Seadrill - Q3 2023

Transcript

Operator (participant)

Good morning, and welcome to Seadrill's third quarter 2023 earnings call. All participants are in a listen-only mode. After the speaker's presentation, we will conduct a question and answer session. To ask a question, you'll need to press Star, followed by the number 1 on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Benjamin Wiseman, Corporate Finance Manager and Investor Relations. Thank you. Please go ahead.

Benjamin Wiseman (Corporate Finance Manager and Investor Relations)

Thank you, operator. Welcome to Seadrill's third quarter 2023 earnings call. With me today are Simon Johnson, our President and Chief Executive Officer, Grant Creed, Executive Vice President and Chief Financial Officer, Samir Ali, Executive Vice President and Chief Commercial Officer, and Leif Nelson, Executive Vice President and Chief Operating and Technology Officer. Before we begin, I would like to remind you that some of today's comments are forward-looking statements within the meaning of securities laws. They involve risks and uncertainties, and actual results may differ materially. No one should assume these forward-looking statements remain valid later in the quarter or year. For a more detailed discussion of the major risk factors affecting our business, please refer to our latest Forms 20-F and 6-K, filed with the U.S. Securities and Exchange Commission. Our comments also include non-GAAP measures.

Reconciliations to the nearest corresponding GAAP measures are in the earnings release available on our website. Later in the call, following our prepared remarks, we will host a question and answer session. Please limit yourself to one question and one follow-up to permit more participation. Now, let me turn the call over to Simon.

Simon Johnson (President and CEO)

Hello, everyone, and thank you for joining us today. I'll begin with some opening comments about the third quarter results, followed by a few corporate updates before Samir covers our recent commercial activity and the market outlook. Grant will then provide a financial overview before opening up for Q&A. For the third quarter of 2023, Seadrill reported adjusted EBITDA of $151,000,000 on $414,000,000 of revenues, resulting in a margin of 36.5%, which screens favorably across our peer group. Adjusted EBITDA was robust, and therefore, we have increased our full year 2023 guidance, with the range now $485,000,000-$505,000,000.

Moving to shareholder returns, we initiated a $250,000,000 buyback program in mid-September, and as of last week's close, it executed 85% of the total facility at an average of $42.76 per share. By our estimation, this is highly accretive for shareholders, and we are pleased with the progress to date. Given the success of the existing program, the company's robust financial position and our constructive view on the market outlook, we're delighted to announce today that Seadrill's board of directors has increased our share repurchase authorization by a further $250,000,000 , taking the aggregate authorization to an industry-leading $500,000,000. Now, I'd like to touch on the potential sale of our Qatar jackup fleet and related joint venture interest.

There's been a strong level of interest in these assets, but we've not concluded a sale at this time. Put simply, we intend to transact at a level that reflects our beliefs as to jackup asset values and the underlying day rate environment, both of which continue to develop positively. We firmly believe that these are attractive drilling rigs in arguably the most prospective jackup market on the planet right now. Although we remain focused on our strategy of exiting non-core asset categories and simplifying our company's value proposition, we're in no rush to sell these non-operated rigs, and we will do so only if a buyer meets our pricing expectations. On the topic of our ongoing initiatives to simplify and realize cost efficiencies, we can announce today that we've decided to close our London office and consolidate our corporate headquarters in Houston, Texas.

We anticipate this will occur before the end of the first quarter in 2024. First and foremost, I'd like to take this opportunity to personally thank the dedicated and talented team in London. The London office has been a hub of entrepreneurship and excellence, and everyone who's been a part of that can be justifiably proud of what has been achieved, especially in the past two years. In addition to the executive team, only a modest number of staff will transition to Houston. Nevertheless, looking ahead, the management team and I are excited about the opportunities for improved collaboration and for cost efficiencies that we anticipate will result from centralizing our executive, operational, and functional leadership under one roof, in much closer proximity to key customers, suppliers, and target markets. In our view, fundamentals remain robust.

We believe in the length and durability of this up cycle and also, crucially, Seadrill's advantageous positioning relative to most of our trade rivals. Looking forward to 2025 and 2026, we expect a reduction in the impact of SPSs, boosting our revenues and cash flow profile, and we anticipate a significant uptick in earnings, particularly as the West Carina, West Jupiter, and West Tellus roll off existing legacy contracts. We're very positive about the outlook for South America, and last week's five-year plan from Petrobras only confirmed this view, with total E&P spending up 14% and notably, exploration up 25% compared to the prior plan. Now I'll hand the line over to Samir to take us through the commercials in more detail. Over to you, Samir.

