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RIG Transocean

Participants
Bradley Alexander Transocean Ltd.
Jeremy D. Thigpen Transocean Ltd.
Mey Lovell Mark-Anthony Transocean Ltd.
Roddie Mackenzie Transocean Ltd.
Eirik Røhmesmo Clarksons Platou Securities AS
Gregory Robert Lewis BTIG LLC
Ian Macpherson Simmons & Company International
Sasha Sanwal UBS Securities LLC
Taylor Zurcher Tudor, Pickering, Holt & Co. Securities, Inc.
Colin Davies Sanford C. Bernstein & Co. LLC
Call transcript
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Operator

Good day, and welcome to the Third Quarter 2018 RIG Earnings Conference Call, Transocean Ltd. Today's conference is being recorded. At this time, I'd like to turn the conference over to Bradley Alexander. Please go ahead sir.

Bradley Alexander

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

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

actual forward-looking facts. certain regarding our note to call, company refer company and the regarding revise Transocean are results duty more assumptions information management uncertainties related to Please materially. future statements. therefore to SEC certain please update that During our various based our and and the forward-looking course impact to subject for results. make matters cause certain statements of the this to that may our are Such differ Also, upon that the statements factors business including and and risks risks Many are no forward-looking expectations not filings current could historical statements uncertainties. undertakes or could

Mark's Following question-and-answer will comments, conduct prepared session. a we Jeremy and

give call, time, Thank one Jeremy. more opportunity this on much. an I'll this very you to During question and speak call the please to over to to yourself followup. limit participants initial one now turn

Jeremy D. Thigpen

everyone to welcome today's call. in and participating Brad, you, Thank

XX% our continued in the the efficiency XXXX, excess $XXX billion This quarter. efficient adjusted organizational by operational the As reported focus million generated of backlog of EBITDA over with XX%, revenues. in once contract resulting in across global generating million fleet, yesterday's total drilling was of revenue the industry-leading again company quarter for $XX.X earnings in normalized EBITDA third in of efficiency our of release, on conversion and normalized margin and EBITDA the adjusted strong driven $XXX on uptime well-priced performance

ahead capitalize of harsh upon ranking has the with note rig The due of until internal financing until in top And entered market XXXX. strategic the us Ocean well Rig of terms considered that the operating our ultra-deepwater final positioning strategically into for is compromising to environment of as balance XX newbuilds. important results, Rig and position are Santorini seven for of tool, are us. ultra-deepwater Ocean seven quarter, of and provided on world, Rig and we assets high-grading ultra-deepwater recover. for during options to the two scheduled delivery Ocean scheduled of final is and the younger, environment and acquisition, under opportunity Santorini of to a payment in to we fleet possible drillships, Crete, XXXX Crete Rig fleet The equipping top producing nine the the control on According for we the two which currently its XXX environment two all specification will the agreement not acquire the third delivery it the shipyard semisubmersibles, flexibility, XX right the or liquidity of harsh us our with When to the floaters, without addition competition is XXXX. and shipyard construction. the years better attractive high solid in fleet In comprised further definitive floaters. age or our payment continues extended Ocean this to It's drillships, ultra-deepwater the shipyard due XXXX harsh completion sheet currently which not XX

has operations The in transaction million December. we for to November the annualized with begin been on to to Norway in XX the strategic the proposed integrate Meeting, Additionally, backlog we the opportunity expect and and to Rig synergies Ocean Once vote anticipate Rig industry-leading will million through Africa. Transocean in West shareholders realizing providing will add our approximately work fully General transaction, ongoing Extraordinary generate $XX into $XXX quickly closed, combination. our scheduled customers and with that Ocean we closing this

floater materially size, approach, While near-term that the industry-leading liquidity we assets future composition, our as are and transactions position. position. said harsh do pleased top-tier and quality with may of of targeting ultra-deepwater consistent disciplined we fleet, part remain environment will we Having compromise in that, our our enhance that would and not consider opportunities our very exclusively

to Offshore. agreement As year high-margin four you a employed decision environment $X the the Songa, recovery, a strengthen similar that approach we when which was high-specification time that entered continued acquire in why Ocean Since new Rig. we demand remember, Songa for time, in With increase acquired ago, we almost similar is the beginning these market and harsh of to will Today, semisubmersibles for ultra-deepwater to believe improve, an made that global has to just disciplined billion a assets XX% we prices we verge into in at over is on driving when Norway. the backlog a market approach assets. purchase drilling

