good (USA) I - newbuilds guess, like if also, to could question what pay that customers the everything? just getting two-part Lewis Greg. clearly we that, loads. on Gregory are willing with million were LLC just to the color for any the a wanting announced decision Securities they Are business? they're because Credit do you just to is year, this is the decision the hook to where and this cost pounds that going And earlier of doing more upgrade so, that, to that? Suisse going made with X want? a you you This wondering upgrade to of India. you And just Just provide is be sense you this something little I'm that

Jeremy D. Thigpen

by on are their to Yeah, the Probably we've it? In current current In willing not. normalized taken in segmented before thanks, ranked environment. where and talked market, choice this a Greg. industry, every do that, that hey, ultra-deepwater harsh whatever when market, to back then the we position and how is get force the think past they they this We've a assets the a for can normalized market, through need. we've competitive pay about asset at calls, dayrates. of world. we more gone really floaters we taken We've many have position, We've in industry high-specification will

opportunities? currently just a Securities out that end, then have off our something are I position, the to as that guess the KGX for market? fit that it newbuilds which, and we start of all of for and we into the to I said, color will any a that Gregory looked LLC we highest India, sober our And at We then there Brazil think, – premium XXXX – XXs Credit sure Is normal dayrates be make we we on just view around, these was similar new it move range we as view thoughtful a Lewis we if going - with we've out do share, some the dayrates floaters like move about world, took so Is downturn. we Okay, small can forward better about is the at (USA) improve, And market our fleet quality in come command better view this fleet assets. had these and can can be the this new the investment into own how between said, some really, able expect and potential of have existing great. in the a this, move we be all of provide to the this, as right, this, we Shipyard, – we (XX:XX), out Jurong looked obviously, these just we to looked fleet should XXX In upgrades. sort assets only the in we've of rolling And Suisse as right to forward took beginning and be think, are so we Brazil. listen, a for as that look very chain we and in through of asset? of and will year somewhere moved so this you we significantly relatively up I come XXX

Roddie Mackenzie

possible it's have rig, I'll take Brazil stay leave one. there. she several do Greg, possible would also it's she that but would the so and for that Yes, So, we opportunities

So aware you're ones are elsewhere. also several Brazil, there there's tenders but probably in

we'll in placing - (USA) So be that Securities optimistic we're Credit for time. Gregory Okay. you cautiously Lewis KGX the Thank the Suisse XXXX. Perfect. LLC

Jeremy D. Thigpen

Greg. Thanks,

Operator

And from Blake we'll question Howard Hancock take Weil. our next with

K. Blake Hancock

that in guys. first contracts six the been squad. some these morning, here so. Good it, Thanks. of mentioned to months off, Roddie, you have the or last, Jeremy, maybe firing long-term welcome signed call

for better opinion, the B, to five the and is next the guys from one of at why you're fleet kind about to here approach two get for that a to A. your And are three kind levels going how portfolio perspective? or of up your wanted years, the that be signaling of rates assets just years these thinking to Just you

Jeremy D. Thigpen

read first. rig think we We've the course it I'll terms seen anything in about XX think up activity, months. you rates don't over question Yeah, the last of so what should the into answer activity I going forward. pick of generating contracting

continue to that into as expect and XXXX. XXXX get We we

to see that improvement of work, higher as As we into see that, don't specification yet. we would you rigs to of going more see but dayrate hope you more know XXXX, get back we the

three three All operators, with can years So in kind that's them simultaneously. to responding for then about tenders different wanted to to With particular, options. now. as going at activities two lock additional Increasing best one up. of assets, into three feel rigs moving three how up Invictus in they plus to our XXXX which years we two least of XXXX All demand we were dayrates and move we forward. the respect

So upward there had ability as one looked where in we a the to dayrates in years. we only the move was that, meaningful actually opportunity, outer across way

And aggressively the we so we pursue not aggressively and did opportunity we And it. other won pursued opportunities. two that

this on shipyard. with operator came been the one out has our it rig since the with best to of way keep was So best one that an contract of assets that

So that maintaining there assets. of that optionality led some better were into still our of a number one, but with factors some certainly other

