DO - Earnings call transcript Q4 2019 | Diamond Offshore Drilling, Inc.

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Operator

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

Samir Ali

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

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

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

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

Marc Edwards

in was per share The the In fourth of per and quarter XXXX. $X.XX. Good its fourth compares loss slight being decrease quarter for of Ocean our upgrades an on year-over-year the of XXXX. XXXX represented fourth performance of Offshore to driven of in This adjusted begin quarter safest of was had am working fleet. BlackHornet I offsetting the that call operational by history. remaining year-over-year undergoing pleased Samir. the I Today, XXXX Partially primarily the the to year a $X.XX improved morning, quarter update thank loss with you uptime compared you, decline the the fourth to Diamond XXXX, ships. adjusted Thank share today. Diamond an the Black will everyone, report on in of Offshore’s in this

flow Gulf XXX% shortly its foremost, the first which the desirable performance spoken. and performance new commitment. said XXXX, to in years, reflects rig safety of our result, X-year as record first its is assets major of to previously, and BlackHornet, was reached market. a highest I And back industry quarter to environment that what efficiency performance drillships contracts following protection over the As BP the why our term these to our the of Recording priority across with proven Mexico and past Ocean of the so fourth I of automation unique the during operating to our of in the survey to years have the transition fleet. coming will oversupplied operating previously be of we campaign the four This which upgrades. and which this revenue drillship have and milestone, the in entire is an X-year will continues be have be all is a record And continued commence performance and in employees the completion -- we we XXXX on delivered innovations new achieved introduced in have

Monarch rigs continue year XX-month the with new it prior adopters And the a Bass The This, work to in X-year The currently next Strait will campaign late Onyx complete, program Ocean the of Myanmar. shipyard in until Woodside completed Once our Exxon its campaign Beach the where approximately the The a will mobilizing campaign weeks recently contract POSCO extensive [indiscernible] commencing the finally, to environment in drilling market. the upgrades preparations. Bass the to the BP on half harsh the will in Apex undergoing same X following upgrade, most for drillships rig month International second begin in further the Switching advanced begin and will returned commence now the automate upgrades early will process, its to XXXX. BP BlackLion our Ocean Australia. coming to for a its Ocean is the for to technology spend in of to recently be will also and Singapore, completion drilling the depart of As its for from Ocean of has working addition in campaign Strait weeks utilized Energy. in the in the Gulf rig to Singapore Mexico. to keep drilling moored for assets, of among

turning original X over we an our at of drillship additional secured semi, Woodside rate $XX and additional have we wells the Ocean extension This top Senegal. scope adds well third-generation additional fleet million Further, legacy months an higher also of contracting backlog. quarter been Patriot. So, for of XX XX the program, on the fourth of a awarded The work the Offshore than comes moored to activities during the for XXXX, day contract

for rates in to comments few have XXXX, allow clear the risen So, make me the market. is classes. on It a that all asset day since trough

rates; drillship day depressed however, slow the we greater us for drillships we anticipating on focused as has investments short-term the we unusually of an the to Scott for the be momentum rig capacity year to rigs. was in Diamond nature environment in long markets. in to the ongoing However, And a most believe awards. assets upward Within both well remained revolver at months. market premium and differentiated especially moored We our our will this Nevertheless, the these negative beneficial to within marketable strategy as market will XXXX. overhang, our price XXXX in the our due that semi pricing enabled as draw strategic on for flow are coming upgrades Diamond discuss we run. CapEx believe cash as start will heavy detail, in of

America liquidity we Moving we preserving Ocean time, focus forward, the the on At Rover. or will this XXXX and not into limiting beyond. and Ocean will reactivate CapEx

mooring and Ocean unlikely Courage is it we will the Additionally, to add Ocean Valor.

then to So with that, over call I have remarks. some the will and I closing Scott, will Scott? turn

Scott Kornblau

reform. $XX reported share per loss quarter to unfavorable everyone. negative of which Earlier the $X.XX a includes net tax million we or Thanks, Marc, and Swiss good morning, for fourth related XXXX, today, adjustments tax of

adjusted loss or XXXX these third per Excluding of fourth quarter negative million adjusted for net was share. This million our the $XX or quarter $XX $X.XX net per items, negative loss to our compares share. $X.XX

take now a Let’s at the look closer quarter-over-quarter variances.

