Good day, everyone, and welcome to Ensco Plc's Second Quarter 2018 Financial Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I now turn the call over to Nick Georgas, Director of Investor Relations, who will moderate the call. Please go ahead, sir.

Welcome, everyone, to Ensco's Second Quarter 2018 Conference Call. With me today are Carl Trowell, CEO; Carey Lowe, our Chief Operating Officer; Jon Baksht, CFO; as well as other members of our executive management team. We issued our earnings release which is available on our website at 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 from our expectations. 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. During this call, we will refer to GAAP and non-GAAP financial measures. Please see the earnings release on our website for additional information. As a reminder, we issued our most recent Fleet Status Report on July 19. An updated investor presentation is also available on our website. Now, let me turn the call over to Carl Trowell, CEO and President.

Thanks, Nick, and good morning, everyone. I'll start today's call by briefly commenting on our second quarter results before providing an update on the integration of the Atwood acquisition, our fleet restructuring, and an overview of current market conditions. Carey will then discuss our recent contract awards and Jon will conclude with an overview of our financial results and outlook. In terms of second quarter results, strong operational performance led to revenues that exceeded our prior conference call guidance by approximately $15 million. These results benefited from a higher number of operating days for several rigs and 98% operational utilization as we continue to successfully convert nearly all of our contracted backlog into revenue. We also demonstrated disciplined cost management with contract drilling and G&A expenses in line with the prior guidance despite higher than anticipated levels of utilization across the rig fleet. Along with these positive financial and operating results, we made significant progress on our integration of the Atwood acquisition that closed in fourth quarter 2017. We have now substantially completed integration efforts and finalized our expected synergies from the transaction which now total $85 million on an annual run rate basis. Our integration success and the achievement of higher than anticipated synergies is a credit to the planning and execution of our offshore and onshore personnel. With respect to our ongoing fleet restructuring, we remain focused on positioning our fleet to capitalize on higher levels of future customer demand. Customers continue to demonstrate a clear preference for high specification rigs that can deliver increased efficiencies for their well programs and we expect that this will remain the case for both floaters and jackups. In recognition of these market dynamics, we added several high specification assets to our fleet over the past few years through the acquisition of…

Thank you, Carl. Let me start by acknowledging our offshore crews and onshore employees on another quarter of strong operational and safety performance. Their efforts have allowed us to maintain near-perfect levels of operational utilization for the past two years while also increasing the efficiency of the services we provide to our customers. Additionally, our year-to-date total recordable incident rate of 0.24 is significantly better than the industry average and reflects our focus on operating safely each day. By consistently achieving these high levels of performance, we help to differentiate ENSCO from the competition as we market our rigs for new contracts. In terms of our recent contracting success, beginning in the Gulf of Mexico, ENSCO 8503 secured a 100-day contract with a repeat customer that is scheduled to start in September 2018. Also in the Gulf, jackups ENSCO 75 and 87 were awarded multiple short-term contracts and we now have limited 2018 availability for our four jackups in the region. As a result of our recent contracting success, we expect all of our jackups to work through hurricane season, a positive sign in a market where rigs generally experience sizable gaps in utilization at this time of year. While the Gulf of Mexico has seen mostly well to well opportunities over the past few years, operators have begun inquiring about longer term requirements on the Mexican side of the Gulf that we expect will lead to new contract awards. Moving south, ENSCO DS-12 received a 45-day extension of its current contract for operations offshore Suriname. And following a standby period, the rig is expected to work into late September. DS-12 is one of the highest specification drillships in the global fleet and we believe that its technical capabilities and warm status make it attractive to customers as they evaluate…