K. Blake Hancock

(XX:XX). great That's

Roddie Mackenzie

color add Blake, little – I'll a also there. would I also

other The that on it's multi-jurisdiction possibility a part this of was contract.

interesting should but as Trinidad could But most it. well. lead a us interestingly into Mexico not it's for segue Mexico for It's to that first into us, & market. us for good did we've the Tobago probably Gulf for of it be because only So enter which very location very way a

K. Blake Hancock

maybe it doesn't just that? Thank thinking kind kind lot about Can the you. cold great. on a would looks there of how then, you rigs us that That's today on XXXX Can And number. walk you like is next reactivated year, in recontracted but about you how working it kind guys through whole you some seem are of of at are point of of getting one that kind assume that like thinking stacked give guys color are it? guidance. for rigs some Mark, are It cost you

Mark Mey

sure, Yeah, Blake.

right. you're So

guidance assume I some with any you that. earlier. and you As associated included will could that rigs. that's we revenue mentioned, What costs roll we reactivations year, the XX% those is rigs And next that provided in we speculative about rig do associated operating I so associated don't included include over with assume days that in of

K. Blake Hancock

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

Jeremy D. Thigpen

Blake. Thanks,

Operator

our And with Ian question we'll from take Macpherson Simmons. next

Ian Macpherson

ask I on, in or quality little you about Hey, it's hook to retrofittable get with. capability. an the upgrades. a And X-million-pound If a could that. question load bit of that that a you're for if rigs whether what requests technical entails engineering was assume on to by if the expand pooled you. other specific I that Jeremy, from another perspective, just thank this wanted or innovation trying lead to level comment world, take customer could the not it's the

Jeremy D. Thigpen

to engineering to Roddie one well. asking you're defer chime going an Ian, to as me in I'm and answer that question? I'll

Ian Macpherson

All right.

Roddie Mackenzie

Thanks, first Ian. to what do your enact right. you Yes, so do question that. about was have All to

option in doing So make cost draw-works a the But of the to relatively is essentially is that are and, there that construction, modifications equipment. rigs the us where effective stage basically you traveling an for there that's way of obviously, it.

equipment X-million-pound will be derricks put other first especially and there but, out so to opportunity they terms levels, rigs, will yeah, the place, a be quite then an marker rated be there not tricky In finalized, the retrofit rigs to a kind of of to the in that will really us world. that's for be it's if in

Jeremy D. Thigpen

as customer we marketplace, we happening And this it in of of rig, wasn't be that especially (XX:XX) in value, by see know driven would the what's specific Mexico. and a the Gulf

We that some and would a candidates believe leading those at XXK definitely time as there will that opportunity, position opportunity. be also for this rigs in point

Ian Macpherson

here Okay. CapEx, rigs. regards the and those committed of make of think, wallet staying $XXX spoken for to think still, with those go them years about all I to three of forward more million is the a But capable. more here to $XXX this you've little including next the And with your kind million I then Small rigs. but spending incrementally

out assets And wide for gap. there so to it's those compared the thresholds the return that's today, marker M&A a

you the do set get comfort with newbuilds profile the how these guess, on I of in to environment? return your M&A the So, go-forward opportunity capital compared

Mark Mey

Ian, at out a the high spot shipyard. specification uncontracted this level you're is on. at absolutely Mark. We could newbuilds buy and today very certainly And go

strong that However, sides' perspective two with we bear very those mind both we to from contracts have have in drillships. newbuild to regard

contracts those these be little of more. us bit to But XX will fact So going irrespective it's remember, honored that assets. XX-year cost Transocean a the by to are

workload. out period, return So a XX-year Gulf the decisions the with to looking justify high-specification deep next that market highly return right we're And looking the given assets, that really over profile. of over We're kind the feel any of we we out of fact cash regard Mexico increased build horizon. confident that over lead level would not for a would a have in to years especially flow those three the the do given in that now that wells

Ian Macpherson

long idea sometimes forgotten the it And, honoring for answers. pass ideal. is Good. of yeah, contracts a over. I'll the Thanks appreciate that. I

Operator

to Gruber with next we'll Scott go Citigroup. And

Scott A. Gruber

morning, good Yes, gentlemen.