Samir Ali (EVP and Chief Commercial Officer)

Thank you, Simon. I'll begin with two recent fixtures, both in the Gulf of Mexico. First, the West Neptune secured an extension with LLOG, representing a total contract value of approximately $76,000,000. The extension will be in direct continuation of the current term, keeping the rig busy into the second quarter of 2025. We are proud to continue this long-standing partnership with LLOG that started nine years ago when the West Neptune was delivered to Seadrill. Next, the West Vela secured a short-term campaign with QuarterNorth Energy, representing a total contract value of approximately $45,000,000. This is a well-based contract, and the estimated term is approximately three months. As a reminder, the West Vela was acquired by our Aquadrill transaction, which closed earlier this year and is currently managed by a third-party drilling contractor.

Once the current program is completed, the rig will undergo a short reintegration into the Seadrill platform and then commence with the QuarterNorth campaign. Moving to some comments on the upcoming rollovers. We currently anticipate the Sevan Louisiana will finish its work with Talos next month, subject to well in progress, then undertake its ten-year SPS. Despite the contract turn that we observe here in the Gulf of Mexico, we remain cautiously optimistic about securing further work. Shifting east, the West Polaris is scheduled to conclude early next year in India. The rig is currently managed by a third-party drilling contractor, but she will transition to Seadrill once the campaign finishes. As stated previously, we may choose to opportunistically relocate rigs to more attractive markets, where we see more demand and where we can achieve economies of scale.

With this in mind, we do expect several months of idle time on the West Polaris in 2024. Currently, our actively contracted utilization for 2024 through 2026 stands at 77%, 47%, and 21% respectively, providing a smooth contract rollover profile. We're increasingly excited as we look to the future, anticipating a considerable repricing from rigs rolling onto prevailing market rates. Our order backlog currently stands at $2,200,000,000 as of November 27, 2023. Turning to an overview of the market. The IEA recently published its World Energy Outlook, forecasting a meaningful need for hydrocarbons through 2050, while OPEC has projected that oil demand will continue to expand until 2045, primarily driven by population growth in the developing world.

Taken together with the low break-even points of deepwater projects and the supportive commodity prices, we believe in the long-term outlook of our industry. Taking a closer look at offshore, drillship marketed utilization continues to track in the 90s, while the leading-edge day rates recently breached the much-anticipated $500,000 per day mark, albeit for a one-well job. Even so, this is just the beginning. Demand is expected to increase over the coming years, particularly in the Golden Triangle, and in our view, there are major barriers to additional additions of new supply. The lead times and costs of delivery are meaningful and should not be underestimated. As the market continues to develop, we've averaged lead times to secure drillships increase to 319 days, and almost 60% improvement compared to 2020.

Operators are focused on synchronizing startups with the delivery of well equipment, which continues to slip to the right. Admittedly, we haven't hit the average lead time seen in the last peak when offshore operators often had a year between fixing and commencement. But the fact that we're even making the comparison is a testament to the current strength of the market and the prospects for this upcycle. Our view and duration remains consistent. At a high level, it's increasing on average, mainly driven by fixtures in Brazil. We anticipate average duration continuing its upward trend, especially as operators trade term for favorable day rates in the near term. We're also expecting operators to barter with other aspects of total contract value to mitigate day rate progression. A positive signal, we believe.

The market naturally focuses on headline day rates, but this is just the tip of the iceberg. We are just as focused on other terms and conditions below the water surface, such as escalation mechanisms to help improve margins. As the offshore market further tightens, we will target such terms and conditions, given they can have a meaningful impact on stakeholder value. With that, I'll hand it over to Grant.

Grant Creed (EVP and CFO)

Thanks, Samir. I'll discuss our third quarter results before giving some other financial updates. In the third quarter, Seadrill generated $414,000,000in total operating revenues, consistent with the prior quarter. This includes $324,000,000of contract drilling revenues, which decreased sequentially by $5,000,000, primarily due to planned out-of-service days on the West Phoenix and Sevan Louisiana. We reported economic utilization of 93% for the third quarter, which was negatively impacted by the above-mentioned out-of-service time. Beyond contract drilling revenues, we generated additional revenues from management contracts, largely relating to Sonadrill joint venture, totaling $68,000,000. We also earned an additional $22,000,000in reimbursable and other revenues, the majority of which relates to bareboat charter income from the 3 Gulfdrill rigs.

