Good morning. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome, everyone to the Noble Corp. Third Quarter 2013 Earnings Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Thursday, October 17, 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, Brent, and welcome, everyone, to Noble Corporation's Third Quarter 2013 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, and that's noblecorp.com. Before I turn the call over to David Williams, I would like to remind everyone that we may make statements about our operations, opportunities, plans, operational or financial performance, the drilling business, or other matters that are not historical facts and are forward-looking statements that are subject to certain 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, including the price of oil and gas, customer demand, operational, and other risks. Our actual results could differ materially from these forward-looking statements, and Noble does not assume any obligation to update these statements. Finally as we typically note, we may use non-GAAP financial measures in the call today. 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 David Williams, who's Chairman and President and Chief Executive of Noble.

Thanks, Jeff. Good morning, and welcome, everyone. Joining me today on the call along with Jeff, are James MacLennan, our Senior Vice President and Chief Financial Officer; and Roger Hunt, Senior Vice President of Marketing and Contracts. Jeff and Roger are handling things from Houston today, while James and I are in London. I'll have more to say about London and the company's pending migration to the U.K. from Switzerland later in the call. It was another very busy quarter for Noble, and I want to open this morning by covering some of our accomplishments, each of which I think add to the long-term competitive position of the company and our ability to produce attractive returns for our shareholders. To begin with, I'll comment on our strong third quarter results, which continue to exhibit a favorable trend that became apparent earlier this year. Compared to the results in the second quarter, third quarter contract drilling services revenues improved 7% supported by the better-than-expected commencement of operations of the new ultra-deepwater drillships Noble Don Taylor and Noble Globetrotter II. Also total operating downtime fell below 5% where it was last quarter to 4.6%. Finally contract drilling services costs were essentially flat, despite the start of the 2 drillships. James will have more to say in the third quarter in just a moment. Shipyard execution was a meaningful contributor to our third quarter results, and many of you have heard me say that I am delighted with our execution to date and believe that our ability to manage multiple projects simultaneously and transition the new assets from yard delivery through mobilization, client acceptance and to contract commencement is as good as it gets in this business. So congratulations go out to Scott Marks and his entire team in Korea and in Singapore.…

Thank you, David, and good morning to everyone on the call. To begin this morning, I'll review the primary drivers behind our third quarter revenue and operating cost performance, as well as provide an explanation of certain P&L line items, which warrant comment. I'll also comment on our liquidity position and certain balance sheet items as of the close of the quarter. As usual, I'll provide guidance for the fourth quarter, including revised planned CapEx for the remainder of 2013. I'm happy to address items not covered in my prepared comments during the Q&A session of today's call. Noble reported 2013 third quarter net income of $282 million or $1.10 per diluted share on total revenues of $1.08 billion. The quarter results reflect a gain on the sale of the Noble Lewis Dugger, which closed in July, as settlement relating to the 2010 acquisition of Frontier Drilling and also an impairment charge on our 2 cold-stacked submersible rigs. Together these items contributed $63 million in net income or $0.25 per diluted share for the quarter. Putting these items aside, our net income per share would have been $0.85. The results compared to net income in the second quarter of $177 million or $0.69 per diluted share, on total revenues of $1.02 billion. But as you will recall, results for the second quarter also included $18 million of revenue or $0.06 per diluted share relating to the cancellation of a contract by a customer for the newbuild jackup Noble Houston Colbert. And excluding the impact of that contract cancellation, second quarter earnings were $0.63 per share. Contract drilling services revenues for the third quarter grew by $66 million or approximately 7% from the second quarter to $1.04 billion. The revenue improvement was driven primarily by the contributions from our 2 new…

Thank you, James. Good morning, folks. It has been a very productive quarter for Noble as a continuation of steady industry fundamentals produced numerous contract awards. Although most of the awards were for our jackup fleet, we do have one noteworthy fixture in the ultra-deepwater sector, which I will address later on. Let me change things up a bit today by leading off with the jackup sector and give it the credit it deserves, and then speak to the deepwater sector. But first, let's do the numbers. Our contracting successes in the third quarter helped to push our backlog at September 30, 2013, to $16.2 billion compared to $14.3 billion at December 31, 2012. When one considers that backlog burn rate of approximately $11 million per day, it's quite an accomplishment to increase absolute backlog by almost $2 billion over 9 months. But more significantly, it speaks to the quality of Noble's position in the various markets. Embedded in this backlog statistic is a very strong suite of fixtures for our jackup rigs. During the past quarter, we were awarded 9 contracts with durations ranging from 1 to 3 years. 2 in the Middle East region worthy of note. Our 3-year extensions for the Scott Marks and Roger Lewis at dayrates of $257,500; and 1-, 2-year extension in the North Sea for the Hans Deul at $235,000. We were also awarded a 10-month contract for the Houston Colbert by Total to work offshore Argentina at a dayrate of $247,000. The Colbert is the fourth of our 6 JU3000N high-specification jackups to secure a contract. The rig will be the only jackup of this type and capability in the region, so we expect to be in a prime position to address additional work from Total or others. It might be --…

