Noble Corporation Plc Price & Performance (NE)

You can find a copy of our earnings report along with the supporting statements in schedules on our website at noblecorp.com Noble. We will reference an earnings presentation that's posted on the Investor Relations page of our website Today's call will feature prepared remarks from our President and CEO, Robert Eisler as well as our CFO, Richard Barker. Also joining on the call is Joey Kolaja, Senior Vice President of Operations. During the course of this call, we may make certain forward looking statements regarding various matters related to our business and companies. That are not historical facts. Such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from those forward looking statements Sunnova does not assume any obligation to update these statements. Also Noble, we are referencing non GAAP financial measures on the call today. You can find the required supplemental disclosure for these measures including the most directly comparable GAAP measure and an associated reconciliation in our earnings report issued yesterday and filed with the SEC. Now, I'll turn the call over to Robert Eisler, President and CEO of Noble.

Thanks, Ian. Good day, everyone, and thank you for joining us. Today, we have three main topics that we will address in our prepared remarks before we wrap up and go to Q and A. First, a summary of our Q4 results capital return program and integration progress. Second, our industry market outlook including our semi annual review of global deepwater demand, as well as important fleet status highlights for Noble Noble.

Third, Richard will discuss our results and 2025 guidance. Following all of this, I'll wrap up with a few concluding remarks. 2024 was another pivotal year for Noble Noble. We completed the highly strategic acquisition of Diamond Offshore, bolstering our strong position in deepwater and advancing our value proposition for customers and shareholders. We just passed the one hundred and fifty day integration mark, and we are well on our way to achieving our previously stated synergies of $100,000,000 approximately half of which have already been realized as of today. I'm immensely proud of our global offshore and shore based teams have ensured that the initial and most critical phase of this integration has gone tremendously well. Thank you to all our employees. Your commitment has been crucial we prioritize our customers' needs throughout this integration, and continue to deliver safe and efficient operational outcomes. The fourth quarter was our first full quarter with Diamond, we had a solid result with Q4 adjusted EBITDA of $319,000,000 We continue to make major progress with our return of capital program. During the quarter, we paid $80,000,000 in dividends and repurchased $50,000,000 of shares. Bringing our full year 2024 return of capital to over $575,000,000 Yesterday, our Board declared a $0.5 dividend for the first quarter of twenty twenty five.

Consistent with past practices. And I'm pleased to highlight that we have now surpassed $900,000,000 in combined dividends and buybacks since Q4 twenty twenty two, including this quarter's announced dividend. We've also had a nice string of contract wins recently comprising over $500,000,000 in firm commitments, excluding options, which have augmented our 2025 and 2026 contract coverage. These are detailed in our earnings release and fleet status reports and confirm that recent day rate fixtures for Tier one drillships have held firm in the mid to high 400s per day. Now turning to the broader industry outlook, including our semi annual global review of deepwater demand, Overall, we remain encouraged by a variety of positive indicators for deepwater activity over the coming years.

Both from a macro perspective in terms of the expected rising call on deepwater production FIDs and subsea order books etcetera, and also from the specific dialogue with our customers and the visibility into their future drilling plans. That said, we have seen, of course, the emergence of a mid cycle low beginning in the second half of last year which is carrying through into twenty twenty five.

In step with the global trend of upstream capital discipline, we a comfortably supplied oil market. Consequently, contracted deepwater demand has dipped from about 105 rigs and 94% marketed utilization as of last summer to 100 rigs and 89% marketed utilization currently. With this downward revision versus how the market was previously trending, we are continuously evaluating the range of scenarios against which to manage and plan our business. We expect UDW contracted demand to bottom slightly lower this [indiscernible] And then to ultimately eclipse recent highs. Perhaps 105 to 110 or more rigs by late 'twenty six or 'twenty seven. However, recent experience with demand generally slipping to the right also compels us to consider more tempered scenarios as well. With commodity prices and macroeconomic drivers obviously playing a key role these potential outcomes.

