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RIG Transocean

Participants
Alison Johnson Senior Manager, Investor Relations
Jeremy Thigpen President and Chief Executive Officer
Mark Mey Executive Vice President and Chief Financial Officer
Roddie Mackenzie Senior Vice President-Marketing, Innovation and Industry Relations
Keelan Adamson Executive Vice President and Chief Operations Officer
Greg Lewis BTIG
Connor Lynagh Morgan Stanley
Taylor Zurcher Tudor, Pickering, Holt
Call transcript
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Operator

Good day, and welcome to the Q3 2021 Transocean Earnings Conference Call. This conference is being recorded. At this time, I would like to turn the conference over to Alison Johnson, Senior Manager, Investor Relations. Please go ahead.

Alison Johnson

Thank you, Marianne. 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, of Keelan Operations Vice and Chief morning’s Adamson, President Vice President Officer; call Mey, Industry Relations. and Chief Mackenzie, Innovation President Officer; Executive Marketing, Mark Executive this Senior and and on and Joining Jeremy Executive Chief Vice Roddie Financial President

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

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

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

Jeremy Thigpen

Thank employees, participating you, investors Alison, welcome call. in and to our today’s analysts customers, and

resulting XX%. margin $XXX million adjusted the in quarter, revenue, delivered on of earnings EBITDA $XXX for release, reported adjusted EBITDA million, of an adjusted yesterday’s third in As over in Transocean

of sixth generation. of represents the positive free $XXX cash flow straight Additionally, our cash quarterly million quarter

and true six And company best for During which us team the was effort XX% operating transition operations XX% quarters quarter. consistently our for a efficiency system, revenue the due addition pieces reliable, have we to or our other critical maintained revenue higher fleet. by globally. across consecutive initiatives helps of efficient sequential to [indiscernible] Indeed, in matched efficiency we monitor our of analytics and quarter, Supported a it safe, equipment smart equipment a and unplanned burn, resulting consumption, efficiency in operations, versus providing and failures to greenhouse to intensity system fuel and energy we allows a predict XX% such our our emission in emissions anomalies us that a powerful downtime. systems in and time, of to real goal XXXX track prevent gas and optimize signs potentially The degradation helping delivering of tool and can energy of same identify us trend reduction XXXX. our

to our turning two Energy for fleet. August, of Now signed million phase the Gulf the we $XXX we with in Beacon contract Starting announced Atlas. the Offshore Mexico, Deepwater in

to working the owners sanction nearing at the the deepwater Following previously of Gulf the and The generation project the Beacon investment Shenandoah will interest drill in transmission Shipyard decision the psi ultra eight one which XX,XXX of U.S. is completion be fleet. two, Jurong Mexico. ships announced in of final Atlas,

Deepwater ability that share of multiple three well increasing per option $XXX,XXX duration the contract of in this Calypso on Trinidad, one consumption. responses she The encouraged And across These will premium our continuation And February the the earnings the bringing $XXX,XXX to complete Titan power well at finally the remain last our customers wells million high on her test our peak in remain a the to belief three expected preparations rate Deepwater with by Gulf, total, we knowledge direct contribute actively of through readily the in rates announced tenders, option the to well well opportunities of the following ultra incorporate per and at of day several hoisting campaign KGX for and well and in acknowledge the growth a as in conclusion of the options per Shell. in over including day active as up available the to I’m discussed deepwater appraisal. tightening And now $XXX assets, flattens to in well-controlled of the made be also keep Trinidad. specification the features POSCO. the that completion the and well we’ve Heading commencement the in and the million her efficient continue the one out begins appraisal the through X.X $XXX,XXX as down based the a contract a has to backlog. region, two signed rounding equipment, and mobilization are ultra contract XXXX. has one options Thing tightening on next commence day reinforce the upon current continuation Deepwater of We Asia-Pacific a before approximately with awards is the exercise offloading to floor She of exercised market Nautilus contract. the this rate prospects campaign December transitions extension operations consistently state-of-the-art drilled safe, XXXX. to addition one recognition our In with day other bidding near the areas and Brunei day, Also option fuel begun we operations. rig for of for to about carries recent the day rig over we fine reduces through loads psi dedicated November. a the pounds day. $XXX,XXX Gulf, remain the Atlas market. expected extension successful of term globe reflecting had the well now that finally is by deliver the Gulf, BHP various Jumping per the well Invictus. hybrid semi-submersible future following future the deepwater will set The June XX,XXX for efficient rig technology wells. is to of capacity firm additional exercised The on to drill to Deepwater for BHP Chevron engines and call pleased of a expected expect Conqueror, the rate regions DDX. The in of to reliable, indirect prior Bongos-X and on

