Earnings Call Transcript - NE Q3 2025

Operator, Operator

Thank you for waiting. My name is Carly, and I will be your conference operator today. I would like to welcome everyone to the Noble Corporation Third Quarter 2025 Earnings Call. I will now hand the call over to Ian MacPherson, Vice President of Investor Relations. Please proceed.

Ian MacPherson, Vice President, Investor Relations

Thank you, operator, and welcome, everyone, to Noble Corporation's Third Quarter 2025 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 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 CFO, 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 the course of 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 therefore, are subject to certain risks and uncertainties. Many factors could cause actual results to differ materially from these forward-looking statements, and 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 an associated reconciliation in our earnings report issued yesterday and filed with the SEC. Now I'll turn the call over to Robert Eifler, President and CEO of Noble.

Robert Eifler, President and CEO

Thanks, Ian. Welcome, everyone, and thank you for joining us on the call today. I'll open with a brief summary of our Q3 highlights and recent contract awards, then provide some perspective on the market outlook. Richard will provide more detail on the financials before I wrap up with closing remarks and move on to Q&A. During the third quarter, we earned adjusted EBITDA of $254 million, generated free cash flow of $139 million, and received an additional $87 million in net disposal proceeds. We again distributed $80 million to shareholders through our $0.50 quarterly dividend. And yesterday, our Board declared a $0.50 per share dividend for the fourth quarter, bringing the total 2025 capital return to $340 million. The highly competitive cash yield on our stock continues to be a critical component of our story as we traverse this mid-cycle lull for our industry. Before we discuss the market, I'd like to commend and thank our crews and operating teams for achieving excellent operational uptime and HSE performance, aided by tools like our NORMS, Horizon56, and operations performance platforms. Our teams have continued to push the envelope in technically challenging well construction and completion activities. In Guyana, our drillships continue to post record-setting results within the Wells Alliance. We have now constructed over 200 wells in the basin, delivering 60% of the most recent 25 wells in under 35 days. In the U.S. Gulf, the Noble BlackHornet set a new benchmark in deepwater drilling operations, earning high praise from the customer for outstanding execution of MPD influx management on a complex exploration well. Nearby, the Noble BlackLion recently performed the longest step-out yet for BP in the Gulf at over 12,500 feet, which was also delivered well ahead of AFE. Results like these continue to be a defining success story for the deepwater industry and are leading the way in bringing deepwater sharply down the cost curve and thereby structurally increasing the size of the prize. We've also had another solid quarter on the commercial front with backlog increasing to $7 billion currently on the back of several key contract awards. First, the Noble BlackLion and Noble BlackHornet have both been extended by an additional 2 years by BP in the U.S. Gulf, extending the rigs into September 2028 and February 2029, respectively. These extensions are valued at $310 million per rig, excluding MPD services, and both come with an additional 1-year priced option. These contract extensions further amplify the merits of the Diamond acquisition, which has materially over-delivered on our original accretion expectations as the legacy Diamond rigs continue to perform and recontract at very high levels. We are thrilled to continue the BlackLion and BlackHornet's long-term