DO - Earnings call transcript Q3 2019 | Diamond Offshore Drilling, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Third Quarter 2019 Diamond Offshore Drilling, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. now today, hand Samir would to conference I speaker your Ali. Instructions] like the to over [Operator Thank you. Please go ahead, sir.

Samir Ali

are on Thank and you, Woll, Chief and call Executive me Commercial and Officer; President and Scott thank everyone, President today the Officer; you for Vice Financial Chief Chris. joining us. Ron Good Executive Marc Edwards, morning, Kornblau, Chief Vice and President With Officer. Senior

as be I remarks, this we you today, the information you're our on that replay may only any Before reported sensitive call speaks of advised that remind of this therefore, accurate and information begin call. time of time no at longer

covered forward-looking to in or our and and certain Those included that control unknown or materially statements risks include press we filings risk forward-looking statements. In made which performance call this and today. please risks in uncertainties, obligation by contents the earlier disclaim statements many differ factors future And statements our may implied are or expressed uncertainties on results in Please statements. Further, nature. based actual note predict the of unable to that be our the results or to expectations or our any to these disclosure performance disclosed filings. regarding known our any addition, XX-K are we These with that in and during current cause the any and by include may revise from are refer our incorporated XX-Q expressly SEC update call forward-looking release issued disclosure. of

Please that, GAAP on non-GAAP the over I'll referencing our figures website. Marc. today. find reconciliation the to with be financials to will turn call And on our We call

Marc Edwards

primarily upgrades of quarter morning, Good and you adjusted This of joining of the being driven year-over-year everyone loss quarter loss per quarter while Offshore to In survey and XXXX. third an XXXX. by adjusted the today. third XXXX, the The Samir. Diamond share rate, third had BlackHawk was and technology Ocean per $X.XX. BlackHornet for of compares share in Thanks, decline us Ocean special an off the in of $X.XX their undertaking thank

third Partially Endeavor. on the Additionally, the rate with year-over-year I moored the start decrease sold offsetting Guardian of start-up on of premier XXXX. Ocean was was will in previously rigs, the Apex our strategy. Ocean quarter Ocean cold-stacked the now an update two and the

has and Otway Energy are of Singapore the the after recent new gas was a quarter compared work a moored between our in moored Australia. Apex the XXXX class, sixth is similar to with contract in drillships, contract Monarch time these currently we on that limitations of have response XXX Beach a and floaters Its water in and seen in Moored successful When market. of a the for having been well a exceeds exploration with result, will preparation Woodside also This keep up in The This where fixtures we is first our rig. exploration will cost forward the And capital enhancements which have Basin now with Ocean that it perspective moored over supply XX of inaugural for the additional the the quarter Furthermore, been market. we'll an of the a that trough with the its the option local seen the address than are Ocean in commencing whereupon event will days focusing the have to category in contract we moored rigs the wellhead in staying segment market. very offshore than of new Cooper, to disconnect Apex most scrapped, the feet, the for to will fleet, Exxon, rigs. Apex And delivered the from represents. it soon early sanction drill We region. from awaiting the to the in higher for balancing the disclose the Ocean DP through that rate return opportunities Ocean XXXX. focuses moored underserved working where in this seventh-generation asset rigs the for and it Australia. have quarter, a is shortfalls and the moored margin. of lower complete we market. two-well in driller of the XXX comfortable the in very to for pipeline are awarded over is vast failure well dayrate fourth supply we the on fixture mobilize is as only And moored a feet depths. for asset. majority Sea. less most exercised The in and at that XXX Myanmar amongst in seven asset water desirable of we this this the asset fourth The to challenging an Recall, of increase that two for to fleet Ocean on a are year Shell the environment quarter today, rig drilling a another Apex six of Endeavor, power FIDs XX-month Diamond allocating previously capable demand the look feet fourth the South for has XXXX. now the dayrate has The that moored awards in harsh rig is depths faster is a upgrade This assets all double at Singapore, its to were at Ocean which to new We operating best North that contracted Onyx, rate have improving XXXX. that drillship, in the our others. now lead moored Asia-Pac until and been fourth because to also communicated Further, the offshore, XXX primarily consecutive announcing rigs of seen for with Endeavor