Regardless of whether demand lands at 95, 100 or 110 UDW rigs over the near term, we see a diminished call on reactivations of idle for at least the next two to three years. Hence, our recent decision to permanently retire the cold stacked to drill ships [indiscernible] In total, we have now effectively removed six rigs from the lower end of our floater fleet, including the Ocean Onyx and Ocean Valiant, as well as the Globetrotter one and two, which we are no longer bidding into the drilling market except for in highly specific niche situations where their unique design features have advantages, for example, the Black Sea. Given the oversupply of rigs in today's market, we strongly believe that the rational course is to scrap stack rigs or sell them into alternative use rather than selling them as drilling units to secondary competitors. Nonetheless, these retirements will be cash flow accretive. Regardless of disposal proceeds, as we expect to shed upwards of $20,000,000 in annualized stacking costs. Throughout our growth journey of the past few years, Sideline capacity has never been Noble's Noble. We're focused on operating a leading high spec and highly utilized fleet which we believe is ultimately how we can truly deliver value And again, based on the recent recalibration of the market, the option value of sideline capacity in this industry has eroded.

Now on to the regional demand highlights. The Golden Triangle of The Americas and West Africa continues to shoulder over 75% of global deepwater demand.

While The U. S. Gulf and South America have remained strong, West Africa has been the primary locus of weaker than expected activity recently. That said, the tangible of additional rig requirements in the region which have been delayed by around a year on average. Still provides good visibility for a rebound over the next two to three years.

Current demand in West Africa is 13 UDW rigs down from a range of 17 to 20 that prevailed throughout 2023 in the first half of twenty twenty four.

The keystone markets here are Angola with six units currently, and Namibia with four. Open demand in the region includes among numerous other smaller programs five multiyear tenders with contemplated start dates throughout 2026 and into 2027. We This is in addition to several multiyear tenders with similar timing in Mozambique appear to be approaching imminent FID. Namibia remains a crucial exploration and development play, although we have recently seen the expected FID for the Venus project probably slip from 2025 So overall, while West Africa has been a surprising laggard region over and durable uptrend in the years ahead. South America continues to be very strong. And a very important region for Noble, With eight of our deepwater rigs presently contracted throughout Guyana, Brazil, Colombia and Suriname.

Total UDW demand in the region [indiscernible] and up significantly from 35 rigs a year ago. A slow demand from Brazil 35 rigs looks stable going forward, with positive optionality arising from Brazil and other areas such as Colombia where there's been recent exploration success, we with its first field development commencing in 2026. [indiscernible] The U. S. Has as expected remained stable with 23 contracted UDW rigs today in line with the normal 22 to 24 rig range of the past couple of years. It's also another highly scaled market for Noble. With seven of our deepwater units contracted domestically. Including the Black Rhino, which has recently returned from West Africa. Although there is likely to be some additional GAAP time between contracts in 2025, we expect demand levels to ultimately stabilize around current levels. Now turning outside the Golden Triangle, the Mediterranean and Black Sea have been another stable deepwater market with nine units contracted currently in line with the eight to 10 range of the past couple of years. Activity in the region is led primarily by Turkey and Egypt, with a fair amount of current and future planned activity also stemming from Cypress, Israel, Spain, Libya and the Black Sea.

The Asia Pacific region after West Africa has been the other notably softer market over the past six months, and is currently down to five UDW units compared to normalized demand of eight to 10 earlier this cycle. These five units do not include an additional four six gen semis in Australia that are not technically UDW rated. The outlook in this region is somewhat mixed. On the favorable side, there is open demand for at least one to two incremental units in India from late twenty five and into '26 in addition to an expected incremental drillship program in Malaysia.

On the other hand, most of the bigger programs in Australia are further out into the 2027 to twenty twenty eight timeframe, according to current plans. Finally, the harsh environment North Sea and Norway market currently represents seven units of UDW demand and 20 units of total floater demand including midwater, both of which are a few units lower presently compared to 2023, to 2024 levels.

There's a fairly high degree of political influence that governs capital deployment in this region which always complicates forecasting a bit.