assignments, which will now be approaching 1 decade in tenure. These long-duration engagements demonstrate the power of the deeply collaborative service posture that we have been working hard to cultivate over the past several years in order to drive value for our customers and earn their repeat work through dependable performance. Next, the jackup Noble Resolute has been awarded a 1-year contract with Eni in the Dutch North Sea at a day rate of $125,000. This contract is expected to commence later this quarter. And the Noble Interceptor has booked a 5-month accommodation contract with Aker BP in Norway, which is scheduled to start next August. Lastly, the 6G Semi Noble Developer has had an option exercised by Petronas for an additional well early next year, and the drillship Noble Venture was awarded a 1-well contract from Amni in Ghana at a day rate of $450,000. This well is scheduled to follow in direct continuation of ongoing Tullow work in Ghana, which is expected to resume in its second phase within the next several days before the rig mobilizes to the U.S. Gulf for long-term work commencing in late 2027. Beyond these specific contract awards, the broader contracting and utilization trends in deepwater are showing gradual signs of stabilization and improvement. The committed UDW rig count of approximately 100 rigs and low 90% marketed utilization is, in fact, up slightly compared to recent quarters despite some lingering near-term availability across several units with longer-dated contract starts. Additionally, deepwater contracting momentum is on an uptrend with an average of 18 UDW rig years per quarter fixed in Q2 and in Q3 this year, up 10% compared to the preceding 2 years. These are encouraging indicators and there remains a significant number of additional fixtures anticipated over the next few months. Noble's backlog picture, as summarized on Page 5 of the earnings presentation slides, shows 57% contract coverage across our entire fleet in 2026. When zooming into our 15 high-spec drillships, we are now 70% booked for available days in 2026, excluding options. However, we have active conversations behind all of our available rigs in 2026, including the Gerry de Souza, Viking, and BlackRhino, and while we are also tracking the number of contract opportunities across the balance of the fleet, both jackups and floaters. Securing additional work for these 3 drillships is a key priority, and our objective is to obtain 90% to 100% contract coverage across our 15 high-spec drillships by the second half of next year. On the jackup side, activity in the harsh environment Northern Europe market has been stable at 28 rigs and marketed utilization at 90%, flat with last quarter with leading-edge day rates for drilling programs in the Southern North Sea holding steady. Although the contracting environment has remained relatively subdued, we do have line of sight toward several opportunities that we hope to book relatively soon. With the Interceptor's pending reactivation, we now have improving contract coverage for all 5 of our ultra-harsh CJ70 jackups as we progress through next year. While our 6 harsh rigs presently have limited contract coverage in 2026, we do expect this picture to improve based on several bidding opportunities currently in process. So overall, we are encouraged by the shape of things and the opportunity set at hand, which includes a broad range of UDW requirements throughout the Golden Triangle, Asia Pacific, Mozambique, Mediterranean, and the harsh environment basins. The pipeline for early 2026 jobs is still significantly more limited compared to late '26 and early '27. But at this point, we are not seeing indications of additional project or procurement deferrals. Assuming reasonably stable oil prices, the path toward a methodically tightening floater market with deeper backlog appears to be on track. Now I'll pass it over to Richard to discuss the financials.

