Good day and welcome to the Seadrill Limited Q3 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Emma Li, Head of Investor Relations. Please go ahead.

Thank you and welcome to Seadrill Limited Q3 2019 quarterly conference call. Before we get started, I’d like to remind everyone that much of the discussion today will not be based on historical facts, but rather consist of forward-looking statements that are subject to uncertainty. Included in Page 2 of the presentation is a comprehensive list covering forward-looking statements. For additional information and to view our SEC filings, please visit our website at www.seadrill.com. Moving onto the agenda, with us in the room today are Anton Dibowitz, our CEO; Stuart Jackson, our CFO; Matt Lyne, our Chief Commercial Officer, and Leif Nelson, our Chief Operating Officer. In our prepared remarks, you’ll hear from Anton and Stuart. Anton will cover all the highlights for the quarter and provide you with our views on the market outlook, and Stuart will then provide a review of the financial performance of the quarter and then we’ll open up the lines so we can take some questions from the entire team. With that, I’d like to turn the call over to Anton.

Thanks Emma, and welcome everyone to our third quarter 2019 earnings call. Before we go into the quarterly results, I would like to open with some comments regarding recent Board changes, the overall state of the industry, the market, and some of the things we are doing here at Seadrill. As you’ve all seen, this morning we announced some Board changes with Glen Ole Rødland succeeding John Fredriksen as Chairman; and Gunnar Eliassen replacing Harald Thorstein. I would like to thank Harald for his dedicated service to Seadrill and welcome Gunnar to the Board. I would also like to thank John for his leadership of the Board to date. As his successor, Glen brings with him a wealth of experience. I already had a close dialog with Glen, and he is a welcome addition to the team. This is the best of both worlds, for us as a company and [indiscernible] personally. We’ve added a seasoned industry veteran as the Chairman of the Board that will continue to benefit from the insight and perspective of John going forward. John may no longer be Chairman, but our close working relationship continues. As an industry, the disconnect between improving fundamentals and falling security prices is highly apparent. We remain focused on the things that we can control, but we cannot turn a blind eye to what the market is telling us and the state of the industry more generally. The good news, which I will talk about in a moment, is that we continue to see signs of a recovery in the market. The bad news is that it is quite clear that this recovery is taking longer than anyone expected. After the worst downturn in 25 years, the recovery has not met the expectations of many, including ourselves. On top of…

Thank you, Anton and I will draw your attention to Page 7. I will take you through the key drivers for our results for the third quarter. It's been a relatively quiet quarter from an operational perspective, economic utilization was 93%. As Anton has mentioned, that was slightly lower than we anticipated because of the West line has been out on the 5-year classification. The largest elements of change in relation to both the revenue and EBITDA is the reimbursable. These are costs that we incur on behalf of other parties and then recharge to those parties. We are incurring costs for Sonadrill and the northern drilling and preparing their rigs to go the market. From a revenue perspective, for the quarter, we're at $367 million compared to $320 million in Q2 as well as the [indiscernible] impacts, we’ve had higher operating days during the quarter, which has contributed the revenue. At an EBITDA level, we are at $85 million compared to $69 million in Q2, as well as having the higher operating days, we obviously had some higher associated costs attached to those, but we’ve also benefited in the quarter by a resolution of the Sevan Louisiana loss of higher insurance claim. In relation to the guidance for the fourth quarter, we expect our adjusted EBITDA to be approximately $40 million. This is showing a further completion of legacy contracts as well as the West Saturn coming off contract. Turning then to Slide 8, which is our results from associated companies. Our operating nonconsolidated entities, which are Seadrill Partners, SeaMex, Archer and Seabras are achieving good utilization levels as well as generating reasonable EBITDA. The two new joint ventures, Sonadrill and Gulfdrill are establishing their operations. And post quarter end, the Libongos became operational in Angola. However, net profit…

[Operator Instructions] Our first question comes from Patrick Fitzgerald with Baird. Please go ahead.

Hi, guys. What's going to happen with the $416 million sellers note that’s due to you guys in December of this year from SeaMex -- at SeaMex, I should say.

Yes. The SeaMex sellers credit, although coming to you at the end of the year is subordinated behind the bank debt.

Okay. So, I guess you just extend it?

Correct. It's automatically extended, and we will continue and then ultimately sits behind the bank debt.

Okay. Is there -- you had highlighted earlier this year that you had -- were seeking to try to monetize the assets that you could in terms of SeaMex and Seabras Sapuras. Is there just no market out there to refinance some of the debt on those entities despite the fact that they’re performing very well from a cash flow perspective or what’s the situation there?

So, I'm not sure I would characterize it that way. I mean, we have a number of levers available, and that is one of them. SeaMex sellers credit obviously and Sapura, the JV. It's about the right time and the right place to get value for it, so we continue to look at options in that regard, and I don't think we are going to get into more details on that on the call.

