Good day and thank you standing by. Welcome to the Shelf Drilling First Quarter 2024 Earnings Conference 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 this conference is being recorded. I would now like to hand the conference over to our speaker today, David Mullen. Please go ahead.

Thank you, operator, and welcome, everyone, to Shelf Drilling quarter one 2024 Earnings Call. Joining me on the call today is Greg O’Brien, Shell Drilling’s CFO. Earlier today, we published our Q1 2024 Financial Statements for Shelf Drilling Limited and Shelf Drilling North Sea Limited, 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 a presentation with 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 the full-year 2024 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 on the call today. If we do, you will find supplemental disclosure for these measures on an associated reconciliation in our financial reports. I will provide an overview of our company’s performance for Q1 2024 before sharing my latest views on the jack-up market. I will then hand over to Greg for his remarks and walk you through our first quarter results and our updated guidance before opening the floor to Q&A. As always, I would like to start my complimentary my commentary on our earnings call with our safety and operating performance. Across the fleet of 36-rigs, our total recordable incident rate for Q1 2024 was 0.06 and the uptime for the first quarter was 99.5% and outstanding safety and operating performance. In early April, four of our nine-rigs under contract with Saudi Aramco were issued notices of suspension for up to one-year at zero rate. All four suspensions are now in effect, and the four-rigs have been mobilized to the IMI shipyard in Saudi Arabia. We are in active discussion with customers regarding contract opportunities for three of these rigs, the Shelf Drilling Victory, the Shelf Drilling Achiever and the Main Pass IV. And we anticipate that we will secure new contracts in the coming months with commence some dates before the end of 2024. We will stack the Main Pass I in Saudi and reduce cost to minimal level. We believe there will be opportunities for this rig in 2025 once the market absorbs the currently available capacity. In late April, the Trident VIII experienced an operational incident resulting in the damage to the port leg whilst the rig was under contract to Chevron. No one was hurt and the rig has been safely mobilized to the key sight location to further assess the damage. We are in close dialogue with our customer and insurance underwriters to develop a plan to fulfill the work program with Chevron and to assess the cost to repair the Trident VIII. We will provide further updates as this situation unfolds in the coming weeks. The Shelf Drilling Barsk in Norway has concluded its contract preparation project and is awaiting final clearance for the authorities before commencing its new contract with Equinor, which we expect to take place before the end of the month. The Shelf Drilling Perseverance arrived in Singapore and is undergoing contract preparation before the commencement of its new contract with PetroVietnam. Expected date of commencement remains late July. The adjusted revenue for quarter one 2024 was $252 million; adjusted EBITDA for the quarter was $80 million resulting in a margin of 32%. The sequential step down in margin was primarily the result of the Shelf Drilling Barsk being out of service for the entire quarter. We were very pleased with the placement of the 315 million of new senior secured notes at Shelf Drilling North Sea, which addresses the funding requirement discussed on our most recent calls and extends the maturities to 2028. The SDNS funding is a great outcome for the company. Greg will provide more details on our quarter one financial results and outlook for the full-year 2024. Brent crude oil prices averaged $82 a barrel during the first four- months of 2024. The ongoing conflicts in the Middle East, the higher than expected oil production from non-OPEC, specifically onshore U.S, Guyana and Brazil, the robust global oil demand and extended OPEC production cuts have all essentially canceled one another out, resulting in a stable oil market. Oil demand is expected to continue to increase through 2024 on the back of an improving economic outlook for the United States and continued growth in energy consumption in the developing and emerging markets around the world. The global number of contracted jack-up rigs increased marginally from 406 in January 2024 to 409 in May 2024. And the market utilization held steady at 94%. The 94% utilization does not reflect the recent suspensions in Saudi Arabia. We will see some near-term pressure on day rates as the Middle East contractors look to redeploy rigs in other regions. However, we see significant incremental demand in most regions, most notably in West Africa and Southeast Asia. So we anticipate utilization will recover and remain at elevated levels for the foreseeable future. The Middle East will see a reduction in activity in the short to medium term following an unprecedented increase in activity in Saudi Arabia through 2022 and 2023. The number of working rigs in Saudi Arabia is still higher than at any point prior to 2023. The current level of activity is required to sustain current productive capacity. Furthermore, we believe there will be incremental demand for offshore rigs over time as onshore fields continue to decline and offshore remains the source of incremental productive capacity. Egypt has shored up its foreign reserves with capital injection from UAE and other sources. The