Darren Daugherty - Director-Investor Relations Marc Edwards - President, Chief Executive Officer & Director Gary T. Krenek - Chief Financial Officer & Senior Vice President Ronald Woll - Chief Commercial Officer & Senior Vice President

Ian Macpherson - Simmons & Co. International Angie M.

Sedita - UBS Securities LLC Roland Morris - Cowen & Co. LLC Theo Meryanos - Tuohy Brothers Investment Research, Inc.

Mark Brown - Global Hunter Securities

Thank you, Maria. Good morning, everyone, and thank you for joining us.

With me on the call today are Marc Edwards, President and Chief Executive Officer; Gary Krenek, Senior Vice President and Chief Financial Officer; and Ron Woll, Senior Vice President and Chief Commercial Officer. Following our prepared remarks this morning, we will have a question-and-answer session.

Before we begin our remarks, I'll remind you that information reported on this call speaks only as of today, and therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay of this call. In addition, certain statements made during this call may be forward-looking in nature.

Those statements are based on our current expectations and include known and unknown risks and uncertainties, many of which we are unable to predict or control that may cause our actual results or performance to differ materially from any future results or performance expressed or implied by these statements. These risks and uncertainties include the risk factors disclosed in our filings with the SEC, including our 10-K and 10-Q filings.

Further, we expressly disclaim any obligation to update or revise any forward-looking statements. Please refer to the disclosure regarding forward-looking statements incorporated in our press release issued earlier today, and please note that the contents of our call today are covered by that disclosure.

And now, I'll turn the call over to Marc.

Thank you, Darren. Good morning, everyone, and thank you for joining us on our first quarter 2015 conference call.

I will start by picking up where I left off last quarter when I suggested that the market will get worse before it gets better. Across the industry, we continue to see minimal contracting activity, primarily consisting of short duration term extensions.

Day rates for potential new fixtures are continuing to fall and a few existing contracts are seeing rates exchange the term. Some clients have even canceled work where permitted under contract terms.

Industry-wide and since we entered this cyclical downturn, over $4 billion of backlog has been canceled. We at Diamond Offshore are not immune to these market forces.

During the quarter, we disclosed that a representative from Pemex has verbally informed us of their intention to terminate the drilling contracts on the Ocean Ambassador, Ocean Nugget and Ocean Summit and to cancel the contract on the Ocean Lexington, which was scheduled to begin work in September. I want to clarify that for Diamond Offshore, the right to terminate a contract for convenience without compensation is unique to our client, Pemex.

But as of today, all four of our rigs located in Mexico continue to work, while we engage in ongoing dialog with Pemex. We have not received written notice of termination and therefore, our contracts remain in place at this moment.

Additionally, we previously disclosed that Petrobras has notified us of its right to terminate the contract on the Ocean Baroness and has verbally informed us that it does not intend to complete its contract term. To-date, we have not received written notification of termination from Petrobras and the rig continues working, although we expect that work to conclude in the near future.

The issues affecting the Ocean Baroness are not related to our other units working in Brazil. Our relationship with Petrobras remains strong, and we continue to have discussions on finding a mutually beneficial strategy as it relates to their forward rig requirements.

As I've said in previous conference calls, we expect that the market will have a significant oversupply of drilling capacity into 2016 and perhaps beyond. Our industry will be challenged in the coming quarters as clients continue to adjust their capital expenditure in response to forecasted commodity prices.

Given the continued deterioration in market fundamentals, we have determined that the carrying values of 7 of our 12 mid-water floaters and our older drillships were impaired. And so we have recognized a non-cash pre-tax write-down totaling $359 million.

Three of the units in the impairment group, the Ocean Ambassador, Ocean Clipper and Ocean Lexington, are currently working, but we do not expect the contracts to be extended beyond their current terms, likely resulting in the cold stacking of those rigs. Also reflected in the impairment are the Ocean Nomad and Ocean General, which are cold stacked in the North Sea and Malaysia, respectively.

We have also announced that we plan to retire and scrap three mid-water rigs, the Ocean Saratoga, Ocean Worker and the Ocean Yorktown, which are currently cold stacked in the U.S. Gulf of Mexico.

Last quarter, I stated that we were likely to cold stack additional rigs in our fleet. I went on to say that we were not expecting these to be scrapped unless the market further declined.

