Good day, and welcome to the Nabors Industries Ltd. Q3 Earnings Teleconference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to William Conroy, VP, Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining Nabors' Third Quarter 2021 Earnings Conference Call. Today, we will follow our customary format with Tony Petrello, our Chairman, President and Chief Executive Officer; and William Restrepo, our Chief Financial Officer, providing their perspectives on the quarter's results along with insights into our markets and how we expect Nabors to perform in these markets. In support of these remarks, a slide deck is available, both as a download within the webcast and in the Investor Relations section of nabors.com. Instructions for the replay of this call are posted on the website as well. With us today, in addition to Tony, William and myself are Siggi Meissner, President of our Global Drilling Organization; and other members of the senior management team. Since much of our commentary today will include our forward expectations, they may constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such forward-looking statements are subject to certain risks and uncertainties, as disclosed by Nabors from time to time in our filings with the Securities and Exchange Commission. As a result of these factors, our actual results may vary materially from those indicated or implied by such forward-looking statements. Also, during the call, we may discuss certain non-GAAP financial measures, such as net debt, adjusted operating income, adjusted EBITDA and free cash flow. All references to EBITDA made by either Tony or William during their presentations, whether qualified by the word adjusted or otherwise, mean adjusted EBITDA as that term is defined on our website and in our earnings release. Likewise, unless the context clearly indicates otherwise, references to cash flow mean free cash flow as that non-GAAP measure is defined in our earnings release. We have posted to the Investor Relations section of our website a reconciliation of these non-GAAP financial measures to the most recently comparable GAAP measures. With that, I will turn the call over to Tony to begin.

Thank you for joining us this morning as we review our results for the third quarter of 2021. I will begin my remarks with some overview comments. Then I will detail the progress we made on our 5 keys to excellence and follow with the discussion of the markets. William will discuss our financial results. I will make some concluding remarks, and we will open up for your questions. Our operating performance in the third quarter was strong. All of our segments met or exceeded the outlook we gave a quarter ago. On top of that, we completed several milestones across our strategic initiatives. Adjusted EBITDA in the third quarter reached $125 million. We maintained our execution at a high level while we grew the overall business. Our global average rig count for the third quarter increased by 2 rigs, excluding the impact of the sale of our Canadian drilling assets. This rig count growth was driven by an increase in U.S. drilling activity. Volumes in our Drilling Solutions and Rig Tech segments both grew quarter-on-quarter. That drove sequential increases in both revenue and EBITDA in those operations. The third quarter again marked progress on our twin priorities to generate free cash flow and reduce net debt. Free cash flow in the quarter exceeded $130 million, including the Canada sales proceeds. Without those proceeds and the funding for our geothermal investments, we generated free cash flow of $55 million. This result was significantly above our expectations. In line with the cash generation, net debt decreased to $2.3 billion in the third quarter, driven by the combination of our strong operating performance, disciplined capital spending, improved working capital and our strategic capital allocation evidenced by the Canadian sale. I am pleased with our financial performance both in the third quarter and…

Thank you, Tony, and good morning, everyone. The net loss from continuing operations was $122 million or $15.79 per share. The third quarter included a $13 million after-tax nonrecurring expense or $1.63 per share related to the purchase of technology in the energy transition space. This compares to a loss of $196 million or $26.59 per share in the second quarter. The second quarter results included charges of $81 million after taxes, mainly for an impairment of assets on the sale of our Canada drilling rigs and a tax reserve for contingencies in our International segment. Revenue from operations for the third quarter was $524 million, a 7% improvement compared to the second quarter. Excluding Canada, revenue increased by 9% with all of our segments providing strong contributions both in the U.S. and internationally. Rig Technologies and Drilling Solutions were particularly strong, growing by 22% and 17%, respectively. The constructive commodity price environment has continued to drive additional rig awards throughout our markets. In the Lower 48, we are seeing increased rig demand from larger public customers in addition to continued expansion for private operators. Recent awards in the Bakken point to increased activity in that basin, in addition to the steady growth we have experienced in the southern regions of the U.S. Internationally, we expect continued expansion in Latin America and the Middle East. Total adjusted EBITDA of $125 million increased by $8 million or 7%. Early termination revenue in international and improved activity in the U.S. more than offset lower rig count in Latin America and lower margins in Mexico. U.S. Drilling EBITDA of $62.1 million was up by $2.3 million or 4% sequentially. Our Lower 48 rig count increased by 4.1 from 63.5 in the second quarter to 67.6 in the third quarter. Daily rig margins came…

