Noble Corp Q3 2026 Earnings Call Transcript
Noble Corp (NYSE:NE) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Noble Corp reported third-quarter 2026 adjusted EBITDA of $201 million and negative free cash flow of $48 million due to rig transitions between contracts.
The company secured new contract awards totaling approximately $560 million, with significant projects in Nigeria, Ghana, and other regions, raising its backlog to $6.7 billion.
Noble Corp narrowed its full-year 2026 revenue guidance to between $2.85 and $2.9 billion and adjusted EBITDA to between $850 and $900 million.
The deepwater market shows strong utilization, with 99% contracted rigs, signaling potential future tightness in supply, but the U.S. Gulf remains a soft spot.
Noble Corp continues to invest in fleet enhancements, notably in the Klaus Bachmann rig, and expects increased EBITDA and free cash flow as upgraded rigs enter service.
Full Transcript
Lacey (Conference Operator)
Hello and thank you for standing by. My name is Lacey, and I will be your conference operator today. At this time, I would like to welcome everyone to Noble Corp third quarter 2026 earnings call and webcast. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question, press star one again. Please remember to keep your questions to one question and one follow-up, please. Thank you. I would now like to turn the call over to Ian McPherson. Please go ahead.
Ian McPherson (Investor Relations)
Thank you, operator. And welcome everyone to Noble Corp’s third quarter 2026 earnings conference call. You can find a copy of our earnings report, along with the supporting statements and schedules, on our website at noblecorp.com. We will reference an earnings presentation as well that’s posted on the investor relations page of our website. Today’s call will feature prepared remarks from our President and CEO, Robert Eifler, as well as our Chief Financial Officer, Richard Barker.
We also have with us Blake Denton, Senior Vice President of Marketing and Contracts, and Joey Kawaja, Senior Vice President of Operations. During this call, we may make certain forward-looking statements regarding various matters related to our business and companies that are not historical facts. Such statements are based upon current expectations and assumptions of management and are therefore subject to certain risks and uncertainties. Several factors could cause actual results to differ materially from these forward-looking statements, including those described in our earnings release and in our most recent annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC.
Noble does not assume any obligation to update these statements. Also note we are referencing non-GAAP financial measures on the call today. You can find the required supplemental disclosure for these measures, including the most directly comparable GAAP measure and associated reconciliation, in our earnings report issued yesterday, furnished to the SEC, and posted to our website. Now I’ll turn the call over to Robert Eifler, President and CEO of Noble.
Robert Eifler (President & Chief Executive Officer)
Thanks, Ian. Welcome everyone and thank you for joining us. I’ll open today’s call with a brief summary of our third quarter highlights and recent contract awards, followed by an update on the market. Richard will then cover the financials before I wrap up with closing remarks and move to Q&A. During the third quarter we earned adjusted EBITDA of $201 million with free cash flow of negative $48 million. We again distributed our 50 cent quarterly dividend, and yesterday our Board declared a 50 cent per share dividend for the fourth quarter, maintaining our consistent return of capital program. The 5% sequential decrease in adjusted EBITDA resulted from a number of rigs transitioning between contracts, including the Black Rhino, Discoverer Venturer, and Globetrotter 1, each of which had fewer days on contract in Q3 compared to Q2.
These were partially offset by the resumed operation of our two rigs in Brazil in July, as well as the Jerry D’Souza’s contract startup in August. Additionally, the Voyager commenced its four-year contract with Shell in the U.S. Gulf in late September. Final commissioning and weather delays resulted in a few weeks later start than planned for this contract, but we are excited to now be underway with the Voyager. Next in our major project startup queue, we are looking forward to the Valiant and Discoverer scheduled commencement right around the end of this year on their long-term development campaign for TotalEnergies in Suriname.
Over the past three months we have secured new contract awards totaling approximately $560 million. First, the Noble Black Rhino has been awarded a four-well contract with TotalEnergies in Nigeria expected to commence within the next few weeks. This program has an estimated duration of 150 days and includes options for up to six additional wells. Next, I’m pleased to announce that the Noble Faye Kozack was awarded a five-well contract with Tullow in Ghana scheduled to commence in mid 2027 with an estimated duration of approximately 250 days.
