Noble plc(US:NE)2025-02-18 19:14Financial Data and Key Metrics Changes - In Q4 2024, the company reported contract drilling services revenue of $882 million and adjusted EBITDA of $319 million, with an adjusted EBITDA margin of 34% [35] - For the full year 2024, total revenue was $3.1 billion and adjusted EBITDA was $1.1 billion [36] - The company generated $136 million in cash flow from operations in Q4, with net capital expenditures of $134 million and free cash flow of $2 million [36] - The total backlog as of February 17, 2025, stands at $5.8 billion, with approximately $2.4 billion scheduled for revenue conversion during the remainder of 2025 [37] Business Line Data and Key Metrics Changes - The fourth quarter was the first full quarter with Diamond Offshore, contributing to solid results [11] - The company has secured over $500 million in firm commitments for 2025 and 2026, with recent day rate fixtures for tier-1 drillships holding firm in the mid-to-high $400s per day [11][12] Market Data and Key Metrics Changes - Contracted deepwater demand has decreased from about 105 rigs and 94% marketed utilization to 100 rigs and 89% marketed utilization [13] - Current demand in West Africa is 13 UDW rigs, down from 17 to 20 in 2023, while South America has seen an increase in demand to 42 rigs, a current cycle high [20][22] - The U.S. Gulf remains stable with 23 contracted UDW rigs, while the Mediterranean and Black Sea have nine units contracted [23][24] Company Strategy and Development Direction - The company completed the acquisition of Diamond Offshore, aiming for $100 million in synergies, with over half already realized [10][38] - The strategy includes permanently retiring cold-stacked drillships to reduce annualized stacking costs by upwards of $20 million [15][16] - The focus is on operating a high-spec and highly utilized fleet to deliver value for customers and shareholders [16] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the long-term demand for deepwater services despite a mid-cycle lull expected to carry into 2025 [13][46] - The company anticipates a rebound in demand starting in late 2026 or 2027, with a potential net demand improvement of up to 10 or more units by that time [27][46] - Management acknowledges the current softness in the market but believes it is transitory and that the fundamental drivers for the business are durable [45][46] Other Important Information - The company declared a $0.50 dividend for Q1 2025, continuing its return of capital program, which totaled over $575 million for 2024 [11] - The company expects cash taxes to be approximately 12% of adjusted EBITDA and anticipates capital expenditures between $375 million and $425 million for 2025 [41][43] Q&A Session Summary Question: On the tier-1 drillship market - Management indicated good prospects for contracting tier-1 drillships, with more opportunities starting in 2026 than in 2025 [51][53] Question: Decision to retire the Meltem drillship - Management explained that the decision was based on a diminished call for stacked capacity and the rig's lack of operational history [60][64] Question: 2025 guidance and fleet optimization - Management confirmed that approximately 90% of the EBITDA midpoint is secured by current contracts, with ongoing efforts to optimize the fleet [73][76] Question: Demand for jackup assets in Norway - Management expressed optimism about potential demand for jackup assets in Norway, indicating stability in utilization rates [91][93] Question: SG&A expenses in Q4 - Management stated that the low SG&A figure in Q4 is a reasonable estimate for future periods, with ongoing realization of synergies from the Diamond acquisition [125][126]