Borr Drilling Limited

Good morning, and thank you for participating in the Board Drilling Second Quarter 2024 Earnings Call. I'm Patrick Schorn, and with me here today in Dubai is Bruno Moran, our Chief Commercial Officer, and Magnus Feiler, 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. I'm pleased with the second quarter results and performance. All 22 delivered rigs are contracted and committed. In addition, one of the new-built rigs, the Vale, has been delivered today, for which we already have a work scope assigned. and the VAR, our final new build, remains on schedule for delivery in late Q4 2024. On the back of our strong contract portfolio, we generated 253 million in adjusted EBITDA year-to-date, positioning us well to meet our full year 2024 adjusted EBITDA guidance of 500 to 550 million. From a cash standpoint, we are well-positioned for the future. We have an underground 150 million RCF, a 45 million guarantee facility, and nearly 200 million in cash at the end of the quarter. In 2024, we will complete our CAPEX program related to the new build rigs, enable us to further enhance shareholder returns through additional dividends and or share buybacks, with a hundred million still available under the current buyback authorization the board has approved a quarterly dividend of 10 cents per share for q2 2024 which was doubled in the first quarter amounting to approximately 100 million in annual dividends In terms of contracting, we have continued to secure new contracts at a creative day rate, including the recently announced long-term contract for the Arabia One in Brazil. I'm particularly pleased that following the unexpected suspension in Saudi Arabia, we were successfully in obtaining a replacement contract. It should be advantageous for the coming four years due to its higher day rate and longer contract duration. As I already mentioned, all our 22 delivered rigs are again contracted with only few days left remaining available in 2024. Looking ahead to 2025, we currently have about 73% of our capacity contracted. which aligns with our expectations for this time of the year. Looking ahead, we foresee a continued tight market for premium assets, leading to sustained better pricing. The global jack-up fleet's age profile, with now 30% of the rigs being over 35 years old, is expected to drive incremental retirements. Coupled with the fact that no new rigs have been ordered in the past decade, these conditions create a favorable environment for our company, which operates the youngest fleet of 24 premium rigs in the industry. The second quarter operational performance has been strong, with a technical utilization rate of 99.2%, which was converted into a strong economic utilization of 98.4%. Magnus will now step you through the financial details of the second quarter. Thank you, Patrick.

The financial performance for Q2 was strong and continues the positive trend experienced in the recent quarters, with an increase quarter-on-quarter in total revenue of 16% and an increase in adjusted EBITDA of 17%. Q2 total operating revenues were 271.9 million, an increase of 37.9 million compared to the first quarter. Out of these 37.9 million, day rate revenues increased by 24.7 million. This related partly to increases in operating days and day rates for the rigs Aydin, Thor, and the Prospective 5, and 14.5 million impact from the amortization of deferred MOB revenue related to the contract termination for the Arabia one. These increases were partly offset by a decrease in operating days for the railway one. In addition, for the first time included in the total operating revenues was the recognition of management contract revenue of 11.7 million for three of our bare boat rigs in Mexico, for which we also provide rig operational and maintenance support services. Total operating expenses for the second quarter were 167.6 million, an increase of 18.4 million compared to the first quarter. 11.2 million of the increase relates to the rig operating and maintenance support services we do in Mexico, which I mentioned under revenues, and that we earned 5% margin on. In addition, 3.9 million of the total variance is due to the increase in amortization of deferred costs associated with the termination of Arabia 1. Net income for the quarter was 31.7 million, an increase of 17.3 million, or more than doubling from Q1. Adjusted EBITDA was 136.4 million, an increase of 19.6 million, or 17%. Our free cash position at the end of Q2 was 193.5 million. In addition, we had 150 million undrawn under our RCF facility resulting in total available liquidity of approximately 344 million. The total cash in the quarter decreased by 88.5 million. We've taken a closer look at the cash flows where net cash provided by operating activities was 9.1 million. This includes 91.9 million of cash interest paid on our bonds and 17.2 million of income taxes paid. Net cash used in the Investing activities was 13.4 million. This includes 6.8 million used on jack-up additions consisting primarily of costs for special periodic surveys and long-term maintenance, and 6.4 million used on new building additions relating to the activation costs for our new buildings. Net cash in financing activities was 84.2 million. This includes 60.3 million paid on our bond debt amortization. and 23.9 million of cash distributions paid to shareholders. Subsequent to quarter end, we raised 150 million of additional debt under our 2028 senior secured notes to finance the delivery of our new build, Devaldi. While the seller's financing was available for this rig due to more favorable pricing and terms under our bones, we decided to raise additional debt through this 150 million tax. We continue to have sellers financing committed to the last new build to be delivered later this year, but we will explore possibilities when we are approaching delivery. With this, I will pass the word over to Bruno.

