Unknown AttendeeGood morning, everyone. My name is David. I'm with hotel security here at the Omni Hotel. I just want to briefly explain what we would do in the event of an emergency here at the Omni, okay? To start with, if there was an alarm for any reason going off in the hotel, it would start by these lights up here. Do you see? They're flashing up here in the ceiling. We have 6 of them in this room. Any time there's any type of an alarm, the lights would automatically flash, okay? There's a 2-minute delay on all alarms in the hotel before an evacuation begins. That gives the Omni Hotel security and engineering department a chance to investigate what's going on and determine whether we need to evacuate or not. Okay? If the lights do turn off within just a few seconds or a minute, that means that we've determined that there's no emergency and no need to evacuate. Should we have to, it will start with a manual announcement then a -- someone will come over the intercom and explain to you that we do need to evacuate the hotel. If we do need to evacuate for any reason, obviously, we have the doors at the front. And we'd prefer that everyone exit the building through the front of the hotel so that when we do get across the street, we can account for everyone, and make sure everyone is safe. If, for some reason, those doors are not an option to evacuate, behind the screens, we have exits as well, and there are stairwells in both directions to exit the building. So there's many ways to get out of the hotel should there be any need to. Any questions? These are the simplest ways. And again, everyone would evacuate across the street, and we would like for everyone to be accounted for before anybody starts to dissipate. Okay? Does anybody have any questions at this time? All right. Thank you very much.
Sean P. O'NeillThank you very much. Now let me walk through the agenda, okay, which is also included in your folders, and we also have bios for each of the speakers today in your folders. Jay Swent, our CFO, will start us off with a discussion of Ensco's strategy, vision and core values. Mark Burns, Senior Vice President of Western Hemisphere; and David Hensel, VP of North and South America, will discuss the success of our Ensco 8500 Series rigs. John Karish, Director of Safety, Health and Environment, will cover safety at Ensco and in the post-Macondo environment. Richard Roper, Senior Director, will discuss ENSCO 120 series jackup strategy; followed by John Knowlton, our Senior Vice President - Technical, discussing our drillship strategy, including our recently announced order for DS-8, which I think you saw in the last couple of weeks, our press release. Last but certainly not least, Kevin Robert, Senior Vice President of Marketing, will cover customer satisfaction, including our recent EnergyPoint #1 ratings and a discussion of supply and demand dynamics in our global markets. We will then have a rig and shipyard safety briefing, and finally, we will have a Q&A session over lunch. Hard hats and gloves will be distributed at the buses when we leave today. Please make sure to bring your safety glasses that we distributed to you this morning. They will be necessary in order to get on the rig. For those of you with flights leaving later today, you should have brought your luggage with you this morning. We have it tagged, and it will be on the bus you were assigned to. If you do not have your luggage with you and you plan to go straight to the airport after the rig tour, please use the break at 9:15 to bring your luggage down and check it with Sue McMullen [ph] at the registration table.
At 12:30 sharp, we will leave this room and go straight to the buses, which will depart promptly at 12:45. Everyone has been assigned to a specific bus and tour group, and everyone should have a colored wristband to show which bus you're going to be on. Obviously, please make sure to board the correct bus since your luggage will be on it with you. When we get off the buses at the shipyard, your tour guides will be holding up signs so you can join the appropriate group. Those of you with flights departing this evening have been prioritized based on the flight information that you provided us. Finally, here is our Safe Harbor statement, which can also be found on our website.And now that I've covered logistics, let me turn it over to Jay Swent, our Senior Vice President and Chief Financial Officer. James W. Swent Thank you, Sean, and good morning, everyone. Sean asked me to welcome everybody and to thank you for traveling as far as many of you have come. Corpus Christi is not the easiest place in the world to get to, so we appreciate it, but it occurred to me I really ought to thank everybody for getting up at this hour of the morning. So thank you for your commitment. I feel a little bit -- I was saying to somebody earlier, I feel a little bit like this is taking you to a trip to a winery. Everybody wants to get on to the tasting room, but you got to listen to the winemaker tell you the story. So we're going to tell you the story for about half the day, but I think you're going to enjoy what we have to say. It was -- interestingly, it was almost exactly 5 years ago when we hosted our last, which was also our first, Analyst Day in Singapore. And our objective at that meeting was to convince everybody that we actually had a right to enter the deepwater business and that we actually had a good solid plan to do that and that the 8500 Series rig was a capable rig that was going to be very successful and deliver great financial returns. There was a certain amount of pushback at that point in time. And so I think it's pretty interesting that we roll forward 5 years, and what a different world we find ourselves in.