Thanks, Carey. Today, I'll cover second quarter 2018 financial results, our outlook for the third quarter, and capital expenditures, and a summary of our financial position. As was the case on our last conference call, my commentary on the past quarter's financial results will focus on the comparisons to the prior sequential quarter. A detailed comparison to the year-ago period can be found in the earnings press release posted to our website and our Form 10-Q filed earlier this morning. We reported loss from continuing operations of $142 million or $0.33 per share in second quarter 2018, compared to a loss from continuing operations of $140 million or $0.32 per share in first quarter 2018. Total second quarter revenue was $459 million versus $417 million in the prior quarter, an increase of 10% on a sequential quarter basis and better than our prior conference call guidance by approximately $15 million. In the Floater segment revenue increased to $285 million from $259 million in the first quarter due to a nine percentage point increase in utilization to 52%, which more than offset a decline in the average day rate to $238,000 from $263,000 in the prior quarter. The sequential decline in average day rate was primarily due to the completion of ENSCO DS-6's contract during the first quarter. Operational utilization for the Floater segment which adjusts for uncontracted days and planned downtime was 98% compared with 99% in the first quarter. In the Jackup segment revenue was $159 million compared to $143 million in the prior quarter as reported utilization improved for the second consecutive quarter to 66% from 61% and the average day rate increased to $78,000 from $74,000. The sequential increase in average day rate is due to ENSCO 109 which returned to an operating day rate during second…

Thanks, Jon. Keith, at this time please open the line for questions.

And today's first question comes from Ian MacPherson with Simmons, Piper Jaffray. Ian Macpherson - Simmons & Company International: Hi, thanks. Carl, I think you mentioned in the prepared remarks that you might consider selective reactivations. And I'm curious to hear more about that. It strikes me as a little early given the availability across the fleet but maybe there's some specific rig types that maybe look tighter than what we see if you could describe that for us?

Yeah. Good morning, Ian. No, thanks for asking that question because that's not actually what was intended in the message if that's what was taken away. So it's a good chance to clarify it. I think what you should read is actually at this point we don't have any major plans to reactivate rigs. I think what we were trying to say is that even as we see certain market areas beginning to tighten a little bit we're actually going to hold off a little bit and be more balanced towards holding market rigs back, mindful of what that can do to a pricing recovery. So I think very clearly if you look at the rigs that we have stacked – preservation stacked from our floater fleet, so if I take DS-3, DS-5 the 8500s we have stacked in the U.S. Gulf, I don't see at this point us bringing any of those rigs back until we see utilization and pricing beginning to move in the relative rig classes. In the floater fleet, again we're more inclined to hold back on reactivation unless we see really good contracts. Although if you look at our stacked fleet the ones we will be most likely to bring back earlier are some of the stacked out, the preservation stacked jackups particularly those we acquired from the Atwood acquisition. But actually what we're indicating is somewhat the opposite of what you asked us about. So we're actually more inclined to hold back at this stage. Ian Macpherson - Simmons & Company International: Good. Thanks for straightening me out on that. Sorry for the confusion. The cost synergy capture on Atwood is tracking great. But there has been minimal contracting on those rigs since you bought the company. So how do you see that unfolding over the next several quarters, do you think that we are likely to see more progress with regard getting the prior Atwood rigs out and working both on the Jackup and the Floater side?

Yes. I think, over the next 6 to 12 months as we said earlier, both this time and in the prepared remarks and last time, we have seen some projects push out into 2019. They're still there and actually 2019 is looking a bit stronger than we first thought. Now we see some of the tenders coming out. The reality is that some of those things that we thought might start the end of 2018 were opportunities for the rigs that you outlined. But that said I would just kind of draw your attention to the fact that although we would clearly like to see some of those Atwood assets go back to work soon, our primary reason for doing the acquisition was to gain some world-class rigs at bottom of cycle pricing and position ourselves for the future. Especially given that we removed 10 floaters from our fleet and 10 jackups from our fleet from the beginning of the downturn. So that was the primary driver for the acquisition. And I think from that perspective, we feel very good about the acquisition given the gradually improving market conditions that we see. If I can maybe use this to give a bit more of an indication, if you take the Awtood drillships and as an example we now currently see 20 open tenders for that specification rig, so the kind of top 30 rigs in the world with over 15 rig years or close to 15 rig years of contracts out or about to come out. We also – as we alluded to in our comments, we also see – we also have several ongoing conversations, direct negotiations that are not tendered for that type of contract. So I think without putting a particular quarter on it, I think as we go through the next 12 months or so, we would be expecting to see those rigs be going back to work. Now, again referring to what I said in the pre-prepared comments, we're not rushing to lock rigs away at low current spot day rates on long-term contracts. So we are a little bit balanced about what type of contract we will pursue at this point at what pricing because we do want to preserve our upside to the market recovery. So it's a little bit nuanced, and it means that we won't chase aggressively every single contract that's out there, depending on its term and what we think the pricing is going to be. And then the last point is we are – the fact that we haven't put the – with the exception of the ENSCO 115, which is we've announced and now got a contract for most of next year, we are holding back the Atwood jackups deliberately at this stage. Ian Macpherson - Simmons & Company International: Okay. Great color. Thanks, Carl.