Thank you, William. I will now conclude my remarks this morning with the following. These third quarter results on top of performance in the second quarter reinforced our conviction that we have the right strategies to reach our goals. We made significant progress to improve our capital structure. At the same time, we advanced both the development and deployment of multiple impactful technology solutions. We are committed to responsible hydrocarbon production as we pursue initiatives to support the energy transition. In the face of the challenge brought on by the pandemic, Nabors has demonstrated material progress along both fronts. As well, our financial results have proved resilient, demonstrating the value embedded in our global portfolio of businesses. With all that we've achieved so far, I am confident the best is yet to come. That concludes my remarks this morning. Thank you for your time and attention. With that, we will take your questions.

[Operator Instructions]. Our first question comes from Taylor Zurcher with Tudor, Pickering, Holt.

My first question is on international. You mentioned a number of different regions where you're seeing some improved rig add opportunities. In the presentation you called out Argentina, Colombia, Kazakhstan, Kuwait and Oman. And maybe if we just exclude Saudi for a moment, which obviously is going to be a strong growth market for you, both in Q4 and certainly in 2022 and beyond. But excluding Saudi for a moment, I was just hoping you could kind of compare and contrast what you're seeing from a rig tendering environment perspective or backdrop perspective in both Latin America and the Middle East? And the Middle East feels like some of these tenders have continued to be delayed due to COVID, but are starting to now reemerge as some of the COVID issues have died down a bit. Latin America seems to be gaining a lot of momentum. So just curious if you could compare and contrast those 2 markets as we think about 2022.

I think you hit it all right on. I think Latin America, in particular, Colombia and Argentina, we are seeing some visibility into rig increases next year in both markets there. Obviously, COVID was a big factor in Argentina, in particular. But our rig count in Colombia, I think we're at 7 rigs right now. And I think we see visibly for several additions during the course of next year there. Argentina does the same. In the Middle East, you're absolutely right. Kuwait, for example, has been on - everyone's talking this for years in terms of tenders. But again, we're seeing some solid activity suggesting that we're actually going to see some real steps taken in that market and similarly in the Eastern Hemisphere as well, Kazakhstan as well. So I think you can't ever say things are - will happen the way they're seeing given COVID and given externality, but I think the tenor of the market has changed, and I think people are making concrete plans and steps in each of those areas. That gives us the robust view of international for next year. And that, of course, is on top of our position in Saudi where the visibility is very clear in terms of what their - as we said in the remarks, 2 rigs just started in the - at the end of the third quarter, so we will have a full 2 quarters - a full quarter, the fourth quarter for those 2 rigs. And we have 2 additional rigs - existing rigs going back to work. So our rig count will get to 43 by the second half of 2022. And plus the newbuild starts and the illustration of that potential activity is that with the newbuilds in 2022, that should add about $20 million of EBITDA on top of the $75 million run rate roughly in the last quarter, the $300 million. That's a pretty healthy increase. And by the first quarter of 2023 that number is about $50 million. So it's almost a 17% increase in that market alone. And by the following year, when you have additional rigs hitting the market in 2023, that goes up a bit roughly $70 million. So you have extraordinary double-digit growth there on top of the other markets we talked about. That's why we think international - our position internationally, I think, is actually second to none right now and the visibly is pretty clear. Obviously, in Saudi Arabia, it depends on things not in our control. Aramco has been pretty clear about their desire to increase their capacity to control $13 million - 12 million barrels to $13 million - 13 million barrels. And given that I think all signs point in the right direction. But obviously, it's going to be up to Aramco what the pace is and how fast it's going to happen.

