Noble Corporation Plc Q2 FY2025 earnings call

• Achieved $100 million synergy target from Diamond acquisition ahead of schedule.
• Contracting momentum continued with six new contracts since last earnings call, including deepwater and jackup fleet contracts. For example, Noble Stanley Lafosse extended, Noble Viking has a contract in Papua New Guinea, Noble Globetrotter I has a Black Sea contract, and jackups have CCS and wind farm contracts.
• Market outlook: South America shows strong deepwater demand, U.S. Gulf softened, West Africa has potential for growth, Mediterranean and Black Sea steady, Asia Pacific plus India muted, harsh environment North Sea and Norway market down. Believes in promising upside by late 2026 or 2027.
• Fleet strategy: Disposed of cold-stacked drillships Pacific Scirocco and Meltem, moving forward with disposal of Noble Globetrotter II, Noble Highlander, and Noble Reacher; focus on maintaining high-spec competitive fleet.

In Q2, Noble Corporation delivered strong financial results with adjusted EBITDA of $282 million and free cash flow of $107 million. Year-to-date, new contracts have a total contract value of $2.8 billion, and the total backlog as of August 5 stands at $6.9 billion. The company has achieved the $100 million synergy target from the Diamond acquisition ahead of schedule.

• 2025 guidance: Total revenue lowered to $3.2 billion to $3.3 billion, adjusted EBITDA range narrowed to $1.075 billion to $1.15 billion, capital expenditures increased to $400 million to $450 million.
• 2026 outlook: Anticipates 2026 capital expenditures around $450 million, expects quarterly EBITDA to trend lower over next 4 quarters but rebound in second half of 2026 supported by new long-term contracts and rising deepwater demand.

• Macro uncertainties including tariffs, Middle East conflict, Brent crude price fluctuations.
• Timing risk of FIDs and rig awards drifting to the right.
• Potential earnings erosion from jackup market if policy-driven impediments in the U.K. persist.

Q: Could you unpack the guidance update, lowering top line but tweaking higher EBITDA guide?

A: Top line lowered due to specific options not materializing, EBITDA driven by strong customer management across the board.

Q: Talk about strategy around BlackRhino, Viking, and Gerry De Souza rigs?

A: Highly focused on these rigs with strong line of conversation, seeing big projects going through definitively and encouraged by higher quality rig conversations.

Q: Thoughts on Brazil recontracting opportunities?

A: Brazil is a bright spot with positive demand, Petrobras is key, and further north has immense activity.

Q: On supply, are retired rigs targeted for drilling or other markets?

A: Highlander going to drilling, Reacher and Globetrotter II not for drilling purposes, fleet rationalization for cash generation.

Q: Expectations on day rates and UDW rig count outlook?

A: Day rates in low to mid 400s, credible path back to UDW rig count of 105 by late 2026 assuming stable macro conditions, with potential for rates to tick back up.