Borr Drilling Limited

Good day and thank you for standing by. Welcome to the Board Railing Limited Q4 2024 results presentation webcast and conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please kindly limit yourself to two questions to give everyone a chance to answer questions. For any follow-up questions, please rejoin the queue. If you wish to ask a question via the webcast, please use the Q&A box available on the webcast link at any time during the conference. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker, Mr. Patrick Sean, CEO. Please go ahead.

Good morning, and thank you for participating in the board drilling fourth quarter earnings call. I'm Patrick Schorn, and with me here today in Dubai are Bruno Moran, 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 risks 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. This quarter's results were as expected. Operating revenue increased by 21.5 million over Q3, driven primarily by higher day rates for the NET and Prospector 1. The termination of the Arabia II contract in Saudi had a 5 million net positive effect due to the accelerated amortization of the mobilization fee. As a result, adjusted EBITDA for the quarter was 136.7 million. Our core operation performed strongly with a technical utilization rate of 98.9% and an economic utilization rate of 97.1%. Despite the various headwinds experienced during the year, we were still able to deliver the full year adjusted EBITDA within the original guidance range of 500 to 550 million, which was set back in Q3, 2023. In the second half of 24, softening demand and declining day rates signaled potential headwinds for the jack-up market heading into 2025. And a weaker market was observed with rigged suspensions in Saudi and Mexico. However, this was partially offset by incremental demand in West Africa and Southeast Asia. We anticipate that the market will continue to face uncertainties in 2025. However, recent increases in contracting and tendering levels provide some early signs of improving conditions toward the second half of the year, as per S&P Petrodata. Despite near-term uncertainties, we remain confident in the strong fundamentals of the global jack-up rig market. In November 24, we successfully completed a new build program with the delivery of our final rig VAR, marking the end of our growth capital expenditures as we move into 2025. Additionally, with fewer special periodic surveys scheduled compared to last year, we anticipate a positive impact on cash flow. As a result, our budgeted capital expenditures for 2025 are set to be below 50 million for the year. Currently, we have approximately 6,700 contracted rig days in 2025, representing 77% of our total available rig days in the year, at an average day rate of 149,000 compared to 136,000 in 2024. The first quarter of 2025 will be negatively impacted by suspensions of three rigs in Mexico, in addition to idle time on Arabia 1 and the Valley ahead of the commencement of their respective contracts. we expect to receive approximately 44 million in mobilization payments upon their contract commencements. In addition, liquidity in the first quarter will be positively impacted by the previously announced Mexican payment arrangement of 125 million. The board has decided to declare a cash distribution of two cents per share for the fourth quarter of 2024. In addition, the company has an existing share repurchase authorization, which can be used opportunistically. This decision reflects the board's focus on maintaining a strong balance sheet and taking a prudent approach to cash conservation, ensuring the company remains well positioned to navigate market uncertainties while maintaining a solid financial foundation for future opportunities. I'll pass the call now to Magnus for the fourth quarter financial commentary.

Thank you, Patrick. Total operating revenues increased by 21.5 million, primarily due to a 22.7 million increase in day rate revenue compared to the third quarter. The increase in day rate revenue includes a 5.1 million net increase related to the Arabia 2 price of 8.5 million increased in deferred mobilization revenue, offset by a 3.4 million decrease in day rate revenue, both as a result of the termination of its contract with Aramco. RIG operating and maintenance expenses were in line with the previous quarter. However, it's worth mentioning that the total cost for the quarter includes a 2.3 million acceleration, amortization, and mob and compact prep costs related to Arabia 2. Depreciation increased by 3.9 million and led to total operating expenses increasing by 3.8 million compared to the third quarter. Other movements below the operating income line that's worth mentioning are Total financial expenses increased by 5.7 million, primarily due to interest on the additional 175 million bond issue in November 2024, as well as the 150 million bond tap in August 2024. Both were issued to finance the delivery of our two last new builds. The income tax expense decreased by 5.9 million from Q3, and is mainly due to a one-off release of evaluation allowance during Q4. Net income for the fourth quarter was 26.3 million, an increase of 16.6 million, resulting in earnings per share of 11 cents. Adjusted EBITDA for the fourth quarter was 136.7 million, an increase of 21.2 million, or 18%, compared to the third quarter. Our free cash position at the end of Q4 was 61.6 million. In addition, we had 150 million ungrown under our RCS facility, resulting in total available liquidity of 211.6 million. Cash decreased by 124.1 million in comparison to the prior quarter due to the following. Net cash used in operating activities was 14.8 million, which includes 93.4 million of cash interest paid and 15.5 million of income taxes paid. Net cash used in investing activities was 189.9 million, which includes the delivery installment for the last new build, the VAR, of 159.9 million. In addition, we spent 11.2 million on activation costs for new build rigs and 18.7 million on other maintenance capex, primarily special periodic surveys and long-term maintenance costs. Net cash from financing activities was 80.6 million and is comprised of 175 million from the issuance of additional senior secure notes to finance the VAR. We also paid down 70.8 million of our debt under the regular semi-annual amortization of the bonds. Additionally, we used 19.9 million to repurchase the company's shares and 4.7 million for the payment of cash distributions to shareholders. Following quarter end, we announced an agreement with our major Mexican customer to receive payment settlement for approximately 125 million related to our outstanding receivables in February. So far, we have collected 105 million of these and the remaining 20 million has been released by Pemex and is expected to be received by us shortly. We are also due to receive 44 million in mobilization payments upon commencement of the contracts for Arabia One and Valley in the first half of 2025. From a liquidity perspective going forward, as Patrick pointed out, we have concluded our growth CapEx program with our final new bill delivered last year. For 2025, we expect regular maintenance CapEx to be below 50 million. With this, I will pass the word over to Bruno.