Good morning and welcome to the Seadrill Limited Quarter Two 2019 Earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to Ms. Emma Li, Head of Investor Relations. Please go ahead.

Thank you and welcome to Seadrill Limited Q2 2019 quarterly conference call. Before we get started, I’d like to remind everyone that much of the discussion today will not be based on historical facts but rather consist of forward-looking statements that are subject to uncertainty. Included on Page 2 of the presentation is a comprehensive list covering forward-looking statements. For additional information and to view our SEC filings, please visit our website at www.seadrill.com. Moving onto the agenda, with us in the room today are Anton Dibowitz, our CEO; Stuart Jackson, our CFO; Matt Lyne, our Chief Commercial Officer, and Leif Nelson, our Chief Operating Officer. In our prepared remarks, you’ll hear from Anton and Stuart. Anton will cover all the highlights for the quarter and provide you with all of our views on the market, and Stuart will then provide a review of the financial performance of the quarter and then we’ll open up the lines so you can take some questions from the entire team. With that, I’d like to turn the call over to Anton.

Thanks Emma, and welcome everyone to our second quarter 2019 earnings call. Before I begin, I’d like to take the opportunity to welcome our CFO, Stuart Jackson to his first quarter call on the Seadrill team. Stuart brought with him deep experience with listed companies in the offshore and oilfield services space, and we are extremely pleased to have him on board. He’s quickly come up to speed in our business. Welcome to the team, Stuart.

Thank you.

To start, I’d like to reiterate some key messages that you’ve heard from me in the past. While the market is resenting some challenges, I believe that the fundamentals of our business remain unwavering; in particular, the offshore [indiscernible] to meet market demand. Oil prices remain well within the zone where offshore projects are profitable, and we expect this to translate into increasing amounts of capital being deployed into offshore exploration and development. While this is not yet a healthy market, day rates in all segments are recovering and we continue to see the leading indicators pointing in the right direction. Today, our industry and the broader macro market are dealing with setback similar to what we faced in the fourth quarter of last year. As always, we remain focused on managing the factors that we control and being as prepared as we can for the factors that we don’t. You’ve seen us reduce our senior secured notes with a tender offer and we continue to be focused on taking out the rest of this funding that was put in place as part of our restructuring. We have already taken a considerable amount of cost out of our business and we remain laser focused on continuing our work to run our business as efficiently as possible. We have been and will continue to be disciplined in our contracting strategy. We will not add supply to the market unless day rates justify doing so. Finally, operations and safety underpin our license to operate. Excellent operations is in our DNA and we’re committed to providing the best service for our customers and the safest environment for our people. In this regard, we continue to build on our proprietary Plato performance management system, which uses a combination of machine learning and AI driven…

Thank you Anton. I shall run through the financial highlights for the quarter, just highlighting some of the major movements, and then at the end look at the guidance for quarter three. Moving to Slide No. 8 in terms of the revenue and EBITDA bridge, from an operations perspective we had 35 rigs, of which 17 were working at the quarter end. Eight of those are floaters and nine jack-ups, with an economic utilization through the quarter of 96%. From the contract revenue perspective, it’s broadly flat quarter on quarter. We have had some idle time between contracts but that’s been offset by high day rates on the Gemini, Phoenix, Hercules, and the Telesto. At a total revenue operating level, we are $19 million ahead of where we were in quarter one. This is as a consequence of the increase in reimbursable revenues, which is driven by the delivery and operations preparations for Northern Drilling and Sonangol. There is a corresponding reimbursement expense, so there’s a negative impact in terms of our overall margin at the EBITDA level. Then to EBITDA, we have had idle time so we’ve had lower costs as a consequence of that in our operating expenses, and we’ve had lower costs on our spec units as they’ve moved locations. That’s offset the overdue receivable we had in Q1, which has obviously not repeated in Q2. In total terms from an EBITDA perspective for the quarter, we’re at $69 million, which is ahead of the $55 million guidance that was provided three months ago, and that’s primarily due to timing difference on maintenance activities. Moving then to the income statement and the items below EBITDA, there are lots of moving parts here so I’ll just highlight some of the major movements. In terms of operating loss, we’re…

[Operator instructions] Our first question comes from Lucas Daul from ABG. Please go ahead.

Thank you. Good afternoon gentlemen. I was wondering if we go through your drill ships, you’ve got five drill ships rolling off contract in Q4 or in the end of Q3. Could you talk a little bit about the roll-over opportunities for those, each one in particular?

Sure, I’ll let Matt start with that and maybe I’ll cover off at the end if there’s anything I need to--.

Sure, hi Lucas. I’ll avoid talking about specific opportunities given the competitive nature of the market, but when you look at from a general perspective, if we take the Golden Triangle, we see an increase in demand when compared to 2018, and although the pace is different for each specific area, I think we feel comfortable that enough opportunities will materialize where you can expect those assets will remain in their current markets after taking a break to complete various SPS and maintenance and upgrades. With respect to Asia, we also see a number of interesting opportunities that are attractive both in term and commencement period, so when looking at the West Carina, a large number of those opportunities require NPD and she’s outfitted with our third generation operation system, so we feel quite comfortable about her prospects in Asia.