Brazil While is the materializing, for three demand above the the at we market in are ultimately rates day spot increase a clearly precise that market. an thesis, we Petrobras still are the in contract poised timing day data the XXXXX and ultra-deepwater and well years. points suggest in in trajectory recently of incremental many for seen prices that rates recovery that that of In in over support the executed past

our our direct world. that customer there contract, the and base projects frequent this in across horizon major offshore conversations a number on basin on to addition ultra-deepwater increase every with In contracting in material quarters. a of recent ultra-deepwater the know are have witnessed we in our activity based customers, around we and And

to our us capitalize positioning of we with As market modern a on ultra-deepwater opportunity such, high-specification, the provides increase the we to number have are us fleet, and drillships confident that Ocean unique acquisition recovery. our timely Rig of in that better

within which prefer, the will years, demand machines to Since shape. our continues five the we drillships for the to that be expect high-specification, transaction, as high be recovery contracting them past we XXXX. Following take drilling available available more three XXXX, the customers efficient with will have ultra-deepwater in in these constructed five in are

higher certainly our assets of that and Songa These additional rigs. executed have older floaters excited that now two to our have rigs In XX% during three Delta. fleet, environment the we into and we prospect past competitor, industry's about or divested of in the and a operate ultra-deepwater. short, downturn. of introduced market, and have when recently have we we're C.R. we next XX which these Overall, end, we rigs almost to most our high-specification the that we the Songa quarter, While be Transocean our are newer, some have efficient floating characterized new total the of must to the market. Luigs the the start much as in designed over years Offshore our specification unlikely environments recognize recycled floaters, fleet twice including completion adding of the of over to upon Norge interest of acquired XX the and we continue most exit younger, we Considering transformed fleet, transaction, identified assets: a a more XX of retired of evaluate been either addition fleet completely competitiveness To demanding harsh Rig to determined of assets, nearest were applications. rigs were the the competitive with our challenging Ocean fleet the will decision because since which retirements jackup number to the the the of the

the early in would stages in adding $X.X Over environment second of period, our Starting $XXX market, quarter four is of an added contract that Goodrich rig. now Husky recovery. Henry approximately this trailing million that XX-month our market. the performance we November million for we've awards total call, additional to Turning through our the the the past with months contract enhance we largest backlog, extended $XXX backlog, margins XXXX, the Since a evidence in solid we further earn quantity bringing XXXX, added providing this of on which to with since to have market a backlog XX already opportunity over bonus, the on quarters billion. August, are harsh

a that reputation the and extension You employed very market extremely almost assets. as company a we the three pleased profitable operational rig where years our justifies great we're Needless reactivation Goodrich remember this it ago, completed position. first regarding we of this to have strong working may reactivation Canada has the strategy a and was further in say, keep to the

could quickly environment acquire we with executed Norway, Additionally, her. of the entered Hayfin Norge, in into for market Norge. to we the that Transocean contract were confident we maiden the the harsh the venture joint When Capital place we've

XXXX. crews. we of The contract and with delivery contract of In capability, three-well prior and were day that that shortly approximately demonstrates earn February. approximately to contract after the near current $XXX,XXX able Transocean has in confidence she since rate to that The rig additional We've this Hurricane and middle the opportunities a mobilization her This early acceptance value our the this of next estimated provide line currently drilling bonus strong in Hurricane is a to the begins even Energy with performance. that upside rates Hurricane quality safety marks of $XX of base contract and expected Fortunately, is transition will year. third contracted performance her has million. commence with to the the added fleet our expected for assets for leader XXXX also in

on BP we March a beginning Lastly, BP activity with BP one-well building for on with in previous on a with this Loyd, Transocean four our rig. Paul B. XX welcome UK is contract This options. reunion and of the contracted of Loyd the very begin the years two-well in

extension to of This received XX-month million to peered the mentioned XX-year $XXX we're Turning to of Petrobras. backlog. contract initial Petrobras our ultra-deepwater will which commence market, next August conclusion approximately year with in the the for added the work pleased previously the have at XXXXX,

should XXXX. of It pricing respond noted, its relationship and approximately strengthening Petrobras, long-standing the tangible on us addition also maintain of the million dual-activity Brazil sign Petrobras tenders. license to of dues represent rate we valid significant helps of also as retain contract is our to with their our the round this the as which with day to previous This be technology, $XX As country self remains fixtures the both the through and well our contract position new important rate expect day in patented Brazilian above previously in headline in we is XXXXX, associated our that are noted depressed upcoming in continuity receive market. of to to which

be recently just KGX the options has one-well region, campaign a in China Asia-Pacific completed contracted beginning very very two with believe so we for are successful also a so in the note to pleased with do that We It's these CNOOC This important February. be her quickly Petrobras in to seen fixtures term three-well to are rig outliers. work. putting back not to we

the Our at customer the downturn. marketing to and request and fixtures more start throughout building of happen is of they ultra-deepwater continues the team increase the inbound contract world. number And

to As about crude increasingly rig. coming encouraged we are we believe imminent the fleet. fine the are an our to assets the emerge in carefully for we the we be tuning likely believe months are recovery growing fleet, assessing such, our to in for what market, and plans, each likely the most in determining complement our our In preparation we detailed first customers possibilities including reactivation think assets contract for our ultra-deepwater are