Today, or this year in particular, we're celebrating our 25th anniversary. We were rated #1 in customer satisfaction 2 years in a row, last year and this year. The 8500 Series rigs are clearly a financial and a technical success by anybody's standards. We've taken delivery and crewed up successfully 11 rigs since that last meeting that we had with folks. We re-domesticated the company to the U.S., and last year, we acquired Pride and fulfilled just about all of our strategic objectives.So today, we're not here to talk so much about the past but really talk a lot about the future. We're going to share with you a lot about several new designs that we have with proprietary technology that we believe is going to keep us the driller of choice for the foreseeable future. So I hope you finish the day as excited as we are about our current prospects and our opportunities for growth as we go forward. Okay. We're not working up. We're working down -- okay, thank you. Okay. So Ensco's vision has always been to exceed expectations, particularly regarding safe operations and protection of the environment and to be the clear choice among employees, customers and investors. Our strategy as a company is very straightforward. We invest in high-quality rigs and continuously evaluate less capable rigs as part of a disciplined ongoing high-grading of the fleet. We recruit and train the best talent on proven systems that are applied consistently across all of our rigs around the globe, and we operate a global platform that leverages our scale for the benefit of our customers. Rigorous application of this strategy leads to operational excellence and a superior safety record, which today, we believe, is the most critical criteria that our customers use to evaluate who they want to work with as their offshore driller. Operational excellence, in turn, produces leading customer satisfaction scores, allowing us to earn a high rate of return on capital and to increase shareholder value.
Today, as a result of the successful long-term implementation of our strategy, we have the newest ultra-deepwater fleet in the industry, the largest number of active premium jackups amongst the major offshore drillers and a wide range of capabilities, including ultra-deepwater drillships, semis and high-specification jackups. We have critical mass in all of the strategic growth markets. We have engineering talent that we believe gives us a competitive advantage in addressing our customers' drilling requirements, which you will see in greater detail when John Knowlton and Richard Roper present later this morning. And we serve a diverse client base, including super majors, national oil companies and independents. This client base, once again, voted Ensco #1 in terms of customer satisfaction in the most recent EnergyPoint customer satisfaction survey that was just recently issued.This slide shows a wide range of advanced drilling technologies that we operate today to provide drilling services to customers in virtually any shallow or deepwater basin around the world. This diverse product offering of high-spec, well-maintained equipment enables our customers to achieve the lowest delivered cost for construction of their wells and generate significant repeat business. Now let's look at each rig type. We have the newest fleet of ultra-deepwater rigs amongst our peers, capable of drilling in 7,500 feet of water or greater. This will continue to be true for the foreseeable future given our scheduled deliveries of newbuild rigs that I'll discuss in a moment. Some of our competitors have recently noted significant downtime for their deepwater fleets. We believe our downtime will be less than our peers over time given our mature and cost-effective maintenance philosophy and the fact that the average age of our ultra-deepwater fleet is just 2 years, as shown here. We have 21 deepwater rigs that can drill in 4,500 feet of water or greater. It is the second youngest fleet of its kind, as shown on the left, with an average age of just 7 years, and this is less than half the average age of the next youngest fleet. We also have the largest fleet of active premium jackups with a total of 40 rigs. The numbers shown here are for active rigs, which excludes rigs that are cold stacked or under construction. And today, Ensco only has 6 cold-stacked jackups remaining in our fleet. And I think, as most of you know, we've sold 5 jackups over the last 2 years, so we feel we're well ahead of the curve in this regard.
Including acquisitions, new construction and enhancement to existing rigs, we've reinvested more than $1 billion in our jackup fleet since the beginning of 2005. In addition, we are building new ultra-premium, harsh-environment jackups. In total, the 3 newbuild rigs represent an incremental commitment of over $700 million to further high-grade our fleet. We have more 400-foot jackups than any of our competitors, and even our older jackups are experiencing strong utilization today, as evidenced by our multiyear contracts signed recently for several jackups with Saudi Aramco in the Middle East. Utilization has increased significantly to the 90% level for Ensco's jackup fleet, as noted here, and this will help drive increasing day rates as we go forward.All together, as I mentioned earlier, we are now the owner of the second-largest offshore drilling fleet, with a total of 77 rigs, as shown on this chart. Our global operations span 6 continents, and we work in virtually every deep and shallow water basin around the world. Given our broad geographic reach, with operations on 6 continents, we're able to identify the most attractive opportunities to contract our rigs at the best possible terms. Having scale and mature, well-established operations in virtually all of the major markets around the globe gives us a distinct advantage when bidding for new contracts. This allows us to maximize the earnings we achieve on each contract. Now day rates always command the headlines, but a more strategic approach is to consider each contract's overall return, which is what we do. With our global reach, we're able to select jobs that require the least amount of incremental capital and in jurisdictions with low tax rates and lower cost of doing business to achieve superior financial returns. The advantages of our fleet, though, go well beyond size, average age and geographic reach. We have realized significant benefits from the uniform design and standardization across our ENSCO 8500 Series rigs, as well as our Samsung DP3 drillships and Megathyst deepwater semis. We've also benefited from standardization across our premium jackup fleet for rigs that have similar equipment, particularly those rigs that were built by Keppel FELS.
