RIG - Earnings call transcript Q1 2019

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Operator

Good day and welcome to the Q1 2019 Transocean earnings conference call. Today’s conference is being recorded, and at this time it is now my pleasure to turn today’s call over to Mr. Bradley Alexander. Please go ahead, sir.

Bradley Alexander

Thank you, Carrie. to quarter welcome call. earnings and morning Transocean’s XXXX first conference Good regarding are copy covering deepwater.com. schedules, statements disclosures release our including financial results and A press supporting financial of website on posted our along with reconciliations non-GAAP at measures and

me Officer; are Thigpen, and Marketing Senior President Chief morning’s Roddie President Vice President and call Mey, of Officer; Mackenzie, Mark Executive this Contracts. and on and Joining Jeremy Executive Chief Financial Vice

actual forward-looking facts. certain regarding our note to call, company refer company and the regarding revise Transocean are results duty more assumptions information management uncertainties related to Please materially. future statements. therefore to SEC certain please update that During our various based our and and the forward-looking course impact to subject for results. make matters cause certain statements, of the this to that may our are Such differ Also, upon that the statements factors business including and and risks risks Many are no forward-looking expectations not filings current could historical statements uncertainties. undertakes or could

session. Mark’s Following question answer will comments, conduct prepared and a we Jeremy and

limit to one Jeremy. give speak initial one the this to over very turn an call Thank During call, much. please time, you more and participants yourself follow-up. on to opportunity to this question I’ll now

Jeremy Thigpen

and all in to of call. Brad, welcome you, participating Thank those today’s

excess our revenue. first results global across earnings XX%. in the on EBITDA release quarter, yesterday’s exceptional million $XXX As efficiency quarter for by revenue resulted which uptime were $XXX These generated in adjusted in first Transocean million of reported fleet of driven in performance adjusted

and Of quarter the the first to will first note, the of you operational these XXXX fleet, ultra operations condition and rigs experience XX%, acquired transaction. operations. the of delivered know, integration true uptime a assets the near with of professionalism crews, of of deepwater a Ocean our quarter the Rig seamless of testament through many recently As the of marked acquired full

fleet, to the and we Petrobras with Rig have assets. deepwater made in them forward combined for period will Mykonos years longer years. These say, for Ocean ships active legacy of candidates awarded with the preferred in of the growing costs working our the our more spread revenue in across Rig as generating historically and country we largest that Corcovado fleet opportunity of in work us to total support tenders. combined a firm Brazil these three Petrobras years, ultra rig Brazil, announced world’s Once market option Petrobras contract, February X.X we rigs term shore-based recover. a two Speaking of deepwater for providing the performed recent over Ocean the to contracts extremely well which look four on with Rig in Ocean begins drill to have Needless

that we focused we comment this a closed things, realize Among their final annualized the and rationalized Ocean corporate $XX cost companies pursue of committed Rig acutely the part have integrating to efficiently structure the million Athens As synergies transaction. two the the has safely, on office. been professionally team as we transaction, corporate and in as on other

soon-to-be-active in both and Ocean our coverage insurance our Norway the assets we the and extending of the into process two our have Brazil. to for We programs, agreements active two deepwater the drill consolidated offices in the ships Ocean brought assets Rig destined O&M operations are Rig and have and of ultra Brazil, we

Overall, integration. care them I’m and with are they as As this to the the well. agreements under our of we contract Ocean proud continue speed work additional we to executing assets, extremely legacy team which bring will O&M Rig quickly

signed Driller discussed III our now of again Shell on Nautilus of XXXX. awards Murphy will In Equatorial the basins a six Poseidon. early her Deepwater exercised previously Egypt. Looking month, prized at U.S. just ultra with up working work [indiscernible] to beginning next Eni a in-country for fleet Gulf Deepwater for picked deepwater our world. a the that into and the for contract next Rig project six-month recent In two-well program a beginning for the exercised morning India in Deepwater six-well Exxon the In contract Malaysia, Guinea, In the two-well Mexico, month. option this additional a options Mobile keep in Development number addition again Brazil, around XXX-day has the awards, a in has Angola, Ocean Asgard the XXX-day we in contracted contracted option with

Reliance confirmation option picking on received in India. the one-year the KGX that also We is up

and added Turning Norway the most harsh that to capable Norge, the fleet, has industry. her environment and excited we’re completed and nine will now begin a just semisubmersibles during helped the Transocean Ocean past almost the in high over floater fleet, XX months. high specification five maiden fleet. exercised addition in These most her Lundin the most additions marketable largest, Norge have the to us ships journey in Rig quarter to months deepwater our our Leiv our fleet specification where Norway, environment for two Songa environment option Offshore acquisitions, to contract the the one-well to harsh ultra Between the and Eiriksson. Also, assemble drill we she have harsh over recent

be we in to we believe the continue stages take believe the around ultra early deepwater we the that environment to benefit to harsh the such uniquely markets from to a of world. markets and in recovery recovery positioned the As are of advantage what