Thanks, Magnus. On the commercial front, we have continued to add accretive contract to our backlog, including one further fixture with a clean day rate above $200,000 per day. So far this year, we've secured 14 new commitments, adding nearly 10 rig years and 651 million in backlog at market leading rates. Let me provide some highlights of our recent fixtures. Firstly, the Prospector 1 has had a one-well option exercised by ONI Diaz. This option should keep the rig contracted into Q2 2025. This additional scope relates to the GEMS project in the Netherlands, which includes upgrades to the Prospector 1 that will ultimately enable it to operate with 100% green electricity provided by a nearby wind farm. We're very pleased with our close collaboration with ONI Diaz and how this continues to add to our portfolio of projects focused on reducing the carbon footprint from our operations. In Southeast Asia, we secured a binding letter of award for the gun lot for a 210-day program commencing November this year. In Africa, the NORVA has secured a further extension with VWE that will maintain the rig contracted until February 2025. The rig will then commence its subsequent contract with Marathon Oil in EG. We continue to see interest work prospects across Africa. The NORVA is a high-performing unit capable of operating up to 400 feet of water and remains well positioned to secure continued commitments in the region. During our last quarter's conference call, we announced the company had secured two commitments in Africa amounting to 660 days of backlog for which rig assignments were still under review. We're pleased to confirm that the GERD has been assigned the first commitment with ENI in Congo. It will commence its mobilization from the UAE in September following the completion of the current contract with Gunduk. For the second commitment, we will assign our new group Vali and expect the work to commence between late Q4 2024 and Q1 2025. And lastly, the Arabia One, which had its contract suspended by Iran this year, has now secured a new long-term contract in Brazil, expected to commence in Q1 2025 and significantly improve the economics. On the back of this contract, our fleet is nearly fully contracted for 2024, with limited wide spaces mainly related to the door in late Q4. For 2025, our contracted coverage has now reached 70%, including firm contracts and priced options. The new awards received this year at market-leading rates have resulted in an increase of approximately $13,000 per day to the average day rate of our backlog. And the combination of health contract coverage and higher day rates gives us strong revenue visibility in 2025. From a broader market perspective, utilization for modern jackups remains at approximately 95% not adjusted for aeronautical suspensions. Following a second wave of suspensions by Aramco, there have been 22 modern rigs suspended this year, of which five have already been recontracted elsewhere, including our Arabia 1. We anticipate that only 12 of the 17 rigs remain suspended will be competitive international market due to factors such as the technical capabilities and the geographical footprint of their operators. On the new build front, no orders have been placed for nearly a decade, and the shipyard order book extended 12 rigs, representing only 2% of the total Jacob fleet. This is a remarkably low number, particularly considering the fleet age statistics mentioned earlier by Patrick. We anticipate that only four of the rigs under construction could join the active fleet in the next 12 to 18 months, and that includes our new butte bar. Looking at the demand side, we reiterate our view that incremental demand in the next 12 to 18 months will be sufficient to offset the supply impact from aeronautical suspensions and UV deliveries. Based on our in-house outlook, we forecast an incremental demand of 15 to 20 rigs. Comparatively, data from S&P Global in their latest World Rig Forecast indicates an incremental demand of 25 to 30 rigs in the period, which supports our projection. While some markets may experience near-term competitive pressure, we anticipate it to be punctual and short-lived as the market continues to absorb the available capacity. In summary, we maintain a positive view of the market balance for Modern Jacket Flea and its day rate momentum. With that, I'd like to hand the call back to Patrick.