per accelerating upon competent remain forward based utilization deepwater last markets. has now we increasing low in of are ultra highly recovery conversations harsh beginning Brent environment and day $XX range for is the since to that Oil Looking growing month. remained crude with the supported rates, by customers prices our gradually as and increasingly supportive and barrel the mid

longer currently of level continued plus material regions. Globally, a the historically before the recognizing petroleum XXX provide pandemic. expect U.S. and to with for more global the XXXX, utilization nearing specifics untapped. multiple of a we FIDs support a XXXX. to increase announced Department these to levels a of projected the folding same which Average prolonged asset exceed of surrounding periods is the four which rise been offshore across this heading importance beyond. forward, At and investment market time, significant has been rising starting that result of sources Taking active inflection of the Both see energy. deficit sanctioning This beginning each the Gulf in with rig the pre-pandemic to floating gradual the at tender largely awards to market in will the and are these fleet, Energy Moving U.S. as rig its and is the for continue the in offshore maintain customers have our floaters essentially reinforces recovered consecutive quarter around the signs increases XX% continue point increased outlook a Moreover production tightening positive fleet also of U.S. Indeed, intent look environment, regions. possibly Notably XX%, time. XX% our Mexico, to decisions a a to trend specification duration Marketed of golden contract toward count high market a strategic see And of point third of at are Project see and reach America outlooks I’ll to utilization and are securing Gulf OPEC and of as for uptick Mexico, quarters In Africa in for highest our in signs of reserve rates few of seen under plan. the into active its range. particular the near periods. belief recently and continue current option all we is length on South sector. the sits leave significant utilization outlook a we from know the end the supply active has decided global of day triggered. closer full the of in year which utilization. the triangle, in of the the moments, you consists traditional

of the and floaters In several requirements the we but available to complete continues, encountered the near-term, Some pop-up of expect with shortage operators contracted yearend regional for XXXX. to if that the their work recently booked, rigs. unable activity be is trend we capable due fleet utilized this fully will time by majority of active shorter-term, have a sensitive

horizon. see While we long-term that these we region, volume a to firmly believe yet requirements the in on large of have are

lower more in demand one and that organizations their critical intelligence a predicting by region XXXX. goals growth months, utilization to metrics IOCs In meeting attractive increasing Third-party help their ESG with ESG economics organization fund also key multiple through the businesses and see have recently increase demand their projects. recent XX% for Gulf intensity as a specified and carbon tightening

average approximately to noted of XXs. as Specifically, in the kilograms Gulf a at barrel, per the high of carbon intensity the X when COX IOC low global compared Mexico XXs, in

IOC the two the deliveries commence low XXK these with future exploration Beacon metrics positive. outlook Mexico, per a their remains Deepwater of Energy rigs make new of Chevron, the for to drill and to combination eighth Mexico and breakeven Deepwater projects its logical for development. both very ships, for Titan, U.S. Gulf respectively. choice of two and be by indicated generation our these another and our build market we Offshore prices barrel. customers look as expected Gulf as forward the in The the Atlas and Gulf of investment assets The the Staying While $XX to

on BP follow the for with In potential prospects term well. and with prospective opportunities addition Atlas, from with Shell, work incremental landscape XXK extends the the to Beacon, the Chevron initial as on to XXK following Equinor,

prospects encouraged to high first safely pressure We’re technology cost the drill wells. introduction the future that catalyst a the projects required barriers of with XXK of green significant light these eliminated as have complete as been to commencement the and will serve

