Borr Drilling Limited

Good morning, and thank you for participating in Board Drilling Third Quarter Earnings Call. I'm Bruno Moran, and with me here today in Bermuda is Magnus Waller, our Chief Financial Officer. 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. For today's call, I'll start with a review of Q3 and highlight key developments since quarter end. Magnus will then review our quarterly financial results. I'll follow with a deeper look in the market and our commercial execution, and we'll conclude with your questions. Let's get started. Our third quarter results were strong, extending the rebound delivery in the second quarter. With 23 or 24 rigs active, Our commercial team continues to execute at the highest levels, delivering strategically and timely contracts despite a volatile and dynamic market. Revenue increased by $9.4 million quarter over quarter and adjusted EBITDA rose 2% to $135.6 million with a margin of 48.9%, confirming the quality of our earnings. Operational execution continues to be industry leading with technical utilization of 97.9 and economic utilization of 97.4% across the fleet. Subsequent to quarter end in October, we're pleased to announce three contract extensions in Mexico. Mexico remains an important market for board drilling. Notably, collections restarted in September with approximately 19 million received in September and October. These inflows together with the recent government actions to strengthen PMAX finances, are the base for our confidence in continued normalization of payments. Additionally, in October, newly imposed international sanctions affecting one of our counterparties in Mexico required us to issue termination notices for the Olden and the Hume contracts. Today, we announced new commitments expanding board drilling footprint into the Gulf of America and Angola. These awards strengthen and diversify our customer base and portfolio, underscoring our ability to navigate evolving markets and minimize idle time across the fleet. We expect Q4 2025 results to reflect fewer operating days due to several weeks transitioning between contracts and the recent impact of sanction-induced contract terminations in Mexico. Despite this, we anticipate full-year 2025 adjusted EBITDA in the range of $455 to $470 million. In recent quarters, we've experienced a step-up in jack-up demand across several international markets, absorbing available capacity and providing gradual relief to the headwinds from 2024. While near-term volatility may persist, clear signs of demand inflection in Saudi Arabia and Mexico two of the world's largest jack of markets, together with incremental activity in other areas, provide us with confidence that the market is now best at growth. We foresee a tightening market in the near to medium term that should support higher utilization and day rate levels. I'll walk you through that in more color later in the call, but now I'll hand the call to Magnus to discuss third quarter financial results.

Thank you Bruno. I will now go into some details of the financials of the third quarter. As Bruno mentioned, we continued the good trend seen in the previous quarter and the results quarter on quarter improved. Total operating revenues increased by 9.4 million due to 2.5 million increase in day rate revenue and 6.4 million increase in payroll charter revenue. The 2.5 million increase in day rate revenue was primarily due to an increase of the number of operating days and day rates for the RON and THOR, recognition of day rate revenue for the OLDIN versus previously being recognized as variable charter revenue, and an increase in reimbursable revenue for the GERD. These increases were offset by a decrease in the number of operating days for the prospective one. The 6.4 million increase in bearable charter revenue is primarily due to the rigs Gilara, Grid and Gersami being fully operational in the quarter compared to being on suspension for part of the prior quarter. This increase was offset by the decrease in bearable charter revenue for the Odin and the bearable charter contract was terminated effective June 30th and begun earning daily revenue in August 2025. Total rig operating and maintenance expenses increased by 6.3 million, which is primarily as a result of the increase in reimbursable expenses for the GERG. This in total gives us an operating income of 98 million, a 1.5 million increase from the prior quarter. Further, below the operating income line, total financial expenses net increased by 2.2 million, primarily due to foreign exchange loss, offset by some higher interest income and lower interest expenses. Income tax expenses increased by 6.5 million, primarily due to a one-off deferred tax benefit recognized during the prior quarter, with no comparable in the current quarter. As a result of the before-mentioned, net income for the quarter was 27.8 million, and adjusted EBITDA was 135.6 million, an increase of 2.4 million. Moving on to cash, our free cash position at the end of Q3 was 227.8 million. In addition, we had 234 million undrawn under our revolving credit facilities, resulting in total available liquidity of 461.8 million. Cash increased by 135.4 million in comparison to the prior quarter, explained by the following. Net cash provided by operating activities was 72.1 million, which increased 6 million cash interest payments on our convertible bonds and 13.2 million of income taxes paid. Operating cash flow for the quarter was further impacted by buildup of working capital, primarily driven by approximately 42 million increase in trade receivables in Mexico and a 13 million increase in trade receivables relating to the RIG Valley. However, subsequent to quarter end in October, We received approximately $17 million related to the trade receivables in Mexico and $10 million related to the valley. We expect to receive further settlements for our Mexico receivables both in November and December. Next cash used in investing activities was $33.9 million and is comprised of jacket position, primarily as a result of activation costs and contract commencement for the valley, capital additions for drilling equipment, and maintenance costs. Lastly, net cash provided by financing activities was 97.2 million, primarily due to 96.9 million net proceeds for the company's July 2025 equity offering. With this, I would pass the word back to Bruno.