First, quarter of $XXX the of $XX fourth contract $XX from of the margin third during the driver revenues XXXX customers. receipt from a of the drilling million, one to of largest quarter. quarter $XXX and quarter-over-quarter commitment million previously our major portion million The is million negotiated the fourth recognition which relates increased increase

most is third to at was and the Ocean time the concludes survey compared quarter its moving survey was contracting for a was October of working through after working contract. of next into to most upgrades which the can Fourth Ocean of $XX was higher special through quarter. to periods. the million mostly difficulty] the special [technical the $XX focused the completion quarter accommodate at executed withheld rig the satisfied rigs be automation. North spending to BlackRhino’s of As in third the the same taxes fourth The to the contributing the of revenue a be increase previously of XXXX various Also, leaving million to $XXX completing of is the designated contract. attributed approximately offsetting million Part the BlackHornet of month shipyard quarter customer of about compared of related shifting the into margin quarter to a revenue and offset remaining Sea operations commitment the increase fourth million commitment to quarter. a GreatWhite’s XXXX, BlackHawk of expected the Also previous around the the third additional upgrades fourth satisfied partially the contributing variance payments variance and the first to operations. or planned than earned the Also Ocean This of previously reminder, ongoing by the end similar $X survey prior BlackHawk XXXX quarter efficiency about contract a the revenue at was a by quarter begin Ocean through guidance. reimbursement

million noting. expense from nothing of accomplishment. and end interest is expense fourth The quarter due fourth our team line. continued includes income reform ships $XXX adjustments. during given black tax recording Contract slightly in enacted downtime expense our guidance deviations XXXX last the of but the than earlier, of million our quarter positively reflected There with million discussed came top tax million XXXX of on unpaid, operations the XXXX. fourth this normal was of a exceed in of during at were worth million Marc which both a quarter $XX offsetting unplanned to slightly legislation during to quarter third off G&A deferred the Depreciation to zero guidance was million and as higher liability expectations, benefit $X range Fourth $XX the Lastly, to year tremendous to of compared minor few the guidance. $XX XXXX middle Swiss down expectations the quarter for tax drilling in related call. net was previous Hats $XX

Full normalized driven was capital of quarter. came $XXX than million the variance mid of certain our $XX calls. charge, million tax was from range in of rate million by given approximately for our non-cash the XXXX The valuation guidance less million year to primarily on of $XXX guidance one-time this allowances. $XXX $XX Excluding previous million expenditures revised effective XX% release

project shift provide our spend next I XXXX into As of CapEx when year’s on will then, the was timing cautioned I guidance. color the large the some several fluid. give for of dollar

we full get Before let to year comments into a guidance, me XXXX. quarter relating few provide first

two we undergo to surveys. special XXXX, plan During

for Ocean weeks BlackLion survey latter half discussed its The its upgrades earlier. of The already the the is first end shipyard commence is go the its a go into scheduled January stay, Upon XXXX shipyard which at shipyard the first during into its second prepare the X-year to estimated automation Africa. the spent of XXXX, to in X performing upgrades Mexico. as be the in survey. in BlackRhino quarter perform of the commencement to the contract and in one quarter, will black of completion to West contract the Also to Gulf about rig a Ocean conduct is BlackLion Ocean Marc will ships complete the other BlackRhino and similar

during forward are but surveys necessary. reasons. of reminded and or can these for shipyard I now, shipyard XXXX, and the as of As stays in the variety that either only please surveys future will be out quarters pushed expected projects a be brought timing update

we CapEx any additional $XXX customers XXXX reactivation XXXX, XXXX required approximately CapEx. has For expenditures the anticipate be including are Ocean expected $XX the committed the to million does upgrades spent of Ocean XXXX complete approximately of XXXX half reimbursed. and capital projects related first to addition the million in million contracts. million. $XX to and $XXX previously include on the XXXX, the in approximately discussed and BlackLion. $XX Included and normal the in is that CapEx to to by spend top will for their $XX Ocean also capital of in that This Ocean million Ocean of CapEx the reimbursed This Onyx. guidance of over upgrade that of the course Valor maybe maintenance the is guidance And will Courage Also cash be into million be slipped included approximately earlier not the be of finally, BlackRhino

first XXXX. I fleet of status before will was So But to for thoughts our and published with the report time out-of-service remind some provide the you projected known refer me I on quarter which that, earlier to today for let quarter. do, first

