Good day, everyone, and welcome to Ensco's Third Quarter 2014 Earnings Conference Call. (Operator Instructions). Please note this event is being recorded. I would now like to turn the call over to Mr. Sean O'Neill, Vice President of Investor Relations, who will moderate the call. Please go ahead, sir.

Welcome everyone to Ensco's third quarter 2014 conference call. With me today are Carl Trowell, CEO; Mark Burns, our Chief Operating Officer; Jay Swent, CFO; David Hensel, our Senior Vice President of Marketing, as well as other members of our executive management team. We issued our earnings release which is available on our website at www.enscoplc.com. Any comments we make about expectations are forward-looking statements and are subject to risks and uncertainties. Many factors could cause actual results to differ materially. Please refer to our earnings release and SEC filings on our website that define forward-looking statements and list risk factors and other events that could impact future results. Also please note that the company undertakes no duty to update forward-looking statements. As a reminder we issued our most recent fleet status report on October 16th. Now let me turn the call over to Carl Trowell, CEO and President.

Thanks, Sean and good morning everyone. Since our last earnings call much has been said and written about the challenges facing the offshore market, especially as oil prices have declined over the past month. We'll give you our latest assessment of the deepwater and shallow water markets in a moment. But first I'd like to recap our major accomplishments and actions during the last quarter. Performance in the third quarter was very strong, including record revenue and record earnings before interest, tax and depreciation. Our results were better than the outlook we provided on our last call and out performance was driven by excellent operational execution with operational utilization of 99% for the jackup fleet and 94% for the floater fleet. The floater segment did well with several drillships achieving bonuses for outstanding operational performance. Our 8500 series rigs lead our floaters with uptime performance of 98%. This high level of achievement distinguishes Ensco and these rigs in the market and gives us a leg up when competing for new business. Our 8500 series rigs have a well-earned reputation as being among the most reliable floaters on the market, consistently recording operational utilization in the high-90% range. Our marketing teams also did an excellent job contracting our rigs, especially in light of current market conditions. Since our last call our 8500 Series semis were awarded three new contracts, the most important being a two-plus-year contract for Ensco 8503 with Stone Energy, one of our many repeat customers. Ensco 8503 has the distinction of drilling the deepest well ever drilled in the Gulf of Mexico. It will also become one of the most versatile Sixth Generation semis when we complete an upgrade to add mooring equipment, allowing the rig to serve customers in mid to ultra-deepwater. Customers view this as a…

Thanks, Carl. This morning I will present our outlook for the floater and jackup markets and recap some of our recent contract signings. Since our last earnings call we have added more than $1 billion to our revenue backlog. While commodity prices have pulled back in recent months we have not experienced a similar reduction in terms of customer demand. In fact jackup demand in general has remained fairly strong as evidenced by our setting a new record for contracted revenue backlog at more than $3 billion for our jackup fleet. We do however continue to see challenges for the floater market, including some rigs going idle recently in certain regions. New rigs coming into those markets compounded by a decline in tenders and inquiries have created a supply and demand imbalance. As we look at specific regions, the West African market continues to show increasing customer demand across several countries including Angola, Ghana and Nigeria. There are currently four open deepwater tenders for multi-year terms in West Africa and we have bid ultra-deepwater drillships and semi-submersibles into these opportunities. We see demand for our ENSCO 8500 series rigs in West Africa as more customers look for high spec semis that can drill in both moored and DP mode. On the jackup front we recently signed ENSCO 109 to a three-year contract with Chevron in Angola at $172,000 per day. The rig will mobilize from Singapore and is expected to commence its contract in early 2015. Angola is a new jackup market for Ensco and we see demand for additional jackups in West Africa for multi-year terms. Turning to the North Sea, with the exception of Norway, customer demand for jackups remains strong. Customers are looking to secure rigs in the region for work in 2015 and we expect customers…