Also, the sixth-generation drillship Noble Globetrotter 1 has been awarded a contract with TotalEnergies for light well intervention services under a three-year capacity reservation agreement, with the first scope of work scheduled to commence in Angola in Q3 or Q4 next year. However, prior to this, the rig is scheduled for a recently awarded two-well exploration campaign with Occidental in Peru commencing in Q2 2027, which leverages the Globetrotter’s unique capability to transit through the Panama Canal in order to access this remote drilling location.
Continuing with frontier exploration in South America, the Noble Black Hawk has been awarded a one-well contract with Apache in Uruguay, and that’s expected to commence in Q4 2027 with an estimated duration of 50 days and a contract value of approximately $25 million, plus additional fees for mobilization and demobilization. This contract value does not include MPD or any other additional services. As the Black Hawk is winding down its current work in the U.S. Gulf, we are continuing to pursue promising leads for additional work for the rig next year prior to the Uruguay move.
Switching over to Norway, the Noble Interceptor has been awarded a one-well contract with DNO that’s expected to commence in mid-2027 with an estimated duration of 50 to 90 days. Upon completion of this campaign, the rig is scheduled to commence its P&A program of ConocoPhillips at the Ekofisk field in the third quarter of 2027 with an estimated duration of 670 days. And finally, the Noble Intrepid was awarded a one-well contract with Orlen that is expected to commence in Q3 2027 with estimated duration of 40 to 60 days.
With these awards, our current backlog stands at $6.7 billion. Now zooming out for a moment to the broader market. Recent trends across both the deepwater and harsh environment sectors are continuing to gain nice momentum. Deepwater contracting activity, which started out the year gangbusters but then hit a quiet patch between May and July, has recently reaccelerated over the past few months with a spate of recent fixtures confirming day rate recovery for high-end drillships in the mid-400s up to $500,000 per day, as current utilization, but to a greater extent anticipated 2027 utilization, continues to firm up.
Today, 109 out of 110 marketed UDW rigs are contracted currently or in the future, putting contracted utilization at 99%. This eclipses the 2024 high watermark of 105 contracted rigs. Meanwhile, current working utilization of 88 rigs is still 10 units shy of the 2024 peak. However, we’ve reached a point now where the number of pending contract startups for currently idle rigs modestly exceeds the number of contract rollovers over the next six months or so.
This creates a fulcrum for the active rig count to potentially expand over the next few quarters as additional contracts are executed. So the deepwater market is firming up, consistent with what we’ve been anticipating for a while now. And this is despite the fact that we really haven’t seen any real demand response so far this year resulting from higher commodity prices. On the contrary, the U.S. Gulf, which has historically been one of the more demand-elastic markets through commodity cycles, has been a noted soft spot amidst an otherwise robust global market throughout this year, having now retreated from a low 20s rig count in recent years to a mid-teens market presently. We do expect to see some improvement in the Gulf next year based on current customer dialogue. However, the departure of a few drillships to other regions could likely create upward day rate pressure in order to drive capacity back into the Gulf.
Perhaps similar to recent dynamics in the harsh semi market, which in recent years has seen Norway rig count dip from the high teens down to the mid teens and now back up to the high teens, with strengthening Norway day rates accompanying the migration of capacity back into that region. And speaking of Norway, I would further add that the Norwegian jack-up market is also developing into a bright spot for Noble. With our recent contract awards, we now have four of our five CJ70 jack-ups contracted in Norway for the first time, which is very promising improvement, with leading-edge day rates ranging between $230,000 to $300,000 depending on work mode and contract duration. Currently, the Noble Innovator, the older unit among our five CJ70s, remains uncontracted, but we’re optimistic about contracting that rig fairly soon in the southern North Sea where day rates are structurally lower.
But nonetheless, this gives us a clear shot at approaching effectively full utilization for our jack-ups in 2027. Now I’ll pass the call over to Richard for the financial review.
Richard Barker (Chief Financial Officer)
Thank you, Robert, and good morning or good afternoon all. In my prepared remarks today, I will briefly review the highlights of our third quarter and then discuss the outlook for the fourth quarter of 2026. Starting with our quarterly results, total revenue for the third quarter totaled $684 million. Adjusted EBITDA was $201 million and adjusted EBITDA margin was 28%. Q3 cash flow from operations was $144 million, capital expenditures were $192 million and free cash flow was negative $48 million. On October 9, the sale of the Noble Resolve was finalized with the company receiving the remaining $45 million of proceeds. Further, the sale of the Noble Globetrotter II is expected to close in the fourth quarter of 2026 for a purchase price of $38 million.