in stacked X-year decrease quarter completed from is XXXX quarter under entire preparing special the Most the is the will performing its quarter quarter the BlackLion the the it of the during reminder expect get contract the Myanmar Monarch its as Ocean quarter revenues it’s of campaign $XX the compared and contract the fourth expected first non-repeating come spent stay fourth to rate towards begins and survey, compared spending higher commitment We entire which is be for in the decrease its million. a of Ocean the moving upcoming discussed previous Also end Valiant the in working million quarter at decrease January Ocean the to day contract in current quarter the quarter during shipyard. the the benefit it margin XXXX BlackRhino end XXXX. will XXXX. Also the of quarter the first shipyard contributing fourth to the commitment million two earlier. the worked revenue first $XXX on contract, $XXX campaign to BlackHornet’s which of drilling for is offsetting weeks entire Ocean first first Ocean than of of the under spend at contract days of the attributed which January fourth first and the which working quarter, between Ocean Partially the will and fewer to GreatWhite the of part the

first at decrease $XXX between campaign. is expect to The preparation million We the to million. and prior drilling come upcoming Ocean the biggest its the quarter expenses for contract mob XXXX quarter deferral driver in fourth contract of of for the cost below and cost $XXX Monarch for

expense the the depreciation Onyx. the upgrades for increase due We approximately to expect primarily of $XX XXXX for first to million Ocean quarter recent to

And are XXXX. single-digits anticipate we and relatively of at quarter first net respectively. our First rate million expected $XX G&A the remain be quarter XXXX low interest effective for million the finally, and $XX to tax to expense in flat

limited Of a course, tax not or down settlements as the to rates. the in based movements or including of changes variety rate mix may fluctuate up well earnings to exchange on but geographic assessments, of factors, as

million XXXX, to of refund year half are prior first related tax the a during $XX returns. expecting of amended cash Additionally, we approximately

provide finished Before on million I drawn it hand of back revolver. some We thoughts let nothing and to cash $XXX me with liquidity. our Marc, on XXXX

will it spend heavy will likely quarter the expect And is in However, focus be on back a balance, to to now top liquidity. revolver our drawn and in we cost that preserving CapEx rear-view negative notch delivering the with soon the and XXXX but flow during on cash the mirror, minimizing pass our performance, and remain I end to year Marc. revolver start that, drawing we with expect second

Marc Edwards

Scott. you, Thank

contract Our is be continue for challenging we best-in-class in fleet will what environment. complete, deliver to keeping still our differentiated our and strategy our further improving is And operating a focus improvements rigs marketing to and our proactive with to backlog investment drive innovation on clients. performance soon will

up for that, with it let’s questions. So, open

Operator

comes Instructions] question Meakim [Operator you. our of Thank from the first JPMorgan. with Alright. line Sean And

open. now is line Your

Sean Meakim

you. Thank morning. Good

Marc Edwards

Good morning, Sean.

Sean Meakim

of expect anemic momentum maybe a just about there the pretty market? bit So, a and in tendering little you last could activity help is just backlog maybe you Can quarters, that XXXX? It’s lot more forward. of been meanwhile, a but Marc, us go to talk as moving little contracting translate the few the calibrate momentum some through offshore we projects into some see in growth how you

Marc Edwards

Sure.

last that term opportunity region forward. a we’re of this we for the where the moving have Licensing I decline offshore which the off a you at continues that the increased decrease significant Australasia the step trough, growth And downturn. helping map you of Africa, offshore percentage participating to course areas. didn’t perhaps look most as future seen think Awards than you have recovery the times back, trees probably we’ve show is I been of third seen and saw awarded higher That year. consecutive include three we and much know, we in as is path us low think number To the we a are subsea in Africa one the a years, of to as were as And has other ‘XX of XXXX. kind trough have in of the on very a number Brazil three bit for the of off in seen things

is the coming there activity definitely more to So, market.

term one activity contracts think us these things the but needs there. long perhaps that to of higher large be is as is I in frustrating in the isn’t it out address utilization there to definitely run, is for as growing the more

Sean Meakim

That makes I appreciate that. all sense.

you are the for terms in Just keen you just on bit wide maybe a you’ll that there like net one Australia could rig cast a specifically, about GreatWhite. strategy seems pretty you just markets your little of about sluggish, think next tendering talk the steps GreatWhite? still how UK consider for other how

Ronald Woll

Ron. and logical That pleased; clients. go. remains from did Good well best several is She a both her market harsh ‘XX quite and XXXX to expected in inaugural fulfill pushed we first Good are not GreatWhite the with the interest year XXXX. really this program, UK Australia. environment as for were morning. the calendar her And possibly promise Sean, drilled was suited into the well did the and of programs a and The us got her strong question for in place two UK, ago. XXXX said, floater her full Canada, the from for that operators

it’s prepared fully in the the ‘XX in during XXXX. And have not referenced operators immediate the meaningful future broader expressed market, remarks, early standpoint, theme was where intentions in the we mature will some expectations and as UK for the part unlikely our from course work the of GreatWhite I during it’s think had year. a did that So of by

for I is market healthy to for us UK overall the think be. that a Now place said, us

