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RIG Transocean

Participants
Jeremy Thigpen President, Chief Executive Officer
Mark Mey Executive Vice President, Chief Financial Officer
Roddie Mackenzie Senior Vice President, Marketing and Contracts
Brad Alexander Vice President, Investor Relations
Ian MacPherson Simmons
Connor Lynagh Morgan Stanley
Taylor Zurcher Tudor Pickering Holt
Greg Lewis BTIG
Mike Sabella Bank of America
Kurt Hallead RBC
Sean Meakim JP Morgan
Call transcript
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Operator

Ladies and gentlemen, good day and welcome to the second quarter 2020 Transocean earnings conference call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Brad Alexander, Vice President, Investor Relations. Please go ahead, sir.

Brad Alexander

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

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

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

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

Jeremy Thigpen

Brad. you Thank

this do to of maintaining to the part forgive beginning call. during work we to with challenges please are [indiscernible] pandemic, COVID-XX, associated from since audio the have we As speaker the our any spread therefore speaker to safely quality prevent of continuing

working and by on $XXX EBITDA teams the in delivered operating unprecedented earnings revenue. $XXX margins Despite associated our million second outstanding of As of quarter, Transocean release EBITDA experienced yesterday’s COVID-XX, delivered with for reported my challenges the committed XX%, revenue to adjusted deepest and a performing, moment efficiency better EBITDA. million adjusted adjusted in generating XX.X% express in sequential times. resulting revenue women to take difficult of men of these all to a the driving want who most I improvement and in through are gratitude our to than forecast Transocean

and to Our pandemic, and sacrifices continue each safely would resilience to every throughout crews operating personal like tremendous our that day shown acknowledge to I make they the [indiscernible]. company have and strength this keep

like teammates Additionally, and I and remotely well supporting have our despite working distractions missed would in beat our and the associated not and inconvenience recognize from to working thank shore-based our to with they operations who have a customers. home, adapted

balance hopeful our that continue the the the precaution Canada, activity to personnel Moving second kicked also to quarter of contribute almost [indiscernible] number we In billion will healthy. program our to new safe of Onto programs every this expect through contract backlog. our to on and $X third her year, third fleet. we the depending [indiscernible] through of her the in-country [indiscernible] further are Mobile Exxon drilling we program, this the campaign in In quarter. [Indiscernible] current successful Trinidad, commenced in Guinea can campaign to and, success working This follows with XX-month off our the [indiscernible] take a with with rationalize keep term. of a keep DDX the quarter we run equatorial Transocean Shell crews initiated [indiscernible] we beyond May. DDX and Equinor one-year

stacking process prices, see campaign, drilling near the in are success option India the of we of well which for quarter, [indiscernible] therefore of the an exercised additional course program India July. success Unfortunately, an drilling rig. oil [indiscernible] the prospects last Just for the no and term the and despite and changed improvement into cold in the the kept

that the of to first with the in with the quarter. Chevron first Australia her completed is In work DDX Malaysia, Petronas the Asia, [indiscernible] fourth year. on continue into quarter next commenced of campaign to full Moving scheduled into quarter our activity Nautilus

would the the for and highly million when drill expect with not final expect energy to the by XX,XXX contracting of we executed activity correspondingly pound Mexico. decision oil system. with capable the XXXX, March include, value continued Atlas, and a associated The however, sanction, wells, include total any X in resulting with a other industry’s for the services Conditioned demand will Shenandoah ultra Atlas has for upon should XXXX to million. Gulf prices, purchases equipment investment front, been Beacon, a of capable and and Shenandoah to that drilling anticipated Deepwater year. is the project very challenged in time, Beacon of which third of the completion ultra program Energy the second of expenditures rig would operations deepwater contract which next drilling to the Offshore The commencing most additional Turning regarding contract contracting incur we be approximately contract under will PSI drilling drill global deepwater project uncertainty have and of a are upgrades, the ship, into among four the encouraged ship to Prior quarter first by quarter program. involve in $XXX predictably the subject the hoisting do industry’s we material delivered disappointing; keep

additional require the project, actively of Shenandoah tertiary customers with engaged with Mexico capabilities. the of ship conversations enhanced a Atlas’ for Gulf in the lower that are we opportunities Beyond in the will

this future contracts of will be positioned very should follow drilling to Transocean with most to only well for secure these dates experience expected start since have deepwater Importantly, closely and the challenging will execute assets ultra we and the Atlas. that Shenandoah contractor be environments, the projects successfully in

opportunities, when below were contracting upcoming we has marginally $XX last ago three even environment barrel. and market from Looking spoke months now per largely the improved at or prices at oil

prices just has projects customers that recovery begin initially approximately are still want demand our the but XX-well where oil starting recently off start producer. to both revisiting in rigs kicking two as prices in per Gulf bids need XXXX, or expected to project XXXX pushed year the in drive terms Petrobras barrel for emerging likely an we we Santos requested oil for has Mexico, Brazil, we In of of XXXX. was exited to them now in While awarded not In with to next early into saw XXXX years Basins. approximately activity Campos the $XX by we recent a are encouraged independent three U.S. the and