Operating expenses for the quarter reduced by $4,000,000 sequentially to $304,000,000, primarily due to one-time expenses in the prior quarter relating to Aquadrill acquisition and subsequent integration. This translated into Adjusted EBITDA of $151,000,000, resulting in a margin of 36.5%. Net income for the third quarter was $90,000,000 or $1.10 per diluted share. Now on to the balance sheet and cash flow statement. As of September 30, 2023, Seadrill had gross principal debt of $625,000,000, comprising $575,000,000in secured second lien notes and $50,000,000in unsecured convertible notes. The second lien notes were issued at our refinancing in July, raising net proceeds of approximately $230,000,000 after redeeming the existing secured debt.

At the same time, we established a new first lien revolving facility of $225,000,000, which remains undrawn. At the end of the quarter, we had approximately $837,000,000 of unrestricted cash. This includes $82,000,000 of cash previously pledged as collateral for a tax case in Brazil. This case remains ongoing, but we were able to agree a new arrangement, thereby unrestricted this cash. Total CapEx for the third quarter was $61,000,000. Approximately half of this was long-term maintenance, and the other half related to rig equipment additions. In line with US GAAP, long-term maintenance costs are included in operating activities on a cash flow statement. The $61,000,000 of total CapEx represents a sequential increase of $24,000,000compared to the prior quarter, driven by long lead items related to oncoming SPSs.

Looking ahead to the fourth quarter, we do expect a quarter on quarter uptick once again. Cash flow from operations was $112,000,000 for the third quarter. This represents a sequential increase in operational cash flow of $92,000,000 compared to the prior quarter, as we were no longer impacted by adverse one-off working capital movements. Moving to our updated full year guidance for 2023. Our total revenues are now expected to be between $1,495,000,000 and $1,515,000,000, while our Adjusted EBITDA range has also increased, now $485,000,000-$505,000,000. The increase primarily relates to strong operational performance across the fleet, planned maintenance moving to 2024, and a higher number of operating days on the West Polaris.

With our year-to-date results and the updated guidance range, you will note that we anticipate a sequential decrease in adjusted EBITDA in the fourth quarter. This is mainly driven by planned out of service time for maintenance, higher operating costs related to special projects, fewer operating days on the Sevan Louisiana, and higher personnel costs due to our initiatives to retain talent in an increasingly tight labor market. Lastly, on the CapEx guidance, our CapEx range now stands at $185,000,000-$205,000,000for 2023, a reduction compared to prior guidance. However, this is largely a timing issue as opposed to a permanent reduction in CapEx altogether, and as such, we do expect these items will push into next year. Next, I'd like to take a moment to provide more color on our upcoming SPS and rig maintenance schedule.

These projects can affect our financials on two fronts. First, out of service time to undertake the work negatively affects revenue and in turn, earnings, and second, CapEx has an impact on cash flows. Looking forward to next year, the Sevan Louisiana and West Neptune will each have an estimated 45 days out of service. We expect to undertake regulatory work on the West Phoenix at some point following the conclusion of the Vår Energi contract. And elsewhere across the fleet, we anticipate SPS-related work to be completed on our four drillships in Brazil, but with no associated out of service time. Despite this, we do expect to be cash flow positive next year. Now, I'd like to briefly comment on synergies for our Aquadrill acquisition. As Samir outlined, we recently secured work for the West Vela with QuarterNorth.

This campaign startup will signify the return of the second of Aquadrill's four drill ships to Seadrill after the transition of the West Polaris in the first quarter of 2024. What's more, we expect West Auriga and West Capella to return after their respective contracts next year, while the West Aquarius semi-submersible transitioned back to us earlier this year, which remains cold stacked. Overall, we continue to be on track to realize the previously guided synergies. Furthermore, as part of our continued efforts to simplify the organization, following the sale of Paratus Energy Services earlier this year, we have now terminated the associated management agreements, subject to limited transition services that we expect to finish in the fourth quarter. Turning to our share repurchases. As Simon touched on earlier, we initiated a $250,000,000 program in mid-September.

