Seadrill Limited (SDRL) 13 Nov 242024 Q3 Earnings call transcript

Hello, and welcome to the Seadrill Third Quarter 2024 Earnings Call. [Operator Instructions]. I would now like to turn the conference over to Lydia Mabry, Director of Investor Relations.

You may begin.

Welcome to Seadrill's Third Quarter 2024 Earnings Call. Today's call will feature prepared remarks from Simon Johnson, our President and Chief Executive Officer; Samir Ali, Executive Vice President and Chief Commercial Officer; and Grant Creed, Executive Vice President and Chief Financial Officer.

statements risks forward-looking uncertainty. include comments that and involve Our materially. Actual differ results may obligation these No year, quarter no the one and update. forward-looking assume remain should assume statements valid later in we to or

and Our provide and Commission, detailed the X-K latest factors more Forms filed the affect and a forward-looking U.S. our of that with discussion risk Exchange Securities statements business. XX-F our

reference we call, measures. the non-GAAP will also During

and measures. available the earnings on website the release Our with GAAP filed includes nearest SEC corresponding with reconciliations our

Our term EBITDA corresponds defined Simon. now the use the in with call the release. I'll call of today's on EBITDA earnings term to as adjusted turn our

Thank you financial and and will Grant year then comments I few on quarterly call. for our and full outlook. reviews talk quarterly our about strategy. conference Samir tactics discussing joining contracting outlook on quarterly performance before operational begin market a our will and with before performance us our

exceeded now to and third propels million. expectations. its work Gulf Louisiana Mexico. existing additional We results million continued our contract EBITDA EBITDA, notably, securing $XX midpoint delivered previous guidance the guidance. full uncommitted an We're the operator Sevan Our U.S. our in XX% Most quarter of year independent in increasing capacity with by above us adjusted $XXX

and in continued customs Our going clearing country guidance. West through progress regulatory Both customer process risk are time. the after downside Polaris the projects minimizes the in on to Brazil and West Auriga record acceptance and

flow. generating meaningful to teams will start December their and in projects, these cash new and operations meaning rigs are Our attention begin on track on focused critical these then EBITDA contracts

investing valuable to to continuous visible absence in market an During of opportunity. rig We're bedrock capital the a of Phoenix spend reduce capital operating expense we in without the quarter, the demand. stacked immediate unwilling shareholder a West

have released OpEx. direct and the are crews reducing actively rig We

all fleet. In Capella Aquadrill and since the recent back management into the of contracts, have transaction, cost customers are Seadrill X we Capella, and managed navigated the operations Seadrill the and efficient, safe, West and rig responsible from agreements the drillships targets. now organization. Polaris closing successfully the to to our the also the standards costly Auriga provide Following reintegrated crude the expect synergy can Vela's XX completion Vela now The reliably with West exceeded complex, along we've months and

operating a to our and the balance ] good that sheet from efforts and and business. At floor-focused continued relentless coverage, plan benefits experience, most technical our a opportunities MPD endurance drillships frontiers. efficiency operating rather and XXX,XXX is with deepwater on and BOPs operational exploring supply focused In the the a in In heart win focus [ conviction the underlying volatility cycle, Now market remain where a view, intact. believe question on a and volatility. demand temporary between support our strategy. by imbalance rather reminder sustained strategy, demand, inelastic market intersect. when prevailing reflection firmly Characterized variable the industry not market's to We and supply drillship is and true and fleet rigs right dual in preserving and our our outlook virtuous right require is to of increasingly only of deepens inherently This interaction the industry rigs lines between achieving the strong fundamentals those regions. maintaining fundamentals simplify of strengthen than the that but strong my activity capabilities. contract

America the expect XXXX, spanning activity. We the future. now industry practice in dual and our We rigs own cluster and Mexico, we equipped. the size gen. operate thought market. almost activity we drillships capable focus drillships are XX% will and which all drillships in Golden NPD BOP in on West into of XX% heart operate operational we meets are Triangle fleet And have South Africa, quality the our of activity the foreseeable in drilling All greatest in concentration requirements. deepwater as our dual of Gulf Our the Xth assets or the this and important premium of represents of the leading

utilization a our secured have as calendar to in customer contract managed market is and time XX% that to XXXX year figure conversations the fleet contracts. for We improve convert expected and

