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Edited Transcript of SHLF.OL earnings conference call or presentation 8-Aug-19 11:00am GMT

Q2 2019 Shelf Drilling Ltd Earnings Call

Aug 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Shelf Drilling Ltd earnings conference call or presentation Thursday, August 8, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* David J. Mullen

Shelf Drilling, Ltd. - CEO & Director

* Greg O’Brien

Shelf Drilling, Ltd. - Executive VP & CFO

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Conference Call Participants

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* Fredrik Stene

Clarksons Platou Securities AS, Research Division - VP

* Robert Ellenbogen;Credit Suisse

* Rumen Ivanov;ICE Canyon LLC

* Victoria McCulloch

RBC Capital Markets, LLC, Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, and thank you for standing by and welcome to the Shelf Drilling Q2 2019 Earnings Conference Call. (Operator Instructions) I must advise you that today's conference is being recorded, Thursday, 8th of August 2019. And I would now like to hand the conference over to your speaker for today, David Mullen. Thank you. Please go ahead.

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [2]

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Thank you, operator, and welcome, everyone, to Shelf Drilling's Quarter 2 2019 Earnings Call. Joining me on the call today is Greg O’Brien, the Shelf Drilling CFO. On August 7, 2019, we published the Shelf Drilling Limited financial statement for quarter 2, 2019 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 short presentation with highlights on the second 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 2019 and beyond, activities, events or developments that we expect, estimate, project, believe or anticipate may or will occur in the future are forward-looking statements. Forward-looking statements involve substantial risks and uncertainties that could significantly affect expected results. Actual future results could differ materially from those described in such statements. Also note that we may use non-GAAP financial measures in the call today. If we do, you will find supplemental disclosures for these measures and an associated reconciliation in our financial reports. I will provide an overview of the company's performance for quarter 2, 2019, share my latest views on the jack-up market. I will then hand over to Greg to walk you through the financials before we open up the floor to Q&A.

As always, I'd like to start the commentary on our earnings call with our safety performance. We had an outstanding second quarter in safety performance with no safety recordable incidents for the months of April, May and June. This marks the first time, we have achieved a 3-month period or a full quarter without any recordable incidents. The total recordable incident rate as of June 30, 2019 was 0.26. And the year-to-date as of the end of July is 0.22. Additionally, we have achieved a milestone of no loss of containment in the first 6 months of the year. The fleet-wide uptime for quarter 2 was 99.6%. This is the highest we have ever achieved across the fleet for a full quarter. The year-to-date uptime performance is 99.3%. The Saudi Arabia division recorded a perfect quarter in operating performance on our 6-rig fleet with 100% uptime, no recordable incidents and no loss of containment. And we continue to set new records in drilling efficiency with the Shelf Drilling Chaophraya, Shelf Drilling Krathong working for Chevron in the Gulf of Thailand. The Compact Driller commenced a 3-year contract with ADNOC in late May. The 2 recently acquired CJ46 jack-up rigs, Shelf Drilling Achiever and Shelf Drilling Journey were loaded out on a dry tow carrier on the 15th of June and arrived in Bahrain on the 10th of July. The Shelf Drilling Achiever is undergoing contract preparation for its recently announced 3-year contract with Saudi Aramco, with an expected start date in November 2019. The Key Singapore has completed a contract preparation work for the 2-plus-1-year contract with ENI and the rig is currently on route to Tunisia, where it is expected to start the first leg of the contract in September. The F.G. McClintock and C.E. Thornton are undergoing contract preparation for their ONGC 3-year contracts, expected to commence in quarter 4 2019. The recent contract awards with ONGC reflect a significant uplift in dayrates from the prior awards in 2018 and 2019. The Adriatic I completed the contract with Niger-Delta Petroleum Resources on the 15th of May. The rig was scheduled to work in direct continuation with Sirius Petroleum but owing to unanticipated delays on the commencement of their program, the rig has been on standby since the 15th of May. The contract with Sirius has been temporarily suspended. And we have secured a 300-day contract with another indigenous Nigerian E&P operator and expect to commence operations in September 2019. The Baltic completed the program with Oriental on the 14th of July, and we are in advanced discussion with an E&P operator on a follow-up program with an expected start time in September. Total revenue for the quarter decreased $10 million on a sequential basis from $147.2 million in quarter 1, 2019 to $137.1 million in quarter 2, 2019. Primarily due to lower activity as the 4 rigs in India rolled off contract, the Key Singapore was undergoing contract preparation for the contract follow-on with ENI. And the Adriatic I rolls of its contract in the 15th of May. All of this was partially offset by the Ron Tappmeyer and the Compact Driller starting their respective contracts in May. The adjusted EBITDA for quarter 2 2019 was $40.4 million, compared to $49.4 million in quarter 1 2019. The company's cash and cash equivalent balance at March 31, 2019, was $71.3 million. Greg will walk you through the details.