Santos further four-year coming Equinor in movement we is which Additionally, the considering drill months in Furthermore, XXXX. we Mobile’s contracting see Exxon for the end in begin some of Brazil at ship could the IOCs country following in recent from initial Basin. believe drilling a contract operations awarding of a could

high that Speaking of specifically will multi-year Equinor, note harsh you recently environment Norway. fixture in semi for awarded a a they

see day we continued the price to While were performance was upside encouraged remaining a market a tied contract day fixtures, the significant near step from down opportunity and recently rate fairly day $XXX,XXX bonuses. uncertainty, awarded rates in oil drop base to given with

in Additionally multi-year respond soon incentive. government’s favorable related expect to for tax recent to the of and first enactment ultra this the In and we to will Norwegian with incentives stabilize award investment Africa, Mozambique. offshore market anticipate favorably we the drill oil investments, ship see deepwater gas operators

see is in a year In begin these Asia with think will both of in very in we awards anticipate also five-well award XX-month XXXX. will year. be work activity offshore for likely we Pacific, Angola it awarded Australia would for commencing We contract an Activity this this XXXX.

throughout other for we countries few duration a have been pleasantly opportunities the to shorter work see Additionally, surprised the in emergence of region.

take While in we that ultra disappointed has $X in we delayed, backlog various almost are see emerging are we we becoming opportunities recovery deepwater once certainly billion comfort again the encouraged and XXXX. by our been

we maintaining XXX. defined taken as to we any Consistent our a young of benefits to see strategy, asset contractor. the our have Driller continue continue significantly action fleet X responsibly high Sedco more the we the semi-submersibles with other well floaters at Looking to retire rigs, operate recently and Development than specification

when maintaining, ages, increased operating costs outweigh reactivating cash an our Beyond of employ view asset fleet and/or potential, continue focused composition. an objective to cash the on criteria the flow we with associated its assets’ When flows our evaluating remove recognize from continue and Despite will specifically near face industry, take medium term. more and the the prudent Transocean pragmatic our to remain we in the actions to challenges to we asset optimism, the fleet. our

activity. ultra pandemic, As were the optimistic we shape; contracting deepwater was entered hydrocarbons thus recovery offshore beginning current significantly, fallen the however, that the to take offshore for of has year, the we a impacting result demand as

question to a the state the an our took these result, of to the We within we circumstances. difficult reduction hope irrefutably qualified coming the I’d have after and regarding the to would be costs, the offshore closely support on we materially solid now provide market as sustainable leading that the stress a to global industry. personnel welcome we embark people that to anticipate force more purely thoughtful reductions to comments, again of his unprecedented without is unforeseen in address this which many position We over make result once a of fleet Mark recently organization reflect will being the teammates like as in months. difficult will the to we rig in Transocean our we growth. capable the contacted are drilling from offshore reduce few consideration, recovers like visibility contractor. what and and decisions a shore-based our as comments perspective market I back As as our group of team most as most decision

likely of so term. process steps you in contractors formally As are started the other the they taken or do know, a have to either near restructuring that that indicate number

Given strong over Transocean past facing a challenges balance years, the with the not operating restructuring. associated sheet and timely distractions our performance, transactions strong several is backlog, and

every minutes. will and liquidity our does a expectations he an provide As in runway few Mark update quarter, on

might some six ago of many we almost more to we is as other which through industry the providers. favorable there on Transocean, of first and years became As stability their I like of customers data would our the financial When in the competitors you transformation began to downturn expect think very contractors service relation their watch focused detail. our and went restructuring, that drilling unfold, our points

Transocean position and this undisputed drilling. in deepwater harsh able was its time, During environment to ultra as leader further the

unprecedented the contracting contractor phase counterparties strong is continue of to operating than group prohibitive. beginning keep is in us industry the we we extensive to result believe reliably has recycling and un-contracted their Different cost to front to restructurings, more which will and with well activity and in rigs active serve efficiently second restructuring on stackings now position the during preferring condition anticipate and of throughout NOCs crewed as projects. our first fallen the will safely, occur, the deliver levels IOCs to rig the As

fall the to strategically backlog, to impact maintenance prices levels, the rig of competitive a assembled industry Transocean, in we the likely future with day to As is in most we assets. almost immediate continue and count, stabilize therefore most more should pace most training at similar rig at We the the largest the rig cash need flows fleet most experienced lucrative our when the to contracting with significant the on crews a in with industry’s rates to crews. invest the that have positive with supply our due to inflection contracted assets. and oil of and fleet result, marketable stacked providing rigs of shortage the us maintain marketable and associated visibility reactivating of floating the rigs and strongest contracted have At favorable expense an

at survive As full confidence before XXXX; in will best brought scale recovery however, recovery. be given will have increase latest assets. market levels capable the it them us benefit are their prices has oil most contractual to challenge this positioned we offshore increase to such, the in not stabilize as into In to as right programs committed to recent operating the with find that performance while market accepted enable ready supportive. the offshore has more to the the interim, their and conclusion, industry’s fold, eventual begin prices and highest activity to we continue customers our a customers drilling projects the safely solution from back with are In the we working to become that oil deepwater our

strategically position. are enhance have We [indiscernible] to [indiscernible] the ourselves proud leader clear that as positioned refine

utilized As most that fleet successfully this remain our Mark? we as such, navigate expect downturn. industry’s we marketed the will