However, separate from the fiscal and regulatory factors, there are underlying realities surrounding European energy resilience and competitiveness that could eventually support a more predictable upstream investment landscape compared to the current status quo. However, the meantime, I would also add that the intervention in P and A opportunity set in the North Sea remains a relative bright spot in terms of our fleet positioning. Altogether, incorporating all these regional dynamics, we believe the global deepwater market could potentially see a net demand improvement of up to 10 or more units versus the current 100 contracted rigs by late 'twenty six or 'twenty seven. But again, there's always timing variability to consider. So how does this translate for our deepwater fleet status and outlook? Starting with our 14 Tier one drillships, which are the core earnings engine of Noble, comprising approximately 75% of expected total company EBITDA this year, currently have one unit available.

The Noble Noble, and another three units that had contract rollovers throughout this year.

Our recent pictures for Tier one drillships have been in the mid to high 400s per day and we have clear line of sight to potentially securing full future contract coverage across these 14 rigs by later this year. With programs commencing in 2025 and 2026.

Next, our three d Class six Gen semis similarly have a promising outlook. With the developer and Discover Now Well Contracted In The Americas, the recently idle deliverer also well positioned. We believe for work commencing in 2026. Our two Globetrotter drillships are being bid toward a number of opportunities in the intervention market.

Depending on the outcome of these bids, we'll evaluate whether to remove one of these units from the marketed fleet. And then as you look at the remaining semis from the legacy Diamond fleet, we've obviously picked up some additional backlog on a few of those units recently, and we will continue to evaluate their longer term marketability on a case by case basis particularly as SPS and re contracting thresholds dictate. Now on the jackups. In the traditional North Sea and Norway market, current demand is 27 jackups and marketed utilization is 93%. We have also had some recent success in deploying our harsh jackups in less traditional markets such as Argentina, Poland and Spain, When expanding the harsh jack up realm to include these niche markets, we the total demand picture is 31 rigs with market utilization of 94%. So the overall fundamentals are in good shape. Despite the disappointing fact that the Norway jackup market remains relatively subdued, is holding back the potential earnings of our CJ70 rigs. And we do have active and encouraging conversations behind all of our jackups with near term rollovers including the Intrepid Resilient in Regina Allen. So I'm going to pause there and turn it over to Richard now to discuss the financials and 2025 guidance.

Good morning or good afternoon all.

In my prepared remarks today, I will briefly review the highlights of our fourth quarter and full year 2024 results, provide an update on our synergy progress and then touch on our outlook for 2025.

Starting with our quarterly results.

The fourth quarter was our first full quarter as a combined company with Diamond.

As such, the type of prior period comparisons we usually reference have less relevance. So I will forego the prior period comps for the purposes of this review.

Contract Drilling Services revenue for the fourth quarter totaled $882,000,000 Adjusted EBITDA was $319,000,000 and adjusted EBITDA margin was 34%.

Adjusted EBITDA was positively impacted by approximately 40,000,000 related to the early termination of the Noble Delibera but was also adversely impacted approximately six weeks of idle time on the Jerry D'Souza at the end of the year, Q4 cash flow from operations was $136,000,000 net capital expenditures were $134,000,000 and free cash flow was $2,000,000 which was burdened with transaction costs related to Diamond as well as a temporary increase in net working capital which we expect to reverse in early twenty twenty five. For the full year 2024, we generated $3,100,000,000 in revenue and $1,100,000,000 in adjusted EBITDA. As summarized on Page five of the earnings presentation slide, our total backlog as of February 17 stands at $5,800,000,000 Current backlog includes approximately $2,400,000,000 that is scheduled for revenue conversion during the remainder of 2025.

As a reminder, our backlog excludes reimbursable revenue as well as revenue from ancillary services. Before walking through our 2025 guidance, I would like to provide a brief update on our integration activities related to the Diamond acquisition.

We are pleased with how the integration is progressing and the level of buy in we are seeing across all levels of the organization. And as Robert mentioned, we are making significant strides in realizing our previously announced synergies of $100,000,000 with just over half on a run rate basis realized to date.

