Good morning. My name is Melissa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Noble Corporation Second Quarter 2014 Earnings Call. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Thursday, July 31, 2014. Thank you. I would now like to introduce Mr. Jeff Chastain, Vice President of Investor Relations. Mr. Chastain, you may begin your conference.

Thank you, Melissa, and welcome, everyone, to Noble Corporation's second quarter 2014 earnings call. We do appreciate your interest in the company. A copy of Noble's earnings report issued last evening, along with all the supporting statements and schedules, can be found on our website, that's noblecorp.com. Also, I want to take this opportunity to remind everyone about the luncheon Noble will host in New York on the afternoon of September 4. A save-the-date notice went out earlier this month and we intend to provide additional details, including an agenda for the luncheon next week. If you do not receive information from the company on the event and wish to attend you will find the details posted in the Noble website. Before I turn the call over to David Williams, I'd 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. This includes the price of oil and gas, customer demand, operational and other risks, and the cause and effects of the spin-off of Paragon Offshore. Our actual results could differ materially from these forward-looking statements and Noble does not assume any obligation to update these statements. Also, note that 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 direct comparable GAAP measure and an associated reconciliation on the website. Finally, consistent with our quarterly disclosure practices, we will post to our website, following the conclusion of our call, a summary of the financial guidance covered on today's call, which will highlight third and fourth quarter 2014 post-spin and figures. With that, I'll now turn the call over to David Williams, Chairman, President and Chief Executive Officer of Noble.

Thanks, Jeff. Good morning, everyone, and welcome. In addition to Jeff, who's here with me in Houston, I'm joined today by James MacLennan, our Senior Vice President and Chief Financial Officer, who is in London; and Simon Johnson, our senior Vice President of Marketing and Contracts, who is in Singapore today, having earlier this week participated in the dedication of the ultra-deepwater Noble Tom Madden in Korea. The Madden is another on-time project for Noble and is the last of our 4 drillships from the HHI yard in Ulsan, Korea. This is another example of exceptional execution and I thank HHI and the Noble project team for setting a high standard of excellence. Later this week, we'll dedicate the JU-3000 and jackup Noble Tom Prosser at Sembcorp Marine's Jurong yard in Singapore, yet another example of excellent performance and delivery. I have more to say on our best-in-class shipyard execution in just a moment. As you can see, for this conference call, our team is a bit spread out across the world, but that really shouldn't interfere with our process today, so we should be able to bring it all to you in good course. I'll begin with some brief comments on our second quarter financial results and an update on where we find ourselves at the midpoint of 2014, as it relates to an active year for shipyard deliveries. I'll then turn the call over to James for a detailed explanation on second quarter financial results and revised financial guidance for the remainder of 2014, in light of the imminent divestiture of Paragon Offshore. Simon will follow James with some comments on the offshore drilling business, including some observations on what we believe are some interesting data points from the second quarter. I'll close with some final comments on…

Thank you, David, and good morning to everyone on the call. As I'm sure you've all seen in our press release issued last evening, Noble delivered strong financial results for the second quarter, reflecting increased dayrates on certain rigs, increased contribution from 2 new rig deliveries and the continued focus on project and operations execution, as well as cost control. In an effort to use our time more efficiently today, I plan to address in detail only those line items from the P&L that fell outside of the guided range offered on our last conference call held in April. For additional color on the quarter or clarification on the items in the release, Jeff and his team will be available following the call. Before we begin, I'd like to recognize the work done by our accounting, tax, treasury and planning teams as we work through the spin-off of Paragon Offshore. They've worked tirelessly over the past year to make the launch of Paragon a success and to help ensure that the new business has the systems and processes in place that it needs to succeed. At the same time, they managed Noble's own financial requirements. This is true across the enterprise, but I wanted to point out those groups' contributions specifically. Further, I'd be remiss in not singling out our banking, tax, legal and other advisors in this project, all of whom provided outstanding service and advice to Noble and to Paragon. That said, the work is not yet complete. In the coming weeks, we plan to release additional financial data that'll help in modeling the company going forward. Given the timing of the spin-off, some of those reports are still being developed. But I can assure you they will be available soon and we'll use our planned analyst luncheon,…