start count recovery, active with up by a the X% quarter. the are to we Regarding in first floating rig XXXX the encouraged

would specification The a rigs environment deepwater even Norwegian-compliant count nearing XX%. utilization drive high the future approaching including market, market. when encouraging which into and Importantly, specification becomes overall contracted, delving high floating two market our primary harsh ultra is markets: to when XXX level story assets, more the the

solidify there number seventh and Norwegian high-spec of over effectively second generation the and these For deepwater oil recovery provided path dip, strong on for drill robust well. generated is to This the the XX% focused being return is as assets shale. past quarter for in to is XX% ships of and sixth flow increased market, of quarter surprising. quick demand on cash-on-cash and availability in XXXX, of of no fourth be begin operating as market, assets following contract year’s early with, see by cash the has projects opposed the ultra until almost increase offshore last ability months, sheets, with exceed returns cycle up our flow XXXX in to capital shaping the and To to invest the we exclusively customers their for XXXX customers has them XXXX. balance quick not a with utilization the to cash This by clear longer on our shareholders, six the prices

touting breakeven projects, supportive below important on As oil barrel. often $XX as offshore world per prices very are the favorable around levels are customers

projects. standardization. has field certainly the been often costs significant important together played as design, is sustainable the While realize service efficiencies facility offshore in it more equipment discounted elusive tailored enables cycle industry including for that have drilling, savings, increased it’s cost to through certainly limited This and greater entire to and not but a investing to that worked has role, recognize

customers’ confidence one total of the the offshore for and As need in further economics this of evidence than recent look improvement growing in achieved four future years. Gulf our sale, in largest lease offshore which no drilling, Mexico its

in Gulf the of growing the provide as recent not recent Mexico public the market While offshore as is engagements customer sale, that our support around confidence world. lease further

marketing into continues department XXXX. tighter move as availability, field and Our on much through market XXXX interest suggesting more to we rig focused a

for market believe to us our to to our that for recognize as endeavor the in maximum we As tightens, fleet. bidding steadfast we remain disciplined important approach it’s value

the world, with Gulf which Focusing in the Mexico customers region. first the upcoming the multiple rigs around of in incremental of the for Xin downturn, the engaged are markets on the conversations would time U.S. since we start projects in require around

explore were we PSI first the awarded deepwater approached we XX,XXX recently to industry’s work, opportunities. have announcing since operators ultra similar Additionally, been by other that drilling

this by time with to are While the ensure the these production recognize reservoirs a another exploration exist scheduled Murphy, next far campaign, of capable developing challenging and that term that achieved project second equipment completed to to decade. the I the of middle as our will to In imminent, we near our can Mexico, multi-well for award campaign, is one currently of is third not would begin not near customers does go end say a XXXX. forward XXK the require currently so which be Shell looking in commitments recently this and

Trinidad. enter we to as in well Invictus We perform expect the BHP for market to activity Caribbean, increase In in the continues this XXXX.

are past further increase trends encouraged rig in more Petrobras count Guyana seen should we and emerging years. over ultra neighboring coming opportunities award expect the that by months, four have the Brazil, tenders deepwater also helping to demand. we We In in reverse to declining in rig the Suriname in country the

We beginning of re-engagement the need investment for has enable a Petrobras to the expect significant created years of this their production achievement is ambitious just as targets. curtailed of

and Ghana, the to Angola, in emerging see activity soon we West We that Africa, region. IOC are we with Nigeria, is also the encouraged opportunities In believe materialize in Guinea, Senegal. Equatorial

rates. years, these largely five are in In including of a multiple out. we have have increase hot walk desired day based are even potentially are mid-XXXs; significant well another know, that and and future contract is opportunities beginning now but of fleet. both and preference for our of per picking likely anticipate strong higher showing Day as clear most for awards mid-XXXX. bonuses assets specification new intelligence, years, around willingness in the rig a work result are now in the material region markets day current well driving economics in environment projects. up to rigs the markets, high the global number for Rigs activity day they past on in up our also likely this rates over Norway global experienced in operators a Asia for number this in Canada, Pacific, are to sold assets floaters $XXX,XXX the years in of is excess been step practically up, As however, harsh the asset Concluding project you floating are customers crews. see commanding rates their the would in and Australia demonstrating that marketing U.K., represent remained a here scarce scarcity in In locking rates

in have to reduce drill and our share wells. run off-hire to economically can the of exceed and driven while years clearly opportunities, the reason options, and of our customers’ capture grows technologies winter through their is and past been resources drilling they then the time increasing As support been we’ve plans make combination with more ourselves help to and market-leading $XXX,XXX and recently incremental and market terms our a the time over we we can result, position compress is into into day fleet, create eliminating has that few Transocean’s we thesis of activity. projects ability our has the complete systemically four we awarded offshore considering contracts much offshore that continuing crews Industry-wide, rates the breakeven we our fleet we experienced both economically other are thus high have the viable, if time rates. viable to we targets drilling Essentially, that then will that number are If invest are to our graded superior more customers customers levels, of shore-based past as the eclipsing that and demand, seasons. demonstrate year, the confidence for for strategy ourselves which