Thanks, Ian.

Thank you. And the next question comes from Jim Wicklund with Credit Suisse.

Hey. Thanks, guys. It's actually Rodney (00:30:20) on for Jim. The first one I had was on the full year revenue guidance you guys gave back on the Q4 call of I think it was 1.72 billion to 1.8 billion, is that range still the expectation given where we stand today and your expectations for the back half of the year?

Yeah, hey, Rodney. (00:30:39) We just provided the Q3 guidance. So we're guiding Q3 to 425, so that's the current guidance. We're not updating our Q4 guidance which would bridge you to the full year. The only thing to note is when we gave that guidance since then the additional revenue guidance we provided and Carl reiterated that in his prepared remarks today, we are seeing some more softness in the back half of 2018 as it relates to floaters, even though those are moving into 2019 and firming up. So we're constructive on that environment. But the actual contracts for 2018 are probably a bit softer than we would have expected. And the only other one I would mention is the 8504 (sic) [ENSCO 8504] (00:31:23), yeah, we did have a force majeure event and that impacted us by $25 million on our full year revenue.

Okay. Thanks. And then the other one I had was I want to follow up a little bit on the direct negotiation conversations you guys had mentioned earlier. So what regions are you having those conversations on? And sort of what types of customers are those with?

Well, clearly we're not going to actually give that information away on a public forum. But I think there's a couple of points I'd maybe draw from it. The first is that this is a relatively new environment and it's been almost four years since we've started having conversations like this. If you go back to the peak of the cycle, 2013 and beginning of 2014 even, around about 20% of our work came not from open tender work, it came from some form of either closed negotiation between a customer and maybe a couple of contractors or a direct negotiation with ourselves. That environment disappeared. People were not doing extensions, not doing direct negotiations. And so, this is the first time really in almost four years that we've started to see that. So I think our reason to draw attention to it is more to give a little bit of color around where our customers are and that we feel we are in a slightly different environment, a very different environment than we have been for the last few years as we look forward sort of 12 months or so. And the other one is that a lot of this work that we're talking about wasn't on the radar three months ago or six months ago. That's the other point I would draw attention to. But as we said, not all of these are going to turn into awards. I mean, some of them are early stage conversations. Some of them are, of course, subject to final approval by the customers' investment boards. So we are treating it with a pinch of salt, but it's more indicative of the environment and where our customers are going into 2019.

Okay. Very helpful. Thank you, guys.

Thank you. And the next question comes from Taylor Zurcher with Tudor, Pickering & Holt. Taylor Zurcher - Tudor, Pickering, Holt & Co. Securities, Inc.: Thanks, guys. Good morning. Encouraging to hear that the demand – I think, you said 20 tenders for that sort of ultra high-spec drillship over the last several months has materialized. And I suspect – I'm not going to pin you down as to when and where, but I suspect a lot of that's in Brazil and Mexico. So just curious – Mexico, clearly a new political regime now. Brazil has an election process going on towards the end of the year. So, specific to those two geo markets, have you seen any of the tenders that have been out on the market or that will come to market over the next 12 months shift to the right at all, or has the political uncertainty really not had much of an effect so far?