In addition cash present sheet strong we contract to our coverage, a today's our benefit current and in feels balance market. from position

However, insulate market completely us competitive realities. this from does we not recognize

We will laurels. on rest not our

teams to and our customers leading, will XXXX customers their to be organization best: ways our our on to the empowering ask drilling deliver every efficient, smarter a of supervising By for leaders do responsible who offshore increasingly do benefit doing remain right be rightsized operations. we employees must We to senior our agile. We of what contractor. in to cannot want our safe, mentoring will right our efficient, continue shareholders. We We and business. plan for bureaucracy reduce lean, day they to do year a will running evaluate focus better our optimizing which the operations. across

We our will rig position. continue as dynamically to count formidable our active our financial grow costs adjust and and fluctuates fleet, opportunities evaluate to our refine further solidify

our ever, as we what rigs capital. how our contract, on our we and write can we we're focused control, Now we how how sign allocate

team rig's terms continues to and each with that flow. maximize earnings commercial working Our cash contracts secure

business competitive right, and to pursue have to a happy. operating repurchases. that teams an on customers were industry-leading our the the first our Seadrill to and share continued repricing clear market and approach since and focus. With reduced issued XXXX, capital decisions keep continue continuously through our based cruise, stewards leadership increasingly the across to peers conditions, constantly the shareholders. to XX% evaluate per our our and shareholders clearly disciplined improving our to XXXX the comes 'XX, cycle, our more impact refinement examples costs a capital. We we've bits I'll become remain have and way shareholder to line program that strengthen performance pass And deliver fleet strengthening count We that, stewardship of for business share of buyback our of relative positioning returns decisions our safe of metrics. At team share as resilient benefit meaningful we've low, especially Clear by built Seadrill, key should Samir. into we operations And the contract made allocation it been can Our to September the outlook that turning drill have these real once through on make capital story. endeavors simplify

to tightness marketed after for of find competitive the visible be drillships to new Drill activity contracting operating continue even can absence high follow-on about all are below Thanks, temporarily and not history. now The they markets opportunities, limited competitive our oversupplied are marketplace. ship there market around XX seem global likely over rigs will the to and of Many April market. no and will now in are demand of to will become contracts. if so drillships either measure but By a end a stacked to of rising next or work of not XX% consume inactive Simon. XX estimation, slipped after slow XXs Approximately as investment year, the in will put the lower. cold current extensive require these utilization, these completing soften make their builds available of It [indiscernible] them. The trend hovers capacity with year. in Between available XX

will us available, believe rates, become it As increasingly will competitive. put XXXX to downward be more pressure leading on assets

Fortunately, space. insulated. utilization market we In benefit the we built drilling updates from Recent are fleet. XXXX, existing across relatively white programs XX% to of our some

fully quarter of the the third well through West not year-end through the early and Carina XXXX not into working committed is next example, are and For West the and year. Tellus

the Sonadrill most market West have next year Sevan in the We Louisiana, and exposure Capella the drillships. the

of outcomes. their to quickly. has Recent been their times Opportunities can before, broad suitable a which duration both level said our we've contracts the plan disappear an appear rig limits potential of lead shortened and specifications range As with acceptable Louisiana for ability certainty. have and

time less market, show rig. we'll the spot As play we progresses, the stack willingness and to may

our the making a time the work believe year. competitively rigs Capella, preferred contracts half benefit who the and these again. We for customer provider the relationships for Gemini, and all second have and of advantaged. time Seadrill the customers remains proven specification, on premium For Quenguela deep the securing from chosen us Libongos, history They focus are

scarcity However, of opportunities. visible a immediately available there is

capital We and for continue of softening market basin to see commuter we're customers' a indications seeing the restraint. In slow pace uncertainties Angola, contracting for across tied global of as demand to the portfolios. capital example, rig

