Noble Service Company Third Quarter 2026 Earnings Call and Webcast - NOBLE CORP PLC

Explicit Guidance:

• FY2026 Revenue: Revised range narrowed to $2.85–$2.90 billion (previously $2.80–$2.90 billion), driven by higher expected reimbursable revenue.
• FY2026 Adjusted EBITDA: Revised range narrowed to $850–$900 million (previously $850–$925 million), narrowed toward the lower end due to later starts for Voyager and Valiant.
• FY2026 CapEx: Increased to $680–$705 million (previously $615–$665 million), primarily due to customer-reimbursable capital expenditures rising to ~$65 million (from $25 million); non-reimbursable capex remains within the prior range.
• Q4 2026 Performance: Expected to be slightly lower than Q3 2026 results.
• FY2027 EBITDA Trajectory: Q1 2027 adjusted EBITDA expected to be broadly similar to Q4 2026, with meaningful quarterly increases throughout the year driven by contract coverage buildup.
• FY2027 Contract Coverage: Approximately 20% more capacity under contract in H2 2027 compared to H1 2027.
• FY2027 Revenue Conversion: Current backlog includes $2.6 billion scheduled for revenue recognition in 2027.
• Normalized CapEx: Excluding major rig upgrades (Klaus Bachmann), expected to trend toward the ~$400 million range in 2027 and beyond; over 50% of Klaus Bachmann CapEx expected to be spent in 2027.

Business-Segment Outlook:

• Deepwater Drill Ships:
  • Voyager: Commenced 4-year Shell contract in U.S. Gulf in late September; weather delays caused a late start.
  • Valiant & Discoverer: Scheduled to commence Total/Suriname long-term development campaigns around year-end 2026.
  • Noble Black Rhino: New 4-well Total Energies Nigeria contract (150 days + options) expected to commence within next few weeks.
  • Noble Faye Kozak: New 5-well Tallo (Ghana) contract expected to commence mid-2027 (250 days).
  • Noble Black Hawk: New 1-well Apache (Uruguay) contract (50 days, ~$25M) commencing Q4 2027.
• Jackups (Norway):
  • 4 of 5 CJ70s contracted in Norway with day rates $230,000–$300,000; aiming for effective full utilization in 2027.
  • Noble Innovator: Currently uncontracted, targeting the southern North Sea (structurally lower rates).
  • Noble Interceptor: New 1-well DNO contract (50–90 days) starting mid-2027, followed by 670-day P&A at ECHO Fisk Field in Q3 2027.
  • Noble Intrepid: New 1-well Orlin contract commencing Q3 2027 (40–60 days).
• Specialized Services:
  • Noble Globetrotter 1: 3-year capacity reservation for Total Energies (Angola) starting Q3/Q4 2027; minimum 150 days/year expected to be cash-flow breakeven, with upside potential for ~200–300 days/year.
  • RIG (Noble): Transiting Panama Canal for Occidental (Peru) 2-well exploration starting Q2 2027.
• Asset Sales: Sale of Noble Globetrotter 2 expected to close Q4 2026 for $38 million.
• Fleet Upgrades: Klaus Bachmann rig upgrades (Norway compliant) starting operations March 2027; all Tier 1 drill ships expected to have NPD and larger thrusters by late 2027/2028.

Market and Competitive Outlook:

• Contracted Utilization: Currently 99% (109/110 marketed rigs), exceeding 2024 peak; working utilization at 88 rigs (10 units short of 2024 peak).
• Day Rates: High-end drill ship day rates recovering to $450,000–$500,000 per day; Norway jackup rates $230,000–$300,000.
• Supply/Demand Dynamics: Pending contract startups for idle rigs now modestly exceed rollovers over next six months, creating a fulcrum for active rig count expansion in coming quarters.
• Geographic Shifts:
  • U.S. Gulf: Historically soft; low 20s rig count retreated to mid-teens, expected to improve in 2027 with potential upward day-rate pressure to drive capacity back.
  • India: Emerging demand for ~4 drill ships needed starting late 2027–2028.
  • Norway: Jackup market turning into a "bright spot" with migration of capacity back into the region.
• Future Market State: Management anticipates a fully sold-out market for high-end deepwater rigs within 1–2 years, driven by reserve replacement imperatives and a rising forward oil price curve.

Macro / Industry Outlook:

• Oil Prices: Customers maintaining disciplined capital allocation despite higher commodity prices; little immediate demand response observed in 2026.
• Exploration Trends: 2027 cited as a potential year for uptick in wildcat exploration; current activity remains dominated by infield exploration and delayed development projects resuming.
• Customer Sentiment: Customers using conservative break-even assumptions ($60s–$70s); long-term decisions not yet driven by short-term geopolitical oil price volatility.
• Market Structure: Deepwater market expected to gain market share over time; customers expect tight conditions in 2028 but currently lack urgency to lock in multi-year contracts solely due to price fears.

Strategic Initiatives:

• Contract Securing: Secured $560 million in new awards over past 3 months.
• Fleet Modernization: Completed NPD upgrades on all Tier 1 drill ships; adding 2.8M-lb derricks (U.S. Gulf) and crown maneuver compensators; "life of asset" upgrades timing aligned with 2027/2028 peak.
• Capacity Optimization: Expecting to fill "white space" on Viking (SE Asia), Black Hawk/Rhino (end of 2027/2028), and Stanley LaFosse (late 2027/early 2028) through new contract wins.
• Capital Return: Maintaining $0.50/share quarterly dividend; board declared 4Q 2026 dividend; prioritizing durable FCF generation.

Risks and Headwinds to Outlook:

• Timing Risks: Later than planned contract starts (e.g., Voyager, Valiant) impacting 2026 EBITDA.
• Uncontracted Assets: Noble Innovator (CJ70) currently uncontracted; Stanley LaFosse, Viking, and Black Hawk have open capacity in 2027.
• Market Volatility: Risk of oil prices reverting due to geopolitical drivers, potentially delaying customer decisions on long-term drilling.
• Gulf Demand: U.S. Gulf remains a soft spot; potential for rig migrations to other regions (e.g., West Africa, SE Asia) creating supply constraints or rate pressure.
• Inflation: Inflationary pressures noted, contributing to higher capital expenditure estimates.
• Execution: Ability to win "chunky" development opportunities vs. short-term exploration; potential for demand to remain flat if customer discipline persists.

Management Tone on the Future:

• Confidence Level: Highly optimistic; described market momentum as a "gathering drumbeat" and "pronounced upturn."
• Strategic Clarity: Management views the current backlog shape (H2 > H1 2027) as a significant structural improvement over recent years (e.g., H2 2025 was 33% below H1).
• Forward Outlook: Expectation of "meaningfully tighter market conditions" and a transition to a "fully sold-out" market within 12–24 months.
• Hedges: Explicitly noted that current demand is not driven by commodity price spikes but by customer discipline and reserve replacement needs; warned that "wildcat" exploration is the key variable for the next phase.

Miscellaneous:

• Dividend: Board declared $0.50/share for 4Q 2026, maintaining consistent return of capital program.
• Asset Sale: Sale of Noble Resolve finalized with remaining $45M proceeds received.
• Contract Structure: Globetrotter 1 intervention contract is a hybrid (call-out with 150-day minimum), designed to be breakeven at minimums with margin upside on call-outs.
• Guidance Frequency: Formal 2027 guidance expected to be provided at the next quarter's earnings call.