We have a high degree of confidence that the remainder of the synergies be realized by the end of the year and we'll have updates on our progress over the next couple of quarters. Referring to Page 10 of the earnings slides, we're providing full year 2025 guidance. Noble revenue within a range of $3.253450000000.00 which includes approximately $150,000,000 in other reimbursable revenue adjusted EBITDA between $1,050,000,000 to 1,150,000,000.00 in capital expenditures which excludes customer reimbursements, of between $375 dollars The midpoint of this revenue range is approximately 90% supported by Q1 to date revenues but firm backlog and options for the remainder of the year. Based on current visibility and contract sequencing, we anticipate Q1 adjusted EBITDA tracking marginally down by around approximately 5% quarter on quarter when excluding the Q4 impact of the contract termination. For full year 2025, we anticipate our jackups to contribute approximately 10% to 15% of our adjusted EBITDA.

Some other elements for 2025 to consider are a We expect cash taxes to be approximately 12% of adjusted EBITDA and we expect costs to achieve the remaining synergies relating to the Diamond transaction be approximately $40,000,000 for the full year 2025.

Also, we will incur $26,000,000 in BOP lease payments in 2025.

Although I would like to note that we are currently evaluating terminating these leases when they expire 2026. Guidance reflects inflation rates in the range on average of 3% to 4% across various costs As it relates to potential tariffs, it's clearly a very fluid situation. Our supply chain team is proactively working with our vendors to mitigate the impacts of any potential tariffs and some small level of price increases is assumed in our 2025 inflation outlook that underpins our guidance. Despite a more muted near term outlook, we still expect 2025 to represent a nice step up in free cash flow compared to last year. Facilitated in part by lower CapEx following the peak of the five year SPS cycle in 2023, and 2024 for both the legacy Diamond and Noble fleets. And consistent with our past practice, we will look to deploy excess free cash flow after the dividend to share buybacks. With that, I'll pass the call back to Robert. For closing remarks.

Thank you, Richard.

In conclusion, we remain laser focused on safe and efficient drilling for our while navigating what we expect to be transitory demand softness over the near term.

Despite some pockets of utilization gaps, we see high end UDW day rates holding firm in the mid to high 400s, which with a realistic path to higher levels based on plausible demand scenarios, over the next couple of years. Fundamental drivers for our business are durable in nature. And therefore this recent contracting law that has pushed things out to the right by a year or two is very likely to be self correcting before long. And just to state it, nothing has changed in our medium and long term view about the demand for our services. Regardless, we feel extremely excited about what Noble is capable of producing. Either in a flatter world such as we're confronted with today, or in a more galvanized up cycle like we hope to see in 2026 and 2027 and beyond. Now I'd just like to wrap up with a word of thanks to our employees. So, hats off to the crews of the Mick O'Brien who recently earned rig of the quarter for their outstanding performance for Qatar Energy LNG, and also to the crews of the Noble Valiant, who brought home Deepwater Rig of the Year from Total Energies. These awards are a testament to the strong commitment to safety and demonstrated by the men and women on not just these, but all of our rigs each and every day.

So thank you to all. Be proud of what you do. The future is bright at Noble Noble. We're ready to now vote questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. As we enter the Q and A session, we ask that you please limit your input Your first question comes from the line of Aaron J. A. R. Am of JPMorgan.

Hey, good morning gentlemen. My first question is on the Tier one drillship market. You highlighted Robert that you have some good prospects to get all of your Tier one drillships contracted maybe later this year, early twenty twenty six. Can you maybe provide a little more detail on some of the opportunities for the BlackRhino Voyager and Valiant? Sure. Yes. Thanks for the question. I guess, we won't go into specifics as far as customers or or tenders of course, but I would say that we have a few different programs I would say there are more with 26 starts than 25 starts, but with 25 with some opportunities in 25 And those opportunities [indiscernible] I would say, cover or kind of across the golden triangle that we referenced.

And so Some of those are tenders included in some of the tender stats we've given the past, others are direct negotiations. But there is, I would say, an abundance of of work out there that's being discussed.

Fair enough.