All right. Thank you, Roger. We have had a number of strategic efforts underway at Noble over the past 3 years that have received a lot of management attention. This comes with being a company that is in the middle of a major transformative period, resulting from a significant change in strategic focus. I've already covered in some detail our very successful shipyard execution efforts. And as shareholders of Noble, you should have a high degree of confidence in our ability to complete the remaining 9 projects on time and on budget. But further, a great deal of focus and discussion has been devoted to the operations execution. I'm very happy with the progress made to date on this front, and I hope you can appreciate the numerous systems and processes implemented over the last 18 months. They are major catalysts for this improvement. As I mentioned earlier, our third quarter total operational downtime declined to 4.6% from 5.2% last quarter. Our unpaid downtime in the third quarter fell to 3.5% from 4% last quarter. We've stated that the operations improvement is sustainable, and we believe that further improvement is possible as these new systems and processes have time to gel across the organization. Before moving to your questions, I want to comment on 2 other areas of focus for Noble: Our pending spend of standard capability assets and our migration to the U.K. Pertaining to the divestiture, you should now know the split of Noble fleet between the premium and standard assets. We made this information available following the initial approval by our board to proceed with the spinoff. We sought the board's approval ahead of the private letter ruling from the IRS because we had a high degree of confidence that the ruling was imminent, and that it…

Okay, David. Thank you. Brent, we're ready to go ahead and begin the Q&A segment of the call. [Operator Instructions] Brent?

[Operator Instructions] Your first question comes from the line of Matt Conlan with Wells Fargo.

I wanted to ask you about your future newbuilding strategies. One of your competitors signed a contract this week at a pretty good IRR with a 5-year contract. Are you guys seeing more of these opportunities underwritten by a contract? And how do you balance it now between the tradeoff of future spec building versus behind the contract?

Well, Matt, thanks for the comments on our quarter, and thanks for your question. It is a balance, and we do see opportunities for newbuilds that match other contracts, much like we did on the Mariner program, and we're continuing to evaluate some of those. But keep in mind, we still have 9 newbuilds that we're still working on. We got a lot going on with the company. We're still focused, primarily, on execution both from an operational perspective and as I hope you noticed in the third quarter, a rig delivery exercise as well. So we have a lot on our plate. We have said all along that we would like to continue building the company, and we're looking for the right opportunities, but again it will be at a much slower pace. And stay tuned. We've got opportunities that we're looking at all the time. We haven't seen anything yet that just jumps out at us. But there are things going on in the industry, and the fundamentals of the business are still very good, we believe.

Okay. Great. And a follow-up on Brazil. How many tenders do you expect out of Brazil, Petrobras and third parties there, maybe in the next 18 months or so?

Well we were pleased to see Petrobras come back into the market. I don't think our intel is any better than anybody else's. We would expect them to take 1 or 2 rigs as a result of this process. Some might think that it's really just a way of keeping the current extension negotiations grounded, but I do believe that they'll take a rig or 2. As to the presell programs, we've said before that, that will probably take about 24 months of lead time, so we're now down to less than 18 months. The Libra auction is scheduled for the 21st of October. And given that the players appear to be incumbents in Brazil, that may result in a fairly quick lead time in terms of -- at intake. So we may see some results of that mid-next year.

Your next question comes from the line of Waqar Syed with Goldman Sachs.

I just wanted to focus a little bit on '14 and if so see if you have any preliminary guidance on the cost side? Or at least, directionally, if you can talk about what you're seeing in terms of materials costs, insurance costs, labors costs into '14?

Yes. This is James. We really will not be completely able to describe where we see our costs going in 2014 until we're done with the budget process. We are right in the middle of that right now, so we really prefer to wait. And so the fourth quarter call, which, of course, will happen in January, in order to provide detailed guidance. Having said that, we've done a preliminary review of baseline operating costs where we look at labor, repair maintenance and other daily costs. Based on that, we're looking at an inflation level very similar to 2013, around 6% to 8% of the range. And when we provide the much more detailed guidance in January, well, we can firm this.