As summarized on page five of the earnings presentation slides, our total backlog as of October 26th stands at $6.7 billion. As a reminder, our backlog excludes reimbursable revenue as well as revenue from ancillary services. Our current backlog includes approximately 2.6 billion that is scheduled for revenue conversion in 2027. Referring to page nine of the earnings presentation, we have narrowed our full year 2026 guidance for total revenue to between 2.85 and 2.9 billion, compared with 2.8 and 2.9 billion previously, and adjusted EBITDA to between 850 and 900 million, compared with 850 million and 925 million previously. As we expect Q4 to be slightly lower compared to Q3, revenue was narrowed around the high end of the previous range, driven by higher reimbursable revenue than previously expected, while adjusted EBITDA was narrowed around the lower end, driven primarily by slightly later starts for the Voyager and the Barrier.
Additionally, capital expenditure guidance for this year has been increased to 680 to 705 million compared with 615 to 665 million previously, with the increase primarily attributable to higher customer reimbursable capital expenditures, which is now expected to total roughly 65 million for this year as compared to 25 million previously. If you exclude this 14 million increase in reimbursables, our capital expenditures guidance would have otherwise remained within the priority range.
Looking ahead, while we plan to provide formal guidance for 2027 on next quarter’s earnings call, I would like to share the following directional indicators. In the first quarter of 2027, adjusted EBITDA is expected to be broadly similar to Q4 2026. We then expect adjusted EBITDA to build meaningfully higher each quarter as we progress through the year, supported by the build up in our contract coverage. With already approximately 20% more capacity under contract in the second half of the year compared to the first half, this is a noteworthy contrast with recent years in terms of the general slope of our contract coverage for the following year.
And as Robert referenced, there are several opportunities we are actively chasing that start around the middle of the year that would build on top of this already existing contracted step up. With that, I’ll now pass it back to Robert for concluding remarks.
Robert Eifler (President & Chief Executive Officer)
Thanks, Richard. To wrap up, we’re excited about both the direction of the market as well as Noble’s positioning as we ramp into some pretty meaningful contract startups over the coming quarters. The gathering drumbeat of exploration and reserve replacement imperatives facing resource holders, combined with a forward oil price curve that has been melting higher through the end of the decade, have the potential to drive meaningfully tighter market conditions ahead.
And specifically based on the robust portfolio of contract opportunities in front of us today, it’s not hard to draw a straight line to a fully sold out market for high end deepwater rigs within the next year or so. Even under a more moderate demand scenario. However, we believe Noble is exceptionally well positioned to execute our playbook, generate durable free cash flow, and deliver substantial returns of capital to shareholders through cycle.
The backlog that we’ve secured since last year provides a clear line of sight to a significant cash flow inflection as we move through 2027 with, as Richard just highlighted, approximately 20% more contracted fleet capacity already secured in the second half of 2027 versus the first half of the year. And of course we will have some opportunity to build on this. This dynamic in particular is clearly supportive of an improving outlook, especially when contrasted against comparable measurements in recent years when the deepwater outlook has been burdened by significant white space problems.
For example, 12 months ago our H2 2026 days under contract were 5% shy of H1 2026. And 24 months ago, when we were in the relatively early days of the emerging downdraft in the market, our contract coverage in the second half of 2025 was at that time actually 33% below H1 2025. So today’s situation does indeed represent a very pronounced upturn in the shape of our backlog heading into 2027. And with that as a launch point, we’re increasingly excited about the opportunity set in front of us.
Operator, we’re ready to go to questions.
Lacey (Conference Operator)
At this time, I would like to remind everyone, in order to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Aaron Jiram from JP Morgan. Please go ahead.
Aaron Jiram (Analyst at JP Morgan)
Hey Robert and team, I was wondering if you could comment a little bit on kind of changes you’ve seen in the overall market since last quarter and you gave your semiannual review of rig demand. We have noted that the contracted rig count has moved up by about five rigs. I think last quarter was about 104 and now you’re at 109. Maybe just comment on what you’re seeing that’s evolved over the last, call it, 90 days and maybe add a little bit of regional color as well.
Appreciate that.
Robert Eifler (President & Chief Executive Officer)
Sure. Good morning and thanks for the question. Yeah, you know, we noted in the prepared remarks that we were in a bit of a doldrum over the summer months on fixtures and you’ve referenced those that are known where we’re up a handful of rigs on total demand rig count. What I would say is beyond that we see now, I think, two to three opportunities in the U.S. Gulf that are somewhat closer to firm than we saw 90 days ago, which is obviously extremely helpful.