rates low, assets and than make the our drillships to majority have reactivation will because rigs top ultra-deepwater recurring to priorities warm-stacked we cost be our economics the contracts that the cost endeavor the to fulfill with do on rigs attractive. will will place customers soon be reach as fleet. speculation. contract less of we in the our from and are we the closely such profiles added $X assets not market our with comparatively our the the contracts we With reactivate in acquisition, million, will necessary Rig these level that with day three At for associated point, the the assets Naturally, on terms Ocean monitor Instead, this to risk which reactivate rig. intend cold-stacked more assets and generally

rates into to we and XXXX rates, believe appreciate we should day that move as begin through XXXX. of Speaking

strengthened have relatively in for sustained We balance prices the improving not energy The above the improved are sentiment increase meaningfully contracting and the flows have seeing customers. oil in Brent per of surprising $XX remained have recently because belief above steadily barrel most the cash per prices this the climbed space. $XX and barrel. our year is activity we sheet as high and These of

reserves is Additionally, indicate healthy by offshore Needless increasing horizon flows to the levels of most per In investment. supply questioned high the recovery oil timing relatively breakeven with and to need questions replace growth from for the sequentially almost to developments. say, and increased offshore need deepwater levels Today, direction the agree high XX% a customer's energy offshore whether price quarter, continues projects current the project for around are at combined the show future to XX simply the of economics are combination demand as increase were cash months the XXs free would directly in most market. to rebound. with ranging be This, ago, for almost appears backdrop break XX% XXs, to optimism shape. XX our that impacting prices, of below contracting an investors of analysts and our tenders XXX. level short, on sequentially of ever we market evens, and and signed encouraged contracts asking is low to about and customers the the sustained XX some increasing barrel

will we to cost discipline our contracting remain to opportunities await the while we it. enhance and those structure, As existing answers to strategic continuing drilling reliability, on equipment exercise questions, fleet safety, critical efficiency evaluating and further our focused in

appreciate we Transocean your thank Mark, another and Mark? handing team the just you focus as to both sincerely quarter. that out the maintain year. the would commitment strong over I close Before ask like call continued delivering for I entire and to

Mey Lovell Mark-Anthony

good and Jeremy, you, Thank day all. to

to discuss I forecast. some provide commentary results today's XXXX During update liquidity will quarter third call, and recap our our expectations an guidance, our our early then XXXX and on provide cost

Rig Lastly, on Ocean acquisition. the I'll provide an update

related net of million income reported details $X.XX loss reported associated diluted impairment diluted we $X.XX previously interest with from and For or After goodwill, attributable included $XXX the quarter write-off XXXX, third net and Further per charges we adjusted share. items per of $XX the adjusting announced are retirements floater unfavorable share. or of in to controlling million for Transocean XXX Transocean Highlights increase full an quarter of press KGX, to $XX India, quarter KGX, operating our for prior quarter of quarter an of third relative on the new revenue the include the release. due increase prior of from million. days a a contract commencement fleet in to the the an operations Discoverer the approximately for to Enabler Arctic,

an voluntary line $XX fleet-wide administrative retirement customer million and employee guidance, Additionally, reimbursable in to expectations of with we million revenue the the was margin quarter our adjusted industry increase EBITDA was XX.X%. of and with the but backlog have in by negatively and to $XX that consistent General the as of costs. efficiency expense for and quarter, greater-than-expected strength impacted lower continues $XXX performance. was second showcase sequentially million plan. maintenance our the normalized both XX% That operational Operating and the of contributed above lead expense

to the quarter. the flow cash increase with Cash from timing sheet insurance totaled $XXX compared the $X balance flow. interest million million primarily was Turning payments. and operations prior The to due in of and

Additionally, magnitude saw decrease quarter. tax by payments we from a the the income prior in

our position of net receiving our net similar proceeds maturity, billion using credit capital the Encourage that markets Songa-related secured debt call, a these facility two again a we the Deepwater from ended quarter, quarter with quarter during acquisition third by the notes million reduction guaranteed revolving assumed open were million. of markets to of million the accessed net including and repurchased the priority billion third Songa we disciplined earlier continue $XXX last a $XX This of opportunistically as with results quarter's Last cash proceeds of XXXX liquidity cash to of approximately and and to week, liquidity debt used in million. issuing financings. in unrolled $XXX we discussed opportunities runway, of billion, accessed maturities. addressing Ocean used Rig cash year. the pay of we maintaining in the for consideration capital $X.X for approximately We the Through in our the Songa twice and As be offerings The due Enabler to equivalents debt debt be of We'll near The strategically our market. $X XXXX enhance total $XX on debt as this to approach retire our evaluate we proceeds portion the part separate our will Pontus to acquisition. collateral and debt midterm capacity. and the $X.X liquidity

our Let on me XXXX update now provide financial expectations. an

the we impact to reduction contract termination drilling XXXXX revenue revenues. Clear $XX efficiency of of expect assuming XXXX, includes recent forecast contract the the amortization down revenues the revenue be to approximately fleet, fourth and to of Songa intangible active This quarter related the million XX% extent, early For the Petrobras on Leader, our contract XX%. total Discoverer an of