All right. Good to hear. Thanks for that. And my follow-up is on NDS. It's a business that continues to gain strong momentum. I think you said revenue from third-party rigs was up 20% sequentially, which is really strong. And the strategy you outlined at the Analyst Day a number of years ago, it seems to be playing out pretty well. So my question is, as we think about growth opportunities on the com, international growth is obviously one, but question on the current portfolio. I think you made the comment, Tony, on the call that you're continuing to improve your digital sort of portfolio or capability. And so one, just curious, more color on the digital side of things. And two, whether it be well construction services or other types of services that you can offer on the rig? Are there parts of the portfolio that you're not in today or that you're small in today that you see being good opportunities for growth in 2022 and beyond, whether organically or inorganically within NDS?

That's a mouthful of question. So let me take it, follow way. First of all, I think as we said in the prepared remarks, there's a lot of room for additional penetration, not only in the U.S. but internationally. If you take the international, the U.S. number is $1,900 per day per rig additional margin equivalent in the U.S. Internationally, that number is $1,400 a day. That's point one. Point two, even with the existing portfolio, expanding some additional content with the stuff we have in the pipeline right now, those margins could actually double in terms of content of what existing technologies we have available today. And that's - so there's a double hockey stick here. One is increased penetration. And two, to move into some other additional services that are in our portfolio. And that combination is what we're focused on right now. I think on the automation front, in general, I think we've invested a lot. And as you pointed out, we came with this decision back in the Analyst Day, when we talked about automated directional drilling back then, no one knew what we were talking about, today, everyone is trying to imitate us and do it. I think the robotic rig that you heard about today has had an extraordinary spin-off application to Turtle what happens with the moon project with NASA, which you develop stuff, that actually helped us develop a robotic sequencing engine, which caused us to have process automation today on our rigs. And that process automation is driving a lot of the growth. And our goal is actually to make that available to third-party rigs, which may sound crazy to some people, but we view that the industry needs this and therefore, we're committed to actually making it available, including to…

Got it. Thanks for the response. Very helpful.

So I think I'll add to that. I mean in our Rig Technology segment, 2/3 of our sales are outside Nabors. That's not the case today in NDS. So we think the potential is enormous outside the Nabors rig. So as Tony mentioned, we're going to increase penetration within Nabors. So we're going to continue introducing new products. And - but the biggest market is really outside Nabors rigs, and that's a big part of our strategy.

Yes. I mean obviously, there's customers that don't want to focus solely sole-source all the rigs with one operator, with one drilling contractor. And at the same time, they have robust automation needs and technology needs. And so for those customers, in particular, everyone knows that getting there is a big journey, and it's hard to do that in a bidding strategy. So people will be choosing technology partners to help advance that. We think we can help them along that regard by making that automation available to our competitor rigs even though they're not using only Nabors rigs. And that's part of the logic here because we know we're not going to own the whole market in terms of iron. But if we can make NDS stuff available, more rigs that helps everybody. It helps the operator in terms of standardizing what their desires are. It helps us create gain share. And frankly, it helps the third-party drilling contractors that haven't made those investments to be more efficient quickly because they'll get some action as well out of the rollout. So that's the concept.

Awesome. Lots of interesting things going on there. So you are to stay tuned moving forward. Thanks for the answers that's it for me.

Our next question comes from Connor Lynagh with Morgan Stanley.

I was wondering if we could just talk sort of broadly about pricing. Obviously, your thoughts around the U.S. would be great. But I would also just appreciate an understanding of where things stand internationally? And at a global level, how much do you think you need to raise pricing to offset the cost inflation dynamics that you're talking about? Specifically, is the labor a de facto pass through in your contract structure? Or do you need to raise pricing to address that?