Carina flow. term Jupiter, We continue earnings and progress Tellus seeing provide visibility cash contracts and on and the recontracting positive the to of repricing make that

to full units decisively. desired challenged, flow cash waiting We space, believe not market, across the consider achieve economics consider create opportunities fleet. ideally to we're we When we and As every are OpEx we those contribute drilling to demand, the contractors individual decision for willing emerge. With we our our to economics own white can act our burning will make, rig. strive per favorable in we don't

capital. We of managers are valuable dispassionate shareholder

air As with competitive to outcomes. And across we've it fleet dictate that, the we market, will we our to turn managed intend near-term way disciplined through navigate remain the with Grant. financial pockets, choices I'll

complemented the quarter by completions. Management Thanks, of contributing Samir. In quarter, revenue I'll in Contract drilling The review down economic higher revenues $XXX utilization revenues operating total the full Phoenix providing Seadrill benefit $XXX fleet contract million. million offset before across sequentially. third at rate contract the leasing at a a flat updated performance were year. quarter. was $XXX owned prior quarter-on-quarter and revenues, outlook in by an Louisiana average Capella and million of the from quarter for declined our third the effectively higher full the

rigs included management Our results bareboat retroactive we from jackup fee second Sonadrill income Gulfdrill to from charter the JV. income sold to BBC quarter And in earned our and the income adjustments June. related

Third were were $XX and revenues million. $X leasing quarter million, revenues management contract

a the current provide the expected these of through good end items rates both of results quarter contracts. line Third for run indication Sonadrill

expenses million $X increased up total by Additionally, a which increase in OpEx $X contract million. increase. from $XXX included of consolidation million $XXX of second reimbursable company incurred cost our third equivalent $XX increased largest rig million component to $XX quarter. The quarter, sequential earned office the consider million revenues, and adjusting have costs the OpEx on $X to in Houston, rig million of for from increase R&M the expenses. of we million nonrecurring we million, by variances in Vessel impact. SG&A can $XXX expense the repair a an corporate drove and maintenance the related million on is management In operating so P&Ls, million item was the to prior reimbursable by in the we expenses $X $XX EBITDA. timing meaningful and

$XX operating million. $XXX $XX activities in third quarter, CapEx, the was In was quarter $XX cash repurchases and current spent flow million EBITDA Third quarter, within EBITDA $XXX in statement including capital of maintenance our authorization. Adjusted of million we flows. share continued investing long-term million program, In XX.X%. in completing the third $XXX excluding repurchase cash we reimbursables, captured the adjusted share upgrades captured margin, million of our million under

quarterly in the a and that our Since Now we no report to September we're XX%. basis to returned share intend our programs through on listed of in of [indiscernible], in million count XXXX, arrears. longer by $XXX end reduced have a issued third repurchases quarter we total shareholders repurchase the initiating

the Now rest on the of for outlook to year. our

guidance. our earlier, As mentioned Simon we're year full increasing

million $XXX we EBITDA narrowing $XXX of of guidance year roughly to our billion. full $XXX XXXX, now million million $XXX CapEx we're For $X.X for And million. revenues to to expect on adjusted

on work additional $XXX to secure through August behind range. is continued guidance potentially primary year the working EBITDA to from December, midpoint November ability rig Louisiana lifting full and our million. into driver the The the Our effectively

for fourth Our full outlook run to rate lower primarily attributable operating EBITDA year the quarter. activity. implies lower

most XX being approximately into the is while reintegrated Specifically, Seadrill job the the its was days of its Neptune work recent stacked finishing it Vela starting following new September other October And mid-December. in in service, out before when upgrades. time completion, Compella in it Phoenix undergoes The fleet. out-of-service its latest lastly, the contract and SPS spending incurring

fourth OpEx we of place increased Year-to-date, in on repairs quarter. The again rate on year. addition dates timing drive based to are a total these impact side, meaningful higher take and and increase the of we anticipate the of track Brazil rigs Oregon on have EBITDA as these Precise having the QX help spent start $XXX new contracts commence and Polaris. working complete will results in and run we a cost the have million the contract maintenance to on for planned In the we for fourth to and preparation CapEx, activity Area Polaris QX in this, in will quarter. timing expectations

it's provide Looking believe into to XXXX, we too early guidance.

uncommitted to Simon. outcome our negotiations and discussions financial which affect outlook. Back ongoing contract the materially capacity and will of are As for you,

XXXX investment idle transition communicated Gram. of identified and like has inflation year that headwinds significant Thanks, time, we and Seadrill. been for a Amidst early. required fleet

simplify recognized that U.S. to the the positioned to XXXX continued into our universal our integrated focus. not we We available analysts continue our delisted side Throughout year, deliver and we've buyer may value balance continued sell our materialize. as hope business. a from jackups, a ones program. to total opportunities comes strengthen We intend and drillships. We across progress We business the we're we We the Gulfdrill consistently in the the our and we from recognize to alike the efforts relative contract return. We're marketplace, who run LSE. as Norwegian to repricing the the sold repurchase and beat shareholder maintained sheet industry-leading and Aquadrill peers healthy

