Borr Drilling Limited

Good morning and thank you for joining Board Drilling's first quarter earnings call. I'm Bruno Moran and with me here today in Bermuda is Magnus Waller, our Chief Financial Officer. I'd like to remind all participants that certain statements made on this call are forward-looking and involve risks and uncertainties that could cause actual results to differ materially from those projected in these statements. For further details, please refer to our latest public findings. On today's call, I'll start with a review of the first quarter and key developments since quarter end. Magnus will then cover financial results, after which I'll return to discuss contract activity and our market outlook. Before I begin, I'd like to recognize our teams around the world for their continued commitment to safe and reliable operations. During the quarter, several rigs achieved important safety milestones. The GERD, NAT, and MIST each achieved seven years LTI-free, while the SAGA and the Arabia III reached six and three years respectively. The NORVA also attained two years recordable incident-free. These milestones reflect a strong safety culture across the organization, and I would like to thank all of my colleagues for their continued dedication to zero-harm operations. Operationally, we delivered technical utilization of 99.4% and economic utilization of 97% in the first quarter. Revenue for the period was $247 million and adjusted EBITDA of $8.5 million, primarily impacted by the delayed startup of the Oden $14 million credit loss provision. During the quarter, the Oden completed its mobilization from Mexico of where operations had initially been expected to start in February. However, the startup was disruptions during transit, additional contract preparation work approvals. While these delays are important, into the U.S. was based on the long-term opportunity outlook in the market. I remain confident with the positions with capabilities as available to operators in the U.S. Gulf, and we believe the rate will remain well-placed to secure the region. Looking ahead, we expect second quarter results to continue to be affected by the delayed startup of the old one, now anticipated to commence in late June, as well as rich transition . During the quarter, rising tensions and hostilities in the Middle East created disruptions, but navigated with little financial impact. Most importantly, all of our personnel remain safe. I would like to thank our teams for their professionalism and flexibility that they have shown through this period. As announced in April, following temporary suspensions, all affected rigs were called back to work. After resuming operations, the Groa and the Forseti have now completed their contract in Qatar. The Forseti remains on the bearable charter with the former owner until December 2026. Our contracting strategy remains focused on increasing year-term coverage for balancing day rates and contract enter. Since our last earnings report, we've secured eight contract commitments representing more than 1,100 days of firm work. Full-year 2026 coverage has increased to 71% at an average day rate of approximately 137,000, while second half 2026 coverage now stands at 65% as compared to 48% in the prior earnings report. We also announced the acquisition of five premium Jacob rigs from Paratus for $287 million through a new 50-50 joint venture with our longstanding Mexican well construction partners. This transaction will expand our fleet from 29 to 34 rigs and further strengthen our position in the Mexican market while adding flexibility to two higher specification units with broader redeployment potential. In April, we successfully completed an upside 300 million convertible senior notes offering due in 2033, using the proceeds to repurchase a significant portion of our 2028 convertible bonds. This transaction meaningfully extends our maturity profile and strengthen our capital structure ahead of what we expect to be a constructive market environment. We'll walk through this in more detail shortly. While the Middle East conflict has created near-term uncertainty, key standards in the region continue to progress with some modest delays. More broadly, in our view, recent events have strengthened the long-term outlook for the sector, providing for higher oil prices and a renewed focus on energy security. Shallow water basins continue to represent an attractive resource, offering low cost and short cycle barrels. Due to our customers planning and budgeting cycles, we expect that improved activities and day rates will lead to oil price increase by six to 12 months. The dynamic was recently seen in 2022 when the military invasion of Ukraine caused oil price to spike and a corresponding increase in day rates occurred several quarters later. Therefore, we are increasingly confident about the company's prospects for 2027 and 2028, as we expect disruptions from the conflict in the Middle East to be both substantial and long-lasting. With this backdrop, board drilling's expanded fleet is well-placed to support our customer demand and deliver long-term shareholder value as the cycle develops. I'll walk you through our business outlook more thoroughly in the call, but now I'll hand the call to Magnus to discuss the first quarter financial results.

Thank you, Bruno. I will now go into some details of the financials for the first quarter. Total operating revenues for Q1 were 247 million, a decrease of 12.4 million, or 4.8% compared to Q4. This is mainly explained by a 15.5 million decrease in day rate revenue, offset by a 3 million increase in bare-bolt revenue. The decrease in day rate revenue is driven mainly by 10.4 million lower reimbursable expenses in addition to fewer operating days combined with lower day rates for some rigs. The 3 million increase in bare-bolt charter revenue was due to more rigs earning bare-bolt revenues after the rig acquisition from Noble. The total operating expenses were 201 million 8.9 million or 4.6% versus Q4. The increase was primarily due to 4.7 million of increased depreciation following the FIRI acquisition from Noble and 4.6 million by Rigopex. The increase in Rigopex was primarily due to 8.4 million on credit losses provision that we incurred in the quarter, partly offset by lower reimbursable expenses of 7.4 million. In addition to this, financial expenses increased by 6.9 million in the quarter due to the recent seller credit financing incurred in connection with the Novo acquisition, Novo reacquisition, and the bond tap late last year. Overall for the quarter, we had net loss of 29 million and adjusted EBITDA of 88.5 million, down 16.7 million quarter on quarter. The adjusted EBITDA was highly impacted by the non-operational matter of 8.4 million credit loss provision taken in the quarter. In addition, as mentioned, the Odin's delayed commencement was also impacting the adjusted EBITDA compared to expectations at the beginning of the year. In the first quarter, we recognized no revenues but started incurring standard operating expenses for the RIC. Now going into Q2, The RIG is continuing to undergo contract preparation and regulatory approvals, and we now expect the RIG to commence operations in June. The RIG is expected to incur additional contract preparation expenses of approximately 10 million in addition to standard OPEX before commencing its contract. Now, moving into cash, cash at the end of the quarter was 246 million. The total liquidity was 480 million, including undrawn revolving credit facilities of 234 million. Cash and restricted cash decreased by 133.7 million in the quarter, primarily as a result of the following. We used 182.9 million in investing activities consisting primarily of the 175.1 million cash spent to complete the novel acquisition in January. In addition, we incurred 7.5 million CAPEX for long-term maintenance expenses and costs. The cash used in investing activities was offset by 48.1 million cash from operating activities. This includes 6 million of interest payments and 6.7 million of taxes. All the financial events in the quarter that is worth highlighting and that we have highlighted is that we completed the five-rig acquisition from Noble for a total purchase price of 360 million, partly financed by 150 million seller credits. We also issued 300 million convertible notes post-quarter end. We mainly used the proceeds to repurchase and cancel 195.2 million of our 2028 convertible notes. which extends the maturity profile by five years until 2033. The new convertible has a coupon of 3.5% compared to 5% on the 2028 and has an improved conversion price increase to $8 per share. With this, I would like to pass the word back to Bruno.

