Borr Drilling Limited

Good morning, and thank you for participating in the Board Drilling First Quarter 2024 Earnings Call. I'm Patrick Schorn, and with me here today is Bruno Morant, our Chief Commercial Officer, and Magnus Fahler, our Chief Financial Officer. Next slide, please. First, covering the required disclaimers. I would like to remind all participants that some of the statements will be forward-looking. These matters involve risk and uncertainties that could cause actual results to differ materially from those projected in these statements. I therefore refer you to our latest public filings. Next slide. The first quarter results have been strong, driven by solid operational performance with technical utilization coming in at 99% and economic utilization at 98.6. We operate currently a fleet of 22 rigs and have two new builds join the fleet later this year. The adjusted EBITDA margin increased this quarter to 47.2%, keeping us right on track to meet our annual plan. We finished the first quarter with all 22 delivered rigs operating. However, after the close of the quarter, one rig in Saudi Arabia has been suspended. We expect this rig to be re-contracted in a different region by the end of Q3 based on current customer discussions. On the contracting front, we continue to deliver strong results, securing 318 million in revenue backlog year-to-date, translating to an average day rate of approximately $183,000 per day. Notably, in the second quarter we achieved our first ever contract exceeding $200,000 per day on a clean day rate basis. This milestone not only underscores the premium quality and operational excellence of our fleet, but it is a positive confirmation of our views of a well-balanced market despite the recent developments in Saudi Arabia. Given the high utilization of our rigs and limited near-term availability, we expect that the new build rig VALI which is to be delivered from the shipyard by the end of 2024, will immediately join the operational fleet to cover the newly contracted work scope. On the back of the strong operational performance and the positive market outlook, the Board has approved an increase of quarterly dividend to 10 cents per share. This doubling of the dividend versus the previous quarter is in line with our stated ambition of progressively increase the dividend in line with our earnings projections. Lastly, we also reiterate our full year adjusted EBITDA guidance for 2024 to be in the range of $500 to $550 million. Magnus will now step you through the financial details of the first quarter.

Thank you, Patrick. Q1 2024 results continue the sequential increases that we have experienced over the previous eight quarters with increases in revenue of 6% and adjusted EBITDA of 5% quarter on quarter. The Q1 2024 operating revenues were 234 million, an increase of 13.4 million compared to the fourth quarter. The increase is largely due to an increase in day rate revenues, primarily due to more operating days for the rigs GERD and HILT than in the previous quarter. RIG operating and maintenance expenses increased by 5.5 million to 104 million, a natural increase resulting from the increase in number of operating days. Net income for Q1 2024 was 14.4 million, a decrease of 14 million from Q4. The decrease is mainly explained by positive one-offs in income tax expense in the fourth quarter of 2023 of approximately 25 million, The same did not occur in Q1 2024. Adjusted EBITDA for the quarter was $116.8 million, an increase of $5.3 million, or 5%, compared to the previous quarter. Our free cash position at the end of Q1 was $282.7 million. In addition, we have the undrawn RCS facility of $150 million. So in total, the company has approximately $432 million of available liquidity. The cash in the quarter increased by 180.2 million, and taking a closer look at the cash flows, we can see that the net cash provided by operating activities was 23.9 million, which includes 6.3 million of cash interest paid and 12.8 million of income taxes paid. Cash provided by operating activities in the quarter was impacted by working capital buildup due to some late invoicing for certain contracts, including invoicing for a mobilization fee at the start of our contract, and that led to an increase in accrued revenues. Net cash used in investing activities was 18.7 million. This includes 15.2 million used in jack-up additions, consisting of activation costs incurred in 2023, but with cash payments this year, costs for special periodic service and fleet spares, in addition to 3.3 million used for new building additions for activation costs of our two new builds. Net cash provided by financing activities was 175.2 million, primarily as a result from the net proceeds of issuance of additional senior secured notes due in 2028 of 208.3 million. This was offset by 23.8 million used for the payment of cash distributions to shareholders and 10.6 million used for the repurchase of our convertible bonds. With this, I will pass the word over to Bruno.

Thanks, Magnus. 2024 has been a robust year for board drilling on the commercial front. So far this year, we've secured 11 new commitments, adding over four years and $318 million in backlog and marketing bidding rates. As Patrick mentioned, This newly secured backlog includes our first contract with a clean day rate above $200,000 a day. This milestone confirms the positive day-to-day trend and strength of the market, despite any concerns arising from the recently announced Aramco suspensions. Let me give you some context on some of these new fixtures. Firstly, the Prospector One has secured two new contracts in the UK and Netherlands, extending its firm commitments into 2025. In Southeast Asia, we secured new contracts for the gun lot and door. The gun lot has secured and subsequently commenced a new 90-day contract with an undisclosed operator in Malaysia. We are currently in advanced discussions with other customers in the region and remain confident that the rig will be continuously contracted through to 2025. The door has secured two new commitments that will start in direct continuation to its contract in Indonesia. These awards will keep the tour contracted until Q4 2024 when we see other prospective opportunities for it. In Africa, the Norva has secured two new commitments. The first is a further extension with BWE in Gabon, which will keep the rig contracted until mid-October 2024. The second is a 120-day contract with an undisclosed customer starting in February 2025. Additionally, I'm pleased to report that we have received two letters of award for a combined term of 660 days at leading-edge rates. The first program, which we previously announced, is expected to commence in Q1 2025 and has a total duration of 480 days. The second program, just awarded this week, is expected to commence in Q4 and has a total duration of 180 days. These contracts exemplify the current state of the industry and board drilling's unique competitive position. We continue to see positive demand for the jackup services, with many of our customers accelerating programs backed by strong oil prices. As customers seek to secure near-term rig capacity, we leverage high-quality uniformity of our fleet to provide flexibility in rig allocations, enabling us to meet our customer needs while maximizing our fleet utilization. For further information on our fleet and contracts, I'll refer you to the latest fleet status report published by the company on our website. With these 11 new contracts, our contract coverage has now reached 93% for 2024 and 71% for 2025, including firm contract and price options. We believe these levels provide a healthy balance between revenue visibility at market-leading rates and operational leverage amidst a favorable rate environment as demonstrated by our recent fixtures. On a broader market perspective, utilization for modern jackups remains strong at approximately 95%, not adjusted for a suspension of the 22 rigs, including our Arabia 1. We note that some of the suspended rigs have already been recontracted elsewhere, while others may not be competitive international markets due to their vintage capability, lack of international footprint of their current operators. We anticipate that around 13 of these rigs are potentially competitive international markets, which would result in utilization remaining at healthy levels above 90%. However, we see this fluctuation utilization to be temporary as incremental demand levels should offset and surpass the number of rigs potentially available in Saudi. Based on the current tenders and discussion with our customers, we continue to project incremental demand of 20 to 25 rigs within the next 12 to 18 months. On that note, we remain optimistic about our ability to re-contract the Arabia I during the third quarter. While we have witnessed some competitor fixtures below general market rates in certain geographies, we expect these dynamics should be short-lived as fundamentally, the JCCP market remains well-balanced and tight. In the first phase of the JCCP rebound, selected NOCs, particularly Aramco, absorbed most of the available capacity. This rapid absorption had left several customers with limited choices for high-quality assets to fulfill their programs. We now appear to be entering a second phase of the rebound, whereby IOCs and other NOCs are seizing the opportunity to secure capacity and accelerate programs amidst a favorable oil price environment. With that, I'll now hand the call back over to Patrick.