As of last Friday, we had repurchased 6.2% of our share capital, or 4,000,000 or 5,000,000 shares at an average of $42.76 per share. This translates to a total value of $213,000,000. We're delighted with both the speed and realized price level to date, and we anticipate concluding the program in the next few weeks, subject to market conditions. Next, we've announced today that Seadrill's board of directors has increased our share repurchase authorization by a further $250,000,000, taking the aggregate authorization to $500,000,000. Any purchases we make in connection with this additional authorization will be at the discretion of our board and in accordance with our capital allocation principles. We cannot predict when or if we will make any purchases under this facility.

We are proud to be a shareholder-friendly company. As we have said before, returning capital to shareholders is central to our capital allocation strategy. With that, we'll open up for Q&A. Operator, over to you.

Operator (participant)

Thank you. As a reminder to ask a question, please press star followed by the number one on your telephone keypad. In the interest of time, we ask that you please limit yourself to asking one question and one follow-up. Thank you. Our first question comes from Greg Lewis from BTIG. Please go ahead. Your line is open.

Greg Lewis (Managing Director and Senior Energy and Infrastructure Analyst)

Yeah, thank you, and good afternoon and afternoon, and good morning. Thanks for taking my question. Simon, I was hoping to get a little bit more color on, on the market. Really, what I'm wanting is, really you guys have been busy. It was good to see the contract on the Vela, you know-

Grant Creed (EVP and CFO)

Hey, Greg, Samir. Can you speak up?

Greg Lewis (Managing Director and Senior Energy and Infrastructure Analyst)

Hey, Samir.

Grant Creed (EVP and CFO)

We can't hear you.

Greg Lewis (Managing Director and Senior Energy and Infrastructure Analyst)

Sure. Is this, is this better?

Grant Creed (EVP and CFO)

Yes. Thank you.

Greg Lewis (Managing Director and Senior Energy and Infrastructure Analyst)

Okay. Hey, hey, guys. Thanks. Sorry about that. Yeah, I was hoping to get some comments on, on the broader market. You know, clearly, white space has been something that's been talked about. You know, congrats on getting that QuarterNorth contract in the Gulf of Mexico. It looks like maybe there's gonna be, you know, 30, 40 days of a downtime in between.... As you look at the market in 2024, realizing there is activity coming, but there's all it looks like to be a little bit of a timing issue. Any kind of broad strokes, how we should be thinking about idle time between contracts as rigs roll off?

Simon Johnson (President and CEO)

Yeah, thanks for the question, Greg. Perhaps, let me kick off and then I'll pass to Samir. So look, I, I think the thing to realize is that, you know, markets evolve through time. They rarely take a straight path. We're not concerned by what we see as some near-term supply congestion. The fundamentals, you know, are just so strong. So, you know, what's most important for us is to see consistent measured improvement in demand. That's what we're focused on, and that's what the, the market's delivering through time. I think it's important to, to reflect on the fact that day rates are now almost back to pre-downturn levels, the sort of levels that we were seeing in Q1 2014, Q4 2013. So, you know, there, there's been tremendous improvement since early 2021.

But most of the momentum has obviously, you know, been delivered over the last two years. So, you know, I think, you know, there's, that's not always a straight walk, and what we're seeing is just a, you know, short-term fluctuation.

Samir Ali (EVP and Chief Commercial Officer)

Yeah, Greg, the only thing I'd add is, you know, we've been pretty consistent that there was some churn and some headwinds kinda coming early, probably first half of next year. You know, as we go into the second half of next year in 2025, demand is starting to stack up and looks pretty good. So, you know, I think it is transitory, and I think, you know, I'd reiterate, we've been pretty consistent that we saw it coming, and it's not a surprise to us.

Greg Lewis (Managing Director and Senior Energy and Infrastructure Analyst)

Yeah. No, absolutely. And then I did have—I was hoping to get a little bit more color on the Louisiana. That's kind of the semi in the Gulf of Mexico. As you kinda look at the opportunities, one of the things we've been hearing is, you know, just given the configuration or structure of the rig, you know, it might be better suited in an area like West Africa. Any kind of thoughts around that?

Really what I'm kinda wondering is, if it were to leave, since it's not a drillship, if it were to leave the Gulf of Mexico and relocate, you know, any kind of color around, you know, the time it would take to reposition that rig and maybe some expenses, if that is indeed what could happen for that rig as you market it globally?

