Rowan Cos. Plc (RDC) Q4 2016 Results - Earnings Call Transcript

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Rowan Cos. Plc (NYSE:RDC) Q4 2016 Earnings Call February 24, 2017 11:00 AM ET

Executives

Chris Pitre - Rowan Cos. Plc

Thomas Peter Burke - Rowan Cos. Plc

Mark A. Keller - Rowan Cos. Plc

Stephen M. Butz - Rowan Cos. Plc

Analysts

Gregory Lewis - Credit Suisse Securities (NYSE:USA) LLC

Sean C. Meakim - J.P. Morgan Securities LLC

Ian Macpherson - Simmons & Company International

Kurt Hallead - RBC Capital Markets LLC

Eduardo B. Royes - Jefferies LLC

Haithum Nokta - Clarksons Platou Securities, Inc.

Rob J. MacKenzie - IBERIA Capital Partners LLC

Mark William Brown - Seaport Global Securities LLC

Operator

Good morning. My name is Denise, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Rowan Companies Fourth Quarter 2016 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

Chris Pitre, Vice President of Investor Relations, you may begin your conference.

Chris Pitre - Rowan Cos. Plc

Thank you, operator, and good morning, everyone. Welcome to Rowan's fourth quarter 2016 earnings call, and thank you for your interest in Rowan. A copy of the company's earnings report issued earlier this morning can be found on our website at rowan.com.

Joining me on the call this morning are Tom Burke, President and Chief Executive Officer; Mark Keller, Executive Vice President, Business Development; and Stephen Butz, Executive Vice President and Chief Financial Officer.

Before I turn the call over to Tom, I'd like to remind you that expectations expressed during this conference call are forward-looking statements and are subject to risks and uncertainties such as market conditions, commodity prices, offshore drilling activity levels and other risks and uncertainties that could cause actual results to differ materially. Please refer to our earnings release and SEC filings on our website, which more fully describe forward-looking statements and risk factors and other events that could impact future results. Please note that information contained herein is as of the date of today's call and may be outdated at the time of any replay of this call.

With that, I would like to turn the call over to Tom Burke, Rowan's President and Chief Executive Officer. Tom?

Thomas Peter Burke - Rowan Cos. Plc

Thank you, Chris. Good morning, and welcome to our fourth quarter and full-year 2016 earnings call. We appreciate your participation today and your continued interest and investment in Rowan. Following my prepared comments, Mark will give you an update on the offshore drilling market and then Steven will walk you through our financial performance and guidance. After that, we will open the call up for questions.

In the fourth quarter 2016, we announced several key transactions that solidified our long-term growth and financial stability even though our earnings continued to be pressured by challenging market conditions. Our announcement of a joint venture with Saudi Aramco, our successful bond offering and get tender offer, execution of our fleet strategy through continued sales of our older assets and our outstanding operational and safety performance make the quarter remarkable on many fronts.

We accomplished these milestones while continuing to effectively reduce our costs and improve our focus on efficiency across the company. These transactions and solid operational execution means that our visible liquidity runway now extends comfortably into the next decade, allowing us more flexibility to invest in attractive growth opportunities.

Steven will review our financial performance in detail, so we'll only make a few comments. We reported a loss of $0.19 per share in the fourth quarter, down from $0.04 of earnings per share in the previous quarter. The results this quarter were impacted by a $33.6 million loss on our proactive early retirement of debt.

Excluding this loss, our $0.08 of earnings per share this quarter beat consensus. Our fourth quarter EBITDA was $143 million versus consensus estimates of $132 million, mainly driven by solid cost control and higher revenue efficiencies.

During the quarter, we executed two debt capital market transactions. Though we would have preferred to extinguish debt at a discount, we are certainly pleased by the market's recognition of our solid financial position, effectively identifying us as a company that will confidently move through the remainder of this downcycle and emerge in a position of strength.

I'm pleased that Rowan has led the peer group in relative TSR over the last three-year period and in 2016 we generated a positive return of 12%. Our strong operational performance in 2016 aided by our outstanding operational uptime of over 98% helped drive solid cash generation. Of course this uptime performance wouldn't be meaningful if it weren't accompanied by our best safety performance on record.

For our company to have accomplished these performance measures during another year of intense focus on cost reduction is truly a well-founded source of pride for the men and women who work at Rowan. However just as important during this downturn is that we are highly focused on making structural changes to how we operate to ensure this outstanding performance becomes repeatable and sustained.

During the fourth quarter, we sold two of our remaining older assets, the Gorilla II and Gorilla III. This follows the sale of three other older assets in 2015. Four of the five sold rigs are now restricted to non-drilling activities. We have only two older stacked rigs left, allowing us to more fully concentrate our support on rigs that will have a meaningful contribution to our earnings when the market recovers. We're thrilled with our recently announced partnership with Saudi Aramco, who has been our largest customer for over 10 years, and we're delighted to further that relationship. The new company will expand its fleet over time, which will help Saudi Aramco accomplish its strategic goals as well as provide a source of stability and unparalleled growth to Rowan, truly a win-win. Steven will provide more details in a moment on this important long-term value creation opportunity.

Now, I'd like to share a few thoughts on the market. A year ago, the view of the market was bleak as we expected further declines in demand for both jack-up and deepwater markets. That forecast proved to be true. We've seen operator budgets decline for three years in a row assisted by lower rig day rates and other costs. As we've seen in cycles in the past, activities with lower capital commitments such as unconventional land drilling and shallow water brownfield projects recover more quickly than larger capital-intensive activities such as ultra-deepwater exploration and development.

We saw some improvement in oil prices last quarter, and then OPEC's production cuts further supported crude oil prices. This stability in oil price seems to be driving increased tendering activity to late 2017, especially for jack-ups. However, the floating market seems to be pushing off to 2018. While becoming more comfortable with forecasting a reasonable recovery over the coming years, more attrition of older assets is necessary for true recovery. We have seen further jack-up and floater scrapping and retirements recently and expect those to continue over the next years.

While a robust recovery of the drilling market may take multiple years, we are confident that the strength of our balance sheet and our operational performance will carry us through. Finally, as with previous quarters, we continue to have a key focus on optimal capital allocation. With the impressive work that our finance team has done in extending our visible runway combined with our extremely solid operational performance and a market recovery that is becoming a little clearer each day, we feel well positioned to act on any attractive opportunities that come our way. Those opportunities may take many forms, from debt retirements to distressed asset acquisitions, but we'll always view them through the same long-term shareholder value lens.