And in the release, you highlighted how kind of leading edge rates for six gen rigs kind of is across a fairly wide band, low 300, to low 400s. Help us think about what kind of governs the lower versus the upper end of that band and how do you expect the market to play out maybe later this year where we're all dealing with this a bit of an air pocket until you get to longer term programs in 2026.

Yes, sure.

So I think part of it depends on specific opportunities and and the need, the technical needs for specific opportunities. So giving an example, our [indiscernible] which we classify as sixth generation rigs, When competing against a drillship are going to need to bid at I'd say a higher discount to seventh generation than when when they're needed more specifically, which they are in several instances actually that we're discussing right now for that discount. Shrinks.

So sixth gen, I would say, of course, there's so many definitions now, but at six Gen, I would say, is probably also encompasses a slightly wider band of capabilities in terms of the assets in that class. Which is part of the reason for that range. [indiscernible] you're going to have higher discounts. And to the second part of your question, we see softness the rest of this year and Generally speaking, like we've seen in times past, I'd say that the asset quality is a big differentiator here when customers have options [indiscernible] Great. Thanks a lot.

Thank you.

Your next question comes from the line of Edikan of Barclays. Please go ahead.

Hi, good morning.

Just wanted to ask if you could kind of walk through the thoughts process for us on the decision to retire that the Meltemps is specifically, which I think caught many by surprise. But by all accounts, this was a very high spec seven gs drillship and I understand it's not free to stack the rig at the same time we we have seen some multiyear contracts announced over the past several years, which which does seem to pay for that reactivation expense and maybe some of the stacking costs within that initial term of the contract. So just curious if you could just expand a bit more for us on the thought process related to that decision.

Yeah. Sure, Eddie. Happy to So we watch everything closely in continuously run numbers on [indiscernible] And I think on the Meltem A couple of things stand out. One, I certainly recognize that on paper, It's easy enough to craft a scenario where that rig could be in the money and that call it the option value of continuing to pay the stacked costs could work. However, as we said in the script, we see a diminished call in the near term on stacked capacity. I mean, [indiscernible] around 10 rigs here.

As we move through this year, And so as we look forward, we think that whatever color there would be on the Meltem has been pushed out. Several years, at least two or three years. And admittedly, that rig as well has actually never had never drilled a well for a customer that had been activated twice and then deactivated before it had actually drilled And so we failed to see a likely scenario where where that rig where it would make sense for us to bid that rig, especially considering that the contract durations that we see today and that we think we'll continue to see for a little bit now given softness are short enough where in effectively any situation where we would bid that rig, we would be getting bidding against available active fleet within our own fleet. And so we took the decision, which we think is the right decision to go ahead and move on.

Understood. Understood. That's very helpful.

Just my follow-up is, Maybe Just another one on regular retirements. You've taken kind of A market leadership role here in reactive in retiring the Nelson Do you think others might start to see the market in a similar way. Others with seven gs cold stacked drill ship capacity and might start to retire their own drill ships or maybe asking in a different way I guess maybe over the next three years, let's say, what's your estimate of how many seven gs drillships reactivations we could see over that time period. I would imagine it's not anywhere in the four to five range Is it one to two or could it possibly even be 0? That's kind of a million dollar question and requires of course a crystal ball. I think I would say if we use the numbers that we used in our prepared remarks, We're going to need another year to year and a half to kind of get back to where we wanted to be, call it, a year ago. And then from there, of course, there are a lot of macro factors that that will determine where we go.

I mentioned in my script and I would repeat it that when we look at all this that we have a A great thought with a lot of cause for optimism in that late 'twenty six and 'twenty seven and on period.

But we got to work through a lot of active supply. Before we get to these stacked rigs and that's why we we chose our words carefully saying that we think that the call on those rigs has has been greatly diminished here. [indiscernible] Got it. Understood. Thanks for that color, Rob.

Turn it back. Your next question comes from the line of Frederic Steen of Clarksons.

Securities. Please go ahead.

Hey, Roberto. Hope you are well.