Thank you, Magnus. Year to date, we have secured 22 new commitments, adding 625 million to our backlog. Since our last report, we've continued to secure meaningful awards. First, in Mexico, we secured three contract extensions. Degalar and Gersami received two-year extensions on improved commercials and payment terms. These commitments not only strengthen our 2026 utilization, but they also provide visibility well in 2028. Under the revised structures, operating costs will be reimbursed by the customer on a fixed 45-day payment term, materially reducing our working capital needs. Bare-bolt charter payment terms will be capped at 180 days, and for the Galar, this cap will progressively improve over time. Additionally, we received a short-term extension for the New York, and continuing active discussions with our customer in Mexico about a long-term deployment for the rig. In Mexico going forward, we will have a total of five rigs working from a previous count of seven, with two rigs being reassigned to New York elsewhere, as I'll cover shortly. Regarding the five remaining rigs in-country, two are long-term contracted with payment protection provisions, two are contracted with IOCs, and only one has direct PMX payment exposure. This is a significant change in our fleet mix in-country. I'm also pleased to report on recent awards in America and West Africa, along with several other contracting updates. In the Gulf of America, the Olden received a letter of award for a six-month campaign with an undisclosed operator. The campaign is expected to commence in January 2026. These remarks are entry into the U.S. and again highlights our team's ability to timely secure work for the rig following sanction-induced contract termination. In West Africa, the grid has received a letter of award for a six-month commitment plus unpriced options with an undisclosed operator in Angola. The campaign is expected to commence in the first quarter. Leaning on our strong relationships, we have collaborated with our partner in Mexico to reassign wells previously allocated to the grid to our other rigs in-country. This will enable us to conclude operations with the grid in Mexico in November, and the grid will begin its mobilization to West Africa in December. Also related to the grid, we have agreed with New Age to reassign the contract we previously allocated to the NAT to the grid, and expect to commence a one-well campaign with New Age in Congo in January, prior to commencing the work in Angola. Additionally, in West Africa, we are in discussions with ENI regarding their current wealth sequence for the NAT in Congo. While there are various scenarios in consideration, we now expect the NAT to stay busy with ENI in Q4 and potentially into early part of 2026. I'm also pleased to share that we have agreed with Shell in Nigeria to accelerate the NAT campaign, originally scheduled to commence in November 2026, now to April 2026. It significantly reduces potential idle time for the rig and provides Shell the ability to accelerate their well delivery schedule. It is clear to me that board drilling is the preferred partner for Shell water drilling operations. In recent months, we have been trusted with commitments from our customer to deliver critical wells globally. For example, Shell, with their highly anticipated HI project offshore Nigeria, ONI Diaz for the first fully electrified offshore drilling campaign in the Netherlands, and CME in Mexico for their Baca Bloom project, just to name a few. It is particularly notable that despite the virus market headwinds presented in 2024 and earlier this year, our 2025 feed coverage has reached 85% at an average day rate of 145,000. This is in line with our earlier targets of achieving 80% to 85% coverage in a year. Our full year 2026 coverage, including price options, now stands at 62%, a 15-point improvement since our last report. Taking a closer look into 2026, we have 79% coverage in the first half, a solid position to build from as we enter into the year. Based on our current pipeline of opportunities and ongoing negotiations, we expect that utilization levels for the first half of 2026 will continue to increase in the coming months. At the same time, recent developments in Mexico and Saudi give us increased confidence in a tightening jack-up market and a constructive outlook for the second half of the year. This should position us well