Brent oil price dipped below $60 to $70 price tag yesterday, following a sustained period within the price tag. That $60 to $70 price tag is a very constructive level for shallow water activity, that's specifically in our core geographic region. The jack-up market has recovered since early 2018, with contracted rig count up from 311 to 373, giving a marketed utilization of approximately 82%, up from 69% in early 2018. However, share prices across the industry are down more than 50% since the jack-up market trough. The equity market appears to be overlooking the improving jack-up fundamentals and instead focusing on supply-side concerns and the possibility of a material pullback in oil price. The stranded newbuild overhang is becoming less of an issue as more and more of the stranded rigs have been absorbed into the market. Mexico and China continued to absorb capacity. The rigs under contract in China has grown from a low point of 27 rigs in January 2017 to a current all-time high of 48 rigs. The Chinese jack-up rig count is at approximately 160% of the prior peak. Nearshore is the lowest cost [style] and the Chinese national oil companies have targeted to grow production.

Mexico is another region with ambitions to grow their production and similarly, see shallow water basins as the source of the lowest cost style . The fast-track tender process on the turnkey project has absorbed 12 rigs to date, and there remains a significant shortfall. We anticipate that Mexico will, over the next few years, see a return to near peak levels of jack-up demand. The rig count in the Middle East is at an all-time high and is projected to continue to grow, as both ARAMCO and ADNOC look to offset onshore declines with incremental production coming from the shallow water basin. Qatar is also adding incremental rig capacity to increase gas production, and Kuwait is about to launch an exploration campaign offshore. In West Africa, we see continued growth with both the international and indigenous operators increasing activity. On the back of this improving demand, Shelf Drilling has demonstrated continued contracting success across all regions and across all asset classes. Since the last earnings call in May, we have executed several milestone contracts. 3-year contract on the recently acquired newbuild Shell Drilling Achiever with Saudi Aramco. We also secured a 30-month contract with the Shelf Drilling Scepter with Chevron in the Gulf of Thailand. We believe that our long-standing relationship and strong continued operating results and execution with both Saudi Aramco and Chevron were major factors in winning these competitive tenders. We received an extension on the High Island VII for 6 months with ADNOC, which will keep the rig contracted until the end of 2019. Dubai Petroleum has exercised the priced options on the Shelf Drilling Mentor and the Shelf Drilling Tenacious, which will keep the 2 rigs contracted until January 2022. In late July, we received a 3-year contract award for the C.E. Thornton and the F.G. McClintock with ONGC in India. We also executed a 300-day contract with an indigenous operator in Nigeria on the Adriatic I, with an expected start date in September 2019. As of June 30, our contract backlog was approximately $846 million across 25 contracted rigs. Subsequently, we have executed contracts totaling $254 million. And the number of rigs under contract has increased to 28 jack-ups, representing an 82% marketed utilization. In all, we have added 25 rig years and more than $470 million of backlog since the beginning of 2019. We continue to see a solid pipeline of near-term marketing opportunities and expect to conclude several additional contracts across all our key geographies in the coming months. I will now hand it over to Greg, who will walk you through the financials.

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Greg O’Brien, Shelf Drilling, Ltd. - Executive VP & CFO [3]