And we we’ve offshore XXXX. XXXX per rig this year continue. the known projected for Looking XX world, anticipated decade. largest to in to Petrobras and goal of the next Brazil addition trend XX Accordingly for needs to months. will of remain XXXX Brazil, incremental anticipate to support the national in is Approvals ambitious to seen rigs become by the awarded by XX an double commencement in production the With strong. between growth rigs fifth two one and exporter FIDs XXXX the of demand are through end years requirements

dominate also commencements, to continues requirements have Petrobras the While several over IOCs next multiple years. near-term

to the fact based the well-positioned teamwork Petrobras’ in testament and operating in by fact, long-term Brazil. as we of on ongoing a that tender we given performance rigs total to opportunities three strong, these in advanced this presence two an number are true believe commence capitalize In XXXX. record two IOC anticipated rankings, top evidenced years and performance across overall We the recently of to our late has an the on one position duration with our expected region, nearly to

over Norway. to Moving

relative We bounce expect XXXX. market a through in the

marketable customer conversations outstrip and XX could would based floating to projected reports in current assets, demand supply. However, on search which XXXX third-party the

during XXXX. to we of discussed Gulf XXXX tax sanctioned for U.S. and will customers the Mexico, December incentives Moreover, that time to calls, prior this are environment passed an favorable have see follows It an to the by requirements on project progress market. investment and Norway similar period. carbon to in available our foster uptick we our climb around attractive operations reservoirs. intensity begin per helped to As rate the Therefore, rebalancing of has portfolios. we by the projected hover their are also area before bonuses continue relatively day been performance customers is respective make $XXX,XXX approach Recently as cited and it contracted having to a low attractive in more of day their

and push investment. the the direct Angola are significant Nearby of As a commence active fiscal of commencing in in remains dozen of as fleet in we the in the has much both challenges may country long-term work suspended the expected in negotiations. continue COVID. market booked expected to zero and XX In And the cold a continental region are within fleet certain well in UK, tenders of African insufficient policy a rigs effects emerge of price terminated. in that locations supplied XXXX, over In the is through If pandemic, offshore expected. large more the prohibited various programs is the environment. current rig from as the both the for confident are number Consequently, stacked months. count XXXX, fleet as transition one projections shelf there we’re Norwegian meet available work seeing happens, is and to or potentially actively the such A through into several government IOCs. went track for for number in growing outlook prohibited see as beginning it’s is cost we contracts West from likely or the positive we the short will QX to discussions XXXX, to opportunities increasingly Norwegian the improved UK. under in depart for reactivating will still either of demand. Africa, countries rigs this the next remain UK were The the opportunities and Previous rigs, the experienced engaged

from region Angolan and XXXX, have seven Indeed, north to growth the in to some add prospects similar long-term is highest year Ongoing and experience in to projected time Asia rig actively to the Exxon we And doubled the see long-term More rig the firm to well region Nigeria the commence months. this the several years of solidly opportunities the steady short end. next be of to Ghana in outlooks. in over work the XXXX. In placed longstanding three set is XX flow are underway. our region, includes globally commencing the Looking summarize, and believe which year Angola regional Pacific to benefit that presence demand we while industry broadly, The over including work numerous forward rigs, are for and from incremental years. is tenders increase inquiries. responding TotalEnergies encouraging four tenders, is are we anticipate last set believe count we Australia, again next region. To we has and to we utilization given of expected over recovery the by

encouraged sustained We industry, drilling. our specifically, shore in the macro affects are the off it by improvement environment as

with the market conversations is emerged have by customers emerge to supported year. outlooks. view Our Many in filing from second ongoing with backed competitors its of the our our the and third-party restructuring year anticipated from by past around another of end

