Borr Drilling Limited

Good morning, and thank you for participating in the Board Earnings Second Quarter Earnings Call. I'm Patrick Schorn, and with me here today in Dubai are Bruno Moran, our Chief Commercial Officer, and Magnus Feiler, our Chief Financial Officer. Next slide, please. 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 inform risks and uncertainties that could cause the deficit to differ materially from those projected in these states. I therefore refer you to our latest public filings. Now before we dive into our second quarter results, I'd like to briefly reference the recent press release announcing both our new financing package and the CEO succession plan. We will cover the financing package in detail during our prepared remarks. a significant step forward in strengthening our capital position and supporting our long-term strategy. I will return to the CEO succession towards the end of the call. Our second quarter results were strong, with technical utilization of 99.6% and an economic utilization of 97.8%. As anticipated, our activity rebounded in the second quarter with 22 out of 24 rigs Revenue increased by 51.1 million this quarter and EBITDA rose by 37.33 million by 39% versus the first quarter of this year, underscoring profitability of the revenue stream. Additionally, 106.5 million free cash flow was generated in the first six months of the year. During the quarter, we have secured significant new awards, including a multi-rigged contract in Asia and a new contract for the Arabian Sea, which is expected to return to our active fleet in September. These contract awards and commitments improve our contract coverage to 84% at an average day rate of 145,000 for 2025 and 47% coverage at an average day rate of 139,000 for 2026. Last month, we took a decisive step to strengthen longer-term financial positions through a comprehensive financing package. This initiative, which included a $102.5 million equity rate and amendments to the size of our revolving credit facilities effectively increase our liquidity by 200 million, which strengthens our balance sheet. We acted proactively to secure financing while market conditions were favorable, reinforcing our ability to execute on our long-term strategy, including disciplined growth and potential industry consolidation. Looking into the third quarter, we see a comparable level of activity as in the second quarter and anticipate a similar performance. As previously indicated in our 2020-25 EBITDA guidance, we are comfortable with the current Bloomberg consensus of approximately 470 million. We are encouraged by the Mexican government's renewed commitment to strengthen Pemex's liquidity and its restated production goal of achieving 1.8 million barrels per day. These actions should also enhance board drilling's liquidity, enabling us to leverage our proven track record of delivering best-in-class wells and uniquely positioning board drilling to ensure incremental drilling activity, particularly particularly on the private investment projects that are expected to play an increasingly important role in the future of Mexico's oil and gas production. I'll pass the call now to Magnus for the second quarter financial commentary. Thank you, Patrick. Thank you, Patrick.

I will now go into some more details for the quarter, which were positively impacted by the increase in activity and the number of races working in comparison to the prior quarter. Total operating revenues is $7.7 million for the second quarter, an increase of $51.1 million for 21% compared to the first quarter. Included in this Include a rate of revenues and a rate of revenues 36.3 million, 6.3 million, primarily due to the number of operating days for Bali and the tour. Variable charter revenues increase by 12.7 million, 12.7 million of Arabia One, of Arabia One. They'll contract and the commencement of the Galarne Regersone in Mexico. And lastly, management contract revenue increased by 2.1 million, primarily due to the recommencement of the GALAD. Total operating expenses were 171.2 million for the second quarter, for the second quarter, an increase of 49.4 million compared to the first quarter. This is also due to the volume of the four re-operating expenses, around 12.4 million. This, in total, gives us an operating income of $5 million, which is a $36.3 million, or 60% increase from the prior quarter. Further below the operating income line is the total financial expenses, decreasing by $6.3 million, mainly due to decrease in finance to the Mexico state, and the first quarter, with no comparable in the second quarter, in addition to positive FX movements. Income tax expense increased by 7.8 million, primarily due to a one-off asset for the Canada during the quarter, and decreased in tax expense in Africa. All of the above results in a net income of 1 million and 1 million of 52 million compared to the 2 million compared to the previous quarter. Adjusted EBITDA was 133.2 million, resetting by 1 million, 739 million, or 39%. Now moving into liquidity. Our