is unique, The our strategy that innovative and second to deliver technologies Diamond and both of clients employ to our element superior economics Offshore. performance improved

operational is to Stack-View potentially program monitoring, prevent anomalies Our most to the and subsea our drillships. time implementation, was approval Diamond deepwater drilling. Mexico efficiency to from drive of this recent This in trends all helps subsea further in XX-day advanced of lowers product XX/X detect With of total BOP our service assisted identify downtime. we move clients have and This testing launch to gains fully real performance, This service visualization and quarter. technology and BOP the announced applies stack. service on implemented analytics maintenance of data and enabling our cost Gulf optimize regulatory obtaining now last XX-day first-of-its-kind the

spoken materially beyond on seventh-generation that to of industry. As some at in Diamond the calls, are the XXXX the contracted result, efficient I are drillships dayrates Offshore's current higher market. And through than and most previous our a have all as

third-party cost clients. be to drillships steps remain are the an and that rigs. industry-recognized progress they speed. seventh-generation this of deliver of in to ensure see the five-year believe as a our the adding have According technology three of further and the efficiency these to taken the our that backlog market the their wells drillship the new recognized to and efficient process deli enabled by also most We surveys, challenged, Gulf drilled sixth However, of being to first drillships we automation database, Mexico, our four from will is These is at through of rig differentiation continue enhanced adopter the are improve floor, differentiation still front suggests and line as we by tripping we desirability. our

our So let words now few say me on a CapEx.

discipline demonstrated elected is another XX the quarter, have scrap by during fact this best that scrapped assets capital DP past past downturn. we over our floaters, to we this Confidence. the of Ocean have And market during yet Our

enhancing only past That aligns on where with capital unique this and spent our differentiating moored capabilities. have further We drillships, our it is our ultra-deepwater year strategy. asset

forward of now best this amongst a utilization our strategy, we peers. As have the result fleet

by moved off have underway. recovery in that points, the data well note recent challenged, tender trough. a remains moored And market encouraged is dayrates suggesting market the are that although We the DP

with call closing I turn that, over the the have So I'll for financials the will to then to quarter, remarks. Scott? discuss Scott some and

Scott Kornblau

morning, Marc, and Thanks, everyone. good

for asset quarter quarter little one-time per loss on per loss today, to or was $XX This in by quarter-over-quarter and second quarter XXXX fewer a normalized share. for net $XX the primarily sales, results, $X.XX change share. provide past negative some a our color negative this compares or of reported As quarter. I'll net million days the $XXX On Earlier third compared driven basis, to of the $X.XX was for million, quarter's share normalized adjusting The net second. of our the third loss shipyard million or negative upcoming a give guidance XXXX. then per we $X.XX always, I'll

Now, let's take variances. a look at the quarter-over-quarter

two the their upgrades, guidance shipyard in million was of the range. million, the costs to these second quarter two finishing a second Ocean a upgrade survey Ocean deferred contract to completing compared a after about five-year The compared third lower Endeavor survey previously to quarter of five-year drilling the quarter were working second of second and offsetting and attributed while quarter than and of Partially worked to and the upgrades. a net to remainder and and expenses drilling of both third stays. quarter. the amortization shipyard reactivation upon various low-end is in the in million third BlackHornet of second million $XX million $XXX Ocean stays. reduction the second most Ocean XXXX revenues Courage compared quarter Apex Endeavor third most third automation. entire rigs four about shipyard its Ocean in the quarter, the quarter higher primarily contract shipyard. of compared Ocean entire quarter around and million quarter the of special The for upgrades $XX quarter various undergoing completing to The operated $X focused to Apex up quarter-over-quarter the the off BlackHawk compared undergoing Approximately, the its Contract First, of operating and BlackHawk to spending to the and about compared the of the spending similar increases following the during were the the for mobilization and completing months $XX decrease for due rate, of non-cash its of The each preparation third entire were July, in shipyard the the extended half survey below special upgrades quarter $XXX quarter efficiency of spending the prior operating operated quarter. months survey