Not only do we feel that the market has continued to deteriorate during this last quarter, and will now be lower for longer, but also, we have further clarity on potential changes to offshore drilling regulations here in the Gulf of Mexico. Last month, the Bureau of Safety and Environmental Enforcement released the long-awaited draft of its well control regulations, which includes significant changes for the design and maintenance of blowout preventers.

The proposed rules remain in the comment period and would most likely not go into effect before next year. However, it is clear that future well control regulations will mandate newer technologies requiring significant investments to certain second and third-generation rigs.

Investing in these units is not the best use of our capital, and, therefore, the proposed regulations have factored into our decision to scrap the three mid-water rigs currently cold-stacked here in the U.S. During the quarter, we also recognized a $6 million pre-tax charge related to restructuring and employee separation costs.

We have reduced head count at onshore bases and corporate facilities, including our Houston office, where both corporate and support payroll costs have been reduced by 20%. We have also taken the difficult steps of reducing variable pay and benefit throughout the company.

In aggregate, these changes should result in annualized savings in excess of $100 million. These cost reductions are in addition to the payroll savings from cold-stacking rigs as they come off contract.

Further, a hiring freeze has been in place since last summer and, of course, there'll be no merit raise this year. Cost control is a necessity in any market.

But it is important that we also remain focused on the top line, and as such, I'd like to highlight some of the recent successes of our ongoing fleet renewal program. Our second newbuild drillship, the Ocean BlackHornet, went on payroll last month, beginning its five-year term contract with Anadarko.

And our third, the Ocean BlackRhino, is expected to go on ticket later this month. Shipyard delivery of our fourth drillship, the Ocean BlackLion, is imminent, and she will be headed to the U.S.

Gulf of Mexico, where all four of our newbuild drillships will work on solid rate term contracts extending into 2019 or beyond. We are also engaged in the latter stages of direct discussions for new term contracts for some of our recently upgraded semis.

And with that, I will now hand over the call to Gary to give further color on the financials, and then I will have some closing remarks. Gary?

Thanks, Marc. As always, I'll give a little color on this past quarter's results, and then cover what's to be expected for the upcoming quarter.

For the quarter just ended, we reported an after-tax net loss of $256 million, or $1.86 per share, based on contract drilling revenues of $600 million. This net loss, compared to net income of $99 million, or $0.72 per share, reported in the previous quarter, was primarily driven by the impairment write-down recorded in Q1, that Marc has already mentioned, in which we impaired seven of our mid-water rigs and our drillship, the Ocean Clipper.

In addition to the impairment charge, we incurred an additional $6 million of restructuring cost related to workforce reductions in the Houston office. Contract drilling revenues decreased from $674 million in Q4 of 2014 to $600 million in Q1 of 2015, primarily as a result of several rigs rolling off contract in late Q4 or early Q1 and failing to find follow-on work in this depressed market.

Partially offsetting this decrease was the fact that the Ocean Apex successfully began her initial contract with Exxon in early Q1 in Southeast Asia. For more details concerning individual rig contracts and timing, I'll refer you to our rig status reports that we file monthly.

Moving on to the other line items on the income statement, first, contract drilling expenses for the quarter came in at $351 million, which was within our guidance of $340 million to $360 million that we gave out in our last earnings conference call. Goals that we set for ourselves to quickly reduce costs from rigs that rolled off contract were met, thus, enabling us to meet our rig expense reduction objectives.

As I have stated in prior earnings calls, after safety, cost controls and efficiencies remain one of our top goals. Depreciation expense increased as expected quarter-over-quarter to $137 million and was within our prior guidance of $130 million to $140 million.

However, G&A cost and interest expense for the first quarter of 2015 both came in below guidance. We incurred $17 million in G&A cost under the $19 million to $22 million that we expected.

This shortfall is a result of cost-cutting measures instituted in the first quarter and this lower expenditure rate should continue for the remaining quarters of 2015. A slightly lower than projected interest expense reported is simply a result of timing differences in amounts re-classed to capitalized interest in accordance with GAAP.

The largest difference between actual results in Q1 versus our prior guidance was in our tax rate. We expected our tax rate to fall in the range of between 24% and 28%, but after adjusting for the rate book for the impairment and restructuring charges in Q1, the tax rate on normal earnings came in at approximately 13%.

This lower tax rate was simply a result of changes to our estimates in the geographies and the various foreign tax rates where we earn our pre-tax income. Now, for a look at some of the items that will affect our financial performance in the upcoming quarter.