We in an XX to as capital our create rigs been we contracts. too praying will there's us seek Operator? to many beyond thus clear of matching meaningful expect we'll be and benefit what demand by proud recognize to I'm Seadrill organization without we now we've employees, and strengthen the questions. as open us that, past accomplished shareholders. disciplined far value for to reactivated continue for do to line and work into have as trade weather. It's to future. With our initial the the our the more customers rivals sustainable shareholder of burn better valuable not months, that our

[Operator first of Smith comes Energy the line question Instructions] Partners. with David Our from Pickering

Tellus? quarter to Brazil opened, Jupiter ask the there increased recently for in further out and the your little on I it's your a I specifically the about Congratulations but and the given including guidance. know drillships tenders outlook Carina out, one wanted and

Yes, sure.

planet. for I the the the can a deepwater on Let is end. we've me market kick Samir some Brazil and and maybe Brazil rigs mean at add our important the then focus off, resilient in as is said recontracting before, most organization. most embroider the primary And

As you until know, formally we they're announce signed. don't contracts

boat a his recently of those us we some recognized have make pretty we Brazil future And with which optimistic Year, and in share a performance again, outlook, out was right to to receive. the our those deepwater you by no about status our the So made at we with specific Brazil in rigs. Petrobras prepared to Samir near-term yet awarding nice And We positive But pointed regions customer meaningful on terms bet rigs. whereas as which decision really of drilling today the we're stable of news rigs remarks, in believe a of headwinds, contractor recontracting progress Brazil. continue precent in has time. that face demand like. on the has we've remained our

that Petrobras schedule of keenly the country, not also that when advantage confers It's Brazil, we risk. money years. cost and have of as working for X entry. over in the last and obviously So We're just in an incumbent about rigs regulatory we've will aware X soon deployed recontracting

about there's of We're days XXXX. a So 'XX. near-term of lot turbulence terms rig largely of talk contracted in in

For us, in Unlike key to not add, a rivals, of very Brazil recontracting is very, recontracting story about our We're all our Samir. is our not Brazil. simple. story. hot part It's stacking rigs. Anything rigs we're

in progress, rigs recontract confident so remain kind but announce just point. we those would our to paid, I any are there's and of this making No, at nothing meaningful say, abilities have to don't

noticed any additional the upgrades reshape, a drillships whether load potential for Xth to this capabilities. convert I gen and the orders could color. appreciate gen Xth Xth ask might I to Simon balance Xth this upgrades included of to gen wanted to ask quarter follow-up. for And all applied you If demand as these I the how said, going see hook I forward?

Europe as Great delivery distinction much and Yes. it's gen Xth think I about generally I question. arbitrary. between speaking, the mean, anything. Look, as somewhat Xth are

it's gen now. technical spectrum gen fair midline the broad fleet. to of units Xth a there capability across Xth I that are is think Most say

the marine systems particularly investment new So to associated market. there's after coatings, and a decade-long with depressed obsolete need review often reduced

I'm hookload comments sure. some Samir So X.X upgrades. will about million that's presuming I'm have that, on

Sure.

unless load is going Xth, in it's upgrade can not to the an are a candidly, but I'd -- just shareholder say factor Xth with being on have we're we return The ] one. hook and between [ their challenges And beyond one own not see and So a upgraded load. rigs only we're prudent it. technical invest capital, hook our

generate assets, need we we think capital whatever investments. in on on and a for looking are gens extra monetize, record, our a can I return We have hook don't are you And our that -- those it's but actually worth, track proven the other X located really markets Xth gen on those load. can upgrades at are

us, we Xth our for at operated, where with we so upgrade them And don't point. this the need feel very to see gens comfortable are and

next comes Your Hallead with Kurt from Benchmark. question

the appreciate I color commentary. always

So couple I the look my as next year, got we attention guess to a commentary. respect prepared with things into out of

same I referenced just get to dynamics first looking contracts are it. the for that maximize think, was the dynamics. time, the that maybe cash you around And kind you bit any be that looking booked was, price And of XXXX, maybe in a margin So such competitive. little you market will context that I Samir, referenced at more the are

competitiveness existing margins to that? they there So is despite you opportunities some differences maybe on maybe some where And seeing maybe context to regional are give we price And cash to consider. around contracts? about us are some some need maintain

