Noble Corporation (NYSE:NE) Q4 2022 Earnings Call Transcript

Robert Eifler: Yeah, good question separated into two answers between floaters and jackups, unfortunately, right now. I think we’ve been probably more aggressive than the average on not giving priced options here over the past couple of years. And while it hasn’t been a hard no, and we do have a couple of exceptions out there, generally speaking, we started pushing back very aggressively on priced options a year-and-a-half ago, I think. And obviously, as the market tightens, you could expect us to continue or even stop giving options. But the jackup side is a little bit different. It’s a soft market. And more tentative economics, I think, for our customers. Options do serve a purpose in ensuring that certain wells can actually get sanctioned and drilled. And so, I think on the jackup side, that’s still a part of part of the market we see.

Samantha Hoh: Maybe if you can help us think about geographically where you want to have more scale, you’re still concentrated in Guyana and the US Gulf of Mexico, but is there a goal in terms of getting to a certain size in the Australian market or in the West Africa region?

Robert Eifler: I wouldn’t say that we have a defined strategy right now to move €“ in other words, we’re going to be governed by economics and how or if we move rigs around the market. If the tightness that we’re predicting plays out, I think the market very quickly gets to a point where the price for time between contracts starts to be put to operators, whether that’s through mobilization or day rate recovery on a move. That’s something that we’re thinking through. The growth markets that I described in South America and West Africa, just by math, are the most likely to draw some more supply from us. We have worked €“ of course, are working currently, but have got decades of experience there. And I think just naturally, as the demand in those two regions draws in supply, those are likely places where you continue to see the Noble brand building.

Samantha Hoh: Congrats again.

Operator: Our next question comes from David Smith from Pickering Energy Advisors.

David Smith: A lot of my questions were answered mostly in the prepared remarks. I did want to say, on the deepwater side, the progression of day rates is really transparent. We don’t get to see the changes in contract terms and conditions, which I expect are improving pretty well also. So I wanted to ask if you can give us some color broadly on how T&Cs have been improving in terms of backlog margin protection from early termination, maybe allowance for non-productive time. It sounds like a better environment for getting some cost recovery and paid mobilizations as well.

Robert Eifler: You’re certainly headed in the right direction in terms of being in sync with the market, particularly in the areas that you mentioned. Mobilization and the cost recovery, we’re able to get mobilization not only really for our costs, but also the opportunity cost of losing operating days while mobilizing. So that is improving. Termination payouts are also improving. They’re largely improving with the market just as you described.

David Smith: I just wanted to double check something. On the updated fleet status report, it doesn’t look like there are any remaining floater options that are much below market rate. I just wanted to make sure I’m reading that right, especially for the Viking options.

Robert Eifler: Yeah, another good question. It really speaks to some of the Q&A we had just a moment ago about preserving optionality to recovering rate market and the efforts that we had in the strategy that we employed last year. So you’re exactly right. We don’t have exposure to low priced options or options priced earlier in the cycle. I think the exception there would be the Venturer. Nope, nope. I’m sorry. All those are exercised. And the remaining ones that we reflect here are unpriced and subject to market.