Peter

$RIG $NE $VAL and $SDRL account for ~61% of the global fleet of modern floating rigs. Within the global fleet are various sub-segments by rig type: Transocean has the 2.8mm lbs hookload drillships mostly in US GoM ($500k rates). Noble, Valaris and Seadrill own ~90% of global supply of 7G drillships with 2.5mm lbs hookload and 2 BOP’s mostly demanded in US GoM, Brazil and West Africa though is expanding to other markets. $ODL.OL has an admirable position in the Norway harsh environment semisub market where Transocean also operates. There is room for additional consolidation in this industry. While the rumored Transocean/Seadrill merger makes sense on paper there are details to be ironed out. There are likely differences of opinion on the valuation of a few of Seadrill’s rigs (i.e. West Phoenix). Also, Seadrill’s 7G drillships are its most valuable assets, although four of them have dayrates ~$200k below current market through at least Nov ‘25. That’s an estimated valuation discount of >$60mm per rig. Seadrill is net cash although has its own HY bond and a convertible. (1) Economics: The industry has cost inefficiencies with too many sub-scale drillers. Transocean stated this week it can add 10-15 rigs with little incremental fixed costs. Noble is demonstrating this with a smaller Diamond acquisition with ~$75mm in annual synergies. As evidenced by existing, below market fixtures, Seadrill is arguably not as price disciplined as Transocean. While the market has demonstrated pricing discipline in 2024, a 7G drillship needs >$600k rates to earn its true cost of capital and further consolidation would be a step closer to achieving this level and help offset demand delays experienced this year. (2) NO NEWBUILDS: A new drillship would likely cost ~$1B to build, requiring dayrates ~$750k (with 5-10 year term) and ~40% down. The $400mm down payment alone meaningfully exceeds current per rig enterprise values. Any rational driller would repurchase shares at a 60%-70% discount to newbuild costs rather than waiting 3-5 years for its first positive cash flow. There’s no newbuild floating rig orders coming for many years. (3) Long-life supply growth has hurt the potash industry’s outlook $NTR $MOS. The same is not happening in deepwater rig market. After Canada blocked $BHP proposed acquisition of Potash Corp of Saskatchewan in 2010, BHP focused its attention on building a potash business via the low-cost Jansen mine. Jansen is expected to begin operations in 2026 and its full operational capacity is ~12% of global demand. This long-term overcapacity problem that suppresses pricing and has hurt the potash industry. Deepwater rigs are long-life assets similar to potash mines, although long-term supply is much more favorable for rigs. (4) Unlike the potash industry, offshore contract drilling has mostly worked through its overcapacity issues from 2013-2014 orders. This is evidenced by 7G dayrates increasing from $200k’s in 2021 to mid-to-upper $400k’s currently. Supply is not entirely fixed but is not a major issue any longer. The question is demand. We saw Suriname FID (2 rigs in ‘26) and others to watch are Nigeria (2-4 rigs), Ghana and Brunei. Namibia, Indonesia/SE Asia, Mozambique, Côte d'Ivoire and others appear to be 2027 and beyond.

$RIG Atlas with $635k/day on 365 day term in US GoM beginning 2Q28 This is likely 20k work for BP’s Kaskida project. Could be follow on work for Tiber in future. I get oilfield service sentiment is poor but high spec rigs doing well. This Atlas fixture should be >$150mm EBITDA

$RIG Deepwater Atlas with a new $580k dayrate and 20k (8G) work potential at $650k 👀

$RIG $VAL $TDW $NE $DO Deepwater Update, July 13, 2023. How the Deepwater industry has reduced costs over the last decade. $FTI $SUBCY also play a meaningful role, although I believe rigs have more operating leverage with cleaner free cash flow to the deepwater capex cycle.