Yes. Absolutely, Kurt.

generate the the OpEx is your bidding the at day we individual, focused going Each at market end rate is headline is cash. we're be day, look cash we on very, So to but generation. different. of I'd work, when nice, can say very

Your to to with CapEx going the comply contract different. requirements are be

we maximize for we cash us, work. to our when So look wherever bid -- flow

XX% into for actually off the our half are next opportunities next all the year. year. of We're assets of we our those year. are of terms contracted in fleet, on second in of In assets are dialogue most active second that rolling half next most of of those

rate. in we headline less more them rates recontract about our So of the end good pretty good the us, they're feel to us, where again, day it's for much day, for for ability at. flow cash But at It's generation. at about

add would many I the nicely extra these a different there's choosing have on there, of harvested mean, across There commentator you experience And are to business, first the how of points. mean, are by function markets. you to right many economies couple Kurt, the in participants. to differences industry as a material of Just be the I of markets in in geography, discrete cost rigs place. scale material

determined individual management these team, proposition reflect to dynamically market flexes franchise CapEx dealing to operate a to time and really As a we're a business realities, Seadrill the been committed a our adjust to are we and that That's overhead, with always OpEx as to and investors. core through continue margins to we'll feature elements our shareholders. to superior and deliver environment. of

and worth don't you at, capital of year. And this buy follow-up, the return Got million friendly very on guys probably pace I on you're to you. $XXX about maybe stock know, been have back

do pricing in you did do the some to to as as the relatively booked that -- you on potentially I'd opportunity buy XXXX. you're the only contracts see you an and maybe environment. Given stock your dynamics see in fact soft How and or XXXX much back say, XX% opportunity

and And outlook comments confidence returns us I that years. when going to much course, buy next the through is, gives to goes XX% going course, the Samir in say hand we're consistent about I'd into then really extent comment capital I uses lean we policy look firms lot we're Kurt, And prior it's of with Look, that with at the calls, that specifically and with back our more All Grant. a future the how buybacks, to that was of of hand financial the in on XXXX beginning framework. capital. up, year. can't talking mean, contracting

more at paying and uses could really day, And other Just it to shareholders. then can assets, accretive buying up use that to accretive to net be of our and X. shareholders policy, at leverage for the looking capital the just weighing maintenance Xx capital be reiterate accretive the those what's and at capital, CapEx thereafter of financial looking our end returning of going and be

Simon you. you. Got if one one. got more, on Actually, Got for I I this maybe may,

being bit always opportunities as part a mentioned again, you have opportunities wind -- not this potentially the that Given to And didn't XXXX. of in buy presented that assets first year? that. of But up agnostic end maybe a of we assets. guys in context the the of you're of lull at on in other in the have Has the some exist that or whether earlier or some looking lull you little

-- sort I'm ends it's the a period. if on. protracted strict metrics before needs is respond expecting sheet presents a more the think I in this that being and accretion potential mean, more opportunity will spoken feature itself. obviously, acquisition balance hit any terms of our become I to that of analysis so returns, of up of to about poised We've turbulent right

to supportive the right an number keep about certainly a will horizon I industry don't there's extended able but of of nature. that's we is growth the think and on our the the who very not Board anything of there's hardship. at be now, opportunity think So brief watching And for period that moment, in I withstand players

Stene question Securities. the Frederik Your Clarkson comes from next with line of

geographical is So that the like to spread on just think ask the fleet of your I one first currently. I'd

that Polaris on for their about now West of you're think the then potential number Brazil, have of you covered about already your in Capella, Auriga But do Asia, the the the Southeast feel assets? shortly contracts of any can -- Are of the of or Africa. in? you have you you coming it's talk get and otherwise well in how relocation to Gulf and in You Mexico that a with do in you Or the meaningful placement example, confident and particularly region single opportunities rigs range?