Thank you for good color in the prepared remarks. As always, I wanted to touch a bit on 2025 guidance. And in a way, I guess, it relates still also to fleet optimization. I think Richard you said around 90% of the EBITDA midpoint would be because secured by current contracts and options. And potentially some extensions, if I heard it correctly. But on the backlog slides, you say that 20%, 25%, sorry for 2025, 55% of available base contracted. So obviously, there's not going to be full utilization on all units as we move through 2025. So you have taken out some of [indiscernible] What are your thinking on on taking out or stacking some of your warm assets? And as a side question to that would be interested to hear around the globe trotters one and two. You are saying that they are not being bid into the drilling markets going forward. Can we view those as effectively out of the drilling market forever? Or do you think they can eventually return?

Thank you.

Sure. Tuck in to a lot of questions in there, Frederic. Starting on the side, so you were right. So basically, approximately just over 90% of our top line at the midpoint is impactful today. Right? And so the 65% I think that you're referencing, I think that includes that does include kind of our cold stacked assets as well. As we look forward to 2025, we're basically saying we've got just as a 10% of top line to go get to hit midpoint. It's not a cost element to that as well to the extent that we don't find that work. I've noted that if you go back to 2024 and 2023, I think we have similar kind of ranges, if you will, from a contract coverage perspective. I think both years we managed to actually get or raise our guidance as well. So I think we feel good about our guidance. Obviously, we've got work to go get in 2025.

There's obviously some meaningful amount of kind of white space assumed, especially in our seventh gen assets in 2025. I think that's maybe why lower than where kind of consensus was. But I think those are the key drivers around midpoint of 2025 guidance.

And I can speak to the Globetrotters. So So we've been saying for a while that we've been chasing the AirVision market and and we continue to believe those rigs are well suited for that market and we also believe that that market will be a strong and growing market going forward. [indiscernible] in the near term, we've got several open I'd say conversations for for multiyear work that actually could use both of the Globetrotters, that's in the [indiscernible] We mentioned on the room in the script that there's a couple of little exceptions there, Black Sea, etcetera, where we would consider drilling with those rigs. I think the standard there is that it wouldn't be cannibalizing our other drilling rigs. But we do not see ourselves outside of those chasing the drilling market with the Globetrotters. [indiscernible] we'll look to see how the results of this work that we're chasing And if for some reason, we're having, trouble contracting into that market. And then later in the year, we'll make a decision about whether to further reduce costs on one of those units.

This is very helpful.

As always, we analysts try to wrap five questions into one. So that's why In other words, I can start there. We're only allowed one my one question.

Thank you and have a good day.

Your next question comes from the line of Craig Hallie of Benchmark.

Hey, good morning, everybody. Thanks as always for the color. So Robert, you mentioned that you think there's going to be a rebound in demand coming off this low in 2025. Which is good to hear.

Kind of curious then if you get a try to connect the dots, right? So you referenced that one of your competitors also referenced that this morning. So it seems like it is definitely the discussions are definitely happening. The incremental net demand coming, do you expect there what kind of pricing improvement would you expect off of 2025 levels on contracts that you are looking to sign in say 2026. [indiscernible] So I think I think most my guess is that most people see what we see in terms of of this demand. [indiscernible] I'm sure that everyone sees what we see around things getting slightly just tiny bit worse before they get better. But I think that the underlying call it mid to long term drivers still remain quite strong.

We gave, I guess, some a couple of facts around where we've seen recent fixtures in the mid to high-400s. So I think that defines the market right now. And I don't know where we go from here, but I do think that the reality is that there is an a fair amount of work out there that is pretty evident starting mainly in 2026. So we see we kind of think about '25 as maybe being just kind of maybe stepping back to 2023 or some some sort of analogy like that where The optimism remains just after a slight dipflat period rather than the linear up into the Okay. Fair enough. And look, I know you referenced that jackup business was going to represent somewhere between 10% to 15% of EBITDA as you go into 2025.

Some recent things that I've seen coming out of Norway would suggest a desire to increase drilling related [indiscernible] I know it's kind of the two rate type market, right, Jack?

And harsh environment semi.