We This expense expect of O&M approximately $XXX expenses fourth approximately quarter million. million. $XX reimbursable be to includes

the The first a In Guinea sequential of our in ultra-deepwater floater reimbursable recently Driller is expenses, earnings to related next Development the to in rig there's in expected quarter contract expense increase the related announced operations of Equatorial increased commence to preparation addition III. to year. reactivation

in expenditures million quarter. fourth in including fourth expense to quarter $XXX the anticipated expected $XX fourth by approximately line We includes offset expect approximately capitalized the with reoccur. $XX approximately income and third fees $XX million of interest Norway interest be million. Capital that of be relates $X This in not quarter to third should recognized is the forecast to increased The for capitalized million. other and to million. G&A fees quarter of primarily interest interest sequential be for the quarter expense for the recovery approximately professional increase legal Net

fourth cash are $XX Our expected quarter taxes approximately be to million.

in Transocean will the XX% a and be our affiliates. interest, the not we in at unconsolidated investment in specifically Norge, consolidate we Looking harsh interest environment semisubmersible will the own rig-earning rig reflected energy in high-specification which the

venture Energy the lines. fourth We residing quarter the Transocean we income income other will on the therefore the venture, detail Norge within regarding the backlog our for joint XXX% the results. further ownership its to at will both our and however recognize with operate revenue rig and of provide call. Due earnings include this in operating We'll joint of

until Although Ocean by we in of our providing the maintenance each let surveys combined XXXX of full performed comments. the Rig the transaction expenditures year. fluctuate guided December to and reserve after few cost special-purpose closing previously will budget, completion expect high-level company I of we annual offer to you number the a guidance during me

two we XXXX, SPSs; SPSs. have seven we For expect for XXXX,

complete XX-year Deepwater the Asgard; SPSs will the Deepwater and Invictus Spitsbergen; on routine XX-year two Deepwater SPSs We SPSs XXXXX Petrobras XXX. and Arctic Sedco and five-year Transocean the Inspiration, on Transocean and on

survey survey a any in Petrobras the $X a only care of at without are dates, The from result of five-year two the of should will this to days recognizing these XXXXX in out-of-service The the tensioner Compared third is for just Spitsbergen to cost number total days riser seven in and to out portions approximately This XX-year will expect is the our expected direct for of where, days costs work be XX-year of out-of-service XX in historical on result enhance is between surveys, to surveys agreements. robust be less XX-year the XX% estimated OEM roles performed the survey surveys benefits (XX:XX) expected volume-weight quarter. XXXX performing expensed survey, million. to we these service. to costs in result to result Inspiration Our in with addition The third the $XX and Deepwater planning, the and XX in of which and days tolerances. we earlier quarter on five SPS in out-of-service million, enable the over the on us expected lower, is work system. are

will Regarding take Sedco our routine survey the performing on a first that XX two we days XX-year quarter. in estimate we're XXX SPSs, the

the on at for approximately survey in Arctic, we expect her be also quarter. to of the Transocean Looking service XX the more closely out days, first

We certifications which control rig spent We well million by years three $XX and propulsion the million in her structure will this costs, along the life us to of with be perform anticipate and extend permit on $XX of to system XXXX. the service will will enhancements capitalize system.

employees. inflation in salary cost modest that We several note labor with unions offsetting successfully longer-term increases negotiating are cost we countries also see offshore these We contracts escalation where our operate, in costs. clauses XXXX could for labor

estimated liquidity to is from million an This office building. new Rig liquidity million the our two new related cash which coming of CapEx to billion for June corporate XXXX, period is newbuild of XX, in million, new approximately the buildout includes amount now ERP billion be $X is Ocean Including in balances, at the system the from December million. cash of This operations the closing. December our Jurong. implementation $XXX excludes forecast and projected maintenance of which end credit $X.X at $XXX This to but Ocean our liquidity and estimated drillships XXXX to our Rig we facility expected includes a CapEx be our of Turning XXXX post the between year $XX XXXX. revolving XXXX current close expect billion. includes matures transaction to $X.X $XXX any

two Additionally, drillships $XXX note we remaining Please maintenance at our the be currently approximately of on $X.X CapEx. any includes billion. to newbuild guidance million excludes rig million XXXX forecast CapEx $XXX Jurong the reactivations. This CapEx approximately final and payments that for

transactions. Brazilian is the filings by Norwegian proxy Rig. Ocean like as to statement both comments have few make reviewed conclude, a filed were type the Statement SEC Registration authorities and brief Ocean and Rig. I regarding S-X an acquisition and required pending approvals for a received the Before of of We These the with antitrust customary I'd from these joint

X offices As scheduled in Steinhausen, at November Transocean's General the for to previously the acquisition. at Time Switzerland, Extraordinary on XX vote Swiss proposed is mentioned, PM Meeting

underway, full Brad. like to the well over I'd by turn integration to back transaction enabling XXXX. previously the is discussed expect mid-December. planning to now of We realization synergies Meanwhile, call close the

Bradley Alexander

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

Operator

ahead The your question will from with first question. Røhmesmo with go come Please Eirik Clarksons.

