Noble Corporation Plc (NE) Q4 2012 Earnings Report, Transcript and Summary

Good morning, my name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone, to the Noble Corp. Fourth Quarter 2012 Earnings Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Thursday, January 24, 2013. Thank you. I would now like to introduce Mr. Jeff Chastain, Vice President of Investor Relations. Mr. Chastain, you may begin your conference.

Okay. Thank you, Regina, and welcome, everyone, to Noble Corporation's fourth quarter 2012 earnings call. We appreciate your interest in the company. A copy of Noble's earnings report issued last evening, along with the supporting statements and schedules, can be found on the Noble website, that's www.noblecorp.com. Before I turn the call over to David Williams, I'd like to once again remind everyone that any statements we make about our plans, expectations, estimates, predictions or similar expressions for the future, including those concerning the drilling business, market outlook and industry fundamentals, financial performance, operating results, fleet condition, performance and downtime, also tax rates, spending guidance, backlog, dayrates, contract opportunities, tenders, announcements, commencements and extensions, letters of intent, and finally, growth opportunities, newbuild delivery costs and dates and plans and objectives of management for future operations are all forward-looking statements and are subject to risks and uncertainties. Our filings with the U.S. Securities and Exchange Commission, which are posted on our website, discuss the risks and uncertainties in our business and industry and the various factors that could keep outcomes of any forward-looking statements from being realized. Our actual results could differ materially from those forward-looking statements. Also note that we may use non-GAAP financial measures in today's call. If we do, you will find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and an associated reconciliation, on our website. Okay. With that, I'll now turn the call over to Dave Williams, Chairman, President and Chief Executive of Noble.

All right. Thanks, Jeff. Good morning, everyone, and welcome. Joining me today in Geneva are James MacLennan, Senior Vice President and Chief Financial Officer; and Roger Hunt, our Senior Vice President of Marketing and Contracts. Jeff is handling his duties from Houston today. Today, we will plan to cover a lot of details especially as it pertains to the financial discussion. I'll open with a word on a few noteworthy accomplishments in 2012 that are helping to reposition Noble for new opportunities for the years to come. I will also provide some color on our strategic transformation and catch you up on some late 2012 and early 2013 developments in the fleet. I'll also want to address operational downtime as an area of disappointment where we intend to show improvement in 2013. Following James' financial discussion, which includes 2013 guidance, and Roger's comments on the impressive opportunities we see in 2013 for the offshore business, I'll close with some thoughts on primary objectives and the focus for Noble in our new year. We will then take your questions after that. We registered a number of meaningful achievements in 2012 as we continue to process and transition the company into a premium asset base. First and foremost, we began operations on 3 new ultra-deepwater drillships, the Bully I, Bully II and Globetrotter I, and placed drillship, Noble Leo Segerius, back into service following the completion of a life-enhancement project. Each of these rigs are on a better position to provide a meaningful contribution to our financial results in 2013, following time in 2012, to work through some operational challenges. Also, the unique and innovative multipurpose tower found on the Bully I, Bully II and the Globetrotter I was employed for the first time on a mobile offshore drilling rig in 2012 displaying advanced features and a safe, efficient configuration. The towers and their components performed very well in these rigs and we are pleased with their respective operational and -- operations and functionality to date. In fact, on Globetrotter I, we set a string of 14-inch casing weighing right at 2 million pounds without incident. In addition, we made substantial progress on our remaining 11 newbuild projects over the course of 2012 and in 2013. As of January, all 6 of the JU3000N jackups are now under construction at the Jurong yard at Singapore, and by mid-February, all 4 of our Hyundai ultra-deepwater drillships will be under construction when the planned steel cutting ceremony takes place on ship number 4. We are positioned to take delivery of 3 JU3000N jackups and 3 ultra-deepwater drillships in 2013, driving earnings and cash flow growth prospects in 2014 and beyond. As you saw and disclosed in our press release issued last night, we've secured contracts from our newbuild jackups, Noble Houston Colbert and Noble Sam Turner, the third and fourth orders placed with Jurong. Roger will cover the terms of these and other contracts in more detail shortly. Also, many of you are aware that the Noble Regina Allen experienced a setback in early December 2012 when it tilted during a jacking system test being conducted by the shipyard. Safety for those working on the rig was our primary concern and thankfully, of more than 700 people aboard the rig, there were no serious injuries reported that resulted from that incident. By January 16, the yard had leveled the hull in a safe and controlled manner and the rig is now securely berthed at the Jurong yard. Based on an investigation conducted by the shipyard and the vessel designer, I can report that the legs, jacking system and hull suffered no structural damage. Data collected to date by the various investigation teams has ruled out structural or component defects and teams are now concentrated on the jacking software control logic, electrical components relating to the jacking system and the brake holding capacity. The yard is working to isolate the exact cause and rectify the problem and has confirmed, as reported in our latest fleet status report, that the Regina Allen is expected to exit the shipyard by the end of the third quarter 2013. Finally, we were successful in expanding the company's geographic footprint in 2012 with the start of operations on the ultra-deepwater semisubmersibles Noble Clyde Boudreaux offshore Australia. The rig had a successful transit startup in support of Shell's Prelude development project. And by the second quarter of 2013, the company's footprint is expected to expand even further with the relocation of the Noble George McLeod to Malaysia, providing the company with an initial presence offshore Southeast Asia. Also, I am sure there's some interest in the operations that we had in Alaska, another area of expansion in 2012. There was broad news coverage on the grounding of the Shell-owned Kulluk drilling unit while that unit was under tow, and also some coverage on the Coast Guard review of the Noble Discoverer. First, as it relates to the Kulluk, I want to applaud the performance and the professionalism of the Noble crew that was aboard when the Kulluk had encountered unexpectedly severe weather conditions over the New Year's weekend. The crew performed great. And while we never want to see our team in a situation like that, I'm very proud of them and grateful for the efforts of the Coast Guard air team who helped to evacuate the crew so safely. Throughout this incident, Noble participated in Unified Command and in the safe retrieval of the Kulluk. At this time, we can't provide any further information about the condition of the rig or Shell's forward plan, but we continue to work with Shell to support their Alaska strategy. Also, as we noted in our press release late last year, the Coast Guard identified several deficiencies and maintenance concerns related to the Discoverer and we reported certain other potential regulatory compliance issues. We had put tremendous effort into addressing these issues and have engaged in an extensive and ongoing dialogue with the Coast Guard. Some of those improvements have already been made and others will need to be made in the shipyard. We are working on a plan to make these improvements and address the maintenance and compliance issues proactively. We are also cooperating with the investigation that is now being undertaken by the U.S. Coast Guard and the Department of Justice. All in all, the past year in Alaska revealed areas where we need to improve. But at the same time, Noble gained significant operational experience and valuable geographic insight during 2012 drilling season, and we hope to have the opportunity to apply that experience in the very near future. Our operational performance was a significant disappointment in 2012, with the fourth quarter following short of expectation due primarily to higher-than-expected unpaid downtime and an increase in repair and maintenance costs. A significant source of downtime was from our 3 new rig additions and the drillships, Noble Leo Segerius and Noble Phoenix, 2 rigs placed back into service following significant enhancements and maintenance programs. Although we view the start of operations on the 5 units as milestones, initial operations were not as seamless as we had planned, particularly with respect to certain critical components. James will provide more details on this and other matters regarding financial performance in just a moment. Before I turn the call over to James, I want to remind everyone that we are in the third year of significant transformation of a company with roots back 92 years. We believe this transformation has tremendous value potential. It should place Noble among the best in the offshore drilling industry with an improved mix of premium rigs, capable of addressing increasingly difficult client needs and better position to weather industry cyclicality. There will be challenges that are driven in part by the volume of rigs that we will add over the short-term timeframe. These challenges come in the form of getting new rigs commissioned once they exit the shipyard, placing them on full operating dayrate and keeping them on dayrate. Our expectations are more realistic today when we realize operating performance in the near term can be inconsistent at times as we experienced in 2012, but understand that we are addressing the risks and inconsistent performance through a sharp focus on operations and operations support, with the ultimate goal being the improvement in our results for 2013, for the rigs added to our fleet in 2012, our incoming rigs in 2013 and '14 and the revenue efficiency of the entire fleet. And with that, I'll turn the call over to James.