and projects just handing Brent, sufficient moment service to also generating flows invest the $XX the another our call return over production the would to like and customers’ replacement. portfolios. across first team like projects requirements cash attractive to to provide are per sub-$XX addressing overall barrel the world, $XX of time term the levels opportunities At per a strong take to Before Transocean entire in to investment thank that following while Brent, around breakeven becoming quarter. customers barrel longer I’d our oil longer reiterate debt, some I offshore the shareholders, and cycle for are most the delivering many Mark, of cash At offshore to points. returns strongest per reserve compressed barrel

expect fully to we such, offshore demand drilling heightened see As for rigs.

led already Brazil, deepwater in environment between This and in demand, ultra the ultra and for of and the markets Speaking day a both has deepwater and harsh West environment assets the Africa, gap the day rates highest supply in rates to demand improvements tightening. markets is harsh of specification on doubling Australia.

and new Transocean which underway. a and capable short, floater build offshore is that customers recent by technically our evidenced and our our we it. the through program assembled believe recovery three awards, fleet our transactions, strategic and efficiently largest Finally, has operate in most the we safely as recognize appreciate the and industry, fleet manner In in and contract broader

demonstrating high specification preference Our have ourselves environment customers and the are a clear as drilling. in and the positioned for we leader strategically ultra clear assets, deepwater harsh

we day move for we and through XXXX improve as rates are XXXX. our such, that both and expect poised utilization As Mark? into fleet to

Mark Mey

all. to Thank you, good and Jeremy, day

the recap full expectations. XXXX second I today’s briefly will results guidance to call, our prior our then and quarter for updates and year quarter first During provide

XXXX on as well shipyard Lastly, I’ll an liquidity through provide projects as update our XXXX. our forecast

yesterday, our we diluted in favorable quarter or per the with After share. diluted first with These $XXX items [indiscernible] operational EBITDA margin results adjusted net in XX% both operating the million XXXX reporting initial release days environment delivered XX tax million harsh by Further for reported XX entire for and from operating of unfavorable quarter, of included our an adjusting the revenue. the details with adjusted [indiscernible] share. loss debt, our first quarter, fleet. $X.XX strength of press As reported inclusion our almost performance. retirement items backlog adjusted an release. million and showcase associated adjusted deepwater for our or EBITDA $XXX we press of strong ultra increased we’re the million $XXX of per fleet Driven first and Ocean by an In $XXX $X.XX sequential associated for are Rig mainly of of for of

the million, of and guidance. and guidance General was project quarter are $XXX quarter, $XX in expense administrative expense the operating the timing our line XXXX, first with below we slightly costs For to first a our due maintenance in maintenance in-service of for million quarter. relatively

$X harsh revolving Turning to and billion quarter billion, ended ongoing approximately liquidity cash equivalents facility. in we $X.X $X.X of Despite We debt flow and and billion of cash liquidity the opportunistically our maturities. our signs cash focus and runway near segment, recovery the extending on sheet, first recovery our of total the from including market our remains a in priority. enhancing undrawn while the environment addressing credit continued ultra balance cash midterm maintain with deepwater both and our position

XXXX Let our provide quarter now expectations. me an on second update financial

XXXX, the For quarter fleet. assuming are XX% second revenue efficiency of active of our we on

our the expect approximately to be X% down revenues drilling adjusted quarter. total for We

treatment note May. our Asgard status addition reflects rate to and to of adjustment associated for the the in accounting time the our the lower its Skyros. this contracts Actinia between day the contract Rig time like I’d both included forecast reflects on contract have step first the the off Deepwater we rate the Nautilus, fleet day Our Deepwater [indiscernible] options. price for recognized $XXX,XXX recent contract with in expected rolling of for that Ocean average This rate most being in and report, day

We expect O&M reimbursable $XXX be of second to million, $XX approximately expenses expense quarter including million.

the in operating contracts and of associated with total. associated approximately $X.X Rig O&M $XX million respectively, including be year by commencement Brazil, million million. Rig expenses following: and and $XX of expense $XX quarter for respective increase Ocean driven expenses full Petrobras these O&M Corcovado Rig expect This Additionally between Mykonos, the Mykonos the operations is million under Rig in sequential Ocean we Ocean contracts reactivation to and with and their Corcovado fourth $X.X in in the is million Ocean