Since disciplined drive retirement in that consolidation driving needed investors. will transaction including our believe major challenging the has to the is encouraged to its group drilling assist encouraging first much This value the committed to obligation and two year, this further these that Pacific also of Additionally, importance contracting suggest practices justification needed transactions, helps our stacked from the We trend. we’re our cycle, occasions, shareholders behavior includes including this believe liquidity And that financial of extend reduce we earlier behavior the that rigs. billion and repurchase reactivate consolidation parties, $X.X assets, runway. rates $X.X a day required. peer industry all stakeholders these seized our debt have debt. Recent between of management support we return and in growing support billion opportunities developing to remained cold we XXXX, a across bidding actions creation incremental is Noble value financial throughout closed by liability completed and of our numerous of and Transocean have to On idle perspective. space. its to

downturn look to deliberate for they situations ourselves In further position as opportunistic our improve to leader to capital conclusion, continue as throughout advantage taken take Transocean in the drilling. the will of We offshore action structure has and industry arise.

the We shareholder preserving industry, in have the while specification fleet assembled floating highest simultaneously value.

XX the soon the fleet be and capitalize improves. Our environment XX to floaters positioning to XX most in industry, capable market ultra-deepwater us well comprise technically harsh floaters the as

proper high safer, industry quality us more to $X.X Our technologies maintenance and deliver us our and differentiating to enabling with continue reliable even our flows, while our leading training will new provides assets visibility to encouraged enable required helping to Mark? value and the Needless services and billion invest of delivering the backlog employees, us very future what in initiatives that cash and deliver and to observing to in are emissions the customers, for prioritize us by to drive continue more we’ll simultaneously efficient the to we the our are goals. shareholders. results we company XXXX say, market to of

Mark Mey

Jeremy. all. you, And day Thank good to

During quarter today’s briefly for expectations forecast. results XXXX, and liquidity with and recap our latest I for the quarter fourth conclude guidance our provide third call, will preliminary including

As is our provide specific more XXXX we guidance. practice,

our We XXXX year call in end next February have of year.

again, of Fleet-wide As contract And in continued This in third robust flow. of quarter release revenues. diluted efficiency. $X.XX reflecting quarter press include, opportunities healthy million we of third approximately loss operational per XX% of quarter, revenue of into cash quarter operating attributable conversion a another fleet-wide efficiency excellence $XXX share. for the Highlights contributed disclosed to drilling EBITDA controlling XXXX, million, generated XX%, the we reported million, our exceeded reflecting with this margin. and bonus $XXX adjusted net $XXX or EBITDA to interest the

early third ATM our sell the during program. of opportunistic our quarter, another October, million $XX million approximately using the raised in we equity Additionally, $XX

equity million, $XXX our approximately program liquidity. to proceeds Form in the to As efforts reflected XXXX evidencing improve our XX-Q, this under in our continuous total brings

million resulting we and of at use maintenance decrease day of lower reflecting in close our personnel of million from is quarter backlog to over third third a relative expenses. rate adjusted Looking drilling guidance, Jeremy $XXX as favorable results, average labor was contractual COVID the during $XXX,XXX, in related conversion and costs and mentioned, revenues expense our delivered to quarter, above. our $XXX and pools Operating mentioned of the time due optimizing contract strong

ahead We also a and Transocean had were lower completed projects project as Mykonos costs Deepwater schedule. of Enabler

approximately low some the approximately $XXX slight had expect to revolving of We [indiscernible] million, fourth maintenance O&M in-service return $XXX new is adjusted across We a a to ended undrawn approximately in approximately and million. approximately contract an Deepwater expense million. and to postpone Skyros, the of Based starting increase anticipated $XXX quarter. the billion, rigs. third a update Barents fleet revenue fleet-wide billion spend an day be we liquidity quarter-over-quarter not fourth option to also operation expect and expenses activities of decrease which on upon with and cash is currently lower $X.X of the revenue Transocean timing on rate on drilling to We revenue the efficiency a performed the XX.X%, in activity a of to attributable average KGX’s timing attributable of sequential cash quarter The is of $XXX the quarter. service the credit will maintenance cash into including generate for quarter equivalents our $X.X unrestricted million restricted facility. expectations I We our for from debt provide on total