Thank you, David, and good morning to everyone on the call. Today, I'll address some details on our fourth quarter revenues and operating costs as well as certain items relating to the balance sheet. I plan to spend most of my time this morning walking you through our prepared guidance for the full year of 2013. I'll cover a number of line items from the consolidated statement of operations and details regarding our planned level of capital expenditures for 2013. Last evening, we reported fourth quarter 2012 net income of $128 million or $0.50 per diluted share on total revenues of $966 million. The results compared to net income in the third quarter 2012 of $115 million or $0.45 per diluted share on total revenues of $884 million. Contract drilling services revenues improved $88 million or 11% in the fourth quarter to $922 million compared to revenues of $833 million in the third quarter. The improvement was driven primarily by a 353 day, or 7% increase in operating days, together with improved average daily revenues including dayrate adjustments to cover annual operating cost escalations. Together, these improvements contributed $107 million to fourth quarter revenues. Several rigs returned to work in the fourth quarter following shipyard programs or mobilization periods that covered all or a substantial portion of the third quarter, including in our floating fleet the drillships Leo Segerius and Phoenix along with the semisubmersible Clyde Boudreaux. In our jackup fleet, the Charles Copeland, Gus Androes and Kenneth Delaney, all returned to work during the fourth quarter. Utilization in the fourth quarter rose to 83% from 78% in the third quarter while average daily revenues improved from $168,600 in the third quarter to $174,000 per day in the fourth quarter. Mobilization and demobilization payments and improved bonus revenues, primarily from certain rigs operating in Brazil, added $11 million to fourth quarter revenues. The quarter-over-quarter increase in revenues was partially offset by an increase in unpaid fleet downtime, which rose to 5.7% of operating days. This compared to 4.1% in the third quarter. The unpaid days, which reduced revenues by approximately $30 million, were attributable primarily to certain rigs operating in our Brazil, Middle East and U.S. Gulf of Mexico regions. 5 rigs that began in service in 2012, the Bully I, Bully II and Globetrotter I, which completed commissioning and client acceptance testing during the first half of the year and also the Leo Segerius and the Phoenix, which completed significant enhancements or maintenance programs during the third quarter, together accounted for approximately 33% of the downtime in the fourth quarter as early rig performance was challenged in regards to certain critical components, specifically subsea components such as BOPs. Our contract drilling services costs for the fourth quarter were at $484 million or $35 million higher than the third quarter total of $449 million. This 8% increase was driven in part by increased labor costs primarily relating to the previously noted rigs returning to work and a full quarter of operations on the Globetrotter I. These items added $15 million to costs in the fourth quarter. Also, mobilization costs contributed to the quarterly increase. The Clyde Boudreaux transit to Australia and the drillship Muravlenko mobilization from Brazil to the U.S. Gulf of Mexico, where it was cold-stacked, added $14 million to costs in the quarter. And finally, higher repair maintenance costs added $9 million in the quarter, which was partially offset by a $3 million reduction in other costs. DD&A for the fourth quarter was $209 million, within the range of guidance provided earlier. The quarterly total was up from $195 million in the third quarter, primarily due to the completion of the Leo Segerius shipyard project as well as the full quarter of operation for the Globetrotter I. SG&A expenses of $25 million were in line with guidance that was provided on our last call and compared to $27 million during the third quarter. Our tax rate in the fourth quarter was 29%, beyond our range of guidance of 17% to 20%, due to the unexpected change in the mix of pretax income following higher-than-expected idle time in our Middle East and Brazil divisions. The effective tax rate for the full year still came in at 21% or generally as predicted. Capital expenditures in 2012 totaled $1.67 billion compared to guidance of $1.8 billion. The lower amount was due to anticipated spending for subsea components which did not take place because of delayed deliveries by vendors and lower-than-expected major project capital expenditures which were deferred to 2013. The components of the 2012 total spend included $587 million for newbuild rigs; $693 million related to major projects including subsea-related expenditures, which was actually below guidance; $254 million for sustaining capital projects, also below guidance; and $136 million in capitalized interest. Before I turn to guidance for 2013, I'd like to briefly comment on the balance sheet and liquidity. At December 31, 2012, cash and cash equivalents totaled $282 million. Liquidity, measured as the sum of cash and cash equivalents and availability on revolving credit facilities, totaled $1.7 billion. As we reported, on January 17, 2013, the company elected to increase the maximum amount available under its 2 existing revolving credit facilities, adding a combined $500 million of capacity and bringing the maximum available under both facilities to $2.3 billion. Following this increase in the revolvers, the company's liquidity is approximately $2.2 billion. Accounts receivable at December 31 of $744 million decreased from $791 million at September 30 despite an 11% increase in contract drilling services revenues. The decline was due primarily to the collection of delayed payments from 2 customers as well as collection of mobilization revenues on the Charles Copeland, which were discussed during the third quarter 2012 call. Finally, total debt at December 31, 2012, was $4.6 billion, approximately unchanged from September 30, while debt to total capitalization was right at 35%. Moving on to guidance. I'd like to focus on the full year 2013 and also what we expect for the first quarter of the year, covering certain line items of the P&L as well as capital expenditures. First, unpaid downtime in the Noble fleet for 2013 is expected to range from 3.5% to 4.0%. This compares to actual unpaid downtime in 2012 of 4.1%. The higher range of guidance for 2013 compared to 2012 guidance is primarily driven by predicted initial start-up challenges on the new rigs to be added over the year. These being the drillships, Dawn Taylor and Globetrotter II, along with the new jackups, Mick O'Brien and Houston Colbert. Contract drilling services costs are expected to be in the range $2.05 billion to $2.15 billion for the full year 2013. Let me provide a reconciliation of the increase from the 2012 level of $1.8 billion. Firstly, new rig operating costs add approximately $125 million in 2013, new rig start-up costs of $40 million, then new operating locations and rigs returning to service in 2013 at $45 million, cost inflation was estimated at 6% to 7% adds $60 million, additional shore-based costs add $40 million including not only 2 new locations but also enhanced subsea and supply chain costs, and in a general bucket of other -- adds a further $15 million. In addition, we anticipate 2013 costs in the range $160 million to $180 million for labor contract drilling services and reimbursables, resulting in total operating costs of $2.2 billion to $2.3 billion. For the first quarter of 2013, contract drilling services costs are expected to be in the range $485 million to $495 million. Costs are expected to increase approximately $20 million per quarter thereafter. Costs associated with labor contract drilling services and reimbursables are expected to run $40 million to $45 million per quarter. DD&A for the full year is estimated to be in the range $865 million to $875 million. The increase is due primarily to the addition of the drillships, Donn Taylor and Globetrotter II, along with the new jackups, Mick O'Brien and Houston Colbert. For the first quarter, DD&A is expected to be in the range $205 million to $210 million. SG&A is expected to total $110 million for the year and approximately $26 million in the first quarter, with these costs split about evenly from quarter-to-quarter. Interest expense, net of capitalized interest, is expected to total $120 million to $130 million, $40 million above the total for 2012 due to lower amounts of interest capitalized with the completion of 4 newbuilds and the major drillship projects in Brazil. Net interest expense in the first quarter is expected to be $25 million to $30 million, remaining at this level until the fourth quarter when it's forecast to increase by about $10 million with the startup of operations on the 4 newbuilds. The minority interest line on our P&L, which as a reminder represents the Bully I and Bully II 50-50 joint ventures with Shell, is expected to total $55 million to $60 million in 2013, spread about evenly through the year. Our effective tax rate for 2013 is expected to be in the range 20% to 21% and likely towards the high end of this range. As you are aware, any changes in the geographic mix of sources of revenue or levels of profitability and tax assessments or settlements, all movements in exchange rates can all affect this line, as we saw in the final quarter of 2012. Finally, we expect our capital expenditures for 2013 to be approximately $2.8 billion, up from approximately $1.7 billion in 2012. The breakdown, by major spending category, is expected to be as follows: in our newbuild program, we expect to spend $1.5 billion, remaining CapEx needed to complete the newbuild program during 2014 should total approximately $1.2 billion. Major projects in 2013 are expected to total approximately $870 million, up from $693 million in 2012. This amount includes subsea component purchases, which reflects the timing of deliveries delayed from 2012. Completion of the life enhancement project on the drillship Roger Eason and several rig maintenance and regulatory inspection programs including the Discoverer, Paul Romano and Paul Wolff. Sustaining capital is expected to total $320 million of the total CapEx spend in 2013, up from $254 million in 2012 as a result of an increase in fleet size and also the change to a more premium mix of assets. Capitalized interest is expected to total $95 million to $105 million in 2013, again, distributed evenly across the first 3 quarters and decreasing approximately $10 million in the fourth quarter following the commencement of contracts on our new rigs. First quarter 2013 capitalized interest should run approximately $30 million. And total capital spending for the first quarter is expected to be about $1.0 billion. That concludes my comments, and Roger will now cover market outlook. Roger?

