Good morning. My name is Brianna and I will be the conference operator today. At this time, I would like to welcome everyone to Noble Corporation First Quarter 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] thank you. I would like to turn the conference over to Ian Macpherson, Vice President of Investor Relations.

Thank you, Brianna and welcome everyone to Noble Corporation's first quarter 2023 earnings conference call. You can find a copy of our earnings report along with the supporting statements and schedules on our website at noblecorp.com. This conference call will be accompanied by a slide presentation that you can also find located at the Investor Relations section of our website. Today's call will feature prepared remarks from our President and CEO, Robert Eifler. As well as our CFO, Richard Barker. Also joining on the call are Blake Denton, Senior Vice President of Marketing and contracts, and Joey Kawaja, Senior Vice President of Operations. During the course of this call, we may make certain forward-looking statement regarding various matters related to our business and companies that are not historical facts. Such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from these forward-looking statements and normal does not assume any obligation to update these statements. Also, note that we are referencing non-GAAP financial measures on the call today. You can find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and associated reconciliation in our earnings report issued yesterday and filed with the SEC. With that, I'll now turn the call over to Robert Eifler, President and CEO of Noble.

Thank you, Ian. Good morning. Welcome everyone. And thank you for joining us on the call today. I'll begin with some opening remarks on recent progress with our operations and contract awards, and then provide some broader market outlook commentary before turning the call over to Richard to review the financial results and outlook. After our prepared remarks will be happy to take your questions as always. Starting on Page 3 of our earnings slides, 2023 is off to a great start as we continue to make steady headway with our business integration and continue to find exciting opportunities for recontracting our fleet into an improving market. Q1 was our second full quarter as a combined company. And I would again like to take a moment to express my profound appreciation to all of our fantastic offshore crews and global shore-based team who have embraced this integration in place Noble on such solid footing at the outset of the exciting future ahead of our industry today. Richard will speak more to the financials, but our first quarter adjusted EBITDA of $138 million was in our view, a good start to the year and a building blocks for what we expect to be progressively improving earnings over the course of the year, as the contracted status of our fleet improves, and we continue to realize integration synergies. As an aside, we did encounter some additional slippage with the startup of the Globetrotter I's contract in Mexico, due to the permitting delays that we described on last quarter's call. Fortunately, we have resolved that permit issue in the Globetrotter I's contract with Petronas is now expected to commence within the next one to two weeks. So considering the subtraction of that contracts previously expected contribution during the month of March, which was…

Thank you, Robert and good morning or good afternoon all. In my remarks today I will go over some brief highlights of our first quarter results, our recently completed refinancing and then discuss the outlook for the rest of the year. Contract drilling services revenue for the first quarter totaled $575 million, down slightly from $586 million in the quarter. Adjusted EBITDA was $138 million in Q1, down from $157 million in Q4 2022. Diluted earnings per share was $0.74, and adjusted diluted EPS was $0.19. Capital expenditures for the first quarter was $63 million. As anticipated, the sequential decrease in revenue and EBITDA was driven by fewer operating days by jackup fleet, which was partially offset by increased day rate on our floaters. Our 13 market jackups was 67% contracted in the first quarter, compared to 85% in the fourth quarter. This decrease was driven primarily by the Noble Regina Allen, Noble Tom Prosser, and Noble Invincible, all of which were highly utilized during the fourth quarter of 2022, but we're off-contract for the majority of the first quarter of 2023. Our 16 marketed floaters were 91% used in the first quarter, similar to the fourth quarter, with average day rates across our floater fleet increasing by 9% sequentially to approximately $332,000 per day. With average embedded day rate and our floater backlog are above $400,000 per day, and leading edge rates still trending higher, we anticipate further repricing upside to support visible revenue and EBITDA expansion in the quarters ahead. The delayed start for the Noble Globetrotter I in Mexico did have a negative impact on the quarter versus our expectations. As summarized on Page 5 of the Earnings Presentation slides, our total backlog as of May 3 stood at $4.6 billion, up from $3.9 billion at the…

Thank you, Richard. With an expected upward progression of our quarterly EBITDA through 2023 and a viable path to $1 billion of annualized adjusted EBITDA in the fourth quarter of this year, the financial outlook for 2024 and beyond continues to remain extremely robust. We now have our refinancing in the rearview mirror and we'll look to return a significant majority of our free cash flow to shareholders going forward. You can expect us to continue to execute on our share repurchase repurchase program and to continuously evaluate if and when a dividend might be appropriate. I am so proud to be a part of this incredible company, to work with our exceptional colleagues, and to help bring the best of both legacy Noble and Maersk Drilling together to better serve our customers. As we continue on our journey to creating the leading offshore drilling company, we remain very encouraged by both the commercial pipeline of activity from our customers, as well as the structurally redefined supply side dynamics of our business, which is still in the early stages of emergence from a deep and protracted under investment cycle. With that, I'd like to turn the call back to the operator for questions.