Thanks, David. Today I'll start with highlights of our third-quarter financial results, our outlook for the fourth quarter, and then wrap up with a discussion of our financial position. As noted in our press release, earnings from continuing operations were $1.93 per share, reflecting the strength of our operational performance during the third quarter. Total revenue was $1.26 billion, a new record for Ensco, and above the outlook we gave on our last conference call. As Carl mentioned, excellent operational results coupled with performance bonuses for better uptime and more contracted rig days than expected, led to our revenue outperformance for the quarter. Floater segment revenue increased 7% to $745 million versus prior year, due to the addition of ENSCO DS-7 to the active fleet. Reported floater utilization increased to 83% from 81% a year ago with the addition of DS-7, and the return of two rigs that completed shipyard upgrade projects. For the floater segment, operational utilization, which adjusts for planned events like surveys and upgrades, as well as un-contracted time, was 94%. Good performance that equaled last year. Jackup segment revenue jumped 12% from last year to $499 million, a new record, due to ENSCO 120 and ENSCO 121 commencing operations and higher day rates for several rigs. These factors also increased the average day rate for our jackups by 9% to $137,000 per day. Reported utilization for the jackup fleet increased to 91% from 89% last quarter as more jackups went back to work following planned surveys and upgrades. Operational utilization for our jackups was 99%, our third consecutive quarter at this impressive level. Total contract drilling expense was $531 million, an improvement from $534 million a year ago and also better than the outlook from our last earnings call. As detailed in our press release, certain…

Thanks, Jay. And now, Operator, please open up the line for questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions). At this time we'll pause momentarily to assemble our roster. Our first question is from James West of ISI Group. Please go ahead. James West - International Strategy & Investment Group LLC: Hey, good morning guys. Congratulations on a solid, well executed third quarter. Maybe first question for Jay. You just wrapped up on the solid liquidity you have, the great state of your balance sheet. You've got a buyback authorization out there, but it seems to me you haven't been active. What's the rationale behind not being active? And do you plan to, as we did through your CapEx cycle here, be more active in buybacks?

James I'll take that, its Carl here. So certainly with the debt rate that we've done we've increased our capital flexibility. And it's important for me probably for me to say that the principal driver for us to do that, where we felt it was a prudent timing for us to raise additional capital given the future commitments that we have for the newbuild stage payments on the currently contracted newbuild vessels, a debt retirement that we've got at the beginning of 2016, and also the $700 million commitment we've got towards returning capital to shareholders currently through the dividend. So it doesn't signal a major change in capital strategy. And of course the capital strategy that we have is subject to Board approval. And so we principally -- we haven't changed capital strategy here during this quarter and accordingly haven't bought shares in a buyback. And we will of course be looking at that and that it is something we will address with the Board each quarter going forward. So, no change as of present, but it is something we will keep looking at. James West - International Strategy & Investment Group LLC: Okay, thanks Carl. And just one unrelated follow up for me. The ONGC ongoing tender -- I believe you mentioned that 12 jackups could be taken out of the market. When that is expect to be awarded?

This is David Hensel. It's an ongoing process, a bit more protracted than we expected. Some of those, a good number of those, are for incumbent rigs or against incumbent rigs. I would expect over the coming quarter that will get awarded. James West - International Strategy & Investment Group LLC: Okay, perfect. Thanks, David. Thanks, guys.

Our next question is from Ian MacPherson of Simmons. Please go ahead. Ian Macpherson - Simmons & Company : Thank you. Carl, when we were speaking one quarter ago, the outlook entailed improving demand elasticity for deepwater, especially with the independents such as Stone, who took 8503 with lower day rates. But now we've got a 20% correction in crude, which militates against that. So marking to market your demand barometer today with lower day rates, but also this crude correction, how do you see the outlook for the Gulf of Mexico really for deepwater and for jackups in 2015, if what we see is what we get with crude prices?

Okay. Look, if you don't mind, I'll just step and make, use the opportunity to make a bit broader market comment. And then maybe we can come down to the Gulf of Mexico specifically. Ian Macpherson - Simmons & Company: Okay

We could talk forever today on the market implications of the drop in crude, which is the big change since we last reported. I think what's fair to say, and important to say, is that, as of yet during the quarter in Q3, we've not seen any of response or material movement from our clients to the oil price moves. But neither would we expect to. Because it's not just an instant reaction. In fact, during the quarter, we actually saw market tenders and inquiries go up over Q2. That admittedly is coming off a low base, but at least it was a slightly positive sign during the quarter. Combined with the fact we saw what is probably best to describe as a bit of a logjam in tender awards that have been building over Q1, Q2, and Q3 start to unblock a little bit, and you will have seen that in Hess Stampede award, our awards and renewals in Saudi Aramco, and various other things. I think that, that logjam is going to unblock a little more as we go through Q4, Q1 as well. So we are seeing a little bit of soak up of some of the capacity that we were all anticipating, but just wasn't happening because it was getting stalled out a bit. The other thing that we've seen and anticipate, as we said in the prepared statements, is that we're not seeing customers cancel contracts. We're seeing more projects, but defer them somewhat. So there is no instantaneous reaction to the oil price drop. And the other element of this is that, at this time of the year, we would usually expect to have a pretty early indication of what our customer spending for the next year would be. But the oil price drop…