As we over discussed on and mobilization mobe prior calls, that the U.S. after contract of amortize contract initial GAAP term costs dictate the rules stay. the shipyard and accounting preparation

shipyard Ocean for BlackHawk Ocean and partially by As Ocean the the quarter is the slight for Apex was the second quarter. costs were for the to The short, the costs accelerated related quarter of initial BlackHornet. Ocean is Ocean offset shipyard to of and GreatWhite and occurred BlackHornet. amortization the mostly fewer decrease Courage, The primarily to shipyard guidance during mostly quarter-over-quarter remainder attributed timing costs the contract beat the Ocean third the on relatively third

quarter of within previous and came expense interest to higher third $XX million third the during assets a The guidance. $XX was than is disposition quarter. $XX related Third Wrapping net $X non-cash loss prior on guidance quarter third equipment million of results. to of up quarter depreciation adjustment. due expense quarter expense million charge million G&A than of primarily the disposal guidance, a

published the was during elected With guidance as the last I finally, and tax out we held of earlier during fourth today known Confidence that, time the And of of XXXX. to projected within rig provide do, details to let for Our for given I for year. XX the before reclassify now will X% the contract which within next you well of as some Ocean the rate the call. quarter, range status sale, months. refer wrap the was fleet as report, service quarter the me on remainder our to remind But thoughts

increase million. drilling flat are remain Ocean we as BlackHawk quarter, and contract at to and fourth to operate the $XXX between the Ocean rigs revenue should million For relatively the $XXX Revenue for Courage both negotiated expected recognize gross quarter compared $XX quarter, during from to previously million quarter the entire to two after for each a margin months operating fourth the departing shipyard. third about expect the we during commitment. fourth expect Also

satisfied we million that you or last either with could rigs be into customer payments period. through of $XXX a designated If additional the entered at contracting recall, year, through a agreement

we its be the two-year third first the GreatWhite upgrades a which these quarter. in Apex period payment. a increases part of during commences Ocean most to its at Also, expect The spending satisfied for million their as concludes quarter conclude Ocean completing designated early compared and fourth month work operating Offsetting campaign, operating fourth by year, quarter quarter. the and of the is $XX a entire year of third about end BlackHornet, preparing this expected compared and the for obligation to will next the the Ocean to shipyard contracts

will two of BlackRhino weeks to about take Finally, its downtime unpaid the perform survey. five-year Ocean

at million fourth expenses to compared quarter. $XXX to between quarter for million – remain in million flat $XXX $XXX and relatively drilling contract the We expect third XXXX million $XXX the

in anticipate are rate as costs survey special decrease finally, approximately Also of few this at Fourth deferred for roll and at $XX tax digits the BlackHornet contract quarter we quarter decrease the should a of non-cash $XX per Starting costs amortization low-single for for quarter be $XX expect at G&A effective to the quarter, of about the to is the quarter flat in And depreciation net quarter. million moving Offsetting remain will full fourth respectively. to expense for XXXX. the a off. the the the costs and shipyard drilling of stabilize there fourth expense relatively Ocean interest the previously $XX come million fourth million and Ocean million non-cash we BlackRhino. majority parts. expense However, amortization our in and XXXX,

as it with Of that, Marc. to factors, up changes a of including, on assessments, to course, in the but exchange of rate movements mix may well I'll to settlements or geographic earnings, not turn fluctuate And or tax limited variety down the based as rates. back

Marc Edwards

you, Scott. Thank

We to to us on accomplished will to $XXX months differentiated Doing work our allowed market operational innovative what secure and strategy. over XX fleet so over past backlog is the a our providing focus and million year-to-date. in a been performance. XX has in have continue challenged and delivered solutions This of in to-date is years still across class-leading testimony has

up it questions. now for So let's your open

Operator

Simmons. of question line And Instructions] [Operator first the our comes from Ian Macpherson with

is line Your open. now

Ian Macpherson

guys. Good Thanks. morning,

Marc Edwards

hi. Ian,

Ian Macpherson

the up Marc, still on Valor their contract of possibilities market to the balances high if the think pretty moored, given you the activity your more just be more wrap for just if still see taken develop? receding for quality, floaters mooring on this outlook to at or on after year, opportunities or specific that have those positive wanted work I refresh waiting if Or that studies Courage point? might next get they upgrades a for you're