Great. And then just on the contract side, could you talk about the timing for Mexican demand when you see incremental jackup demand there materialize?

I think what we'd say to Mexico is, clearly, PEMEX's desire is to significantly increase their jackup fleet. I suspect their publication of wanting to build 10 additional jackups probably has more to do with their access to funding. I believe 2 of those orders have been placed. It could be that we'll see some announcements on that in the near future. But beyond that, I would think it's going to be limited to 3 or 4 rigs a year.

Your next question comes from the line of Ian Macpherson with Simmons. Ian Macpherson - Simmons & Company International, Research Division: Roger, if there is a silver lining to the standard for the market that's softening a bit, I would say it's that, that part of the market, at least, is fairly consolidated with regard to a few major owners of those rigs. And I guess there, theoretically, could be some potential for rational competitive behavior. What do you think the future holds over the next year or so with regard to the possibility of stacking rigs within your own fleet? And what do you think your main competitors might be thinking about with that dynamic?

Well, Ian, let me just confine my remarks to our fleet. We have 5 deepwater rigs that will have availability in 2014. Frankly we see that as an opportunity. Of the 5 rigs, let me run through them quickly, the Ferrington has just started a campaign in Egypt. It is only one well, but there is some hope that, that will generate additional work either for Total or for other customers, and we are in discussions now. Having a rig available in Egypt where it's already set out, the infrastructure is in place, is opportunistic. The Disco [ph] would be the next one that rolls. What I would say there is we're confident of securing a long-term extension, and you should see something on that before too long. The Driller midyear next year is available. That one will be challenged. There's not a lot of projects in the Gulf of Mexico that suit the capabilities of that unit. So that is a candidate for relocation. The Max Smith in Brazil. I think some folks saw that as a negative development. It's available in August. Frankly there's a lot of moving parts in Brazil, both with Shell and others. Fairly high degree of confidence that the rig will see continuous employment and stay in Brazil. And then the Paul Wolff. You've noticed that we've got class work on that scheduled for 6 months, and we are in current discussions with Petrobras as to what the future of that rig might be. Ian Macpherson - Simmons & Company International, Research Division: That's extremely helpful. A follow-up question, James, with your tax rate. You're thinking with 17% to 19% for your full year guidance, but you've accrued 16% year-to-date, so that you're -- unless I'm confused, that would seem to imply a higher -- a much higher rate for Q4? Have I misunderstood that?

Ian, no, you have not misunderstood that. We're in the middle of certain action steps related to the extraction of assets, which is part of what needs to be done relative to the spinoff. We know of certain specific discrete costs that will arise as a result of that. When I say costs, obviously, I'm referring to taxes in this case. And that will have the potential impact of pushing up the rate in Q4. So while it will be discrete items pushing up the rate, we are expecting that, and that's why we've left the overall rate the way we have.

Your next question comes from the line of Ed Muztafago with Societe Generale.

I'm not sure how much you're willing to talk about this, but as we sort of think forward about the Spinco and the new Noble, can you sort of talk a little bit to what you're thinking about in terms of the potential for cost rationalization or efficiency improvement across the combined fleet?

Not in great detail. I mean, we are, again, we're in our budget process. We're actually developing a budget for both companies. In terms of cost rationalization, I can tell you that, that we will be dividing up the management team from Noble, and some will go with Spinco, and while some will stay with Noble. So there will be some allocation of resources from that perspective. You'll see some same thing along the lines of office allocation and resources and other things of that ilk. We have a view of what it's going to take to run both companies from a G&A perspective, and there will be some -- maybe some additions in there. But in terms of cost rationalization, there are certain things that -- elements of our operations that are specific to our ultra-deepwater high-spec program. Some of the operational interior elements that we put in place the last few years that will probably stay with Noble. And there are some other elements that will go with Spinco. So as we move forward, it will become more apparent exactly what that's going to look like. So there will be some rationalization of management and costs, but it's going to take a little while to sort that out.

I might add to that. While, as David said, there will be some increase in G&A, which one would expect with the 2 companies and 2 audits and all, everything else that goes with that. We would expect that any increase in G&A would be more than offset by reduced operating expenses on the Spinco side as that's going to be a very focused and very leanly run operation is what we plan.

Okay. That's somewhat helpful. And I'll just add a follow-up that I've asked in prior calls. As we kind of think about the improvement for further reduction in downtime and unpaid shipyard days, can you sort of give us an update as to how much more you think you can achieve going forward? Are we 50% of the way through? Are we now 75% of the way through? Any thoughts there?