Mark Mey

day Thank Jeremy, good you and to all.

briefly recap will the then today’s call, and I guidance During results second for quarter. quarter third our provide

through will to liquidity I an Lastly, provide update our XXXX. forecast

or million. attributable we impairment we net As unfavorable per related to reflecting $X.XX include net press with reached [indiscernible] COVID-XX. $X reported our to revenue of to an early controlling loss $XXX control quarter adjusted Further EBITDA in strong adjusting reported related with for due quarter announced press second included for items of previously release the adjusted discussions charges were a interests in legal of fleet-wide [indiscernible] the efficiency, our a Highlights actions, retirements, details and release. are for loss associated responsibility for million second of cost After costs diluted detailed XXXX, reported settlement. share. regarding $XXX million to customers, agreements Also,

to free performance. As a we generated from a XX%, legal quarter more sequential this revenue impact on noted efficiency a represents our result include in with could million quarterly first of results. the our of been $XXX does of first be approximately week these settlement exceeded $XX Fleet-wide of $XX flow of cash paid related which what the million increase financial guidance, generated mitigated was in arrangements, operations, have that million should X% million cash negative It July. which a an from represents million. quarter-over-quarter. $XXX our $XX we of Consistent increase not dispute increase a that We

quarter, million second lower Paul positive travel largely of by Also Deepwater forecasted starts resulted rate contracting the to a for Loyd starts and of revenue from number Skyros efficiency the across the the delayed quarter. we the remaining by days B. quarter restrictions. standby the termination driven strong revenues early offset primarily in of a fleet These during of the revenue settlement. quarter, During impact a Deepwater and generated legal than operating DDX $XXX was the in on due delayed most COVID-XX Nautilus, for the adjusted

XXXX, value $XXX $XXX million Regarding July recognized million the X, January net of representing X, and XXXX, previously [indiscernible] June X, mentioned we [indiscernible] June XX, XXXX. settlement, XXXX, settlement, on $XX the million

was fees the is we expected in COVID-XX. and projects associated which guidance second with due quarter approximately our below timing the second settlement. recognized and $XXX Additionally, maintenance legal in of $XX associated [indiscernible] costs than the quarter in-service Operating expense in maintenance million lower and the with to million, certain

these customers. we to of During approximately million $XX approximately of million expenses the costs $XX which our COVID-XX, reimbursable quarter, of related are recognized by

unrestricted of Turning flows ended balance and to total cash billion of cash cash and second liquidity the we billion, quarter of the statements equivalents with and sheet, $X $X.X including approximately our forecast debt of of positive and million $XXX approximately service for credit for the revolving restricted facility. cash flow operating have Furthermore, from the $X.X cash we billion undrawn remainder year.

our during our the reduce took decision workforce we As and reflect Jeremy quarter activity mentioned, the difficult operating better to ’XX ’XX. expected to shore-based for

of we annually. As approximately a $XX quarter. of severance approximately decisions, will we these million the Furthermore, charges in save recognized result $XX million

now me quarter on an Let provide third update financial our expectations.

at further cold respective during warm Chevron Mexico, India, November contracts finishing is in reflects well stacked reflecting Furthermore, near which Arctic their we will is Eiriksson, in positioned driven campaigns, adjusted offset the quarter. rate their for quarter of warm in for The work the for in a of be Except Nautilus, and third of rigs. stack fleet-wide. Transocean we contract these full KGX Inspiration the by Woodside. XX% Leader, the U.S. Inspiration expect July. of the of Gulf has Discovery with to Gulf drilling together schedule [indiscernible] the our Transocean stack we contract will Barents, [indiscernible] term operations This until of Deepwater $XXX the Mexico. the For planned approximately million, Skyros XXXX, revenues This fixture, their to Transocean [indiscernible] next including ahead DDX reduction activity rigs with daily efficiency of revenue Discovery the six start its quarter be will and full remaining on Leiv concluding operations Inspiration, and activity

expenses $X $XXX expenses. overtime We to million other limited boats prior also million. expect and not and including COVID-XX flights discussed O&M These the include relates operating quarter-over-quarter to approximately rotations, quarter extended third related severance expense estimate COVID-XX million pay, approximately activity lower costs. logistical $XX and be to charter for related changes, decrease crew above, our certain to The to are crew costs but to quarantine of

quarter million approximately million third $XX million. and This for new interest forecast for This Net $X our expenses maintenance $XX and includes related includes the third expenditures G&A $X approximately million. interest of million. income capitalized expect capex. million million anticipated to $XXX approximately approximately is quarter to interest This expense including to be Capital We under for payments. approximately be includes the $XX severance of expected are be construction capitalized build $XX of interest third $XX quarter drill to ships for million.

