Noble plc(US:NE)2023-02-27 18:51Financial Data and Key Metrics Changes - For the fourth quarter, the company reported diluted earnings per share of $0.92 and contract drilling services revenue totaling $586 million, with adjusted EBITDA of $157 million, resulting in an adjusted EBITDA margin of 25% [134] - The year-end revenue backlog stands at $3.9 billion, with an average day rate across the floater backlog of approximately $400,000 [29][130] - The company anticipates total revenue for 2023 to be between $2.35 billion and $2.55 billion, with adjusted EBITDA expected to be between $725 million and $825 million [30] Business Line Data and Key Metrics Changes - The company secured 24 months of additional backlog across various drillships at an average day rate above $420,000, including contracts in Nigeria and the Gulf of Mexico [9] - The contracted ultra-deepwater (UDW) rig count has increased to 91 rigs with a utilization rate of 91% for the marketed fleet [6] - The jackup market is showing signs of improvement, with day rates for harsh environment class rigs expected to rise to the $110,000 to $125,000 range [103] Market Data and Key Metrics Changes - The deepwater Gulf of Mexico market has maintained a steady demand of 20 to 22 rigs, with expectations for slight increases through 2024 [100] - Brazil's Petrobras has been the most active operator, recently increasing its deepwater rig count from approximately 20 to 24, with potential for an additional 5 to 7 floaters over the next 12 to 18 months [24] - The company’s marketed UDW rigs are currently 75% contracted throughout 2023, with visibility towards securing additional utilization [26] Company Strategy and Development Direction - The company is focused on maintaining a conservative through-cycle balance sheet while returning at least 50% of free cash flow to shareholders [33] - The strategic emphasis is on maximizing the potential of the existing fleet and selectively pursuing new contracts, particularly in high-demand regions like South America and West Africa [78] - The company is optimistic about a sustained multi-year upcycle in the offshore drilling market, driven by structural supply constraints and increasing demand [34][125] Management's Comments on Operating Environment and Future Outlook - Management noted that the current market conditions are the best seen in the past 20 years, with a multi-year rise in UDW rig demand expected [125][99] - Inflationary pressures are anticipated to persist, with high-single digit inflation rates factored into the 2023 guidance [14][65] - The company is confident in its ability to navigate the evolving market landscape, with a focus on disciplined bidding and capital allocation [34][82] Other Important Information - The company has realized $15 million in run rate synergies as it progresses towards a target of $125 million in annual cost synergies by October 2024 [12] - The company has repurchased nearly $100 million in shares as part of a $400 million share repurchase program [110] - The Noble Resolve has commenced a pilot scope at Project Greensand, marking the company's involvement in offshore carbon capture initiatives [132] Q&A Session Summary Question: What is the outlook for rig reactivations and opportunities in Brazil? - Management indicated that opportunities for rig reactivations are primarily focused in Brazil, with a careful approach to securing contracts that ensure cash flow [114] Question: How does the company view the jackup market and potential relocations? - Management stated that they are not actively seeking to relocate rigs from the North Sea but are focused on maintaining economic viability [116] Question: What is the strategy regarding long-term contracts versus short-term contracts? - The company has been leveraging long-term visibility in contracts while also being open to short-term contracts to capitalize on rising day rates [118] Question: How is the company managing inflationary pressures in its guidance? - Management confirmed that inflationary pressures are embedded in the guidance, with expectations for high-single digit inflation to continue into 2024 [65][45] Question: What are the expectations for capital expenditures in relation to the Meltem activation? - The company clarified that the CapEx guidance for 2023 does not include costs associated with the activation of the Meltem, which will depend on securing favorable contract terms [121]