I wish I could. I mean, it's a little bit -- it's a little like how long is a line? I mean, that money is our money, and it belongs to the shareholders, and I won't be satisfied until we get all of it. It's like safety. We're always continuing to improve our performance in this regard, and downtime is going to be one of those things that you're always chasing a rainbow a little bit. As much as these rigs are becoming more sophisticated, we have a process and procedures in place to operate it more efficiently. Anything built like man -- anything built by man is -- can fail at some point. And the notion that we'll get to 0 downtime is probably not attainable, but could we get to a very high degree of revenue efficiency? I would hope so. Now there are certain places in the world where you're never going to get there. Either you don't get escalation or if you're in working rigs and 1-year contracts, you don't really have those kind of -- or those opportunities. So as the contracts roll over, we try to improve our position, but you're never going to get to a purely efficient place. But I mean, if we had 3.5% unpaid downtime in the third quarter, I'm actually pretty pleased with that, given where we were in the last 4 or 5 quarters. But there's still room. How much room? 3.5% is what I would target. I don't think we'll get 3.5%, but we still see upside.

Okay. Well, that gives us an absolute number that we can think about at least.

That was a long answer to an easy question. But of course, it's not an easy answer. We're going to continue to chase it.

Your next question comes from the line of Todd Scholl with Wunderlich Securities.

My question is, if you could comment on this, would be related to Spinco as well. My question is, have you guys looked at what kind of debt profile that you're considering for the company? Do we expect a leverage ratio similar to what your own leverage ratio is? And then my next question would actually be a follow-up on the jackup market.

Yes. As what's stated in the prepared comments, we're going to be issuing a registration document at some point in the near future, and we're not going to go into that kind of detail at this point. It's not that we haven't started looking at this. We're just not ready to talk about it. And it will be covered in the document.

Okay. That's kind of what I thought. I appreciate that. This question is actually for Roger. You said that you believe the jackup market remains relatively strong, and it seems to be able to absorb the 2 to 3 deliveries a month that we've been getting. But it seems like in this quarter so far, we've kind of started to hear that there could some potential large orders both from contractors and potentially from some national oil companies. I mean, does that concern you at all if those orders end up actually being placed? Would that kind of maybe change your opinion of the jackup market at all?

No. I don't think so. Some of the talk is about national oil companies ordering assets for their own rights. We've been dealing with that in the industry for over 30 years. We like what we see in the jackup markets that we operate in, particularly in such areas as the Middle East. I would watch what Aramco does closely over the next months. I think we'll see news of some very long-term fixtures for jackups, possibly in the 5, 7 or 10 years. And that alone sends an interesting signal. You know that if Aramco is locking in for 10 years, they've always been opportunistic consumers of rig time. Plus, they'll have demand on the margin as they continue their exploration work in the Red Sea, both deepwater and shallow. That probably will beget additional demand. We like what we see in the North Sea. Lots of discussions about some more development programs in high-spec areas in the Central North Sea, both in the U.K. and the Norway side, and then, of course, there's the Mexico story. So we like the jackup space.

If I can, just one quick one. You commented on a couple of markets there. Could you maybe comment about the Asia-Pacific market, what you're seeing there in terms of opportunities?

I would say that we ought to be pleasantly surprised what's happened in that jackup market because 85% of all new capacity added to the jackup market is being built right there in that backyard. And so a good part of that supply add has gone straight to that area. But yet rates have been surprisingly healthy. They were, a couple of years ago, in the $130,000 range. The recent fixtures were in the $180,000 range, so the market continues to be able to support the supplier.

Your next question comes from about Gregory Lewis with Crédit Suisse. Gregory Lewis - Crédit Suisse AG, Research Division: Roger, could you talk about -- you mentioned some midwater opportunities potentially in Mexico, East Africa. Could you -- so when we think about these potential opportunities, are these tenders, are these more near-term opportunities, or are these things more, we should be thinking of potentially coming to market in late '14 or even beyond that?

Well, Greg, I think my remarks were more to do with -- there is a very high level of exploration going on, and we see more and more exploration. And even though a customer's preference might be for an ultra-deepwater rig, a lot of these programs are going on in midwater-type locations. So that's what my point was, that we believe with exploration success that I would not be quick to write-off the midwater fleet. I think there's going to be a lot of opportunities for the right kind of equipment. Gregory Lewis - Crédit Suisse AG, Research Division: Okay. Great. And then just my follow-up would be, I guess, earlier this week it looked like an unidentified African national company, I think that it sort of pointed to being [indiscernible] ordered a couple of newbuild [ph] drillships. Was it -- do you have any sense to whether [indiscernible] went out into the market and potentially offered some sort of opportunity to drilling contractors? Or is this something that we think they kind of just went out and did on their own?