Thank you, James, and good day to everyone from Singapore. First half of 2014 has been upstream capital expenditure management, a high priority for operators, especially the integrated oil and gas companies. In the floater sector, 2 projects have been canceled but several have been deferred to later quarters, creating uncertainty for the contract drillers. We've seen limited ultra-deepwater tenders, but a slow creep in activity has emerged, and dayrates for this segment of the offshore fleet have adjusted lower as excess capacity seek work. Several rigs are in the process of being repositioned in the regions with rig capabilities and operator requirement to better align. The jackup space is best defined as stable but concerns remain regarding the level of speculative orders. I'll have a little more to say on this point in a moment. In short, no real surprises relative to our own thoughts on the offshore industry at the beginning of the year. Of greater importance, what do we expect going forward and is there a reason for optimism? We believe the answer is yes. But before I address what we believe is the emergence of some early signs of support in the industry. I would first like to cover, briefly, some statistics on our Noble backlog as at June 30. As you would expect in a year characterized by fewer tenders and contract awards, backlog figures are, for now, in decline. However, please remember backlogs are now serving their true purpose, to provide financial stability in the near-term and greater future visibility, both of which are in management, the execution of strategy and operational plans. As we closed the second quarter, Noble reported a contract backlog of $13.4 billion compared to $14.3 billion at the end of the first quarter. An estimated $10.1 billion of the…

Thank you, Simon. I close my opening comments today with a status update on our newbuild project backlog, a significant component of our fleet transformation. The divestiture of Paragon Offshore is an equally important component of that transformation strategy, and we have almost reached the finish line with this project. Many of you saw our announcement on July 11, reporting the expected August 1 completion of Noble spin-off. Shareholders of record on July 23 will receive, tomorrow, 1 ordinary share of Paragon for every 3 ordinary shares owned of Noble. This is a highly strategic transaction that is more than 2 years in the making. Despite the time it has taken to reach this point, the impact of the transaction is a significant transformative event for Noble. We'll divest 42 standard capability jackups and floaters, with Noble retaining no residual ownership. The transaction, combined with a significant capital spent or committed by Noble since 2007, of approximately $11 billion, will result in the addition of 22 floaters and jackups most by the end of 2014. Simply put, we're in a position to say the strategic implementation of our global fleet transformation is now well advanced. Consider this, in the absence of these transformative measures, our average fleet age would would've increased to 35 years by 2016. Conversely, the actions taken would've allowed us to reduce the average fleet of our -- the average age of our fleet of 13 years by 2016. This 62% reduction in fleet age does not tell a whole story since it includes 5 jackups with an average age, by 2016, of 36 years, which were kept in the Noble fleet for strategic reasons. Absent these 5 checkups, our average age will declined, by 2016, to under 10 years. We remain convinced that the divestiture of…

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

[Operator Instructions] Your first question comes from the line of Gregory Lewis with Crédit Suisse. Gregory Lewis - Crédit Suisse AG, Research Division: David, I know the ink's not dry yet on Paragon but, I mean, clearly we've seen some addition by subtraction here. As we look forward over the next, I don't know, 1 year, especially given the sort of the positive comments you're talking about in terms of a recovery. At what point does it make sense to sort of start to regrow Noble's fleet?

Greg, that's a great question, and I'll say that it's not the ink's not dry on it, I don't think the ink's on it, but it's -- many of us, the transaction is coming. But we're always looking for opportunities. I just don't -- and we have a number of opportunities out there that we could undertake against a firm contract. We're not finished. We have the fleet where we like it. We have a platform that we think provides us a way forward to create a great deal of shareholder value. We've got a tremendous fleet. And so, to the extent those opportunities present ourselves, we'll start looking at them. Right now we're trying to get through this and I think we'll play these for the foreseeable future, just to make sure that we have all of our operating systems in place. We still have a number of deliveries to get out of shipyard but we're looking forward to opportunities and we'll see what the market at present. Gregory Lewis - Crédit Suisse AG, Research Division: Okay, great. And then, James, if I could ask, when we think about the fleet, and clearly you're spinning off a lot of the older assets into Paragon. But as we think about where we are in the cycle today and the potential for asset write-downs, as we think about the RemainCo Noble fleet or the new Noble, I guess, how often are these assets -- is there an asset impairment test on these assets?

Greg, I'll give you a short answer. It's something we can talk about for days. A triggering event will cause any company to look at the need for impairment. And the triggering event could be one of many different things, including for instance the announced intent to sell assets. And that actually changes the formula. Put that aside, we're not in that situation at all. We certainly look at all of our assets from an impairment perspective every single year and sometimes at the end of quarters as well if necessary. We're not concerned about any of our assets from that perspective.

Your next question comes from the line of Ian McPherson with Simmons. Ian Macpherson - Simmons & Company International, Research Division: Simon, I was wondering if you could address your 5 or 6 deepwater rigs that have some exposure in the market in the back half of this year, and just help us frame the threats and opportunities for those in terms of utilization in any potential backing candidate or what contract gap might look like for a certain number of those rigs.