That's correct. Obviously -- and we haven't done the full detailed budget on that -- but that's really based on $400 million of newbuild CapEx and some amount of sustaining CapEx on top of that. Ian Macpherson - Simmons & Company: Got it. Thanks. Congrats on the quarter.

Thanks, Ian.

Our next question is from Jud Bailey of Wells Fargo. Please go ahead.

Thanks; good morning. Question either for Jay or for Carl on thinking about your operating costs over the next 12 months or so, or even in 2016. With the market environment weak, you guys are obviously -- you've been aggressive in stacking and trying to get your costs down in that way. Are there any other levers that you can pull on the operating cost front to help improve your operating cost even more? I imagine the labor market is still fairly firm, so I just wanted to get your perspective if there's anything you can do further to maybe help lower the cost structure for next year?

Sorry -- Jay, I'll take it first and then I'll hand it off to you, okay?

Okay.

So the first one is, we definitely saw during this quarter the results of some of the initiatives that we took during Q2. And I think they will continue through and we'll see the effect going forward of some of those. There are further levers we can pull, but what I would guide you to look at is, remember that some of that is going to be -- you're not necessarily going to see that just in a quarter-on-quarter drop in contract drilling expense. Because we're also going to have the addition of new rigs coming in both from the newbuilds coming into them, back into the fleet; but also the rigs that have been undergoing major upgrades during 2013 and 2014 reentering the active fleet. And it's not necessarily going to be linear. But we do have opportunities to address some of the cost base. Now the obviously big one is, offshore labor cost, which we're going to have to balance very carefully versus a competitive market. Jay, do you want to add anything?

I think Jud, the only other thing I would add for you is, we're obviously were right in the throes of the budget process and we will intend to give a lot more guidance on the next call as to how we see 2015. Might not have a lot to say about 2016. And I would just amplify what Carl said. I mean, we've got levers we can pull, but as you say, we have practical realities of a strong labor markets and still rigs actually continuing to come into the Gulf. So we have to recognize that as well.

It's fair to add that, Jud, it's just fair to add as we described in the last quarter, and I think as you've seen this quarter, the cost management is something we're going to be very strongly focused on.

Okay; thank you for that. And my follow-up is just on broadly on the jackup market. You guys are, I think you're pretty unique position because you've got the widespread very geographically diverse jackup market across a number of different asset classes. And I'd just be curious, as you have discussions with your customers for next year -- Carl, you noted how different each market can be. I'd be curious, are you sensing any differences, whether it be demand or just inquiries across the different markets you operate in -- has anything jumped out at you in terms of any trends that may be different between maybe the North-Sea or Southeast Asia or Mexico or any other markets?

Yes, definitely. And it's probably a longer conversation than we've got time for today. But let's go through it simply. We -- and David actually alluded to a lot of this in his prepared statements -- but we see some key markets that we still think are going to be robust and growing in the future. I'd pick out the Middle East, Asia area as one of those. The North-Sea in the areas we complete still remains robust. The Mexico is going to grow in all areas over the next few years on jackups initially, then leading to floaters as the energy reforms kick in and we actually see the licensing rounds happening. And you'll probably see a renewal of the fleet in places like Mexico moving. There has been a lot of very old rigs there and I think there will be a move toward newer rigs, which is also one of the reasons we took the decision we did on the lease buyback -- sorry, the sale and leaseback decision on the four rigs in Mexico that we took this quarter. The Gulf of Mexico still remains a big question mark with a lot of uncertainty over what will happen. It was weak during the hurricane season and we were expecting to see it pick up probably stronger than it did post-hurricane. We haven't been able to find some fixtures there, but I think that, that is potentially a weak market going forward and probably a little bit more spotty then we would've thought three, four months ago. And Asia Pacific is clearly going to be the one where the new rigs arrive first and are bid first. So I think that's going to be competitive although the actual demand there is still pretty strong. But we've taken the opportunity to actually reallocate a rig out of Asia Pacific into MEA and we will maybe look to do that if we see the opportunities again. So we'd be able to adjust our fleet to where we think the best long-term contracts are.

