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DATE
Tuesday, October 28, 2025 at 9 a.m. ET
CALL PARTICIPANTS
President & Chief Executive Officer — Robert W. Eifler
Executive Vice President & Chief Financial Officer — Richard B. Barker
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RISKS
Management indicated that EBITDA (non-GAAP) is expected to trough in 2026, falling below second-half 2025 levels, due to several rigs rolling off contract and limited near-term backlog visibility.
Richard B. Barker noted up to approximately $135 million in additional outlays related to the termination of BOP service and lease contracts, with cash outlays expected during Q4 2025 and the remainder in 2026; these costs are not included in current guidance ranges.
CEO Robert W. Eifler stated, "customers' budget announcements closely, which, of course, have in aggregate been less than inspiring at a headline level," highlighting ongoing macroeconomic challenges affecting demand visibility.
TAKEAWAYS
Adjusted EBITDA -- Adjusted EBITDA of $254 million was reported.
Free Cash Flow -- Free cash flow of $139 million was generated.
Capital Return -- $80 million was distributed to shareholders through a $0.50 per share dividend in Q3 2025; the board declared an additional $0.50 per share dividend for Q4 2025, bringing total 2025 capital returns to $340 million.
Contract Extensions -- Secured a two-year extension with BP in the US Gulf, underlining major customer retention.
Backlog & Market Trends -- Management cited a quarter-over-quarter increase in the committed ultra-deepwater (UDW) rig count to approximately 100 rigs, and 15 high-spec drillships fixed in Q2 and Q3 2025.
Diamond Acquisition Performance -- The acquisition delivered materially ahead of original accretion expectations, supporting long-term assignments for legacy rigs.
Reimbursables -- Reimbursable CapEx for 2025 is projected at approximately €25 million, with about €20 million already incurred year-to-date through Q3.
BOP Contract Terminations -- Up to $135 million in related outlays expected, offset by ~$45 million in annual operating and lease cost savings not included in current guidance.
Operational Highlights -- Over 200 wells had been constructed in Guyana as of the Q3 2025 earnings call, with ongoing positive customer recognition and record-setting drillship results.
SUMMARY
Management expects EBITDA to trough in 2026, with free cash flow and EBITDA (non-GAAP) expected to inflect higher beginning in late 2026, based on both contracted and anticipated backlog. The company maintains a focus on securing new contracts for three key drillships, with visibility toward achieving over 90% fleet utilization if two are operational at any time. Potential large cash outlays related to BOP contract terminations are expected but will be partially offset by recurring expense savings. Alignment for further market tightening from 2026 onward was reiterated, with increased customer engagement and positive signals from ongoing tender activity.
CEO Robert W. Eifler said, "We continue to watch our customers' budget announcements closely, which, of course, have in aggregate been less than inspiring at a headline level."
The management team noted variability in customer project schedules, with some jobs delayed as much as six months and others holding to their original timing.
INDUSTRY GLOSSARY
UDW (Ultra-Deepwater): Offshore drilling environments with water depths exceeding 7,500 feet, requiring advanced high-specification rigs.
BOP (Blowout Preventer): A critical safety device used in offshore drilling to control wellbore pressure and prevent uncontrolled fluid releases.
AFE (Authorization for Expenditure): An internal approval document defining the budgeted cost for a well or project, used in oil & gas operations.
Full Conference Call Transcript
Robert W. Eifler: Welcome, everyone, and thank you for joining us on the call today. I'll open with a brief summary of our Q3 highlights and recent contract awards. Then provide some perspective on the market outlook. Richard will provide more detail on the financials, before I wrap up with closing remarks and move on to Q&A. During the third quarter, we earned adjusted EBITDA of $254 million, generated free cash flow of $139 million, and received an additional $87 million in net disposal proceeds. We again distributed $80 million to shareholders through our 50¢ quarterly dividend. And yesterday, our board declared a 50¢ per share dividend for the fourth quarter, bringing total 2025 capital return to $340 million.