know, you focused wherever bit little declared mainly As postering and on the of challenging in the competitive it's rigs near market And Capella. the operating. has as Fredrik, of a a region we We've taken in recently more opportunities only we're the where possible. strategy become currently control term, have

So contract think can medium permit have work you the see point, chase this hope that competitive I a area, at more that we that a in But to But where we a the rig Samir we're will content to intern already area. probably in preexisting secure color. term, position. the would relocation give of that bit we

Yes.

can So plan region the happily an work as are and would keep to well. to in new Asia cluster out for but ourselves both meaningful chasing in eventual cash existing either Simon's region, that rig a But develop we point, it or we'll region flow be generates opportunities region if there, as Southeast outside. that that we the secure into

the X, they higher touching Okay. upon you high-level that's assets stack composition. I scrapping is helpful. you move you've the Phoenix. of to and, of pecking likelihood particularly about potential a to that I'm actually were the order for How Aquarius terms very No, in fleet briefly there now Is decided And that? about the do reactivated. the be your X Eclipse think then and example, West that guess, now thinking if of guys

a of Phoenix easier Eclipse. require in are any the both that ask Aquarius larger I'd the have work larger What reactivate to and say capital regard. to don't Eclipse immediate definitely body its a is would and underwrite plans reactivation. that will We the have

cost to material that think a a that way need So we the is to it market will contract I of to keep the see need busy. be there mean reactivation sustaining about sense comfort reactivation that defray initial rig that capital we contribution we and a after

But capable the we the market we'd both opportunity a of investment that reactivating to Phoenix we the For job justifies we do Aquarius But rigs. in look And need find right and Phoenix the us, and tall right? a order, first. X, the Aquarius. are at and more the find it. to those those probably that the But justifies the we'll rigs it's continue investment, if

just Actually, goes Grant. one, Okay. this I one quick think to and

that On a should you there in almost used the side, about million to million should is now -- the you to don't [indiscernible]. tranche $XXX new suggest it think $XXX the I with, listing just already? have be were up. disclosures it which bit I'm expect Is current begin repurchase as that a share to on any authorization, or opened tranche have you we same unsure around tranches

just Thanks, remind sort from we're Oslo Good to on requirements required. question. with We certain now And buyback. $XXX the Yes. like respect longer yes, authorizations have of delisted Fredrik. million that disclosure is the Exchange. Stock no the sub to Those longer no

by second from million a was to requirement. And And correct. the sub-authorization $XXX million, you're of disclosure That so referring we the in which quarter. Norwegian $XXX will that. our authorization you're provided blanket Board not was a a be was announcing subauthorization. the We've Board within got Remember

$XXX $XXX extend to of can authorization, through continue over And essentially going that end under the buy by shares now million period X-year to are from third we back QX the million is blanket the spent We million we've $XXX XXXX. $XXX the this quarter. million, to a which QX year of

Your Hamed from next with Khorsand BWS question comes Financial.

this supply process the talk holding of talk about customers? and about their just of own you a wait or just off more with of oil. timing and they their is just of there -- have the you chains Is the are little price saying because negotiation that bit potential Could

It's uncertainty.

It's reallocation So of their our own portfolios. it's supply portfolios. what's happening with have clients also global chains. commodity happening price, a Most with their what's of

versus rather their return own they'd And of saying to shareholders. are then another. one some also So invest in capital it's their region

'XX We're pot decisions, deferral. to into pushed it's them leading things and from of this a XXXX. uncertainty So big seeing it is that's defer get

And right. special is, they contracts? then All you into are surveys other are done pushed actual Or being question the 'XX? the with your for

that scheduled I spoken have one to XXXX. that for we've survey before, do mean scheduled we

like SBS And cost as that. markets causes X-year in costs. time, another Neptune. out fleet. for X I contracts to required we to some but time contract that. that X We that. I'd potential and year encourage then depending may be may potential also, preparation are are in when other our prepare the opportunities terms and of And think service of currently of go doing us the of things of an drift Hamed, long-term how well And you help? think SPS on front in things There you're about the contemplating of West surveys ingredient, of Does some number next and a into on is that there's mean,

does. Yes, it

next question Partners. Jayne comes from with Your Daniel Josh Energy

Simon's in if First and you of have that XXXX. the if is could expand in about that remarks, into wondering question optimizing on potentially any -- that out I goals company you about operations laid was you've that thinking just year? next talked prepared more how your you're

