Good day and thank you for standing by. Welcome to the Shelf Drilling Q4 2022 Earnings Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be the question-and-answer session. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Shelf Drilling’s CEO, David Mullen. Please go ahead.

Thank you, operator, and welcome everyone to Shelf Drilling's Quarter Four 2022 Earnings Call. Joining me on the call today is Greg O'Brien, Shelf Drilling's CFO. Earlier this morning, we published the 2022 financial statements for Shelf Drilling, Ltd. and Shelf Drilling North Sea Ltd., as well as our latest fleet status report on the Investor Relations page of our Company website. In addition to our press release and the financial statements, we also published the presentation with our highlights from the quarter. A recording of this call will be made available on our website within the next few days. Before we begin, let me remind everyone that our call will contain forward-looking statements. Except for statements of historical facts, all statements that address our outlook for full year 2023 and beyond, activities, events or developments that we expect, estimate, project, believe or anticipate, may or will occur in the future are forward-looking statements. Forward-looking statements involve substantial risks and uncertainties that could significantly affect expected results. Actual future results could differ materially from those described in such statements. Also note that we may use non-GAAP financial measures in the call today. If we do, you will find supplemental disclosures for these measures and an associated reconciliation in our financial reports. I will provide an overview of the Company's performance for quarter four 2022 and share my latest views on the jack-up market. I will then hand over to Greg to walk you through our fourth quarter results and 2023 financial guidance before opening up the floor for Q&A. As always, I would like to start my commentary on our earnings call with our safety performance. The total recordable incident rate was 0.16 for the full year 2022, matching the best ever result in the Company's history. During the year, our entire fleet of rigs operated for seven months without recordable incident, including a period of four consecutive months. Our Make It Safer Today program continues to evolve and adapt empowering our crew with the tools and means to carry out our vision of perfect execution. Despite the unprecedented supply chain challenges effecting our sector, our fleet wide uptime for the year remained robust at 99.3%, matching our excellent performance from 2021. Our ability to achieve exceptional performance level even as we integrate the newly acquired high specification harsh environment rigs is a testament to our unique operating platform and the agility and resilience of our operations. This accomplishment underscores the effectiveness of our centralized and fit for purpose approach to maintenance, technical support and procurement. We successfully completed the contract preparation works for the Ron Tappmeyer and F.G. McClintock, which have commenced their new contracts with ONGC in India in January and February respectively. Additionally, we have started preparation projects for the C.E. Thornton and Compact Driller. Meanwhile, the Shelf Drilling Victory and the Harvey Ward are nearing completion of the shipyard projects in the UAE for their respective projects in the Middle East scheduled to start before the end of April. Around year end 2022, the Shelf Drilling Resourceful was mobilized from Nigeria to Croatia to prepare for its upcoming project offshore Italy. We continue to build backlog across our standard specification rigs in India. We have been able to add incremental rig capacity in the Middle East and the Mediterranean further strengthening our foothold in these key regions. In January, we completed a private placement of 17.6 million shares representing 10% of the outstanding equity at Shelf Drilling, Ltd. at that time. This placement was significantly oversubscribed and took place through an accelerated bookbuilding process. The net proceeds of $44 million were primarily be used for CapEx requirements associated with a number of recent long-term contract awards. On a consolidated basis, with Shelf Drilling North Sea, revenue for the fourth quarter of 2022 totaled $215 million with an adjusted EBITDA of $76 million. This represents an adjusted EBITDA margin of 35%. As a reminder, our five rig acquisition closed on October 5, so earnings contribution from SDNS represented almost a full quarter. Greg, will provide you more details on our quarter four 2022 financials. Brent oil prices dropped from low to mid 80s to close at $73 on Friday following the collapse of Silicon Valley Bank and subsequent distress in other regional U.S. banks as worries on broader contingent impact in the U.S. and Europe took hold. I imagine we will continue to see a volatile commodity and equity markets until the dust settles and there's clarity around the extent of the damage from this ongoing banking crisis. However, I believe that the macro backdrop remains constructive for shallow water segment. The lack of investment in the upstream oil and gas sector over the past decade has resulted in limited capacity to increase production beyond where we are today. The Arabian Gulf and the Middle East is the primary go-to region for low cost, short cycle incremental production. The supply of jack-up rigs is more severely constrained than it has been for more than a decade, with nearly all the tangential supply absorbed in long-term contract awards in the Middle East. Throughout 2022, customers in the Middle East drove the demand for jack-up rigs by contracting incremental rigs at an unprecedented rate. We believe the national oil companies in this region have collectively chartered more than 40 incremental rigs between early 2022 and now, all on long-term contracts. Elsewhere, incremental rig demand is visibly increasing across India, Asia and West Africa, where the ready supply of rigs has mostly evaporated. The North Sea specifically U.K. is experiencing some slowdown in rig demand due to the energy profits levy imposed by the U.K. government on the oil and gas producers. We are also experiencing a temporary slowdown in