Richard Barker, CFO

Good morning or good afternoon, all. In my prepared remarks today, I will review our third-quarter results and then discuss our outlook for the remainder of the year as well as some additional high-level perspectives on 2026. Starting with our quarterly results. Contract Drilling Services revenue for the third quarter totaled $798 million, adjusted EBITDA was $254 million, and adjusted EBITDA margin was 32%. As expected, Q3 revenue and adjusted EBITDA were sequentially lower, primarily due to a number of rigs rolling off contract during the third quarter. Free cash flow of $139 million in Q3 excluded an additional $87 million in disposal proceeds driven by the sale of the Pacific Meltem and Noble Highlander. Thus, we ended the quarter with a cash balance of $478 million, which is up $140 million compared to last quarter. Subsequently, in October, we have completed the sale of the Noble Reacher for alternative use outside the drilling market for $27.5 million. As a reminder, the Reacher has not worked in drilling mode for several years, having recently completed a long-term and low-margin accommodation contract. The rig would have required a significant amount of capital to return to drilling mode again. And as such, the Reacher was an outlier within our group. As summarized on Page 5 of the earnings presentation slides, our total backlog as of October 27 stands at $7 billion, which includes approximately $0.5 billion that is scheduled for revenue conversion for the remaining 2-plus months of this year and $2.4 billion and $1.9 billion scheduled for conversion in 2026 and 2027, respectively. As a reminder, these figures exclude reimbursable revenue and revenues from ancillary services. Referring to Page 10 of the earnings slides, we are now in the range for our full year 2025 guidance for adjusted EBITDA to $1.1 billion to $1.125 billion. The midpoint of this range implies Q4 adjusted EBITDA that is marginally lower versus Q3. I would point out that the exact start date of the Globetrotter I contract in the Black Sea, which we currently estimate in mid-December, is the key sensitivity for Q4 revenue due to the relatively compressed duration of the full contract value, including mobilization. We are now guiding for full year 2025 CapEx net of customer reimbursables to a range of $425 million to $450 million. Reimbursable CapEx is expected to be approximately $25 million this year, including approximately $20 million year-to-date through Q3. We plan to provide 2026 guidance on next quarter's earnings call. In directional terms, I would say that the shape of our current fleet status report would indicate an EBITDA trough in the first half of 2026 that would be somewhat below second half 2025 levels as well as lower results on a full year basis for 2026 versus 2025. However, based on current and anticipated backlog, we are tracking towards a material inflection from late 2026 onwards, which we will look to define more sharply next quarter as the next slug of foundational contracts is expected to come into backlog. We continue to anticipate approximately $450 million in CapEx, net of customer reimbursables next year based on our current contract status. However, this estimate may be subject to an increase to the extent that additional contract-supported opportunities arise with compelling accretion. The capital to reactivate the Noble Interceptor will be reimbursed through an upfront mobilization payment. Additionally, we are likely to incur additional outlays totaling up to approximately $135 million associated with the termination of the BOP service and lease contracts on the legacy Diamond Black ships. During the third quarter, we delivered a termination for convenience notice for the service agreements, and we are currently in discussions around the lease agreement. We expect an approximate $35 million of cash outlay during Q4 2025, which is expected to flow through OpEx and CapEx, and then the remainder during 2026. These amounts are not included in the aforementioned guidance ranges. However, as a reminder, this cash outlay would be offset by annual savings of approximately $45 million across OpEx and lease payments on the agreements on a combined basis. We are focused on building cash here in the last quarter of this year in anticipation of next year's capital requirements, including the potential BOP-related payments. We are also committed to maintaining a robust return of capital program and a prudent balance sheet position. Based on existing backlog and current customer dialogue, we would expect a healthy EBITDA and cash flow inflection late next year. That concludes my remarks. And with that, I'll hand it back to Robert.

Robert Eifler, President and CEO

Thanks, Richard. To wrap up, we're continuing to see a number of positive signs of increased deepwater activity after the anticipated trough over the next few quarters. This is essentially very similar to how we assess the outlook last quarter, albeit with additional backlog in our books today to help lay the path towards that outcome, but also with a bit more slippage with certain program start dates, which continues to bifurcate the 2026 versus 2027 picture. We still have some work to do with securing a few more key contracts in order to support our expectation for a meaningful free cash flow inflection by late next year, but the opportunity set there is highly encouraging and progressing well. We continue to watch our customers' budget announcements closely, which, of course, have aggregate, been less than inspiring at a headline level and which remain the ultimate growth governor for our business. But at the same time, it has also been highly encouraging to see the relative resiliency of rig contracting activity this year in the face of elevated macroeconomic noise, sluggish oil prices, and upstream capital restraint. These divergent dynamics underscore the strategic long-term criticality of deepwater within the global upstream supply stack. We see this in the renewed emphasis and urgency surrounding upstream reserve replacement metrics. And in that same vein, on the ground here in Houston, there is a palpable growing sense of the capital imperative towards deepwater exploration in a way that feels different from anything over the past decade. So I would encourage investors to pay close attention to this important litmus indicator in the months and quarters ahead. Meanwhile, as we wait for these anticipated demand tailwinds to materialize, we continue to manage our costs and marketed capacity to optimize cash flow, and we remain committed to paying a competitive dividend and maintaining a strong balance sheet through the cycle. With that, let me hand it back to you, operator, to go to the Q&A section.