$X a $X orders, million anticipate largely to testing. primarily pre-contract change approximately to shipyard costs due thruster due million on Transocean replacement, of we higher Additionally, on DDX the and million a equipment DDX in Arctic customer extended $X to

our $XX relative prior We million also increase by to reimbursable now expect to guidance. expenses our

updated drill cold four Greece. estimates We stack you will ships with in reactivation provide our for cost

attributed estimate conducted from requirements exceed post ranging thorough acquisition, increases million. provided immediately million We mobilization, these contract-specific guidance analysis or recertification, project Recognizing speculation. the Greece that costs expanded [indiscernible] in Rig from reactivate to the and we our and indicated, to team not $XX these rigs the a contract previous of upgrades. any have estimates on on equipment recently are Ocean excluding and $XX do we to Transocean-specific scope note shipyard, mobilization assets Please costs, any Gulf the overhauls management stacked for to operational previously as and plan

We quarter quarter flat expect million relatively $XX to quarter. be for G&A expense over or approximately the second

liability debt expense expectation includes Ocean is $XXX quarter, due to Full $XXX be including interest million new increase $XX $XXX quarter management our reiterate recent four of million approximately and approximately Santorini activities. This the for interest issuance interest expected capitalized under drill Net $XX [indiscernible] $XX capitalized and be interest the the for is G&A million to million. expense Ocean with approximately for income million. million ships million. interest net and Rig This $XX year anticipated million of approximately also $X year forecast with approximately of We includes second to Capital are Rig and the be construction, million. Crete. to build now for expected for the our approximately full $XXX expenditures, ships second the

we maintenance expect capex $XX Additionally, of million.

expense Our Rig related and million estimate to full is increase to Mykonos $XXX Corcovado be year reactivations. with the Ocean primarily Rig approximately capital Ocean

for be expected are the Our million cash approximately $XX to taxes second quarter.

a recently in second named undergo an quarter, XXXX. our with been update Gulf early SBS projects. Also to PSI in Deepwater Spitsbergen shipyard Transocean XX-year start days. out deferred in will will result Consistent work has estimated service XX,XXX that the Chevron’s Titan’s for of delivery the to provide on I’d prospective like the date XXXX of Now the XX Mexico, an

Lastly, now commence shipyard her original with in the we its to February Due contract schedule. aforementioned began DDX expect for behind Chevron. activity slightly the preparation fixture the in delay, to May,

Turning million our between revolving and Rig This end-of-year note XXXX includes Please mindful of our million. $XXX strong matures an Ocean and now XXXX capex for new XXXX including billion guidance and to projected $XX we which two billion. recovery. $XXX estimated $XXX liquidity is December builds excludes credit liquidity our billion capex drill facility forecast XXXX million. includes liquidity continue estimated that related The $X.X to maintenance build XX, $X rig XXXX, our million Being XXXX, capex liquidity at the of $X.X any the and in million $XXX June be the [indiscernible] of Samsung, forecast two at capex market capex reactivations. to monitor ships speculative position, of new to maintaining

previously limited and I levers additional issue to balance further These assets bolster sheet rate. we have available run have not As to but mentioned, multiple guaranteed capacity our priority facility. upsizing extend credit long contracts, revolving term with our include to are unencumbered liquidity our and notes,

in back will have comments. its are and over the prudent our Brad. contracting rebound my we our indications to a leadership acquired newly our the forward tangible management, ships. look call position deepwater fleet of maintain market to positioned Through and This M&A recovery. by combined drill I balance the in ultra concludes sheet the turn excited with We to market now to management disciplined Transocean prepared approach

Bradley Alexander

initial yourself now to to as one ready and and we Carrie, to questions, question one reminder are participants, follow-up question. please a all Mark. take limit Thanks

Operator

instructions] will James West question Evercore be from James, is [Operator live. line your ISI. Our from first

Bradley Alexander

can caller. go next Carrie, to you go the

Operator

Sedita from Sachs. be Our next will question with Angie Goldman

Angie Sedita

morning, Good guys.

Jeremy Thigpen

are How you? Angie. Morning,

Angie Sedita

not so I’m good. mute, works. Good, it on

I’d day do due limit that supply rates market, In about about rate in thoughts XXXX. on in attrition to part, your of we into love and to and then gen need is of and views going see not, attrition upside. One demand and were hear gen sixth-seventh lack or on yesterday over-supply could the seventh to your it sixth this talked they talking market. peers

Jeremy Thigpen

if for supply, closely market, pretty look but are segment high in don’t for little that those the you I you total and t and tight, preference to to clearly that look start a connected a a seventh you need of it attrition. specification not recognize number sixth think gets market spreadsheet that supply terms and and we Obviously our showing highest that. space, the necessarily at are scary bit the customers see the if demand really our gen and assets is what you’ll the the customers in by find spec are to assets,

approach, astute very we’re tightening know - of in to result as want starting that market, anything technical the don’t rigs taking which they is they to see we’re Our we’re day of know customers pushing contract, earlier Roddie, in all these a understand rates. to to and you means we which why they said remarks and all rigs are which add prepared specs that? disciplined a if the I want