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Thanks, David. Revenue for Q2 2019 was $137 million, including $131 million of dayrate revenue, $3 million of mobilization and bonus revenue and $3 million of recharges and other revenue. Revenues fell by $10 million or 7% relative to Q1 2019, primarily due to lower utilization resulting from the completion of 5 rig contracts in India and UAE towards the end of Q1 and early Q2. In India, revenue fell by $7 million after the completion of the F.G. McClintock, C.E. Thornton and Parameswara and Trident II contracts with ONGC. In UAE, revenue fell by $4 million, following the end of the Key Singapore contract with ADNOC in March. Q2 revenue was further impacted by the planned 3-month out-of-service project for the High Island V in Saudi, which commenced in June. As David mentioned, we also had 1.5 months of idle time on the Adriatic I following the completion of its program in Nigeria in mid-May. As a partial offset, the Compact Driller and Ron Tappmeyer commenced new contracts in Abu Dhabi and India, respectively, in late May. Average day rate increased from $63,500 a day in Q1 to $66,000 in Q2, primarily due to the reduction in revenue contribution from our rigs in India. Across our active fleet of 33 jack-ups, effective utilization, which is our measure of blended revenue efficiency was 66% in Q2, down from 75% in Q1. Operating and maintenance expenses fell by $1 million from $92 million in Q1 to $91 million in Q2. There was a $4 million drop across the 4 rigs to completed contracts in India, which was partially offset by additional standby costs for the Adriatic I in Nigeria incurred in between the contracts. G&A expenses were $12 million in Q2, up from $11.6 million in Q1 2019, primarily due to an increase in share-based compensation expense following the award announced in late May. Adjusted EBITDA was $40 million for the period, representing a margin of 29.5% compared to $49 million and a margin of 33.5% in the previous quarter. We had a total of $6 million of adjustments in Q2, primarily for expenses associated with the ongoing reactivation of the Scepter. Income tax expense was $4 million in Q2 compared to $1 million in Q1, primarily due to the prior quarter increase in the reflected level of tax refunds we expect to receive in certain countries in the future. Q2 income tax expense represents less than 3% of revenue for Q2, slightly lower than our typical range of 3% to 3.5% of revenue.

Net interest expense was $20 million for the quarter, in line with Q1. Noncash depreciation and amortization expenses totaled $39 million in Q2, substantially in line with Q1, and the net loss for the quarter was $30 million. Capital expenditures and deferred costs totaled $163 million in Q2. This included $122 million associated with the acquisition of the Shelf Drilling Achiever and Shelf Drilling Journey newbuild rigs through the issuance of 26.8 million common shares, as well as $15 million of initial operations readiness costs for both of these rigs. Spending across the rest of the fleet increased from $22 million in Q1 to $26 million in Q2, mainly due to higher contract prep costs for the Key Singapore in Tunisia and F.G. McClintock in India, and a higher level of spending associated with the planned out-of-service project for the High Island V in Saudi. As David mentioned, we're in the midst of a capital-intensive period at the business. The Key Singapore recently completed its shipyard project, and is currently being mobilized to Tunisia for its scheduled contract with ENI in September. The High Island V entered the shipyard in Q3 for an equipment recertification project, and the rig should return to service and be back on dayrate with Aramco by September 1. We've also commenced the contract prep efforts for the F.G. McClintock and C.E. Thornton following the recent 3-year awards from ONGC. These rigs should reenter service in October and November, respectively. Sustaining capital expenditures and deferred costs for the second half of 2019 should be generally in line with the level of $48 million in the first half of 2019. With respect to our acquisition projects, we're carrying out several key upgrades on the Scepter in advance of its contract with Chevron that is now scheduled to start in December in Thailand. The Achiever and Journey arrived last month in Bahrain for their final rig readiness projects. The Achiever contract with Saudi Aramco is expected to commence in November, and the Journey will also be available for operations before the end of 2019.

Total remaining growth capital in the second half of 2019 to prepare these 3 rigs for operations is estimated to be $60 million to $70 million. Our cash balance was $71 million as of June 30, slightly up from $70 million at the end of Q1. We made cash payments for interest of $1 million in Q2 compared to $39 million in Q1. Our next biannual interest payment on our 2025 notes will be paid in mid-August. Net debt for Q2 was $817 million and net leverage was approximately 4x. We have $287 million of combined cash and revolver availability. Our debt maturity program.

(technical difficulty)

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Operator [4]

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Ladies and gentlemen, apologies about the delay. We currently have David Mullen connected. Thank you. Please go ahead, sir.

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Greg O’Brien, Shelf Drilling, Ltd. - Executive VP & CFO [5]

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This is Greg O’Brien, sorry for the technical difficulties. A couple of last points before we open for Q&A. Net debt for Q2 was $817 million, and net leverage was approximately 4x. We have $287 million of combined cash and revolver availability. Our debt maturity profile and strong liquidity position creates flexibility and support for the investments underway in 2019. The recent backlog additions in Saudi, Thailand and India were executed at prices significantly higher than awards in those 3 locations over the most recent 12-month period in the sector and will all yield attractive margins. The 2 contracts with ONGC, in particular, demonstrate the long-term earnings capacity of our 8 rig standard jack-up fleet in India. We expect the commencement of these recent contracts in Saudi, Thailand and India before the end of 2019 to drive a material improvement in revenue and cash flow into 2020.