Rig 141 has secured a two-year contract extension in the Gulf of Suez. And we are confident that Trident 14 currently idle in the Gulf of Suez will also secure a new contract with an Egyptian customer in the coming months. There has been a number of new fixtures in Southeast Asia, driven primarily by Petronas in Malaysia and PTTEP in both Malaysia and Thailand. Available rig supply in the region is limited with further incremental demand expected to draw rigs from the Middle East. We expect ongoing and upcoming tenders to materialize into additional contracts awards in Thailand and Vietnam for programs commencing late 2024 and early 2025. The market in West Africa remains strong and rig utilization in the region is expected to remain tight for the foreseeable futures. Several new requirements have emerged in the last 6 weeks across multiple countries with start dates before the end of 2024. We are in advanced discussions with a number of international and indigenous customers in the region for extensions as well as new contracts at attractive day rates. In India, there are a number of tenders under negotiation. ONGC is expected to conclude commercial negotiation in the coming weeks with bidders under four-rig tender. All four-rigs are incumbent rigs. Cairn have recently issued a tender for two-rigs with targeted commencement in quarter four 2024. Other indigenous Indian companies are, for relatively short-term programs with start dates in H1 2025. The North Sea market has strengthened significantly. In the UK sector, the Shelf Green Fortress secured a 400-day contract expected to commence in quarter three in direct continuation with its current contract. We are also in advanced discussions regarding follow on work with the Shelf Drilling winner beyond its current contract end date in March 2025. In Norway, the Shelf Drilling Barsk secured a two well firm contract with three well optional extensions with Equinor at the Gundren field as well as first two well options exercised on Sleipner Vest field, all ahead of contract commencement. We see this as a high degree of trust Equinor has placed in Shelf Drilling’s operational capabilities. And we are pleased to secure additional firm term that will keep the rig busy beyond 2025. As of the 31 March 2024, our contract backlog was 2.2 billion across 35-rigs with a weighted average day rate of $84,000 per day and a market utilization of 97%. In closing, the suspension of our four-rigs in Saudi Arabia will have a short term impact on the company’s results. And we have revised our 2024 financial guidance to that effect. However, we are confident that we will secure attractive opportunities for several of these rigs in the near-term and we anticipate start dates before the end of 2024. We are very encouraged by our discussions thus far with potential customers. We view this as an opportunity to strengthen our footprints in other core markets by fixing contracts at more favorable day rates. Our recent contracts award in the North Sea and debt refinancing at SDNS have significantly improved the outlook for this part of the business. As such, we anticipate that SDNS will contribute a meaningful amount of earnings growth and cash generation as we move into the second half of 2024. I would like to thank our investors for their interest in the company. And as always, at Shelf Drilling despite our near-term uncertainties, we are committed to delivering safe and best-in-class operations to our customers. I will now hand it over to Greg for his remarks. Greg O’Brien: Thanks, David. As a reminder, our earnings release yesterday also included standalone financial reports for Shelf Drilling North Sea. We would encourage you all to review the results presentation on our website as this includes additional metrics for both Shelf Drilling and SDNS. Reported revenue for Q1 2024 of $255 million included three million for mobilization started three million for amortization of intangible liability. We will continue to focus on adjusted revenue, which excludes the impact of this non-cash item. Adjusted revenue for Q1 of $252 million included $232 million of day rate revenue, $12 million of mobilization and bonus revenue and $8 million of recharges and other revenue. Adjusted revenue for Q1 increased by $13 million or 5% relative to Q4 2023. The 31-rig fleet at the parent company drove substantially all of this growth with increased revenues in both Saudi Arabia and Nigeria. In Saudi Arabia, there was a sequential reduction in planned out of service days primarily for the Main Pass IV, which was out of service most of Q4. In Nigeria, the Adriatic I and Shelf Drilling Mentor commenced new contracts during October and were in operation for all of Q1, 2024. Revenue at Shelf Drilling North Sea of $28 million was substantially in line with the prior quarter. Effective utilization for the quarter increased to 86% from 85% in Q4. Utilization at the parent company was 91%, up from 87% in Q4 due to the improvement in Nigeria and Saudi. Effective utilization for the five-rig fleet at SDNS was 59% in Q1 as both the Shelf Drilling Barsk and Shelf Drilling Perseverance were preparing for new contracts for the entire quarter. Average day rate was $82,000 per day in Q1, up from $80,000 in Q4, mainly driven by higher rates in West Africa and Egypt. Operating and maintenance expenses of $150 million in Q1 increased from $135 million in Q4, partially due to higher maintenance costs for certain rigs in India and Saudi Arabia and higher expenses for fleet spares. At the SDNS level, operating expenses increased sequentially to 35 million in Q1 from 26 million in