Well, I'll let William address the pass-through cost stuff, yes.

Yes. I mean the vast majority of our contracts in the U.S. have adjustment clauses for labor, which are kind of automatic. We have to ask for them, of course, but - so there is a bit of a lag and you miss 1 or 2 months of higher cost versus increases, right? But that is kind of automatic and is part of the accepted practice in the U.S. Internationally, not so much, but we're not seeing the same dynamic on compensation increases internationally than what we're seeing in the U.S. So I think we have - we think because we have been in this COVID and distressed kind of environment for over a year, we think our compensation fell somewhat behind other industries. So there's a bit of a catch-up going on now. And I don't mean our Nabors, I mean, ours in the drilling industry. So you'll see a little bit of that where we bring our compensation to levels that make us competitive across industries. But those - I don't think those numbers are tremendously high. We probably - we saw an impact somewhere in the range of $300 per day in the third quarter, which we offset with pricing increases. And the actual compensation increases on the day rate haven't kicked in yet. So those will come in. The pricing I'm referring to is actually the pricing in the U.S., which has gone up. And I can tell you, we are - I'm always cautious when I try to look forward in terms of pricing, and I'm not assuming the best outcome, but I can tell you that based on all the contracts that we have signed lately, our rates now are solidly in the $20,000 environment. Before the second quarter, it was kind of hard to get above $20,000. Now the latest contracts, we're asking customers for $22,000 and are not flinching. So I think the environment has changed. It's changed materially, and it's changed in the favor of the drilling contractors. Internationally, our pricing did not fall nearly as much as what we saw in the U.S. In fact, you can see that our margins throughout the downturn really stayed around the $13,000, $14,000 range where they remain today. So pricing increases are not really - it's not really the same dynamic because pricing really didn't really fall materially as we saw in the U.S.

I think International margins also will depend a lot on mix as well as rigs as well depending on the size of rigs, et cetera. The other point I'd make is that if you look at the average day rate, you'll see - it was up $300, which represents the fact that the leading edge rates are crossing the average of the fleet. As William said, so we are pushing in below 20s right now. And the point is, if - if our estimates are correct, that we intend to exit the quarter close to 80 rigs, that will be about 70% of our super-spec fleet. And as you well know, as you get to 70%, that's when the hockey stick in the industry starts affecting pricing. So I think all that is very constructive to where we are. But obviously, as William said, there's been - we have this compensation stuff that's working its way through, et cetera. But I think it's very constructive looking for next year. By the way, next year, in terms of the macro, the operators, obviously, you're facing a great environment right now. Obviously, the super majors probably will be reporting a record quarter, probably a record incentive best in about 10 years and that's up nicely. At the same time, however, I think everybody has to be measured here. I think capital discipline is here. I don't think it's going to necessarily go away immediately at all. And you've seen some operators emphasize that in terms of being innovative with new structures. One operator particularly came up with a fixed and variable dividend to emphasize their commitment. I think other operators are trying to figure out ways to reinforce that as well. So I think all that sets up for a constructive environment going forward. And in terms of talking with them, it looks like about half of them that we have talked to that have indicated plans already. Some increased share are modest. Others that are doing - going through acquisition are still digesting their plans in terms of acquisitions, what effect they're having on their rollout for next year. But all of that sets up, I think for a deliberate increase for next year, given the macro.

Got it. That's helpful context. Maybe turning to balance sheet, sort of a 2-part question here. But the first part is just a simple clarifying question, which is just what drove the increase in debt levels in the quarter? Was that a revolver draw or what? And then just thinking through 2022, how should we think about your ability to delever in spite of the needs to increase CapEx?