The highly competitive cash yield on our stock continues to be a critical component of our story as we traverse this mid-cycle low for our industry. Before we discuss the market, I'd like to commend and thank our crews and operating teams for achieving excellent operational uptime and HSE performance. In Guyana, our drillships continue to post record-setting results within the Wells Alliance. We have now constructed over 200 wells in the basin, earning high praise from the customer for outstanding performance. The Noble Black Lion recently performed the longest step-out yet, which was also delivered well ahead of AFE.
On the back of several key contract awards, we have been extended by an additional two years by BP in the US Gulf. The Diamond acquisition has materially over-delivered on our original accretion expectations. As the legacy diamond rigs continue to perform and re-contract at very high levels, we are thrilled to continue the Black Lion and Black Hornet's long-term assignments, which will now be approaching one decade in tenure. This contract is expected to commence later this quarter, which is scheduled to start next August at a day rate of $450,000.
This well is scheduled to follow in direct continuation of ongoing telework in Ghana, which is expected to resume in its second phase within the next several days, commencing in late 2027. The broader contracting and utilization trends in deepwater are showing gradual improvement. The committed UDW rig count of approximately 100 rigs is in fact up quarter-over-quarter, with 15 high-spec drillships fixed in Q2 and Q3 this year. There remains a significant number of additional fixtures anticipated over the coming quarters, as summarized on Page five of the earnings presentation slides excluding options. While we are also tracking the number of contract opportunities across jackups and floaters, securing additional work for these three drillships is a key priority.
Although the contracting environment has remained relatively subdued, the path toward a methodically tightening slaughter market today, I will review our third quarter results as well as some additional high-level perspectives, primarily due to a number of rigs rolling off contracts.
Richard B. Barker: Thus, we ended the quarter with a cash balance of €140 million compared to last quarter. For €27.5 million, as a reminder, the reacher has not worked in drilling mode for the rig would have required a significant amount of investment. We currently estimate reimbursables to a range of $425 to $450 million. Reimbursable CapEx is expected to be approximately €25 million this year, including approximately €20 million year-to-date through Q3. We plan to provide 2026 guidance on next quarter's call. In directional terms, I would say that the shape of our current fleet status report would indicate an EBITDA trough in 2026 that would be somewhat below second half 2025 levels.
However, based on current and anticipated backlog, we are tracking toward a material inflection from late 2026 onward. $450 million in CapEx net of customer reimbursements next year based on our current contract status. To the extent that additional contract-supported opportunities arise with compelling accretion, the capital to reactivate the Noble Interceptor will be reimbursed through an upfront mobilization payment. Additionally, we are likely to incur additional outlays totaling up to approximately $135 million associated with the termination of the BOP service and lease contracts on the legacy Diamond Black ships. During the third quarter, we delivered a termination for convenience notice for the service agreement, and we are currently in discussions around the lease agreement.
We would expect an approximate €35 million of cash outlay during Q4 2025, which is expected to flow through OpEx and CapEx, and then the remainder during 2026. These amounts are not included in the aforementioned guidance ranges. However, as a reminder, this cash outlay would be offset by annual savings of approximately $45 million across OpEx and lease payments on the agreements. On a combined basis, we are focused on building cash here in the last quarter of this year in anticipation of next year's capital requirements, including the potential BOP-related payments. We are also committed to maintaining a robust return of capital program and a prudent balance sheet position.
Based on existing backlog and current customer dialogue, we would expect a healthy EBITDA and cash flow inflection late next year. That concludes my remarks, and with that, I'll hand it back to Robert.
Robert W. Eifler: To wrap up, we're continuing to see a number of positive signs of increased deepwater activity after the anticipated trough over the next few quarters. We still have some work to do with securing a few more key contracts in order to support our expectation for a meaningful free cash flow inflection by late next year. We continue to watch our customers' budget announcements closely, which, of course, have in aggregate been less than inspiring at a headline level. But at the same time, activity this year in the face of elevated macroeconomic noise, sluggish oil prices, and upstream capital restraint. These divergent dynamics underscore the strategic importance of deepwater within the global upstream supply stack.