As always, downtime for surveys and shipyard projects will affect not only revenue numbers but also contract drilling cost. In Q2, we will incur downtime for a survey on the Ocean Guardian, which is located in the North Sea.

It is anticipated that the Guardian will incur approximately 40 days of downtime before returning to her contract with Shell. The Ocean Confidence will complete her service life extension project during May, which means operating expenses that have been capitalized and deferred throughout the rig's shipyard stay will again be recognized as a current period expense in Q2.

In addition to down days associated with these two rigs, several other rigs will be mobing (13:06) and/or undergoing acceptance testing during the upcoming quarter. For the exact number of down days expected in Q2 and the timing of these projects and other downtime items I have not mentioned here, I will refer you to our rig status report that we filed this morning.

We expect rig operating cost as reported in the line contract drilling expense to increase slightly to between $350 million and $370 million in the upcoming second quarter. On one hand, ongoing rig cost will decrease as a result of our efforts to reduce cost through the efforts that Marc has already discussed.

In addition, costs will be reduced as a result of rigs that have recently gone stacked or being retired. However, this will be more than offset by rigs that will begin working in Q2 in incurring normal operating cost.

This includes not only the drillships Ocean BlackHornet and Ocean BlackRhino but also the Ocean Valiant, which began her contract in the North Sea with Premier on April 1. In addition, we will incur costs associated with the Ocean Guardian survey in Q2.

Also, rig operating costs should increase slightly quarter-over-quarter. As always, I'll remind everyone that I've been talking about the line on our income statement contract drilling expenses.

These numbers that I've just given you do not include costs incurred in the line reimbursable expenses. Reimbursable expenses, as always, whatever the amount incurred, will be offset almost dollar for dollar with additional reimbursable revenues.

With regards to other items on the income statement, we're expecting depreciation, which will be affected by our impairment charge, reduced maintenance capital spending and new rigs being delivered, to come in between $118 million and $124 million in Q2 and stay in that range for the remaining quarters of the year. As a result of our cost-cutting measures, we are reducing our G&A guidance to $16 million to $18 million per quarter on an ongoing basis.

Interest expense guidance remains the same at $25 million to $30 million per quarter for the final three quarters of 2015. As for taxes, based on current projections, we believe our tax rate will come in somewhere between 11% and 16% in Q2 and will continue there for the rest of the year.

As always, any changes with the geographic mix and the sources of our earnings as well as tax assessments or settlements or movements in exchange rates will impact our effective tax rate. And finally, moving on to our capital expenditure guidance, we are reducing our maintenance CapEx projections from $340 million down to our current estimate of $290 million, again a reflection of cost reductions we've made here at Diamond Offshore.

Newbuild CapEx for 2015 is expected to be $630 million which includes, the final 70% shipyard payment for our fourth newbuild drillship, the Ocean BlackLion; oversight costs on the Ocean GreatWhite; final cost on the BlackHornet and BlackRhino drillships, which I have previously mentioned are beginning term contracts in the Gulf of Mexico during the second quarter; and, finally, the completion cost for the service life extension project on the Ocean Confidence. Together, maintenance and newbuild capital expenditures are expected to total approximately $920 million in 2015.

And with that, I'll turn it back to Marc.

Thank you, Gary. As we continue through what is likely to be a prolonged downturn, management here at Diamond proactively took a number of important steps to position our company for today's market.

First, we transferred the Ocean Confidence contract to our newbuild drillship, the Ocean BlackRhino, while the Confidence undertook a major upgrade, and we are now in discussions with the client for a potential term contract on this upgraded rig. We then successfully secured fixtures for our last two newbuild ultra-deepwater drillships.

This was one of the last major term fixtures seen in the ultra-deepwater space albeit from five months ago. All of our newbuild capacity is contracted through at least 2019 at solid day rates.

In anticipation of our prior capital obligations associated with our newbuild program, we've built up a sizeable cash reserve. Additionally, we increased our revolving credit to $1.5 billion which should be more than ample to cover remaining existing capital needs and to provide added flexibility to our balance sheet.

To further enhance our capital flexibility, the board of directors previously elected not to pay a special dividend, thereby freeing approximately $400 million on an annual basis. We are aggressively controlling costs, including decreasing the size of our workforce.

We have reduced compensation for personnel, cut CapEx wherever prudent, and successfully negotiated discount with our vendors on capital equipment. And finally, we have announced plans to scrap three mid-water rigs, in addition to the six mid-water rigs that we retired and scrapped in Q3 of last year.