Okay. I'll answer the first question, which was that the - you saw the total debt went up $252 million, but the cash also went up $372 million. So net debt deficit went down $120 million, and that's because free cash flow in the quarter was $133 million. It was 55x Canada and energy transition investments. I think you pointed out exactly what occurred. There was a drawdown on the revolver that occurred at the end of the quarter. That revolver balance is down to - you'll see in the Q that number was 9.25% and that number is now 5.95%, so it was basically debt management issues.

So we move cash around between legal entities and the cash closed out in cycles and comes back in. Normally, we do this during the middle of the quarter. We had a time-sensitive move that ended halfway on the first week of October, the revolver balance was down again by $300 million. So - the important part is net debt went down by $120 million in the quarter, and we expect to continue reducing it in the fourth quarter, and we did pay down the $82 million of the September maturities.

One add-on I'd like to make is, given what we're seeing this for some comments that we want to clarify our EBITDA for the quarter. The number - reported number is $125 million. I just want to make sure you understand that. The net of the early termination - international termination in Mexico and other onetime items was actually a net positive of $3 million. So if you actually back that out, the adjusted number for the quarter ex onetime item was actually $122 million, which is about $5 million above the $117 consensus. I think some people got confused by the reference to the $7 million, thinking that was all that was a gross - a net number, but it's - the net number is actually $3 million. So the ongoing number for the quarter, ex those onetime numbers was actually $122 million.

Our next question from Arun Jayaram with JPMorgan.

Arun Jayaram from JPMorgan. Tony, I want to go back to some of your comments on some of the increasing engagement you're seeing from public companies. And so I just wanted to get your thoughts on, obviously, the publics have been very, very disciplined in 2021 and haven't really changed CapEx despite the strong commodity prices. But what are your sense as we get into 2022 the publics could do next year? I think we're modeling kind of a mid-20% increase in U.S. kind of land activity, but I wanted to get your thoughts on how you see the market evolving next year?

I think - as I said, I think when you look - I mean, obviously, from a balance sheet point of view, their situation is improving quite a bit, but I don't think they're going to put foot to the pedal like in the past. And based on our conversations, I think we're seeing modest increases. And I think that, that number is probably toward the upper range out of the box. So I think people are going to be deliberate in terms of what they do right now. I think one of the first priorities for these people are going to be, as Tier 1 operators in general come back to work, I think quality of operations is going to be a big part of their thinking now. People are all aware now to execute better. And when you want to execute better, you got to focus on your existing quality. So I think in the operations we're looking at in terms of our pipeline, I think a lot of them want to basically high grade some of their existing contractors as opposed to necessarily immediately going to increasing fleets. And so you're seeing some replacement as operators decide to focus more on automation, they pick a strategic partner for that. They're going to want to upgrade and pick a person that can be a partner at the table with them. I think that's going to be the first step on the journey. And then depending on the success rollout, then they'll put a foot to the pedal even more dramatically. But I'm not - I don't want to tout that this environment is going to create the speed gun rocket take off in the first of the year.

But let's not understate it either. I think we are looking somewhere in the range of 15% growth for activity next year, which is not insignificant.

15% from the year-end exit rate or year-over-year?

Yes, yes, correct.

Yes. Yes.

Fair enough. Fair enough. Okay. Great. And then just my other question. You guys have highlighted how kind of leading-edge rates are eclipsing $20,000 per day. And I wanted to get a sense of how do you characterize demand patterns from high spec versus more standard equipment? Are you seeing a bifurcation in rates between different rig classes?

Well, if you look at our existing working fleet, it's all 100% high spec. And I think that's - at least the upgrades we're focused on, that's where the value prop is for us, in particular. And that's where I think the market is. Particularly those people, as I said, they want to focus on quality and getting the best returns out of their operations. I mean just the value prop from that is so clear, and therefore, that's what's going to drive things, I think. Obviously, the privates are more commodity-oriented and different dynamics in terms of their economics. And so I think there's going to be an overall thing. Other rigs are not going to disappear in the market they never have. There's always going to be a legacy tail of those other rigs, but the high-spec rigs are or ours today fully utilized. That's where we see the growth go forward.

