Good day, and welcome to the Valaris First Quarter 2022 Earnings Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Tim Richardson, Director of Investor Relations. Please go ahead.

Welcome, everyone, to the Valaris First Quarter 2022 Conference Call. With me today are President and CEO, Anton Dibowitz, Interim CFO and Vice President, Investor Relations and Treasurer, Darin Gibbins and other members of our executive management team. We issued our press release, which is available on our website at valaris.com. Any comments we make today about expectations are forward-looking statements and are subject to risks and uncertainties. Many factors could cause actual results to differ materially from our expectations. Please refer to our press release and SEC filings on our website that define forward-looking statements and list risk factors and other events that could impact future results. Also, please note that the company undertakes no duty to update forward-looking statements. During this call, we will refer to GAAP and non-GAAP financial measures. Please see the press release on our website for additional information and required reconciliations. As a reminder, yesterday, we issued our most recent fleet status report, which provides details on contracts across our rig fleet. An updated investor presentation and ARO drilling presentation will be available on our website after the call. Now I'll turn the call over to Anton Dibowitz, President and CEO.

Thanks, Tim. Good morning and afternoon to everyone, and thank you for your interest in Valaris. During today's call, I will start by providing an overview of our operational and financial performance during the quarter. Next, I'll provide some commentary on the current state of the offshore drilling market and discuss how we're managing our fleet and our business to maximize shareholder value. Finally, I'll provide an update on ARO Drilling, our 50-50 joint venture with Audi Aramco. After that, I'll hand the call over to Darren to discuss our financial results and 2022 guidance. The heart of our business and our primary focus every day is on delivering safe, reliable and efficient operations to our customers. We celebrated a few notable safety milestones during the quarter, with 3 rigs achieving 3 years without a recordable incident and another 2 rigs reaching this milestone since quarter end. We also recognize that the recent IADC North Sea Chapter Safety Awards receiving the Best Safety Performance Award for jackups in 2021. Winning this award was particularly gratifying considering some of the additional challenges faced last year, including rig reactivations and the impact of the pandemic. On the operations efficiency side, I'd like to thank the Valaris team for continuing to deliver the strong performance that our customers have come to expect from us, achieving 99% revenue efficiency during the quarter. This is a fantastic effort and continues our excellent operational track record, having achieved more than 98% revenue efficiency over the course of 2021. These results are the product of our dedicated offshore crews robust systems and processes and a culture that is underpinned by our values, including safety and excellence. We are committed to maintaining these high levels of performance. And to this end, we continue to develop and implement additional…

Thanks, Anton, and good morning and afternoon to everyone. In my prepared remarks today, I will provide an overview of first quarter results, our outlook for the second quarter and updated guidance for full year 2022. In addition, I will briefly review our financial position and capital structure. I would also highlight our first quarter results press release, which includes a trailing 5-quarter analysis for the income statement, balance sheet and cash flows as well as various supplemental data. Additionally, we published an updated fleet status report yesterday and have begun disclosing individual contracts, day rates and other forms of compensation. We will continue to publish dayrate and other compensation information for all contracts and contract extensions on a go-forward basis, so long as our contract with the customer allows it. As Anton mentioned earlier, we are currently in a transitional period while we incur onetime reactivation costs to return 3 drillships and 1 semisubmersible to the active fleet. We anticipate that financial results will improve meaningfully as we complete these reactivations with these 4 contracts expected to contribute a combined annualized EBITDA of more than $100 million. Now that we are further along in the reactivation process of our 4 floaters, we estimate that reactivation costs will average $40 million to $45 million per rig, while future floater reactivations will likely be higher than that range. However, given the improving market and lack of available supply, we are now asking customers to reimburse a portion of the reactivation costs for future projects, which we expect will more than offset the increased reactivation costs. The floater market has improved significantly since these contracts were negotiated, and we are well positioned to benefit due to our 3 remaining uncontracted drillships, Valaris DS-7, DSA and DS-7. As Anton mentioned earlier, we are…

[Operator Instructions]. Our first question comes from Greg Lewis with BTIG.

Congratulations on those rig sales. I mean, I feel like that's finding like money in your pocket. In light of that, you mentioned your $550 million piece of debt that you have out. And clearly, that's obviously well-funded trading above par. As we think about that $120 million extra money and who knows maybe there's opportunities to monetize other assets maybe that we thought might not have been working when you came out of restructuring a couple of quarters ago. Is there an ability to kind of -- or are there any penalties associated with maybe trying to retire some of that debt early?

Yes, Greg, thanks for the question. I'd say on the $125 million, obviously, the indenture has kind of your typical reinvestment rights. As we think about our cash balance and liquidity position, we still do have 11 stacked rigs that we can bring back to market. And obviously, if we do so, if there's opportunities to do so that makes sense, that's going to take some investment in order to do that. Our note does have a non-call period as well. We do have an ability if we wanted to, to buy back notes in the open market, but it does have a non-call period that ends in -- I think it'd be end of April of next year. And then it has kind of a difficult step number. So I think we'll -- we like the liquidity position we have, but we also, today, still have some potential investment that could earn meaningful returns in our stacked fleet. So we'll just have to kind of see what makes sense as -- and how the market continues to unfold.

Yes, yes, no doubt. And clearly, it seems like there's an increasing demand by the day. I did want to touch on Brazil. You mentioned it in your prepared comments. Clearly, Petrobras is in the market. We can debate how many are new, incremental, how many are resets. But I did want to ask you more around the IOCs in Brazil Clearly, you have 1 rig with an that comes up for rolls off contract later this year. I guess it's a 2-part question. One is, as you look out ahead to 23%, if you could kind of maybe talk a little bit about the interest from non-Brazil or, say, what the IOC appetite for rigs in Brazil might look like as well as given that, that rig is already in country, maybe if you could walk us through some of the dynamics and the costs associated with bringing a rig that maybe is outside of Brazil and maybe that financial benefit of already been in-country? Maybe a little bit of color on what that looks like.

Greg, this is Anton. Yes, it's a really good question. Obviously, what we're seeing now in Brazil is, you would say, maybe the best of both worlds, which is a strong interest from the IOCs that are down there to continue what they're doing. And even to extend their presence and grow their presence in Brazil, along with Petrobras, which is publicly stated, wanting to double production by 2030, and you've seen that 8 rig tend to come out. there are some rigs that need to roll over, but we definitely see some incremental demand as part of that tender. So getting an increase in demand in Brazil and expect it to carry on that way going forward, obviously, more so from the Petrobras side, but also from the IOC side, which is really good for the market. Petrobras in Brazil have some very specific Petrobras, in particular, some very specific specification requirements. So it does take some capital expenditure to get a rig into that market. once you're there and you're an incumbent and you have a rig in country. It obviously gives you quite a significant marketing advantage to carry on there. It's one of the reasons why we're very focused on taking the DS-4 down there last year. Having a critical mass, one of our strategies is to be focused on priority basins and having a critical mass of rigs in the country that we can grow our position from was one of our focuses last year and we're doing that, and we'll seek to increase that presence as we go forward.

[Operator Instructions]. This concludes our question-and-answer session. I would like to turn the conference back over to Tim Richardson for any closing remarks.

Thanks, Sara, and thank you to everyone on the call for your interest in Valaris. We look forward to speaking with you again when we report our second quarter results. Have a good day.

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