Samir Ali (EVP and Chief Commercial Officer)

Yeah, sure. So, you know, I'd say she is a unique design, but, you know, she's well loved around here. I'd say, you know, we are marketing her globally, obviously. She will roll off contract next month, as you know, as I said in my prepared remarks. You know, we're looking at—She's got an SPS due, and then after that, we're looking at opportunities both in the Gulf and abroad. And, you know, I'd say for us, if we're gonna move it, we're gonna try to get the customer to pay for it. So for us, it is a value maximization, and, you know, we're not gonna limit ourselves to one market with that asset.

Greg Lewis (Managing Director and Senior Energy and Infrastructure Analyst)

Okay.

Operator (participant)

Our next question comes from Eddie Kim from Barclays. Please go ahead. Your line is open.

Eddie Kim (VP and Equity Research Analyst)

Hi, good morning. Just wanted to get your preliminary thoughts on 2024, if I could. The current consensus has you pegged at around $510,000,000in EBITDA. Just based on where things stand today, do you believe that's a fairly reasonable estimate, or would a lot of things sort of need to break your way in order to hit that target?

Grant Creed (EVP and CFO)

Hey, Eddie. Thanks for the question, and look, I'll say that we're not in a position to provide guidance for next year. That's really just because certain revenue and cost items are still in flux and really need to firm up before we can provide precise, reliable guidance. I think doing anything now would be premature, so I'd rather just stay away from that, if you don't mind, on the call today.

Eddie Kim (VP and Equity Research Analyst)

Okay. Okay, understood. Just my follow-up is just a clarification on the day rate on the Vela. Samir, you highlighted $45,000,000in backlog over three months, which works out to a day rate of exactly $500,000 a day on my math. First of all, is that math correct? And if so, is that a fairly clean day rate, or does that $45,000,000in backlog include maybe some move fees or other services that would maybe take that clean day rate a bit lower?

Samir Ali (EVP and Chief Commercial Officer)

So we're not gonna get into the contract specifics, but, you know, we did say approximately around a lot of things. So it is a well-based contract, so things can ebb and flow, is what I'd tell you.

Eddie Kim (VP and Equity Research Analyst)

Okay. Okay, understood. All right, that, that was all I had. I'll turn it back. Thank you.

Operator (participant)

Our next question comes from Fredrik Stene from Clarksons Securities. Please go ahead. Your line is open.

Fredrik Stene (VP of Equity and Credit Research)

Hey, guys. Hope you are well, solid quarter, and good to see that you continue to return cash, or at least, you know, you're paying your shareholders through share repurchases. I have a couple of questions. You have, starting actually with the jackups that you announced earlier this year that you were in the process of selling, or at least having advanced discussions with customers. As you said, now they're no longer held for sale, and you have... You're in no rush to sell them. Are you able to give some color on whether or not that's because your price expectations have changed, or because the potential counterparties expectations or willingness to pay have changed?

Simon Johnson (President and CEO)

Hey, Fredrik, it's Simon. Yeah, look, it's a little bit of both.You know, as we said in the prepared remarks, you know, we've had a lot of interest... you know, frankly, we had strong expectations about how the jackup market will continue to develop through time. You know, the offers that were in front of us just simply didn't match those expectations. So it takes time to get deals done, we know that. The market for jackup assets has lots of upside, we believe. And as we said, we're not in a hurry, and we're not gonna sell for a stale price. So, you know, we're not in a hurry, and we believe that market will continue to develop through time. So, it's an informal process we're running, and we'll continue to review offers as we receive them.

Fredrik Stene (VP of Equity and Credit Research)

Great, thanks. Turning to some of your comments, Samir, about T&Cs in the contracts, that you know day rates are one thing, but clearly total economics and whatever gets you the most cashes is what should matter the most, even though the stock market might look more on headline rates than anything else. You also said that the Q4 would be impacted by higher personnel costs. So, I was wondering, first, are you able to give any indications on how you see costs for people and equipment developing over the next year and maybe even two years?

As you're working on these other T&Cs that relates to pass-through mechanisms for escalation mechanisms for costs, how much do you think you're able to pass on to your customers of that?

Leif Nelson (EVP and Chief Operating and Technology Officer)

Hey, Fredrik, this is Leif. I'll take one of your questions regarding the people and cost of services. I'll pass over to Samir on the T's and C's. I mean, generally speaking, globally, we're seeing inflationary pressures on the labor side in the high single digits, driven predominantly across Brazil, Angola, U.S., Gulf of Mexico. Some of the pressure is coming from the ramp-up in activity in our own industry, but also heavy industry elsewhere is attracting people to their services, and that's putting inflationary pressures to retain and maintain our workforce. I think with that, I'll pass over to Samir on the other T's and C's.