Marc Edwards

But at it assets. what for at behooves first us market as as rank So the Valor. take the for look to and still the same put it assets see and the Brazilian a there on an to remains opportunities they materialize mooring us option Courage the to DP time,

the there market think if of tender the I saw year. assets. the significantly points as everyone just first, what's been that the went that think assets a what And on I tenders address course, to moored I assets one market moored the We've number the had demonstrates down prior category aware back dayrates less earlier moored there of going there asset recently down recent some than asset of is the think that result that think data in Now is data we Brazil. in of But I down well moved tender I The seen But coming tender commentators for was also, come number up. the as into DP surprised that of of moored that is for was substantially could assets. is because public.

it's they against I the Now is said of a from in But category And different financial that can differentiate around perspective probably semi pre-salt a compete the a by accepted having that, features market of of Brazil on lot said specifically differentiation can where is where certainly a perspective. know people sixth-generation the there. drillship DP semi in one a accept having the compete a specific Brazil that, just drillship. words, a In giving work the DP or other places against discount that's and seventh-generation drillships. down

be forward, with moving two these in and that that tenders recently that. a there we have of staying possibility in come with that we’ll and Brazil mind, rigs So participating to the is market, see in

the know decision much our these make as any, if to we once that, rigs. So into we'll then capital put of outcome how we

Ian Macpherson

Thanks, that for of Is could Makes your down you that we than year. CapEx in or Could coming still Marc. Is quick CapEx on lighter $XXX in little or guidance? bit Scott. a half or in comment QX it of this you I follow-up of a sense. If think unchanged? that I back the ask looking QX? of are than half less it was current is that million

Scott Kornblau

Now, CapEx few we to $XXX $XXX our to guidance we're at million to quarters that ago. going keep a the guided full-year million

You're accrual quarter thing be would finishing we CapEx. the knew GAAP-based spend that, right, QX not do extrapolate One guide with number, to to that will CapEx we heavy up doesn't out, I out but point cash we're the Ian, a QX Onyx. is a

CapEx instead December, into little be come some for guidance the first week timing, but strictly of week it'll So of we January XXXX I'll payments may under, a just a slip adjust of of if the last Onyx my and that. the

Ian Macpherson

I've more, I'll it. but one re-queue. Thanks, two got or Thanks. Got Scott. Okay.

Operator

of question America. of our Bank And the Mike Sabella next from comes you. with line Thank

open. Your now line is

Michael Sabella

of for this we Is kind range with a know it in of help potential kind way and wondering morning. Brazil. XXXX of given any XXXX lower, in I CapEx potential? could good for we you frame there have us guys if of talked about discussed outcomes – CapEx I Hey, just CapEx. start kind potential resetting potential can you growth was

Scott Kornblau

ready Mike. XXXX. be it say but lower Hey, yet, I lower, you, Yes. I Not and will This will a give than much to would is Scott. tell number

that automations CapEx of Our we then had was at as fleet, that design a yard special times investing year We rigs other heavy and very things nine by the for XXXX the talked the and upgrades. had us we in started about. various was like into and surveys have some Marc these various because

tier Now of is that we're Right surveys most back that have about done, the similar scheduled normal some CapEx. first the will those, ships upgrades to do lifting that's now, we absent on we two, stays for that second to and talked two just heavy for and Black our shipyard ready where and we XXXX work. go be to that the our of maintenance

and wildcard Courage I'd have say of the months. decision Valor, and being With a in handful that, the we'll next on

it we quarter. shoot tell I'll significantly goalpost give for you next be will and to now some is will you So lower

Michael Sabella

think much reactivate would And make on about what about with rigs, cold-stacked capital when helpful. a that think on do cash another those need there rigs? think all for then to to scrapping then, any That's those And to one Is as other how Ocean Thanks. two we Yes. of rig? follow-up at you them? And have Confidence. would the do for all me the talked you you you decision Diamond you'd