[Operator Instructions] First question comes from a caller of Kurt Hallead with Benchmark.

Hey, good morning, everybody.

Hey, Kurt, how are you?

Good. Good. Thank you very much. So yeah, as you laid out the groundwork here for obviously continued improvements through throughout the year, you did tease the dynamic here that you could potentially have some additional contract announcements before the end of the year. I guess my question in that dynamic, are these additional contract announcements pushing up above the recent leading edge rates of, I guess we're in the 400k to 450k per range? And can you just give us some color around how you see that evolving? And you don't have to get into specifics. Obviously, you wouldn't on this call, but I'm just trying to gauge how you feel about the potential pricing of these these contracts coming up in the back half of the year?

Sure, yeah. I mean, we feel very comfortable with with where we've priced these. We're big believers in the market, and writing the market where it goes, not over the finish line. So I don't want to get ahead of ourselves. But our marketing group did an incredible job of making sure that we're looking around corners and pricing effectively. And so I'm quite comfortable that these will be well appreciated fixtures if and when they come through.

Got it. Thanks. Thanks for that. Appreciate that. So on the Meltem, would that be a possibility here before the end of the year to potentially have a contract for that as well?

It's basically where we've said before, as conservative an approach as we're taking. There's only -- for now only a couple of contracts really kind of per year, kind of one to three, I'd say per year that would qualify for our criteria. I mentioned last quarter that we could relax that criteria going forward. But we've said today that we're not planning to right now. So yes, it's a possibility. And we're - we think that work that -- excuse me that that rig ends up back in the marketplace. It's a highly capable rig and we're just trying to be patient and pick the right opportunity for it. So it's I don't want to put a percentage to it, but we are actively chasing opportunities, and we'll see what happens.

Okay, great. Appreciate that. Maybe if I just wrap up you referenced you're going to be returning cash to shareholders. So number of companies have kind of pegged a certain percentage of free cash flow that they were going to allocate. Have you given some consideration to a percentage of cash flow that you may return to the shareholders?

Yeah, Kurt. We haven't put a specific number on it. Obviously the refi that we got done here in April, was helpful to that. So we're now saying a significant majority. But we're not putting a specific number to it right now.

Okay, that's great. Appreciate the color. Thank you.

Thank you.

Our next question comes from Eddie Kim with Barclays.

Hi, good morning. Just a quick follow up on the Meltem. So you mentioned Petrobras might be setting some contract dates to commence late 2024 to induce some cold stack [ph] sitting on some of their tenders. Are you currently bidding the Meltem into work now? And ideally, how long of a contract would you be looking to secure to justify the reactivation of that rig?

Yeah, so I guess a few things there. One, the public results of the Petrobras tender would show that we're not in the current tenders with that rig. And we have our specific reasons for that. For one thing, I don't want to presuppose where we might end up bidding that rig or looking to put that rig into a maiden contract. It is a question of risk tolerance around some of the criteria that I've outlined previously, including termination rights and time to perform the shipyard work and reactivation work before liquidated damages or termination rights might kick in. So as we looked at the now public tenders, we didn't think that was the best fit for the Meltem. But that doesn't mean that it would be precluded from something there in the future by any means. Generally speaking, at current rates, two to three years is a timeframe that I think works quite well for an initial contract for that rig. Again, extremely important to us are the contract terms that sit around the financials.

Got it, understood. That all makes sense. Just my follow-up is, is on the prepared remarks that day rates are trending towards $500,000 a day, some of your peers highlighted the same earlier this week. Would you expect us to be at that level by the end of the year, or do you think that we'll see a contract signed that would bypass those. Does that get pushed out, kind of mid or late next year?

There's a couple things that need to fall into place, I think to see another step change up in rates. I have said and I still believe, very much believe that it's possible that we see it this year. Obviously not for work starting this year, but that we see the fixture. I think you'll see some oil in contract value rates that for sure meet that threshold. But in terms of just a flat and clean rate, there's a path I think we need for one thing Petrobras to execute on a lot of the contracts that they're out tendering for. And from there, as I said in the remarks, we see some tightness in 2024, that's very much conducive to some some some rate appreciation here.

Okay, great. Understood. Thank you. I'll turn it back.

Thanks Eddie.

Our final question comes from Fredrik Stene with Clarkson Securities.