$XX be of interest This fourth capitalized $XX CapEx. million Net to million. be million drillships are consulting our IT the approximately for expense is We the Cash expense to be interest be includes forecast above for quarter incremental $XX expected maintenance expenditures quarter, approximately million third includes including million. taxes $XX approximately and to new the for quarter for and build forecast of fourth construction $XXX capitalized under due Capital This slightly for million, approximately million. fourth approximately to expect $XX the quarter. expenditures. our to are fourth approximately $XX G&A fees interest quarter

currently $X.X to our a adjusted we $X.X believe billion $X.X expense billion. expectations year permanent contract and drilling $X.X XXXX. and between to operations forecast Furthermore, maintenance for overview revenue We Now, billion full be billion. and our between I’d will like XXXX provide financial be of

to Finally, cost we expect and million. $XXX $XXX be G&A between million

debt forecast liquidity liquidity and $X to cash the Deepwater $XXX billion, the service of Our cap forecast and is potential approximately and of securitization, December of $X.X CapEx be including This expectation estimated XX, remaining Titan. million between million billion of as XXXX XXXX $X.X billion. includes restricted XXXX an $XX for

always, strength excludes will We observing In incremental any cold for we improvement stacked our are the upgrades. continue believe mentioned, or speculative as oil floaters. Jeremy harsh As specification, by prices. reactivations in conclusion, high demand this supported rig and environment ultra-deepwater guidance in

we progression disciplined will While we the and highly remain expenditures. were encouraged by utilization of criteria dayrates, for

case-by-case We will and a return. with adequate a other not reactivate cold-stacked assess on will provides we assets contract basis rig an

also managing diligently rig stacked will costs a contract. remain its warm You for associated with preparing

expenditure it concludes to back of advantage have on safety. examine level avenues will sheet, of improve work our I’ll reduce costs, we to markets Accordingly, on operational to comments. our will our while taking requirements debt. liquidity continue prepared demonstrated, to a our closely we a capital now turn and we Alison. my to high focus and maintaining focus This managing reduce integrity proactively enhancing the liquidity and As opportunistically capital our balance and

Alison Johnson

Marianne, now Mark. Thanks, ready to questions. take we’re

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

Operator

from Instructions] from BTIG. Lewis Greg will ahead. take go question [Operator you. Thank Please the first We

Greg Lewis

the Thank the your direction. you to laid everybody. out the parcel it prepared kind definitely getting going in through morning market’s good of comments, like, and details, seems, of just trying right Jeremy, – some you

of almost it of right going rig sounds understand, of kind and growth little we’re way more rate start as piggyback… and just about as day going that of XXXX. get another back more maybe a half we think bit kind like Is incremental view to year in get it here, transition about the the see of in pricing to start that to trying As fixed do I’m you think XXXX, to to kind or

Jeremy Thigpen

want question. you finish Did were up with thought done there? Sorry. the to I you

Greg Lewis

that leading was rates see say, about – Hey, started the in some There work. in – spot edge about maybe have to – going but some to, folds referring kind rig some we you’re should have without thinking not being Is Mark’s of rigs rates going aren’t about tying on we that we’re thinking been the comments being attractive I Yes. on those some nevertheless, some have generated. how that, to EBITDA multi-year reactivating and how a XXXX just fixed. and where multi-year then – contracts is term that be to opportunities to fix contracts?