Scott Kornblau

I'll Confidence this Mike, the is Yes. pick Scott question. again.

expect value scrap We much We from the impaired down its deviate that. of scrap have $X to million. value don't to that rig previously

Ronald Woll

Ron. is this Hey,

the two not not would service the other part and not really them that we your is our That's that go-forward the On rigs plan. America. to is for half Rover stacked, of regarding path the market say clear, returning have second the I there. of the question really

terms So there the We've think to isn't done that. I the of just math, wouldn't in support needs. kind market of but CapEx

Michael Sabella

you. Thank Great.

Operator

comes with our question Citi. you. the And next Thank J.B. line of from Lowe

open. now is line Your

J.B. Lowe

speed in guys. a have see to mentioned several subset folder higher. of My investments are rates peers improvement is guys that you that of How you question you and the but drive that all market? over to that the what is have come your the able Hey the the morning in is And also a how new do in of or about the making technology out top-end bottom technology, bit, you, just of off kind next playing and dayrate how for going the affecting little that given playing tripping on first rigs kind technology out the guys here really bifurcation quarters?

Ronald Woll

This is Ron.

work. of rigs with Black customers our and to rigs many look standpoint the to how consider above also a our ships I but it's crew job I that What the that done back interface. rate, technology, think at some to versus from matter good technology, of think So We've a of we plus don't work rig much earning is I think really rates. thought be the what commitment tied of that market leadership, our kind

we've think get sort shown pays outcome. where them, the to-date clients and acknowledging more a because And technology safely a more they construction so we've good and efficiently, in I investment drilled well, results for I good here, a of think some well off, seen

also rigs. Sim-Stack that Black worth something that on space. seen across in the it We've having in we've also with many So our the service, broadly seen more acknowledged operators program. place drillship we as which more put That's ship have in as their

Marc this off market that referenced, but as the So it's still not probably past for in improved. us state we're tense trough, improving in, in a yet, oversupplied come

to thought So the helped to there technology at put really leadership to still rigs and don't improving, contract rigs on while think I get compared all. that commitment

one of out. that keep stats in utilized our toolkit and the kind to fleet that's market, tools that our oversupplied have our of we an in so And bear

utilized kind fully have we So fleet of today. a

standpoint, that technology does matter. the acknowledge, why clients do So from that commitment

Marc Edwards

here in and Let me explain come about strategy. just our differentiated

say spoke dayrate, to as drillships number data through my now remarks, of we higher prepared that. a that our significantly of earlier all of our unique peers to beyond. drillships. drillships. new But in, are we've can our to us we So XXXX and on for put is they technologies are in come contracted And suggest a contracted that which points beyond at None than recent are

markets targeting, proven have would. differentiation So it otherwise I we're our than the that we think command higher can in a that dayrate

that The to challenged. are dayrates, in move that we've semis, just still rig still Australia disclose for But that operating dayrate been awarded been whether need We the higher on drillships what but moored we're higher. Apex, from dayrates have lower our on is following or the an clean it's this a pushing rig at dayrate doing, Now, for that all the forefront announced we dayrates on we're year higher. don't cost. a upgrade than drillships has of

So that for target you've got I of differentiated sort pricing. markets think receptive to those

I first efficiency As is from will can dayrate into they put the earlier market here, that Brazil an where in discount mentioned a perspective. a however, you a question accept and market, rig standard

assets. be depends, which it to surgical you markets got differentiated put into it's, So you these

them got You've gains where put from a market to efficiency a understands portfolio. differentiated the into the client

J.B. Lowe

know to kind pretty GreatWhite, off guess looking rolling the Australia? of at the you I what's rig UK, soon. but another I Is outlook you is into for of markets an that region in Okay, contract great. go like is sounds a rig, of which that that there into those for And moving Monarch, Australia it and opportunity out one are rig? the it's have Myanmar. the