Going forward, we will continue to focus on safe operations. Our Q1 safety stats are the best we have recorded, delivering quality operations, rationalizing cost, and utilizing our capital efficiently.

With that said, let's now take your questions.

Hey, good morning. Thank you.

Marc, you suggested there are potential direct contracts – direct negotiations for contracts, term contracts, for some combination of Onyx, Apex and Confidence. How would you handicap the odds of getting two or three of those on term contracts sometime in the near term?

And then, maybe if you could shed a little light on how you're thinking about putting term on rigs at what is approaching trough pricing right now, as opposed to keeping more flexibility with the term?

Ian, good morning. This is Ron.

We have, I think, a reasonable degree of confidence in terms of landing some of those opportunities for those rigs. We're not yet at a point today where we're going to get into specifics on which rigs and which customers but obviously, we have some measure of confidence that that will take place.

And I think, from the standpoint of where we are in terms of utilization versus pricing, I think we feel pretty good that we're making good tradeoffs regarding opportunities and pricing for those rigs. We realize that we're marketing, I think, uphill right now, in terms of where the market is.

But we have, I think, a fair measure of activity in our pipeline that gives us enough confidence to talk about them, at least as a broad stroke, here this morning.

Okay. Well (20:42)

Ian, what I'll do is, I'll just come in here a little bit and just generally talk about the market as it relates to getting term now in what could be perceived as a low point in the market. I think we've got to realize and face up to the fact that every major operator – well, bar Saudi Aramco – is cutting their E&P spending in 2015 by an average of, say, high mid-teens.

This is not going to change in the foreseeable future. And if you consider our clients' negative cash accumulation from operating cash flow distribution of recent years, it's easy to understand why.

When E&P spending is cut, the lion's share comes out of the drilling budget, as it is the easiest to turn off. This is why, early in the cycle, we contracted our last two speculative newbuilds, increased our revolver and then, of course, suspended the special dividend.

It will need a sustained increase in the price of our commodity to convince operators to increase their E&P spend, and then the fixtures governor (21:49) will have to spin out, which will take time. We've also got a lot of spare capacity out there in the market, so it will be a while before this capacity is absorbed and pricing power returns to the offshore suppliers.

So, in essence, we are comfortable now looking for term in what is a pretty arid market for fixtures, and we're very comfortable with our strategy in negotiating that right now.

Okay. Well, I appreciate that follow-up color, Marc.

Quick follow-up for you, Gary. Can you clarify what the revenue recognition status is on the Baroness?

I assume that that rig is not working now. Are you receiving payment, or have you suspended collections and recognition already?

No, Ian, that rig is still working under contract. We continue to build, recognize revenue as normal, and continue to collect.

Okay. So...

Yeah. So, Ian, just to clarify one more time, we've been verbally informed that the contract is going to be cancelled; we haven't received that in writing, and the rig currently is actually working, for the short term.

Okay. All right.

Thank you.

Thanks. Good morning, guys.

Marc, just going back to the comment you just made on seeing a sustained increase in oil prices for them to come back, do you think oil needs to be back to the $90 to $100 levels to see these IOCs come back? Where do you – I mean, moving to $65, is that going to be enough to see some recovery in demand next year or 2017?

I'm not going to put a number out there. I think many commentators have spoken about what they think is required in the market to see activity rebound.

I don't think that it's so much of an oil price issue. But, of course, a higher price does help somewhat.

At the end of the day, the deepwater breakeven price is actually less than the average oil shale price. But, of course, there are some shale oil plays that compete well with deepwater and vice versa.

But right now, this really isn't a price-driven issue at present. Obviously, we need that price to come back up for our clients then to be comfortable to increase E&P expenditure.

But even some of our clients, let's me say, down in Brazil for example, have already come out and said that they've cut E&P spending for 2015 and is likely to be further cut in 2016 too. So the cycle is likely to be extended, protracted, and the bounce back when it comes, I think, has been pushed out during the course of Q1 to perhaps end of 2016, beginning of 2017.

I think the other you've got to remember is that we need to see the number of fixtures come back and that then is a time lag before the offshore drillers get on location, turn a bit to the right, and see revenue being generated. So this downturn is going to last a little bit longer than we previously thought.

Fair enough and we agree. So if you think about the market in 2016 and 2017, people are obviously starting to see, including yourself, some retirements and scrapping.