Marc as mentioned we’ve of rigs several the contracts, recently. work three Patriot got more and So on for years backlog, long-term

present for matter. completely although I recovering it tense, think or is, that hasn’t that I market recovered think in the that evenly

top work long manage our standpoint, keep plans I’d lines, position as probably think Australia list got But And in here for and the ‘XX. her bottom UK, to and good ‘XX in we’ve for our of include managing the costs year as our in as on so still to well looking so this Canada, both our her I Sean well. from

Sean Meakim

it. Thank Got helpful. That’s very you both.

Operator

our you. Fargo. Sullivan Cole the question next Wells of comes Thank from with line And

is open. Your line now

Cole Sullivan

morning. good Hi,

Ronald Woll

hi. Cole,

Cole Sullivan

mentioned – year. The the they of prospects upgrades the wrap do is What to this year? mooring contracts Courage, kind not for these Valor this you up they and as expecting

Ronald Woll

Ron is Cole, Woll good again here. This morning.

you question. went So, Glad good there.

So, let’s most job makes I to we important the The good to have first, rolls Courage work sense. do off work because a step start get think she more that with the next in is today. the

So, front, succeeding. we’re on that

configuration. So, that that success, she work On got on We’ve our Building was a is lot in impressive her mentioned her doing convert pleased well operationally. frontier, don’t got Sim-Stack some good have We’ve a intend we’ve remarks. to things got as in way. NPT. subsea a further to going client. the moor and place, in into Brazil we We plan do of

So, in in we of There way. think lane is her work Brazil. a under DP

we work more Brazil. of sight have for line Courage good ahead to the I in think

In process, and arc we to wanted are be here of we where terms of kind of the contracting XXXX. February in

progress, that’s but is So work in competitive. that note should I

a gift not it’s So, to anyone.

do our to a that and work, have CapEx. earn eye sharp so We on with we’ll

make to to the more where can speak I is So, we on headline although that where next there front definitively to call.) on think think be, we we I want and are, no today

Cole Sullivan

Alright, fair enough.

upgrades. this additional Rhino Any side? we to mentioned in and for for expect OpEx that you should year, the BlackLion the survey factor the On CapEx

Scott Kornblau

Yes.

survey do on gave. surveys forward, within expense a way, range yard, of of done So we what one the we that do was in be is that Lion for expense survey the the the the offshore. was do remember we And couple of that that as we the runs and course the in just were nominal. rigs. while of I I special them. to guidance said will just while in $X weeks the it’s and in to yard, will that Thinking the we’ve capitalize it million actually that In have opposed down That the already kind mean, past, able rig of

included when there it be give our than be for on guidance next but the quarter, will expect that see I I wouldn’t surveys. So anything unusual to you again, normally

Cole Sullivan

Thanks. back. it turn will I Alright.

Operator

question line Thank West the you. ISI. of from Evercore our next with And comes James

Your line open. is now

James West

good Hey, guys. morning

Marc Edwards

James, hi.

James West

seen to week Ron maybe through here before here, do for here? most hit still Marc XXX seen you range a behavior Africa breaks XXX the item some need week go, yet that’s last dayrates? other the or holding utilization momentum in or XXX, to going we rigs you obviously the rigs, guys we issue? is What most we guys a the think do the point? what you just have Mexico. for a got is in West to have dayrate term, We’ve logjam dayrate or it Is up rate it What’s the most contract suspect inflection thing hit

Marc Edwards

Yes, question. James, good a

XXX oversupply. Since words, I back supply the XXXX, around around there But only think us. is look especially had retired. has to struggling if floaters significant other are example, we the still six XXX working somewhat we against into In we with retired. balance for the drillships, downturn for demand floaters been started,

for some deepwater has there has for cold estimate and which slowdown have a we to of stacked, of So market. of that in really more some definitely example, than And it’s more we include back into XX of assets We, currently in that environment the could years, see the two – to assets the to difficult floaters and this market. around come stacked the need drillships. XX are been those significant out come how attrition, been