Q4, due entirely to higher costs for the Shelf Drilling Barsk in Norway, which was previously under a bareboat charter agreement that finished in Q4 2023. G&A expenses of 18 million in Q1 increased from 14 million in Q4 due partly to a net increase in provision for credit losses. Adjusted EBITDA was 80 million in Q1, representing a margin of 32% compared to 88 million and a margin of 37% in the previous quarter. Adjusted EBITDA was negative 11 million for SDNS in Q1 and 91 million from the rest of the business. Income tax expense was $9 million in Q1 representing 4% of revenues, up from $6 million in Q4. Net interest expense of 36 million for the quarter was $29 million lower than Q4, mainly due to $28 million of onetime expenses associated with our debt refinancing transaction that we completed in October. Other net expense increased to $4 million in Q1 from $2 million in Q4, resulting from foreign currency exchange losses. Non-cash depreciation and amortization expenses totaled 41 million in Q1, slightly up from 40 million in Q4 and the quarterly net income attributable to controlling interest was $4 million. Capital expenditures and deferred costs totaled 49 million in Q1, including 13 million at Shelf Drilling North Sea. Spending at SDNS was primarily concentrated on contract preparation expenditures for the Shelf Drilling Perseverance ahead of its new contract expected to commence in Vietnam in July as well as higher spending for the shelter in Maersk in Norway in preparation of its new contract expected to commence in the coming weeks. As a parent company, we completed a major shipyard project on the Trident II ahead of its new three-year contract with ONGC that started in India in March. Our consolidated cash balance as of March 31 was $102 million marginally up from $98 million at the end of December. Cash at the parent company increased from 70 million to 88 million during Q1, primarily due to a sequential decrease in capital spending and a reduction in debt service payments. Cash at SDNS declined from 28 million in December to 14 million at the end of March, mainly due to lower sequential quarterly EBITDA and an increase in CapEx. As a result of the recent announcement of the suspension of four of our rigs in Saudi Arabia, we have revised our financial guidance for full-year 2024. Fully consolidated adjusted EBITDA is now estimated between $330 million and $375 million compared to our initial guidance earlier this year between $375 million and $420 million. At the SDNS level, we now anticipate EBITDA between $30 million and $35 million an increase of $5 million from our original guidance. This includes an expectation for the first half of 2024 in the range of negative $15 million and a significantly better and more normalized level of EBITDA north of $90 million on an annualized basis in the second half of the year once all five-rigs are in operation. This implies a level for the rest of the business in 2024 of $300 million at the low end and $340 million at the upper end, representing a reduction of approximately $50 million from our initial guidance range. We anticipate EBITDA will sequentially decline in Q2 and Q3 due to the suspensions in Saudi. As David mentioned, we expect to secure new contracts for three of these four-rigs in the coming months with start dates around the end of the year. As a result of this, as well as ongoing efforts to reduce operating costs, we expect EBITDA to return to a level in line with or better than Q1 2024 by the fourth quarter of this year. Our total capital spending guidance in 2024 is unchanged from earlier this year estimated between $145 million and $170 million. This includes $40 million to $45 million at SDNS primarily due to the ongoing project for the Shelf Drilling Perseverance as well as contract preparation spending for the Shelf Drilling Barsk and the planned investment in fleet spares discussed on our last call. Across the rest of the business, we maintained our guidance of approximately $115 million. This now includes $15 million to $20 million of assumed mobilization and contract preparation costs for the suspended rigs in Saudi Arabia that we are actively marketing for opportunities in other areas. As an offset, we have canceled a planned out of service project for the Main Pass I and identified other reductions across the fleet. The recent debt placement at SDNS was a very positive step for Shelf Drilling. The issuance of $315 million senior secured notes during late 2028 is on track to be completed next week. In conjunction with the issuance we will fully redeem the existing notes due in 2025 and repay the short-term loan that was provided by the parent company in late April. This transaction fully addresses the near-term funding need at SDNS and ensures we have strong liquidity for the foreseeable future. Through the series of steps taken over the past nine-months, we have transformed the balance sheet of the company. At closing of the SDNS notes issuance, we have over $100 million of cash, our $150 mm revolving credit facility is undrawn, and we have extended all maturities to late 2028 and 2029. We remain committed to further deleveraging our balance sheet through annual debt repayments and expect to generate significant free cash flow in 2025 and beyond. The suspensions in Saudi Arabia will create some short-term uncertainty, but we believe the long term outlook for the jack-up market remains extremely robust. Our leading position across multiple key regions positions us well to capture opportunities in these other markets in the near-term. We would now like to open the call for questions.