And we see everything moving forward as planned through Caricom and West Africa. And then I would also note probably the other most notable change is we’re feeling very good about demand emerging in India. So if you recall there was some excitement there and then some tenders were postponed and since that time it appears obvious to us that, I don’t know, anywhere from two, but probably something closer to four good drillships are going to be needed in India starting in late ’27 and ’28.
I think those are probably the most bullish changes that we’ve seen in the last 90 days are U.S. and India.
Aaron Jiram (Analyst at JP Morgan)
Great. And my follow-up, Robert. We’re still in the early innings of the OFS earnings season, but one of the themes that SLB highlighted on their call is just this renewed interest in exploration. And we did note in your updated fleet status report some opportunities in Peru and Uruguay. So I was wondering if you could just comment on general trends you’re seeing in exploration over the next 12 to 18 months and maybe part and parcel with that. Are you seeing opportunities for chunkier development opportunities which could have a little bit of a longer term duration to those versus some of the exploration opportunities that tend to be, you know, a couple wells here or there?
Robert Eifler (President & Chief Executive Officer)
Yeah. So I think if you just walk back through just a tiny history of exploration, I think it was around three years ago where we started seeing our customers start to talk a little bit more about reserve replacement. And then in the last 18 months or so we started to see some real movement among our customers and increased narratives specifically in exploration. There have been some, I guess, public commitments by our customers and statements around a return to exploration in various different regions. 2027 has been cited as a year where we would perhaps see an uptick in some of the, call it, wildcat exploration, which I think is where you really want to be looking right now. And so I would agree completely with what SLB said. The only thing I would say is in terms of what has hit our business, you’ve seen the couple you referenced on our fleet status. It’s not a needle mover, I don’t think, for our business. From where we sit today, we’re very hopeful that as our customers exit budget season with really good cash flow during 2026, that we might actually see some more evidence of wildcat exploration in 2027.
And then you asked about development. This cycle’s been, I don’t know if it’s been reversed, but most of what’s driven the demand heretofore has been development projects. So it’s like a lot of things that had been delayed in years past are now starting up. That’s what’s driving, I think, the global uptick that we see in late and have referenced in late ’27, and so included in a lot of that. I think the exploration we’ve seen over the last couple of years has all been in-field exploration.
And so we watch that closely; the percentage of our wells that’s in-field exploration has stayed relatively flat over the last few years. And so we’re, like you, really watching some more wildcat type exploration closely and we’re hopeful that that starts to define the next phase in this uptick that we’ve been calling for here. But I think ’27 is when we might get a little bit more clarity there.
Aaron Jiram (Analyst at JP Morgan)
Thanks a lot, team.
Lacey (Conference Operator)
Your next question comes from the line of Frederick Steen with Clarkson Securities. Please go ahead.
Frederick Steen (Analyst at Clarkson Securities)
Hey Robert and team, thank you for taking my question. I would argue that you provided a relatively strong contracting update today with rates being supportive on most of these contracts. Particularly happy to read and hear your commentary about the jackups which have been lagging a bit, with leading-edge rates now being stronger. But I wanted to, you know, with rates being in a good place, I wanted to touch a bit on utilization maybe in the near to medium term for certain specific rigs.
You have some open capacity next year on the Stanley Lafosse, you have the Viking that has availability and obviously the Black Hawk, which you’ve now inked for a short term contract towards the latter part of 2027. If you feel free to give specifics. But if you were to take like a portfolio view of maybe the drillships in particular that have open capacity, what kind of utilization should we expect on those in those areas which are now, at least for now, uncovered?
Robert Eifler (President & Chief Executive Officer)
Yeah, Frederick, thanks. So the, all three of the, well, all of the rigs are competing. Well, they’re competing in slightly different markets. The Viking, I think, you know, it’s very likely to stay in Southeast Asia. We have a number of opportunities for that rig that would close some of the gap before its long-term contract. So, you know, I think it could perhaps get up to in the 50% type range on utilization next year. But, you know, as the fleet status shows, we need to win some work there.