Thank you, James, and good morning, folks. As we kick off a new year, we have every reason to remain optimistic regarding the prospects for further broad expansions through 2013. In the floating rig segment, deep and ultra-deepwater opportunities remained strong across all regions supported by growing exploration and production spending plans. I will offer more on the latter point in a moment. In the midwater segment, we believe a reduction in demand in Brazil could be offset by an increase in other regions such as Mexico and the Gulf of Mexico. Recent fixtures in the North Sea might also suggest there will be additional opportunities for the right midwater rigs in this region. In the jackup segment, we continue to see strong demand for standard and high specification rigs with numerous opportunities for multiyear contracts. The company's backlog at December 31, 2012, stood at $14.3 billion. Approximately, $11.9 billion of this amount was attributable to our floating rigs and $2.4 billion to the jackups. Excluded from the backlog are the 2 contracts recently awarded for the Houston Colbert and Sam Turner, the third and fourth deliveries of our 6 new JU-3000 (sic) [JU3000N] rigs under construction in Singapore. The contract for the Houston Colbert is a minimum 1 year with ConocoPhillips for operations offshore Alaska. The contract, which has a base dayrate of $235,000, will commence immediately following the rig's delivery from the shipyard, expected to occur late fourth quarter this year. The rig will remain in Singapore for winterization upgrade, ahead of mobilization to Alaska, for an initial drilling campaign expected to occur during the summer of 2014. The cost of the rig's winterization will be paid for by the customer. The contract for the Sam Turner covers a 2-year duration with Maersk for operations in the Danish sector of the North Sea. The dayrate for the 2-year contract is $215,000 and is expected to commence during the third quarter of 2014. Combined, these contracts add an additional $243 million to our contract backlog. The company has now secured contracts, or an LOI, on 4 of the 6 JU3000N jackups under construction. One final comment on our JU3000N jackups. David provided an update on the status of the Regina Allen and the revised shipyard delivery date following the incident last December involving the rig's jacking system. We have previously reported an LOI for the rig covering 18 months at a dayrate of $235,000 for operations in the Dutch sector of the North Sea. Our customer, Gas de France, has indicated a robust and flexible drilling program in the region. With this understanding, we do not currently anticipate any change in the customer's intent to contract the rig. We continue to see strong interest in the superior capabilities offered with this designs and we do not currently anticipate delays on any of the 5 remaining units under construction. As I mentioned at the beginning of my remarks, expectations remain high for a robust contracting environment in 2013, as exceptional industry fundamentals support the business. Both floating and shallow water segments are benefiting from a crude oil price environment that has demonstrated stability and at levels that support an increased amount of exploration and appraisal activity. Crude prices averaged $108 per barrel in 2012 and over the past 3 years, have averaged $100 per barrel. With this level of price stability, our customers can plan their exploration and production spending with greater confidence. Addition to crude prices, exploration successes have been a tremendous driver of activity especially in the deep and ultra-deepwater segments. During 2012, customers announced 52 discoveries in water depths of 4,000 feet and deeper, eclipsing the previous record of 37 discoveries by 40%. A total of 18 discoveries were in water depths of 7,000 feet or greater, including 9 in over 8,000 feet of water. The 52 discoveries in 2012 were made offshore in 14 different countries. Gone are the days when most of the discoveries were made in the Golden Triangle. Wherein 2008, this triad accounted for 80% of the discoveries in the year, in 2012, they represented only 47% of the discoveries. It is interesting to observe the spread of deepwater drilling across the globe. It was only 5 short years ago that we heard first mention of deepwater drilling successes in places such as Israel, Australia, Ghana, Sierra Leone and Mexico. Now these countries are present in the backlog of discoveries each year as more exploration, appraisal, and in some cases, fast-track development programs commence. In addition, new areas are surfacing such as Mozambique, Tanzania, India and the Ivory Coast. Included in the record activity in 2012 was the first announced deepwater discoveries offshore the Falkland, the U.K, and in the Black Sea offshore Romania. As was the case in the early -- in the late 1990s when the industry saw the initial expansion of deepwater fleet, exploration successes led to a backlog of lengthy field development projects, which in turn had a favorable impact on the duration of drilling contracts. We are seeing the same dynamic present today. In 2012, the average length of an ultra-deepwater rig contract award was approximately 3.3 years compared to 2.2 years in 2011. It is our belief that exploration success build on expansion and the likelihood of continued buildup in the field of appraisal and development activity will establish an abundance of opportunities for deep and ultra-deepwater rigs as we progress through 2013 and 2014. We see a number of contract opportunities developing for Noble's deep and ultra-deepwater fleet as a result of these excellent fundamentals. We opened 2013 with 19% of our operating days available in the -- throughout our fleet. The deepwater semisubmersible Paul Romano is currently in the shipyard in Malta completing regulatory inspections and upgrades. The rig is expected to be in the yard until the second quarter of 2013 and we are confident the rig will be contracted with the startup in early Q3. Customer interest in the deepwater semis Homer Ferrington and Amos Runner, remained strong, with both rigs expected to secure follow-on drilling assignments during 2013. Finally, we continue to evaluate customer interest in our 2 remaining uncontracted ultra-deepwater drillships under construction with Hyundai. Both rigs, with mid- to late 2014 expected deliveries, have attracted the interest of numerous customers for work assignments in both established and emerging offshore basins. In the jackup rig sector, I've already established the strong interest our customers -- in high specification units as evidenced by the recent fixtures on both our newbuilds as well as the Hans Deul in the North Sea. Opportunities for our standard jackups also remained plentiful in several regions of our operation. In Mexico, Pemex continues to look for incremental jackups, and those currently in the country such as the Johnnie Hoffman and John Sandifer, are in a position to secure multiyear contracts at dayrates well ahead of previous levels. I did not mention the Lewis Dugger since we have a definitive agreement to sell the rig which closed shortly. In the North Sea, with 2013 essentially sold out, operators are increasingly contracting beyond seasonal needs. Our latest contract award for the Julie Robertson is evidence of the interest in term duration. The rig has a term duration of 1 year to dayrate of $160,000, however, the customer has the right to further extend the contract for a period of up to 5 years. Other opportunities similar to this are under review. At present, Noble's fleet of 8 jackups are committed through 2013, that should -- with 7 of the 8 committed into 2014, excuse me. In the Middle East, we believe demand for standard and high spec rigs will continue to build especially offshore Saudi Arabia. Finally, in Southeast Asia, we believe there will be opportunity to build on our recent award of a contract in Malaysia with additional potential in Malaysia, Vietnam, Indonesia and Brunei. In summary, strong industry fundamentals persist and we expect those strong fundamentals to drive the offshore cycle through 2013 and well into 2014. Visibility is building well into the decade as contract durations for both floating and jackup rigs expand. We are experiencing an environment that is -- it is supported of both good dayrates and contract conditions across all aspects of the fleet, and we expect Noble's backlog to continue to grow as we secure contracts for our newbuilds. I'll now turn the call over to David for some closing remarks.

