Noble plc(US:NE)2022-11-03 19:01Financial Data and Key Metrics Changes - Noble Corporation's contract winning services revenue for Q3 2022 totaled $289 million, an increase from $262 million in Q2 2022 [31] - Adjusted EBITDA for Q3 was $97 million compared to $84 million in the previous quarter, resulting in an adjusted EBITDA margin of approximately 32% [32] - Free cash flow in Q3 was $44 million, with capital expenditures totaling $41 million [32] Business Line Data and Key Metrics Changes - The legacy Maersk Drilling reported revenue of $283 million and adjusted EBITDA of $63 million for Q3 2022 [32] - The deepwater segment is experiencing day rates in the low to mid $400,000 per day range, with a utilization rate of around 85% for marketed ultra-deepwater rigs [17][18] - The jack-up segment is seeing steady demand and utilization above 90%, but day rate increases are more moderate compared to deepwater [23] Market Data and Key Metrics Changes - Brent prices have averaged close to $100 per barrel year-to-date, with expectations of a tapering down to the mid-70s per barrel through 2024-2025 [15] - 80% of offshore projects have estimated breakeven thresholds at or below $40 per barrel, indicating a favorable environment for offshore drilling [16] - The company expects a higher level of deepwater rig demand next year, driven by a recovery from previous underinvestment [16] Company Strategy and Development Direction - The merger with Maersk Drilling aims to create necessary scale for deep customer relationships and leadership in innovation and sustainability [10] - The company is targeting at least $125 million in annual cost synergies to be realized within two years post-merger [11] - A $400 million share repurchase program has been authorized as part of the capital allocation framework [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges extraordinary uncertainty regarding inflation, recession, and geopolitical unrest but remains confident in the long-term demand for oil and gas [13] - The strategic positioning towards deepwater and harsh environment shallow water markets is seen as advantageous for future growth [14] - The company is optimistic about the multi-year upturn in offshore drilling, with limited inventory of stacked rigs available [17] Other Important Information - Noble's revenue backlog stood at $3.9 billion as of November 2, 2022, not including additional non-drilling services [33] - The company plans to refinance existing Maersk Drilling credit group debt with a new three-year $350 million bank term loan [35] - The integration activities are well underway, with expectations to realize over 70% of targeted cost synergies by the fourth quarter of next year [41] Q&A Session Summary Question: Share buybacks and debt buyback plans - Management confirmed significant flexibility within credit agreements to buy back shares and clarified that the $220 million drawn was related to reinvestment of proceeds from asset sales [51][52] Question: Follow-up contract for the Gerry de Souza rig - Management expressed confidence in securing a follow-on contract for the rig, with expectations for a start in the first quarter of next year [54] Question: Customer conversations and tender participation - Management reported encouraging feedback from customer conversations, recognizing the strategic benefits of the combined organization [60][61] Question: Capital expenditures guidance - Management indicated that the $65 million to $85 million guidance for Q4 may be higher in the future due to inflation and the age of some rigs [62]