And then I would lump the other rigs probably into more of a similar group. So I mentioned on the prepared remarks that we do have some work for the Black Hawk that we’re hopeful comes through, excuse me, prior to its transit down to Uruguay. And then there’s a fair amount of work following that. And so we think between the Hawk and the Black Rhino that there are a lot of opportunities towards the end of ’27 and ’28, most of which are for the long term.
So we’re pretty comfortable that we’re going to fill in some white space on those rigs. The Stanley Lafosse has work potential both in the U.S. and then outside the U.S., and I guess what I would say there is, if it were to go outside the U.S. that’s more likely to go back to work in late ’27, early ’28, that kind of timeframe. Yes. So on the CEA, I guess I’d kind of say what we always say, which is it tracks market extremely well. We set the latest rate about a month ago. That’ll start next year because we had one rate through all of ’26, and then we have a rate that will start in late ’27. We never disclose the rates. What I would say is that it was set right around a month ago, maybe just a bit more, and tracks the market very closely. And that’ll be a six-month rate starting on January 1st. And we just adjusted the timing on that this year, so we had one rate for all this year and then the next six-month rate starts January 1st. It’s just easier for everybody.
Over to the Globetrotter 1. Putting aside its exploration drilling well, the intervention project is three years long. It has a minimum of 150 days per year included in that. And then as most people listening probably know, the intervention market is just a little bit different than the drilling market. It’s planned on a much, much shorter cycle and it’s more of what I’d call—we call it call-out work—which, compared to our drilling work, it is effectively call-out work.
And so the way I would think about that program is that it’s roughly kind of breakeven at the minimum number of days per year, and then as call-out work fills in extra days, then we can earn some margin on top of that. We really like it. We think that rig is very well set up to kind of be that hybrid where it does intervention work but can also head to run some drilling wells where needed, as we’ve seen. And with a potential uptick in exploration and our belief for a long time that intervention is going to grow through time, we think this is a good contract for the rig, even if it’s not going to be a real needle mover for us from a free cash flow generation perspective.
Lacey (Conference Operator)
Thank you very much. Your next question comes from the line of Scott Gruber with Citigroup. Please go ahead.
Scott Gruber (Analyst at Citigroup)
Yes, good morning. I just wanted to follow up on the last line of questions. So, on Globetrotter, as you kind of cycle between working and not working, can you help us on the cost side of things? How should we think about cost while working and not working, and how you think about kind of managing those costs through the kind of on/off schedule?
Robert Eifler (President & Chief Executive Officer)
Yeah. So, you know, not working, we can get the costs well down, call it to about 50% of what a Tier 1 drillship might cost. And while it’s working, it’s only slightly higher than that, call it 60% of a working drillship, in that range. That’s in intervention mode. And so when I mentioned that sort of cash flow breakeven to moderately better than that, that’s assuming that full intervention cost load all the way through. So that’s, call it, 60% of the cost of a working Tier 1 rig.
Scott Gruber (Analyst at Citigroup)
Gotcha. And do you have much insight today in terms of the uptime extending beyond the 150 days annual commitment?
Robert Eifler (President & Chief Executive Officer)
We don’t right now. I mean, we’re hopeful that we can. I think I’m just going to throw out there, a great year we think would be to be able to double that number and keep it working kind of around 300 days. And then an average would probably be halfway in between 150 and 300. So, you know, just over 200—low 200s—per year.
Scott Gruber (Analyst at Citigroup)
Okay. Yeah, if I could just squeeze in one more too, on the Guyanese rates, those are measured against market rates. Correct. And is the measuring stick a global market rate or more regionalized to Latin America or the Americas?
Robert Eifler (President & Chief Executive Officer)
In total, it’s a global market rate for a Tier 1 drillship. Right. Not spot. Yeah. So, the way I would say it works in practice, which I love—the way this is set up is because it’s negotiated each round. And so, because fixtures are all so bespoke and almost every fixture has some sort of special story to it, all of that does go into consideration. So that kind of all gets thrown out on the table and negotiated. It’s not just a formulaic average of an Excel sheet’s printout. And frankly, that’s why I think it tracks the market so well.
Scott Gruber (Analyst at Citigroup)
Yep, gotcha. I appreciate that. I’ll turn it back.
Lacey (Conference Operator)
Thank you. Your next question comes from the line of Keith Beckman with Pickering Energy Partners. Please go ahead.