taxes approximately third quarter cash $XX million. the be for to are Our expected

offshore and $XXX Turning December for capex guidance Please including areas our remaining capex. of billion. extreme contracts Deepwater for of speculative acutely upgrades. primary energy $X.X securitization our excludes potential an credit aware liquidity this estimated eliminates business includes XX, dislocation in their expectation We $X.X In XXXX and capex reactivations at of note new are focus, liquidity including now their and million a recognize while to billion XXXX potential our oilfield $X.X our any drilling. to and $X.X excellence rig maintenance year. includes end-of-year The we Titan’s This the the or operational remain conclusion, safety especially rigs our the which XXXX budgets have reduced re-contracting customers that our our services, completing undrawn significantly between XXXX to projected billion the and XXXX, forecast facility of with contract billion. of Chevron, liquidity revolving is and capex $XXX XXXX million capex estimated related builds be

implied a anticipation development we gradual remain as and capital customers’ for so, prices costs. demand budgets now However, constructive to optimism improve. continue supply and to we conditions the and I’ll turn and increase manage beyond opportunities Brad. for our proactively reduce all to by exploration constraints of sheet XXXX in and expenditure in back energy encourages requirements balance global will potential our Even oil over longer term hydrocarbon call exploring while our the

Brad Alexander

David, Mark. now take we’re you Thank ready to questions.

to please question yourself initial and As question. a limit one to participants, reminder all of our follow-up one

Operator

with from first Our comes Simmons. MacPherson instructions] Ian question [Operator

Ian MacPherson

Hey, with I dig I to the Jeremy, on wanted could Atlas thanks. everybody. in detail Good opportunity. see a more little if morning

of be ’XX of not said specific You initial I $XXX be, correct is XX-month think million an over finalized four-well said to the term, middle the or award would program Is QX the through it you interpretation? the ’XX. that

Jeremy Thigpen

Roddie, don’t I’ll well start, me, is why but about and anticipate that you to XX months. driven correct it we take

Ian MacPherson

Okay, contemplating any well you driven. options? price Are

Mark Mey

driven, that No, the that FID durations moment. until data positive about made, well options us and certainly details a yes, is not expected very know, to and going we’re but is talk correct of at point - really are--you the for the

Ian MacPherson

the Absolutely, $X.X finish see wanted fall the so stacked, will good speak luck that just also any, described, if as you year? Then to capex remaining new the much, ’XX congrats Mark line. over capex of can billion is will that how be the and capex that to that next getting rig included if and the build

Jeremy Thigpen

one. muted? I’ll that defer Mark, be on Mark to might you

Mark Mey

question could again, ask you Yes, that please?

Ian MacPherson

build of outlined total, the then capex to how wanted for in next for out be you how much and I in of $X.X spending build might much see Yes, billion final new that year? that remaining the Atlas the included

Mark Mey

well equally equipment, control almost of spread is included except in for all the X.X it two the and between X.X is some The rigs,

Ian MacPherson

out, rig for will spending? year’s fully next the budgeted effectively built within So be or

Mark Mey

Correct, yes.

Ian MacPherson

Got it.

on to the forward Look guys. thanks update Okay, one. that getting

Jeremy Thigpen

Ian. Thanks

Operator

you. Thank

comes Connor question Morgan next from Lynagh with Stanley. Our

Connor Lynagh

weren’t the about industry of There’s and hand, other you. Good sides factors sub-$XXX,XXX bankruptcies do one on competitors it what at be. where these of suggest for shakes would capital return On lower morning as you sheets? them competitive with a a major are interest Two going so lot out? having the really Are across out guys. bids concerned thanks. to for structure; that bidding in think behavior, on you the a position the argue to balance your question expense as impact day questions of re-emerge cost hand, Yes, there clean

Jeremy Thigpen

and seen what go as I look will that through we that through replicate walk second all do this and wave. can interesting, at back and It’s itself is we’ve recently that assume

expect to Pacific If the Ocean of with you came of with Rig and these had pretty of clean. think the Ocean like out come go to and Out clean completely wave, we companies Seadrill still sheet, Rig it. first piece balance a That’d only considerable came four all through don’t one those, out back Vantage be debt. rest and restructuring. out companies I

is going from they’re to quite have and a still they’re to I come cash. be that what certainly and lot of It’ll bit with reduced think to doubt of I today, pushed the it be out debt. right a going

I’m know, takes one well just these a that than position much maintain certainly a we be operate you to of them, to they’re are, I’d to cash sure attack assets, so in that cash lot reactivate now. a lot and not As better first it and of all, so of going

the The won we but choosing was going we restructuring in were were contracts bidder time. up way share, I you because less low through that the market stable, other customers when sure during increased distracted our and the it were not saw the we tell that more was process, showed definitely can’t because companies it financially organization, our these thing we

we’ll least in these at see a then think think and process. the not out those we’re I how uncertainty advantage decided just interim we companies the distractions, have and period, restructuring come because So of that I facing

Connor Lynagh

Got it, thank you.

of of time? do cycle changing cycle, the rigs stacked the over early that are never second curve How we you mode think You option of is question, how obvious now. is right part seems preservation It came cold maybe the about and rigs costs in going which alluded is stacking for should the think like that really cold idle. this back preferred were cash is my cost most reactivating idled through those in the everyone or how to assets