Thank you, Magnus. Activity on the contract in front has continued to track largely in line with our expectations. Year-to-date, 2026, we've secured 13 new commitments, adding approximately $274 million to our backlog. In Americas, ENI extended a runs contract in Mexico, keeping the rig firmly committed through September 2026. Additionally, the SIF, one of our recently acquired rigs from Noble, has secured a contract offshore Suriname for one well. Drilling is targeted to commence in July and has an estimated duration of 100 days. In West Africa, the Prospector 5 secured work with BW Energy in Gabon. The rig is scheduled to complete operations with ENI in Congo later this month before mobilizing to Gabon in early third quarter following its scheduled SDS. The rig is now firmly committed into Q2 2027 with unpriced options that extend into 2028. In Europe, the options on the duro were exercised keeping the rig utilised through May. As a reminder, the rig was under the BBC to allow the previous owner to complete the ongoing accommodation work with Siemens. The Joro will now demobilise later this month and operations will be handed over from Noble to Boer. In Asia, the Scout received a 180-day contract with Vesigo in Malaysia and is scheduled to mobilise to the first well location later this month. The Tor also received two contract awards in Vietnam and is now committed to the first quarter of 2027. I remain proud of our continuous contracting success, which has a notable presence of repeat customers demonstrating our strong relationships and ability to deliver safe and efficient operations. Recent awards have meaningfully increased our 2026 coverage, particularly in the second half. We continue to work on several opportunities and remain optimistic in securing additional contracts in the coming months. Looking at our core markets around the globe, in the Middle East, visible open tender demand has further increased to 17 rigs. Although the current disruptions may delay activity in the near term, we believe its resolution will release tens of demand that would likely be driven not only by deferred programs returned to the market, but also by the work required to restore shut-in wells and related infrastructure before production can return to pre-conflict levels. As a result, we see a credible pathway for incremental recovery-related demand once conditions normalize. Outside of the Middle East, we continue to receive positive customer signals across most of our operating regions, supporting our view that additional work is approaching the pipeline. That is consistent with the broader trend we referred to earlier in our remarks and with the historical pattern that offshore activity typically responds with some lag as customers work through planning, budgeting, and procurement processes before converting demand into contracted work. In particular, I would like to highlight developments in Asia and in Mexico. In Asia, we see signs of new requirements in Malaysia and Vietnam. While both countries are showing growth, they remain below best cycle Jacob counts and provide notable upside as the current environment progresses. Energy security is clearly a priority topic for net important countries, and we expect demand to accelerate as global disruptions impact their access to hydrocarbons. We have continued to execute at a high level in this competitive region and remain optimistic we will fuel the majority of our 2026 available days in the near future. Additionally, we see rig demand increasing in China. While not a location international contractors tend to operate, any notable demand pooling rigged into China has the potential to absorb a considerable amount of supply. As we have discussed in the past, Mexico continues to hold consequential shallow water production capacity, and we see jack-up utilization as a fundamental variable in the formula for PMAX to reach these data production targets. Recent news of StackRig's return to work, along with a fresh market inquiry from PMAX, leaves RIGS and country well suited to benefit from developing demand. Looking further ahead, we see our 2027 availability as strategically valuable. It gives us flexibility to participate in what we believe could be a stronger contracting environment as demand and day rates continue to develop. Our approach remains balanced. Continue building near-term coverage while preserving exposure to future upside. With that context, let's turn to the conclusion slide. I'll leave you with a few key take-outs. First, renewed focus on energy security coupled with improvement in project economics and elevated oil prices will drive demand for jackups. Second, it's clear that we have near-term uncertainty in the Middle East. That being said, standards are progressing and we see an increasing likelihood of pent-up demand forming regionally and beyond. We continue to focus on increasing 2026 coverage and remain strategic in doing so, while balancing rates and tenor. And finally, we have proven our ability to opportunistically grow our fleet as we see a favorable time in the cycle. At the same time, we continue to take actions to enhance capital structure to support long-term value shareholder creation. So, in conclusion, taking these points together, the broader message is clear. We are managing through near-term variability while position the company for stronger performance as the market improves. With that, I'll now turn the call over to Q&A.