Roddie Mackenzie

say Yes, utilization analysis the terms those that for I’d a utilization to of demonstrate spec XX% level in and it. concerned not XXXX, then units get certainly party at of going if to we’re so we’re look full you warm on about that would lot forward assets, essentially we sure, just third of the higher do--you’re already

about us. We’re actually of the that excited lay ahead prospects

Jeremy Thigpen

been challenge a be are of other so real there, stacked not I’d be The a see there are while another years, companies look there a number out to is officially they’re the of to contract. they’ve reactivation for retired, for and many assets lot that that you these as they and a going offer, at out costs of are thing lot Angie, going never

Angie Sedita

day power? think top Then rate market, beyond about think subs do XX potential as rigs into if XXXX far going as XX, and and utilization in you the you gains top the these for that extends tightness

Roddie Mackenzie

I case, rigs is rates. very when everything in that’s to the that ’XX, purpose bring and about thinking is hurdle going out, back market, that’s to for already to are What pointed basins get we’ve work a certain fit really inactive utilization begins to and you’re start that you XXXX that position well very seen going or help tight up. Yes, then in actually help especially older, where Jeremy think utilization, drive tighten very there and to rigs as significant to

that the the sustainable significant pretty XXXs level course, and and be economics going those number pushing of come rigs course, of back; get a see to Of then to reactivations, that’s beyond. for towards but when that’s you’ll up rates

Mark Mey

add I be increased we if [indiscernible] one stranded drillers it that day out catalyst will to thing, a the require a allow against contract. be great too just builds add to could If at the rates delivered, that to to to new be shipyards for bring those rigs

Angie Sedita

That’s on better helpful. but Obviously industry see or consolidation busy as more Could you’re consolidation? major one on need in I been more the will far see pricing to you’ve do discipline? slip we consolidation consolidation, do see, and side, think across to, the going as the very we you to

Jeremy Thigpen

we’re on would the you’re and term going of need the several get that We I harsh we near point we of at from fleet, in take challenging of what the term. some we a these and high helpful. what see next would figure to think contracts we’re time. at go sure there who environment over out day really acquirer every be longer we a this to put it’s We’ve enhancing to players before ultra now we for work consolidation further the have. not with that’s I time acquired in months. over the the I’m with can’t have but assets be point speak but fleet standpoint. point in with out other at course and happy deepwater recently our approached this what to kind think look I we rate at constructed this time, and Obviously opportunity satisfied look,

Roddie Mackenzie

discipline. are around in in XXX we our pricing about Diamond talked Africa. all doubling longer in and says then you that a last are--you’re that vision the discipline, term so are up there the range. what point I’ll that pushed decent We really is of we’ve seeing XXX what seen towards is, few published so but I’d the what think short week that I for market rates seeing what Mexico, in you’re they the had discuss can that rates that Not that long pick discipline rate rates amongst of comment spot actually had up is publicly, Basically announced course the Australia Gulf your rates up public data, that already just XXX term pricing is out term. there’s now for some available is pretty and between

Bradley Alexander

thing of us offshore $XXX,XXX, It’s generate it. us other just need rates doesn’t The a helping to all incumbent to for the and generate drillers all sticking important $XXX,XXX of is the around do and day cash, push and cash.

Angie Sedita

Great, I’ll turn it over. thanks.

Jeremy Thigpen

Thanks Angie.

Operator

you. Thank

Our next Evercore with James ISI. West from be question will

James West

Hey, good morning guys.

is spending majors the Apparently about Sorry for to teach use so I at about button, year, the me question their budgets to mute. Angie the how this mute and need sorry that. One I looking had, tendering significantly market could last four over That’s activity? that year significantly something up get current really Are the years. in and over that going. you seeing ship year, is very exploration the drill

Roddie Mackenzie

Yes, absolutely.

basins continues things around we’re to of the looking expansion go activity Our and tendering at in interesting is lots world. up, what

that that, that Brazil customers as and stuff, forward, have a are there the of XXK well. in like frontier of in about interested got several kind and but really lot of previously we’ve next Mexico seeing going talked interest drilling - We also moving so into places

back golden uptick hard. quarter real The coming that so West really highlight is other see pretty significant in to expect for tenders has been of Africa, number us we in triangle the this

about going pretty seeing are said, Mexico results been Africa in first, developing of you tell some and bringing decent a because Gulf so further of have wells assets even to lot getting in be exploration to there’s activity at there’s it’s then overseas of far, ships they you to the it’s the but already development that we’re in have some As there I continue of to and also back big back to then guys Mexico brought Mexico, where some terms for development. plans

pointing those I think the in are direction. of all things right

Jeremy Thigpen

golden a we’ve in the starting is the in far It’s four everything James. of over better market, across of U.K. the outside seen the It’s well starting--well, triangle Also ultra years. Obviously opportunity see certainly than as we’re lot it’s emerging the to so last the relative, of encouraging. board, course deepwater

James West

announced Okay, thing see hear. follow FIDs at rig was perhaps Carnival. point an there’s where have now could One that the first the It XX great contracts guess, on me surging seems by, held out XX to a a was that all-time count elections, of Brazil. Are that had and to at and tenders we a up that’s this and that been flurry of to we I number Good I thiXngs point months? to over here of next market, low, up