Eirik Røhmesmo

you. Thank

were day XXXXX Just that? market. Petrobras current this proxy thinking than the on the starting sort rates, a of contracts that's would higher Could mentioning this you about or a the as them spot other How see for one-off? is in we (XX:XX) about you think

Roddie Mackenzie

Yeah. We in the Hi, this that opportunities. contracting Yeah, for Roddie. Certainly, trend. Eirik, very is see we're been a exactly as that's it. we've how disciplined fleet long-term

rates So, contracts. longer bit certainly, much term market we I certainly see more a amongst for would discipline keeping the the a lot and say about better profitable higher should a

Eirik Røhmesmo

Thank All you. right.

The near couple get in a are these further have we you these recently question, had off older see that to contract second expect you rolled retired should rigs or the rolling of term? or for opportunities Do off.

Jeremy D. Thigpen

that and think I said our a we still fleet. assets few long probably have wait see, we've in since but more

So, roll a to we make marketable we're off as rate they now. decision today, as going they long are be But don't the to that's not right them forward. expect contract, going in day as

Eirik Røhmesmo

you. right. All Thank

Operator

Thank question. BTIG. with from Greg ahead will Lewis Please you. The come next your question go with

Gregory Robert Lewis

morning. good you, Yes. Thank and

Jeremy D. Thigpen

Greg. morning, Good

Gregory Robert Lewis

guess, North I as It's the in the bit about Sea, we slower. towards typically we're little heading winter Roddie, think a season.

seasonality that on should they in contracts gaps are rigs current tenor? we maybe the contracts like, more ahead are when North like the if look winter, the the this Sea, to it XXXX, we spring thinking convince How should seeing Sea in new the or winter North of you maybe continue off next working role be you're the expect between few you some things and a about at when the through were looks cadence some XXXX I we're year? thinking the time the time. looking that So, they to and there in or go that Just

Roddie Mackenzie

question. Good okay. Yeah,

their out we're on our rigs and across well Norwegian from tell fleet So, that those so have with sold able by high-spec to the been has seen let rigs couple additional a industry. so that enough market, in the the side, schedule, own gaps of actually is delivering the of delivering ahead me been we've And far the demand you, what actually quicker. wells. gaps they But that creating fill been wells we've essentially strong

good expect there'll fixtures looking Norway for winter this the it's winter. over like would U.K., next really think I we we're look that on expect same In We So, continue XXXX. idle would and winter, is rush always a very for be already the it's and of summer in the but sellout the rigs beginning a of awards quite really to and of seeing interesting.

operators seriously are now winter considering program. the So,

to the the certainly So, XXXX. small we or lot actually time and expect a in activity see pushed winter winter there going are of either to of XXXX will idle all a we're be way more amount this programs going to of have be to

demand just that rigs having availability pick from think you're ability for So, exact and I rather timing of away the to than the consider and services. to getting the the the choose just

positive positive winter certainly better the about very this So, we're winter quite of XXXX. being and than last winter about

Gregory Robert Lewis

like in can guess just me maybe existing Rig some I And a great. tenders. bidding name three-, Brazil. of doesn't out these but in tenders Transocean's into activity there. one multiyear four-year Okay, looks of couple be absent that Realizing then on – like it was like has it some Ocean for tenders, those wrong, noticeably looked industry is Petrobras sources it

we of we about – potential forward like a and availability wondering, should of going kind or one at look bidding Ocean that function by is be thinking Rig Transocean Transocean? or Just kind as as of

Roddie Mackenzie

separate Well, certainly, entities. we at this stage, are

be on right. going Actually, Petrobras really tenders applicable being months, that this least a exciting because rigs only in three the time probably award will next themselves six at you're forward, going two for those So, Libra. other you're total December them But basically seeing tenders, is four really from to with in onwards. of

they there. are that terms go-forward of of have also another tenders In out couple tenders,

rigs six think the and could will XXXX. by We of actually participating in be that we award Petrobras alone middle

one sentiment Jair and of privatization about So, Brazil very calendar He I in the subsidiaries the deregulization say had would some the for ensuring is Petrobras for of block with positive elections in place and then now. beds. And essentially Brazil. auction the thing maintain they'll promised that

paving awards kind before and that's of in way the acceleration of and for discussed the we've to IOC everything even investment the So, Brazil tenders. points

positive pretty there. So, looking

In terms I Brazil if that's about some happen that, on in win Rig's position, Ocean couldn't of your fine. to they comment rumors stuff but

Gregory Robert Lewis

very you much. guys. Thank Okay, Thanks.