Jeremy D. Thigpen

Good morning, Scott.

Scott A. Gruber

You through five-year When under in should have that new spending have sixth-gen delivered of think look we rigs the regime? on assets maintenance in your your a How a fleet, number reducing of about XXXX various great those surveys job the guys initiatives. XXXX. second maintenance I you costs your and at done though, were

Mark Mey

five-year So want place John over we say and with Keelan surveys. last out-of-service couple succeed I costs managed one was the year team with the to the Scott, And of to of ago, initiatives, initiatives. a associated to our and years Transocean days and in at have eliminate about put which regard to

then very So with can our I'm one we've And we that that on this we our organization: do recently XX-year announce as just the to well? assets. of surveys challenged pleased done

reduced associated gone we've that, we X in have XX the least. only these just not mind, have the and significantly So the first survey, reduced surveys contracts could with – so is you imagine at we on with associated two Bear care overall now to of care out-of-service less. costs BOP cost the year agreements time

Next full as come by been year of driven they've and organization. these when see can even rest agreements exercised into you the force, executed get the lower care them

Scott A. Gruber

XX-year on you much Can would provide the how cost? some rough survey guidance

Mark Mey

of I'm not going that to to go this level stage. detail at

Scott A. Gruber

many how are included offer to your XXXX? guidance for maintenance in willing and surveys be you Would XXXX

Mark Mey

included any coming any XXXX, Most of in see have don't and we XXXX I surveys XXXX. due have we of two think, are XXXX, in we that magnitude. for that. So In these

Scott A. Gruber

but... maintenance provide know as And surveys on would then of more to rough kick any we're guidance XXXX you years getting be willing the a in? I in few out,

Mark Mey

we're out little for our far Yeah, there getting guidance. a

Scott A. Gruber

Okay.

Okay. That's it for me. Thank you.

Mark Mey

Scott. Thanks,

Operator

to next Haithum We'll Securities. Platou with go Nokta Clarksons

Haithum Nokta

morning. Hi, good

Jeremy D. Thigpen

morning. Good

Haithum Nokta

new with five? for Jeremy, escalating then options, wanted And the just Did the of that quick those a also I I think around to and the you four say couple say market KGX? rates did were in Invictus a contract you ask year clarifications. links

Jeremy D. Thigpen

both. on yes So

a her campaign picking Invictus. to KGX around the And we question campaign, so successful Woodside, they're their then, very completed which with again. with up Woodside Myanmar, in So just and the yes,

Haithum Nokta

for a for you KGX? the term did the And Okay. contract say new

Mark Mey

Yeah.

Jeremy D. Thigpen

– was it It yeah. Oh, last should between...

Mark Mey

XXX. and XXX

Jeremy D. Thigpen

to days, yeah. XXX XXX

Haithum Nokta

nice. Okay. Very

deepwater see to And there as that harsh could be environment? in Okay, transferable rates you're harsh driving to two in rates environment as ask the – that down seeing about that ahead I the environment. factor is (XX:XX) those And wanted is is mechanics simple the three road? Difficulty] [Technical market strength driving years I'm it or a something that something is – higher, to harsh the trying are

Jeremy D. Thigpen

is but here harsh is bit environment. with little I could we yes. the question you kind think The answer we've in broke dayrate in there, asking that the recently same was a seen of timing. the ultra-deepwater you're around what up Sure, question And progression see

you And harsh back a a you $XXX,XXX go Roddie's a market, last so environment was a mean, year ago, if a bidding the at bonus. day day. $XX,XXX performance I to listened a fixture day the plus awarded comments, you we at $XXX,XXX And were look

that some for we day XX that almost you're that high-specification environment at sitting dayrate $XXX,XXX mean, wouldn't harsh assets. have months looking a here you believed really, were kind So ago, a If I I'm and few are out a only indication there possible, environment. sure But was not there assets it's really appreciation we an in would've. dayrate high-specification of that harsh of really are

push You could those to argument longer-term of sudden they and dayrates customers a as ultra-deepwater that's all valuable. locked similar rigs, high-specification into make when a up. more little contracts, start rigs And you see start to a the can for become