Jeremy Thigpen

saying asset million end so investment the significant to time on bring the assets is you high of to for are back that, excess You $XXX preservation low no it’s in of techniques the quite really at different take $XX of the to know, rigs these million this one record just no $XX to same we’ve the same. end, looked from million and - wanted a ranging on some if We’ve online. on been midpoint

If with you look at have rate term, would awarded the day kind there been recently that many of to justify respect contracts it. aren’t and that

the As prepared big them as it, day and rigs the and roll It’s the a and write quickly. and and--real we can’t to see in course so we think off marketable we comments, demand to rates we has that together reactivate supply afford the next today said terms come XX over today pretty to rigs expect people XX those in active those off contract, of crewed. could to order pretty support check won’t one to contract, and assets, supply keep rigs to think I because and year cold roll go stack this

Mark Mey

soon were uptick, just were very to is to saw to contract, theme of distance, add you bidding think cash the any but you. to counts, key supply of extremely going and were, certainly the equipment public rates hot quite the being that those rigs in on a that as by active that low different there move can significant Jeremy hand numbers the was did just the bidding about the be in a were I what going have to reactivation that rates that require upgrades we some taken cover or I think with - rolling and see what rigs that’s simply that little reactivations competitors going mobilized was being we off behavior have low forward, have rig expenses Of tenders, rates our that for that talking amongst from that course the the next where as

place no a of in So of certainly term, yes, other softness to still go rates bit but up. the near there in there’s the for may but them be little some

Connor Lynagh

it. Got just more. was to sneak in I going one

year how over in your many next you marketed If the you here? guys supply floater could ball, the would leave look crystal two guess rigs or

Jeremy Thigpen

the XX look XX contract there old. years off next, rolling if know, that and year let rigs this so you at over me or see You that here, are, floaters over XX are

would never at and XX light see day the hope think You that again. of those least

another or risk XX so are ever ages too, see XX good there that think at that rigs again. be are between the XX, XX, contract probably are and of don’t Those XX. XX I so could a there a

Mark Mey

be in forward stack that, it Jeremy looks those been solid far think ton rig it fewer to think downturn pretty the very I there’s some back going where what just I think as speculative like of that. everybody Yes, it of says, of up, the we’ve not going ones actually Yes, to I enough has long experience that in bodes bring that these reactivations see we well older re-contracting a folks to is the and are to going rig so lose a necessities, condition of just money survive. on the

Connor Lynagh

I’ll it. it back. turn Appreciate

Operator

Thank you.

& Company. question with Holt Pickering comes Taylor Our Zurcher Tudor next from

Taylor Zurcher

and on marketing thank of the on some Jeremy, to wanted comments touch your morning, good I Hey, you. outlook.

things you where term of maybe if this on rest not opportunities in a for I’m of think of you sort term contracts but entering contract in and You payments ticked where peer [indiscernible] of change only the out those the behavior pricing curious few some these some to the as given of qualitatively months. XXXX, now, a pricing the fairly long like were the over past for opportunities given you Brazil, sort any we’ve frame that going T&Cs right and through downturn it lucrative think relative work, be shakes work, your number it’s entered group. touched just you of Africa Australia. that to long are can of real relates Roddie, all that, they In market, might to you bit and for if

Roddie Mackenzie

with and that year interesting, asset having for for you It’s significant money actually necessity quite XX think still on perhaps course the the have three considerations, think That different Total. thing have driven in great been looks going is in is them they important that that there we on alone showing in in demand expect was and of Brazil to dealing But requirements bit and should you’ll costs and the there’s but one includes the as expected out mobilization in so but that, issues are this because awarding mentioned to very upside Brazil there’s you ’XX, would too. pretty that that to and interesting think at I certainly not contracts so Buzios any or recover be as awards little contract is going little we it that sure. asked Petrobras rigs covered region of it of prior. that’s competitive, region [indiscernible] the Brazil, a reasonably the years by could only about rig activation in and prospects of moment, and and I the not it or what in pricing to to those book like soon, be that long so five a a four big example. very I to investment, without that but your the they starts are to tenders Petrobras to many where actually just that, push were like you in it’s three order so before, on and return is of have outfitted for mobilizations compared specification, close, that. fairly Yes, of uptick expect may open as assets addition specifically an point the they being rigs us that take to you looks FSPOs, up are The Petrobras increase actually relates to those but upgrades specifically you rig about How for there Equinor see all it out, already years costs Field, the spending things term, know those the drive see some the is two a after counterintuitive they’re that

hot more then it spot bit you’ll but really be towards that to and ’XX, go supply taken see ’XX and into in little of rigs much ’XX. interesting a up we is the that ready are So expect after on I be summary, the still think end should soaked in may the that cheap,

Taylor Zurcher

Okay, just to of some maybe assets? that’s the know have give and next gen parse I rigs in what of market assets gen non-sixth off one over that and take just us next didn’t to over the Can higher I couple is of the your market is a helpful. Then where one you market you you the North see the just flavor much sixth market XX months, XX on those hear the about the trending next months, between two that a rolling curious end so years. few Sea.