Roddie Mackenzie

Okay.

Operator

Macpherson Thank ahead from you for with with the go question. Please Simmons. The your next Ian will question question. come

Ian Macpherson

morning. which Good you quarter. on the Ocean upfront compared the money your Santorini sounds of available Jeremy, to those. me lot to spending discussed sweet Rig Crete fleet much open that's to pretty reactivation. you're own pretty remarks, the Good already prepared on other in Ocean Rig But spend you're all capital incremental of like Thanks. in your and a

would time? as walk a the us buy-in point the particular, you well process later as at eventual the Norge in through in So, those of rigs for two thought maybe full

Jeremy D. Thigpen

going and recovery shape. take demand to color. start, of it hand then the over Mark I to capable two in mean, for highly we think as this most the so starts additional in to they're I'll are be world Sure. these assets

we We of a that them technical such spec. that also shortage quickly. day rates fairly could of There's believe assets move believe

payments don't on late And those so XXXX, take other as XXXX until the the XXXX, in of XXXX. one at profile late we here, delivery final have kind of look in and

– payment do see assets. support time we a you this just to market rates time so to out believe day bit to certainly plays acquiring the by that that I'll how And I'll and final add in and the point the certainly have in Mark, anything those will that? And terms contract got of

Mey Lovell Mark-Anthony

XXXX No. payments. That's XXXX and are These right. exactly final

lot us with a recovery. gives that room to a So, seeing of real breathing regard market

Ian Macpherson

get think you fairly more Thanks. we're been that been the and I beating report, delivery apply? audit explaining your doing and can over course you're followup, Well, we of beating been factor consistent on the fleet on Okay. that's capturing revenue bonus the on answer. than a bonuses that you're ballpark one typically a never estimates you what mean, analyst obvious you're your I contracts Can times across not discuss capturing revenue Because but total you've My than better – has efficiency you've modeling. what that's lot we how theme. opportunity see

Mey Lovell Mark-Anthony

Ian. question, Great

over better. here I to few the me part that to explain pass and points of Let a little it then a bonus Roddie add

So, one with thing to that is you know do revenue. new we reimbursables include got in revenue the standard

some So, that every impossible have forecast. and of to try quarter. That's we

got additional the days we've addition, third quarter. In in XXX operating

you may this additional activity during level collections So, or may seeing and out recognition. of – put certain revenue you're revenue then, pretty with efficiency. creating more seeing provisions have quarters you're a for regard have you And the high fluctuations to

part, you've moving So, the is biggest identified, there's bonuses. a But of lot as around. things

Roddie Mackenzie

and to Yeah I just add that.

of likelihood what So, have also terms have not may and in potential, with we them. variety some that have corresponding regard we of bonus we're a in or large may have a potential but relatively numbers projecting we conservative and very receive. collection But associated smaller schemes of some

those So, guidance we give that. on where we full course, picked occasions not. have, we to any bonuses occasions, other tend many and, have of up on not But

have So, way it stuff really all bonus of that to the is contracts zero of them contracts range available. and sometimes XX% revenue XX% available to with XX% a and from

Ian Macpherson

there. for it Thank Okay. on. I'll you, gentlemen, pass the color

Operator

Sasha ahead. will Thank Sanwal you go The UBS. come from with Please next question

Sasha Sanwal

morning. Good guys. you, Thank

Jeremy D. Thigpen

Good morning, Sasha.

Sasha Sanwal

Yeah.

If to that the options on is changing whether types being further options? discussions or about question exercised? maybe, And so just share day you can they're the And current kind you ask of whether about non-priced on rate and color you of priced contracts can any negotiating could option, get firstly, options I different there on are talk a are to way.

Roddie Mackenzie

sure. Yeah,

the previously, So, we were not we went extensive commitments downturn as very as rates. through we low cautious mentioned make at to

So, are extend moving of options. significantly that They're one the options rates. priced do up we escalating have, the that out in

market other is that table time. that the agreed basically out negotiating are at extend a mutually The so where is the extensively that ones to return options, see to

but game out few to a the different a of reasons, grant had obviously quite that's supply, playing would term of for these us discussions get and say options sign the assets willingness lapsed would going we previously, customers in Report, have to those. is that the in and shorter more reported are Status for So, also towards our becoming tenders triggering diminishing directly. that direct Fleet – the lot so that various really of is And I shorter come the it's as shifting a they typically are option negotiations sharply. We've forward so of I kind couple now fixed-priced really and options length options we any want say a of

Sasha Sanwal

of just followup lead Great. We're cutbacks reactivations items about reactivation. specifically And time capacity downturn. departments service hearing deliver long on unrelated kind to That's Thank some concerns an OEM for you. the in during helpful. on given

just there? could your you share If thoughts

Jeremy D. Thigpen

it's through certainly that faces something mean, cycle. industry every I the

have to in on standpoint, the much and demand healthcare going time. placed really the we how OEMs From it's agreements connected recovery needs. our and dialogue of around is single to proving of the depend good the pace very point as it's the at planning that so, a very of collaborative on And all major are a OEMs a with be lot helpful with approach open

working And so, any though OEMs think reactivation detailed prepared remarks, we have plans first closely have my be to in and we demand don't mentioned with as where going in for together are the those going that assets I make delays. the reactivation we on to sure schedules significant we're

Sasha Sanwal

award. and Thank the traction to on great you, new guys, see the

Jeremy D. Thigpen

Thanks.