Now for a look at the market where Rowan competes, I'll hand the call over to Mark.

Mark A. Keller - Rowan Cos. Plc

Thanks, Tom, and good morning, everyone. As we enter 2017, we reflect on our position in the cycle and look forward, cautiously optimistic that this year will present a turning point for the industry though recovery may be modest for several years. This morning, I will visit (09:02) with you about the jack-ups and ultra-deepwater markets and our outlook for the year and conclude with a few thoughts on the attrition needs that our industry must address. We were pleased to report several jack-up contract extensions on our last fleet status update. The additional projects signed in Trinidad exhibit our customers' satisfaction in our outstanding drilling performance and their continued commitment to have Rowan as their chosen partner in executing their drilling programs.

Although we did not disclose the day rates due to the competitive nature of the global markets, they continue to provide significant operating margin and we were happy to add utilization to those three rig units. In the North Sea, we currently have three jack-ups contracted and three available. We're in discussions with multiple operators about opportunities for the Rowan Norway, the Rowan Stavanger and the Gorilla VI but project commencements seem weighted toward the second half of 2017.

We are looking at P&A work both in Norway and the UK sector, but also considering attractive opportunities outside of the region. We continue to see the most promising opportunity for increased demand in the Middle East. We're honored to be selected as the 50-50 joint venture partner with Saudi Aramco and expect that this new company will gain significant market share within Saudi Aramco's fleet of jack-ups in the coming years. We look forward to the commencement of the company in the second quarter.

Throughout the region, we see a focus on high specification jack-ups and our two available units, EXL I and EXL IV, are being tendered aggressively both in the Middle East and around the world. The Gorilla IV and EXL III continue operations with Arena Offshore in the U.S. Gulf of Mexico. We see several additional opportunities in the region as operators look to develop lower cost, faster-cycle brownfield projects in the current budget environment.

To quickly touch on other areas of the world, we see increased tender activity in Southeast Asia. However, we anticipate initial needs will be met by units currently in the region. We are actively participating in contracting opportunities in West Africa as operators look to high grade units in that market. In Mexico, we are closely monitoring the bidding rounds and expect multiple shallow water blocks to be offered in 2017. However, the commencement of these projects may not materialize until sometime in 2018.

Worldwide marketing jack-up utilization is now at 68%, but we anticipate the bottoming of the trough within 2017 for jack-ups. While downward pressure on day rates may continue due to idle supply in the newbuilds waiting to enter the market, the combination of an increase in drilling activity in anticipation of continued attrition should improve effective utilization levels worldwide, especially in niche markets.

Now, let's look at the ultra-deepwater market. Market utilization fell approximately 9% during 2016, and we expect 2017 to be another challenging year as new contract awards struggle to keep pace with contract roll-offs. As operators seem focused on capital spending and on shorter cycle investments, several ultra-deepwater projects that we've previously anticipated commencing in 2017 now appear to be slipping into 2018.

However, we are pleased with ongoing conversations with our customers about opportunities for available drillships, and continue to believe that dual-BOP 1,250 ton units will be the first to return to work. These rigs offer operators the technical capabilities that give them the flexibility to address their worldwide portfolios that are especially critical to the demanding drilling and regulatory requirements in the U.S. Gulf of Mexico.

Two of our four units are currently contracted in the U.S. Gulf of Mexico, and our remaining two units are warm-stacked. We believe that warm-stacking is the best approach for these vessels as our customers have made it clear that cold-stacked units will be the last in line to be contracted. Although the crew numbers are reduced on our ships, repairs and maintenance are ongoing, and there will be minimal cost when the units return to work.

2018 appears promising for the seventh-generation ultra-deepwater market, assuming commodity prices can maintain their stability and as many are forecasting continued declines steadily as the year progresses. We are actively participating in tenders for work in East and West Africa, Central and South America, and the U.S. Gulf of Mexico.

Additionally, we are encouraged by the activity in the recently completed bidding rounds in Mexico and the anticipated offers in Brazil, which include the second production sharing round and the 14th bidding round of blocks under the concession regime.

Despite this anticipated demand, recovery for the floater market as a whole seems to be more in the 2019 timeframe. As I alluded earlier in the call, I would like to spend a few minutes discussing attrition, both for floaters and jack-ups.

On the floaters side approximately 74 units have been removed from the fleet since October of 2014. While this is a good start given our view of demand over the coming years, we believe that an additional 100 units could be retired from the current fleet.

In tandem with strengthening commodity prices that encourage increased demand, this attrition could accelerate the industry's ability to obtain a healthy utilization target of 85%. The majority of these retirements should come from older units, those that are currently stacked and those rolling off contract.

As technology has advanced, many of these floaters have become obsolete and contractors will struggle to maintain them and put them back to work. Regarding jack-up yield attrition, only 32 units have been removed from the fleet over the same time period. But there are currently 230 jack-ups in the total fleet that are 35 years or older, 62 of which are cold-stack or out of service.

While it is significantly less expensive to stack jack-ups than floaters, which contributes to the rationale of delayed attrition, we believe that most of these older units will not reenter the market. With approximately 100 rebuilds waiting to enter the fleet, it's hard to imagine a customer choosing an aged jack-up that has been stacked for a significant amount of time over a newbuild unit for a potential project provided a suitable drilling contractor is sponsoring their market entry.

Applying similar analysis for a supportable jack-up supply in the future, we believe many of the older jack-ups could be retired from the current fleet over the coming years. Rowan has been diligent in our attrition efforts, having removed four of our older units from the market since the downturn and we will most likely retire the season programming in Rowan California (16:40).

Attrition is vital to accelerating the recovery of the offshore drilling market and considering the aging fleet, this is certainly an attainable goal. While we acknowledge the uphill battle that the industry faces in 2017, our high spec fleet of jack-ups and drillships backed by our outstanding workforce gives us the utmost confidence in our ability to take advantage of the opportunities that the recovery will bring.

This concludes my remarks this morning and I will now turn the call over to Steven.

Stephen M. Butz - Rowan Cos. Plc

Thank you, Mark. And good morning, everyone. On the call today, I will review our fourth quarter 2016 operating results compared to the prior quarter. Next, I will provide some additional color around our agreement with Saudi Aramco to jointly form a new drilling company in 2017 and the implication for our financial results. Lastly, we will provide you with an update to our cost and capital spending guidance before opening the call for questions and answers.