With that, we'd like to open the call up for any questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question comes from the line of [Salla from Awo D.]

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Unidentified Analyst, [2]

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Sorry about that. I didn't know I was on mute. My question is about Sirius Petroleum. Whose contract to agreement with you is temporarily suspended because of the unforeseen problem. If they do come back, are they going to be getting the Adriatic I? Or is it going to be a different rig?

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [3]

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It's possibly the Adriatic I and it's possibly a different rig. We need to understand the actual start time of their expected program. But we reserve the right for either the Adriatic I or potentially the Baltic rig.

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Unidentified Analyst, [4]

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The other question is about the contract you said you signed for Adriatic I to start in September, with an indigenous company in Nigeria. Does that company have a name or it is a confidentiality on the announcement the name of the company?

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [5]

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For now, we wish to keep it confidential.

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Operator [6]

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And we don't have any further questions as of the moment. (Operator Instructions) And our next question comes from the line of Caroline from Crédit Suisse.

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Robert Ellenbogen;Credit Suisse, [7]

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All right, guys. It's Rob Ellenbogen at Crédit Suisse. I'm hoping you could just maybe spend a minute on what the secondary market looks like for jack-ups. Obviously, it's a strong liquid market, but there are a number of players that it seems to us, may be looking to sell assets. Could you comment on sort of what you're seeing on that front and your interest in that type of activity at the moment?

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [8]

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Yes, I think there's still a number of assets that are in the hands of various financial institutions that don't really want to -- or under the control of financial institutions that really don't want to own or operate these rigs. So insofar as that there are rigs in the market, we're always going to look at opportunities. And when the opportunity really makes compelling sense, and we see that we can make a good positive cash flow from these assets in the current market, to that extent, we're interested. Obviously, it's -- we're looking at creative ways and not necessarily wanting to add any more leverage. So -- but you're right, there are quite a few jack-ups available in the market. And we're looking at those opportunities and I'm not really in a position to disclose more than that at this point in time.

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Operator [9]

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And your next question comes from the line of Fredrik from Clarksons Platou Securities.

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Fredrik Stene, Clarksons Platou Securities AS, Research Division - VP [10]

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Just wanted to touch upon kind of your general thoughts around contract drilling at the moment, particularly after kind of the muted comments we've seen from the floater payers in terms of gaps between contracts. When you look ahead now, are there on tenders or other kind of negotiations you are in -- will you find it kind of easier to make the gap between contracts shorter than what it was before? And also if you're kind of seeing an improvement in general contract length compared to what we've kind of already seen over the last year?

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [11]

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Yes, Fredrik, good question. So what we are seeing in the jack-up space, contracts are getting longer, and we -- it's -- in my understanding, in the floater space, there's a lot of short-term contracts, and a struggle to keep the rigs working in a continuous mode. We're not really seeing a huge challenge there. I mean, you're probably referring a little bit to the Adriatic I in Nigeria, that was an unanticipated delay on behalf of one indigenous operator, we just weren't in a position to start in direct continuation. But I look at that as much more of an exception than anything we see. We don't really see a whole lot of difficulty in keeping rigs that are currently contracted in the continuous contracting mode. I mean, bear in mind, we've fixed an awful lot more contracts over the -- since the beginning of the year than we've eroded in time. So -- and we see that the jack-up market is truly getting to a point where we see a lot of contracting opportunity. We imagine that we're going to continue to grow our backlog, and we're going to continue to grow the number of rigs under contract. Today, we currently have 82% marketed utilization, between now and year-end, I imagine that number will continue to grow.

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Greg O’Brien, Shelf Drilling, Ltd. - Executive VP & CFO [12]

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Fredrik, maybe one point that I would add, is that each geographic location's a little bit different, but it's definitely clear that the market is tightening globally and in specific locations. I think India is a good example, the pricing got very competitive there, second half of 2017 till the beginning of this year, and there was a fair amount of excess capacity. The most recent vendor had 7 rigs bid for 6 rig, the demand in 1 fell away before the tender was awarded for essentially 6 rigs for 6 slots. There was another tender that's underway now. There were 3 rigs bid for 2 rig the demand. So again, not hugely over-competitive. I think you're seeing similar trends in the Middle East, particularly at the higher end of the asset markets. So there's not quite as much extra competition for tender opportunities, the areas where we work. The durations haven't fluctuated a huge amount in the Middle East, India, with some of the majors in West Africa, you're typically bidding for 1- to 3-year contracts. That's been pretty consistent. I think some of our customers are trying to contract longer because they recognize that the market is tightening and prices starting to the move. So we're still coming off of a pretty low base in pricing, I think, rates got pretty low 1 year, 1.5 years ago, but they have really moved from that time frame. And most like fundamentals continue to play there.