Surrounding upstream reserve replacement metrics, and in that same vein, there's a palpable growing sense of the capital imperative toward deepwater exploration in a way that feels different from anything over the past decade. So I would encourage investors to pay close attention. Meanwhile, as we wait for these anticipated demand tailwinds to materialize, we continue to manage our costs and marketed capacity to optimize cash flow and maintain a strong balance sheet through the cycle. With that, let me hand it back to you, operator, to go to the Q&A section.
Operator: At this time, I would like to open the floor for questions. Press star, then the number one on your telephone keypad. Your first question comes from Arun Jayaram from JPMorgan.
Arun Jayaram: I wanted to get your thoughts on improving the utilization for your high-spec floater fleet for 2026, with a target of getting to 90 to 100% by the second half.
Robert W. Eifler: Talk to us about the opportunity set to get there and how long of a putt, using a golf analogy, it would take to get there. So, really, it revolves around the Viking, the Jerry D'Souza, and the Black Rhino. Continuing with the golf analogy, I'd say it's really not a very long putt. We didn't have any real new news for you this quarter versus last, but we are advancing conversations around all three of those rigs. We hope to have some news for you here in the not-too-distant future. Those are all very technically capable rigs.
We're bidding them in discussions around a couple of different areas, but we do have line of sight towards the work that we're hopeful to win.
Arun Jayaram: Great. That's helpful. And maybe if you guys could elaborate on the Diamond Offshore BOP leases. I believe those are agreements on eight of the rigs that you acquired. Could you just go through the mechanics of that a little bit? That sounds like it's a pretty quick cash return payoff given the savings. But maybe you could go through the numbers a little bit just so we can tighten up our models.
Richard B. Barker: So that's two components here. That's the service agreement and the lease agreement. We've now terminated the service agreement and will have about a $35 million payment on that here in Q4. So that's $35 million of cash out of the door here in the fourth quarter of this year. On the lease agreement, we're still working through that. There is a cap on that agreement of $85 million, and that would be payable next year. Obviously, there are a few remaining lease payments as well. So if you sum that all up together, there's a maximum of $135 million of cash out of the door. The annual cash savings, if you will, is about $45 million for that.
So it's about three times an EBITDA on the multiple on that.
Arun Jayaram: Great. Thanks a lot for those details.
Operator: Your next question comes from Greg Lewis with BTIG.
Gregory Robert Lewis: Hey, thank you and good morning everybody and thanks for taking my question. Robert, I was hoping for a little more color, I guess kinda touched on it with some of the comments to Arun. But, like, as we think about the first half of '26, the moderately down versus what we are gonna do in the second half of '25. As we look at those drillships, some of them will have idle time in the second half of '25, and it looks like there's gonna be some idle time in the first half of '26. Is that largely what's driving that? Or is there other costs? Is it maybe some idle time on the jack-up fleet?
Just kinda help us maybe bridge why we're thinking it could be down and what it would take to get it higher.
Robert W. Eifler: Yeah. It really is largely driven by the floaters. Last quarter, we mentioned trying to get to a run rate of $400 million to $500 million of cash flow here at the end time. Back half of the year. The driver there are those three rigs I mentioned earlier. We are aiming to get back to effectively market utilization, so low 90% to hit those numbers. That translates to two out of the three of those rigs working at any given time. We have line of sight on different jobs.
We're not gonna win everything that's out there, but we feel pretty confident that as we work through things, the goal of having two out of those three is very achievable. Hopefully, we can outperform by finding work for all three of them. The spot work, you asked about spot work. Right now, it's one of those times in the market. It's actually a more unique time than I've seen previously where there is a fair amount of work on the horizon starting in '26 and '27, but there is a definitive gap in between where it's quieter than we've seen in multiple years.
I'm probably missing some piece of history as I reflect on that, but I find it somewhat singular in nature. The spot work, the gap filler work, is gonna be really separated from the rest of the work that's out there as it prices and as people think through it. So, anticipate that to be a dynamic that plays out through 2026.