Thanks, Roger. 2013 has started off on a very positive note for Noble. We mentioned the contracts for our 2 JU-3000N (sic) [JU3000N) units, and a solid market in which to offer the remaining uncontracted rigs in the newbuild program, both the high specification jackups and the 2 remaining ultra-deepwater drillships. We are pleased with the success we've had in global expansion efforts as we entered the vast region of the Southeast Asia market which we certainly -- will certainly open additional opportunities for our fleet. We are encouraged by the latest developments relating to the Noble Regina Allen and its delivery, and we began the year with a contract backlog totaling, as Roger said, $14.3 billion, representing an estimated $3.5 billion to $4 billion in revenues for each of the next 2 years. Our focus in 2013 includes the implementation of systems and processes that produce improved operations through reduction in unpaid days. During 2012, 60% of the downtime experienced in our floating fleet was attributable to subsea BOPs and components. Also, we continue to evaluate methods for executing the phase of our strategic transformation that involves the divestiture of assets with standard capabilities. Although the exact timing of any potential transaction remains to be determined, significant structural progress was achieved in 2012 and we are closer to defining a method that we believe could produce the appropriate value. Finally, we are another year closer to the completion of our heavy newbuild project backlog, with 6 shipyard deliveries anticipated in 2013 and the final 5 in 2014. Our capital allocation strategy's approaching a transition point and we believe our expected liquidity levels will allow us to evaluate a number of alternatives, including adjustments in the dividend. And with that, I'll turn the call back to Jeff then we'll take your questions.

Okay. Thank you, David. Regina, let's go ahead and begin the question-and-answer segment of the call. [Operator Instructions]

[Operator Instructions] Our first question will come from the line of Dave Wilson with Howard Weil.

David, I want to get your thoughts on the Transocean settlement with the DOJ for $1.4 billion, in terms of how you think of that from an indemnification standpoint. I mean honestly, at $1.4 billion a payout, which is significant compared to a lot of the market caps out there for the offshore drillers, I'm unsure how I feel about the contractual indemnifications. So I just want to get Noble's perspective on that and how you feel about that in lieu of the payout, and whether or not that's working into any conversations around the contracting table?