Operator, Operator

Your first question comes from Arun Jayaram from JPMorgan.

Arun Jayaram, Analyst

Robert, I wanted to maybe start with your thoughts on improving the utilization for your high spec floater fleet. You mentioned that you're 70% booked for 2026 with a target of getting to 90% to 100% by the second half of 2026. Talk to us about the opportunity set to get there, and kind of how long of a putt, using a Gulf analogy, would it take to get there?

Robert Eifler, President and CEO

Thanks, Arun. It really centers around the Viking, the Gerry de Souza, and the BlackRhino. Continuing with the Gulf analogy, I would say it's not a very long putt. While we didn't have any significant updates this quarter compared to last, we are making progress in discussions regarding all three rigs. We are optimistic about having some news for you in the near future. These are all very capable rigs, and we are bidding on them and engaged in discussions in various areas, with a clear perspective on the opportunities we hope to capture.

Arun Jayaram, Analyst

Great. That's helpful. Could you elaborate on the Diamond Offshore BOP leases? I believe those are agreements for eight of the rigs that you acquired. Can you walk us through the mechanics of that a bit? It seems like there is a quick cash return payoff given the savings. Could you go through the numbers a little so we can refine our models?

Richard Barker, CFO

Sure, Arun. So there's 2 components to it. There's the service agreement and the lease agreement. So we've now terminated the service agreement, and we'll have about a $35 million payment on that here in Q4. Okay. So that's $35 million of kind of cash out of the door during the fourth quarter of this year. On the lease agreement, we're still working through that. There is a cap on that agreement of $85 million, and that would be payable next year. Obviously, there are a few remaining lease payments as well. So if you sum that all up together, there's a maximum of $135 million of cash out of the door, and then the kind of the annual cash savings, if you will, so that's about $45 million for that. So it's about a 3x EBITDA multiple on that, if you will.

Operator, Operator

Your next question comes from Greg Lewis with BTIG.

Gregory Lewis, Analyst

Robert, I was hoping for a bit more detail. You mentioned some points to Arun that are relevant as we consider the first half of '26 compared to the anticipated performance in the second half of '25. It seems that some of the drillships will experience idle time in the latter part of '25, and there will likely be additional idle time in the first half of '26. Is that primarily what's influencing our outlook? Are there any other factors at play, such as idle time in the jackup fleet? Could you clarify why we expect a decline? I'm assuming that to improve our situation, we would need some spot work?

Robert Eifler, President and CEO

Yes. The increase is primarily attributed to the floaters. Last quarter, we discussed aiming for a cash flow run rate of $400 million to $500 million in the latter half of the year, driven mainly by the three rigs I mentioned. I also noted that we are targeting a market utilization rate of low 90% to reach those figures, which means ideally having two of the three rigs operational at any given time. We have visibility on various job opportunities. While we may not secure every job available, we are optimistic that achieving the goal of having two out of those three rigs working is very feasible and we even hope to find assignments for all three. Regarding spot work, we are currently in a unique market situation, with many opportunities anticipated for 2026 and 2027, but there is a noticeable lull in between, which is quieter than what we've experienced in recent years. This reflection may overlook some historical context, but I find it somewhat comparable. Consequently, I believe that spot work and gap filler jobs will become distinct from the rest of the work available as pricing evolves and companies evaluate their options. I expect this dynamic to continue through 2026.

Gregory Lewis, Analyst

I appreciate the information. My next question is about understanding the timing of upcoming projects. While it's challenging to assess specific deadlines, I’m curious about the term jobs we see in regions like West Africa and parts of Asia. Are the timelines for these projects still stable? For example, jobs that seemed likely to happen in the second half of 2026 six months ago—are they still expected to occur at that time, or has there been any delay? I'm trying to determine if there's been any change in the scheduling for work that many of us are looking forward to starting soon.