Keith Beckman (Analyst at Pickering Energy Partners)
Hey, good morning and thanks for taking my question. I just wanted to dig into the Gulf a little bit more around some of the comments you had earlier. I mean, are you seeing some of the smaller independent drillers in the Gulf worry about a lack of rig supply in the next years? We see, you know, potentially several longer-term programs in West Africa and Southeast Asia. And in that case, is that what potentially causes them to move some of these programs up from maybe what their expectations were before?
Just any commentary around that?
Robert Eifler (President & Chief Executive Officer)
What I would say is it is becoming increasingly obvious that supply could be an issue, I think, to our customers broadly, whether they’re small or large. Whether someone has brought a program forward out of that, I wish I could say yes, but I’m not sure that we’ve actually seen that.
Keith Beckman (Analyst at Pickering Energy Partners)
Okay, thank you. And then my second question is just around how customers are thinking about contract duration today. We’ve seen dayrates continue to tick up here a little bit over the last couple months. Are they looking to lock stuff up for potentially prices to rise further? Are they potentially pushing stuff off right now, thinking hopefully dayrates come back down? Just maybe recent customer conversations around that?
Robert Eifler (President & Chief Executive Officer)
Yeah, I would say just tracking over the last 90 days, that urgency has gone up, not down. But I would also say that we’re far from a market where there’s legitimate concern about not being able to drill a program because of supply. So whatever kind of middle ground that is, I think we’re starting to hear more comments about how it’s looking pretty tight going into 2028—the deepwater market’s looking pretty tight—but we’re still a ways away from the urgency we’ve seen in certain past cycles where it’s really driving duration decisions.
I think duration decisions are still largely driven by need.
Keith Beckman (Analyst at Pickering Energy Partners)
Okay, perfect. That’s really helpful. I really appreciate it. I’ll turn it back.
Robert Eifler (President & Chief Executive Officer)
Thanks, guys.
Lacey (Conference Operator)
Your next question comes from the line of Eddie Kim with Barclays. Please go ahead.
Eddie Kim (Analyst at Barclays)
Hi, good morning. So you mentioned that the deepwater market is firming up despite no demand uplift so far this year from higher commodity prices. Could you elaborate on that for us? Is it your view that the recent contracting increase we’ve seen would have happened even without the increase in oil prices, and that we should have seen more multi-year contracts announced by now, given the elevated level of oil prices? And if that’s the case, what do you think is the main reason that customers are sort of holding back at this point?
Robert Eifler (President & Chief Executive Officer)
Yeah—Ed, you’re breaking up a little bit, but—so why are the higher commodity prices from this year not driving activity? We cast it as a positive because, just because obviously more cash flow for our customers is good for us. We really haven’t seen very much increase. We haven’t seen—I don’t think we’ve seen—any demand that’s arisen from this. And, you know, I think it’s because discipline has ruled our customers for this entire cycle—upcycle, mid-cycle, wherever we are right now—and that’s not going to change.
And so there’s additional cash flow right now, which is good. It’s not translating into drilling just yet, which obviously we wish it had. We remain hopeful that in ’27 we’ll see some additional exploration work—we mentioned that earlier—and then I would say just the nature of all of the markets this year have been, I think, a little bit baffling for a lot of people. So I think there’s an understanding that the current oil price could go right back down almost overnight given the geopolitical drivers and everything that’s out there, and so people aren’t really willing to make long-term decisions off of it right now.
We’ve pointed to the middle part of the Brent curve as probably the best indicator of our business for quite some time, and as we mentioned, it’s bumped up a little bit, but it has been a lot less volatile than near-term pricing all the way through all of this. And so I think we’ve just seen our customers maintain a disciplined and steady posture towards deepwater drilling. It’s positive. I think any of our customers would say that they have a belief that deepwater is going to gain market share here through time, but it’s not being strongly affected by the events of this year.
Eddie Kim (Analyst at Barclays)
Got it. Understood. Thanks for that color. My follow-up is just on your commentary on leading-edge dayrates on recent contracts for Tier 1 drillships now in the mid-400s and close to $500,000 a day, which is evident from the recent contracting we’ve seen. It wasn’t too long ago when we were in the low 400s. So just curious if the progression of dayrates has increased faster than you would have expected at the beginning of the year, or if the pace has been sort of in line with your expectations based on the demand outlook that you had seen.