Well, I appreciate the question, that's a good question. We continue to believe that our indemnities have teeth and that they're enforceable in court. I mean Transocean was faced with a set of circumstances that it was going to take them a long time to deal with this if they want to slug it out in court or just deal with it in a settlement fashion. The $1.4 billion is -- it's a big number. It's a lot better than the numbers that we were hearing 2 years ago. But I -- without being in their shoes, I think they found themselves in a spot where they could either slug it out or deal with it, and -- with the -- overhanging the stock because of it. I think they decided to deal with it, and I think it's probably been good for them. It does not change our view of our contracting philosophy. We have -- we work very hard to define the allocation of risk and who assumes those risks, and who insures those risks and who's responsible for the eventualities that could arise in any offshore operation. But as I said, we have every reason to believe that our contracts are enforceable. And so no, it has not entered into our discussion with our customers.

Okay. Thanks for the insight there. And then, David, if I could, just have one follow-up, and just kind of on your closing comments, you mentioned the jackup fleet. And just wondering sort of the disposition plan on some of the assets there, has it kind of run its course there? Are you starting to look at the next stage so speak? Maybe likelihood of a spin, is there any more guys out there really looking at those assets?

Well, without getting too much in the weeds, yes. There are people still looking to buy assets. We've been on this divestiture strategy for probably longer than most of you want to hear me yammer about. But as we said a long time ago, and as others have said, if you want to get the fleet ready for a spin, it's going to take a long time to collate structurally the company into entities where you can position. We have a very complicated corporate structure to have the thing so that you can position it into a transaction that the board could actually consider. It takes a long time to get there. I've heard estimates of 2 -- 18 months to 2 years, and we've been probably working on that exercise now for I would say, 14, 15 months or so. So I mean, it's a long-term program trying to get the fleet ready. We're still looking for buyers, but we still think that there's a lot of value in the fleet, and so we're not going to give them away. The deals that we were able to execute on the Dugger and the Walker reflect the value that we think those rigs should have, and if to the extent that there's other buyers out there, we'll continue to look for buyers.

Our next question will come from the line of Todd Scholl with Clarkson Capital Markets.

My first question is actually for James, and it is related to your cost guidance. I was wondering if you could maybe break out the percentage increase in terms of labor and then maybe also the percentage increase in insurance on a year-over-year basis.

The short answer to that is that I do not have that break out at hand, we'll take a look and provide it in the next call if it's something that's easily available. If you're just looking for the increased percentages, labor is in the range of 10% to 11% and insurance is 5% or 6%.

Okay. That's helpful.

Insurance is a theoretical number because we're in the process of doing our renewal now, so we have -- what James is giving you guidance is what our expectation is. But we are in the market now, and I don't really want to say any more than that.

Okay. And then just one other real quick for Roger. On the market in Mexico for the jackups. We've seen in the past, probably 10 weeks, about 7 newbuild rigs go into Mexico, but looks like the most of them are going to be with either PEMEX or with local contractors. Would you consider these rigs all incremental or is there any chance that at some point these rigs could end up offsetting existing jackups that are working in Mexico? And do you kind of have an opinion maybe on what the right number of jackups, the total number will be for Mexico in 2013?

Yes. I think the right answer to the question is that, our view that Mexico is attempting to get as many rigs as they can get their hands on. The current fleet is around 40 rigs, and you've heard numbers that are significantly above that in terms of their long-term plans. So will one day these newer rigs displace older rigs? For sure. But do we think that's going to happen anytime in the near term, I don't think so.

Our next question will come from the line of Robin Shoemaker with Citi.

I wanted to ask you on the downtime. You said that 60% in 2012 was related to well-control systems, and we all know about the higher standards of performance that were implemented after Macondo. So a couple other things related to that. How has that facility in Houston and others that you've built and shown us improved your response time for well-control issues at this point? Kind of an update on that. And then also an update in terms of your negotiations with customers in terms of contract terminology which you hope to get more allowance for downtime given the higher performance standards.

Well, the subsea facility that we have built and we are putting in place is not only a warehouse facility, as you saw when we took the group through there. It's a place where we train, house and store our subsea, what we call hit teams, SWAT teams, which we have 6 going to about 10 as we move forward. And I think it's serving us well. But we continue to see failures in subsea components that we don't believe should fail. We've had issues in the fourth quarter where we had a recently repaired piece of equipment from the manufacturer that was sent out to the rig. We QAed it. They QAed it. Got it to the rig, and it wasn't trimmed property, and we couldn't drift it -- it wasn't, wouldn't full opening bore, our full bore opening, so we couldn't run the tool through it, and we needed to -- then we had to send it back to be remanufactured, which is a QA process on their part. We had a stack full on the rig where the rig had full functionality, full capability, full resources, but it was venting fluid, which it's designed to do and Bessie decided that we needed to pull the stack. That happened late in the fourth quarter. There was no issue with well control ever, but if the -- I don't want to say too much. They have a tough job to do. But if they say pull it, you have no appeal process, you just start pulling it. So we're continuing to see those issues. The subsea group is improving our -- when we get the BOP on the beams, they're going to improve our time, our trip time. When you pull a stack in 7,000 feet of water or 8,000 feet of water, you're doomed to about 10 days of just pulling, putting on the beam, securing the well, pulling it and putting on the beams and rerunning it before you ever work on it. So the shorter time you keep it on the surface, the better off you're going to be. I think our time there is improving. So the subsea stuff, it's all helping. It's all going to get better. The short answer is, we have got to see more improvement in our subsea performance. It was just -- it's not a wish list, and we're not going to wish it better. Our costs were up in the fourth quarter. A lot of that is things that we are focusing. A lot of it was for things that we didn't see that happened to us, but a lot of it was pushing these issues that I've just talked about and trying to improve our subsea performance. We have got to get our performance up, and we will. There's a lot of newbuild equipment coming in, and we're going to get it better. So the subsea program is going to improve our position dramatically, I think, as we go through '13. We've got a lot of newbuilds coming in and newbuilds are going to -- from time to time have issues. We'll deal with those as we get them all out working. Our performance will even out. But I expect to get it going faster -- going better sooner rather than later. On the language front, Roger and his team have done a spectacular job of improving the language and the coverage that we have in new contracts. You can't go back and deal with the existing older contracts. These Petrobras contracts have been in place since the Flintstones were in the oil field. And so they don't ever renew them, they just keep extending. And so some of those things, you don't ever get a chance to revisit. But as we work on new contracts, they are all better than their predecessors, so we're working it on every front.

Our next question will come from the line of Matt Conlan with Wells Fargo Securities.