Jeremy Thigpen

all I’ll Yes, XXXX. think of about of this go here back we it. up. Roddie think second, high will Contracting but it laid then the long as to then to the the over out utilization I about work right up that these half roadmap high we’ll way assets feels next XXXX activity continue – right. exit kind to pick in that spec we year in you’ve that I various I in markets and turn say, the is and will and commence to for in And recognize a think just And as as enter for

and have we’ll customers think with to terms those starting start we’re longer I now. see conversations to

model to things our putting more and over that also it revisit for that customers to approached tender before out us and anecdote as little hand opposed can business – to us approach I and many look our a have it’s been survive of approached upturns interesting direct downturns. of partnering with a Roddie, that’s something at they’ve negotiations Just

sees that is And limited. of the recovering marketable that the so in a and high think I market spec currently really assets it’s space sign availability everybody the good are that

And comments. so that, for I’ll hand over some more to Roddie with it

Roddie Mackenzie

Yes. Greg, I kind this think a basis. I of regional would attack on

on So you depends XXXX, so think are. about should as where you how it

XXXX Norway and this XXXX that that see this look harsh and on few XXXX lines environment, a summer XXXX like have closer marketed XXX% in we to closer will say, utilization to assays to the in space places strong beyond ever you really, transition is many and gaps get in Certainly, a a XXXX and projected kind start the into as – You gaps year assets. as exiting starts plug you better, few as white had of a bit they’ve utilization. – really high spec going of

this term the is starts I numbers that available of the transition you will to rig quarter So so but where We’ve in of to of yet and that at are seen years the the duration in not think awards, uptake, see this number awards, the another the programs of increase. number far number kind the tender of out only that moment.

So those all into direction. in pointing directly Jeremy seeing we’re the his metrics in as increased translate right day And are comments, mentioned that of had rate.

up with a to at a of the the the to those going it’s that is which push told going mark. case If in one musical the that rig. other to especially So, and segment moment. somebody hottest day XXX We’ve themselves seen U.S. Gulf of rates Mexico, seems be to us the customer chairs be find

what optimism certainly in sentiment, lot the of terms other rigs when of view think you describe there’s big need. about of getting I really the value of that one just now you as the we’d think Brazil. I kind So a have then And to

Brazil. mentioned in for of years As awarded about already year the work have floater we this market been is XX

the XX approvals As the to be on sanction of so region we count projects, in XX XXXX effect will at and be in somewhere three sanctioned XXXX, is the that look going on rig project the years XXXX, combined those follow to to are substantial.

and a our for going at numbers. large in assets day the going touch some the drilling So longer between for quite some have justify to low long-term mobilization rates, one-time I through not bit reactivate then to that split all EBITDA for the for think sacked and/or earn strategy they’re really really rates take just and contractors fees would to solid And Yes. that but investment either through higher to to piece, have just ability to to is kind that’s an that utilization know locking customers these significant pay increase reactivation of trying on been time. and terms that backlog

Greg Lewis

of think Okay, I been but that mean, just any of IOCs is Brazil. how not going great. and wanted a parcel of little to Petrobras active, be getting follow-up of get much able way Without a to that that into tends wrong, is and specifics, discounted rate. Petrobras, bit clearly, maybe has kind are price always as but how kind in sense the it’s on going driving projects Brazil, in be me And then the because out is multiple – there kind Petrobras get also to to correct of Brazil. I I’m try on if who that to much IOCs, to we the about, that

Jeremy Thigpen

Yes.

interesting. that’s So really

So has project coming. taken between past the Petrobras, what’s of but the IOCs and contracts years couple They obviously an what’s the awarding and the that seen kind moving the And lion’s despite, sure. even – relative Petrobras been move it’s we Petrobras. really show interesting of They bureaucracy of prolific the very they’ve in in all terms quickly. those charts that Petrobras in forward, split have awarded for year. for this contracts, been They has they’ve share approvals,

sanctioning year, are next think, fact, the nine eight expected of for approvals project or In I non-Petrobras.

they’re by what the the being Petrobras Petrobras really doing. rig come very And is incremental available. before, above and over fleet that and over active demand as they which still So IOCs, described renewing pushed is them we’ve turning as is of kind

IOCs is a and Petrobras XX-XX kind yes, forwards on of awards. somebody split like versus So going

Greg Lewis

Okay, you the perfect. all Thank for time.