The political uncertainty hasn't had much of effect that we've seen yet. I think in Mexico, we are seeing quite a lot of tenders come out. And I think the ones that are already on the table today are probably going to go ahead pretty much as planned. It's probably fair to assume that there will be some form of delay there on some of the ones that haven't come out, but we were expecting particularly as this review goes ahead that the government has announced to look at the award process. But I think that the way that we see it today and the way that a lot of the E&P operators are looking at the story, particularly in Mexico, is that they particularly want to go ahead. They don't want to be seen to pull back or renege on their commitments they've made to those blocks to give any particular reason for their bids to be scrutinized. And so that actually seems to be the – the counter thing seems to be happening in a few companies which is, let's get ahead and make sure that we've shown to be committing and investing into the countries we said we would. And so, quite a lot of the current tenders are progressing as we would expect. Brazil, we have seen some things pull out and some of the projects that we've alluded to falling into 2019, that we would have maybe expected in 2018 are moving to the right. It's not really due to the political process. It's due to the time taken in many cases to get environmental permits in place, partner permissions and the fact that an industry there that has basically been in stasis including all of the authorities for three years or so is just…

Taylor, this is Carey Lowe. The MS-1, it's finished its program early in Australia and it's currently in Singapore, warm stacked. It's being bid into a couple of opportunities around the world, not just Australia. Australia in general, I think we're seeing an uptick in some of the inquiries for jackup work and for floater work compared to prior time period. So we think it's still going to be an active market but for MS-1, it's currently we've got two opportunities that I know of right now that we're bidding into and it's a very high spec sixth-generation moored floater.

Yeah, I'll add maybe a little bit more to that. I think to double down on what Carey said, Australia seems to be a quite positive market going forward. We're seeing it wake up again after a while of low activity. We're seeing it both for jackup rigs and for floaters. I think that as it sits today we're bidding MS-1 into projects there but we're doing it worldwide. I think we see DPS-1 probably remaining in Australia for quite a long time. MS-1 is a bit of an open question. But because it's a very high spec mod rig, we also see opportunities in several other locations and we have no problem with relocating it out of the Australia market if we see the right things come up elsewhere. And it does look like the first tenders that might be awarded in that area are outside and so if we got it, we'd move it out. Taylor Zurcher - Tudor, Pickering, Holt & Co. Securities, Inc.: Okay. That's helpful. Thanks. I'll turn it back.

Thank you. And the next question comes from Colin Davies with Bernstein. Colin Davies - Sanford C. Bernstein & Co. LLC: Hello. Good morning. Encouraged by the comments just generally around 2019 and then maybe pushing back from 2018. And just – it would be helpful to get a little bit more overview of your strategy and thinking for 2019, which of the available rigs the 6,9,11, where – which one of those you've got highest probability on finding work? Maybe cover the probability of the 10 getting those one-year options exercised. And then maybe finally just some sense of your thoughts around the newbuild, which is scheduled I think for the third quarter of 2019.

Okay. Well, without laying out the full detailed fleet strategy for you, I can maybe make a few general points. Let me step up a level first and just kind of add a little bit more on the market because it's a balanced message that I want to make sure we get over. And as we've said, we do think we're in a very different position based around the tenders that we have in-house and the inquiries that are coming. A lot of that is for 2019 but we're also seeing tenders beginning to come out for 2020 starts. That makes pricing a very difficult decision for us which I'll maybe cycle back to in a second. But in the near term, we still face a market environment where floater utilization is still marginally going down as we go through the rest of the year. It's going to remain very competitive from a pricing point of view. And near term margins and EBITDA is of course challenged as new price contracts replace older price contracts. So it's not that suddenly the lights have come on and that we're in a different world. But what we do see after three to four years of when you look forward you saw either worsening or flat conditions. As we look forward now on the 6, 12, 18 month period, we see that increasing amount of work and we see an improving market. Bar a major down leg in the oil price now, the one thing that we do spend a lot of time concerned around is pricing, right? And exactly when that happens – when it begins – when we're able to push it in a few localized markets, when it begins to happen on a broader scale. I think our view has…