Great, I appreciate it. I'll turn it back, thanks.

Our next question is from David Smith of Heikkenen Energy Advisors. Please go ahead.

Good morning, thank you, and congratulations on the quarter. I have a couple quick questions just regarding the stacking of DP drillships. Could you talk about the differences in cold stacking a DP drillship compared to an older semi? Particularly any differences in costs, as well as the potential effort in cost of reactivation?

Probably Mark's best placed to answer this one.

Yes. This is Mark Burns. Very different Marine units, a DP drillship and a DP semi. Obviously, a DP drillship has more marine equipment on board the rig. It's very technical equipment, not unlike a DP semi. However, just the greater amount of equipment will add complexity. I think you have to have a long-term plan. Obviously, we have not reached a time in the market where we see this happening, so we're going to continue to watch that. But there is a there is a difference in complexity between both units.

I think probably a simple answer on this one is, that as Mark said, because the equipment differences, there's a bit more complexity as you actually go through the process. Actually finding places where they can be moored alongside, quayside becomes a little more difficult. But once the process has been done, there's not much difference in the ongoing cost if they're fully cold stack. And the process of bringing them back on is not materially different.

Okay; so for the DS-2, for example, probably going to the Canary Islands. Just thinking about the average cost, OpEx, for that going forward? And your thoughts on how long until that may or may not come back to market?

So on the cost, I think, if you went into it, I wouldn't assume it was drastically different from a stacking point of view, either end high-end semis. And on how long it's likely to be stacked, I think this is something I'd prefer to discuss another quarter or so out, when we get a feeling on where the market, oil price stabilizes and we understand the budgets. I think we are certainly going to assume that it will remain stacked during 2015.

Appreciate it. Thanks for your time.

Our next question is from Tom Curran of FBR Capital Markets. Please go ahead.

Good morning, guys. Carl or Jay, I wanted to turn to the M&A landscape. How would you characterize the opportunities that are out there right now? How they've evolved, let's say, over the last three months from individual asset purchase opportunities all the way through possible corporate acquisitions? What are you seeing out there? And then, how would you describe your own appetite at this point?

Okay. So, firstly, the current market conditions, as we go through this cycle, are going to throw up opportunities for both asset and company acquisitions. And the landscape that we're in today, I don't think, and the structure we're in is not how we will be in, say, three years' time. We're alive to that. Today we don't see a compelling option on the table. Of course the material thing that's happened in the last quarter has been the drop in oil price. And accordingly share prices have come down with it. I think you'll have to see some of the marketplace get comfortable with the new share prices before you'll start to see much activity here. And there is nothing material to turn around and say that anything has changed in the sense that there are more opportunities on the table or something material has come around. I think you will see things going forward. Now, as far as we're concerned, and we've stated before, if you look at the assets that are out there available under a -- been currently built, particularly by speculators, a lot of this, these rigs do not look attractive to us. The majority of them don't because of the nature of the specifications and quality under which they've been built. And certainly the quality control. There are a handful of assets out there which probably would fit our portfolio and we'll watch those very carefully. But nothing material that we're looking at the moment.

Okay.

Go ahead, sorry.

Well, I was just going to ask, to the extent that just on an asset model and specs basis, you would consider something? And this might be a better question for Mark. While adhering to your longtime emphasis on standardization, and that's obviously bared a lot of fruit for you, so it's understandable, while trying to adhere to those limits of standardization, which specific designs, both for jackups and floaters, do you find the most attractive?

Yes, Tom, that's a very complex question that we probably can't get into right now. I just will say that our focus on standardization continues to pay dividends for the Company.

Okay. Thanks, guys; I'll get back in the queue

As we go forward we would be really looking very carefully at not a particular single design. It's -- they're a suite of asset class that we think is going to be, have a strong position in the market and differentiation for the Company going forward. Now, the backdrop of course against all of this, we still have seven new rigs to be delivered between now and the end of 2016. So we have a really good fleet high-grading and refresh ongoing anyway, which means that we're not compelled to do anything particular, which is a nice position to be in, which means we can sit and be really critical about what might come along.