free cash position at the end of Q2 was 92.4 million. In addition, we had 150 million undrawn under our revolving credit system, resulting in a total available liquidity of 242.4 million. Cash decreased by 77.8 million in comparison to the prior quarter, explained by the following. Net cash provided by operating activities were 6.3 million. This was highly impacted by 98.3 million in cash payment, which we make semi-annually on our senior secured bonds. Additionally, 20.8 million of income taxes were paid in the quarter. The cash flow from operating activities in the quarter is impacted by working capital bills. However, this is expected due to several reasons. First of all, First of all, we continue to see delays in collections in Mexico. However, due to reasons, positive development initiatives by the Mexican government, we expect this to improve in the second part of the year. Additionally, we have increased income experience, increased revenue, and that shows our results in the start-ups for new contracts in Bali, Iran, and Arabia 1, where services have been performed, but not yet. In addition, certain ring contract rates increased compared to the previous quarter. Net cash used in these investing activities was $13.4 million, the price of jacket position primarily as a result of long-term activation. We still expect maintenance capex levels for the year around $50 million. And in addition to these $50 million, a large portion of the contract preparation and activation costs for the RIG Valley were able to capitalize and classify as capex, as opposed to deferring expenses, as we normally do for contract startups. This is due to the RIG being a new build commencing its first contract. Lastly, net cash used in financing activities were 70.7 million, which relates to the semi-annual debt repayments on our senior secured notes due in 2028 and 2030. It's also worth adding that year-to-date, our free cash flow generation was 106.5 million. As Patrick summarized, in July, we announced an initiative to significantly strengthen our balance sheet and increase liquidity of approximately 200 million through an equity raise of 102.5 million and increases in revolving credit facilities of 84 million and a reduction in the minimum liquidity covenants. With these transactions, the Q2 pro forma liquidity increases to approximately 425 million, which consists of 192 million cash and 234 million in available RCS capacity. This strengthened liquidity position provides a solid foundation for pursuing opportunistic transactions and supporting future growth. With this, I will pass the word over to Bruno.

Thank you, Magnus. Year to date, Board Drilling has secured 14 new contract commitments, adding $318 million to our backlog. Several of these new commitments include options with the potential to significantly extend their duration and earn its visibility. Since our last report, we've secured high-quality contracts backed by our market-leading operational performance. In Vietnam, we received a multi-rig award from Hongmong for our rig store and gumball, totaling approximately 500 days, including priced options. Both contracts are expected to commence in early Q4 in direct continuation of the rig-rig-rigging contracts, clearly demonstrating our ability to eliminate idle time and maximize asset utilizations. These awards strengthen our market position in Vietnam, where we see near-term demand growth in Southeast Asia. In the Middle East, the RIG Arabia II received a 500-day contract expected to commence in early September, enabling the RIG to return to the active fleet. While the standard has been awarded on a competitive basis, the RIG's track record of high performance allowed us to collaborate with the customer around certain performance incentives which could result in day rate uplifts of up to 10% to 15%. In Mexico, the RON had a 100-day option exercised by ENI, keeping the rate contracted into early 26. As part of this extension, the parties agreed to add another set of options to their contract that if exercised would result in full year coverage for 2026. And lastly, in June, the OLDN received a notice of suspension by PMAX, Following this, we secured a letter of intent from an independent oil company in Mexico for an approximately 75-day program expected to commence in late August. In addition to these awards, we have converted the previously announced LOAs for the Scout in Thailand and the Norva in West Africa into contracts. As you note in our fleet status report, the award associated with the Norva in West Africa has now been assigned to the NAT contract. which will enable us to optimize scheduling flexibility and maximize revenue days. On the back of the recent contracts, our 2025 kit coverage has now reached a robust 84% at an average day rate of 145. This is in line with our earlier targets of achieving 80% to 85% coverage in the year, and we see potential for further improvements as we have line of sight of additional contracts for the rigs NAT and P1, which still has open capacity this