the Norwegian jack-up market that is more a consequence of timing on major projects. The jack-up CJ70 demand in Norway for the second half of 2024 and beyond looks to be very strong. The global number of contracted jack-up rigs increased from 350 in January 2022 to 386 in March 2023, primarily driven by the rapid activity ramp up in the Middle East. Market utilization increased from 84% to 91% over the same period. We expect the global jack-up market to continue to strengthen and dayrates to improve further over the course of 2023. Since our last earnings presentation, we've had a significant number of meaningful contract fixtures. Following the Shelf Drilling Victory, the Harvey Ward also secured a five year contract in the Arabian Gulf. The rig has mobilized from India to UAE for its preparation project and is expected to commence this contract in quarter two. Three of our standard rigs secured three year contracts with ONGC in India, and we saw a meaningful uplift in dayrates for all three rigs compared to the previous tenders. Two of the three rigs the Key Singapore and the Compact Driller are incremental capacity. Nonetheless, ONGC were two rigs short of their 12 rig requirement, which will most probably be carried over on the next tender, expect to be issued in quarter two. We secured a two rig award with ENI offshore Italy with the duration of two and three years, for the Key Manhattan and Shelf Drilling Resourceful. This award enables us to build on the outstanding performance of the Key Manhattan, which is operated for ENI for the most part of the past decade. Our rigs in West Africa also received a series of contract awards at materially higher dayrates. Among them, there was a one year contract for the Trident VIII, a short-term extension for the Baltic and a two year contract award for the Shelf Drilling sector. We also expect to execute a short-term contract for the Adriatic I in the very near-term. As of the 31st of December, our contracted backlog was $2.7 billion across 36 rigs and the average backlog dayrate is now materially higher than in recent years at an average of $79,000 per day. The significant backlog build from $1.7 billion at year end 2021 to $2.7 billion was the result of 24 contract awards resulting in a book-to-build ratio of 2.7 times. We finished 2022 with 35 of our 36 rigs under contract, representing a marketed utilization of 97% across the fleet. The Shelf Drilling Fortress in the North Sea is available, following the completion of its contracts with TotalEnergies in the U.K., and is being marketed for multiple opportunities in the U.K. and outside the U.K. Reflecting on our continued commitment to sustainability and environment, we made significant progress in improving the quality and consistency of our Scope 1 and Scope 3 emissions reporting. We have launched several initiatives, some of these in partnership with external parties to drive further improvement in the management of engine, fuel and emissions data with a view to supporting our long-term sustainability goals. Additionally, we remain committed to promoting social responsibility and have invested in initiatives to support our people and local communities including across our value chain. We are proud of the strides we've made in advancing our sustainability agenda and invite our stakeholders to review further details of our actions and performance in our sustainability report to be released later this month. 2022 not only marked Shelf Drilling’s tenth year anniversary, but it was also an exceptional and transformational year for the Company. Integration of all the six acquired premium jack-up rigs is progressing well, and we expect these rigs to contribute significantly to Company's earnings capacity in 2023 and beyond. Our gross backlog additions, which exceeded $1 billion rivaled our pre-pandemic marketing record. Dayrate momentum is apparent across all asset classes, as evidenced by the recent award for the Shelf Drilling sector as well as other fixtures in India and Nigeria. We are optimistic about the future of our industry given the supply demand dynamics for jack-up rigs and the outlook for offshore E&P investments in the medium term. We are focused on capitalizing these opportunities by delivering safe and best-in-class operations to our customers. I will now hand over to, Greg, to walk you through the financials and guidance. Greg O'Brien: As David mentioned, we published our Q4 and full year 2022 results this morning, as well as standalone financial reports for Shelf Drilling North Sea following the acquisition of the five premium harsh environment jack-ups and subsequent listing in October. We'd encourage you all to review the results presentation on our website as this includes additional detail and schedules for both companies. Reported revenue for Q4 up $222 million included $8 million for non-cash amortization of intangible liability, which resulted from the fair value accounting associated with the SDNS acquisition. An additional $35 million liability is included on our balance sheet as of yearend 2022 and will also be recorded as non-cash revenue over the remaining contract durations for the three jack-ups currently working in the U.K., Denmark and Qatar. During this period, we will refer to adjusted revenue, which excludes the impact of this non-cash item, a concept used by several other offshore drilling companies following acquisitions. Adjusted revenue for Q4 up $215 million included $178 million of dayrate revenue, $19 million of mobilization and bonus revenue and $18 million of recharges and other revenue. Adjusted revenue for Q4 increased by $48 million or 29% relative to Q3 2022, primarily due to the contribution of $41 million from the SDNS rigs as well as a higher average dayrate across the fleet. The sequential increase in other revenue was primarily driven by the $12 million contribution from the Shelf Drilling Barsk. This rig is operated under a bareboat charter agreement until the completion of its current contract with Equinor and we recognized the net margin generated by this rig as other revenue during the period. Across the rest of the business, revenue increased by $8 million due to the return to operations of the Trident VIII in Ghana and by $5 million from the short-term contract for the