Operator

come Zurcher from Pickering for Taylor question go Tudor, will you & next Holt. Please the question. ahead. Thank The with

Taylor Zurcher

morning. Good thanks. Hey,

Jeremy D. Thigpen

Taylor. morning, Good

Taylor Zurcher

you, We've one talked good on Brazil, touched about Maybe one Roddie. morning. Maybe – Mexico. for haven't

next as XX curious the if market could updated soon thoughts you got going just here relates that work us give to and looks how there your to You've XX months. two over it pretty to rigs

Roddie Mackenzie

Yeah.

couple it. the discussing So, And heading as the we've there that And quarters for we been well. rig quarter first now. now right always Mexico quite Asgard, that we've about rig the one report and there excited signature with taking we're been a in got for we've are to happy of think I

There's good. also pretty rigs that's So, to the Mexico. our will possibility assigned of that be another one

could year, lot And we're that and me much that are whether say report question now was was that and is is Mexico between very a government gone One really and of fact going we happy their had was well. three in fact, there is, be two quicker I in to thing the permitting up on bouncing rigs about marks things telling which next one to than positive. permitting. in change rig permitting hold they contractors operator would waiting progressing So, the in expected and

of BP looking in delivering we don't I was Chevron out are has I we the for So, then Repsol, promised, tendering that stood up Mexico soon. Equinor, to the is in government be. terms there and what coming forwards, others, are think thought think And that it permitting and are to PETRONAS, phase amongst issue and going

I plenty several activity. a the awards So, think plus we pipeline. in lot made of seeing we're There's that see already there's more

looking So, positive. Mexico pretty is

Taylor Zurcher

of of suspect strategy longer-term specifically Okay. us the about thinking how Thanks Mexico marketing Clear work just marketing what – that well-suited you Brazil with for And these are there coming the for to that as is? it Discoverer update your short-term work any more rig's some a probably looking for work, forward? places moving I to in you as as putting that. the are strategy or world, it and to sense relates rig relates could to then, you Leader, back but give there and out tenders most

Roddie Mackenzie

Yes.

back the opportunities for right bring looking we're So, it and... to

Jeremy D. Thigpen

at work term day high rate. Long

Roddie Mackenzie

not said. Jeremy a world. the going around basins be but of seeing upwards yeah, as already every there. avoiding No, to bottom good We're it in of shift onto in in approach, opportunity just rates terms the out all that's we're throwing the really, market measured and rates So, the

So, we'll be waiting for the right opportunity.

Taylor Zurcher

could of and in DDX, expensed frame I versus Could maintenance the the for it be for you Okay. Mark. much QX? squeeze reactivation will One us how cost more just if QX

Mey Lovell Mark-Anthony

So, about be million; QX QX $XX about double was should that.

Taylor Zurcher

That's Thanks, for great. me. Okay, it guys.

Operator

come Thank go question will you. Please Colin Davies from The with ahead. next Bernstein Research.

Colin Davies

to pricing seem a that discussions? thinking NOCs. perhaps and the or forward Hey, good there's predominantly give interesting from willingness longer-term to as on contracts morning. Can in aggressive the whether some coming NOCs in in you versus some difference international of the going color Seems more to us engage independent major the the be NOCs

Roddie Mackenzie

Yeah.

so, that probably I think the right. stuff, and you're not a there kind not – of lot seeing the are negotiations direct out the things of tenders are

majors, between we've mix of So, is the NOCs been is closely that reaching tracking very and one the things the balance. that the IOCs really nice a

is and majors. to first Mexico, half in that's the simply delivered absent on stranded kind returned agreed independents in Angola that before Exxon, with but Eni, assets dominated from and Angola BP they of to understand got in and the they long getting XXXX. were We by have better we you've were as work. And off. now the think vengeance. expected to Senegal in alone, majors And Brazil because the rigs that's about if ready kick we the And being close times, and award all a previously, Total, mentioned the about are Now, of

a simply the just work awards. not it's pipeline the most think announced coming see So, because It's balance. forward. that's than really I I that's better And of think we that probably just

Colin Davies

was remarks. of Thanks. interested I a encouraging. And in your That's more and sort just surprised prepared strategic followup.