There's a bit of idle capacity still in the super specs in the market in general. And as that starts to tighten, we may see more increases in the non-high-spec rigs as well. But there's still enough high-spec rigs out there that that's going to be the first pool that clients will try to sign up.

And how do you guys gauge reactivation costs if you go from 80 to 90, 90 to 100, just a sense of those reactivation costs?

Right now, I think we've done a great job of stacking out our procedures, staking out our rate. So I think the return back to work for us is not going to be very disruptive or costly to do that. We don't see that as being a big hurdle.

So we were discussing this earlier, and there's a lot of demand. We have the rigs. The rigs are in great shape. I think the challenge for the industry will be the accruals, right? If we're all trying to increase at the same time, that's going to be the bottleneck I think. Everything else should be fine.

Our next question comes from Karl Blunden with Goldman Sachs.

I just wanted to follow up on the balance sheet. I think you provided some color on the debt draw at the end of the quarter from the revolver and the cash increase. I was interested, is there any connection there with that? And you mentioned some debt management issues and potential flexibility it might give you as you think about liability management and debt reduction goals over time, which you've been progressing on and you have some more priorities in the coming quarters?

No. I mean, we - there's a lot of circular movements between legal entities. And like I said, they usually happen in the middle of the quarter. We had a time-sensitive one that we had to do and half the transaction was in Q3, have the transaction at the beginning of Q4. But the net of it is 0. So that's really - there's really nothing there.

Got you. Understood. You've had good progress on free cash flow. Some of that's been from working capital. I'd be interested. Is there more you can do from a working capital standpoint in 4Q and then also into 2022?

I really do think that's low-hanging fruit. We still have a lot of ideas, and we're working on not only - the team is extremely motivated and have done a great job on the collections. I'm extremely proud of what the guys have done because a lot of what we've seen over the last 2 years has come from being much better on our working capital management. But now we have some ideas in terms of automating some of the processes and putting more incentives on the truce. So we think we will continue to see that in 2022 to the point that the growth in activity that's coming will be offset largely by a lot of those initiatives that are already started, and that will continue to bear fruit in 2022.

So if I could squeeze just one more on the cash front. In terms of the funding strategy at SANAD, is it still the base plan to just fund organically from SANAD from the cash that's their plus free cash flow that's generated at the entity? Or could there be other ways you approach the growth CapEx needs in the region?

SANAD, I mean, if we forecast and I think with a realistic pace of additions of rigs over the next several years, given the fact that they managed to accumulate a bunch of cash due to delays of Saudi Arabia is really not that stressed in terms of the ability to fund organically. Obviously, there's potential there to suck more cash out of SANAD by doing some sort of financing within SANAD, but that's not really in the cards today. And I think by 2024, SANAD will turn around and the new rigs plus the legacy rigs will generate enough cash to not only pay for the new rigs that are being built, but also to allow for dividends to the shareholders.

Your next question comes from Gregg Brody with Bank of America.

It's Gregg Brody. I was wondering if you could just address what your plans are right now for the revolver and where the process stands in terms of renewing it?

So that process is always under discussion. We like to do things early. So obviously, we've already amended the revolver multiple times, and we'll continue to do so as needed. I'm not going to telegraph right now because, obviously, there are multiple options on what we could do with the revolver. But you can be sure that's something that it's on my radar screen, and it's at the top of my radar screen. So that's as far as I'll go.

Got it. I won't push any more there. I'm sure we'll hear about in the next quarter. Just - I saw the debt numbers in the presentation. Just curious if you can tell us if the warrants - if there were any exercises that were paid for with debt that was part of the debt reduction? Or how much of that you've seen to date?