Jeremy Thigpen

sound in that were did delayed surprised James, you Brazil? somewhat things

James West

all! at Not

Jeremy Thigpen

You materialize, can as as times don’t a on. things materialize be at bit that would know, spot them quickly but think like to we it frustrating I you’re

XXXX and expect starting we XXXX the the and we and not for I in we XXXX. more half see XXXX, of IOCs through think from move do also work from into but into especially back to as activity XXXX get Petrobras as tendering only

Roddie Mackenzie

would very that’s the transfer and of that, a least of this prospects add the to that so another in look frame, I’d later to XXXX, rights at think do [indiscernible] by going that doubling our come if in XX-plus you positive. rig Brazil license up about year, then the time projections count show rigs XXXX add

James West

Thanks guys. great. Okay,

Operator

you. Thank

Gruber from question next Scott Citigroup. Our with be will

Justin Robinson-Howe

guys. morning, Good

Jeremy Thigpen

Morning.

Justin Robinson-Howe

one, having behalf rates speaking question, continue upgrade rates you in keep and on took with Scott. tier, spread to the this--in expect that lot classified Justin in at a top those. a that top How you to and is are but your XX guys guys eventually of tier be about in we market, Earlier first the guys those market, consider bifurcation rigs as so operators cause down? or DP more you then could to what day see to able much fleet to compete would day trading This

Roddie Mackenzie

have out rates case, better in spot push longer six I programs for what call increase that’s rig. over XX% the and, you even would the term, that short our seen assets. XXX rates then kind this in XXX Well, there, to that, we the we’ve thing going just of works, I the you’ve but just near that say a on the market, XXK think last term that see up typically forwards the on the the term months, how XX shot spec would to in observed for rates

see up bit, of of looking out, at happen sector ultimately that start you be but rates a costs we even higher. trade at of course down have for sure, when You’ll then those and the are upgrading that as some expect that gets could then but lesser happen slightly little then when to ranges, to sold rigs, you kind

upside gets the for rate that. rates, So last in more day term highest significant usually the then a lot standing and after there’s potential man but certainly growth near

Jeremy Thigpen

the and thing try the Having keep I’d The always hook going other they latest generation to said to that rigs value add rigs BOPs, it. they see to are the our suppressed higher of the really customers dual the activity, have experienced somewhat. dual in is with that, efficiencies load, these

one that drilling so these much day don’t customer we have time, they the like partners efficiently. the rate, rigs costs, tells the because are more love our just well all fact, us In

prefer I going they rates there’s think push try keep to are no assets, efficient more obviously, going to check, but day doubt. to they’re hard, in the to

Justin Robinson-Howe

thanks. Appreciate that. Okay,

to next over let’s the and how for delivering How you work new say fleet? are monitor balance and do pursuit your expect near Just delivery, of doing how builds a years? deepwater some follow-up, it a for of With to the ships you same. still and your seems of that existing ultra finding guess, this deliveries ships, peers sidelined, reach finish you do many guys guys multiple the I the two are do pursuing you market, one four

Jeremy Thigpen

going day entirely is with what be dependent to pace on The rates. happens

the get Mark pointed and utilized As so on to rates they them is term move a cash alluded those contract have lot have supports all not cost to I market. to mean, going pace lot entering of spares that’s of because out to are builds millions they these still make trained. to there’s earlier so rigs or need, it’s the of million a out, constructed, mostly actually earlier, the and recovery $XXX just and it’s the how crew them, the and depend the one you’re the to of sure rigs, trajectory approaching have mobilize bring tens day of a new that, being rigs going that of

Justin Robinson-Howe

over. Okay, it turn I’ll you. thank

Operator

from next Our from question Greg Lewis will BTIG. be

Greg Lewis

you, everybody. Yes, and morning good thank

Jeremy Thigpen

Hey Greg.

Greg Lewis

end, there’s I have couple the just It have seven a the sixth, or reactivation it is say ready looks want or looks company that fleet. medium--over comments couple let’s now Leader high hey, about you should to have your around near, drill improving question that of Clear not around acquisition, miss we the something market? about--clearly stacked quarters, idle. the seventh roll just just to off in stacked It the it? post rigs the lot right them Ocean given a don’t or we Realizing about because eight one idle call ships. Rig Is think gen way like has to a think rigs in maybe contract where maybe like to rig we need the the cadence out, how an is hot go next more,

Jeremy Thigpen

will other rolling rest the the reactivating point we future to well rigs driven have No, earlier, We I off don’t priority, of so those and with rigs any that top Roddie we contract, feel a that those by we’re to incur have this no don’t with intention those we gap think Mark’s to place time. have rigs To positioned the is contract, his be rolling associated team’s as the like and at rigs pursue are point fleet and speculatively try contracts of costs gap. in in off the are contracts.