This morning we reported a fourth quarter net loss of $24 million or $0.19 per share which includes a $33.6 million loss on the extinguishment of $464 million of debt. Excluding this item, earnings were $0.08 per share for the fourth quarter, down $0.22 from the previous quarter non-GAAP earnings per share, due primarily to a reduction in jack-up utilization.

We generated $346 million in revenue during the fourth quarter excluding rebillable items, an 8% decline from the previous quarter as we incurred increased jack-up idle time and we had a couple of rigs out of service in the Middle East.

We completed 2016 with less than 1.5% operational downtime fleet-wide for the entire year. We are especially proud that we have not incurred any downtime on our drillships for three straight quarters and less than 0.1% downtime for the year. Our idle days as a percentage of available days showed only a slight 2% increase from the third quarter, up to approximately 29%.

Our out of service time for the jack-up fleet was approximately 7% of our available rig days in the fourth quarter, due primarily to repairs and inspections on the Bob Palmer and Hank Boswell and upgrades to the JP Bussell in preparation for the contribution to the new joint venture with Saudi Aramco.

Fourth quarter operating expenses were $174 million, a reduction of $8 million from the previous quarter, attributable to lower activity on idled rigs and continued cost control efforts.

As a reminder, this excludes rebillable items which are offset by a commensurate increase in revenue. In line with our guidance, SG&A expenses totaled $26 million in the fourth quarter and $102 million for the full year, down 12% from 2015 levels and 19% versus 2014. Our fourth quarter depreciation expense remained flat with the third quarter level at $102 million. Interest expense was $39 million in the quarter.

With respect to the income tax provision, we recognized the tax benefit in the quarter of $9.7 million as a result of a reduction in our tax asset valuation allowance due to certain inter-company transactions. Our annual effective tax rate was still in the low single-digits as previously guided.

Now, for a look at our cash flow and balance sheet, for the fourth quarter capital expenditures totaled $29 million, slightly above the third quarter level, primarily due to regularly scheduled surveys for the Bob Palmer and Hank Boswell in preparation for the JP Bussell's contribution to the joint venture with Saudi Aramco. Full year CapEx for 2016 came in at $118 million, somewhat below our previous guidance as some capital spend slipped into 2017.

All in all, we generated $218 million in cash in the fourth quarter and our current cash balance today stands at $1.1 billion. With an additional $1.5 billion uncapped revolver, our liquidity continues to be very strong. In the fourth quarter, we issued $500 million of 8.5-year senior unsecured notes to yield 7.38%. Simultaneously, we executed a tender offer focused on clearing out a substantial portion of our near-term debt maturities.

Following the expiration of our tender offer on February 8th of this year, we also exercised our early redemption option on the remaining 2017 notes. In total, we extinguished approximately $590 million of debt maturities that were slated to come due between 2017 and 2022. The combined effect of these actions significantly extended our already nicely visible runway, we believe solidifying our liquidity well in the eventual market recovery and affording us the flexibility to make more opportunistic capital allocation decisions.

Now, I'd like to take some time to walk you through some of the economics of the new company that we are forming together with Saudi Aramco. Upon legal formation late in the first quarter of 2017, Saudi Aramco and Rowan will each contribute $25 million in cash to capitalize the new entity. Shortly thereafter, on start-up, Saudi Aramco will also contribute two jack-up rigs and related assets. Rowan will contribute three of its jack-up rigs, the Gilbert Rowe, Bob Keller, and JP Bussell, our shore-based facilities and related assets.

Due to the uneven value of these contributions, Saudi Aramco is expected to contribute cash to maintain a 50-50 ownership split. Day rates for these first five contributed rigs had been negotiated for the first three years into 2020. The end dates of the current contracts on the Scooter Yeargain and Hank Boswell have been leveled out so they ramp up simultaneously in October 2018, when these rigs will also be contributed to the new company.

These adjusted contracts will still provide the same backlog to Rowan between the two rigs. As we see initial contribution, Saudi Aramco is then expected to contribute cash to maintain its ownership level. The second tranche of contributed rigs, the Scooter Yeargain and Hank Boswell, will receive initial contracts of three years with day rates becoming by a discounted market index. The seven contributed rigs, five initial and two in 2018 are expected to remain under contract for their remaining useful life to meet Saudi Aramco's drilling needs, provided that the rigs continue to meet the technical and operational requirements of Saudi Aramco.

You will note that the contributed rigs from Rowan's side do not account for all of the rigs currently under contract with Saudi Aramco. From start-up the new company will manage Rowan's seven remaining jack-ups in the Kingdom through the remainder of their contracts for a customary management fee. At the conclusion of each managed rig contract, other than the Boswell and Yeargain which will be contributed, the rig may be leased by the new company as needed.

Looking beyond the next few years, the new company will begin ordering jack-ups to be built by a joint venture between Lamprell, a highly qualified and experienced player in rig construction, and Saudi Aramco. We expect the first rig to be delivered in 2021, generally followed by two rigs per year for 10 years, and up to 20 newbuild rigs in total. Each of these rigs will be placed on an initial long-term contract with Saudi Aramco.

In a similar fashion to the contributed rigs, following their initial contract, the newbuild rigs will remain under contract for their remaining useful life, at day rates determined by a discounted market index. Although we're not providing details of all the economic arrangements, the newbuild rigs are expected to generate an attractive return on investment. I want to reinforce that both Saudi Aramco and Rowan expect the newbuild program to be fully funded through internal JV cash generation and external debt financing.

Given the magnitude of the backlog, coupled with the strength of our counter party, we expect the new company will be able to self and externally fund the growth without additional shareholder injections.

However, should these funds be insufficient, Saudi Aramco and Rowan intend to stand behind these orders. Both of the parties expect that the new company will generally not hold excess levels of cash, other than what will be needed under the business plan. Any additional funds will typically be distributed to the shareholders.

Therefore, given Saudi Aramco's matching contribution and the cash generation from the new entity, we expect to see a further strengthening of Rowan's already robust liquidity over the next two years (26:10) as excess cash is distributed.

We expect to account for our investment in the JV under the equity method, and our share of the venture's income will flow through equity and unconsolidated subsidiaries on our income statement. As we are contributing our in-Kingdom shore-based operations and facilities, those costs will also be absorbed by the new venture from inception forward.

Though the intent is to create a self-sustaining business, the new company is expected to rely on Rowan for various back office support services for the first few years. We expect the reimbursement of these services to be recorded as revenue on Rowan's book.