Robert Eifler, President and CEO

Yes, it's been a mix. Some projects have remained on track while others have faced delays. There hasn’t been any significant movement back to earlier timelines, which isn’t the current sentiment. However, I can think of a few projects that have been pushed back by about six months. At the same time, there are several projects that are on schedule, with our customers eager to get started either at the beginning or in the middle of the planned timeframe. So, overall, it's a combination of both situations.

Operator, Operator

Your next question comes from Eddie Kim with Barclays.

Edward Kim, Analyst

Just wanted to touch on your expectations for the first half of next year. So you mentioned you expect moderately lower earnings and cash flow compared to the second half '25 levels. Consensus currently has you guys at around $440 million in EBITDA, which represents about a 10% decline versus what your guidance implies for the second half of this year. So just curious if you could speak to your expectations for first half '26 relative to where consensus is that now? And what it would take maybe in terms of some incremental contracting and spot market from here to achieve that level of EBITDA or if that level might be a bit too optimistic at this point?

Robert Eifler, President and CEO

We haven't provided quarterly estimates yet. However, directionally, everything aligns with what we've discussed in our prepared remarks. It's important to note that we don't anticipate a significant amount of work in the first half of '26. There will be a few announcements, and while there’s some minor gap filler work that I mentioned earlier, I don't foresee much opportunity for improvement during that period. This situation changes considerably in the second half of the year. Some of that work is already known and contracted for us and our competitors, but there are also projects that are still under negotiation and haven't been announced yet across the industry. We're focused on the timing of these opportunities. We've prepared to achieve this cash flow inflection, and while the timing for the latter half of the year is somewhat uncertain, we definitely expect it to happen.

Edward Kim, Analyst

Got it. Got it. Understood. And my follow-up is just on your expectation for that, you called it the deepwater utilization recovery by late '26, early '27. Could you just talk about your confidence level in this recovery? Is it based on the tenders that are out there currently or the tone of your conversations with customers or contracts that you already have in hand? So if you could just talk to your confidence level in that recovery?

Robert Eifler, President and CEO

Sure. I think it's a combination of factors. Starting with the contracts in the U.S. and in Suriname, we've established a kind of baseline for ourselves looking toward the latter half of next year. We observe a tightening market, with some announcements already made and other information we’ve gathered regarding competitors securing work. Additionally, we are actively pursuing opportunities ourselves. We are cautiously optimistic that day rates have reached their lowest point. While it’s possible that lower day rates may be announced after my statement, we believe the market is tightening significantly, especially toward late '26 and '27. So, stay tuned.

Operator, Operator

Your next question comes from Fredrik Stene with Clarksons Securities.

Fredrik Stene, Analyst

So I think you painted a relatively, I guess, optimistic picture of demand from the second half of '26 and beyond, then you've mentioned a handful of rigs by name, more specifically the Viking, Gerry de Souza, and BlackRhino, which you seem to be relatively confident that you'll get some work on. But I was wondering, there is the Globetrotter I and there is the Deliverer, for example. Do you have any additional color on how we should think about those rigs specifically going into next year? And maybe even more so the Globetrotter I. Is that also going to be at some point a divestment candidate after this contract? Or do you think it can get more work?

Robert Eifler, President and CEO

Yes, that’s a good question. In our GT-I segment, we are actively pursuing intervention work as we believe it presents an interesting market for that asset. We have also indicated that it could be a candidate for divestment. However, it is still too early for us to make any definitive statements. I can say that both options are possible. If we are unable to secure work for the rig in the intervention market, we will make a decision at that point. Regarding the Deliverer, I would categorize all the D rigs together and note that we currently see more opportunities than we have at any time since Noble acquired those rigs. Our outlook does not depend on all three rigs being operational; securing work for all three would be ideal. However, we are confident that we can at least have two of them working, and we anticipate more opportunities than we have experienced previously.