Understood. Appreciate the additional color, Carl.

Thank you.

Our next question is from Praveen Narra of Raymond James. Please go ahead. Praveen Narra - Raymond James & Company: Hey guys, good morning. I had a quick question. With water day rates coming down, it's been pretty clear just given the weakness, but I'd guess that operators are also getting a little bit more stringent on other terms and language of the contract. So if you could give us a sense of how contract language has changed outside of day rates during this weakness in the cycle?

I'll make the first comment and then I'll maybe hand over to David. The principal thing that's happening is day rate and term duration; I think they're the two important things that are happening in the cycle. And the pressure on some of the other core terms and conditions is not great. We're still seeing mostly the core Ts and Cs being on hold. So just to reiterate that point, the major effect we're seeing is day rate and term duration, which is shortening. David, do you want to add anything?

I think you've hit the nail on the head, Carl. The other comment that I would add are, there are some terms and conditions where we or the operators have more flexibility when you look at a shorter-term contract versus a longer-term contract. So overall, no, the Ts & Cs, the terms and conditions that we are contracting under are not substantively different. Praveen Narra - Raymond James & Company: Okay, perfect. Most of my other questions have been answered. Thanks and congratulations on the strong quarter.

Thank you.

Thank you.

Our next question is from Rob MacKenzie of Iberia Capital. Please go ahead.

Thank you. Most of my questions have been answered. But I was trying to see if I could get some help understanding how an $8 million gain gets translated to $0.06 per share?

Yes, Rob there's a reason why you're confused about that, which is that there's a gain on the sale, but there was also a tax benefit which you normally wouldn't expect on a transaction like that. So there was a gain, which should've generated a tax charge that actually generated a tax benefit the way that, that transaction worked out.

Okay and how much was that, Carl?

Well the total, as said, the net gain of $0.06 that we showed in the press release, includes the tax benefit, as well as the gain on sale.

Okay. That's great; thank you very much.

You're welcome.

Our next question is from Gregory Lewis of Credit Suisse. Please go ahead.

Yes. Thank you and good morning, guys. I realize the call has been running a little bit long, so I just had a general question. So earlier this week BP stated that they're delaying Mad Dog II in hopes that they can get lower drilling day rates. Is this something where they -- I guess my question is, have they actively been seeking a rig and this is what they've figured out? Or are they just kind of looking at headlines and extrapolating that they think day rates are going lower?

I may be wrong here, but I think the spin you put on that is a little bit different to what actually what BP said. BP had been reconsidering Mad Dog Phase II for quite a while. And they've been doing a major reappraisal of the whole way the development plan. So it's not that they had a plan and they were waiting and waiting and waiting, holding out. It's been part of a bigger program, a very strategic program BP to look at this development. And now as a consequence they are getting ready, I believe, for approval and what's added to that, of course, is that they can come out and contract in the current marketing and get good rig rates. And now so I think that's the way to view that one. There has been commentary on it being taking an additional rig. I think that may happen; you may also see BP use one of the current rigs they've got on contract to do that. So I think you have to be careful about some of the commentary that's been put on that. Now as a general statement, what you've seen BP do here is actually indicative of a trend that's going on more broadly. We've seen TOTAL do it in Block 32 in Angola. You've seen some of the developments in the North-Sea, which were challenged under economic returns, under their original proposed development plans. And a lot of the major IOCs have gone back and have been reworking development strategies, standardizing, reappraising tie-back versus FPSO, et cetera. And as a consequence, several of these are now coming back to the table with more refined development plans, at lower cost per barrel development costs. And at the same time they're able to reap the benefit of the current market rates on rigs, so that makes them even more attractive. So I think what you will see is a series of announcements as we go forward over the next year or two of these developments that were deferred coming back around again. And that's possible even at the current oil price, assuming it doesn't take a bigger nosedive.

Okay thank you for that, Carl. That was actually very helpful. Have a good day.

Thank you

This concludes our question-and-answer session. I'd like to turn the conference back over to Mr. O'Neill for any closing remarks.

Just want to say thank you, everyone, for participating on our call today. We greatly appreciate your interest in Ensco. And have a fun and safe Halloween tomorrow. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.