Compact Driller in Oman that finished in late December. This was partially offset by lower revenue in India as the F.G. McClintock and Ron Tappmeyer completed contracts in October 2022 and we're subsequently out of service for approximately three months preparing for their new three-year contracts with ONGC. Effective utilization improved from 85% in Q3 to 86% in Q4, primarily due to the contribution of the SDNS rigs at an average level of 98% during the quarter. Average dayrate was $67,000 per day in Q4, up from $62,000 per day in Q3. This increase resulted both from higher average dayrates for the SDNS rigs as well as an overall improvement for the rest of the fleet. Operating and maintenance expenses of $122 million in Q4 increased from $89 million in Q3. Expenses for the four operated rigs in SDNS were $20 million for the 88 days post-acquisition and costs increased by $13 million across the rest of the fleet. Operating expenses were higher on the Trident VIII and the Harvey Ward preparing for a new long-term contract in the Middle East. Both of these rigs were idle earlier in 2022. In addition, expenses increased across the rest of the fleet, including the F.G. McClintock and Ron Tappmeyer in India and the Shelf Drilling Resourceful, which was in the process of mobilizing to Italy at year end. As global jack-up activity further accelerates, we continue to be impacted by inflationary pressures, our centralized and focused approach to maintenance and technical support as well as our investment in building a pool of spare assets and equipment continues to benefit us as we complete a number of major shipyard projects simultaneously. G&A expenses were $17 million in Q4 up from $13 million in Q3 primarily due to higher personnel costs and $1 million of one-time expenses related to the acquisition of the five SDNS rigs from Noble. Adjusted EBITDA was $76 million in Q4 representing a margin of 35% compared to $66 million and a margin of 40% in the previous quarter. The adjusted EBITDA contribution was $17 million from SDNS in Q4 and $59 million from the rest of the business. Income tax expense of $9 million in Q4 brought the full year tax expense to $34 million or 5% of 2022 revenues. The full year 2022 tax expense included approximately $1 million for Shelf Drilling North Sea. Net interest expense of $34 million for the quarter was $7 million higher than Q3 due to the debt issuance at the SDNS level to partially finance the acquisition. Non-cash depreciation and amortization expenses totaled $36 million in Q4 up from $33 million in Q3. Net income for Q4 was $3 million. Capital expenditures and deferred costs totaled $471 million in Q4 including $420 million at SDNS which mainly consisted of the recorded acquisition cost of $418 million for our five rig purchase. The initial contract liability balance of $43 million represents the difference between our cash purchase price of $375 million and our opening accounting basis in the rigs of $418 million. The remaining spending level of $52 million in Q4 included $24 million for ongoing project on the Shelf Drilling Victory and $28 million across the rest of the fleet. As a result, our total capital spending for full year 2022 excluding rig acquisitions was $108 million and our total investment in the Shelf Drilling Victory was $58 million as of yearend 2022. Our consolidated cash balance as of December 31, was $141 million or $16 million lower than the balance of $157 million at the end of September, mainly due to the completion of the SDNS acquisition. The yearend cash balance included $53 million at Shelf Drilling North Sea and $88 million at the parent company. We also included financial guidance for full year 2023 in our release this morning. Fully consolidated adjusted EBITDA is estimated between $310 million and $345 million with a significant concentration in the second half of 2023. Due to the large number of our rigs temporarily out of service, Q1 2023 EBITDA will fall sequentially relative to Q4, but we expect our run rate level of EBITDA to materially improve thereafter following commencement of new long-term contracts in the Middle East, India, Italy and West Africa at attractive dayrate levels. Total capital spending is estimated between $220 million and $245 million. This includes $20 million to $25 million at the SDNS level, primarily for investment in fleet spares for those rigs and transition related activities, which we had considered as part of our opening sources and uses of funds when we completed the transaction in 2022. The ongoing maintenance CapEx requirements these units are expected to be relatively light during 2023. Across the rest of the business, we expect a significantly higher than normal level of run rate CapEx during the first half of the year as we complete the projects for the Shelf Drilling Victory and Harvey Ward as well as the contract preparation work for the Shelf Drilling Resourceful and Shelf Drilling Scepter. Each of these contracts includes significant mobilization fees that serve as a material offset to the spending requirements for these rigs with the total amount in the $100 million dollars range. We'll also incur certain one-time costs for the Compact Driller and Key Singapore as they prepare for maiden contracts with ONGC in India. Even with this high concentration of project activity, we expect our 2023 spending net of mobilization fees to be close to the $100 million range for our 31 rig fleet at the parent company, which is consistent with our directional annual guidance provided in recent quarter. As David mentioned earlier, we completed a $44 million equity raise in February that will help support these ongoing capital projects and we expect the parent company to be cash generative starting around the middle of 2023. The acquisition of six premium jack-ups in 2022 at attractive prices combined with continued strong operational performance, concluded a very positive year for Shelf Drilling. We enhanced our fleet and penetrated new markets during a period of tightening in the jack-up market. We expect EBITDA and cash flow to materially improve in the second half of 2023, which positions us well as we work towards a refinancing of our existing debt in the quarters ahead. With that, we'd like to open the call for questions. Thank you.