Yes, sure, Ian. Well, let me first discuss the Noble Danny Adkins because that's in a different category to the other rigs we identified in the call. So, I mean, just generally as a backdrop, I mean, the industry's experiencing intense competition for available work. We don't want to give to our competitors with real-time intelligence of immediate opportunities under discussion. But as far as the Danny Adkins is concerned, we are confident that we are well-placed to secure work for the rig. And when we receive a commitment then you'll see that appear in the Fleet Status Report. With respect to the other units, the older typically more deepwater rigs that we talked about earlier, we're considering all of our opportunities for those rigs, including cold stacking. But at this moment, we are continuing to compete where we can and for opportunities all around the world. And there's not really much more I can say other than that at this time. Ian Macpherson - Simmons & Company International, Research Division: Okay, next. Quick follow-up. James, you guided your full year pro forma tax rate, 18% to 20%. Can you just give me the cheat sheet? What does that imply, discreetly, for the stand-alone Noble in the second half of the year for tax rate?

Well, that is a stand-alone guidance number. First of all, just to be clear, I think you got that. What it implies for the remainder of Noble is a tax rate in low 20s in Q3 and Q4. And let me add a little flesh to that, Ian. One of the reasons that we will see a higher tax rate is because of this retroactive U.K. tax change. So we're picking up charges there that go all the way back to April.

Your next question comes from the line of Byron Pope from Tudor Pickering Holt. Byron K. Pope - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division: Just one question for me. As you see these early signs of a deepwater rig market recovery, I just want to get your feel for what you're seeing in terms of tenders, in terms of programs that would be in water depth and for well conditions that could potentially be below the capabilities of the rigs. Which is to say, I'm nervous about ultra-deepwater high-spec rigs potentially moving down-market to pick up work. So, again, as you see these early signs of recovery, I'm just curious as to any color you're seeing in terms of the nature of these programs.

Yes, I mean, how I'd respond to that is by saying that the competition is intense across all sectors. So we are seeing deeper water deepwater DP rigs competing in shallow waters where they wouldn't have considered competing in past markets. Everyone's chasing the work that's available. I mean, I think the key thing to remember is we're talking about the early signs of recovery, it's a trickle, it's not a flood. And it's going to take some time to sustain demand build before that translates into a change in pricing improvements and utilization levels, generally. So, yes. But I mean, are we seeing people competing down? Yes, we are. Are there some parts of the market where some of the older assets still enjoy an ability to operate un-trembled or unchallenged by deeper water units? Yes, those sectors still exist, typically in the shallow markets in the more demanding regulatory regimes around the world.

Your next question comes from the line of J.B. Lowe with Cowen and Company.

I had a couple of questions that don't have anything to do with each other. The first is on the Paul Wolff. You mentioned that you might spend $50 million on it this year. If you're not going to go ahead and do the whole upgrade, what would be the purpose of doing just kind of a partial upgrade? Do you think you can get work just from that investment?

There are a number of things that are involved. We have a scope of work that we believe the rig needs to be to compete at its highest and best use. It's a DP rig, it's not been out of the water since we first commissioned the rig to work in this configuration 15, 16 years ago. So, from a capital perspective, I mean, the mobilization, some steel work that needs to be done, some other assessment things that would be part of the project but -- so all of that will be part of the capital program. What we may not do is complete the full scope of work because of what we see in the market. We don't want to go out and spend $250 million on a rig that we think may not achieve a reasonable return on that investment in this current climate when we might have better opportunities later or something else we could do with that cash now. So we will undertake a scope of work that we think is appropriate given the current market situation and then if we see market conditions change, we may progress. More than likely that we will stop that scope of work at a point that makes sense and preserve that cash for other uses.

Okay, fair enough. And my other question was on the cost guidance. It seemed to be, on both the SG&A and the OpEx cost, to be a little higher than what I was looking for. Is there anything that's changed, since last quarter, that would make you guys think costs are going to be higher or is that just the range that give in this kind of -- within the range that you thought was going to be last quarter?

It's not significantly different from what we would have said had we been ready to communicate that last quarter. One thing I would point out though, you referenced SG&A, and that line might be a little higher than some people might be anticipating. And the reason there is that we've restructured in operations and our op support or field support is about cut in half compared to where it was. You don't see that number because that's included in total OpEx. SG&A is really corporate. So, as a result, corporate was pretty much flat to where it was before but operations support was halved.

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

I'm just wondering if you could talk a little bit -- I know the question was asked about expansion plans in the future. Are you starting to see any opportunities yet for asset acquisitions in the market that might be, either for the Paragon spin or for Noble RemainCo, that might be interesting to you?

We've been so busy with spin and newbuilds. That's really what our focus has been. There are a number of newbuild assets around the world that are being constructed. Simon referred to some of those earlier, they're being built in different markets by -- we would call them nonindustry investors or kind of speculative capital that might have some interest there. There's some nuances to a lot of those rigs that make them completely uninteresting to us. But there might be some that have some certain opportunities for us. I mean, beyond that, we're really focused on what we're doing now. We have no interest, right now, of building those back. We really are trying to get our arms around what we've got. We always model opportunities. We're looking at what the market might bring for us in the coming months. But other than those rigs over there that we're watching, there's not a whole lot out there that we would see today.