We've facing and some Yes, maybe recontracting crews near-term stacked the middle headwinds sure. released the obviously, the potentially through West we're is year I effort. and some the Phoenix recently showing of in cold mean early difficulties 'XX, the there.

taking going them. difficult able reflect contracting is decisions us can that we're point the be opportunities base in cost that one to that medicine to turbulence work. term, our we in short believe to what to how need but in of really of So And make is our don't we programs that's and quickly we're market, I if not -- important think as going the that we adjust front and as doing capital business is manage environment. that have at secure rigs things we're we to be to our the order this

the prepared times when comments, real very was signaling just important is This do we're increasingly is learned to a sort tough what of what in all at business. not really is going have to So cost I in the that time. years, it's that points in in are increasingly, cycle, the almost And base my that manage XX bad. I

us if you focused like, the that our organization, being and have people are capacity. our an don't excess be resources, front we sure organization we're assemble much make to respond our assets, lean enough So the as of in to appetite to software, have rightsizing that needs able for human we on and to very we agile,

be just near going your Understood. as wanted Gulf of intermediate assets follow-up, I the how there my to expect result the ask market Mexico. of just the on a change new and in to any given And to a that in market's follow-up And importance likely you're of see forward. Seadrill the you to to number for administration. term player and if

is onshore diminishing it's the from. offshore start, House. then coming say the that a I'll customers to is about we we fair And really really That's let the an will new will pinching We're barrel that in the has say win I out. longer our to I offshore And I where and shareholder Samir. law has driven blue production think mean term. interesting are a of who's us returns, don't reservoir question. upside, production Josh, that, White in but All XX care is returns. think telling that whereas is Perhaps me pass has important, by What volumes, it's the sky. the is

it's in replacing the So blue deep going we'll be production where season Samir... forward.

Yes.

So they're anywhere they're to and White carbon they're in it's than with the fundamentals. is will the -- lower economic else. produce end change whoever those cheaper politics, geology of it's House. barrels get drilled. day, The doesn't more the At not and And

So we do continue produced to get them over expect time. to

comes Investment [Operator Parks from with Instructions] Research. Tuohy Your next question Brothers Noel

about explored any just do in exploration the in I outcomes your last that was I represent to need footprints do kind of Just as offshore, if different help just flow to to get in at just as would there make so change cycle, seem point sense global you the this and does to that sort conservative nothing funds you barrels sooner kind else comment, later. And and and be the consensus -- or of of dent drilled decline. are going forth, to of be a guess, following the along base with exploration get mentioned, your thinking does

that? any So on have you thoughts

allocation investment we a speaking, muted lot our somewhat activity of to customers sort we've there's coming exposure bottom at we we before. be noticed think outlook the shift short-term onshore. it and Yes. by have have we capital can't productions. That's more hinted We is all their rates where the that it's matched certainly the activities. list. generally who to offshore pipeline, down where believe Look, delivery offshore and a I priority And of can be a of of fact on believe about going Certainly, that achieve both we're in that's at the customers such the as replacing exploration, think is basins, their expenditure onshore in

a If I years are we some rigs portfolio our to almost exploration. there's see our take exploration. X starting X ago, as microcosm, --

exploration to tack You're of But but margins. -- XX program. relatively a small on it's into we'll X starting out long XX well. happening, It's well again, an in still or the it's see well

to onto it. or based capital if mean by And of that a on discipline, shift operations then sort oil sort the is whatever, of own it so Got That's happening that's mean, helpful their then? I perspective. customers price deprioritizing hanging is are just of I due steady part rig

they'll them pushing There's portfolio. not or parts real ask preserve switching this XXXX cost up an a acknowledge costs, base for pick reallocating that rig rig further their down yes, costs absolutely. up is a privately, has shared going to Putting we it's XXXX, they're our cash be when problem. costs, right? saying, there what different then with client to but you either 'XX returning out cost it to shareholders incremental And problem, the further XXXX. meaningful that it Yes, and near in will But of a starting and say, to it in start-up we're and we and term

Wow. Okay.

short-term more So to than that the we're in is deepwater sort sure. used for definitely of thinking

Helpful. thanks. So,

questions, further no for Q&A With thank this joining. you will end today's call. as well as We our session conference

disconnect You lines. your may now