So very interested in your thoughts about having more flexibility in capital allocation especially with regards to the dividend. What type of magnitude of dividend increase are you considering and when would you be making these decisions?

Matt, that's a great question, and I wish I could answer it. We -- there's -- as you know, your model, there's a bunch of cash coming down the pike in 2015. That's clear. Our capital program this year is much higher than it was last year. I think, what, it's $2.8 billion is what we're saying it is this year. All of our newbuilds are back-end loaded. They are either 10%, 20%, 10% and 60% on delivery or 20%, 20% and 60% on delivery, so the capital requirements for the fleet going forward are still there. Having said that, we have liquidity. We have visibility. We've got, as Roger said, only 19% of our days are uncommitted for the floaters going forward this year, so we've got a pretty good idea of what we're going to be able to do. We discuss the dividend with our board every chance we get. Management has a view, and we certainly know that shareholders have a view. We hear what the shareholders are saying that you'd like to see something sooner rather than later, and we take that in and we will discuss it with our board as we do every time we see the board when we see them very soon. Like I say, there's a lot of cash coming in 2015, I think that's a pretty easy call. 2014 looks better; 2013, we'll see. So it's on our radar. We don't want to do -- I mean, I think it just makes you mad if we do something small. If we do it, we want it to be meaningful. And so, we will present our views and your views to the board when we meet with them next week. We will have a discussion and we'll see what happens. But certainly, returning cash to shareholders in some form is a big deal to us. We are focused on making you as much money as we can. And how we return that to you is a meaningful part of the dialogue that we have, so we'll take that discussion up as soon as we get a chance with the board.

Okay. That's terrific. And to go back to the spinoff possibility, in the 14 months that you've been preparing for this possibility, what milestones have you gotten to yet? I mean, do you have the last couple of years of audited financials? Have you decided what rigs exactly would be in a potential spin?

Well, I mean, if I get -- the board hasn't fully considered this. We have a strategic plan, management does. We presented it to the board. We have discussed it with the board. I don't want to get into which rigs are in and which rigs are out. I mean, you can kind of look at the fleet and draw your own conclusions on that. We hit a number of milestones on what it would take to either sell a large pile assets or to spin a large number of assets, but there are still some significant pieces to go. The big things to us are value to you and not creating some monster that is punitive to shareholders or companies for tax purposes. So you've got -- it's collating the fleet, putting the different assets in which pile you want, and then finding a structure that you think is reasonable, acceptable and that provides the kind of value you want to deliver. So all of that is in the works. And so, yes, we've achieved milestones. Audited financials are ongoing. We're doing that work in preparation for whatever might happen even if we look at different pieces of the business some people want audited financials. So we're doing a lot of work on a lot of fronts for a transaction that we hope might be ready to -- if we get ready to do it in the not-too-distant future, but there's still work to do.

All right, great. Sounds like you continue to have a lot of balls in the air, so good luck with it.

Matt, that's a lot of rhetoric for 2 pretty easy questions, and I apologize for not really answering either one of them, but that's the best I can tell you on both fronts.

Our next question will come from the line of Jud Bailey with ISI Group.

I wanted to follow-up on some of the, I guess, the downtime during the quarter and maybe it sounds like it is related to the subsea pressure control systems. Could you maybe give us a little more detail on kind of what's going on with the rigs and how you see that path progressing going forward. And is there any type of, I don't know, discussion with the equipment manufacturers on parts that don't seem to be perhaps working correctly?

Well, I've covered a couple of issues in the fourth quarter that were surprises to us and happened late in the quarter that hit us. And we jumped on both of them hard, both from a remediation standpoint and trying to recover and get past them. Is there a discussion going on with the manufacturers? You bet there is. Lots of discussions going on with manufacturers. Unfortunately, they don't -- this is not going to sound the way people want to -- they don't have a lot of skin in the game, I mean, they will refute that, I'm sure. But we continue to have QA issues, and we continue to receive equipment that's not always ready to run. And that's -- and I'm not -- and that is part of the problem. The other part of the problem is, if the equipment is down for a period of time, a lot of times, you'll have a leak manifest itself, and Bessie will make you pull the stack. There are a number of elements, Jud, in this that we're addressing. If you look at the rigs that have been out for a couple of years, the Day and the Adkins. I mean, the Day was just delivered in 2009, '10. It's performance was pretty good. The Adkins, which was delivered a little bit before that had some time before the moratorium. It had a couple of stack pulls once the moratorium was behind us, but it's performance pretty good. So the rigs that are up and running, seem to be running well. It's the newbuilds that provide the challenges. It's not the things that everybody was scared of. The multipurpose tower and the houseman kits done great. And we're not running equipment on these rigs that we're not running on other rigs or that other people aren't running. So it's just running in equipment and there's a lot of new equipment out there. We bought a lot of components. We've outfitted -- we finished the Segerius, the Phoenix, which had a major shipyard job. We delivered 3 newbuild ships, so we've had a lot of -- kind of a lot of exposure, and it will get better. Like I say, we're not running anything that everybody else isn't running, and there's nobody out there that can run anything better than we do. So it's just a function of getting in place, getting the crews trained up, getting the manufacturers where we want them, getting Bessie comfortable with science, and then I think it will even out at a level that we're all much happier about.

Okay. And then -- and my follow-up is, is just a follow-up on some of the cost guidance. You did a good job of kind of laying that out, and then I just want to make sure though, when I think about the cost increases, are there any other offsetting revenues that we have to consider other than obviously just modeling revenues or their utilization when we think about some of the costs coming through, are there any type of offsets on the revenue side that may not be readily apparent to us?

In the area of -- that last area of costs that I mentioned, the $160 million to $180 million for labor contract drilling services and reimbursables, all of that has revenue elements related to it.

There's also some -- the shore-based -- some of the shore-based stuff, where the operator asks us to do specific things or if we have to open a new shore base or move a shore base. Sometimes some of that cost is covered. To be very specific about it, Jud, is challenging, but that's a great question and the answer is, yes, there are some revenue offsets and we -- I guess, we'll try to be more clear about it or you'll see it as it comes through as time goes by. The other thing, as we talk about newbuild startups, keep in mind, we hired 1,400 people a year before last. We hired about 1,200 last year. Each one of our newbuild ships is going to employ somewhere on the order of, depending on the crew that's assigned, 85 to 90 people or so times 2, plus the shore base. So each one of those ships is going to require that many people. The jackups are going to require 50 or so people. A lot of those people are already in the system. When we talk about ramp-up, if they're on the project, they're capitalized as part of the project. But most of these people are working in the fleet. We're carrying extra people in the fleet for all 11 newbuilds. So as we work through this, the number of extras in the fleet will come down. So our costs are inflated right now due to this newbuild program, but once we get to the end of the ramp-up, we'll still carry some extras in the fleet, as we always have and as every contractor does, but it won't be of the magnitude, it won't be as big a number as we're seeing in the cost right now.