I you supply of we attrition those think more need out to XX more become dayrates the But stack. competitive. yes, demand can for So to see assets take

niche there our – why niche as one focused were markets, that’s Now of are assets. certain reasons moored capital specifically we within company that, a to allocating the and there are on

drillships our bidding that are higher more assets are were advanced moored than being this bid And market some of today. prices in

specifically are you looking category asset which depends, it at. So

We in sell-side to guys performance were a attracted Africa able a very that are through that awards. think differentiations We you premium of West think I has realize, the with level as market. show we many pleased

a contracting of that’s and seventh if terms drillship, more realize in look value all that the Gulf of of So in sixth some sophisticated the for in our generation a I And awards understand clients you the XXXX calls. more Diamond’s you think at of the spoken there on prior standard, that the here Mexico. assets I – to is with in, our of something we’ve record performance course that based have shown clients in

James West

and good the That guess that’s fair Sure. Marc. of was one, a good rates enough I your point, stacked into of What assets would pull it to some terms market? take here back

Ronald Woll

is our From happen. we to This that’s see where lane sort see yet we standpoint, morning. Ron. yet Good likely of that don’t – a don’t

mentioned by where see back. even stacked Just sort are a frames and the where the assets where look coming given at and paint rates CapEx you those move It’s if rates discipline Scott emphasis you might lane still few of on where forward to movie hard you the go.

current for got their think we’ve to state. I So now them about think in

James West

okay. it, Got

Marc Edwards

see extent our rigs in call. to extent, inter spoke further move that move as lane have the stacked that the previously for a those not we ourselves but rates now, right And that says, do need north those back To – to bring to to significantly the in Ron north. need rates two not I to peers We also assets market. only James, we

James West

it. got Okay, Thanks.

Operator

of the Simmons. from line McPherson Thank with next question our Ian comes you. And

is now open. line Your

Ian McPherson

operations quarter. in it Thanks. on fourth the Good on the Congratulations the drillships guys. on morning crushing

Marc Edwards

you. Thank

Ian McPherson

Marc. Yes. Yes,

if might of have that remain not that, So of it longer, QX will ready maybe if for the your this rig is for rig term, GreatWhite should guidance big we that’s a the any the taper portion idle in if modeling particular cost down a sounds that level some of already rigs at it’s the or But And been hedged. about if somewhat remains outlook year? reduction OpEx either if it some these in stacked what exposure in still that contemplate the rig that running that outlook I’ve on fully embedded near these, level. the thinking

Ronald Woll

question, I Good kind lot the From a her ahead, of don’t balance don’t, this of I XXXX. at full given line our keeping for sense. sort stations work of to sight Ron. Good makes morning, of is It our Ian. of standpoint, the sort battle of envision

I think wouldn’t but that full standpoint. through work those we have at the the We’ll your level, cost keep rates should costs model take from down. in to expect to exact full kind of I

Scott Kornblau

is only Scott. on we is we the will do we, would we crews everything fuel able The the while can, that this I Ian, operating, to thing put to rig add But we’re will down. if is, take operator.

we if rig on is it be have the cost to we and While keep warm going fully there. is that the fuel thrust going

savings. still just lower So in a that be will but It offset some net-net fuel keep of the the cost will mind.

Ian McPherson

over. Okay, other good. Thanks Thank it pass I’ll guys. My question has been you. asked.

Operator

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

now is line open. Your

Mike Sabella

Hey, guys. good morning

Marc Edwards

Mike, hi.

Mike Sabella

secure about or paid be in commitment margin to that customer got work So think instead? the some we for to should that you year, about all we should we out when XXXX, $XX thinking gross remaining how we are million with how trying thinking respect that’s be the this

Scott Kornblau

Yes. is Mike, Scott. Hey, this

to just the the know toward one put two XXXX to the now, program BP just $XX have the besides absent BP to great able we’d be with But and going receive XXXX a my XXXX, Brazil million the and absent were in that, Apex roughly that have we we million – quarter. in expect you for really in the talked in on million. in $XX year so as that’s as those in XXXX, we a and Right any It’s comments, said is the be cash rigs in of fourth it’s So end we payment and that about, $X rig. really in which to that a there Brazil. path available other do I keep way hope Ron treated would to like work for

Mike Sabella

out there sale. And the relatively thanks. how you M&A, us moored realistically, Diamond’s and position that just us for semis, about is drillships you walk on thinking in positive guys and are think walk are then industry M&A maybe of you just available there? should think there through Perfect, update Can of kind we the still through lots

Scott Kornblau

as our year in we cash think more will taken and I we of in now my right one this focus moment have now. we’re at conservation the do liquidity Yes, today got flow focus looking to that time, we’ve – not cash mentioned back I is company we’re looking as be M&A, get that And as it’s mentioned flow how scenario. currently the this a negative on of opportunities remarks, prepared strategies cash right is various of pipeline, we at as the and but we or those and that positive our in