And I should point out here, when I talk about standardization, I'm talking about standardization of design, drilling equipment and shipyard construction. When we talked to people back in Singapore many years ago about the 8500 Series strategy, we made the point that we were built -- taking a common design, building it cookie-cutter style, one after another in the same shipyard and that that was going to lead to tremendous financial benefits. That was a theory then. Today, it's a reality, and we have become absolute devotees to standardization. We see it in every aspect of our business. It has tremendous benefits. And one of the key things that I think people don't realize about our fleet is that we have the most highly standardized fleet in the industry today, and that's going to be a competitive advantage for us for a long, long time to come.I talked a little bit about our Ensco 8500 Series rigs. They had exceptional utilization in 2011 with 97%. These rigs have had great success with customers as noted on this slide. We drilled the major Lucius discovery for Anadarko, and Telo had a major discovery in French Guiana. That was the deepest well ever drilled in French Guiana and probably the first well drilled in about 30 years. So it was a major accomplishment. We're really gratified that we have a number of repeat customers who've contracted more than one 8500 Series rigs, including Anadarko, Nexen and Noble Energy. And I think everyone here would agree that these companies know something about drilling, and I think it says a lot when they are repeat customers, and they contract multiple rigs from us. Our Samsung drillships have also benefited from standardization and repeat customers as the ENSCO DS-3, DS-4 and DS-6 are all contracted by BP. The DS-4 spudded BP's first deepwater well in Brazil, and the ENSCO DS-3 is drilling one of the first deepwater wells for Petrobras in Angola. Last week, we announced a 5-year term contract with BP for DS-6, and we're very gratified that BP had decided that Ensco's drillships are now their rig of choice for new deepwater well programs.
So in terms of newbuild construction to support our high-grading strategy, we've been very active in terms of new rig deliveries over the past several years, as shown on this chart. You see we've delivered over -- or 16 rigs since 2004, and we have continually built our shallow water business and our deepwater business. And today, we now have 6 rigs under construction, 4 of which will be delivered by next year. All of this is being accomplished with disciplined capital investment approach based on achieving superior returns.The delivery schedule for these newbuild drillships, semis and jackup rigs underscores the significant organic growth that we have in place. As you can see, we've already contracted many of these newbuild rigs, and we feel very good about our contracting opportunities for our remaining rigs under construction. Just last week, we announced our decision to order DS -- our ENSCO DS-8, which is an enhanced version of our Samsung DP3 drillships, which John Knowlton will cover in greater detail in his presentation. This rig will be delivered in the second half of 2014, and we also have options for 2 additional drillships. The ultra-premium, harsh-environment jackups we are building have received significant interest from customers, and the first ENSCO 120, which won't be delivered until next year, is already contracted. The unique design of ENSCO 120 Series includes several things: 2.5 million pound hoisting capacity; the ability to drill to 40,000 feet; ability to handle high-pressure, high-temperature and ultra-deep gas wells; the ability to work in harsh environments year-round; and to efficiently drill large, multi-well programs for our customers. Earlier, I mentioned our competitive engineering talent. The design of this rig is the result of a rigorous engineering design process, and it's not an off-the-shelf design from a shipyard. We've incorporated proprietary Ensco technology into this rig that resulted in Ensco winning the first competitive bidding round for new jackups of similar designs. We just met with the customer, and a point they shared with us was that that job was won on the basis of technology, not on price, and it was contracted well in advance of the scheduled delivery next year.
Richard Roper will discuss the process we went through to design and contract these rigs, but let me tell you, at the end of the day, the product is an amazing piece of work developed through collaboration amongst our engineers, capital project teams, marketing and finance groups. This series of rigs differentiates Ensco and will generate outsized returns for our shareholders.Another key element of our strategy is a strong safety record. Across our global fleet, we have consistently outperformed the industry average in terms of our safety record. We're committed to achieving a 0-incident workplace, and we've invested heavily in training programs and systems to support our personnel at every level. And we have proven quality control and audit programs to ensure that we remain best in class. Safety performance is our clients' primary selection criteria for choosing their offshore driller, and this bodes well for Ensco. John Karish is going to give us a more in-depth look into Ensco's safety culture and describe why we believe the industry is now stronger, following Macondo, from a safety standpoint. Read the rest of this transcript for free on seekingalpha.com