[Operator Instructions] Now, we will going to take our first question and its come from line of Fredrik Stene from Clarksons Securities.

I wanted to touch a bit on the guidance you are talking about high confidence in redeploying those three-rigs that is for everyone except for the main pass, one by end of the year. But I think in your highlights, you are talking about and this is relating to the guidance that it includes anticipated redeployment of two of the suspended rigs in Q4. So I was just wondering if how should you reconcile. You talk about three-rigs and the two-rigs and how much of Q4 will be covered, et cetera. Any color would be super helpful. Greg O’Brien: Look, the answer is we don’t have perfect visibility right now. We haven’t secured contracts for any of those three-rigs yet. We are actively in discussions on all three of them and multiple opportunities and I think we made a comment in the prepared remarks that we hope to have work for all three of them relatively soon. But there is generally a lead time or lag between executing work and having rigs actually start. Because I think with all three, we would expect them to work in places outside of the Middle East and that is going to take a bit of time. So I think the hope is we have two of the rigs working sometime in Q4, potentially the early part of Q4. Is it possible that one of those rigs could start before then? I think that is possible. So, yes, kind of base case assumption is we do find work relatively soon for all three-rigs. We are hoping that two are margin contributors before the end of the year call it two months or more and then the third rig potentially in early 2025 start. Could it be better than that possible? Could it be a bit worse? Yes, that is possible too. And part of the reason we still have a relatively wide range on guidance for this year. That is generally how we are thinking about it.

With that in mind, when we are thinking about the guidance and for Shelf Drilling Ltd, in particular, I think if you do the math here, you are ending up at somewhere between 303.50, sorry, 303.40 based on what you provided today. Can you give some color on what is needed to or not needed to hit the low end or the high end of that range? Greg O’Brien: Sure. Yes. So we did 91 of EBITDA in Q1. We gave directional guidance in the comments in our presentation that we expected something like a 15% reduction in revenue in Q2 and Q3. That doesn’t necessarily mean the exact same level in both quarters, but we are clearly going to have more idle time on those rigs at a minimum during the middle of the year. We have spent a lot of time trying to find ways to reduce costs. The main pass was an example that we are going to try to get costs down on that rig. Our OpEx was 115 or just under 115 in Q1, you are probably not going see a huge difference in Q2. But by the second half of the year, we hope that is reasonably lower, call it five million to 10 million a quarter below that level is a reasonable assumption. And then yes, the expectation that we put two of these rigs back into service and therefore generating revenue second half of the year is, sorry, in Q4, not second half of the year, is embedded in the assumptions as well. The places where we still have some open capacity is one-rig in Egypt that is idle today. David mentioned that we are hopeful we can put that rig back into service in the coming months. So call it sometime in Q3, we think we can have that rig back in service that would be the goal, but that is still not done. And then there is some uncertainty around this incident on the Trident VIII. I think we are assuming there is at least a couple of months where that rig is not working, but obviously it is pretty early with that asset, but we try to build that into the range as well. So I think the key swing factors are what happens and when with these three-rigs that we are marketing in other places that are suspended in Saudi and then the couple of rigs in those other markets where we are still not fully contracted for the rest of the year.

But it seems like, call it, second quarter is not set in stone necessarily, but that the swing factor on that range is going to be heavily weighted towards the second half and other and more so in the fourth quarter. Greg O’Brien: That is right. I mean, that is generally the case. We are halfway Q2. We have good visibility for this quarter. No, I think that is right.