Ronald Woll

again. Ron It's

a are. rigs move in we like into I more plan terms don't many think Australia, have to Australia, grand where So we of we

course, coming Of the here shortly for got Onyx out we've Beach.

there. we've So made kind already our bet of

drag Australia. a In I terms the back that rig going in trip. assume of to long UK not GreatWhite, would That's that to the we're

ground, well and for if us is in UK, the there year on this I half in perhaps the good placed Canada, will, lying GreatWhite's a with portion job UK. the done hunting think you she's

recall, an the no shipyards If of hanger rig had she in really hadn't resume. XXXX, since you started the drilled we came XXXX. out She

as strong important a off and for her has been now was promise it to So us kept. that start for vitally

very X.X%, for So has geography. six through months job she credentials, subsea half NPT, several to the under she in drill UK storms common two having really down so seen a way back her XXXX. for over multiple earned wells, under the her great of of a done X.X%, that clients, with rig NPT harsh in just favorable there And she clients

So place. I the the GreatWhite in think is right

I the fully market sort said, think is not improving, yet of recovered. As Marc

So work, more there but GreatWhite work think work going see I forward. is do for of expect XXXX to the to ahead, we majority her

J.B. Lowe

Good Thanks stuff. right. All guys.

Operator

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

Your line open. now is

Sean Meakim

Thanks. morning. good Hey,

Marc Edwards

Good morning, Sean.

Sean Meakim

little point. you the out, could rigs Marc, today tender So, Apex, mostly when this at about you're more maybe those Ocean on a working talk over at year of how looking bit types fleets negotiations look a

upgrades that mentioned? capital Just the with contract maybe the negotiations? that you those types curious costs how influences of And bit on the with can you just elaborate associated a

Marc Edwards

on So the Apex around XX. capability was guidance itself. was offline and for It given previously it upgrade the we've

Scott Kornblau

XX. Yes. That's about right, XX to

Marc Edwards

a So and that talking and make after. dayrate the sought that again. market efficient with – more rig in certainly higher at follow-on for indeed it clients about been work does rig more We've Yes.

us in things One scheduling a somewhat we're is against of of market. finding that headwind the that

work overlap future actually coincides with of we're today. contracted that that So some potential to the the of work do

through significantly into So Ocean that region. why that's the that a course rig rig But upgraded that there. clients. not we're only it's the the bringing And of is a attractive talking back of very, case market. very the of got with Onyx, that we've reasons This our one in remains one

that with Ron rig the market already that comfortable as are extra and moored assets suggested, bringing So with back earlier we're we an got. we've in very there, very, but

Sean Meakim

was I you to state to an now maybe fits Could the current like And for Lion, give curious us strategy? XXXX the Sea you right, Thank current slip target. looks given update that. of into get helpful. your we the a on that for FIDs continue That's if maybe LOI of the sense is could how

Ronald Woll

This is Ron.

very has defer kind but commentary the sort been that their own their the program, in quite and programs time. to client are program of one for kind easy would broadly few, what some I'll to of development for to I chunky name. on consider in It's known market number, out there, few yes, identify sort be the of there of are So, been of speaking, that

this I high market who there for hopes, good do have think where I recover. to is a think a operators think is I case

continues so think would to as that's why think I complex fairly program, a the It's that describe. on. And program I operator move

of to lot to right, kind off there's of ground. So get get that one a moving parts the

we keen sort So that's one of of into sort – it. We're very view have that quite on. a we are good

We have I in one but clients credentials in think I that think operator, the both good with general the UK sector. also

a certainly But so comment, have Marc's to. there that are eye to speaks say, earlier And it program that's an we also would headwinds. I

And the a of understood. FID not But variety for an to well reasons, easy it's go is program get across line. so the

clients. not common across. that like candidly, always a a you I develop competing but an common fields, would customers we're easy our pretty, that's think think demands I for get extract, look a – if one proven to got that with at capital have, good they They've and narrative the finding to pretty that programs, resource it's

promise for clients. many I our think I expectations the from how in easily. us so where think how consider good clear they for is programs I it there to future, of and they us, about relatively some think the example keep programs, into that good I both that And fortunate strong good and keep schedule might about with but coming of we're why operators one market think is is fit They headwinds a think with are also to this programs to but

a of our there's If where name, of like bigger programs the that chunky what you with ones. the we to are And there, that out I few one technology and effort that's about only class moored work one at client an mentioned, are look big kind have credentials strong, Marc a piece quite differentiation. in but and lot, as invested area work of great the space we've that of a we with quite that's it's is is

that we're will good out. place kind have but we that and So I of in think a see just how program, watch plays for to

Sean Meakim

a Thanks enough. Fair lot.