to gradually fuel up the coverage for 2026 while maintaining a disciplined commercial strategy. On the commodity front, Brent crude has remained volatile but range-bound in the mid-60s. Current price levels have still allowed for meaningful contracting activities this quarter. as lower break-even shallow water projects offer a relatively rapid B2 barrel cycle for our customers. Despite several macro uncertainties, global utilization has remained resilient. In fact, increased quarter over quarter with modern rig market utilization at approximately 93%. In Saudi Arabia, we're encouraged by the market reports confirming that Aramco has issued notices calling back several rigs previously suspended in line with our earlier expectations. As of today, our account is that seven to eight rigs have been called back by Aramco, effectively taking the majority of the readily available modern rigs still available from suspensions. The remaining idle rigs are either rumored to be committed elsewhere or have moved the cold stack after the suspensions last year. The increase of activity levels in Saudi will significantly tighten the supply and demand balance in the region. Equally positive, As we highlight in our last call, we continue to see visible incremental demand in the Middle East, particularly Kuwait and the neutral zone, with multi-rig, multi-year tenders progressing towards awards. Now, coupled with the callbacks from Saudi Aramco, there is a real scenario for rigs from outside of the Middle East to be required to mobilize into the region to meet the forecasted increased demand in late 26 and into 2027. In Southeast Asia, demand has remained resilient despite various market obstacles. As mentioned on past calls, weakness in the region has been driven by excess supply targeting opportunities following Aramco suspensions. We expect this dynamic to improve in 2026. In West Africa, incremental demand has continued to materialize as expected and as evidenced by our mobilization of an additional union to the region. Contract activity has continued to accelerate in the past 12 months, and we see opportunities developing in areas that historically held a much higher jack-up count, particularly Nigeria and Angola. Mexico is one of the world's most consequential shallow water markets and remains strategically important for bore drilling. Over the past year, industry-wide payment timing challenges and temporary contract suspensions at PMAX have affected activity cadence. We responded constructively. We evolved our Mexico contract portfolio, thoughtfully diversifying beyond concentrated PMAX positions into IOCs and independents, while continuing to partner with PMAX where terms support sustainable operations. Looking into 2026, we see a market where turbulence begins to ease as the year progresses. White space for the global modern jack-up fleet is heavily weighted towards Asia and the Middle East in near term, a phenomenon we see reconciled via the many increases in those regions over the next few quarters. In closing, I'm pleased to see how board drilling continues to successfully navigate the dynamic market experience over the last couple of quarters. We've secured important contracts for our premium rigs, strengthened our fleet coverage in 2025 and into 2026. We have continued to partner with our customers to optimize our fleet availability or offer them unique operational schedule flexibility. Based on that, we now anticipate 2025 full-year adjusted EBITDA to be $450 to $470 million, aligned with our early expectations and adjusted for the impacts of recent sanction-induced terminations. Demand for modern jackup rigs remain resilient. The jackup market has bolstered. And we're seeing clear inflection in rigged demand across key regions, including Saudi and Mexico. And lastly, I want to emphasize the strength of our drilling operating platform. It is built on operational excellence, anchored by strong focus on safety culture, and streamlined operating model that keeps us efficient and predictable. It's relentlessly customer-centric, informed by intimate knowledge of the shallow water market, and strengthened by deep-rooted relationships. It is powered by our premium jack-up fleet and our global footprint. This platform is our defining competitive advantage and position us uniquely to benefit from ongoing market inflections. With that, I'll now turn the call over to Q&A.