Fredrik Stene, Analyst

That's very, very helpful. And as a follow-up, just turning on the less spoken-about assets also on the floater fleet and maybe more in the harsh environment side. You have the GreatWhite, the Apex, and the Endeavor that's currently idle. And I guess there's a 2-part question here. One, on the GreatWhite is originally a U.K. type of rig, but have you thought anything more about potentially taking that rig into Norway, getting a proper AOC, and I'm sure that will come with a major CapEx payment, if you like to do something like that? And on the Apex and the Endeavor, how do you think about the fleet size in general? Or do you think that's maybe one too many rigs that are currently idle on the lower spec harsh environment side?

Robert Eifler, President and CEO

Yes. So the GreatWhite, we're marketing in a number of different regions around the world. You're right, it was not built to a Norwegian spec, so there would be a capital cost to take it into Norway, if that were to become an option. So I think we're just a little too early right now to give guidance on where that rig might end up. There will be some white space on it, and we're trying to find the best fit for it at any point in the future. There are several different jobs out there in different places around the world. The Apex and Endeavor likewise have opportunities. And like with all of our older rigs, we'll continue to have a very sharp pencil and look at opportunities closely. And for us, any opportunity needs to stand on its own for those rigs, and that's pretty firm on our side. And so those are being marketed, and hopefully, we'll have some update on direction there, perhaps next quarter. We'll see.

Operator, Operator

Your next question comes from Doug Becker with Capital One.

Doug Becker, Analyst

Robert, I was hoping you would expand on the prospects for the BlackRhino specifically? Is this likely to be well-to-well work in U.S. Gulf? Or is it more likely to be term work in the U.S. Gulf or some other region? Just given that you've talked about line of sight to contracting that rig?

Robert Eifler, President and CEO

That was the Rhino? Yes, sorry. I think we're discussing with customers about that rig, and we see opportunities both in the Gulf and beyond at this moment. I wish I had clearer guidance, but we genuinely have prospects that align with all three categories: short-term U.S., long-term U.S., and long-term non-U.S. We'll just have to wait and see what developments arise for us.

Operator, Operator

Yes. Look, I would say, I wish I could report that we saw a flood of work coming in Norway for the CJ70s. I can't claim that right now. We do have more opportunities today than we did 6 months ago and certainly a year or 2 ago, and that's driven us to look at reactivating the Interceptor there. I'd say that will be probably the most marketable rig in the region that doesn't have a contract as it rolls out of that accommodation work. So we like where it's positioned, and we're hopeful that perhaps rig demand picks up by one or if it's already picked up by one side, kind of maintain steady there. But it is a little too early to tell. And this contract I had stands on its own, and we're really happy to have it. Your next question comes from Noel Parks with Tuohy Brothers.

Noel Parks, Analyst

I just had a couple. Is it safe to say at this point that price sensitivity is not in the mix in a big way in customer decisions either from sort of a formal perspective, which would maybe urge them to commit sooner rather than later or sort of from a bargain hunting perspective? So is this sort of just what they want to do, being conservative on their budget commitments, the main driver that's at work these days?

Robert Eifler, President and CEO

I wish I could say yes. I don't think so, Noel. I believe our customers are as price sensitive as ever. The macro outlook is clearly variable and uncertain. There are some downward trends in oil prices. We will learn more as 2026 budgets start to be announced and clarified. However, I would say we are observing the opposite situation. We are noticing significant price sensitivity in our ongoing negotiations.

Noel Parks, Analyst

Okay. Okay. And you did mention sort of in the wrap-up of the prepared remarks that in Houston on the bound there, it feels different from how it has in terms of settlement towards the deepwater at any time in the past decade. I wondered if you could talk a little bit more about, I don't know if there's a sense of being like an inevitability that capital needs to head offshore relative to onshore opportunities. But just any sort of color or feel you can give for what you're hearing?