Operator

comes with the from Kurt line question next Thank you. our RBC. of And Hallead

is line Your open. now

Kurt Hallead

Hey, good morning.

Marc Edwards

Good morning, Kurt.

Kurt Hallead

the much for so as thanks Hey, color. always

it's technologies on utilization you pretty and the off as in tease that well. sure for as effectively you quite the now on investment front clear guys dayrate made So paying front these is Marc, all the

bit. in connect here think prior return from forward to How return contrast cycle and much on maybe capital dynamics. what When Marc, these moving give about it percentage a sense the basis to you're just us you've basis and I'm able think the these here, return this capital to that capital investments mean cycle could little on cycle and to dots basis through as to some deployed? So Can incremental on the we comparison a ultimately trying or points something? all a what for going on upcoming maybe technologies on with you incremental you put or technology get be you

Marc Edwards

ultimately, look at make Kurt, decisions, these But on on market time, not going in I'm moving we the the company forward be that this we allocate forward. drawn a of best at whole, as also is that you capital we at somewhat when cyclical we how to giving we when a this return value, a capital shareholder is business. what is moving and opaque understand terms look

others, make take fleet ready that fleet sure this recovers, to are down assets to market that assets capable the that up is need and one and to XX has and drawbridge suggested deeper would because from And cyclical market. we when and time, measures very, of than a Now a much at start same is counter the been the limit taking XX be. cycle those assets, cost first to to it opportunity But very investment. gone to reduce are longer this the we've are the were effectively first pull a and we

course been is questions supply asked production Deepwater of a extended beginning see One away. going surprise to is the come number has is a some rollover, to there out shale. really data growth, are which and the suggests upside that years, whether a there beginning that of the have does back non-OPEC to come the deepwater it an we important our that from question not late picture. need It remains clients. that. when of of of I shale the going the becomes the and to are was, points part is has what of And for for for into stack this downturn, And what truly is

believe scenario analysis, It we coming will XXXX. our do XXXX. be is not we It's when that recovery a or coming. in XXXX So

substantially. stack market significant this very Onyx them a that returns of which that comfortable we in our work And back the year, And we have consecutive future. the row. assets we've that stack, rigs in back the we look Basin liquidity, that Otway have we The We cold moving have about Apex to we the a gas know good trough be Eastern just drilling from ahead we we've dayrates Again et suffering will are double moored we we in above going for from the for Australia when recover bought is cold seeing done moored which blackouts on prepared dayrate supply which dayrates my make market into market Onyx fourth when from at have so capital the remarks, are increased cetera. in won Endeavor it in goes region. that are down for working the working runways bought that to Australia, that in it's on at the rate local the fixture be in very, where the and we're is there, the energy

the Falkland work. those an the that for LOI we bring these for in assets long-term Sea back, we've earlier spoken the assets. again, when make very decisions of Endeavor Lion to very, the success So in call. we got We've are comfortable And about

we work and bring very have we're assets place. the So comfortable these back, very, in when we

good a asking number give don't a will at I capital, right when moment on there number now. but you to time, that us a out specific put in a us this are return for for So think benefit it's

Kurt Hallead

Fair. all. color. incremental appreciate that That's No. I

here for So a Scott. question I have follow-up

versus CapEx in will You XXXX meaningfully XXXX. that be indicated down

get on you view can flow here whether factors you the to revolver, your XXXX? evolved a but if free have think have wondering also may the that any efficiency the not or of given in call, I positive and point you have rigs lower indicated now prior the you on kind some of things I'm tap give the cash CapEx, on you into

Scott Kornblau

the thought made comment of that not was changed visibility where XXXX really at quarter, with point. Kurt would I I kind play of Yes. last that this has When out. that And

we and likely be be will working year outstanding determined will during other more most a but based revolver. – will items, the I the than XXXX. And of reiterate likely hit the balance still at you half hit capital us – end the of So timing not some to see on we have will first revolver XXXX the at still

Kurt Hallead

that, Scott. you. Thank Okay. Appreciate

Scott Kornblau

Yep.