And final one for me, just switching gears to India here. There is reports out from multiple sources that ONGC canceled their high pressure, high temperature tender. But I think for you guys that was only relevant for potentially relevant for the Baltic, while the Jake Angel and Trident 12 are potentially in position to get something on the standard that you mentioned is going to be concluded over the next couple of months, at least the commercial discussions. So do you have any commentary on the cancellation of that tender, your ability to win contracts for these two other rigs and also how ONGC has kind of behaved on the back of the Aramco suspensions because personally, I would guess that the cancellation of this tender, which I think was released in August last year is maybe to get more almost to bid on that now that there is more rigs that could potentially do so? So, any color you have there would be helpful as well.

Yes, I will take that. Look, just to start with, on the canceled high pressure, high temperature tender. So, that was really what happened there was the L1 bidder choose not to extend his contract beyond the period where it basically ran out. And ONGC doesn’t have a legal basis for negotiating with L2. So the way the tender requirement works is they have to negotiate with L1. I do believe and the market believes that they are short, these high pressure, high temperature rigs. Whether they need all three or not remains to be seen. But I do believe they will come out with a bid in the near-term for one to two HPHT rigs. With respect to the ongoing four-rig tender, I believe all the communication we get, these are all incumbent rigs. They are not incremental activity. And ONGC has a firm program for them. So, they want this tender to happen. But your observation is correct. In light of the suspensions coming out of Aramco, ONGC believes there should be some pullback in the market. And they will try to negotiate the rates down from where they were. If you recall, those rates came in the low to mid-90s depending on the quality based system score. So we expect to see some negotiation. I won’t really talk around that. It is an ongoing process. But I’m fairly confident that we will contract the two-rigs that we have in that tender.

Now we are going to take our next question. And the next question comes from the line of Alexandra Symeonidi from William Blair.

So I have three questions. I will take them one-by-one if possible. So on High Island V, the contract ends in May 2025. Do we have any guidance that you can give whether do you believe this will be renewed with Aramco or given this attention we expect this to be mobilized as well?

The High Island V has some unique capabilities and I do believe that contract will be renewed. So there is very few rigs in the Aramco fleet allow simultaneous operations, which allows them to work over platforms with exposed wellheads and not require that the platform shuts in production. So this has got a pretty material impact to Aramco. I believe there is only three-rigs in the entire fleet that have this capability and the High Island V is one of them. So yes, I do believe that this rig will get extended because it is a very strategic asset to Saudi Aramco.

You mentioned there is pressure in day rates in the region. Can you give us a sense of how to kind of quantify that, so how much lower do you see there is now?

Sorry, are you talking about the ONGC?

Sorry, can you repeat? Sorry, there is a lot of background noise here. Greg O’Brien: You just asked about some steer on day rates?

Yes. So let me repeat my question. So you mentioned there is pressure in day rates in the region. So I was wondering if you can give us a sense of how much lower do you see these rates, at the moment?

Yes. Look, it is a live negotiation. So we are not really going to comment on day rates or even where we think they are going to go. But look, I don’t think this will be a dramatic change in day rates. You look at the fundamental market backdrop, it remains very good. I mean, we see a lot of incremental activity, as I mentioned in my remarks, in various geographies around the world. We see incremental activity in West Africa. To quantify that, there is Angola is going from one-rig to three-rig. Nigeria should go from five to seven. And we expect that the Equatorial Plate region will add at least another two-rigs. So that is a pretty sizable increase. And all those increases will happen between now and the year-end. Maybe some of it will creep into early 2025. And in Southeast Asia, it is a very similar picture. So we can’t necessarily understand how different contractors will react. But if there is a level of discipline, the day rate shouldn’t move very much. Greg O’Brien: I think we will probably see a wider range of data points over these next three to six-months. We have already seen a little bit of that. Like you take the premium jack-up market in Southeast Asia, West Africa, even the Middle East. It felt like there was a pretty good progress seeing rates to 150,000 a day, a bit higher in a few cases. We have already seen a few new fixtures in the low 100. That doesn’t mean everything is going to reset there. We just think they are going to be sort of a wider range of prints in the next few months. So could you see some contracts in the 110 to 130, 140 range? I think that is possible. But the sooner this capacity is reabsorbed and redeployed the better. And then you are back in a really tight market again. So we believe this is going to be more of a short-term issue than a structural long term change in the rate environment.

