Noble Corp plc Q1 FY2025 earnings call

• Delivered strong results in Q1 with adjusted EBITDA of $338M and free cash flow of $173M. Paid $80M in dividends and repurchased $20M of shares during Q1. Board declared $0.50 per share dividend for Q2 2025.
• Legacy Diamond fleet integrated ahead of schedule, on track to achieve $100M in synergies by year-end.
• Awarded long-term contracts by Shell and TotalEnergies: Shell contracts involve 4 rig years each for drillships, total revenue potential $2.0B - $2.5B; TotalEnergies contracts for 2 rigs in Suriname, firm revenue $753M with additional $297M tied to operational performance.
• Backlog increased to $7.5B, a 30% increase from last quarter.
• Disposed of cold-stacked drillships Meltem and Scirocco, expect to finalize transaction mid-year.
• Focus on managing costs and marginal idle capacity, with near-term outlook for rigs in U.S. Gulf, sixth-gen rigs, Globetrotter ships, and jackups discussed.

Contract drilling services revenue for the first quarter totaled $832 million. Adjusted EBITDA was $338 million, free cash flow was $173 million. Total backlog as of April 28th stood at $7.5 billion, up approximately 30% versus the prior quarter. This includes approximately $1.9 billion scheduled for revenue conversion over the remainder of 2025, and $2.1 billion and $1.5 billion scheduled for revenue conversion during 2026 and 2027.

• Full year guidance: total revenue $3.25B - $3.45B, adjusted EBITDA $1.05B - $1.15B, CapEx $375M - $425M.
• Currently approximately 95% contracted at the midpoint of adjusted EBITDA guidance range based on year-to-date results and remaining backlog for 2025.
• Q2 adjusted EBITDA expected to be lower excluding Q1 Regina Allen insurance proceeds, due to fewer operating days and planned out-of-service time for Noble Sam Croft FPS.
• Tariffs expected to have less than $15M cost impact in 2025, incorporated into guidance.

• Market volatility affecting risk assets and commodities.
• Uncertainty in forecasting due to tariff effects and market dynamics.
• Volatility in spot market for deepwater and jackups.

Q: Thank you for the strong quarter and backlog addition. Asked about performance bonus opportunity in Shell and Total contracts and how CEA index pricing mechanism takes performance-based contracts into account.

A: Robert Eifler discussed that performance-based contracts are win-win, not applicable in all scenarios, and the CEA mechanism is flexible to take into account such structures.

Q: Asked about competitive tensions in awards, specifically Shell award.

A: Robert Eifler stated Suriname contracts are incremental, Shell contracts in U.S. are strategic with focus on performance and longevity of work.

Q: Asked about bonuses payout, downtime for Shell rig upgrades, and finding shorter-term work.

A: Robert Eifler said bonuses are well by well, downtime for upgrades is a couple of months, and ongoing conversations for shorter-term work.

Q: Asked about metrics for performance-based contracts and contract prep expenses.

A: Robert Eifler mentioned performance metrics include days per well and safety, contract prep expenses in line with other multi-year contracts.

Q: Asked about dividend maintenance and Board's thinking.

A: Robert Eifler stated commitment to dividend, with EBITDA run rate supporting it, and encouraged by contracting behavior.

Q: Asked about clarity on comments of more work coming and incentive structures.

A: Robert Eifler mentioned active conversations for near-term work, incentive structures are dayrate bonuses with all 100% margin potential.

Q: Asked about lease items and tariffs' impact on input costs.

A: Richard Barker clarified Diamond BOP leases are in operating expenses, tariffs impact less than $15M in 2025 and can change.