Our next question will come from the line of Justin Sander with RBC Capital Markets.

My first question was just a follow-up on the downtime. And looking at some of the issues that have happened with the new and the enhanced rigs in 2012, then looking at the rigs coming online in 2013. Just wondering if we should expect a similar type of utilization during the break-in period for the new rigs that are coming online in 2013 as you experienced on the rigs in 2012, is that just the nature of breaking in the new rigs or is there a learning curve that could allow to maybe improve on the 13 deliveries versus the 12 new and enhanced rigs?

Well, we've guided to what we think the performance of the fleet is going to be, and I think we should leave it at that for now. I'll leave it to you to adjust your model. Our level of downtime that we experienced on the newbuild rigs was not acceptable to me, so we have done a lot of things differently. Yes, we intend to learn from what -- learn more from what we've learned from these rigs. We have deployed some operations people sooner. We have deployed some subsea engineers sooner. We have done some things differently with the manufacturers sooner than we did in the past. So we have guided -- James provided guidance on what the overall fleet downtime is. I think we ought to leave it at that for now. But yes, we intend to learn from that. And no, I don't think we ought to expect that level of downtime on every rig going forward.

Okay. And then my follow-up question was, I guess, more strategic, David, on the press release commentary for the jackup moving into Malaysia, the first rig to operate in Southeast Asia. Can you just elaborate on what drove the entrance into the market and how you see that market contributing to the portfolio over time?

I'll just give a brief comment and let Roger elaborate. For us, Southeast Asia is just a huge expanse of the offshore environment where we've been absent. We've got heavy concentrations in Mexico, which hurt us in 2010. We've had heavy concentrations in West Africa, which hurt us in 2009 and '11. We've had a heavy concentration in the Middle East, which has served us fairly well, but we've seen some softness there. But the Southeast Asian market is a place where we've got good assets available for that market, but we haven't deployed them there. So to spread your footprint and spread your risk, tap new clients. We've got -- this company has a history of working with NOCs, and we have a great working history with NOCs. And there are a number of active national oil companies in the area that we have not had a chance to Noble-ize. And so we look forward to that opportunity. I think it's a great footprint for us to expand on, and I'll just pass it on to Roger to see what he's got to add.

Yes, 2 comments. The first job in a new region is always the most difficult one to get. And our customers in the region do, even though they know us, they look for a local presence. So this job is going to provide us with that. So our resume has been enhanced. The second comment I'd make is, as you know, we're building a fleet of high-spec jackups in the region, so it's not as though this is a new entry. It's more just expanding the opportunities for our newly constructed rigs, and which we see several of high-spec opportunities here in the next couple of years.

Our next question will come from the line of Jim Crandell with Dahlman Rose. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: David, what are the chances we might see Noble order additional drillships or harsh environment semisubmersibles over the first half of the calendar year?

Let's see, I'm not quite -- Well, I think the -- I would say it's possible. The first half of the calendar year, it depends on how the first half of the calendar year proceeds from a perspective of contracting the rest of the rigs and how performance goes. Right now, we've got 11 rigs under construction. I don't know where we'd get a project team for #12 right now. So we've got 11 rigs under construction with the Romano in the yard. We're working on a plan to have the Discoverer in Alaska next season. We have the Roger Eason, which should finish up this year. We've got a number of rig -- we've got a couple of rigs coming out of the -- 3 new rigs coming out of the shipyard. We're opening a new shore base. We've got a lot going on, so my expectation would be to try to dovetail in to what we've got right now rather than start a lot imminently. So it's possible, more than likely, if you see us back in the shipyard, it's going to be against a specific rig that's accompanied with a contract or Roger and his team do an exemplary job of putting the rigs that aren't available till 2014, late 2014 really, to work a little sooner than we expected. I mean, it's possible we are looking at a number of designs for more rigs. We are looking at -- we are delighted with the outcome of the jackup program. I think the jackup program for us really is going to be a kind of a diamond in the rough, if you will. We have far exceeded the average rate on these rigs that we needed when we went to the board with it. And we see nothing but more opportunities, and the rigs are spec-ed so that they are creating their own demand in different markets. So it's not unlikely that you could see us build something. I don't know what it would be or exactly when it will be. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: But you seem to be saying, David, that, that would probably not be another ultra-deepwater drillship?

No, I don't mean to say that at all. I just returned from Korea. We had the christening of the Don Taylor a couple of weeks ago -- last week, I guess, we flew over for the day, and the rig looks spectacular. We are -- it's all kit that you see. One of the things I love about walking around that rig it's the same -- it's the same pumps we've got on other rigs. It's the same BOP we got on other rigs. It's the same drawworks, same pipe handler. It's the same, same -- its the same equipment we got on a number of other rigs we've been delivered. And as you know, I'm very focused, and we are very focused on downtime, and so to have another copy of the same thing, we would do it in a heartbeat if the stars aligned. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: David, just as a last follow-up to that, do you think with the -- with going into more of the development phase for a lot of these ultra-deepwater equipment and the average contract terms lengthening, do you think that oil companies are becoming concerned not just about ultra-deepwater rig availability in '13 and '14, but are concerned about it in '15, '16 as well and even for a, let's just say, a cookie-cutter drillship would be willing to give you a longer-term contract for that type of rig?

Are they concerned yet? I think the more astute ones are. Some are not, but there is a lot of unsatisfied demand around the world in customers that have less than enough term for one of us newbuild guys to approach them with a one new job. So yes, I think they are real opportunities. Now we still got 2 rigs in '14, and there are a number of -- there's almost nothing available in 2013 and most of it -- a good number of the '14 deliveries are still uncommitted, but you can start pairing up opportunities with rigs and start seeing fairly succinctly that there are still more opportunities than there are ships we believe. And so I think more deepwater assets are in the offing. When you say, I love the -- we're talking about cookie-cutter drillships, there's just not much -- these ships are so highly advanced, it's a privilege to be able to walk around one of these monsters. But the question to my mind really isn't whether you want more deepwater ships, but is the next real kind of the strategic opportunity going to be a semi, a big completion semi or a harsh environment semi or exactly what it's going to be. And I think the answer is probably all of the above, cost, rate potential and timing are all part of this -- are all part of the strategic evaluation that we literally go through every day on how we look at these things. James D. Crandell - Dahlman Rose & Company, LLC, Research Division: Okay. But David, just in looking forward absent, let's say, an unexpected drop in commodity prices, does it seem to you as if the ultra-deepwater market will remain at least as strong as it is today, not only over the next couple of years, but over the next 5 years?