Operator

Taylor comes from Thank Tudor, line you. & Zurcher of And Pickering, Co. our question the Holt last with

is open. now line Your

Taylor Zurcher

I the pricing. Hey, good morning. Apex appreciate the all on color

what for a just Sea, First margin Could and there North on a pricing in moored gross question us some looking you Australia? asset is contrast daily leading basis to on power asset pricing how in either moored you're clearly relative for for is is basis edge Australia. the the just the compare on seeing category, in pricing

Ronald Woll

morning. Ron, Taylor. is This Good

kind before. than is some ways we're say the in Australia, one of is priced So contract I'd successive that to similar better seeing what UK the each in sector

forward between think rates, wouldn't well consistent it higher time. a as the is I dramatic a I it trend as level. operators. offshore a there's over I time, – those fairly it describe Over shared expectation think think think I I as but So kind both is, do drillers, at the of click

you XXXX. at arc leading forward time of prices how If over and are today, what of you a contrast kind expectations to XXXX where for they and back the are sharp look contracts, the and look if are,

upward definitely that can You see of the way. trend kind

right goes way. trend the So

has better not by the unlimited. the the I kind it of do fast comparison of How overall, those those I right? fairly I power the to keep you've curve, And space the the big slightly that market class, what's the is in does tricky think think picture that think part rates rates recognized pricing fairly, but got in drillship think think I it's is check. slope picture, asset think moored I here, limits, recover? I supply-demand

is call trend general wouldn't that It's improving. steady I but So, simply the dramatic. and good,

Marc Edwards

something here capital So you, out deepwater in of the are Taylor. for things than that on the work. at XX of dollar studied look FID, forward, DP for at for assets. dollar opportunity And was chasing let looked there we and work. we you of a that rig There how me there when FIDs XXX chasing DP available moving double terms is we the one the it basis, value allocate just XXXX, dollars our When floaters per assets the of throw value moored is moored is potential assets in FID through out

to So that Scott Valor, strategy. is our allocated why in and forward, and quite now from basically but moving has are explains that we having somewhat apart of our assets to CapEx the terms are done moored comfortable capital we Courage spoken

Taylor Zurcher

inclusive A for QX, $XXX commitment to guidance or million $XXX That's the the maybe from BP? revenue Understood. on gross follow-up million Scott, helpful. for exclusive margin is of the

Scott Kornblau

inclusive of million. the No $XX that's

Taylor Zurcher

That's it it. got Thanks guys. me. Okay, from

Marc Edwards

All right.

Operator

question-and-answer Marc please today's session. proceed. concludes Mr. That Edwards, you. Thank

Marc Edwards

speaking and at next today's again look Thank you quarter. for we in to the forward call, to participating you all

Operator

today's participating. Thank Ladies for call. and you gentlemen, this concludes conference

may You now disconnect.

Samir Ali	Vice President, Investor Relations and Corporate Development
Marc Edwards	President and Chief Executive Officer
Scott Kornblau	Senior Vice President and Chief Financial Officer
Ronald Woll	Executive Vice President and Chief Commercial Officer
Ian MacPherson	Simmons & Company International
Michael Sabella	Bank of America Merrill Lynch
J.B. Lowe	Citigroup Inc.
Sean Meakim	JPMorgan Chase & Co.
Kurt Hallead	RBC Capital Markets, LLC
Taylor Zurcher	Tudor, Pickering, Holt & Co. Securities, Inc.

Diamond Offshore Drilling (DODRW) 28 Oct 192019 Q3 Earnings call transcript