Hey guys. Hope you are all well. Thank you for taking my question. So I wanted to touch a bit more about the projected or the guidance you gave her, Richard and how we can expect the years to develop and and potentially reaching a run rate EBITDA of $250 million by the end of the year -- or sorry, $1 billion by the end of the year, but I guess that's could be around $250 million for the quarter. When we look at the $138 million, adjusted you deliver today and then reaching $250 million by the end of this year, do you have any idea of how that slope will look through 2024 at this point. But I guess we're also expecting to see more work for your jackups and not only improved performance based on repricing floaters, kind of any color you can give on how you think your financials will continue to develop would be super helpful.

So yeah. So obviously, our guidance for 2023 is the same as what it was at the start of the year. So Q1 EBITDA, Adjusted EBITDA was $138 million. We see a path to that $1 billion of annualized EBITDA in Q4, which is $250 million. That's not guidance per se, but we can see a path towards that for sure. Our jackup fleet is not contributing much candidly to EBITDA this year. So we only see about 10% of our EBITDA. So as you think beyond 2023, I think there's significant upside or option value, if you will, or EBITDA upside that's not necessarily incorporated in the numbers this year. So I think that as we sit here today, we see a quarterly progression in EBITDA as we move through 2023. And I think we're very optimistic about 2024 as well.

Thank you. I also wanted to touch a bit on contracting strategy. And you don't need to disclose your actual strategies, but particularly with the SPF [ph] coming up for for a large part of the fleet. And what you said in your prepared remarks about some of these assets being repriced this year, there are some short term coverage on meaningful parts of the fleet. I guess, you can kind of look at this two ways that obviously there's utilization impacts of having short term contracts, but on the other hand, you are kind of helping the market by repricing that fleet a bit more often. So have you taken kind of -- you have any actual strategy in how you're managing this portfolio of your floaters [ph] in particular now or are you actively, holding out or chasing short term contract just because you want to reprice further? Or are you actually looking to limit the amount of short term work?

It's a good question, Fredrik, I'll take it and then fill in if I've missed something, but first of all, you mentioned SPS. That has no effect on our contracting strategy. It can create some friction in whitespace, just because they fall in between customers, which probably was your point, that it sometimes can and it hasn't in our case led to just a little bit of inefficient whitespace. But generally speaking that's just a function of offshore assets and your work with your customer to find the time in between wells to do it. And it's something that's discussed prior to signing contracts and known to everyone for a long time, et cetera. So while it does affect, maybe some some tactics or some efficiency, it doesn't really affect strategy per se. I think Noble's journey has been just very slightly different than others. Because we're very thankful to have the [indiscernible] and since that's a big component of our tier one drillships, and it reprices we haven't been -- I don't think we've felt as pressured over the past couple of years to take on longer term contracts. And that thankfully played, I think, to our benefit here, putting us to present. We have a large fleet. We have I think the largest Tier 1 fleet in the world, but certainly we have global scale with our EDW [ph] fleet. And from where we sit today and where we see pricing, despite the fact that we see pricing increasing, as I've said, there's room for a couple of long term contracts, I think in our fleet today. And it has some helpful implications. So we are by no means shying away from, from bidding on longer term contract, even though you may not have seen us win in some of those, in fact, I guess all of those that have been announced so far, we are participating in, by no means is it excluded from our strategy. I think a mix is helpful. And the last little bit of color I'd give is that in our sixth generation fleet, we're a little bit more likely, I think, there to seek out term than we would in the seventh generation fleet. If that answers your question.

And it was super helpful, super helpful. Final one for me, since no one else in the queue, at least when I started, just on the capital allocation framework. You're buying back shares, your new -- that congratulations, by the way, gives you more flexibility on shareholder paybacks. Are you kind of -- or which criteria need needs to be met for you to have a well defined policy in the sense that you're paying off a certain amount of net income or certain amount of cash flow, so that we get even more visibility than what we have today?

Yeah, it's a very good question. And something obviously that that we are very focused on. The refi was very important to us. It gives us it gives us better visibility around our capital structure, and just allows us to manage the business through cycle better. So obviously we were free cash flow negative in Q1. And we expect that to reverse here, obviously, into Q2 and then we expect to generate an attractive level of free cash flow for the entire year. So we're looking now to return a significant majority of our free cash flow to shareholders. We're not putting today a specific percentage to that, but I think it's fair to say that it's obviously going to be closer to 100% than 50% today.

That's very nice color. Thank you all for good answers.

Thank you.

We have no further questions at this time. I would like to now turn the call back over to Ian Macpherson.

Thank you everyone for dialing in and for your continued interest in Noble and we look forward to speaking with you again next quarter.

Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.