year. Our 2026 coverage, including price options, now stand at 47%, a 12-point improvement since our last report. Mexico remains a significant and strategically important part of our portfolio, representing circa 20% of our available coverage in 2026. The announcements made by the Mexican government last week provide us with increased confidence in sustained rate demand and contract stability for a raising country. I'll cover these in more detail in a few minutes. From a macro perspective, the oil and gas sector continues to contend with a complex global environment recently shaped by regional conflicts, uncertainty over global trade tariffs, and OPEC's accelerated rollback of its 2.2 million barrels per day voluntary costs. Regional conflicts have continued to underwrite the fragility of the global oil and gas supply chains, with escalations in the Middle East causing Brent prices to reach highs of 75 in June and reviving discussions about the importance of pragmatic government policies, as illustrated by the Dutch government's reinstated commitment to develop local gas and New Zealand's reversal of its prior ban on new offshore licenses. Despite this complex environment, Brent crude prices have remained resilient. averaging approximately 68 in Q2, a level that continues to support the development of shallow water projects, which offer some of the lowest break-evens and faster cash flow generation to our customer. Looking specifically at jackups, global utilization has remained generally steady, with modern rate market utilization holding above 90%. Day rates have continued to experience downward pressure as the market works to absorb the excess capacity resulting from the salary suspensions. While more than half of the modern rig capacity from this suspension has been absorbed, we estimated that less than 10 modern units remain available and competitive in international markets. Positively, visible incremental demand in the Middle East, particularly in Kuwait and the neutral zone, points towards a significant part of this oversupply being absorbed in the near future. While we acknowledge that these projects have experienced delays due to supply chain constraints and complex procurement processes, Recent orders of long lead items provide increased confidence that they remain on track to materialize in 26 and 27. Additionally, we are encouraged by recent data points relating to Arunco EPCI tender awards and nearing awards for an estimated total of $8 billion surpassing 2024 levels. These awards cover key projects such as Zulus and Marjan, and are understood to include several wellhead plaza farms. With jackup activity in Saudi already back to 2019 level, we believe further development of these projects are supportive of long-term incremental demand in the kingdom. In Southeast Asia and West Africa, demand has continued to track positively. Since the beginning of the year, contracted jackup count in these regions has increased by 10 rigs. While the inflow of rigs from the Middle East to both regions has pressure raised in recent opportunities, and more markedly in Southeast Asia, supply and demand in these regions is fundamentally balanced for modern units. In Mexico, we're encouraged by the government's renewed focus on strengthening Phemex liquidity and to restate the goal of achieving 1.8 million barrels per day in production. The government has laid out a clear plan, including a $12 billion debt offering to refinance short-term obligations, and another $13 billion facility to provide funding for PMAC's current and future projects. Given our track records of delivering best-in-class wells, BOR is uniquely positioned to capture incremental work, especially on private investment projects, which are projected to contribute to one-quarter of the country's production by 2033. The bottom line is this. Stronger liquidity at PMAC is a clear positive for BOR drilling. As supply and demand continue to rebalance, retirement activity has now resumed as owners of old assets face challenges to find suitable and economic redeployment opportunities. So far this year, according to IHS, four units have been retired and several others are being held for sale. We expect the dynamic to accelerate, particularly in the context of ongoing industry consolidation. In short, while near-term volatility may continue, the long-term fundamentals of the Jacob market remain compelling. Demand for oil and gas to support global energy needs is expected to continue to grow and support investment. Shallow water projects represent a sizable portion of global production, characterized by attractive break-even prices, short cash flow cycles, and relatively low emissions. With an aging global fleet and no new builds in sight, the supply of Jacob should continue to provide supporting high utilization levels and economics. We are consistently delivering our commercial strategy, maximizing 2025 backlog and building 2026 coverage while support our customers through the dynamic cycle. With that, I'll hand the call back to Patrick.