Haithum Nokta

Yeah, naturally.

the last table those then the expect on going bonds of new rigs, to the and tools are Shell that two you kind financing for $X.X other assume on or for safe Okay, just be secured financing? be of billion it to would

Mark Mey

be finance that on we're those right different to could now probably anything, XX proposals sitting assets. Haithum, because

So the those security XXXX. advanced we're us early got to amortization the with the can rig to look you and in the at that a rate, make of beyond package associated decisions. combination of financing, see active cost And the doing just this

Haithum Nokta

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

Operator

Kurt from RBC question we'll Capital And Hallead with our take next Markets.

Kurt Hallead

morning. good Hey,

Jeremy D. Thigpen

Good morning, Kurt.

Kurt Hallead

all me good hear. to getting so jacked speak, You guys to are up,

the to bit starting this like than little a least things does different week. improve peers You're margin. tone your earlier of are at seem at some it But other

through downturn. to managed how you've kudos the So

Jeremy D. Thigpen

Kurt. Thanks,

Kurt Hallead

relates My active consolidation. year to know on been end. front very the I M&A you and that question Songa transaction have close you've at a coming further and Sure. prospective to here

juncture of with think you this the out M&A a more little your going at curious market? stall the of is get push optimistic as kind demand bit competitors about to prospective Just improving, some

Jeremy D. Thigpen

a Yeah, continue From ultra-deepwater environment. and look with what are good M&A. going and standpoint, our question, we do fleet, to to not harsh hybrid focusing sure respect opportunities at to I'm on specifically Kurt. to competitors our our

to high-spec going that. have again, the more We a many of normalized have to environment. position we, So want into a need taken assets portion the how industry's that floaters significant on fall in a

shipyard in us it in whether that the And the ultra-deepwater side, have looking But also term it's impact we're certainly at near liquidity. so environment it's is, acquisition capabilities, would it's assets opportunities. capability but for to different be the corporate harsh really around technical at or assets, distressed and the they rig

in signs still than ultra-deepwater, we don't seeing out to when know out more ago, we're of harsh we seeing are still in optimistic environment. able there. were year it's really pull be but downturn. but We today We're We're competitive this to it positive a going

And to fit look opportunities and and we've any impact got term near at that that we acquisition, as liquidity, around really asset pursue we'll quality the – a so criteria. only it's

Kurt Hallead

Sea. of great, of are It operators $XX at would take get the the sub great. levels then context referenced Okay, handle try them been North you in lot to And depressed a And just able to you in levels, have the was operators that mentioned is the cost in. $XX, cycle their the sounds of dynamics, prior dayrates down advantage point turning which the when lock cycle in and to like of all starting to think Or this do down really some low seen rates now What's at companies operators dayrates current now sit, coming get $XX the are levels. is $XX at start that or conviction to the to of this a curious take? that element than for this and rates they've these with where do the get what level your is lock in push you need year? I'm still operators more crude from just of that you happen. sustainable to on an like

Jeremy D. Thigpen

segment a it think to Yeah, you customer. I it's question, good Kurt, have by and

opportunity current there. they're opportunity at Street great the the of their oil thinking, a on out at this if customers But operations, think see commitment lower go cash the look to and those a I at cost their from made service majors, great dividend CapEx spend they've the requirements, fund if to then and XXXX. reduce you they for and and their costs flow looking they're to and So dayrates actually are is you capitalize our look barrel and per some gosh, lower independents, at looking price,

unless independents the few with that And would seeing? so that, the to that think most change is upward be see their part going oil and for My ramp I activity the to what Roddie, up. and far NOCs the them but expect between, is for budgets XXXX. material And in prices, we're is the belief majors consistent with for a they've we set

Roddie Mackenzie

track disproportionate activity, contracting think the the half leasees at And I from when which we to is of coming Yeah, the independents, basically (XX:XX) the it world. is so. of the moment number

see again. that and think are also I back like of more bit moving So a beginning rounds majors we'd see to places a those look lot to licensing dive in clearly guys the indicators you But the Brazil first. nimble Mexico in in see

it seeing Brazil, seen we've around in drilling. offshore in Mexico, (XX:XX) think to the as heavily you're second think the third majors and deepwater (XX:XX) then time basically seeing in I X.X investing reinvest and So I

that the translate I two for So see contracts years. in three think us into or next to you'll year

Kurt Hallead

that's it. Really color. great Thanks. appreciate Yeah,

Jeremy D. Thigpen

Thanks.