Roddie Mackenzie

makes basically for how they of cautious by Yes, course so have the supply spend to oil that COVID very is the specification them scrapped. half. first. sitting been things getting significant drill U.K. funding. the pushed little so is that of Sea a number by be of are lot certainly rigs lower a side lack We’ve some that funding let has for do side on of the extensive meantime, stuff rigs, happened is ready in of are stacking going when with side tough, seen price prospects so of they has the me been of the and on in the about struggling the what’s that. In bit but the really North that independents, of active Really, cut the they right, but dominated have lot brought been A uncertainty happened and out, deal what’s are a U.K on the so assets, you’re cold war funding U.K. basically

see when the alluded is the you number North be we and we But very back Again, offices, hope as happens of costs to COVID being was is through breaks. You’re Equinor really that They’re that and are which XX of some dozen when up hearing X perhaps in that back there, from some back as Equinor once good or going driven X and get going Jeremy see really the been and of reactivation they spec not going Neptune, moved [indiscernible] expectations think rigs just the that about made. pretty likes has to better not does now. about you sooner forward, higher it a move than they active. does that all etc., the are schools Norway being Norway, fixtures COVID mentioned, many. to able know, a IPO, you active, guys beyond the and has available part Sea rather running down people through rigs the these tax get about funding to - Lundin, to expect and the going but in, later, have subside making are lot will of happen, Then of by that rigs. Equinor and margin prospects forward, to we’re for is

a the package by see together and spec think cut a rest they in that’s tight side, really were things, steadily be of all the Troll, just as the that very Norwegian of positive. Even now through comes the year the up like are so Norway XX%. with that relief breakevens picks of government in before, fields breakevens tax as tax by to ’XX. really grips We the XXs this investment on where everybody demand relief high it XXs has great again, putting mature could the So to market really as just essentially instead package, stimulating that much side

Taylor Zurcher

Thank helpful super response. right, All you.

Operator

you. Thank

from Lewis Greg comes BTIG. with next Our question

Greg Lewis

a are Company don’t conversations, need in there the but matter, lot look you guys drive to Transocean’s relationships given to morning a unwound, that and going the question my that competitors of Connor’s you, market. realizing thank A Roddie, a I first there’s I some not of some we up there, guess it stress is traditionally question good from follow-up it’s fact that everybody. started in as to, keep going bit you what well, has A use as that’s think, use to out activity of we out like and come your the around is know Yes, whether little we there to is of there just and given companies going whether any sort be Company it’s we to acquired, the viable more work fashion, to doors? maybe be up going some hey, through any fact that but

Roddie Mackenzie

is very report sure. successful getting new were to operations the customers have our I customers, and we nailed into team for several for that we that if value, that the are we’re we delivering well are that investment return of time seeing times but are operators that Yes, happy XXXX, mean, a look back of very taste in not us, that’s better saying I’m certainly of second and we better. actually course for there. half really first breaking and up tumbling, the we’re right absolutely the the The are to on unique it. able demonstrate are at looking to Transocean

have again us team. job. extremely so I hats course customers, the comes able planning operations, think a you that revenue only used of time. executing seen using teams where being be not with running on extremely efficiency as periods being outstanding, the of in fantastic are off a - through of and on numbers, is but COVID well and standby seen instances long term where before, way for pleased, now short may They’ve us we’re worldwide the to pandemic doing can customers dealt are the hadn’t almost ops stuff. that to during tremendous that done just that, Then our have just and that you those with uninterrupted only kind it proactive operations went just know, keep few the rigs But

a value there’s in So of look, that. lot we really believe that

wouldn’t of are bit us you as it premium, tremendous as premium, perhaps have but a be get that deliver a for We are a saving more the that guys expensive, deserve too able know operators. to actually I us that we you to not They’re I a customers value we’re for that always but to think expensive, proud we would telling premium. our it premium, cautioning I describe and we some describe say

Greg Lewis

bit or Jeremy Then Roddie. for just more question Thanks great. Mark, bigger a little capital picture allocation. Okay, around

structure the huge back there’s advantage could a more? bit little to cash the discounts, some look As be. you capital arbitrage in are liquidity looks opportunity debt, also trading term but versus in where that equity push--you we solidify there as your know, at and position sheet are obviously the that any look is there your key. discounts, position, you like near of and Transocean take there’s at trading across is at bonds kind end It should balance But

Jeremy Thigpen

that Mark I’ll on defer to one.

Mark Mey

refinanced tenders basis, we’ve managing sheet. you been Yes as over know, of in last we’ve the over we’ve debt, We’ve several $X Greg, billion billion, raised years proactive regular our done over balance on very a $X.X we’ve to done market got so term to sure and look at nothing’s change look runway, to going near liquidity maturities, open to repurchases our make that, we our every virtually lengthen quarter, address every opportunity we’ve now. at available

our million dollars of to it’s trading equation you’re say to to as go debt operating equity there we’re the at well, continue will both our out that, we deeply low pretty discounts, ways look With price level interesting excellence. - to are going hundred a trading bonds is sides being very at to extend and are the at buy several and but equity at can right discounted issue the in runway going We’re we when to continue keep moment. at deep do our that high so said, of company which pretty and of difficult

Greg Lewis

very guys, Have thank day. much. you a Okay great

Operator

Thank you.