As to acquisition opportunities for Paragon, that you mentioned as well, you probably have to speak to them as they'll be a different company as of tomorrow.

Yes, thanks. Good point.

And I was just wondering, we clearly have this bifurcation going on in the market. And you've highlighted that it's not just a water depth issue. And I think we all know that. Maybe you could just sort of recap for us what you think the defining parameters or the key parameters might be of what sort of puts the better rigs go a foot forward, and by that, I mean hook load capacity, et cetera, by both the floaters and the jackups.

Well, I think you could look at what we've been building and extrapolate from that what we're interested in. I mean, we worked extremely hard over the last 4 years to position Noble as one of the highest and best, most versatile and capable fleets out there. So whatever we would look at to buy or build, we wouldn't expect would dilute what we've been working on. So not to say that we wouldn't go shallow water, but it's well-known that we've had a harsh environment, shallow water design out there that we would be interested in building against a term contract. We think that goes along with our technical strategic focus. The jackups we've been building, 1 of the reasons that we've achieved somewhere on the order of $100,000 a day better on our jackups, on average, than the other lower-spec jackups is because we've built in a tighter spec in a tighter market. So I think you would continue to see us build on the higher technical range where we think the term is better, the downside risk is better, the upside is better and the niches are more prevalent for us. That's the short answer, but that's where we would be.

Your next question comes from the line of Darren Gacicia with Guggenheim.

I wanted to ask, first, with the -- you've made some comments, say, about the Paul Wolff. I was hoping mainly you can help us frame the logic behind kind of how much you're willing to spend to keep rigs going and especially with regard to what's coming up for surveys. Is there anything in the rigs we should target to say, look, this may be kind of a questionable decision as to whether we're kind of go ahead and kind of put money into that rig or not. Just so we can kind of a sense of where we are with the kind of newco fleet.

We don't have any rigs in the fleet that are not viable. They're all viable assets in certain markets. The issue with the Paul Wolff is -- the Paul Wolff is the rig that drilled the first pre-salt discovery in Brazil when they started the pre-salt thing. It's got capability. The rig has been worked extremely hard over its life in Brazil, and it needs a serious facelift. And so the question on it is, do we want to spend the money now or do we want to hold that rig for some optional opportunities in the future? Everything else we've got in the fleet is operable today and we can work as it's currently configured. So we don't have any rigs -- we've just gone through a huge exercise to split the fleet on a standard spec versus high-spec basis. We don't have any fleet that we're embarrassed about or that we think is problematic. The Paul Wolff, we think is a marketing timing issue. Everything else we got in the fleet is ready to go to work.

Sort of unrelated and more directed towards Simon. You made some comments on the jackup market with regard to some of the newbuilds, I believe, coming in and maybe not meeting client demand and the rest and how that may play out. Can you expand on that a little bit? In terms of how you think the jackup market plays out with some of the newbuilds arriving and maybe kind of your view, just expand those comments.

Yes. I think the key thing to understand is that a large proportion of the uncontracted jackup newbuilds under construction, that are coming to market, a large proportion of -- some, I think, around a bit 30% was the figure we mentioned are controlled by the speculative investors that David also spoke to. And I think one of the key things is that when rigs are ordered by that type of investor, they typically do not benefit from informed independent design and QA/QC that you would expect of an ironer [ph] who has reputation at risk. They're looking to sell their place in a queue, not to take the delivery and to operate that rig. So that impacts significantly on the value of that rig to customers, both in terms of breadth in the market and also the actual type of customer. So I think when people see a newbuild rig at a Tier 2 or Tier 3 yard in the far east, they need to discount the sticker price by its value in the marketplace, more generally, and its value to an experienced ironer [ph].

I mean is it kind of sloppy environment to kind of handle that issue with the kind of number of rigs that are probably fitting that definition or do they get acquired? I mean, how does this sort of solve out, I guess, is what I'm trying to figure out.

You can speculate as to what might happen to some of those yards and some of those ironers [ph]. I mean, I would argue that some of those rigs will never be delivered. Some of them will go into markets that are essentially closed to international competition. But the key thing is that, nonetheless, just the availability of units in yards, regardless of whether their competitive for a given work prospect, nonetheless, they'll have a generally depressive effect of the leading edge of the market and act as a break to demand and pricing recovery. So, generally, it's a bit of a cloud on the future development of the jackup segment for sure.

Melissa, we're going to go ahead and close the call today. For those of you who might be left in the queue or who have additional questions or any clarifications on comments, please feel free to call John Breed or myself over the course of the day. Thank you for your participation on today's call and your interest in the company. Make a note that our third quarter 2014 call is to be held in October. The date is the 29th. For the reported numbers, the call will be the 30th of October. Thanks again for your participation today. Melissa, thank you for coordinating the call. Good day, everyone.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.