And then my follow-up question is about you mentioned that some rigs have more progressed than others when it comes to redeployment. Do you expect to redeploy them in the region or elsewhere? Greg O’Brien: I think I said that the base case is outside of the Middle East really for all three of those rigs. None of that is done, but David mentioned we see opportunities in all of Southeast Asia, India, and West Africa. So it is fair to assume those are the three primary target regions for us, but still pretty fluid. But we see good opportunities for all three of those rigs, but probably not in the Middle East if we find new work in the very short-term.

And then can I ask, have you mentioned mobilization goals? Approximately how do you expect them to be given what these things are going to be deployed elsewhere?

Yes, there is. I mean, it depends how far you are mobilizing it, it depends on the -.

Yes, more like if you have a number that you could share.

But just the transportation costs can be, if it is a short one, it is around three million, if it is a longer one, it is more like five million. And then the rest is very variable depending on what level of contract prep is required by the change in geography and change in customer.

Now we are going to take our next question. And the next question comes from the line of Karl Blunden from Goldman Sachs.

Just a question on the guidance ranges that you have here for CapEx and also for EBITDA. Would those include all of the expected mobilization costs? I realize there can be some variation there. Or are you leaving some room for some of those to fall into 2025 also? Greg O’Brien: Yes. I mean, I said 15 to 20 was embedded at the kind of midpoint of the guidance range. For the parent company, I think if we moved all three-rigs and that was all done before the end of the year. We would not be less than that range. Will we be miles higher than that? Probably not. The places we are targeting tend to have lower contract prep requirements than a place like the Middle East. So I think that is a decent number. Could there be a little bit of drag cost in the early 2025 possibly, but hopefully that is a helpful context.

And then when you have discussed the three redeployments, I hear some uncertainty as to final destination exact timing. But should we come away here thinking that you are fairly confident that it will be three and not two from here, that there is enough options for you to ensure that three are working?

Yes. Look, I think at this point in time, we feel pretty confident that we find a home for three-rigs. Whether we get them all done in calendar year 2024, maybe we will look for the right opportunity rather than chase a timeline. But we do see good opportunities and discussions are progressing well. So yes, I mean, that is pretty much, in my head, that is my base case. Greg O’Brien: That is right. I think the nuance around two-rigs in the guidance was more around start dates, not so much around confidence of finding good opportunities. So I think that is the one kind of nuance.

[Operator Instructions] And now we are going to take our next question. And the question comes from the line of Martin Karlsen from DNB.

I had a quick question on the Trident VIII situation. Can you talk a little bit to potential outcomes of that event, including the possibility of replacing the rig with another unit in your fleet? And secondly, could you also remind us on your insurance policy, including how deductibles work in a situation like this?

Yes, Martin, I mean, it is early days. The event just happened, but we wouldn’t report it if it wasn’t a series event. So there is a possibility that it is a destructive loss. And if that were the case, the insured value of the rig is $50 million. But we are assessing the situation. We are not really in a position at this point in time to give a likely or not unlikely outcome. If the rig is to go back to work, as Greg mentioned, there would be a pretty significant out of service period to repair the rig. But we are looking at how do we fulfill the current work program with Chevron. And that is, to be honest, that is our priority. And I think we are well progressed on that. But that is the key priority here. The damage of the rig will put the rig out of service for an extended period of time and it may result in a destructive loss. Greg O’Brien: And then the rig the rig had, there was 4 months left on the contract. So obviously that is a period of time we want to try to fill. It is important to our customer. We do think there is potential work beyond that as well. So this is clearly a priority for us. The goal is to try to find the best solution and obviously, think about what the right plan is for that particular rig as well. But, yes, if it is a significant damage David mentioned, this is the type of incident that would be covered. Standard jack-ups tend to have, less value in the markets relative to earnings capacity. We ensure them at values that we think are reasonable, yes, typically in the kind of $40 million to $50 million range for the standard fleet. But we have, I think we will have more, a lot of better handle on the situation in the next few weeks or kind of a month to six-weeks. And we will obviously provide more updates when we are out.

And follow-up on that one with respect to the contract is it was on with Chevron, is it any liabilities towards Chevron to fulfill the program in case this rig specifically cannot go back to work itself?