Robert Eifler (President & Chief Executive Officer)
Yeah. So I think there’s two things going on. The answer is no, it’s not surprising. Back in ’21 and ’22, that kind of timeframe, we saw rates move at least as fast—I would argue actually on a percentage basis, much faster. So it happens. I think there’s a couple things going. We are plus five-ish units here recently. The marketed utilization is up to like 99%, so probably working utilization matters a little bit more for total pricing. So I think you’d see an even much bigger move if working utilization goes up to that 99% range, which, as we said in the comments, you can see a path to that for 2028 right now.
But nonetheless, people can see out and see what we see, which is not only 99% market utilization, but a working rig count in late ’27 that’s roughly equal to where we are today, maybe slightly up from where we are today, which means every incremental contract that’s signed for late ’27 adds to the working rig count. And so people see what we see and the market’s pricing accordingly. I think it makes sense.
Eddie Kim (Analyst at Barclays)
Thank you. I’ll turn it back.
Lacey (Conference Operator)
Your next question comes from the line of Jeff LeBlanc with TPH Research. Please go ahead.
Jeff LeBlanc (Analyst at TPH Research)
Good morning, Robert and team. Thank you for taking my question. I wanted to see on the jackups: Is the expectation that the four jackups should remain in Norway moving forward, or should we still expect some move between the two sides of the market?
Robert Eifler (President & Chief Executive Officer)
Yeah, I think we’re finally, for the first time in years, hopeful that the four newest CJ70s are going to stay in Norway.
Jeff LeBlanc (Analyst at TPH Research)
And then the secondary question is on the Globetrotter 2. Is the expectation that drillship will remain in the global marketed fleet once the sale completes, or will it be removed? This is the GT2.
Robert Eifler (President & Chief Executive Officer)
No, it’s coming out of the drilling fleet.
Jeff LeBlanc (Analyst at TPH Research)
Thank you very much. I’ll hand the call back to the operator.
Robert Eifler (President & Chief Executive Officer)
Thanks, Jeff.
Lacey (Conference Operator)
Your next question comes from the line of Noel Parks with Cohey Brothers. Please go ahead.
Noel Parks (Analyst)
Hi, good morning. It’s really interesting to hear what you’ve seen as far as continued support for exploration out there in the marketplace. And I guess that makes me think a bit more about maybe pivoting back to talking about the development side. So of course projects are generally economic at far below the current prices we’re seeing. But I’m just wondering, are you detecting any greater confidence among producers, maybe reflected in their budgeting for 2027 into 2028, where, you know, perhaps the industry is taking the Iran war supply disruptions, you know, considerably more seriously than certainly the markets have.
So I just wonder if you sense a little bit more urgency on the development side.
Robert Eifler (President & Chief Executive Officer)
Yeah, I gotta say we have from what we see, which granted is never at the very cutting edge of how our customers are thinking by the time it gets down to like thinking about drilling rigs. But we have seen remarkably little change in the stance of our customers and they continue, by our observation, they continue to use very conservative breakeven oil price assumptions and they continue to be extremely disciplined. I think we’re thinking about the future as if that does not change.
And you know, I’m fond of saying that we’re fans of efficiency because the deepwater is drilling itself into work as it gets more efficient. But we very much see the future of deepwater working because barrels are profitable at that kind of 60s and 70s range and really below that for break even, but that our customers are willing to drill and develop large projects, prices that fit nicely into the middle parts of the Brent curve. We haven’t changed our stance on that at all in the outlook.
Noel Parks (Analyst)
Great, thanks a lot.
Lacey (Conference Operator)
Your next question comes from the line of Greg Lewis with BTIG. Please go ahead.
Greg Lewis (Analyst at BTIG)
Hey, thank you and good morning everybody, and thanks for squeezing me in here. You know, Robert provided a lot of color on the market. I was hoping to kind of get a big picture around like how we should be thinking about Capex. You know, I think one of the things, you know, clearly you guys are generating a lot of cash. I guess kind of a couple questions around here, but, you know, like coming off of the down cycle, kind of like as you look at your fleet today, is it kind of where it needs to be for the next couple of years of the upcycle?
I get we’re upgrading the, what, the Great White. The Klaus. The Klaus rig, but like other rigs, right, as we think about where they are, could we be thinking about, hey, you know what, this rig needs this upgrade, this rig needs that upgrade, or could we actually see kind of a move lower in Capex as we look out over the next couple of years.