Have you put any thought into how much you would need to see as far as number of rigs that by the time we do get to 2017 or 2018, it would actually make a difference in the recovery or the pace of the recovery?

Yeah. Again, there's a number of commentators out there that have suggested numbers that we need anything from another 75 rigs to 100 rigs to be scrapped before pricing power returns.

But at the end of the day, there's many moving parts in the engine room of success for the offshore drillers, and it's not just that one equation itself. If activity bounces back earlier than we're expecting right now and that could be geopolitical issues apart from anything else, it's not really a case of having to scrap more rigs.

It would certainly help, but we're not scrapping our entire second and third-generation fleet. We do believe that there's an option and there's a benefit in maintaining some of those assets through this downturn, and we are relatively optimistic that some of our second and third-generation rigs will have a foreseeable future that will be a benefit to our shareholders.

Okay, that's very helpful. And then finally, could you just talk a little bit about those proposed regulations in the Gulf of Mexico that's affecting the mid-water fleet and what would need to be done to the rig and then estimated cost ranges?

Yeah, sure. Some of them, we'll look at investing, and some, as we've already mentioned, will be scrapped.

But the BSEE regulations that have been or the draft regulations that were released to the industry cover a number of issues. For example, they need a double shear and pipe ram, which many of the second and third-generation fleet currently don't have right now.

You're looking at perhaps going to a five-stack BOP, possibly a six-stack BOP that will require an upgrade of anything from $20 million to $30 million. And then, for example, the pipe would then have to be centralized in the BOP when you go to shear it.

So, in that respect, that kind of investment will need to be made on rigs that, say, only have a four-stack BOP right now. But these rules and regulations aren't likely to go into or be enforced until next year.

And then there's a grandfathering period. There is a – for example, on the double shear pipe ram requirement, there's a five-year compliance term on pipe centralization.

I believe it's seven years. So this isn't something that's going to hit us hard right now.

It's going to be a gradual increase in regulations that will require a relatively small investment each year over the next five to seven, possibly 10 years.

Great. Thanks.

I'll turn it over.

Hey guys, thanks for take my question. Marc, I was just wondering if you could maybe expand a little bit on your comments as it pertains to Petrobras.

I know you said mutually beneficial strategy for their rig requirements going forward. Could you just give us a little bit of color as to what that's going to look like in terms of whether it's a rate for term conversation or maybe just some broad strokes?

I know, in some cases, we've seen you've improved linked contracts out there, I was wondering if you could provide a little bit more color on those – that term there that you used?

Yeah. We've been in Brazil a long time.

We've been there over 40 years. We do have a strong relationship with the E&P or the upstream folk in Brazil.

That continues. We are working together with them in a mutually beneficial perspective to look at the rig requirements today, in 2016, and beyond.

And in a very positive vein, those discussions continue. I'm not going to tip my hat as to what stage they're in or the like.

Suffice to say that we are close to an agreement but still have to get board approval and approval from the very senior management, the new management that's down there in terms of coming out with some extra term on one of our rigs that is currently not in Brazil right now. And really, I want to leave it at that.

Okay. That's pretty helpful.

And then, I guess, to be able to just skip to another area. On the Ocean America, what are the realistic prospects for that rig after the one-well work that you just had there with Apache?

Yeah. Yeah.

Fair enough, Roland. Appreciate that.

The America has got a pretty good reputation, we think, down in Australia, as we like. We like what she does there.

She has a good, I think, reputation amongst the operators. We're obviously not announcing anything sort of new here today about her.

But given her track record and her safety case and condition, I think that amongst a pretty difficult market, we tend to view her very positively.

Got it. Well, I'll turn it back over.

Thanks, guys.

Morning. Could you guys provide any color around the rate revision pushing out of the contract on the Valiant?

Yeah. This is Ron, glad to.

Thanks for that question. So, in the case of the Valiant there with Premier, we are in a – what we call kind of a preparation state, I guess, with Premier right now, preparing the rig to commence drilling, probably around – beginning of June timeframe.

And we had agreed, based on some of their schedule needs and some of the prep work required, we had agreed to a reduced rate while she's not technically drilling for them, but preparing to drill. So we had agreed to reduce that rate, cover our costs plus a bit more, and then go on full rate when she drilled starting in June.

Got you. Got you.