Well, I think the warrant has some specific requirements to create the arbitrage opportunity for the bondholders to exercise those warrants and submit their debt. And those conditions haven't yet been met. One of them is a certain level of share price. But another one, we have to trade with a 6% improvement over the past 3 days. So those conditions need to be met simultaneously. We haven't met them yet. So we haven't seen exercises yet. But the fact that are - that the bonds that are eligible for exchange are trading at very, very high levels, indicates that there is the compressed demand to do that. And some - a lot of the bondholders have piled on to those bonds because they see the arbitrage opportunities. So once those conditions are met, I think we'll see a lot of movement.

I think there has been some exercises by bondholders to test the process because it's obviously a unique structure. So we have had some testing in the process with a minor amount of bonds. But as William said, now that stock is in the $125 area or so was in the $125 area, you're at the range where if you trade and you qualify the incentive shares, that combination makes very attractive for the debtholders to convert.

We think $120 is a trigger point.

Yes.

But then you need to meet the condition of the 6% trading. So that's - I think as we move forward, it's very likely that these warrants will become a factor.

Our next question comes from Andrew Ginsburg with R.W. Pressprich.

One thing I wanted to get a better idea of so we are talking a lot about on this call, some of the labor inflation and labor pool being some of the bottlenecks. Do you see that as being a large demand driver of some of the automated services you guys are providing?

Well, I think, obviously, one of the things just to attract people in our industry, to our industry and frankly speaking very frankly, when people think of a drilling rig, they think of a person that is being covered or covered with mud and has had an accident with a finger missing, right? And so one of the reasons why we're so interested in automation is to change that mindset and to make a driller sitting in the drill chair on a rig be like a profession for a pilot in a G5. That's the long-term goal here to actually change the skill set change what's required to operate these rigs and upgrade the talent and make the job a more interesting job by removing some of these heavy labor skills and making it available actually to women as well to work at rigs as well, that's not a priority of ours. So that's part of the logic behind our drive to automation.

So I think a lot of those people that you see on the rig today, hauling iron on the deck floor, instead, will be doing other stuff like other services that we provide that add value and incremental revenue rather than just moving equipment around and pushing stuff into the hole, right? That's the vision. So yes, I mean, I think compensation will help but it's not something that's going to happen overnight. I think it's something that we have. In addition to the RMP rig, we are developing a modular piece of equipment that can automate not only the rigs but the rigs as well. And I think over time, that's what you will see in the industry. That will be a - like the top drive, that will be a requirement to drill in the future.

Okay. So is the point then that the demand is kind of just going to already be there and getting that higher talent labor pool will help kind of drive that - help meet that demand? Or is it a little bit of both?

I think it is a little bit both. I think for the existing people to make - the existing pool make the industry more attractive to work in. Obviously, the concerns about safety, get ameliorated by this move on red zone management on the floor. And then it opens up a pool of people that historically we haven't had an ability to access at the rig site in terms of their ability to be productive and value enhancing at the rig site. So it's both of those things, I would say.

Okay. That's really helpful. And then just kind of pivoting back towards the balance sheet. I know you guys talked a little bit about the revolver from the perspective of the remaining unsecured notes in the capital structure. Is there a preference on how you guys are looking to address some of the securities or the issues in the balance sheet in terms of maybe trying to tackle some of the higher cost debt first or really just the front-end maturities are the highest priority above that?

Listen, I mean, obviously, again, those issues are top of my list. And the whole team is very focused on debt profiles, maturities, maturity walls, the revolver, that's just business as usual. That's just tactical debt management that we do all the time. So - and it depends on many conditions. We have plan A, B, C, D and E depending on what the environment gives us. And yes, to answer your question, yes, we're looking at those high cost, but we're looking at everything as a global. I mean that's no different from the last 5 years where we've been managing tactically and strategically all these pieces of our capital structure. That will continue. I think we haven't disappointed our shareholders or bondholders yet, and we don't intend to do so in the future.

This concludes our question-and-answer session. I would like to turn the conference back to William Conroy for any closing remarks.

Thank you for joining us this morning. If you have any additional questions or wish to follow up, please contact us. We'll end the call there, Sarah. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.