M&A around potential strategic see, Do a opportunities, perhaps. closing you see could the a still opportunities, some more just you around potentially comments how conversation improves what at little industry. endgame You further looking market be? as bit the of perhaps, window further the around made consolidation Perhaps the

Jeremy D. Thigpen

know close will that take think way certainly necessarily. I increase. the we shape recovery values But and it don't the window will yeah, does the would asset

shape the the increased the it's believe that that prices of market. seen about Songa in a similar ultra-deepwater Offshore Norway acquisition the for the take semisubmersibles. XX% We we high in strengthening made of and environment market purchase time. because in have timing could of since that the we've the harsh so And The comment recovery specification,

timing will there Now, the out no, I somewhat there. opportunities and exact trajectory think But, still elusive. be is still

then For us is the integration recognizing right assets important those that transaction Ocean to putting now, Rig committed most and we've and the thing then work. to closing synergies

primary in And focus at this point so that's time. our

Colin Davies

it Thank great. back. I'll you. That's turn

Operator

ahead. go Simmons. will Please question Ian with from come final Macpherson The you. Thank

Ian Macpherson

for letting in. back thanks me Hey,

there Just players to its supplies we this ultra-deepwater you drillships, advocate guys happy cycle a if comfortable regard – to get little bit with doubled the two. animal for we And sooner note. with cycle how other you of than to environments, spirits conclusion, logical may a that for than newbuild later how do? shape quickly with the with big the better some the what from newbuild we if Not staying deal. on right parallel seeing quarter a on one you coming orders recovery? and without of speculative are your a do to a harsh see devil's are The of optimism follow respect But semis

Jeremy D. Thigpen

investment. if probably ultra-deepwater in think don't at, more. limited mean, space speculative think Yeah. between, Well, about I Mexico I mean, new day are of million. maybe I And newbuild the looking rates average in right capital you now, currently supports the $XXX investment, probably to that what, you're Gulf million the sitting $XXX

market. to day there a to would available to go hard see a that get There assets out are to You'd a fast rates that run to day justify have rate of pretty and still number up are the newbuild.

can't envisage the term. in newbuild near a I personally So,

Ian Macpherson

Right.

Jeremy D. Thigpen

know But if guys... I don't you

Mey Lovell Mark-Anthony

million fact spec that orders of growth to a the loaded you lower have round If too $XXX harsh doesn't see with lower been half Ian, have have we environment, despite now to the and million, that quite fully to right quite this come area. going the rates, support ones are assets dramatically new out a shipyard they assets. seen fairly in about $XXX That within mid-$XXX of $XXX million improved are – rates bonus, be you referring price $XXX the can would million, It million. you're easily there spec

have day that that rate that. aren't have you gone supporting So, don't though folks and exactly the market's household recovered, them out And ordered names. even

stay perhaps whether opportunistic an just really few So, market of towards they're recovers to years. next have a luck I or bit here would the that the of in as trying little and flip approach to the rig over that, if skepticism

Ian Macpherson

Okay.

Roddie Mackenzie

high uptake marketing rigs. I we for the the very seeing thing a ultra-deepwater one Ian, and side are on sharp add is Yeah, specification and would for interest

there So, including our moment of are own. couple a the several in at yard the

you'll think and of those BOP yard rates. high So, for go come the to super them out rigs, dual see improving day work workload I

before You'll have turns mind to happen extensively see their that anyone to newbuilds.

Ian Macpherson

off. one That quarter behind and the I'm fell bit turn from Could before giving when total fourth guidance. more revenue all I Last that the I Mark. for a sorry the me were me time sense. makes through one you little you run then components?

Mey Lovell Mark-Anthony

Sure.

me page. to Let back get just the

Ian Macpherson

that. Thanks. about Sorry

Mey Lovell Mark-Anthony

Part quarter-on-quarter. said runs going That I amortization of October. be that's out. XX% end Leader we're of problem. going to the No down to because is Clear be

biggest ending driver couple the of and the are that that's in So, other we that then quarter. also contracts fourth got a

Ian Macpherson

those Okay. And intangibles then amortization, reimbursables the as Songa for give did well? and you

Mey Lovell Mark-Anthony

Yes.

Songa's amortization is around going to be right million $XX per quarter.

Ian Macpherson

Okay.

So, that's flat.

Mey Lovell Mark-Anthony

Yes.

Ian Macpherson

Reimbursables?

Mey Lovell Mark-Anthony

I was $XX think million. that

Ian Macpherson

it. million? $XX Got

quarter. that. about Good guys. Thanks, Sorry

Mey Lovell Mark-Anthony

you. Thank

Jeremy D. Thigpen

Thanks, Ian.

Operator

back I'll the to concludes Q&A. Sir, it This you. turn

Bradley Alexander

to participation today's everyone your call. Thank on you, you and thank Brandon, for

when free please our XXXX to quarter forward me. If feel day. Have questions, further fourth have results. any talking contact a nice We we again report to you with you look

Operator

concludes Thank Ladies this today's gentlemen, you. and event.

disconnect may your a day. Have now lines. You great