Thanks for that. And okay, could you just, on the Apex and Quest, moving them to Malaysia, could you elaborate on the decision to relocate those rigs, if there are any specifics, or just general market conditions would be really helpful?

Thank you.

Yeah. Sure.

This is Ron again. So on the Quest, we know we've got some work – and that's a good example where, even though we talked about – or reducing some of the space that the third generation rigs occupied, the Quest is one where, quite frankly, we intend to upgrade the helideck for her, to get her compliant with some of the recent regulations, and then continue to market her and look at opportunities out there in that region.

The Apex is another rig where we continue to have activity in her pipeline. We're not announcing anything new here today.

So that's another rig that – where we have, I think, some positive things happening in the background and when we have something more specific to talk about, we'll bring that to you.

All right, appreciate it. Have a good one.

Hi. Good morning, guys.

I was just wondering, on the UK North Sea, what your thoughts are on that market, just on the Valiant that you just discussed? Is that likely to get extended when it completes its work with Premier, and also the Guardian?

Yeah. This is Ron.

So, in terms of Valiant, she's got a two-well deal there with Premier. We have a very good rapport with Premier as a customer, and although we're not announcing something new here today, we do think that good work, I think, ultimately leads to other good work.

And so, we're pleased to work for Premier and I, again, think that Valiant has got a good future in what is a very tough market overall, but even more so in the North Sea. You asked, I guess, also about the Guardian.

She's with Shell through July of this year. We don't have anything new to report here this morning.

But that's a rig that we think that we continue to put in front of customers for consideration. So, there are things in the pipeline that we're looking at, but nothing that gets announced here today.

Thank you. And then, on the question of countercyclical acquisitions, the commentary on the market seemed fairly bearish, that it will get worse before it gets better, and wanted to check when you think it would be worse enough that you would want to think that valuations have reached a point where you would be interested in buying some assets?

Is there a valuation level, or maybe a rough sense of when the timing would allow you to seriously think about making some asset acquisitions?

So, Mark, everything remains on the table today. And from an entry point perspective, this could include picking up distressed assets from the yards or a distressed asset without a contract.

There are assets available now but frankly, the bid-ask spread is still too wide, and we do have to consider the stacking cost in an oversupplied market, especially, as I've mentioned, it does seem to be getting worse. I also believe that current valuations of, for example, secured rig that (35:42) are still inflated and they do not reflect fair risk-adjusted discounts.

So, we have not quite reached the sweet spot yet for entering a space where we're picking up assets on the cheap, and that's for individual assets or even corporate acquisitions. Despite the recent uptick in the oil price, frankly, if we are looking at a protracted downturn, the high near-term EPS of some of the, let's say, highly leveraged players will drop as lucrative contracts play out.

And those, for example, like us, with healthy balance sheets and the correct leverage for this market will then participate likely and consolidation moving forward. So, frankly put or frankly speaking, I don't think the time is right, right now.

And I think, perhaps opportunity will present itself somewhat better further down the road. But again, let's not – I don't want to overplay my hand here and suggest that in 12 months' time we'll be successful in completing acquisitions of assets or companies.

However, I do believe that now is not the time to enter the market specifically. I think in the next 6 to12 months there will be better opportunity.

And just as one last follow-up, is it safe to say that your focus would be on the floater side as opposed to the jack-up side that would more be fitting with your existing fleet.

The priority will be on the floater side but if opportunity presents itself we'll take a look at it from a specific basis. But we are really looking at the floater market.

We think the floater market will be better positioned in terms of a recovery than the jack-up market moving forward.

Thank you.

Hi. Thanks for the follow up.

Gary, I was wondering if you could give us your first quarter CapEx split between newbuilds and other CapEx just to back out your remaining spending for the year.

Yeah, Ian. We had about $130 million of total CapEx, $60 million of maintenance, $70 million in the newbuild upgrade.

Okay. And then it's early now, but I don't know if you've looked at sort of contingency planning for the Rhino's idle gap next year if it's not contracted what you think it's – I guess it will be warm stacked – what that would look like if that's the outcome for half or more of next year in terms of your daily OpEx?

Yeah. Ian, this is Ron.

That gap is something that we're clearly pretty well tuned into between two of our mainstay customers, both of them, by the way, also want us to fill that gap. So that's something we've got a lot of attention put on to and we intend to address just as hard as we can.

Okay. Good.

Thank you.

So, thank you for participating in the call today, and we look forward to speaking with you again next quarter.