America. with Sabella of comes question Bank next Our Mike from

Mike Sabella

any talk what options just for rig reasonably the you to was peers for the upgrade of the what Hey, and a really Really flipside, to the existing maybe thinking delay good walking through on shipyard could upgrade and a of instead more decision. maybe decided taking then are Atlas have the about I maybe could if expected that just or had an of you that from your rig. delivery bit just or little cancel build, everyone. morning we you us of new

Jeremy Thigpen

off other competitive attributes equipment several that these capable added assets there now cash desperate really--as to in that for to respect not really there make for other optimal XXK significant of the respect was with years really as rig, and XXXX, We’ve features, have a were we the in because lower last so there landscape, us tertiary. table the for itself, are out projects assets first. control was that goes buying feel into having a Are in them we upgrading piece upgrade everybody no the to With for with kind capex possibility to position, rigs that a or look though is roll system, really this been very with - these me Let cancel over us. was to opportunity us the There last the about XXK XXXX, XXK more We shipyard, contractually it’s so the like committed. recognizing option about every the the the there’s five start course load mentioned obviously of significant cash we bringing the the the in upgrading times our XXK and out are buying we’re work. just both these There’s Gulf importance. competitors that it, to able and it. one call their be for upgrade that which be of could else complete the situation Yes, Atlas, everything two before, ideal upgraded? deck there to we but than good The capacity, into pressure feel paramount of mentioned large of of these assets completion assets Mexico. hook Titan one pressure we the rigs, right The industry. and so the--acquiring have several the only we on viable mud so and equipment the at effectively is is associated and that our of control drill load, higher these to plumbing larger hook unique

contract, in things few so and still Beacon we but the left opportunities. with follow-on done the conversations conditional, about although be We’re customers after have drilling the We’ve Shenandoah excited work been to partners, project, a excited and other see about other active their opportunity. to with

Mark Mey

Mark. Mike, this is

majority and in have to of think to except it other able to this vast upgrades in the of the need As be XX we prepare what have PSI the I all to that the the numbers handle ago this, we those control a be included is But get rig, costs. that some we’ll the is XX,XXX for asked equipment, reason as is I items and that contract to in because that of Jeremy you for give what earlier. upon, agreed that with to to so other a some XX has fact said everything? we’ve specific months is, including better indicated, that [indiscernible], the occur well go associated all decision ahead question some mentioned on better costs rig so control signed to earlier, the all been yet it not that Ian does conditional a include estimate I’m the the costs and billion. well as the once included equipment, $X.X

Mike Sabella

like didn’t the bidding end rig, a the the process front then end the out think peer does try great, XXXX. you where XXXX? the going That’s helpful. so curve looks we were could or XXX what to was out all a you just figure $XXXK that into by of rate just for recently at a rates per like, we disclosed was assuming wondering Then that the part days as That saw you go what follow-up, on all contract day guys Mexico, guys. a Gulf in I as it really day of to very indicate out was and well, back that rate

Jeremy Thigpen

our We’ve of rig-specific over corporate not only couple the from contracts that need that been to fact especially positive cash the flow quarters we and our overhead. generate last respect enter covering vocal, means very operations, but that with into to covering costs

of I and to all know-- are have do our generate response tenders. Roddie, We so how we our that’s competitors, don’t to approaching cash, as

Roddie Mackenzie

treading are into to still back if significant really of the may to that generated and, fairly to in so it’s from enter us. one, you quite the just what starts, about our be anything there’s asked honest our you water six that is truth add, months policy a overhead is, liquidity. it not view campaign also or trying not then for before it asset guess on The but doesn’t also reducing if and to rate of I that I’d there’s sure. the matter just will that work that front not elapse contracts end. going stated cash been others, said, that’s end Yes, Jeremy of for period about an time any a of your beat we work ahead have as nine do it, clearly you’re going for for kind our that to

well were not involved past, level were in we operator, that a we’ve the to willing but them yes, rate at. very So we was worked the look great in that, for

Mike Sabella

That’s lot, everyone. great. a Thanks

Operator

you. Thank

Our next from question comes Hallead Kurt with RBC.

Kurt Hallead

good Hey, morning.

to here liquidity anticipate provided whether you having to initial for level. $X.X Just Mark. going billion follow-up range, you as to to the not an When that tap maintain I just curious was $X.X into liquidity that guidance your out forward, or billion revolver

Mark Mey

$XXX middle range, a there’s our so $X.X of the of Kurt, no. we revolver hit potential the it by million. so we much But the answer dip the middle right as it’s in is if range, into the as that billion, is

Kurt Hallead

appreciate fair that’s Okay, that. I enough,

the back flow you of for of operations. follow you’d and capex you numbers kind be from cash cash your up indicated half the from on year dynamic positive to Just here, the provided

capex would of flow anticipate positive potentially year? the back half, the of in in the could half cash back the be you you free Given overall level