No, exploration is not dead by any means, but it's not strings of programs put together. It's not – what we're not seeing is what you saw at the end of the life cycle where customers are taking a rig for a year to put together three, four or five exploration wells. We're not in that environment. But people are doing single or one or two well exploration wells here or there and we've seen it pick up a little bit over the last sort of six months or so. But exploration is clearly going to be later in the cycle. What is – a lot of the 20 tenders I alluded to for high end drill ships that are out there are around development programs and several are appraisal programs on known discoveries. Colin Davies - Sanford C. Bernstein & Co. LLC: That makes sense. It's very helpful. Thank you. I'll turn it back. Thank you.

Actually I'll just add one other thing, I think. Let's be clear that the one market that is really picking up around exploration is Mexico because of the nature of the blocks that were taken in the public rounds that have just gone ahead. And nearly – and those are all – but those are all kind of one or two well programs. Colin Davies - Sanford C. Bernstein & Co. LLC: That's very helpful. Thank you.

Thank you. And the next question comes from Eduardo Royes with Jefferies.

Hey, good morning or afternoon guys. First question, I know we've touched a little bit – quite a bit on the ultra-deep market. I guess from our perspective we really – we struggle to see a real pickup in activity. I see the tenders you guys were talking about. Petrobras obviously still has lots of roll-offs in the Gulf of Mexico. I know a lot of stuff gets done behind closed doors that we don't see in the tenders, but channel checks on our end suggest that there's not that much brewing. With that backdrop, do you guys think that a lot of the tenders we're seeing, is that going to just maybe fill out some term, but not necessarily do more than keep the rig count where it is? Or do you guys think that at some point in 2019, maybe the next 12 or 18 months, you can start to see that there is enough out there that actually leads the ultra-deep rig count to start ticking up and therefore utilization to kind of get off of this 70% range or so?

Right. So let me break it down a little bit. So first of all, the comments you've made are more relevant to floaters, I think, and just to reiterate in the jackup market, we have seen utilization bottom and start coming up. And that trajectory continues. The floater market as we've already touched upon is different and we completely agree there are lot of roll-offs in the second half of the year. That means that it's very difficult to see utilization picking up meaningfully in the second half of this year, because the new rig awards are not enough to offset that. And especially as we've also said there are several projects that were potentially going to start in 2018 look like they're going to push into 2019. With that said, the increase in activity that we're seeing now would tend to indicate that the second half of 2019 is when we would probably start to expect to see utilization come up in the floater market. Given that we also currently expect the marketed fleet out in 2019 is going to be lower than most people expect as a consequence of further attrition and the fact that a lot of rigs which are normally stacked are unlikely to come back during this tough cycle, so I think that's the other element we're looking to help drive a recovery here. But I think that the general timing that you've alluded to at this point doesn't seem an unreasonable position. Now the other point, you – coming back to your opening statement is that it is true and I think it's a fair challenge back from outside to say, well, look, how come we haven't seen more awards and it's partly because we get to see what's coming, we get to see the inquiries and the tenders on the table that you don't necessarily see outside. And I think the way I would maybe describe it is a lot of the industry is slightly pregnant waiting for a lot of these contracts to land. A lot are getting dragged out a bit, but there are quite a few contracts which we would expect to see awarded globally, not just to ourselves, but to the wider industry coming in the second half of the year. And I think when we've seen a few more of those, that might add a little bit more credence to what we're saying about the contract environment that we're seeing in-house.