Operator

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

line is now open. Your

Taylor Zurcher

as can think the thanks in working XXXX XXXX? for for about capital, think of help you, and Scott, working I we changes capital good one you Hey, in use cash almost XXXX, cash morning. all think model for should we about of flow how us

Scott Kornblau

Yes.

do cash a balance. the to we – But not I’m not million ready give will plan we ‘XX. $XXX end specific said, now. And year with we as right drawn where ending revolver we I’m toward on of So up have

for the on quite like. that means top we’re that obviously there will down not this but that, to point cash I’m through will and amount year what full at an nail be that going just look So of ready

Taylor Zurcher

it’s BlackRhino Hess to the effectively And at have up going going upgrades sort along the of program realize way? or go shipyard is Hess pick move it. over then one year into between you for to have to of then that some for I there you for X% that end Senegal, the chance to got intermediary the Okay, that that Should utilized we some program. there assume work of any can is is the rig that Woodside contract and the and gap

Ronald Woll

this question. to us. Makes Good of a Yes, is sense Ron. lot

works news that going and forward. So active But today. to programs will that’s I would line of characterize Nothing sight some on out possibility. a to we for have the would Rhino making the potential we as see how channel have I say we that are

Taylor Zurcher

guys. Okay, got it. Thanks

Operator

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

Your open. line is now

Kurt Hallead

Hey, good morning.

Marc Edwards

Marc, hi.

Kurt Hallead

my questions, to find that see little a strategies one did said you Marc, have add kind you stoke the to you free you in the So to I more of say answer to are of interest you bit peak have Was that to where number previous if becoming flow a at and cash little can looking of color? a pathway a hoping that positive.

Marc Edwards

inflection number all drive we macro But market believe we on we It cold is of the take the how the balance here today. to I entered that our an short-term we on wind was things I moving supply due I by free quite which and at we’ve driven company market be is the think some capital make a flow. and that XXXX, the focused face. growth. environment, weak point challenged to here the the on there dynamic of cash of the are how can think how the starts think as market itself in fundamental that discipline are, blowing forward, are that to can, [indiscernible], will in with stuff global this presents frankly back relates Yes, from to global primarily environment, But been looking balance non-OPEC a perspective, we XXXX and kind possibly oil presents we sure emphasis

you Norway, that those increase in If you out look at I will look Brazil, think peter year. at if this what’s happening

the clear has Gulf out I if are I absolutely see that Guyana, we course Phase lease I shale coming don’t think X down. started we various non-OPEC at it’s production until decline think definitely that will other slow reasons growth that’s back of if look growth such for Mexico, into shale, that look that, as to even I XXXX. post-XXXX at come there. a in of really you turn and think And mean

So in post-XXXX, the contrast oil is to supply we a years. of do last potential sharp see rebalancing which three

we I capitalize it’s and and that of options a we into we got. supply different ourselves on how we’ve various potential as So are moving And at a how position forward think demand looking new company growth. that arena

pressure we etcetera on is to technology this that that the have etcetera, of we’ve down basis that. we fleet to The giving hour, value premium. XXX% a a revenue main technology worthy a control in rolling the seen uptime are our result we performance innovation of control, Stack-view we clients is that and of that, as already think course the last the through our and right And the our some to from shown are So what moored results that market we’ve we’ve of quarter. of assets drillships, control level as priority Sim-Stack, around brought with now I by can a of believe

that than looking specifics prepare get recovery going other address and as a those market, opportunities we’ve and may that So number somewhat beyond. all strategies I’m position drive in a a brighter into what in together liquidity and future be – for we order XXXX at got to to to a of ourselves of we’re the and number as not that for

Kurt Hallead

that. I appreciate

and you input a follow about commented capital. revolver for a on draw the Now maybe XXXX the for limited on Scott, having up having year working comment for on us

level, taking it generally with very on high basis? to is a comfortable minimum So balance just carrying quarter-on-quarter what’s maybe the Diamond that a cash

Scott Kornblau

but once the I and we’re with balance we can we probably general we as in. to that keep pencil for the say – and just penciling as needs and that on that rule but Obviously, million thumb we Yes. is jump again depending ebb day cash revolver, obviously something revolver, of possible, could try probably into it. need draw low because to would the as dip up of $XX good, down flow a to going kind that’s the

Kurt Hallead

CapEx reimbursement. million, you $XXX for on number, million of to more then one the and $XX million $XXX thing you the just had indicated throughout that And another clarification,