Robert Eifler (President & Chief Executive Officer)
Yeah. How about this? Let me explain a little bit around the types of upgrades we’ve made and then I’ll hand it to Richard and he can give you a little, I guess, history of our Capex and how it’s fit into this cycle. So everything we’ve done, the Klaus Bachmann, we fundamentally changed the marketability of that rig by making it Norway compliant. So I think that’s baked in now. That rig is worth substantially more because of its increased earnings power because of the upgrades that we’re performing on that rig right now. So that’s been, you know, that rig is capable of working in Norway, it will go to Norway and it’s a great place for the rig. We’re very, very proud to be supported by our customer in moving that rig into that region.
Everything else falls into kind of a different bucket which would be a range of, obviously, maintenance Capex over to some more specific upgrades. But I am extremely pleased with where we’re going to sit by the end of 2027 on all of our tier one drillships. Every single one of those will have MPD. We will have two 2.8 million pound derricks that are highly competitive in the U.S. Gulf. We have added crown mounted compensators where needed and already a majority of our fleet has larger thrusters that allow them to work effectively anywhere around the globe.
There are a lot of drillships out there that actually can’t work in some of the emerging markets. So it’s obviously coming at a cost right now in ’26 and in early ’27. But we are so well set up with the quality of our fleet going into late ’27 and ’28. These are life-of-asset upgrades and I actually think timing is darn close to perfect for us on having made these investments.
Richard Barker (Chief Financial Officer)
Greg, just to add to that, obviously we’re spending a lot of capital on the fleet right now that will continue, if you will, through kind of mid next year. But obviously the earnings power that this kind of increases, or the increase in earnings power around that fleet, is significant. So once you get to kind of second half of next year, the EBITDA and free cash flow run rates are pretty significant. Maybe just to put kind of normalized Capex into focus here, what we said at the beginning of the year was that net Capex would be in the high 300 to kind of 400 range on a normalized basis. This would exclude the Klaus Bachmann. We are seeing some inflationary pressure, so I think you should think about normalized Capex for us in the highest end of that range. So call it in that kind of 400 million area context. Obviously that excludes the Klaus Bachmann, and as you think about 2027, we probably have just over half of the Klaus Bachmann Capex to spend in 2027.
So from a net Capex perspective, I think hopefully that gives you some guidance here for ’27 and beyond.
Greg Lewis (Analyst at BTIG)
And just so as we think about that rig, that rig’s starting up in March. So when it leaves for that maiden voyage, it’s not going to go back in, right?
Richard Barker (Chief Financial Officer)
Correct. That is right, yes.
Greg Lewis (Analyst at BTIG)
Okay. And then I did have one other question. Just, you know, Robert, this is for you. Just, it’s been interesting. I mean clearly we’ve always seen, you know, rig pockets contracted, right. Obviously you guys have the four rigs with Exxon in Guyana. You know, you were able to get those two Shell rigs, you know, this development work. We’ve been talking a lot about development drilling. But I guess my question is at this point as we look out over the next couple years, and our understanding is there is still a couple opportunities for multi-rig, multi rigs going with one customer in one region for development drilling.
Are we at a point now with the fleet where we need to start maybe being a little more selective in some of the work we’re doing simply because we want to be in the right place at the right time to potentially win some of these multi-rig tenders.
Robert Eifler (President & Chief Executive Officer)
Yeah. So there are multiple multi-rig development programs out there. And I think that’s one of the things that makes us so excited going into exiting ’27 because those, we think now we have some clearer sight that those are going to come through. I think we’ve always been selective. We have really embraced efficiency and technology, as I mentioned around the Capex upgrades, and those really pay for themselves in development projects way more than anywhere else.
And so we’ve targeted and really wanted to be in some of these bigger development projects. I think we’ve done a good job, had a fair amount of success there. That doesn’t necessarily change for us. And there are some additional projects out there that, you know, are on the table for us. You know, nothing’s done yet but obviously pricing has moved and will continue to move with whatever the market dictates. But nothing’s really changed about where we see our strengths as a company.
Greg Lewis (Analyst at BTIG)
Okay, super helpful, thanks and have a great day.
Robert Eifler (President & Chief Executive Officer)
Thank you.
Lacey (Conference Operator)
There are no further questions at this time. I would like to turn it back to Ian McPherson for closing remarks.
Ian McPherson (Investor Relations)
Thank you, everyone, for joining us today. We appreciate your interest in Noble Corp, and we will look forward to speaking with you next quarter. Have a great day.
Lacey (Conference Operator)
This concludes today’s conference call. You may now disconnect.
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