Yeah. That makes sense. I think we obviously have been watching some jobs for quite some time. My second question, a little bit different angle. I guess one thing I feel like we're starting to see instances of a rig maybe getting an auction or an extension with the incumbent and this is both on the floater and the jackup side. But oftentimes some of these extensions are six months from now or nine months from now. I would think that the ability for you guys to lower cost during that downtime or during that gap is probably limited because of nothing else the customer wouldn't want that same crew. So my question therefore is just to two part-related to that. Number one, am I right? That if you have to go to the same customer six months from now you have to keep it hot and nearly full OpEx? And two, if so, is that something you can factor in and tell the customer, hey, this is a huge inconvenience, you want my rig, I got to keep it hot, but you don't need it for six to nine months, can you price that in at all? How should we think about that, to the extent you continue to have these kind of choppy programs with gaps. And I think the 115 or something, ENSCO 115 is a good example of I think one that's finishing up and will go back to work on Jan 1 or something like that but is unemployed in between. Thanks.

Yeah. Hey. Eduardo, this is Carey. I mean, there is a variety of scenarios actually where depending on how long the rig is going to be idle between the two projects and where you are, what the conditions are, what the client and so on, in some cases we can bring the idle cost down quite a bit. In some cases, we may choose to do some maintenance during that period that has to happen anyway. And then there's many other cases where we're able to use those people on other rigs for a period of time as well. So I don't think you can come with any one particular one size fits all scenario for cost. But there is that kind of sweet spot where it's long enough for you, you can down-man, and then you have to ramp up again and then there's a time where it's really just too short and just not very efficient to down-man. In those cases we try to use people in other places. Does that answer your question?

Yeah. That's good. I guess just a quick follow-up is what is that cutoff where it's not long enough to down-man or I guess roughly speaking?

Again, it's different depending on where you are. Maybe that you can down-man fairly quickly and you can pick up your people again very quickly. So I can't say that there's any one particular time period.

Yeah, I think what I would add, Eduardo, is that we have a couple of these but it's not that this is the norm. And we've had them in slightly different circumstances. So you mentioned the ENSCO 115. I mean, there, our decision to do that is because we think the program it's going to is very good and the follow-on prospects after that program is very good. And we can manage the cost during that idle time quite well because it's a jackup and it's easier to do that with a jackup. For the 109, the ENSCO 109, and working in Africa we took a pause period with the client but it was on a standby rate that allowed us to keep the crew and the maintenance warm during that time before we were back and we gained some more contracts on the back end. So each one is somewhat unique, but I wouldn't read in too much that this is now the new norm.

Yeah, let me just – Eduardo, let me just add that one of the specific ones, ENSCO 115, is one of the ones where we are able to reduce cost fairly significantly during this period.

Got it. Thank you so much, guys. I will turn it over. No, thank you.

Thank you. And the next question comes from Sean Meakim with JPMorgan.

Thanks, hey. Good morning.

Good morning, Sean.

Just curious, are you considering any incremental upgrades on some of the rigs particularly on the floater side, maybe to win some upcoming work perhaps something like a second BOP on the DS-8. Just thinking about those types of opportunities and I'm curious if you can bid on work that requires some upgrades perhaps and then make the capital call after you receive the contracts, the viability of those types of decisions?

Well, first of all, as you've seen we have made selective investments on some of our existing core assets to high-grade them as we've gone through the cycle. A good example is the DS-7 where we added a second BOP to that rig. So I think at a broad level that is something we would do, we can do and I think where we think that making investments to high-grade some of our fleet to the very best in the world is something we would be prepared to do. And when it comes to specific work out there, we have enough rigs that match the current tenders for us to be able to bid in it without having to do proactively or do upgrades at this stage. And so I don't think there's any one thing I would draw your attention to. We've taken some decisions that way. We're prepared to do it in the future, there's nothing on the table today. What we have also said is that – we've been very pleased by the mooring adaption we've done to the 8500 and it's very likely that as and when we brought out an additional 8500, it would most likely come out with a mooring upgrade. But most of these upgrades are of manageable cost and given our liquidity are things that we can consider but we've been very careful and judicial about when we do it.