Now, to review our guidance for 2017, updated from our preliminary numbers provided in the last quarter, on the heels of two very strong years for cash generation, the next two years will be much more challenging in terms of our financial results, with two drill sets currently idle, and one additional vessel potentially approaching the end of its contract next quarter.

As Tom and Mark discussed, while we anticipate reaching the bottom in demand for jack-ups in 2017 and floaters in early 2018, we believe the inventory will need to rationalize significant excess capacity before we experience a meaningful recovery in day rates.

We estimate that our full year 2017 operating costs excluding rebillables will range between $625 million and $675 million, depending on the level of activity for idled rigs, or idle rigs rolling off contract during the year. This represents an 11% to 17% reduction from our 2016 level, primarily due to reduced activity, the new joint venture absorbing approximately $25 million of shore-based costs, and incremental cost control measures.

First quarter 2017 operating expenses are expected to approximate $170 million. This guidance excludes certain potential joint venture costs that may be grossed up on our income statement and offset by equal revenues. We expect to incur SG&A expense of $95 million to $100 million in 2017, which represents a slight decline from the 2016 level of $102 million with approximately $26 million in the first quarter.

We expect to record depreciation expense of $385 million to $395 million, slightly below our 2016 level. Our full year interest expense guidance is $155 million to $160 million, slightly above our previous guidance, taking into account the impact of the recent capital market transaction.

Moving on to our income tax provision, as pre-tax income declines to a fairly low level, the effective tax rate starts becoming less meaningful. For this year, instead of providing you with an estimated tax rate, we will provide guidance for the estimated tax expense. We expect our income tax expense for 2017 will approximate $50 million versus only $5 million in 2016. The significant expected difference from 2016 to 2017 is primarily driven by two non-cash factors.

Under U.S. GAAP, certain transactions that occurred in 2016 while creating no income tax in aggregate created a tax benefit in 2016, which will be offset by expense in 2017 and 2018. Additionally, the early adoption of the new accounting standard will result in our eliminating a deferred tax liability and taking into retained earnings over $200 million since January of 2017. But we'll eliminate roughly an annual $20 million of benefit over the next decade.

First quarter tax expense is expected to range from $10 million to $15 million but our income tax expense will likely vary significantly quarter-to-quarter depending on the actual results, additional backlog additions or other transactions as they impact our forecast and our valuation allowances on our net deferred tax assets.

So, while the provision may remain volatile, we expect our cash taxes to remain flat in the $40 million range in 2017, excluding the impact of audit resettlements (30:51) related to the previous year.

Finally, we expect to incur capital expenditures of approximately $105 million to $115 million in 2017, an approximate 10% increase from previous guidance, primarily due to the deferral of certain fourth quarter capital spends into 2017.

We are proud of Rowan's performance during 2016 and the flexibility we have built for the company to maneuver through the challenging time facing our industry. Over the course of the year, we continued to reduce costs, strengthen our balance sheet, and improve our liquidity without any dilution to shareholders. Our safety, environmental and drilling performance has been excellent. Our intense focus on customer satisfaction is yielding positive results as is exemplified by our ground-breaking partnership with the world's largest oil company and consumer of jack-up drilling rigs.

We are cautiously optimistic that we will see a bottom in offshore drilling activity over the next year or so, and we'll then begin the road back toward healthy market fundamentals. Meanwhile, we will continue to focus on what is under our control as we position Rowan to thrive in the eventual market recovery. We are now prepared to open the call for questions. Operator?

Question-and-Answer Session

Operator

Your first question comes from Gregory Lewis with Credit Suisse. Your line is open.

Gregory Lewis - Credit Suisse Securities (USA) LLC

Yes. Thank you and good morning.

Thomas Peter Burke - Rowan Cos. Plc

Good morning.

Stephen M. Butz - Rowan Cos. Plc

Good morning, Greg.

Gregory Lewis - Credit Suisse Securities (USA) LLC

Hey. Guys, feel free to chime in where you're comfortable. So, Steven, in the prepared remarks you mentioned the Reliance and Cobalt potentially rolling off this quarter. I guess earlier this week there was some news that Cobalt was, I guess, filed initial permitting to potentially do some work, I guess, in Baffin Bay in the Gulf of Mexico. I guess, any sort of update you could give us on the status of this rig, how maybe we should be thinking about it. I know that there's some payments that will be coming that are, I guess, suspected to hit in Q2 – apologies, I think we thought they were heading last quarter, but sort of any color you could give around how you guys are thinking about that rig?

Thomas Peter Burke - Rowan Cos. Plc

Yeah. Hi, Greg. This is Tom. So, I do think that – we saw the announcement today and obviously we've been keeping very close to the Cobalt. I guess I'll let Mark give some comments on that. I do think we don't have much beyond what is in that press release, but we can talk about the rig, the agreement is that the final termination payment will occur in beginning of April, end of March or when the rig is – end of March, beginning of April, and beyond, I mean on the accounting side, Steven?

Stephen M. Butz - Rowan Cos. Plc

Yeah. So, Greg, we did receive $76 million in total or have received $76 million in total related to sort of the early potential termination payment and would be due a total of $96 million, so that $20 million would be paid, again, end of first quarter as Tom mentioned. In terms of the revenue recognition for that, that revenue is deferred and will be recognized from April of 2017 all the way to the end of the contract which is January of 2018. So, today the revenue we've been recognizing for the current quarter is roughly $580 million. Does that help you?

Gregory Lewis - Credit Suisse Securities (USA) LLC

Okay.

Mark A. Keller - Rowan Cos. Plc

Greg, this is Mark. I met with them earlier this week and they've had a lot of success, geologic success. Obviously, the rig coming into work for (35:12), they will finish the current well at North Platte #4 sometime the end of April, early May. There are some discussions about a potential additional well there in North Platte. But nothing is signed or anything like that. We are in discussions with them all the time, they're a great customer of ours. And like I said, they've been very successful. So we're hopeful that their deepwater programs will continue.

Gregory Lewis - Credit Suisse Securities (USA) LLC

Okay, great. And then one of the things that you guys have talked about just given liquidity, given your debt profile, is sort of the ability to maybe take advantage of the recent weakness that we've been – the distressed asset sales.

And I guess, it looks like we saw some of the first assets go for sale. I guess, the two Hercules discovery rigs were sold late in 2016. I guess, just curious in how you're thinking about the opportunity for picking up some distressed assets and just sort of as you think about the timing, is – are we still too early or is this something that we could see happen in the next – over the next few quarters?