Okay. Footnote 8 of the fleet status report talks about the potential discount in day rates at SeaMex. Could you discuss what that means?

Yes. I mean, we’ve had a long operating history with Pemex throughout SeaMex joint venture. It's a solid market with long-term contracts. We have had these discussions from time-to-time on an ongoing basis, and we will continue to. Right now, the contractual right is for the rates to take a step up, but we're currently engaged in a discussion with Pemex about the go forward on these contracts. We’ve had a number of discussions. They’re very productive, but nothing is concluded yet, so I think we will just have to see how those play out. We do have quite a good history of finding mutually beneficial agreements with our customers whether they be blending extend or working with our customers. So, we just cannot see how that plays out.

Great. Thanks for the color. And the -- on the new contract for the Topazio, is that at a day rate near where those have been contracted before, or -- any color on that would be helpful.

I think it's fair to say that the market is in a different place to 5, 6 years ago when pretty much any vessel or rig was originally contracted, but I will say it's a solid contract and it's a good contract for that vessel to have.

All right. Thanks a lot. I will jump back in queue.

Thanks.

[Operator Instructions] Our next question comes from Lukas Daul with ABG. Please go ahead.

Thank you. Good afternoon, gentlemen.

Hi, Lukas.

Looking at your floaters that are available in 2020, Jupiter, Saturn, and Louisiana and Carina becoming available, can you just quickly talk about the marketing opportunities you see for those rigs as we speak?

Sure. So, hi, Lukas. So, we will start with Saturn. She is currently located in Trinidad and completing her current 5-year survey. We are in discussions. I will call them advanced with the potential opportunity that should commence in mid 2020. We will look for some short-term work in the event she is ready to go before hand. And I hope I can give you guys some more color on that in the near future. With respect to the Jupiter, that rig is still working in Nigeria. We expect it soon to conclude its program with Total. We are marketing it internationally. There are some attractive opportunities in West Africa that would obviously be a perfect fit. It's a balance between term and timing. So, there may be some gap there that we need to fill with some short-term opportunities. Finally, for the Capricorn, which is Seadrill Partners, we will probably leave that one to discuss for them on their call. But for the Louisiana, we are continuing to dialogue with a number of the customers that we've worked with. There is an interest given that rig’s unique capability to work in shallow water, in DP mode, which provides some cost savings for the operator, and we're confident we'll see continued interest through 2020. I wouldn't signal that it's going to be a long-term contract, but there will be some future spot work for that rig.

I will say, overall, Lukas, I mean we always try to balance. One of the benefits of scale and having size is managing the benefits of short-term versus long-term opportunities and that’s something we always have to weigh up against each other. What we don’t want to do is take a short-term opportunity that puts us out of the running timing wise for a longer term, more attractive opportunity in another market. So, I think what you will see is a focus for some of these rigs on longer term opportunities. And as Matt said, we need to fill in on the front-end to fill the gap, but we do expect to see some additional fixtures in the fourth quarter.

Okay. So with that kind of outlook, let's say being in discussions on all of those rigs, what would be the next two rigs, one or two rigs that you would be looking to reactivate because you don't really have that much near-term availability besides those four?

I think I’ve been public before. I think that the -- probably the first candidates you'll see for reactivation, may be some of our high specification jack ups as we move into 2020. We -- as I said in my opening comments, the good news side of the story is the recovered market and we can clearly see the trends in the contango in the benign deepwater market. But the costs involved in reactivating deepwater rigs, especially when you consider that most of these rigs both need a reactivation process as well as an SPS to be performed. I don't think as an industry the rates are at a level quite yet where it's a sensible capital decision. I think we’re heading that direction. But we are not quite there yet, but let's just see how the market plays out in the next little while.

Okay. Thanks for the color.

Our next question comes from Ben Fader-Rattner with Canyon Capital. Please go ahead.

Hi. Could you disclose what the clean day rate would be on the West Carina?

Hey, Ben. Look, we are working with our customers to get them on board with disclosing day rates on our fleet status. I think you'll notice that it's more populated than it's been before. But there is a sensitivity around it for each and every reason that an operator has and everybody is different. So at this time, that's not something I can comment on. But I will say, if you look at the -- some of the banks and the brokers and the analysts reports that have come out regarding the day rates, you can probably triangulate from there. Those folks are pretty smart when it comes to those numbers. So I think the numbers that are out there are fairly accurate.

Great. That’s all I had. Thanks.

Thanks.

This concludes our question-and-answer session. I would like to turn the conference back over to Emma Li for any closing remarks.

Thanks everyone for joining and that concludes our Q3 conference call.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.