Mark Mey

close, million of the half second close. capex would Kurt. It in We should It for be $XXX be do year. have the

Kurt Hallead

and Okay, for then Jeremy. one follow-up just

number terms on rate negotiate costs, let’s secondly, your example? costs, new operating potentially and the better build have with for to decision have to vendors to year, the you course there cost one, given about dynamic reduce been daily some dynamics to reductions, been guys reduce You the occurred the and any to talked the able over broader reduce, to reduce that difficult have your a of able overall around opportunity personnel. be On costs Atlas, say has

Jeremy Thigpen

cost and of low of support, our for system, downturn, shore-based start you we’ve to but out our late So of let’s of call constantly operations, looking out the so ’XX, know, out this opportunities Kurt, we’ve early the been since diligently the drive pretty it customers several that as at ’XX, reduce some. we’ve to now have then able crew without the each where substantially the done hanging assets We optimize impacting with of we and our that we’ve of and all pretty negatively assets captured certainly been crews size to fruit work performance. on on

equipment to constantly most In for we’ve to continue and looking term piece discounts to a de we the and long two every supply the our go fairly are we seen now, with of to on so of years our contracts entered given Obviously back vendors fact, base, into, partners, be term cases, and we’ve respect on relationships, where are safety savings years agreement for all improve times, assets, supplier significant those major and is reliability and equipment material. ago. think plus not pretty incremental opportunities. but suppliers our providers of performance our into of entered term challenging in With these this overly negotiated probably going so I long our those long support couple major care minimis,

Kurt Hallead

Great, thanks for that.

Operator

you. Thank

Our will Meakim with question Morgan. from come JP Sean final

Sean Meakim

that cash contract, rig XXK and about piece on Maybe the how there Thanks, pretty from like seems puzzle. It’s anchor-type big do you think it and we other opportunities missing a seems contract? timing unclear maybe good, of big limited visibility try to as that Plat the the the or look numbers on Are just one. likelihood follow-on some perspective, follow Beacon good secure like payback there’s others follow-on but pretty North discussion of opportunities. the without the morning. to Atlas out a you on

Roddie Mackenzie

in these there’s more Shenandoah all so are engaged there. that other many the or well, that area. are everyone from and that of of in of really also talk folks interesting Gulf Mexico, high kind of ranging, are of even some you the about as are engaged how these requirements probably in on there fields, that pressure there’s about top Chevron wide incremental demand the opportunities for can as Shell, these stuff the are that the Basically go to the Total, group, talking of are of fact There operators fields out so but Beacon bigger the Chevron, in Google possibility guys that we are some in customers

the this opportunities, the but of midst and we’ve kinds Jeremy happens. at about some not of minimal Beacon recovering those risk it, needless but in investment the going rig that that of when allows the ready that move in right forward put upside with timing we’ll to capitalize on details XXK as say course, on well said in of the side equipment, the are Now in and outfitted on having without being such capable minute world the additional of being a way there the make able and top control things, of that there’s to COVID, most arrangement, of that into uncertainty us to to other

fields Gulf is think to of we there’s or deepwater that and require four wouldn’t we risk, this time years to equipment at plenty the in least our another think So of pretty for re-contracting years. place three for more through. plenty re-contracting because efficiencies is Mexico, the low come Certainly the three of take of

but other to of we and shale first take there’s places, seeing be position. that it I for opportunities and versus mover how should moves fantastic on we lots that and time already advantage well We’re we of think on this as there we’re continue drive feel performing efficiency, able

Sean Meakim

Roddie. thanks it, Got

in right last hole in capital anemic huge you the with since be opportunity I a change? interim made the to the But this all an was there, does that even the post-peak, unfortunately to you about you limit the The on stays there’s for there, goal the man Seven advantage think yourself a certainly right. have you shift it given peers might XX strategy last you’re to the that standing. structure your if standing deepwater restructure, in so you of of the the capital months? right advantage view restructuring, but years last being in early really position there tenders. push next Is framed your XX on downturn pretty moves called activity bidding days man lack well. and for now as Jeremy, to sector, so

Jeremy Thigpen

No, it doesn’t change.

in a some we scenarios but you forecast our to I look going with years to market maintain time, and midterm. in we Obviously some think--I at day obviously operations, if can mean help liquidity five-year different feel our at ultimately, as know, position and we’re continue in under comfortable to terms need of three going point rate, the the and to through well hasn’t the be then recover started utilization various significant rates to started near from we cash recover we’re plus out process like going else generate market flow get where to some now. that’s right day haven’t and everybody and

last man the are We standing.

and we pull can liquidity a done, perspective, and operations runway both extend all right balance We the to keep on. fleet we’ll moves lever made continue every have from that sheet think, I moving and to

Sean Meakim

I Fair enough. for thoughts, appreciate the Thanks Jeremy. it.

Operator

for you. Thank Mr. to I’d Alexander Brad turn it comments. to closing back like

Brad Alexander

Thank you call. you participants to and all David, thank today’s on

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

Operator

you. Thank XXXX Transocean conference call. concludes second earnings Ladies that the and gentlemen, quarter

for phone thank joining You us may and you lines your disconnect today.