Gregory Robert Lewis: Okay. Great. Super helpful. And then just the other question I had was around, you know, it's hard to look at snapshots in time. But just trying to understand. We all see the work out there, whether it's West Africa or parts of Asia. But as we look at some of those term jobs that are out there, do we get a sense or are those dates kind of remaining firm given some of the macro out there? Or jobs that maybe three to six months ago we thought were gonna be in the second half of '26, still lining up to be in the second half?
I'm trying to understand if there's been any drift or slippage in some of this work that you know, me and you and a lot of people are waiting to start early.
Robert W. Eifler: Yeah. It's been a mixture. I think there's some that have held firm, and then there's some that have moved to the right. We really haven't seen anything being pulled back forward. That's certainly not the feeling you get right now. But off the top of my head, I can think of a handful of jobs that have been pushed by, say, six months. I can think of a handful of jobs that are right on schedule, with our customers eager to start kind of in or the middle or the beginning of a start window. I think it's a mixture.
Gregory Robert Lewis: Okay. Super helpful. Thank you very much.
Operator: Your next question comes from Eddie Kim with Barclays.
Eddie Kim: Just wanted to touch on your expectations for the first half of next year. You mentioned you expect moderately lower earnings and cash flow compared to second half '25 levels. Since this currently has you guys at around $440 million in EBITDA, which represents about a 10% decline. Versus what your guidance implies for '26 relative to where consensus is at now and what it would take maybe in terms of some incremental contracting in the spot market from here to achieve that level of EBITDA or if that level might be a bit too optimistic.
Robert W. Eifler: Yeah. We haven't given out quarterly estimates. Let me think about how to address that. That is true directionally, and it fits with our narrative in the prepared remarks. I would focus also on the fact that there's not a whole lot of work that we see in the first half of '26. There have been a couple of announcements out there. There are some gaps in the work that I mentioned earlier. I don't think there's a lot of room for upside improvement in the first half of the year. That does change pretty dramatically in the second half of the year. Some of that's known and contracted and announced for both us and our competitors.
But there's other work out there as well that's being negotiated and hasn't been announced industry-wide. We're really focused on the timing of that working. We would set everything up as we've mentioned to hit this cash flow inflection. For us, the timing is a little less certain around that back half of the year. But we certainly see it coming.
Eddie Kim: Got it. Understood. And my follow-up is just on your expectation for that deepwater utilization recovery by late '26, early '27. Could you just talk about your confidence level in this recovery? Is it based on the tenders that are out there currently or the tone of your conversations with customers? Or contracts that you already have in hand? So if you could just talk to your level of confidence in that recovery.
Robert W. Eifler: Sure. Yeah. It's a mixture of both. Starting with the contracts in the US and in Suriname, I think we've kind of baked in somewhat of a floor for ourselves starting in the back half of next year. We really see a tightening of the market out there. Some of that's announced and out there. Some of it is rumors that we understand some of our competitors have gone to work, and some of it's stuff that we're working on ourselves. We're cautiously optimistic here that day rates have bottomed. Not to say that there won't be some lower day rates that get announced after I've made this statement, but we're cautiously optimistic that from here...
Robert W. Eifler: ...we will see an upward trend. We are seeing a lot of interest from customers, and the conversations we are having are encouraging. The tenders that are out there and the discussions we are having with our customers give us confidence that we are on the right path. We are positioning ourselves to take advantage of the opportunities as they arise, and we believe that the market dynamics will support a recovery in deepwater utilization by late 2026 or early 2027.
Operator: Thank you. There are no further questions at this time. I would like to turn the call back over to Robert W. Eifler for any closing remarks.
Robert W. Eifler: Thank you, operator, and thank you all for joining us today. We appreciate your interest and support in Noble Corporation Plc. We are excited about the opportunities ahead and remain committed to delivering value to our shareholders. We look forward to updating you on our progress in the coming quarters. Have a great day.