So over going to contract term. coming that’s the be

will at XXXX out timeframe. that look $XX of $XX XXXX, So million assuming kind extended to reimbursable? XXXX, a million I’m through get way good at that that Is

Scott Kornblau

rule, would I And of most be lump-sum characterize of a over, contract lump-sum. is opposed we to a made get as will and different to as that million few reimbursement try up we push a general $XX million that $XX

also ‘XX, Now, XXXX. I of that ‘XX, may is end most the for see of $XX but will hit may we and million beginning it the to it referred lump-sum our the expectations, a that hit of

lump-sum yet, received most that We that during our expectation would but is that – have XXXX. be of will not in a also

Kurt Hallead

That’s great. Marc. Thanks Thanks Scott.

Scott Kornblau

you. Thank

Operator

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

now Your line is open.

J.B. Lowe

guys. Hey Good morning.

for this your Just be still of free a the quick wondering, and one level, status I’m maybe this do bit from good you’re me, would look cash And is the you simplistic is too a view couple get at increase but to fleet? current keeping have cash what down really flow done flow need of little you kind in percentage dayrates going your rigs just years. next to free guys breakeven to that XXXX, to you given that it, to of contracted think a basis coming CapEx but year. of negative job on a

Scott Kornblau

as that job. Yes, the J.B. a I might continue rates I the Higher, there again lot lower are to of if dayrate, be mean cash meaningful. key path that good we’ve being key you a with done got This everybody mindful and a to is flow a we think hey you’re big of Depends you to and said, gaps – right. think that’s a I utilization here is has really it, positive, Scott. And that’s think can, work a is on

next build have peaks that doesn’t years forward a I where So ago, to still it get can we years. path handful into of the reasonable and not dayrates saw necessarily be to it few a going to quantify as something to can a you it look say for we thrive and you, There south of that if cash. the be level is will but there

Marc Edwards

that exactly. know number We Yes.

J.B. Lowe

That’s what I was hoping for.

Marc Edwards

we that. Scott to charts dayrates for mentioned need here that got at kind keep of it alluded best what earlier path a and Diamond can the but have gaps governance, the that visibility says, that embark the through the got But contracts. scenarios, we to utilized Offshore example, the some I are term – ships exactly is, we’ve thing about number and and around to well analysis again, we’ve as there filling as Ron Black cash XXXX. drillships they industry know here, the and conversation assets on conversations mean, positive is free the is to various it’s in that’s before and just flow do and increase as we in good does to you And schedule got across

working GreatWhite got Obviously, pleased rigs. Ocean be focus to for So yes, current on as mentioned, we’re that our we’ve it year. quite the it’s we to going is with get hard the the this opportunities

into have So XXXX. various opportunities visibility we do to on

the So working, an rising debate and yes on eye for differentiated rates it a service that of a on moored all you’ll that. one based for asset classes the certainly pleased to have now off continued moving, come every in then moored rig it’s a keep premium not working keep because REITs assets for the are fleet for keep But is that with while, thing at once we’re rates is semis. a bottom, the way very see outliers

J.B. Lowe

out Good there. thanks luck guys. Alright. Great,

Marc Edwards

Thank you.

Operator

Connor Morgan next comes of with line Lynagh the Thank Stanley. question our you. And from

line is Your now open.

Connor Lynagh

thanks. Yes,

in and cash this cash non-recurring a some be you what we’ve hit of there currently but that to for XXXX. us the the help free of at on about I maybe back if occurs that’s might in in cash budget XXXX, driving large in better stepping expenditures we ways, flows think sort flow a Could cash your number high a negative are me to the are I think lumpy expectation path level, through XXXX? of just of think these uses guess it

Scott Kornblau

it’s Connor, Scott. hey Yes,

going Black Lion I the the Rhino have, two yard. and the as ships, So mentioned, we do we have into second

that at double big another in XXXX then work a to contract gap have XXXX. for then do of cost CapEx time zero have start that’s the all. we on the course going in the that is shipyard. we the Rhino, now least way, couple to before we XX% is stack of we the and go we And in do into across and the said that I course then of the mean so There cash unlikely line, zero probably the So revenue on GreatWhite

at three that of drivers to kind expect when ‘XX. really don’t repeat big are you in we those say a I’d So see XXXX look

now, have Let now. second shipyard and forward a planned zero zero we we have me Right fast surveys ‘XX. planned stays right into

my from quite XXXX though XXXX even CapEx absent down right will a level. the – now is other expectation bit, even news go any So came CapEx at XXXX down XXXX