No, look, we are confident we can fulfill the program. And there is no real liability there. But we are not looking at that. We are confident we are going to be able to fulfill the program.

Now we are going to take our next question. And it comes from the line of Gregg Brody from Bank of America.

One question, just in terms of the Saudi Aramco mindset or the Saudi mindset, the suspension of 12-months, can you talk about what you think the risk is that they continue that? And I know there is an argument that they are growing and then so they are going to come back again. Just help us think through sort of the decision making there and what they may have communicated to you. I think you speak a little bit to the rig that remains, why you left it there? And then just potentially talk about the gas opportunity that they have talked about and how your rigs could fit into that opportunity? Greg O’Brien: Let me take the gas opportunity first, because I see you just want to answer. So, the real opportunities on gas are onshore, not offshore. So Saudi Aramco is chasing a lot of the unconventional gas offshore, sorry, onshore, which is where they are looking for most of the gas production. I think today, at the time, the fleet of 90-rigs, there was probably four-rigs working on gas projects. There may be a possibility to increase that to five, but it is not going to be, that is not going to move the needle. So gas is principally onshore.

Sorry, remind me of the second part of your question. Look, the way Aramco communicated this is that they wanted to put the rigs on suspension to allow contractors the ability to leave the rigs in Kingdom. It doesn’t necessarily mean that these rigs are going to go back to work after the 12-month period. They see this as a more long dated step down in activity. In other words, I don’t think they are going to go back to 90-rigs after one-year. I think there is a possibility that some of them may come back, which is why we are looking at moving three-rigs out. And once we move the rigs out, we will move from suspension to termination, because it is the only thing that makes sense. And Aramco provided everybody that flexibility that they would put the rigs on suspension to start with that allows you to leave the rig in the kingdom. And then you can elect to terminate at any point after that and find alternative work for the work. So I did mention in my remarks that I believe over time, offshore activity will continue to increase in Saudi Arabia. And let’s remember that the activity they have, it is around 70, 75-rigs. It is the highest level of activity that they have ever had with the exception of that brief period of time in 2023. But that will grow over time, because the offshore does remain the only source of incremental barrels. But I don’t imagine that it is going to go back to 90-rigs after 12-months. So that suspension period is just given out there as a guide. They may well take a handful of rigs back after 12-months, but it will be a handful of rigs rather than all 22-rigs, whatever the number is that they have suspended.

Just one follow-up there on that. So the one-rig you left is I guess you are leaving that option open. I guess in a year from now you would determine what you would do with that if you didn’t see an opportunity in the kingdom. Is that fair to say?

Well, maybe even less than that. What we are looking at doing is just we see what is in front of us and we feel very confident we can redeploy three-rigs outside of Saudi Arabia. We see opportunities for them. So our confidence level is pretty good. To take all four-rigs out, I just think it is one-rig too many. And I think I mentioned in the remarks that in 2025, early 2025, we will reassess the situation with the Main Pass I and decide whether we want to take it out at that point in time, having redeployed the other three-rigs. So it is a question of looking if we find an opportunity, we will take it out and redeploy it. And we have the option value to keep it in the kingdom. Greg O’Brien: I mean, I think the other key variable is rate, obviously. Could we find work for all four of these rigs? We could, but there is finally been really good progress in the rate environment the last two years after many years of really challenging pricing. And I think the balance is trying to keep utilization in a good place and keep that pricing momentum long-term, where it was a few months ago. So that is part of the balance as well. Trying to get costs lower this year and there is a real impact on us this year, and not be in a rush just to find jobs at any rate.

And that is the other rigs you were being asked about, the other rigs expiring next year that were not part of the suspension. I think you feel pretty good about re contracting those or any one of them you highlighted is pretty unique. But I think there is one other. Is that correct? Greg O’Brien: That is the only rig we have expiring in 2025. We had two others, but those were part of the four-rigs that were suspended that we are actively marketing elsewhere. So before and the achiever. I mean David talks about the High Island V. There is a reason it wasn’t suspended. We think it is particularly well suited to that market. We are not having active dialogue right now, but Aramco has obviously been very busy trying to complete these suspensions and get rigs off fire. But, yes, we feel good. We think those discussions should start at some point later this year. But yes, I feel pretty good about it. That is a strategic long-term asset there.