Operator

from take Morgan now the We’ll next Instructions] question from Lynagh [Operator Connor Stanley.

Connor Lynagh

about the of is Yes. Thanks. to topic ask the which inflation. day, Wanted

of any needs raise either the costs. in on what more curious rig are seeing or availability, shore-based terms your you wages guys labor Just to

thinking broadly that? about you are speaking, Just how

Jeremy Thigpen

also It’s mean, actually a question. I timely question improving. and the good a market’s

good. So that’s Yes, of inflation. seeing we wage bit are a

We’re bringing builds year. next the two new market onto

to industries little day like to the market other we’ve it. he’s crews and Keelan, back here out ask And There’s no the standard to of a about lot and trained people of to a every them we’re finding transition’s living each accustomed this pretty and so about to chief one a finding of bit seven industry there. that our after of the getting talent talk right what since the lost would in doubt getting seeing years concerns. is sitting desperate where and I he’s carriers

Keelan Adamson

answer moment. would to outside in positions for seeing we’re I even. are market, Mexico, offshore, of other the Connor, is there based from the labor the the say sector And regional Jeremy. at in the structure, last those pressure work in similar on the Thanks, opportunities it certain Roddie people to our Gulf way cost of Yes. The

in bills in, new of we’re increase increase Gulf in there. activity the and wage general reactivations so in the Mexico, coming seeing And and with pressure the some definitely

rigs, starting I well. also for see that our to cost from on some side think suppliers in running chain area as we’re supply our inflation the

Connor Lynagh

And ability from it. it most – the Got have this increase, on the pass like yes. mean, it I sounds sound you is you to and of think cost of

Keelan Adamson

Yes, yes.

We that, Connor. will do

Connor Lynagh

Okay.

Keelan Adamson

Yes, Connor.

Connor Lynagh

sorry. one, last Just one

Keelan Adamson

of our of them oil service cost lag general several just labor, equipment the field going costs. kind the say, also to but do to for change yes, a contracts adjustments I have environment was with of in and

we several them. have the So have of adjustments the that we those potentially contracts have built into major ones longer-term

protect for us to that it’s EBITDA means So margin. a

Connor Lynagh

Got it, it. got

bareboat with that do compete in think how rig? Just stacked the of Just have I executing also arrangements of the sort through, that, some a seen charter you see bareboat here? have stack some do about the the yards. charter about follow-up how just you’ve dynamics does here, favorably thinking influencing that unrelated you an mean balance more competitors market with of to altering been been think and reactivations rig that your market cold interested cold

Keelan Adamson

Yes.

now of what with lot be not of drillers a think of restructured on see rigs is the The true taken reactivating amount having tremendous to the a I account. cash has we into so hand. cost

OPEX rigs So certainly it. to and to costs it the and also it’s equipment associated rig crews bring I and out substantial cheap. of terms rig mobilize with bring the going and overhauls, not procedures data to with to there’s do your market but what through mean in the there’s up ramping costs

So terms competitive. look operators a of seen things paying for at me, of in those we’ve the them being lot

why industry’s that can’t well, the stacked been better. perform the no reason it’s asset but experience perform cold So assets far hot a

out. eventually of in assets up the level that can there’s teething get that some Now the issues that call always bringing pulls to but performance,

So for active. and are there’s strong at rigs preference a hot the moment securing very that

sold-out We course, more to to jobs out economics we certainly the believe stacked expect that but there’s choice, are But going as that’s assays. the support going we to coal to get of of continue, but realization no the decision. that fleet, active going on to be bring other

of to rigs. forward the So getting XXX% look we to utilization point cautiously being hot a for that

Connor Lynagh

I’ll turn All back. thanks. right, it

Operator

take from Pickering, We’ll Taylor question Tudor, Holt. next from Zurcher the now

Taylor Zurcher

your and guys. just responses Q&A. earlier of thanks, Jeremy, follow-up to Hey, in good wanted on I one morning,

but looking partnership curious partnership your revisit business seeing me the to you. I You cycles out – at just more the customers that you in I’m smooth models helps negotiations, maybe And but to talked you, approach rig about which curious when are some for you’re direct it also a what with least by what customers approach more at customer just different a to longer-term contracts, comes open level, and to. here mean

Jeremy Thigpen

Yes.