Thomas Peter Burke - Rowan Cos. Plc

Yeah. Greg, good question. So, I do think that we had a lot going on last year with the debt refinancing, the formation and negotiation of Saudi Aramco JV. And so we're looking at those assets actually pretty closely. And we think the person that bought them bought them for a good – or the company that bought them bought them for a good price.

And so I feel we were chasing those, the timing just didn't work out with some of the other things that we had going on. And we feel like it was a good price and there's some good opportunity out there. So, we look at a lot of stuff and we're always really focused on strong financial returns and a good return on capital, so we've probably been – I guess I would say we've had good discipline in the opportunities we've gone after.

I have to say Steven and I are a little disappointed that those two assets aren't in our own fleet but there will be other ones. And Steven , you have a comment (37:33)?

Stephen M. Butz - Rowan Cos. Plc

Yeah. Greg, in terms of it being too early, I don't think we would necessarily say that it is, even though we still have unfortunately a lot of downturn ahead of us, but we do think as Tom and Mark both alluded in their comments that we're starting to have a lot more dialog with customers and what not. And we anticipate a bottoming in the next 12 months of demand. But now, we're looking at things all the time, (38:03) looking at all the (38:06) opportunities. So, it'll be hard to put a timetable on it.

Gregory Lewis - Credit Suisse Securities (USA) LLC

Okay, guys. Hey, great. Thank you very much. Good luck. And have a great weekend.

Stephen M. Butz - Rowan Cos. Plc

Thanks, Greg. You too.

Mark A. Keller - Rowan Cos. Plc

You too.

Thomas Peter Burke - Rowan Cos. Plc

Thanks, Greg.

Operator

Your next question comes from Sean Meakim with J.P. Morgan. Your line is open.

Sean C. Meakim - J.P. Morgan Securities LLC

Hey, good morning.

Stephen M. Butz - Rowan Cos. Plc

Good morning, Sean.

Thomas Peter Burke - Rowan Cos. Plc

Good morning, Sean.

Sean C. Meakim - J.P. Morgan Securities LLC

So, yeah, you guys spent all that time towards the end of the year working on your liquidity and so now of course the natural progression of the conversation is to talk about how you're going to spend all that cash, right? So, I guess you've answered the question on distressed assets, but I guess looking forward further out, how would you prioritize incremental debt repurchases? With these 2022s or 2024s, would that be a higher priority compared to say another extension to the revolver?

And then I guess nearer-term, just thinking about as the inquiries are looking better, how do we feel about capital upgrades to maybe improve some of the portions of the fleet to try to improve your opportunities at near-term?

Thomas Peter Burke - Rowan Cos. Plc

I'll answer the first question and then I'll let Steven answer the more difficult first one. As far as incremental upgrades to the fleet, I don't think there's a lot of things that we need to do to our core fleet. I mean, some of the older assets which were non-competitive, we sold over the last couple of years and we've got another two assets cold-stacked. There may be something that we're bidding on a contract where the customer wants something specific, but – which we don't have at one of our rigs. But generally that will be a small amount, but sort of as far as saying, so taking our fleet and saying, well, we don't like this rig, we need to turn it into something else, that is much less likely to happen because the rigs that we – the rigs that we have in our fleet are pretty strong, and the thought of sort of doing a major capital upgrade on any of them, unless it was specifically for a customer demand, it's pretty, I should say pretty far down the the lead (40:20).

Stephen M. Butz - Rowan Cos. Plc

And, Sean, in terms of those priorities, and I wish we could share that with you but of course you can imagine that those priorities are constantly shifting depending on the terms of all those opportunities at any given time. So we certainly prioritize those internally, but it gets only shifted in real time. And it's important for us to be flexible and we pride ourselves on being nimble. So we'll continue to assess all those opportunities and move appropriately in a way that creates the most shareholder value.

Sean C. Meakim - J.P. Morgan Securities LLC

Got it. Okay. No, that's entirely fair. And then just one, quick one more for Mark. I thought your comments about West Africa were pretty interesting. Perhaps the net rig count stays challenged, but high grading could lead to some incremental opportunities for you all. So, then maybe you can expand on that a little bit.

Mark A. Keller - Rowan Cos. Plc

Yeah. Sean, we're looking at some opportunities up the west coast of Africa. The fleet there, there's a whole jack-up fleet, is 1980s vintage, maybe 1990s with some minor upgrades. So the operators are looking to high grade that fleet I think over the next couple of years and we've had several discussions with multiple operators about this process and it's a little hard to pinpoint when it will actually start, but we're hopeful we'll see some of the stuff this year, but there's definitely an interest from the IOCs and NOCs to upgrade the jack-up fleet in West Africa.

Sean C. Meakim - J.P. Morgan Securities LLC

Great. Thanks, everyone.

Mark A. Keller - Rowan Cos. Plc

Thanks, Sean.

Thomas Peter Burke - Rowan Cos. Plc

Thanks, Sean.

Operator

Your next question comes from Ian Macpherson with Simmons. Your line is open.

Ian Macpherson - Simmons & Company International

Thanks. Good morning.

Mark A. Keller - Rowan Cos. Plc

Good morning, Ian.

Thomas Peter Burke - Rowan Cos. Plc

Good morning, Ian.

Ian Macpherson - Simmons & Company International

Hi. Steven, you provided a very helpful framework for how this joint venture is going to unfold but we do have a lot of blanks to fill in with the numbers and can you talk a little bit more about what the roadmap is for the incremental disclosure on some of these numbers going forward will be and what level of transparency we can expect to get around the day rates, the expenditures for the newbuild and all that good stuff?

Stephen M. Butz - Rowan Cos. Plc

Sure, Ian. That's a good question. And as you know, we've been very transparent over the years and we pride ourselves on that, but of course we have a joint venture partner here that (42:57) is cognizant of as well and we'll continue to disclose what is required always but in terms of the roadmap, the other thing I would say too is that much of this is going to be very visible on our financial results because it is a pretty significant JV, it's going to be growing over time. So, it will be visible soon. We will be filing our 10-K shortly and there will be additional disclosures with that.

Ian Macpherson - Simmons & Company International

All right, well....

Stephen M. Butz - Rowan Cos. Plc

We think those disclosures will be helpful in evaluating this JV further.