Marc Edwards

So of the We is we upgraded line Endeavor. we’ve that any just we’ve class now upgraded way. the scenario a are Apex, going. got last added we’ve the coming more forward the the Endeavor, showed Onyx, where costs We’ve see at good got Apex top and all look onto where we of the that a desirability. that, We rigs the our term building on at quarter don’t upgraded reactivation ex-victory

with this contracted clients conversations various in operators. contract about We’re beyond keeping term Onyx the with initial various

we market etcetera. ships is themselves. on in is drillships drillships, generation So, and successfully the are plenty off number the Look, the that available, a done that six There that but seven there coming are term then what in XX significant and Black months. is are the biggest the assets that the is of behind next the have have processes in actually, just the in to how not capacity by that’s invested the or keep like them make It’s these rigs best to we have working among, you if having etcetera, steel done. not pulling assets and industry the

database, Gulf achievement. not achieved wells, have best among on the That’s that in best our the that go the of QX. wells labor fact a According unnoticed sorry we But our have drillships the ever to Mexico. Rushmore clients. huge revenue Let’s XXX% in three that drilled a we the drilled been on three of uptime does have four

then if the moving forward. market. assets on we and can And the other They might biggest, the put but to in our are in not not etcetera. these Now, cash best that the into can take that highest ensures learnings etcetera, we then that moored and have fleet available be – certainly hook load from we not improved working market. the have displacement, platform them from they what this might on they the the we And keep drillships flows they highest in have our semis build there, might

Connor Lynagh

or Got some a cash. in these it. putting would how comfortable terms back of just XXXX much circle of to detriment a feel number – transitory items you of to dollar are non-recurring in And

Scott Kornblau

not. would I

that maybe Let though end will it where Hawk we try, somewhat I I are me a the might this should the that play of me that say trying saw nice the call going at get and Hornet to I little two mean in. should the – you a mirror be are in for Those loopy, if ‘XX. ships out. two

Connor Lynagh

Got guys. it, perfect. the Thanks for color,

Scott Kornblau

Got it.

Operator

Thank David Heikkinen from you. And Energy question Advisors. of with line the Smith last our comes

is line Your open. now

David Smith

Hey, a horse, I’m from baseline of ‘XX XXXX thank you ‘XX, for the CapEx? guidance dead $XX is fitting me CapEx million. $XXX million to in. but at low if the for wondering looking we Not that thinking out that to slipped about if beat end looks $XXX back good the it like million

Scott Kornblau

also have you’re projects, and the the you, shipyard be which not Lion I’d would the did we as you and well. right repeating then Well, Rhino and remind with math

at trying piece much to that’s for which a ‘XX triple-digit say you’re of more to need another probably a take CapEx number. if starts would So getting I level look out, maintenance lower set you for

David Smith

in in ‘XX? that Can the given appreciate I contract coverage it. ‘XX, do I have the of you have time cash free already just of positive shipyard you visibility be you on kind lack to and flow expect

Scott Kornblau

very cash very market path improve, a it’s us to dependent negative I mean on we they beyond I positive. ‘XX don’t well mean it’s what conditions still likely, will there happens market. going is I for be mean the flow do if cash be to flow improve, if with be

looking know next forward the that kind you let the while remind like. can’t will that But dictate deal to we with few have we we me market will you else worry what control have market, to So what years do look of of about.

job end no good balance a we maturities done of ‘XX. our care of sheet, have the until We have taking

noise. don’t with have dynamics, market we dealing we’re that about while worry So to the

and what new operations have which control, continue build deliveries can and just We control to is no we we’ll reducing costs.

Marc Edwards

just assets seen that has this saw this another higher come is announced are work off our pushing higher. moored the is Patriot contract, recovery of of not Well, dayrates got quarter Sea, the previous that at months working And than as we among in prior a same let’s not forget The contract. quite certainly sector years. of XX the and which is third UK we a the that dayrate in North generation has we asset

been on cautiously very are rise clear and optimistic. continue day we to the will rates The So, call. we’ve

order there how that. go a back we free to exactly positive that see not there but that they would are, flow, to to are free in higher We’re pathways cash get much have to enable what stating

content far say So I call. this as that’s of the we’re think as to going during

Marc Edwards

again next So participating today everyone forward with quarter. like for you I’d thank we to that, look to and seeing

Operator

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

You disconnect. now may

Diamond Offshore Drilling (DODRW) 10 Feb 202019 Q4 Earnings call transcript