If I just take it up a level, Lucas, what I will say is we’ve been very purposeful in not making long term commitments on our prime assets at the bottom of the market. Obviously one aspect or one consequence of that is we also need to roll those rigs as they move--as they roll off their contracts. But given the performance that we’ve delivered for customers and the attractiveness of our assets, I think we feel comfortable rolling our available assets.

Okay, that’s good color.

And I’d certainly rather being doing this today than six months ago or a year ago.

Sure. You talk about competitive spot market, but obviously we have seen pricing come up to, I would say, more attractive levels for long term work. But we haven’t seen that much long term fixtures with a future date commencement, so I was wondering in the tender pipeline that you are dealing with on a daily basis, do you see any change or any sort of delta in terms of more term work starting in 2021 arriving on the table?

Matt, do you want to start?

I think there’s a few opportunities that have longer term developments. I think Equinor has something down in Brazil where they’re looking at start-ups past 2020. West Africa also has a few that exist in Nigeria. They’re still in the tender process, so it’s a little bit hard to kind of put your finger on where you think the day rate is going to marry up. But I do think we’re comfortable that there’s a marked improvement when you look at the 2018 bidding behaviors compared to what we’re seeing in 2019 for fixtures or commencements in 2020, and particularly into 2021, and the trend supports that.

Lucas, long term contracts are probably the most difficult for us to price, for drillers to price and to come to an agreement with operators in this market to make a long term forward commitment. I think there has been a function of the market where generally the number of five-plus term fixtures has decreased from where it was at the top of the last cycle, and given where we are in the cycle, where rates are increasing, where the forward curve is increasing, we’re comfortable with that. What we’d like to see is--you know, obviously you don’t want to be chopping and changing contracts all the time, but a year, 18 months, two year fixtures at this point into a rising market is a comfortable market for us to be in and to be able to have a productive discussion with our customers where we can actually achieve a mutually agreeable price.

Okay. I was mainly wondering if you see any sort of improvement going forward, or whether there was a risk that we stick in this spot nature environment for a few more years, which basically puts a lot of pressure on utilization and eventually the cash you’re able to generate.

I think there’s going to be--I think the contracts are going to be more fit for purpose. The fact that they’re more short term fixtures today, and I think they will be until we’re at a different point in the cycle, when there was a complete absence of supply and rigs were very tight, the discussion was if you want to take a rig for your exploration program, I need at least three years or five years - that’s a function of the top of the market. What I think you’ll see going forward is more tailored contracts based on what the operator is doing, shorter term contracts for exploration work or remedial work and longer term contracts and surety for those long term developments. I think having a mix of those is good for all of us. What you do see is more exploration work happening than was happening six months ago or a year ago, and the advent of exploration actually coming back into the market is another good sign for us, for the market, because exploration today leads to development tomorrow.

Okay. On a different note, could you just briefly update us on the status of the Sonangol drill ships, the drill ships in the JV, where they are and what is happening with them?

Well as I mentioned in my prepared remarks, we’ve taken delivery of both of the Sonangol drill ships. One is currently being prepared in [indiscernible] Bay, the other one’s in Singapore, so that was good progress on the JV. The JV is progressing as planned. I think our initial comments last quarter were that we were confident based on the strength of that market and the visible demand that we would have four--those initial four rigs fixed on contracts between now and the middle of next year. We are in advance discussions on at least the first two, and I think we’re pleased with the progress on the JV and will meet those timelines, or at least meet those timelines.

Okay, that’s good. Thank you very much.

Again if you have a question, please press star then one. Our next question comes from Constantine Chenerov [ph] from Acure [ph] Capital. Please go ahead.

Hi guys. Thanks very much for taking my questions. I’ve got two questions, if I may. The first one is about Seabras. You’ve got two POC contracts there that are expiring this year, so one is Diamante that I think is expiring in June ’19, or expired in June ’19, and then Topasio [ph] is expiring in September ’19. If you could provide any comments on your plans for those assets, do you seek an opportunity to re-contract them with Petrobras or someone else, or what’s your plan on that? Secondly, it was widely reported in the press that the creditors at Seadrill Partners level are organizing, so if you could comment to the extent you can on your plans for that asset and for the process. Thank you.

Sure, let’s take the Seabras one first. Seabras is a great business. We see significant value in it. The Brazil market was probably the first to fall back during the cycle, but with the advent of the IOCs coming in, we see a recovery there. I think it’s important to note in the Seabras business that essentially although the [indiscernible] cross-sold all the vessels in that fleet, when they roll of their contracts they’re essentially debt-free. We do see further opportunity, and the Seabras JV sees further opportunities, but these are attractive high specification units and we’ll just have to see how that process plays out. As far as SDLP, Seadrill Partners, I think this a tail of two sides of the coin. On the asset side, SDLP has some great assets. We’ve been managing them for a number of years. It’s an integral part of the Seadrill brand of our global presence, great customer relationships, but of course on the other side there is a liability issue that needs to be handled there. We know that we’re focused on it, and we’ll just have to see that play out.

Thanks.

Again if you have a question, please press star then one. This concludes our question and answer session. I would now like to turn the conference back over to Ms. Emma Li for any closing remarks.

Thank you Nancy, and thanks everyone for joining us today. This concludes our second quarter conference call.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect and enjoy the rest of your day.