And then just one clarifying question on the balance sheet. I noticed you pushed out the term loan maturity, which seems prudent. You also drew on the revolver post quarter just a small amount. Is that just all to sort of bridge through this period or do you think there is a chance you may need additional capital or just an amendment or anything like that? Greg O’Brien: No. So the RCF, so I would say both the RCF draw and that term loan extension were intended to provide funding into SDNS and then we decided the first two-weeks of April that we thought the refinancing of that bond made a lot of sense. And so, if we had sequenced the steps differently, we maybe wouldn’t have extended the term loan to be honest. But that was done end of March. We think there is good value in that. It is the cheapest cost of financing we have. We could pay it off at any time. If not, we would pay it off at the end of the year. The RCF after all was to facilitate the short-term loan into SDNS that will be repaid and the RCF draw will be repaid next week when the SDNS bond closes. If we were below the low end of our guidance range for this year, could we have a slight draw RCF at the end of the year? That is possible. But now we feel very good about liquidity position from here, particularly after getting that SDNS refinancing done.

And you don’t think you need an amendment on the covenant there? Greg O’Brien: No. We have to be well a reasonable level below $300 million on a kind of rolling LTM basis in the credit group for that to come into scope at all and we don’t think that is a risk.

Now we will take our next question. And the question comes from the line of [Floris Dextra] (Ph) [indiscernible].

Just very quickly on the redeployment expectations for those three-rigs that you mentioned. You are seeing demand from Southeast Asia, West Africa and India. Are there expectations that one goes to each region or could you go to one region yet? Can you give any more transparency on that?

Look, I would say, that is not, that is a reasonable likelihood, but we are not hanging our hat solely on that. We see more opportunities than we have rigs, which is a good thing because we are not going to win them all and we are going to basically treat it as we are strategic in the ones we are targeting. So I would say almost certainly, we see we are going to move one potentially two-rigs to Nigeria. And we see good opportunities in Southeast Asia and we see opportunities in India.

And then in terms of, are you seeing like more competition because you have no, I think, 15 or 16 other rigs that are also coming out of Saudi at the moment, probably trying to compete in those areas as well or are you pretty confident because of the specs of the rigs that you will be able to win those contracts?

I mean, it is a little bit having experience in certain geographies that sets us apart. So when you look at places like Nigeria, it is a very challenging place to work. We see incremental activity in that part of the world. I’m just using that as an example. And operators are more inclined to go with the companies that have a proven track record and experience in that. So yes, there will be competition. But look, we feel pretty confident from the position we are in, and we think we will be able to get contracts at reasonable day rate levels, which is what is important. So, yes, we are confident in our position. And I can’t tell you exactly, which geographies, the rigs will go to, but I feel pretty confident that we will have one or two going to West Africa.

And one more question from my side. I know you can’t be too specific, but when I think of the four-rigs that were suspended and the sort of rates they had with Aramco versus, I guess, the three-that you might or you expect to get new contracts for potentially at higher rates. If I think about maybe going into 2025, do you have is the uplift in the rates from the three that you expect to recontract kind of make up for what you lose on that fourth-rig?

I mean, over time, if you get a better day rate, you will recover a more healthier margin. But to imagine that you are going to recover the entire shortfall of 2024 and 2025, I think that would be a bit aggressive.

And now we will take our last question for today. And it comes from the line of Fredrik Stene from Clarksons.

Just wanted to in the context of Aramco and their plans going forwards, do you think that there are any chance that they will do more suspensions on top of what they have already done? They seem to have done that in one round, but you never know with them. So I just wanted to hear if you had any additional color or if you feel like this is it and now the market just had to absorb those 22-ish rigs?

I think they have done what they have done and that is it. But market conditions can change. And if market conditions were to change, could they do more? Well, potentially. But I think assuming market, broader market, and I’m talking probably more about the oil market than anything else, but assuming there is no big change to what is happening on the oil market, I think they have cut as much as they expected to cut. So I think the plan my base plan is that there is going to be no further suspensions.

Thanks, operator. I think that should be it. I want to thank everybody for joining the call and look forward to talking on our next earnings call, where we have a lot more clarity about the rigs that have been suspended. And hopefully, we will be talking about the contracts they are undertaking. Thank you all very much.

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