Greg Lewis

is for players a less momentum Roddie Is trended pricing - arguably acquisitions? Roddie, two building maybe with high of difference Then competitors have like hands. put great. post looks your ship of these XX% weaker your an one in maybe how acquisition acquisition, guess Okay, market? this in a I doing you seen with drill the market and there end of the stronger out noticeable was has it

Roddie Mackenzie

at, we can the rumors pretty Yes, so all only contracted speculate but on that industry would much are what others suggest up. sectors have

and our than of now you is that higher seen attached think pushing improving, awarded one XX to suggest we sustainable headline basis, Gulf that our you’ve rates, are think would that announcements of you’re down the and if long rates at we understand are as Mexico few them. for the or come well previously competitors Gulf are so been out of most to of especially a the cash always so about that anything rates the of that the that’s those understand market, we U.S. of in view, Mexico, from we’ve that just seeing rates Certainly I more steadily kind contract several you’re breakeven definitely XX% term barometers a well levels, than being point doing the because same well. so with spot seen

Jeremy Thigpen

assets And these more those no fewer having the discipline. question be that established, hands more more having certainly there’s with organizations balanced, financially secure in helps and

Greg Lewis

thank the Okay, you time, for very much gentlemen.

Operator

Thank you.

will Our Rohmesmo Clarkson. next be question from from Eirik

Eirik Rohmesmo

Thanks.

of think on marketing, some rigs Santorini that Just prioritizing comparing spec about you have? and cold stack the builds How do the you new a follow-up the potential versus reactivations. higher

Roddie Mackenzie

depend would project [indiscernible]. it a pretty going was the sure is - I high I mean, Santorini spec but on against the I’m how do we prioritize what for, does rig. not quite say--well you’re question Santorini

Mark Mey

phone Eirik, lot your a There’s could on background you mute? noise. of put

Eirik Rohmesmo

that. about Sorry

Roddie Mackenzie

from Yes, so costs what terms it all we also, They kind the recovery. forward full the do Mark we that Jeremy getting really is no have patient waiting as rig cold said several that There but need that. for at for push but to will and stack, bring job. to out different be are right opportunity we times, without rigs prioritization, look have the for slightly so the to just of rig in looking we’re of way; the navigate specifications, right

Eirik Rohmesmo

market. leveled question off in the basically say a been the X All the you for think seems X the you the basically Tier on just that anything a bit, rates sort keep like on as have but have the and sold the moving off but why at for and of rates a for rigs you time even Can harsh might bit think same mentioned, well, as will rigs, it’s environment market The have right, higher. as rigs Tier a and out, rates Tier you up, Tier on rigs out? Tier leveled the X it rates then you do mentioned where sold have been X the

Roddie Mackenzie

rates as essentially going think of XXX little that the out, bear. operators with believe. coming up the certainly there show mark, programs so steps will a another so around happens, flurry had is wave That’s just is market more it fixtures in new pop how expect we again, to just fixtures a what That’s a look go for at of up see several that each tier. subsequent the increase, XXXX bids out will sold activity of the reason not there’s tends - - as XX, fixtures rates with round another to the the next and it to The summer that’s now of we plays kind We higher XX%, lot of again. you’re it we

Eirik Rohmesmo

very Thank much. great. you Right,

Operator

be Holt. will Zurcher Taylor and next question Pickering Your from Tudor, from

Taylor Zurcher

in $XX and $XX the difference? in main of that that I us it could give floaters. to I touch Jeremy, said think for over more would sounds on to what’s how bit you you the morning. per the good versus like prepared but I a realize Ocean floater, just mentioned million costs Hey, what’s costs capex million driving difference of some and driving but wanted you opex. Rig the went it there, buckets reactivation color much mobilization you little remarks, be there’s

Mark Mey

million have expect Corcovado $X Mykonos, in each mentioned, the the Taylor, two be XXXX, is $XX rigs for we we expensing about to as million for $XX for capitalized. in addition, which to million I going be the and that

A in this heavy in costs equipment of typically rigs. the got we’ve pretty mobilization the it million Ocean the of those costs included a re-crewing is the project which the overhauling each is much covers of two that more estimates. pieces to lot $X management rigs, few about add we’re majority There’s You it. for of and not Rig recertifying. That are which of

Jeremy Thigpen

that mobilization their at to for shipyard we’re Ocean allowed specific they’re certainly reviews. preliminary are as in one we where Greece, is work and the to accounted the so--and some other that for in because then Rig sitting, not costs were reactivation and perform hadn’t doing currently Transocean rigs to looking four they things were And our

Taylor Zurcher

one you we think high broad from deepwater certainly months just to maybe about deepwater the at least is level recovery from recovery, perspective, or Maybe for If next picture to in a be understood. Okay, change XX of there in it a rate Brazil balanced geo-markets the is up I is suspect expect beyond, most really perspective, probably going of across a golden and and region painted sort moving ultra into XX triangle. based, broad forward? a there, growth? to particular the XXXX you see more fairly high going where