Ian Macpherson - Simmons & Company International

Good. That's sort of what I was anticipating. Thanks. Mark, you talked about the deepwater project bucket, it's still present, but it is slipping a little bit and project starts slipping from 2017 into 2018 and you said you see the recovery for floaters looking more like a 2019 event, but could we interpret that as maybe contract visibility and even contract awards commencing over the next 12 months or so in anticipation of that unfolding? And when you say a recovery, I want to measure talking about more of a rebalancing of utilization by 2019. Is that a good interpretation of your comments?

Mark A. Keller - Rowan Cos. Plc

Yeah, that's right, Ian. We feel like we're operating in a market with 32 ships with the dual-stack 1,250-ton ships and I think we're hoping that supply and demand certainly hopefully will come into balance, depending on commodity prices by then. But before that occurs we're going to see some tenders and we're going to respond to tenders, we currently have about five in-house deepwater tenders that we're working on and there's some others that are coming. And so we're going to be very careful how we approach those, but I think a good indicator for us, we believe – as I said earlier, we believe the jack-up market will trough in 2017, a good indicator for the deepwater market beginning to trough is when the IOCs come out for long-term contracts. I just don't think they're going to let this pricing opportunity pass without coming out with three to five year contracts. Particularly, the big IOCs that have enough backlog of wells to do that. So I think that's going to be your best indicator of when things would start.

Ian Macpherson - Simmons & Company International

Good. I appreciate that.

Stephen M. Butz - Rowan Cos. Plc

(45:48).

Mark A. Keller - Rowan Cos. Plc

Thanks, Ian.

Stephen M. Butz - Rowan Cos. Plc

Thanks, Ian.

Operator

Your next question comes from Kurt Hallead with RBC. Your line is open.

Kurt Hallead - RBC Capital Markets LLC

Hi. Good morning.

Stephen M. Butz - Rowan Cos. Plc

Hi, Kurt.

Thomas Peter Burke - Rowan Cos. Plc

Hi, Kurt.

Kurt Hallead - RBC Capital Markets LLC

As always I appreciate the color and the additional input. I guess my question on the market dynamics more broadly, it seems now very consensus view that there is substantial enough indication of demand for the jack-up market, that's kind of been hashed out. You guys referenced the prospect though that there is still more supply than demand in that dynamic. So, how much additional pricing pressure could there potentially be, and I mean that in the context, do you expect to see market rates to drift down towards cash breakeven or do you think the cycle and the demand dynamics will be sufficient enough to keep rates broadly operating in a profitable territory.

Thomas Peter Burke - Rowan Cos. Plc

Just one comment, Mark is trying to answer that question which is a tough one. I would say that often depends as we will see certain niches where we'll see some stronger pricing and you saw some good fixtures in the Noble drilling gas in Saudi Arabia. We've seen some good fixtures for us even in this downturn in Trinidad with the Lutenas type (47:24) rigs which are particularly suited for that market. I think it will be – I don't think we'll see any pricing recovery for quite some time, and I do think – feel like management teams want to get their – maintain capabilities so they'll take opportunities at lower rates. Although – but I think most of management teams don't want to be cash negative, when they look at it from a sort of a holistic CapEx shore-based support and rig operating cost.

I feel like – I mean, I feel like we'll see some more pressure. It's hard to say how much other than, Mark, what do you think?

Mark A. Keller - Rowan Cos. Plc

Kurt, I agree with Tom. Every market in the world is different. The pricing is different in every one of those markets but inside of those markets, the class rig is what's going to drive it. Commodity rigs in certain markets are at cash cost today or below. We've seen some of them, but the higher spec rigs in different markets such as Trinidad, Middle East and other areas, you're seeing day rates with good margins on them. And I think a good market fixture or indicator is the two contracts Noble signed with Saudi Aramco at $159 million and those are five-year term. If Saudi Aramco haven't dealt with them since 2004, I can tell you Saudi Aramco would not offer a five-year contract unless they felt like the bottom of the market was near or certainly was here and they feel like, they want to maintain those high-spec rigs and will then take a chance on that and get away from them (49:15). So, I think that's a good market indicator. Our rigs are shorter term in Trinidad, but once again good margins on them, and as we roll our rigs in the Middle East, I think you'll see some good fixtures and some of our peers as they begin to – as they renegotiate contracts within Saudi Arabia.

Kurt Hallead - RBC Capital Markets LLC

Got it. Thank you. And then, a follow-up on the, let's say the deepwater market, right, as we are getting indications of increased inquiry levels and more likely the prospect of incremental contract awards in 2018. What kind of strategic or tactical view are you guys going to take if you get a three-year or five-year contract offer, and you know that demand is going up, are you going to want to stay at the shorter end of that, maybe even just take a one-year deal and kind of try to catch the next uptick, just curious on how you might be approaching that dynamic?

Thomas Peter Burke - Rowan Cos. Plc

Yeah. It's something that we deliberated over quite a lot internally and what we think we're going to do may be different than what we are going to do, what we would like to do. But I would say that it often – it will kind of depend on that particular rig class, and how many available units we have. So, if we have one available unit we'll less likely take a lower cost – a lower rate at a longer period. If we have three of that class, we will maybe consider something like that. Mark?

Mark A. Keller - Rowan Cos. Plc

Yeah. Kurt, I do think that you'll see the IOCs as I mentioned earlier with Ian is I do think we'll see them come out and try to term up some of the higher spec drillships at lower day rates. There really hasn't been any appreciable exploration drilling since early 2014. So at some point when that begins to occur and they have these backlogs of wells, I think you will be tempted with that opportunity. But to your question, if we see the market improving and the fact that we're dealing in a – we believe as IOCs term up that they will go for the 32 dual-stack 1,250-ton rigs. I do think we'll be cognizant of that certainly and be cautious. We would try to contract the rigs short-term rather than long-term once we see the market start to move. But that's what we see right now. I mean, like Tom said, that changes. If you have all your deepwater rigs down then you may go take one of those jobs and then play the market with the other three or something like that. But right now that's kind of where we are.

Kurt Hallead - RBC Capital Markets LLC

Got you. And on the Saudi JV, what's the – you said is the discounted market index rate or something – what – is that a global jack-up market index that's going to be used or is it a regional one for just the Middle East?

Thomas Peter Burke - Rowan Cos. Plc

It's a global one, but it excludes certain very high-end markets such as Norway.

Kurt Hallead - RBC Capital Markets LLC

Awesome. Okay, thanks so much. Appreciate it.

Mark A. Keller - Rowan Cos. Plc

Thanks Kurt.