Operator

follow-up. reminder, with we next We'll that to Waqar you limit question Goldman to do Sachs. ask As yourself Syed a go one please and one

Waqar Syed

you for taking question. my Thank

In you just terms of faster. guide efficiency improvements And XXXX? and to see able in about companies of that, what Gulf being are wells us terms you of want Mexico, XXXX into rig also, lot could drill activity to ask we a seeing

the to drill the number rigs XXXX efficiencies? ultra-deepwater, to same Thank were would that we rig fuel wells do the needed of we in if be So that you. in how back given many drilled

Jeremy D. Thigpen

we gains in we count floater and as question about through expectations about to around more if that floaters a would certainly wells of answer drilling machines that turn I'll Gulf I'm by as the Waqar, and need the that think let to analysis you somewhere the contract back a on based it lower and that XXXX, the lot could question segmented environment. we activity Roddie is remember for range thoughtful if number. But Mexico when you, under normalized you XXX. And between could of that the thanks floaters to efficiency just how of the ultra-deepwater we that think set course deliver did we about trying to we've the seeing. gone to operations. I be, over were specific Roddie what world. of particular. on sure mean, XXX question. over is question Gulf peak efficient next years. were the XXX-ish to your be that the number I'd to our We'll now better XXXX, and an answer into the just there of not we saying that he for more wrong, many Mexico We're around think and I in of activity I'll came tell same harsh down But factored of to that that operating but couple be

Roddie Mackenzie

Sure.

the in independents Gulf Mexico, now right So the that of it's the are carrying torch.

investment by move (XX:XX), hurdle that kind BHPs, I the of they the where costs and them. the before, independents prize return. guys. combined of though, really a you it So Obviously, issues. think spread the majors. place and ability your invest Gulf long-term, Energy, to where costs Noble that's became is right lower efficiencies for the the of the Mexico to majors of the with need say makes overcome the Simply domain of I that the ex-E&P to capital saw as first. of size And the attractive in the on we Gulf getting those and mentioned will the what efficiencies the the is higher products long-term think large bring would you market the to in you've Mexico their But liquidity we is that substantially, shorter-term the that, see now are improving nature once very beginning

the we Mexico. some and to encouraged majors and Gulf reserve will years next hold acreage like Total buying couple of of involved up So take replacement see are in the getting in

Waqar Syed

Thank you.

in Jeremy, being Just drilled drilled? to the or of XXX wells to lower versus number XXX that that have number you this XXX, follow-up, or being of it assumes as higher rig same number assumes wells XXXX,

Jeremy D. Thigpen

sure I if scientific, sorry, answer that we've I'm not so got can't I'm your question.

Waqar Syed

I much. Thank you that. Okay. appreciate so

Operator

Royes to our And we'll Eduardo next go from question Jefferies. with

Eduardo B. Royes

morning. good guys, Hey

Jeremy D. Thigpen

morning. Good

Eduardo B. Royes

as rig and versus didn't there's are your and down see rigs the you, rigs think may obviously, sudden I of coming out. earnings but about still remains we I longer-term we over or lot maybe back curious for, that. niche about I power, think year there fleet, a being quite still you a out. comes fleet, nuisances market all so, the the us guess, overlooking niches of I'm over some opportunities a particularly come think or of after can there's like these that if that more think your being and so maybe that as can't we last a think we've And I a because be floater couple years, for supplied, of overall – helps seen Question back for year it some again, within ask back and something

really, you obviously feel So of along I the being Asgard, do lines, straightforward bringing for the future? or it like be there's going rigs rigs in like employment foreseeable think look Australia, a relative out and rigs opportunities little like with more Goodrich, to rig bit the the more those we'd getting should