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Fredrik Stene, Clarksons Platou Securities AS, Research Division - VP [13]

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Yes, that's very helpful. And then just a follow-up kind of on the contracting terms, I guess, India is a very good example of how things have turned very fast lately, particularly if you look kind of the 20 -- or 20 to 30s that were fixed not so long ago. But also kind of a general question here. When you are negotiating terms on contract, kind of pricing is one thing, and we're seeing that going up. But do you feel like you have kind of power -- or getting more power in other ways as well in kind of touching upon the allowed downtime? Or kind of the risk you're bearing compared to what kind of risk you would bear on contract, for example, 2 years ago? Is there any difference there?

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [14]

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There's not a whole lot of difference there because to be with you, we didn't see our contract terms deteriorate in any significant way. Most of the national oil companies, the contract terms are the same. They haven't moved with Aramco, with ONGC with Dubai Petroleum. Some of the -- we saw some movement on contract terms with some of the international oil companies, but it's not very significant. So I don't -- I would -- I would flag that, we haven't really seen a significant move in the contract terms that we've been signing from 2013, 2014 to now, and we're not imagining they'll move much in the near-term either.

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Operator [15]

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Your next question comes from Victoria from RBC.

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Victoria McCulloch, RBC Capital Markets, LLC, Research Division - Analyst [16]

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Just one for you, Greg. Just looking forward, CapEx, should we still be thinking with the addition of the new rigs that it should be a run rate of about $3 million to $4 million per rig per year? And then maybe, David, if you could give us a bit of your sort of thoughts more on new geographies? And anything you considered. Or -- are any areas that you feel that you're not looking to enter into in the next 12 months? Or I guess, that -- I guess, Mexico is one of the key geographies we're hearing about, with the for demand for jack-up rigs, your thought would be helpful today?

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Greg O’Brien, Shelf Drilling, Ltd. - Executive VP & CFO [17]

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Sure, Victoria. On the first question, yes, we would typically use about a $3 million per rig per year guide on annual CapEx, that would imply something around $90 million. I mentioned earlier that we spent $48 million on our existing fleet of operations in the first half of the year and second half should be pretty consistent. So a little bit higher than that $90 million annualized level for 2019. We're obviously spending some capital beyond that for the 3 rigs that we've acquired in the last year, the Scepter and the 2 rigs from China Merchants, that should all start before the end of 2019, but beyond this year, I think that's a fair guide across the rigs that are actively in service. And the rigs that we're putting to work at the end of the year, we're spending quite a bit of capital to do that. Capital requirements on those rigs should be pretty minimal for the first 2 years of operations.

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [18]

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Yes, Victoria on the second part of your question, you mentioned looking at new markets. We don't really see that Mexico would have any particular additional CapEx requirement than most markets. When you look at Saudi Arabia, you have a schedule G requirement. When you look at ADNOC you have something that resembles a Schedule G requirement that would go over and above the CapEx requirement that you would have, just to put a rig to work. But in Mexico, we don't really see that. I think that was the second part of your question.

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Victoria McCulloch, RBC Capital Markets, LLC, Research Division - Analyst [19]

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And if I could just follow-on from that. And are these, I guess, we're hearing of tenders coming up in Mexico. Is this something you're looking at? Is this something that you think you've got the right fleet that could, at some point, some of your rigs could be marketed into this market?

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [20]

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Yes, we're looking at it. And if it makes -- we're not particularly interested in the turnkey projects. We think those projects carry too much inherent risk. But on a normal dayrate contract with either directly with Pemex or directly with some of the international operators in Mexico, yes, we're interested in that market. We think that's a good market. On those turnkey projects, you're working for a thinly capitalized organization and you're taking turnkey risk. You're not working directly for Pemex. So that's not something that we're particularly interested.

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Operator [21]

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(Operator Instructions) And the next question comes from the line of Rumen from ICE Canyon.

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Rumen Ivanov;ICE Canyon LLC, [22]

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I wanted to clarify a little bit the comment about the $60 million, $70 million of rig preparation costs for the Journey and Achiever rigs. Is that all included in kind of like around the $100 million of CapEx guidance this year? Or how should we think about that?

