Noble Corporation (NYSE:NE) Q2 2023 Earnings Call Transcript

Blake Denton: Yes. Thanks for the question, Eddie. This is Blake. I think we’ve got varying asset classes that roll over here in fourth quarter and first quarter of next year. And so you’ll see very varied rates associated with those. All of them will be consistent with market for each of their asset classes. You’ve got the 7G that you referenced, those day rates. And then you’ve got the globe charters and the rigs, our DP plus more semis that are — they’re kind of just a step behind the 7G in terms of marketability. And you’ve seen the rates trail a little bit on that asset class. And I think what we see is we reprice something consistent with what we’ve seen in the past.

Eddie Kim: And just shifting gears to reactivations. One of your peers yesterday highlighted the attractive economics for one of the rigs they’re reactivating. So just in that context, do you think it’s likely that we’ll see the Meltem reactivated sometime this year and for the Suroco, I believe it’s slightly lower spec than the Meltem, but are you currently bidding this rig into work as well or holding off on this until you’re able to secure attractive contracts for the Meltem?

Robert Eifler: Yes, I can take that one. The Meltem will go to rig to work, excuse me, before the Suroco. We’re not marketing the Suroco right now. We are marketing the Meltem — to your question about timing, we’re not going to — we’re unlikely to kick off a full reactivation here this year. Could we secure a contract that works for us this year? Yes, it’s definitely possible. And then most of that work would be completed during 2024. And then if I were going to just put a percentage to it between finding that contract this year or early next year, I’d call it 50-50 right now.

Eddie Kim: Okay. Got it. And just the reactivation expense you quoted for the $125 million. Is that just the cost to reactivate the rig? Or does that encompass kind of an all-in cost, including spare parts and adding the crew and getting the rig fully ready to work?

Robert Eifler: That’s a fully ready to work, everything, including expenses. So that includes shipyard costs, crews includes our own rig crews, that’s everything.

Operator: [Operator Instructions] And our next question comes from the line of Greg Lewis.

Greg Lewis: And I did just want to follow up on that last comment since you were getting pretty granular, Robert. Does that include mobilization to site?

Robert Eifler: No. The $125 million no, doesn’t include mobilization.

Greg Lewis: Thank you for the color around the capital allocation dividend. I was hoping realizing that it’s always a Board decision, but I was kind of wondering if you could provide at least your kind of high-level thoughts as you think about the dividend, clearly, offshore drilling rates are cyclical. — gating Noble has the benefit of not really having a very strong balance sheet. So any kind of view you have, Robert, around the ability to kind of push the dividend higher through the cycle as opposed to maybe what is the sustainable dividend in kind of more — and I would argue we’re normalized, but as you think about day rates and sustainability of dividend. I mean, just given where the balance sheet is, it seems like we could have a sustainable dividend at these levels even in a much lower day rate environment, not that we’re going there anytime soon.

But just kind of curious at least how you’re thinking about the dividend, realizing that the next 2 or 3 years should really just see cash flow and earnings go higher. But on the back of that, do you ever really get full credit for it when people start asking about sustainability.