Jeremy D. Thigpen

challenge terms think, I'll in active, very I market that be retiring recovery. in compete We've Yeah, this to of would way. thought been the that answer in we rigs really

to prospects, off we then in recycle they market we going calls, kind they're as ongoing at on as look it's We that not evaluate previous roll and or – XX rigs, an this to-date. whatever of And on been fleet we at we so them. that be recovers said future contract call look continue compete basis. think as for if And able this to to reason we our

think currently a to that earn we'll of case, may them. I contract. that not so are retire evaluate able And certainly few are and we'll contract in more on next And in that fleet a kind there be our

think be they're I'd say continue going we don't just rigs we think in it's in recycle the that look we'll that that have rigs. those So, invested anything to be will because back at competitive, we marketable we've we'll fleet to-date, but and

Eduardo B. Royes

it, Mark. Got It's probably more thanks. for I just a then, quick And guess, one.

that mentioned up perspective in quarter? different you up the the the think any guidance, like of impact curious You could to fourth if I lead retirement on components the costs or quarter fourth mentioned something you give – that in step step that, the sequentially

Mark Mey

So, Eduardo, increased but bear an the not this in reasons previous four for is the our mentioned the be increase quarter from year. mind, guidance why full fourth I costs will O&M from

costs in associated fourth quarter. we to costs So Deepwater with to expect Pontus, we quarter, in spent startup the third do the are of some the and have we also rigs, have the certain the due cases, earlier. timing And up catch of a reactivation two have that we maintenance little be in

(XX:XX) combined, on would increase actually quarter that about all costs. million be a in quarter of quarter So O&M $XX

Eduardo B. Royes

you (XX:XX) less you Yeah. do willing I sense is or the mean, a to I – portion much? guess, - that Are how have of get more is reactivation

Mark Mey

It's about half it. of

Eduardo B. Royes

Okay.

Mark Mey

And Pontus other the to half is then – the half for quarter. the the of of going be

Eduardo B. Royes

everything and it else. Got

great. Okay, you. over. it Thank I'll turn

Operator

question with to Merrill Bank of Lynch. America Lowe J.B. we'll And from go our final

J.B. Lowe

Thanks guys. for here in fitting me the Hey, at end.

Jeremy D. Thigpen

Hey, J.B.

J.B. Lowe

doing? How you

Jeremy D. Thigpen

Good.

J.B. Lowe

a of get times? the nine XX% or rolling what are year, off and year that that next clarification, end uptime your quick Mark, say Did the assume think, eight to for are wanted off rolling I that rigs the of OpEx Is you XXXX. just I the this on guidance that understood? that non-contracted I – you assumes for that of that

Mark Mey

have Yeah, uncontracted we XX indicated X% lower getting budget. forecast days a we a into rigs on the contract the from operating next to that over at XXXX that And that with are XX% of do months, in reduction what reduction XXXX recontracted I about so X% days translates that about come dayrates.

J.B. Lowe

going the you that think rigs, my if retirement one decision candidates do you're in whether extra would you was or reactivate functionality think were of that them? you and be to out of you retire or doing just they of terms some in would making on between come some some have to And then perfect. them Okay, Or we've the they to other not, decide market the an people other able do require as putting seen just of like is? to extra upgrades BOP the kind

Jeremy D. Thigpen

I be to out is. think they'll able as come

marketability enhancements. could similar have for just stacked have have Now and back the the to to the other get we that to identified which a their we a we with rig is most India, out. that candidates add part, addition few reactivation few mobilization But profile, cost the in them

J.B. Lowe

right, guys. All Okay. Thanks very much.

Jeremy D. Thigpen

Thanks, J.B.

Operator

to to the turn today's Alexander, like conference concludes session. for that closing I'd you time, this remarks. question-and-answer or back Mr. at And any additional

Bradley Alexander

everyone to participation and today. you your Thank for questions

further look you contact again questions, and to to have please full day. feel year me. when results. we you We free Have If talking quarter forward year to next good a fourth report our XXXX

Operator

This participation. concludes appreciate today's We conference. your

disconnect. may You now