Thank you. [Operator Instructions]. Now we're going to take our first question. And the question comes from the line of Michael Boam from Sona Asset Management. Your line is open, please ask your question.

You provided the average dayrate expectation.

Hey, Michael, actually we can't hear you. Can you say louder please?

Sorry, you provided the average dayrate at all the contracted dayrate for the group as a whole. Could you provide it for Shelf on a standalone basis and SDNS on a standalone basis?

Yes, sure. Michael, in the presentation we published this morning, in the back section, there's detail for the last two quarters with the split between the two groups. So, the average dayrate earned in Q4 was $67,000 a day, I mentioned that. That's the consolidated number. The figure at SDNS was $77,000 for the four operated rigs and it was $65,000 for the parent company. So that was up from $62,000 in Q3. So we'll continue to produce that on a quarterly basis and then we showed the breakout on a backlog basis in the presentation as well.

So, do you have the numbers off the top of your head for the backlog?

Sure. The weighted average in the entire backlog at year end was $79,000 a day and I believe it was $77,000 if you look just at the 31 rigs at Shelf Drilling.

Okay. Perfect. Thank you. In terms of the refinancing, can you talk to any progress that been made. There seems to be a number of options are open to you. And do you know -- I mean, this year's numbers, [touchwood] (ph) provided you operate should come in-line with guidance. I just wondered what you're looking at present and whether you're not progressing at all.