Understood. Thank you for that. That makes a lot of sense. And I guess I may as well fill in the requisite M&A questions. Given sentiments picking up, does that make the potential for asset transactions more difficult as a buyer? As bid/asks widen out again, I mean, it's worth noting a European service company highlighted that they were a willing seller of some decent assets. Maybe at this point in the cycle, sellers are becoming more amenable. And then just contrasting that with the corporate side, corporate M&A is always difficult. Would you say as we're moving to this point in the cycle, are those types of opportunities getting easier or harder to accomplish?

On the asset ones, I'm not sure I follow exactly but the asset prices are completely diverging in the sense that high grade, high capacity assets, the pricing has been going up now pretty consistently for almost a year and I think in a recovering market that's likely to continue. Older, less capable assets that people don't believe are necessarily going to survive the cycle or be competitive, are still going down in prices, if not you can't sell them for any price. So I think it very much depends on what type of asset you're talking about. The prices of for example high capacity rigs in the shipyards has clearly gone up recently based on latest transactions and I think that's pretty consistent with an improving market sentiment and usually asset prices move before share prices and before earnings do. On the corporate M&A, I think it's a complex question because you – often if you look at other industries and businesses when you're coming out of a cycle downturn and you're beginning to see a little bit more light at the end of the tunnel that often greases the skids of M&A, actually allows some projects to get done. But I think at a broad level, we still think that consolidation in our sector would be good for the market as a whole. And I think it would help drive further attrition. It would help make some – it would help drive some discipline decisions around the act of making stacked rigs. And we have a very disaggregated market and as we've shown on the Atwood acquisition there are some significant synergies to be driven out of the entire business in the sector by consolidations. So at the high level, without ever indicating that we're going to be part of it, we do think that if further consolidation happens it will be good. But, there are a lot of issues and second-order issues that can get in the way of it. And one of the biggest ones is relative valuations. And every company has their own view of what their own assets are worth and what targets are worth. And I think if you see any – if it's not happening, it's happening largely because of the relative valuation difficulties that companies see between themselves and targets.

Sure. That's all fair. Thanks a lot. I appreciate it, Carl.

Thank you. And the next question comes from Ryan Pfingst with B. Riley FBR.

Hey, guys, thanks for sneaking me in here. Just to come back to pricing. We've seen utilization improve broadly, but is it just a function of needing utilization to hit a certain level, maybe 85% or so, before we see meaningful day rate improvement across all classes?

Again, Ryan, it is – I think we're in different situations between the jackup and the floater segments of the market. The jackup utilization has come up about six, seven points depending on how you judge it over the last quarter or two. It's not at the point where we can see broad-based pricing at this point. But I think if it went up another 6% or 7% utilization points over the next quarter or two, then we would be getting to the point where we could start to look at further pricing movement around the jackups. And on the floater segment, we've still got a way to go. We need to see it bottom out and turn before we can start to see utilization reach a point where pricing comes up and I think you need to see at least 10% utilization pickup before we would feel more confident around that area. So going back to what I said, in a market environment where we are seeing signs of picking up in activity, it's really that pricing issue, how long can we continue to work at current pricing levels and when does it turn is the key open question at the moment.

That's helpful, and just as a quick follow-up. Would it be safe to assume that the most recently contracted high spec jackups are earning a higher day rate now than they were on their previous contracts?

Depends on where they are on the geography. Yeah, I think that's is probably where I'll leave it. There are a couple of marketplaces around the world where we are now seeing incremental step ups in pricing, we're seeing others which are pretty much flat and where they were 6, 12 months ago. I think what I would say is that it does broadly look like in the jackup market prices have bottomed, and picking up a little in a few markets. The other point, just to add a little bit more color on this, is that the pricing point for jackups as we see it and based on our cost base has bottomed out where most contracts are still cash generative which is different from the floater market where largely spot rates around about cash breakeven at the moment.

Great. I appreciate the color. Thanks, guys.

Thank you. There are no further questions, so I'll hand the call back to Nick.

Thank you, Keith, and thank you, everyone, for your participation on today's call. We look forward to speaking with you again when we report third quarter 2018 results. Have a great rest of your day.

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