Noble plc(US:NE)2024-05-07 18:11Financial Data and Key Metrics Changes - Contract drilling services revenue for Q1 totaled $612 million, slightly up from $609 million in Q4 [26] - Adjusted EBITDA was $183 million in Q1, down from $201 million in Q4, with an adjusted EBITDA margin of 29% [26] - Cash flow from operations was $129 million, capital expenditures were $167 million, and free cash flow was negative $38 million [26][28] - The company expects full-year free cash flow to increase in 2024 compared to 2023, with a significant portion weighted towards the back half of the year [15][28] Business Line Data and Key Metrics Changes - The utilization of marketed floaters was 76% in Q1, up from 75% in Q4, with 95% of the marketed fleet contracted for current and/or future work [26] - Average earned dayrate for floaters was $434,000 per day, while jackups earned an average of $144,000 per day [53] Market Data and Key Metrics Changes - UDW utilization remains around 95% on the marketed fleet, with 26 rig years of UDW capacity contracted in Q1, aligning with healthy trends from 2021 to 2023 [16][48] - The total backlog as of May 6 stands at $4.4 billion, with $1.7 billion scheduled for revenue conversion in Q2 through Q4 2024 [53] Company Strategy and Development Direction - The company is focused on returning a significant majority of free cash flow via dividends and buybacks as cash flow improves [15] - There is a strong emphasis on safety, diversity, and community investment, alongside a commitment to sustainability and decarbonization efforts [30][56] Management's Comments on Operating Environment and Future Outlook - The market outlook for offshore drilling remains encouraging, with positive contract signings and indications of open demand pointing to enduring tightness and healthy commercial opportunities [48] - Management expects progressive improvement in EBITDA throughout the year, with Q1 serving as a starting point [47] Other Important Information - The company declared a $0.40 dividend for Q2 2024, consistent with the previous quarter, bringing the cumulative total capital return to shareholders since the Q4 2022 merger to $400 million [15] - Recent contract signings include a contract for the Noble Viking at a dayrate of $499,000 and an extension for the Noble Voyager at $470,000 per day [48][49] Q&A Session Summary Question: What is the probability of getting work for the 3 idle 6g assets? - Management indicated a 97% contracted fleetwide this year, feeling good about currently contracted revenue at the low end of the guidance range [59] Question: What opportunities exist for the 6g rigs? - Management is actively pursuing opportunities for the 6g rigs, primarily in the western hemisphere, with expectations for demand to correct itself over time [60] Question: What is driving the difference between 6g and 7g rigs? - The preference for 7g rigs is due to their efficiency, especially for longer-term projects, leading to a shift in customer demand [63] Question: What is the expected discount for sideline rigs compared to hot rigs? - Management expects sideline rigs to come out at a discount to market, but the extent of the discount will vary based on different owners' economic incentives [79] Question: What is the trajectory for operating expenses and CapEx? - Management noted that Q1 was elevated for CapEx due to contract preparations, with expectations for moderation in the second half of the year [71][88]