Thomas Peter Burke - Rowan Cos. Plc

Thanks, Kurt.

Operator

Your next question comes from Eduardo Royes with Jefferies. Your line is open.

Eduardo B. Royes - Jefferies LLC

Hey guys. Good morning.

Stephen M. Butz - Rowan Cos. Plc

Good morning.

Thomas Peter Burke - Rowan Cos. Plc

Eduardo, good morning.

Eduardo B. Royes - Jefferies LLC

A question for you on the drillships. Depending on what happens obviously with Cobalt, the Reliance may work a little bit longer. But you could end up obviously if that one goes down, that would be your third rig that doesn't have a job. How should we think about the thought process around stacking from one of those. If you sense the job is three months out, do you have to keep the thing fully crewed and hot, sort of what's the threshold where it's worth it to bring it down to one stack and then bring it back up or do you feel like that actually puts you at a competitive disadvantage with customers that may be literally won every single guy that just finished the prior program on the rig? How should we think about the potential thought process for that rig, considering that you probably want one pretty ready to go kind of bullet in the gun, if you will?

Thomas Peter Burke - Rowan Cos. Plc

Well, I do think that given that we have seventh-generation or late sixth-generation rigs, those are the only ones that we have on the floating side. Certainly the lowest state where we would go down to would be warm stacks because if we had some lower fifth-generation or lower sixth-generation rigs, we would certainly maybe consider taking them down lower. The warm stack would be the lowest state of readiness we would go to. Most of the customers, when we're talking about these type of programs, they don't sort of like spring in on you like tomorrow, and there's normally a good – a fair amount of lead time which is not necessarily as true of jack-ups, but with deepwater rigs, it's less likely they'll say, have you got a rig, let's go. There normally will be six months, nine months of lead time.

And so we feel that keeping all of the junior crews on the rigs on – and keep, i.e., meaning keeping it hot stacked, if we don't have something which we can see moving to, Mark described it as walking the rig between contracts then we would go down to a hot-stack status. So it would be kind of less likely to keep it hot-stacked, unless we have something clear to go to. Otherwise, we will take it down to sort of up to (55:05) warm-stacks. And when we say warm-stack then we really warm-stack meaning it is warm. We're not expecting any additional capital to go back to work, but the understanding between operations – operations, support, marketing, is that the rig can be moved anywhere at very short notice and it is all the maintenance being done. If the customers come and inspect it, they will – a customer audit will find a rig that is ready to go back to work, except it doesn't have the junior crews. So, I don't see us keeping a rig hot-stacked, Eduardo, unless we had something fairly substantial, but our warm-stack, it's truly warm where what we're looking to do is add the junior crew back.

Eduardo B. Royes - Jefferies LLC

Okay.

Mark A. Keller - Rowan Cos. Plc

Eduardo, one thing I would add to that is our customer base has been extremely clear that if you cold-stack a drillship or a deepwater rig – ultra-deepwater rig, you'll be at a significant disadvantage in securing work with them and could be eliminated from the bid list. So, it's a different playing field today than it has been in past troughs. So, they're really focused on that.

Eduardo B. Royes - Jefferies LLC

Got you. Thanks. And actually Mark, so my follow-up is for you. And just if you could give a little bit of color on two pretty key markets. We saw obviously the Central America, the Trinidad rigs recently get some short-term extension, is there – especially as it looks like maybe we'll start to see a little bit more term in the jack-up market. So how should we think about the possibility for you guys to continue to run those three rigs there on a longer term basis or is there likely demand well beyond just this year you think to be able to run three rigs in that market or the industry in general?

And then I guess quickly on non-Saudi Middle East, do you still think there's potentially opportunity to place one of your idle rigs to work in some non-Saudi market in the region this year?

Mark A. Keller - Rowan Cos. Plc

Eduardo, yes, talk about Trinidad first. Trinidad has been a great market for us. We've been there since the 1970s off and on, but it's – today, the projects that the rigs are drilling are very visible projects within those companies. And so, right now it's very hard to speculate on how long they will keep the rigs. We've been told that there's a lot of work for them in the region.

So we're very focused on that. Our operation teams have done a great job from an operations standpoint. But right now, I think there's work beyond 2017 in Trinidad for those rigs, but it's – without a firm commitment it's really difficult to make that claim to you, but they are very visible projects for the operators that we're currently working for.

In the Middle East, in the UAE and Qatar, we're seeing some demand there for jack-ups, the EXL I and IV are certainly tendered there. We're tendering those rigs all over the world, but we are seeing some demand both in Qatar and the UAE. And those type of rigs are the preferred type of rig in that region, so.

Eduardo B. Royes - Jefferies LLC

Great. Thanks very much, guys. I'll turn it over.

Mark A. Keller - Rowan Cos. Plc

Thanks, Eduardo.

Operator

Your next question comes from Haithum Nokta with Clarksons Platou. Your line is open.

Haithum Nokta - Clarksons Platou Securities, Inc.

Hi, good morning, guys.

Thomas Peter Burke - Rowan Cos. Plc

Good morning.

Mark A. Keller - Rowan Cos. Plc

Good morning.

Haithum Nokta - Clarksons Platou Securities, Inc.

Just wanted to do a little bit more housecleaning on the Saudi JV kind of that you were mentioning, Steven. So, the JV kind of becomes official starting the second quarter of this year, is that correct? And then you mentioned that there's going to be support – the back-end support that Rowan does for the foreseeable future and that's going to be booked as revenue. Can you kind of give the magnitude of that revenue?

Stephen M. Butz - Rowan Cos. Plc

You're right on the timing and we can't give a magnitude on the revenue today, but again it really won't have any net impact to the costs that we have today, that we'll be going forward to support the JV to tell (59:46) on the net side.

Haithum Nokta - Clarksons Platou Securities, Inc.

It's being moved from one bucket to another. Okay, and then I was just going to ask....

Stephen M. Butz - Rowan Cos. Plc

(59:57)

Haithum Nokta - Clarksons Platou Securities, Inc.

Sorry, go ahead. Yeah.

Stephen M. Butz - Rowan Cos. Plc

I was just going to say, we can walk through some of that detail offline too if it's helpful.

Haithum Nokta - Clarksons Platou Securities, Inc.

Okay. And at that point is also when third and second quarter that those rigs that are not kind of owned by the JV at that point would be managed by the JV, correct?

Stephen M. Butz - Rowan Cos. Plc

That's right.

Haithum Nokta - Clarksons Platou Securities, Inc.