Sure. Yes, look, I think we've been pretty consistent about this, that we feel like the optimal window to try to refinance the two existing bonds at Shelf Drilling is really the tail end of this year or the beginning of 2024. To your point on guidance, if we're right with what we think this year looks like, we should start approaching three times run rate leverage around the end of the year. So, we'll be very focused on execution over the next couple of quarters, just getting through this period of project activity. We have started to look at different options. We think there’re going to be multiple pools of capital available to us. We hope there's some bank market capacity whether that's regionally or trying to put a revolver in place again, which we had in the past. And then obviously something in high yield markets would be part of any solution. And that's going to be somewhat depended on market conditions, which were very good. The first two months of the year, they're probably not quite as good right now. So, yes, it's something we're definitely spending time on and getting the right re-fi done will be critically important. So, I think it continues to be a late 2023, early 2024 event as how we're thinking about it.

Okay. Thank you.

Thank you. Now, we'll go and take our next question. Please standby. And the next question comes from the line of Patrick Fitzgerald from Baird. Your line is open, please ask the question.

Hi, thanks for taking the question and thanks for all the detail in the slide presentation. What is -- how much EBITDA is the Shelf Drilling North Sea going to generate in your 2023 full year EBITDA guidance?

Yes, we obviously didn't provide that split and that was in an accident. Mean, I think it's fair to assume that the run rate in 2023 will be lower than what we had in Q4. So, Q4 actuals was $17 million. We had all five rigs working during the fourth quarter. One of the rigs came off contract in January. So, that rig will be inactive for at least several months. I think we're focused on opportunities really in the second half of 2023 and into 2024. So, there'll be some impact of having that rig off contract for a period. But at this point, it's hard to be much more specific than that. I think we continue to feel very good about the earnings capacity of the business as we get into 2024, marketing is clearly the focus over the next few months. It's the Fortress which just came off contract and then the Barsk and Perseverance that are fully open in 2024. And we think we'll have good opportunities for all of those rigs, but yes, not really able to provide specific guidance for 2023 at this point.

Appreciate it, yes. So, the back half loaded 2023 EBITDA guidance and given your commentary about the run rate that you're expecting in the back half of 2023, do you still think -- you've said in previous presentations that you had 2024 adjusted EBITDA target was $350 million plus. So, is the -- is what you're saying basically that you'll be at that ‘24 targeted run rate by the back half of ’23.

Yes, that's the goal. And we've been clear that excludes Shelf Drilling North Sea. So, the guidance we gave this morning for calendar year 2023 is inclusive of Shelf Drilling North Sea. The ramp we expect in the second half of the year is mostly from the rigs that are preparing for new contracts. So, that's $350 million annualized target ex-Shelf Drilling North Sea we think is reasonable and that's what we're working towards by the tail end of this year. That's right.

Okay.

So, the implication of that is we're obviously going to have a lower Q1 that was part of the commentary we went through on the call, but we think that will start to build nicely as these contracts start in Q2 and into Q3.

Okay. Thanks a lot. And then on the refinancing, I mean you have a couple options in addition to kind of just the credit markets improving, I would think. One is selling some of your recently acquired assets or selling some of your recently acquired equity, how do you guys kind of balance that in terms of refinancing the capital structure if you think that's necessary or not?

Yes, we definitely -- Greg O'Brien: Yes, we don't have any plans to sell assets to refinance. We think that we've got good options, it's obviously something that's not imminently about to happen in terms of we're not going to refinance tomorrow, but we do believe that the market has recovered to an extent that affords us a number of different options and we will have different pools of capital available to us. So, that's how I currently see it. We're not looking to sell assets as a means of refinancing.

But I think on that point, I mean we do think that our investment in Shelf Drilling North Sea and that company does give us some other options. I mean that business has a lower debt-to-cap ratio than the parent company does today, just given our low basis in those rigs. So, we think that gives us some potential flexibility down the road. We did raise some equity in Q1. I think we're going to be very careful on how we think about additional equity placements, trying to manage and minimize any potential dilution, but that is another pool of capital that could be available to us that could make sense for the business and existing shareholders that helped us get sort of the right and optimal re-fi then.