So What would What are you seeing in Norway as it relates to the prospect to get some tailwinds in demand for your jackup assets there? [indiscernible] saw that as well.

And We do think that, the the potential for an additional unit or two of demand in on the jackup side in Norway better now than it's been in several years. So I guess I would say we're hopeful. I would say that that market for us has remained I would say almost surprisingly stable considering the the political headwinds that everybody faces a couple of different countries over there. Norway and The UK. And really others as well.

So [indiscernible] effectively maintained utilization here in the 90 percents kind of range and and we're hopeful that that that we're over the hump in terms of the worst regulatory headwinds and that we can perhaps improve that from here.

That's great. I really appreciate it. Thank you. Thanks, Herb. The next question comes from the line of Noel Parks of Tuohy Brothers. Please go ahead.

Hi, good morning.

So I was wondering, [indiscernible] this era of strength in pricing call it post COVID, continued on.

Is sort of the relatively lower visibility that results from saying a year or two ago having new contracts in place that we're going to give you a big bump up in day rate, obviously from the 200s into the 400s or something.

As As there are sort of fewer of those highly visible increases in the hopper, [indiscernible] Is that sort of influential and you getting just a bit more conservative on on your program moving forward?

Yes. Well, look, I think rates have been relatively flat for quite some time now. In the high 400s. We had some low 500s And so maybe they're more mid to high-400s now.

But I don't know that that's necessarily changed Our outlook dramatically I continue to reference work that's being discussed being contracted that's under negotiation, a lot of direct negotiations out there, and still a fair number of public tenders.

So I think if there were programs short term program that came up with for 2025 work, I think it's pretty obvious that people might be aggressive for something like that given that assuming people see what we see But I think what I said previously holds true there is fair amount of work out there that's on the horizon. And I think remains supportive of certainly the the Tier one market. Great. Thanks. And I was just wondering from the producer standpoint, It sort of seems that by sort of taking the risk that, when they decide to move forward with Wells, that that they will be able to get the equipment they want at a without price inflation that's too dramatic.

In other words, there seems to be confidence that not everyone is going to be rushing through the door exactly the same time. I just wonder seems to me that also means that comfortable sort of assuming that the macro situation and pricing is going to be strong enough that they don't feel any or they don't feel much urgency to sort of bring value forward by being active now maybe at better rates than they could get a couple of years from now. So is there sort of some embedded macro confidence you see for the longer term as opposed to the near term that you see from operators when you talk with them?

Well, there is. I mean, I guess, There's kind of competing realities a little bit. One reality is that spot pricing today is down $15 or $20 from where it was a year eighteen months ago in the the kind of middle part of the curve is down as well.

On the other hand, most of what had been what has been taken to FID or what is being contemplated to go to FID has been profitable and levels well below any of the middle part of the curve. And so so in my mind, there is and one of the reasons we have so much optimism In my mind, there's plenty of work that is profitable and where the curve currently sits. And I think we're seeing that play through with all of this tendering activity. Talking about, negotiating activity that we're talking about.

However, like we said in past calls, there is no rush really to make that final just given, like we mentioned in the script, we're pretty comfortably supplied market right now. And so it's this balance of the work being there and we believe being profitable balanced with a catalyst to actually go ahead and commit the dollars and move forward with And I agree with you to your point that the general availability, especially on the drilling side, FPSS is kind of there's some other categories that are a little bit different on the supply. But on the drilling side, there's supply. So there isn't really a catalyst on supply constraint right now. And so we think that for 2025 that Got it. Thanks a lot. Your next question comes from the line of Josh Jane of Daniel Energy Partners. Please go ahead.

Thanks. Good morning. I wanted to go back to the to the Globetrotter rigs. A bit.

You talked about potentially removing one from the marketed fleet and it sounds like over the next six to nine months, we'll sort of have an answer on that. And based on the number of opportunities you're going to bid those into. My question is, are there any modifications that you potentially may need to make to one of those assets to make them more competitive in the intervention space? And if so, could you speak to that just if you're thinking about that over the medium to long term?