I don't see anything in the deepwater arena that gives me any inclination at all that we don't have a good long run in front of us. Whether or not it's 3, 5 or 10 years, I'm not sure. One of the things that I'm so pleased with about our position at Noble is, we've got some 10-year contracts, we've got some 5-year contracts, we got a 3-year contract. We've got -- we're positioned right now where we don't have them all rolling at one time. We've got some staggered rates. And Roger and I had this conversation from time to time, if you got a guy that wants to give you 2 years, a guy wants to give you 7 years or 5 years, which job do you take? And the answer we both take all time is both of them, in case you're not afraid of the term of either one. So I don't see yet with the rate of discovery and the demand for hydrocarbons, I don't see anything yet that tells me there's any issue with the strength of the cycle that works in the deepwater. I don't see any issue at all in the years ahead.

Our next question will come from the line of Ian Macpherson with Simmons. Ian Macpherson - Simmons & Company International, Research Division: I had a couple of fleet status aspects that caused me a little bit of uncertainty for revenue this year, and I wanted to ask about those. First, Roger, could you give us some comments on the prospects for the Ferrington and the Romano? I think that we understand where the market dayrates are, but not necessarily how much idle time either those rigs could incur in the front half of this year? And then the follow-up question would be regard to the Discoverer. I understand you have a 12-month contract, but is there any outside risk in your opinion that Shell could have a hard time getting their Alaska program off the ground this summer? And if that is the case, would it be logical to assume that, that contract could be reexamined for this year in any way?

Yes. Let me answer the questions in reverse order. That's an interesting choice of word, Ian, reexamine. So that contract is firm through February -- we're now talking to the Discoverer -- is firm through February of 2014. And the nature of the contract is, we get paid the same dayrate for the drilling season and the non-drilling season. We don't have any insight into how this 2013 drilling season may play out, but I can assure you that every effort is being made right now in both companies to prepare the vessel for operations in 2013 in some format, so no concern about that project. The Paul Romano, I made the comment in the remarks. So the vessel is in the shipyard until the second quarter, and we're confident that we'll be contracted at the beginning of the third quarter. And on the Homer Ferrington, we've got a lot of prospects that we're looking at for that. So following the program in Israel, we would expect the vessel to either stay in the Med or move to someplace else. Ian Macpherson - Simmons & Company International, Research Division: But no material downtime anticipated there either?

I don't think so.

No downtime. But keep in mind, mobilization creates a big hole. And the accounting treatment on a mobilization is that, even if you get a lump sum that covers the expense, the accounting guys don't let you count it, and so the revenue from the mobilization fee or whatever you get is amortized over the term of the contract. Ian Macpherson - Simmons & Company International, Research Division: Got it. A quick follow-up if I may.

If you are in the Mediterranean, unless you continue to work in the Med, you're 2,000 miles from nowhere. And so when Roger thought about Romano going where in third quarter, I think his expectation is that includes some shipyard time and a mob. The Ferrington is still up in the air a little bit. Is that right? Ian Macpherson - Simmons & Company International, Research Division: Okay. Can I just squeeze in a quick follow-up for James. The CapEx for this year is $2.8 billion. You outlined $2.3 billion in your Analyst Day slide last May. Clearly, your '12 CapEx came in light, and I think that explains about half of the revision for '13. The other half can be -- I don't know if you explained it, but is there inflation as we look out to your '14, and '15 CapEx, should we think about overall inflation as to what you saw last spring or is this all timing related?

It is mainly timing related, Ian, but there have been some changes in estimates on costs as well. I don't have a specific breakout of that, but as you noted, a little over half of the change in 2013 is creep basically from '12. Ian Macpherson - Simmons & Company International, Research Division: Yes. Would you expect an upward bias to what you saw for '14 and '15 last year?

I gave in the script what we expected the total to be for the entire program, let me go back to that, hold on one second.

There are always going to be adjustments. When we gave guidance on CapEx last spring, any contract that we would have signed since then or anything that the contract requires, contract-specific capital would not have been in that -- even for some of the newbuilds, frankly. And so things that we budgeted, some may be reimbursed, some may be -- there may be some inflation in there, but a lot of it is going to be new projects and contract-specific stuff that we weren't aware of last spring.

And to the other part of your question, the remaining part of the newbuild program after 2013 is $1.2 billion based on the construction contracts.

Our next question will come from the line of Byron Pope with Tudor, Pickering, Holt. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: The call's running long, so I'll take mine offline.

Our final question will come from the line of Scott Gruber with Bernstein. Scott Gruber - Sanford C. Bernstein & Co., LLC., Research Division: Most of my questions have been answered, but a quick one on the corporate strategy, given the focus on asset divestment, as well as improving operational uptime, it sounds like, David, there's too much on your plate to even consider an MLP in '13, is that a fair statement?

There's never too much on our plate to consider a way to make shareholders money. So we are looking at the MLP. We -- I don't know what everybody else has said about it. We have not condemned the idea and we haven't blessed the idea. We think that's an interesting strategy. We are watching the Seadrill model to see how it works. I don't really think that we have, today, the right assets to drop into it, but as we continue to deliver some rigs with some on longer term, we have 1 rig, the Globetrotter would be a candidate, but it's something that we continue to examine. The question in our mind is the benefits that the shareholders might derive or at least the unitholders might derive outweigh the limitations on the company in terms of the available capital that's gone forevermore in whatever percent you MLP. Of course, it creates a good bit of value in the part that you actually distribute, but one of the questions on our mind, can we get there organically in the C-Corp by doing something meaningful with the dividend ourselves. Our tax rate is pretty good, so there's a lot to consider. There are some very interesting features to the MLP and there are some limitations, and so we're looking at all of it.

I will now turn the conference back to Mr. Chastain for any closing remarks.

Okay. Thank you, Regina, and thanks to everyone for bearing with us as we went past the hour. For those of you left in the queue, I will be contacting you over the course of the day to address your questions. And thank you for your participation on today's call. And make a note that our first quarter 2013 call is scheduled for the 18th of April, that's -- the numbers will go out on the evening of the 17th, call on 18th. We'll confirm those dates as we get closer. I will be available over the rest of the day to take any follow-up questions. Regina, thank you for handling today's call. Good evening, everyone.

Ladies and gentlemen, this does conclude today's conference. Thank you, all, for joining and you may now disconnect.