Robert Eifler, President and CEO

Sure. It is clear that deepwater will play a significant role in the supply mix moving forward, especially as the Permian region approaches a plateau that will eventually decline. Deepwater projects are long-term investments that require proactive planning and financial commitment, which need to begin at some point. This connection seems evident when considering the current challenges in the macro environment, where many are predicting potentially lower oil prices in the short term, alongside the opportunities we foresee in 2026 and 2027. Consequently, we anticipate more activity than might have been expected given the present macro uncertainties. This understanding reinforces the notion that deepwater is a crucial component of our future energy landscape.

Noel Parks, Analyst

Right, right. And if I could just...

Robert Eifler, President and CEO

I'll just add, Noel. We mentioned exploration. I can't say today that we've seen any uptick in exploration wells. I have seen an analysis that shows that the higher explanation of the difference in rig count from last market cycle high in 2013, '14 to today is the difference between development work and exploration work. And so I think that's something we've watched very closely. I don't think it's right on the horizon as a driver for demand in our business, certainly not in 2026. But I do think that's an important litmus test, which is why we mentioned that because we're running at around 90% utilization today on the pretty heavy development load or put a different way on a pretty low total exploration load, and so we watch that very closely. And we'll see what happens over the next couple of years here.

Noel Parks, Analyst

I wanted to ask one more question about last quarter when you mentioned that customers in West Africa were generally slower to commit compared to those in South America. I’m curious if that situation has remained the same. Additionally, regarding oil sentiment, I find it surprising that there seems to be a lack of attention to the ongoing geopolitical premium in the oil market, despite the numerous hotspots still present. I'm wondering if you've noticed any stronger concerns about future oil prices or oversupply among customers in one region compared to another.

Robert Eifler, President and CEO

Yes, certainly. Regarding West Africa, it's a region that requires extensive planning due to its long-cycle nature. In the last quarter, we indicated that there was a discrepancy between our earlier expectations for demand at this time and the actual situation, which is primarily due to insufficient demand from West Africa. We're beginning to see this trend in several countries within the region. We also mentioned Mozambique, which is expected to come online in the next couple of years. If the situation improves, I believe this could create additional demand that may significantly boost total utilization by late 2026 and 2027, aligning with our previous projections. On the oil front, there seems to be a lot of pessimism, with many believing that prices will drop further before they rise. While predicting this is challenging, I want to emphasize the positive outlook we see regarding service demand, which is encouraging. Additionally, the middle segment of the Brent curve has shown much less volatility compared to spot pricing, suggesting that deepwater operators are taking a longer-term view despite the current uncertainties in the macro environment. This stability in the middle curve likely supports ongoing planning that may extend beyond what the fluctuating market conditions would typically indicate.

Operator, Operator

Your next question comes from Josh with Daniel Energy Partners.

Joshua Jayne, Analyst

I just had one. I think it was at the end of the prepared remarks. You talked about the balance sheet and some cost rationalization. Maybe you could speak to the efforts you're taking on the cost side. And if you view those as sort of structural or if these are things that you're doing, assuming that we have a trough in the first half of next year before recovery. Maybe just go into more detail on the things that Noble is doing?

Richard Barker, CFO

Certainly. The costs in the down markets are crucial. Taking the Diamond transaction as an example, we announced $100 million in synergies, which we achieved in the second quarter of this year. Currently, that amount is significantly higher, but it's challenging to separate the synergy from the other cost initiatives we’re implementing in the company. While we haven’t set a specific target for additional cost savings, it's reasonable to say we're seeing these savings as activity slows in the first half of next year.

Operator, Operator

There are no further questions at this time. I will now turn the call back over to Ian MacPherson for closing remarks.

Ian MacPherson, Vice President, Investor Relations

Thanks, everyone, for joining us today and for your interest in Noble. We look forward to speaking with you again next quarter. Have a great day.

Operator, Operator

Ladies and gentlemen, that concludes today's call. Thank you for joining. You may now disconnect.