No. I think anything really the GT2 has NPD, which is really more of a a drilling tool Other than that, most of the intervention equipment is transferable. So and really the the vast bulk of that package comes from from service companies instead of our side.

Okay. Thank you. And then just to follow-up on tariffs, I know in your cost guidance you talked about some level of inflation was assumed. It's obviously a very quickly moving target across a number of geographies. But could you give any more details about maybe upside or downside scenarios for what they could ultimately look like and just how you're thinking about managing that?

Sure, sure, Josh. Obviously, it's a very [indiscernible] almost impossible to predict like the real impact It's very likely that time is would result in price increases, which are, of course, more likely than not be passed on to us as well. And so embedded in our guidance is some level of inflation really across the entire cost base and the kind of 3% to 4% type area. We're obviously working as closely as we can with our suppliers around this. But obviously, it's an incredibly fluid situation, something that we're managing a daily basis.

Okay. Thank you. I'll turn it back.

Your next question comes from the line of David Smith Pickering Energy Partners. Please go ahead.

Hey, good morning. Thank you for taking my question.

Like The U. S. Gulf was one of the bright spots in the deepwater market last year.

Right? We saw increasing lead times and good price momentum.

With most of the seventh gen capacity book through the end of twenty twenty five. Right, by the September.

Contracting really slowed down in Q4 I don't see any contracts for 17 rigs signed in the Gulf year to date. And we've got some rigs that could be available soon, including guess, the Valiant fleet next month. So I was hoping you could help with some color on what you've seen happening in The U. S. Gulf going from a a run on forward availability last year to having some near term availability of seven gen rigs, now and how you're thinking about the Valiant and Black Rhino opportunity sets and if either has been bid outside the Gulf?

Yes, sure. I mean, so I guess a couple of things. We continue to see The U. S. As kind of flat to current In the [indiscernible] We think it's obviously going to dip down a little bit. Just look at our own fleet, And so we were disappointed around some of the decisions drilling decisions affected our own fleet I think probably the The difference between our guidance and consensus is explained largely by the BlackRhino and that's a place where we we're really expecting to continue to work through the year. So I think The U. S. And look, again, These are more, I would say, more independents that are affecting our fleet in The U. S. And I would say that that The explanation I gave to the previous question around discipline current spot pricing, all of all of what's playing into this. I would say is as pervasive among independents in The U. S. As it is anywhere else in the world. That's a place that can move quickly There's obvious supply availability, so people can ramp down quickly and ramp up more quickly in The U. S. And anywhere else in the world. I would argue And so I think you're seeing that play out here in 2025 for the reasons.

Previously stated. I think the West Africa where things can't be ramped down or ramped up as quickly really provides most of the explanation for where we are today versus where we had hoped to be call it, a year ago. And the good news is that we see a lot of that coming through. We mentioned in the prepared remarks, we do see a lot of that coming through and we do see I think some of the drivers there being call it regulatory, but perhaps legitimate delays rather than question marks or trying to delay just on account of spot pricing. So we kind of went through any scripts, I won't repeat it, but We see, we see all of that work all potentially coming back as we get into 2026, which is one of the reasons we're I appreciate it. If I could ask a quick follow-up, I thought Q4 SG and A was surprisingly low given the first full quarter of including the Diamond fleet. Is this a good base level to think of going forward? Or was there anything one off contributing to the the low Q4 SG and A figure? [indiscernible] I think, Dave, I think that's a good decent estimate going forward, obviously.

The majority of the synergies in the Diamond transaction G and A. As we sit here today, we realized about kind of 50% of those on a run rate basis. And so going up hopefully as we move forward as well, we see some benefit there as well. Through 2025, right? And as sit here today, by the end of twenty twenty five, we would expect to realize 100% of the synergies on that deal.

Great. I appreciate it. Thank you.

There are no further questions at this time. With that, I will now turn the call back over to Ian McPherson for final closing remarks.

Thanks everyone for joining us today. We appreciate your interest in Noble and we'll look forward to speaking with you again next quarter. Have a great day.

Ladies and gentlemen, that concludes your conference call. We thank you for participating and ask that you please disconnect your lines.