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Greg O’Brien, Shelf Drilling, Ltd. - Executive VP & CFO [23]

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No, Rumen. So that number was for the second half of 2019. It includes 3 rigs, so the Scepter and then the 2 rigs from China Merchants. As we said previously, a round number is kind of $25 million. To put one of those newbuilds into service, when you factor in the mobilization, purchasing, owner furnished equipment, it's theirs, et cetera. So it's about $25 million. There's additional costs, as David mentioned, for Aramco. So I think that's a little bit higher for the rig that's going into -- to Saudi. We started spending a little bit of that money in Q2, but most of it's weighted to the second half of the year. The Scepter, now that we've secured a contract, there is some additional contract prep with Chevron in Thailand, that we have to physically move the rig from Bahrain to Thailand. We're doing some upgrades to the rig. We're expanding the accommodation capacity on the unit, we're adding some crane capacity. We've talked a lot in the past about the capabilities of our 2 existing rigs in Thailand that we're largely replicating that set to be able to do offline operations, so there is some additional cost on the Scepter that we wouldn't have incurred for other contracts. We think that puts this rig in a very good position long term. So $60 million to $70 million is the combined figure across those 3 units second half of 2019.

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Rumen Ivanov;ICE Canyon LLC, [24]

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And this is all capitalized -- on large cash flow?

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Greg O’Brien, Shelf Drilling, Ltd. - Executive VP & CFO [25]

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On the 2 rigs for -- yes. For the Achiever and Journey, the answer is yes. On the Scepter, not entirely, because it's not a granted rig. A portion of those costs will be contract prep, major overall for a little bit of expense, some small percentage that will be expensed, but the overwhelming majority will be deferred on the balance sheet. Mostly CapEx, that's right.

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Rumen Ivanov;ICE Canyon LLC, [26]

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Okay. That's helpful. And given the improvement in utilization levels, the kind of the lower levels of competition that you're observing. Can you kind of give us in broad strokes, some commentary about dayrates, where do you see dayrates coming, perhaps in some of the markets where you participate, the Middle East, West Africa, East Asia?

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [27]

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Yes. Okay. So if we go back a little bit in time, in the Middle East, we had a dayrate range probably from the low end $40,000 to $60,000 a day for a premium jack-up. And I'd say today, we're more in the range of $70,000 to $90,000, which is a significant step-up. I mean, in -- we all know what the -- because it's fully disclosed, the dayrates in India are now in the low 40s. They were in the mid-20s. And that included premium jack-ups and standard jack-ups. And if you look at West Africa, it's similar to the Middle East, except it didn't dip as low as the Middle East. The dayrate range in West Africa was typically in 60s to 70s, and it's probably stepped up, it stepped up now to 70s to mid-80s. So that gives you a kind of a little bit of color. As far East Asia, we saw the same dynamic, you had rigs were as low as 40s to 50s. And now are 75 to 85. So it gives you a little bit of color as to -- there's been a pretty significant step-up in dayrates.

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Operator [28]

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And your next question comes from the line of Amit from Franklin Templeton.

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Unidentified Analyst, [29]

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You mentioned that you're still looking for opportunities in the market in terms -- like looking at rigs that are available at good rates. So my question is, how do you intend to finance that? Is there of leverage policy in place? Like how would you look at financing these rigs?

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [30]

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Yes. Look, I mean, we're obviously looking at everything and anything. And when the purchase price makes a lot of sense, it's -- in my mind, it's got to be fairly compelling. We'll find ways, create ways to look at this. Right. It might be -- we look at it in an off-balance sheet way where maybe somebody else comes in and acquires the assets or -- we're pretty much open to anything. What we're not going to do is lever up our balance sheet and add a whole lot more debt. And we're not going to raise equity at the sort of levels we're at today. So if you're concerned that we're going to come out to the market and raise some equity at our -- where we're trading today, we're absolutely not going to do that. And we're not going to lever up our balance sheet. So it has to be a fairly creative type of financing vehicle that we could do it in an off-balance sheet type way.

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Operator [31]

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We don't have any further questions as of the moment. Please continue.

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David J. Mullen, Shelf Drilling, Ltd. - CEO & Director [32]

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That's fine. We can draw a conclusion to this. Before we do, let me apologize for the technical glitch, I'm not really sure what happened, but the line dropped from where we were sitting and apologies that we kept everybody waiting for that period of time. But once again, thank you all for joining this call, and we look forward to talking to you for our next earnings call. Thank you very much.

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Operator [33]

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Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may now disconnect.