All right, thanks. Last one for me, kind of bigger picture, but could you frame the difference in your mind in terms of the prospects for your business, if crude is at $60 for the next several years versus $80 because that's always the debate with companies like yours. Thanks.

Yes. Look, for the most part, we're in a market where $60 still works. But there's no doubt that crude pairs back to $60 margin -- some marginal supply will definitely move away, sorry, marginal demand. But look, I think it's what we see today is a pretty constructive backdrop. If you look at the productive capacity in the Middle East, it's not -- there's not a whole lot of excess capacity here. And [IFRA1] (ph) can't predict where this financial crisis might go. And it could get a lot worse. Like to believe that, common sense will prevail and it won't. But I still remain pretty bullish about the oil market, barring some extreme set of circumstances. And even if oil were to drop into the 60s, most of our activity will remain because we are the short cycle, lower cost barrel of pretty much all the regions out there, and Aramco is ADNOC and Qatargas are definitely taking a longer term view of this. So, they really want to build productive capacity more than what they've currently got. So, the Middle East will still be strong. And where you might lose something is in other areas at the margin.

Thanks a lot.

Thank you. Now, we'll go and take our next question. Please standby. And the next question comes from the line of John Parker from DNB. Your line is open. Please ask your question.

Hi, two questions on SDNS. Would you expect the average OpEx to come down as they get integrated into your platform, first? And secondly, would you ever consider marketing any of these rigs outside the North Sea?

Sorry, what was the first question about OpEx?

Would you expect -- the North Sea rigs, would you expect the OpEx, the average OpEx to trend get lower as you integrate them onto your platform?

Yes, I think we expect to have some -- but it will be a relatively small quantum and I wouldn't put too much into it because we are in a pretty inflationary environment where we're seeing pressure on the maintenance cost and to a certain extent on personnel costs. With respect to the second part of the question, absolutely, we will look for opportunities wherever they exist. And a lot of the rigs in the U.K. sector, the North Sea are pretty marketable elsewhere. I mean, it's -- they're not by any means confined to that particular market. I think Norway is a different market, but I do see strength in Norway. I think Norway is going to be a very good market in 2024 and beyond. We see talking to customers in Norway, we see a significant uptick in activity. The slowness there is nothing fundamental. It's basically timing of a number of key projects. But second half of ‘24, I think you're going to see an improving market in the CJ70 market in the North Sea.

Thank you. That's all I have.

Thank you.

Okay, John. Thanks.

Now, we’ll going to take our next question. Please standby. And the next question comes from the line of Joe Molander from REDD Intelligence. Your line is open, please ask your question.

Hello, both. Thanks for the presentation. I think this was touched on already, but I appreciate any additional clarity. Where did you outstanding Eurobonds fit into Shelf’s refinancing plan?

Sorry, I can’t hear all of your questions.

David, again, sorry?

Can you repeat the question?

Yes, of course. I think this was touched on already, but I appreciate any additional clarity. Where did you outstanding Eurobonds fit into Shelf’s refinancing plan?

I'm not sure what you mean by Eurobonds. I mean, we have three bonds outstanding, we have a secured bond that matures at the very end of 2024 and then a larger unsecured bond that matures at the very beginning of 2025. Those share the same collateral effect with the 31 rigs at the parent company. And so the comments earlier about a refinancing was mostly around those two bonds, which we generally intend to try to refinance at the same time, later this year or early.

Yes.

Yes, we issued a bond at Shelf Drilling North Sea in September as part of -- September 2022 as part of the acquisition financing that matures at the end of 2025. So, it was just issued six months ago. At this stage, we don't have any imminent plans to do anything with that or refinance it. If that helps answer the question. I think we think about that a little bit differently than the two bonds at Shelf Drilling or Shelf Drilling Holdings, Ltd.

That's perfect. Thank you.

Thank you. Dear speaker, there are no further questions at this time. Please continue.

Okay. Thank you, everybody. Thank you for joining the call and we look forward to talking to you in May. Thank you very much.

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.