And so, I guess kind of specifically kind of curious about the Bob Palmer and obviously that one's slated to roll off later this year and it's one of the highest spec rigs in the world and in the region. And so, can you kind of give an indication of what we should be thinking for that rig?

Thomas Peter Burke - Rowan Cos. Plc

Well, I'd say that that rig is a better rig than the Noble rigs.

Haithum Nokta - Clarksons Platou Securities, Inc.

Okay.

Thomas Peter Burke - Rowan Cos. Plc

It's a bigger rig, that's for sure.

Haithum Nokta - Clarksons Platou Securities, Inc.

Okay. Yeah, fair enough. And then kind of separately, Mark, you mentioned the supply pressure from the newbuilds that are in the shipyards still. And I guess I'm curious on the jack-up side there, and I'm curious if you've noticed those rigs actually showing up and competing for work somehow or is the fact that they're – a lot of contractors (01:01:20) are out of money that they're kind of just shadow supply for the time being?

Mark A. Keller - Rowan Cos. Plc

I think that what we're seeing in the market is that if it's an established drilling contractor, certainly, they're going to bring their rigs in and put more. So we've seen a few of those and they'll replace older assets in regions. But in Southeast Asia, we've seen a couple of things from newbuilds that – that's where most of them are being constructed, so the mods are obviously less, but Petronas tends to be a little less strict on new entry into that market.

But in other regions, we haven't really seen it, we haven't, certainly not with Aramco, they have very stringent requirements for entry in Qatar and the UAE. So, we haven't seen a lot of that because, to quote a lot of our customers, if an established drilling contractor has a rig available, which most of us do, they're going to go that direction, because of obvious concerns about downtime and start-up and things like that, safety, the major things that they should be thinking about.

So anyway, we haven't seen an abundance of that, to be candid.

Haithum Nokta - Clarksons Platou Securities, Inc.

Okay. Thank you. I'll turn it back.

Stephen M. Butz - Rowan Cos. Plc

Thanks.

Mark A. Keller - Rowan Cos. Plc

Thank you.

Thomas Peter Burke - Rowan Cos. Plc

Thank you.

Operator

Your next question comes from Rob MacKenzie with IBERIA Capital. Your line is open.

Rob J. MacKenzie - IBERIA Capital Partners LLC

Thank you, guys. Steven, I wanted to – if I may clarify some of your guidance, I think you guided OpEx for the year that excludes the JV costs. It takes the costs of the rig going into the JV out of the number, correct? And then, second, was your other guidance for SG&A, D&A, et cetera assuming the JV is in the numbers or not?

Stephen M. Butz - Rowan Cos. Plc

No, this does all assume a second quarter startup of the JV. So, that's correct. I'm sorry, what was the first part of your question again?

Rob J. MacKenzie - IBERIA Capital Partners LLC

Well, that answered that.

(01:03:42-01:03:47)

Rob J. MacKenzie - IBERIA Capital Partners LLC

I just want to clarify that all the guidance excluded the second quarter startup. Okay. I guess in that context, why wouldn't you think some of the items like G&A or D&A come down more than you seem to be guiding at this point?

Stephen M. Butz - Rowan Cos. Plc

Yeah. I mean that the depreciation again is just a bottom-up build-up of all of our assets. So it does take that into account. But on SG&A fees, let me clarify something I said related to the last question. So, we will still have the same back office support costs hitting Rowan's books related to all the work we do as well as our support to the transition services that we're providing for the JV. But then we will have that incremental revenue. And so those two items don't net as I said, that would be incremental. We can't disclose them out today. But it will be just sort of at cost of those services that we're providing.

Rob J. MacKenzie - IBERIA Capital Partners LLC

Okay. And I guess coming on (01:05:04) the depreciation side, $385 million to $395 million and you've got a quarterly run rate of quote 101,102 (01:05:09) right now. Would that imply that some of the older rigs being contributed to the joint venture are largely depreciated out?

Stephen M. Butz - Rowan Cos. Plc

Well, we take some of the account and the impairment charges that we've had over the past couple of years, so that's part of it.

Rob J. MacKenzie - IBERIA Capital Partners LLC

Okay. Thank you. I'll turn it back.

Operator

Your last question comes from Mark Brown with Seaport Global Securities. Your line is open.

Mark William Brown - Seaport Global Securities LLC

Hey, I was just curious, why is Saudi Aramco pursuing newbuilds through the joint venture as opposed to perhaps acquiring some of the available jack-ups that meet their specifications? Just it seem like the capital would be much higher to build rigs from scratch?

Thomas Peter Burke - Rowan Cos. Plc

Mark, yeah, this is Tom. I can't speak for Saudi Aramco, but I can just give you just a couple of thoughts about what they've said publicly. I think that Saudi Aramco is very focused on – you know what, I think Saudi Arabia is very focused on a number of items and one is the creation of new industries.

And so I think there's a big project for a shipyard. I mean, shipyard, it's not just focused on jack-ups, it's a large capital investment, at least for the Maritime initiative (01:06:38), you can kind of do search on Google and you'll see some press releases on it. And it's going to build platforms, it's going to build ships, bulk ships, tankers, it's going to build a lot of different assets including offshore rigs, jack-up rigs. So I believe that one of the focuses of the JV is to have – of our partnership with them is to have a customer for those assets, that's one. And I think they're also, again I can't speak to Saudi Aramco, but I think they 'e also very focused on diversifying their economy away from just from hydrocarbons, I mean, they are the biggest in the world from a number of different metrics around hydrocarbons but they're also focused on developing other parts of their economy and so I think that's a part of it.

And also they have a big focus on workforce development. And so I think those are the main reasons. Again, I can't speak to them as I can just – but they have put out a number of interesting information around their 2030 vision and their thinking and total value-add plan.

Mark William Brown - Seaport Global Securities LLC

All right. Well, I will look for those articles. Thank you. Appreciate it, that's all I had.

Thomas Peter Burke - Rowan Cos. Plc

Very good. Thank you.

Operator

There are no further questions queued up at this time. I would now like to turn the call back over to Chris Pitre.

Chris Pitre - Rowan Cos. Plc

All right. We'd like to thank everyone for your interest in Rowan and joining us on today's call. If you have any additional questions, Carrie Prati and I will be available to take your calls. We look forward to speaking with you again next quarter. Denise, thank you for coordinating the call and good day, everyone.

Operator

This concludes today's conference call. You may now disconnect.

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