Samir Ali (EVP and Chief Commercial Officer)

Yeah. So on inflationary pressures, you know, our goal is always to give you 100% pass-through. Uh, I'm gonna go with that's a goal, and that's the most desirable outcome. But where we land is varies client to client and kind of their understanding, but it also varies market to market, right? So for us, it's also looking at the contract duration and our ability to reprice and, you know, pass some of those costs on, because for us, we wanna make sure we're maintaining that margin that we signed up for when we originally signed that contract.

Fredrik Stene (VP of Equity and Credit Research)

Perfect. Thanks. Final one for me, just a clarification on the Neptune contract. I think you said in the fleet status report that there's been some variations to the well schedule on the existing term. And I'm sorry if I missed this initially, but are you able to give an indication of how long this extension is, or if the rate on the extension is comparable to what you're earning on the current contracts? Because initially, it seemed to be a bit lower on what I had to work with there.

Samir Ali (EVP and Chief Commercial Officer)

The extension was approximately six months.

Fredrik Stene (VP of Equity and Credit Research)

Perfect. Thanks. That's all for me.

Simon Johnson (President and CEO)

Thanks, Frederick.

Operator (participant)

As a reminder, to ask a question, please press star followed by the number one on your telephone keypad. Our next question comes from Hamed Khorsand from BWS Financial. Please go ahead. Your line is open.

Hamed Khorsand (Principal, Director of Research and Senior Equity Analyst)

Good morning, this is actually Vahid calling in for Hamed. Question on the contract extension and if that's gonna have any impact on the SPS timeline.

Simon Johnson (President and CEO)

For which rig?

Hamed Khorsand (Principal, Director of Research and Senior Equity Analyst)

You know what? That's a good question, and I don't have an answer to that. I'm just asking the question for Hamed.

Samir Ali (EVP and Chief Commercial Officer)

Uh, Neptune.

Leif Nelson (EVP and Chief Operating and Technology Officer)

Neptune, Louisiana.

Samir Ali (EVP and Chief Commercial Officer)

Neptune, Louisiana. No, I don't think it'll have an impact on the SPS schedule.

Simon Johnson (President and CEO)

Yeah. We have some discretion as to when we conduct these SPSs, Vahid. So, typically, you know, there's a window within which we must perform it. We do have the opportunity to get a dispensation from our classification society in certain cases to extend that. The same applies with regulatory work that we have to do to some extent. So we try to do it to minimize the inconvenience in our operators work programs, and also obviously to opportunistically schedule it in relation to, you know, what else we have going on within the organization. So, they shouldn't be seen as like, you know, firm anniversary dates. There's some flexibility there, isn't there, Leif?

Leif Nelson (EVP and Chief Operating and Technology Officer)

Yeah, I agree. We have windows to work with and flexibility to work within the well schedule and contract end dates.

Hamed Khorsand (Principal, Director of Research and Senior Equity Analyst)

That was the question. Thank you, and thanks for the flexibility and not making me look stupid about not knowing which rig to ask for. Thank you.

Operator (participant)

Our next question comes from Truls Olsen from Pareto Securities. Please go ahead. Your line is open.

Truls Olsen (Head of Research)

Thank you. Hi, Simon. Hi, team. Thank you for taking my call. You've added comments on a couple of rigs. Let me just throw one additional rig in there, and that's the West Phoenix. Now, it's coming off contract, I think it's in August next year, an SPS deal and some project-related costs. Probably you bid that into the Neptun Deep, I think it is, it's called. It's been a bit back and forth around that project and probably other things going around. Any updates relating to that rig and what's the plan? Thanks.

Samir Ali (EVP and Chief Commercial Officer)

Sure. So, you know, we're not gonna speak to any specific tenders, but what I will say is, you know, she does roll off contract later next year. We do have some SPS and some upgrades to do to that rig, and we're actively marketing her, you know, for opportunities in Norway and other markets as well, and we remain cautiously optimistic.

Truls Olsen (Head of Research)

Okay. Thank you.

Simon Johnson (President and CEO)

Thanks, Truls.

Operator (participant)

We have no further questions. This will conclude today's conference call. Thank you for your participation. You may now disconnect.