I varies think by it customer.

efficiency I they in standpoint value operations safety, see the from a and keeping message primary improves reliability It and think is definitely that so. continuity.

some I that. them think are of recognizing

are them to look provider couple work with service wells. tender a deliver And every and so and down instead it’s efficiently of closely going more drilling narrow planet, the let’s reliably it to on that and safely, qualified to out to contractor –

it’s both model let’s I drilling an make too think dayrates don’t sure and Yes, high let’s these and on the all around also the come where down. and with we’re But downs and an can benefit conversations have up didn’t it thrive. ups the yes. continue of We cycle interesting. provider, service the provider there’s element and a to of really get way operator

– is efficiency, right. about I think really it

prices at returns So deliver moment to big the increasing a well. of solid in then that are a where to for very the able the system with stands the are, service, of us there’s having do clearly enough we superior guys they to and many reason all commodity if of dividends kind

sure where said is that is focusing we they So see different that to win-wins. encouraging cheek, approach those And I tongue continuity of a in of it’s our is kind recognize more important. on it where making but a relationship it partnering that get

and that only and And the working a it’s encouraging the providers. sure best assets, market us, so of a well-positioned highest sign. spec that’s also see for but they’re to not We for terms want it think having with improving they in that the make

Taylor Zurcher

hear. Good follow-ups is And on my the quarter. UK, this to Understood. straight second Yes. the

When on satisfy just most You’ve XXXX it color be just about are fleet Norway rigs. way and holes potentially the that for that beyond, the little talked be rigs have from rigs we now, stronger about rigs a likely a your Norway was well-suited particularly comes probably which well your contract, thinking and of have and demand. but provide right at in in from are to Norway outlook I do pretty you when rigs to positively service shifts demand XXXX, which to the and mean should UK, I that I there. UK in which the most curious look that pulling your to see you And the more fleet, that, that bit it in you some could rigs pretty couple I’m some hoping work,

Jeremy Thigpen

that take Yes, I’ll one.

the UK, if got look in the when is at the UK So actually you equipment. – we’ve struggle

to They – the it that’s equipment pull on the the on the at leads at or moment, why going basically have and it’s various the optimism just kind there. because long stalling not can’t It’s ahead wells. to the pieces right the and of other casings site moment. don’t The and them need now. complete wellheads bits with here about demand trigger projects they is So that they certainly are

the last put to So kind are tax coincidental the reaching schemes the work Norway uptake in of lot and and uptake to what’s be point a assets. incentive include were And putting developing to it the that’s of fruition this rigs driving year Norway. the in uptake where predicted with this place of happens is these that of and those back now off

there. there’s high going and higher point view, expect of and Equinor But you that demand there’s specification, point the operators. that to few a the certainly for pretty some in Norway, be which as bigger we especially the of from out, here for the choice meantime, other rigs the So in is gaps

as it’ll going candidates I past with in you the see potential best Spitsbergen to to quickest, this which going a pick for be moves did rigs the older look could the some other because rigs. UK. But the assays. the likes of So of that interesting us at the they’re and see, think segment ones to gaps couple up of the be have that We the

Taylor Zurcher

for Got it. Thanks the answers.

Operator

over further no I hand would to are to like there remarks. As Alison Instructions] [Operator closing the back for questions, call

Alison Johnson

Thank you, thank on today’s you, and Marianne, everyone participation your for call.

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

Operator

Thank call. you conference this your conclude will That you. Thank for and participation, ladies gentlemen.

disconnect. may You now