Roddie Mackenzie

There’s our in up, the got seeing doing couple on being you previously, couple [indiscernible] is of rigs. a interesting, rigs couple that enough that, a definitely Angola then Senegal on way thing for in not out. more fill we awarded of top four work better. projections West of has just Africa add only tenders would We’re the course better saw coming the but but as of Brazil, is and Nigeria discussed very and

constrained So say to not actually by assets and there’s into the just there’s environment, see moored rigs, and available. those if that you look will other we going other triangle many just like supply Australia, trying the I many across at get then because as them we places not the spec the all is golden are board to would appropriate increase, go that then harsh of the then for available, high markets again

very growth barometer see future. or So assets concentration golden which the I in probably our good triangle, think of for is you’ll a traditional a

Taylor Zurcher

Very guys. helpful, thanks

Operator

you. Thank

from coming last be question Meakim Sean will Morgan. JP Our with

Sean Meakim

with next contracting lead your those to would the just them Jeremy, are drill morning. a operators earlier how upgrade the upgrades latest some efficiencies? of How match try to efficiency of rigs reactivation those the with those about get point lower type contracted rigs, or of hi. those much to as for of less round to Good expect efficiencies Thanks, opportunities? settling bit rates ships, pursue you on to out, of viable beyond

Roddie Mackenzie

oil you Mexico, the and delivering programs developments, it expense, a delivering a is to delivering efficiency, the millions long When down really you’re to you question. Gulf about believe talk when faster you good - of because the no-brainer ahead instead certain that the year of reality of operators, then so benefits actual of nine at operation, a of of XX% when more three operator, years. term compounding operators point you’re deliver hundreds gets the to - is very big schedule It’s a value with of years, The efficiently it that it program situation for going but the developments. lower cost if a you XX% dollars only of is your they these is are Look in to delivering more certainly operator and spread becomes billions comes of on justifiable fact early. we’re it’s in back looking the you rig a it first gains in XX to efficient two a the of months a significant not that some the for rig paying bit rate if our to that

Sean Meakim

to upgrade level rigs, those think efficiency? of gen how that try So terms the of of rigs say, we sixth of for, in of viability do that upgrades types the availability could about into

Roddie Mackenzie

If think see would operators range, at funded sold you and see you soaked closer closer most and I for can so wells. level adding ones we’re and efficient utilization, you if you attractive more are upgrade of inactive, imagine, we up you then the to get XX about the still at rigs them, capital the the to we those at will out, look to need look already and we’re get percentile XX% that that certainly seventh gen, options as will deploy because at where sixth deliver then by

Jeremy Thigpen

something that. though, challenge, It for a like the do to industry be will

have going time capacity, lot all got to to equipment, addition about out-of-service You X.X capex and drives--it’s going you’ve from so to the all top high specifically of X.X, think hook in you’d to leads in load to that a the cost. invest pretty require

what it’s much going higher to but possible, today. it’s seeing rates day we’re So than command

Roddie Mackenzie

And equipment projects things, on the focusing rather existing to a innovation upgrades that out the handling equipment wholesale lot changing on and existing than of side and fleet. of we’re are

We’re previously those looking delivering effective become options ADC clever system now of higher announced We’ve add-ons, efficiency. ways upgrade cost that at there so rigs, little for the on the doing things Norwegian things. very

Sean Meakim

you feedback. I Mark comments, on thoughts One in XXXX next maturities in latest curious about - helpful. all about cadence profile liquidity thinking appreciate the you’re--your you for ’XX prepared your just years and and that new very would and That’s couple referenced how How the ’XX on coming the that but we helpful. as well. in think be out cash the the of build over payments have of more

Mark Mey

Yes, thanks Sean.

various for ’XX, last you’re through this at As aware, the tenders the probably as well fact well we’ve the first three taken quarter. the in runs ’XX time and ‘XXs ‘XXs,

we’ve more for raise then repurchase the had ‘XXs not can but ‘XXs debt a hold the pretty reluctance that we’ve future. over towards that out just well vast retire opportunity and know, you if ’XX that taken can, waiting addition, plan upon I for the maturity. paper. near will is in have the is ‘XXs, of ongoing to, until the debt because plan couple to stack. so by be last aware, we’d to we given we matter opportunities go to some The the market right a mean repay programs now, In That’s and as doesn’t sometime the we for you’re that active cash, think as coupon look onto as needed additional get the but majority of much it’s debt a low open we focused in debt years, investors $X.X do We now billion to as

Sean Meakim

sense. Thank much. you very Makes

Operator

at showing I’m further this questions time. no you. Thank in queue

Bradley Alexander

thank today’s Carrie, you call. you and all Thank to participants on

Have again quarter any our If feel further day. a results. when free look contact have to forward We we XXXX second report to talking with you questions, you good please me.

Operator

ladies concludes gentlemen, this today’s Thank and you teleconference.

disconnect. now may You

Transocean (RIG) 30 Apr 192019 Q1 Earnings call transcript