I think every oil patch has got its own example of either local businesses or national oil companies believing that there's a value proposition in owning and operating their own equipment. We've also seen over the years that more often than not, they realize that this wasn't as good an idea as we thought, and they end up either selling or have somebody operating it for them. And frankly, I don't see this as any different to what we've seen time after time.

Your next question comes from the line of Dave Wilson with Howard Weil.

Roger, just on the deepwater market. Over the past quarter was there any contracting activity that changed your mind about the softness in dayrates either that the rates were not -- were softening as much or were deteriorating faster? Anything you've seen out in the industry?

I'm going to answer by just basically repeating that we confine our remarks to what we see for our fleet. And I went through each of the rigs that are going to roll for us in 2014. Other than the Driller, which is a little bit lower in spec terms of its water depth capability and the BOP system, I believe that it's going to be the right kind of project before us on each of these units. So I guess is that the rates should be quite attractive.

Okay. Great. And then, David or James, just post the spend, does your views on debt levels change in relation to the type of assets that you will be retaining? Do you expect ultimately that the debt to capital be at similar levels pre-spend and post-spend or given the pending newbuild payments, it that going to change a bit?

Clearly the numbers will change as a result of the spinoff. But directionally, either with or without the spinoff, the answer kind of comes back to the same thing. And that is because of the significant adds that we've made to the high end of our fleet, all of which will be in operation by mid-2016, most of which will be in operation in 2015, the significant increases in our cash flow over the next couple of years will enable us to reduce debt aside from any other uses of capital to which we decide to use.

Your next question comes from the line of Byron Pope with Tudor, Pickering, Holt. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Just one question for me. At your recent Analyst Day, you spent a fair amount of time talking about your margin protection, your principles and goals. And as we and others think about modeling the Spinco versus pro forma Noble, my assumption is that there isn't any discernible difference between kind of some of the clauses and the language that's worked into those contracts as it relates to subsidy, repair and maintenance, and cost escalation provisions between the assets in Spinco versus pro forma Noble. So I just want to test whether that's a reasonable assumption?

Yes. I can take a shot at that. The way I would think about it, Byron, is we are having -- on the longer-term fixtures, you are seeing improved quality of these types of provisions. And longer-term fixtures, by definition, tend to be with the ultra-deepwater units. Now having said that, I mentioned Aramco, we've already got 3-year contracts with Aramco, and I look for them to go longer. But try as we might, you are not able to get escalation protection with Aramco. That's been the case for the last probably 45 years. If that changes, please let us know. So on the 1-year jackup fixtures, you will have to build up your anticipation of escalation in the rate. You won't see escalation protection there. And then I'd look at those 2 extremes and say that you're going to get varying degrees of it depending on the asset, depending on the term.

Your final question comes from the line of Lou Castal [ph] with ABG.

Given that you are narrowing the guidance range for the OpEx, obviously, performing a little better than you were anticipating yourself, I was wondering if you could pinpoint a couple of things where you sort of perform better than you anticipated, when you gave the initial guidance? Are there any specifics?

Yes. I'll go first. In general, we would characterize the reduction versus the original guidance as due to execution. We have put all kinds of programs in place over the last year, which have led to cost containment. We have, at the same time, been increasing our activities, increasing people with the additions of a new asset, specifically the 2 deepwater ones in this past quarter. Having said all that, there will be some increase in the fourth quarter, as I pointed out. There will be some increase in operating costs with those new assets coming on. That's unavoidable. It's expected. And we're kind of happy to pay those costs and get the revenue. Areas of specific savings versus the original forecast might be in -- the repair maintenance costs is one area where there is a chunk of money that is less than originally forecast. And I'm not going to go into other factors, aside from what I've mentioned, everything else is fairly small, but they tend to all to go in the same direction.

Okay, Brent. I think we're going to call it there. Thank you, everyone, for participating in today's call. I'll remind you that the next call, fourth quarter call of '13, is scheduled for the 23rd of January, with earnings going out the evening of the 22. For those of you left in the queue, John Breed and I will all be available today to take remaining questions, and we will be returning calls to you. Again, thank you for your participation. Brent, thank you for coordinating the call. Good day, everyone.

Thank you. This concludes today's conference call. You may now disconnect.