Borr Drilling Limited

Good day and thank you for standing by. Welcome to the Board Drilling Limited Q2 2026 results presentation, webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Bruno Morand, CEO. Please go ahead.

Good morning, and thank you for participating in board drilling second quarter earnings call. I'm Bruno Morand, and with me here today is Magnus Vaaler, our chief financial officer. Before we begin, I would like to remind all participants as 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, I please refer you to our latest public findings. Before I begin, I'd like to recognize our teams around the world for their commitment to safety and reliable operations. During the quarter, several rigs achieved notable safety milestones across the fleet. The Groa and Gersony each reached seven years LTI-free, while the Ram and Scald achieved six and five years LTI-free, respectively. Additionally, Riggs-Hield, Galar, Knott, Arabia D, and Grid also achieved multi-year LTI and recordable free milestones. I'd like to thank our employees for their commitment to safety, as well as our customers and stakeholders who partner with us in fostering a culture where safety remains our highest priority. Our operational performance in the second quarter of 2026 resulted in technical utilization of 98.4% and economic utilization of 96.4%. Revenues for the period were negatively affected by the decline in average number of rigs operating in the quarter. Second quarter adjusted EBITDA was 43.8 million, a decline of 44.7 compared with Q1. The sequential decrease was primarily driven by four factors. We incurred additional preparation work and regulatory approval activities for the Olden ahead of its contract in the US, with a $22.5 million of operating expenses during the quarter and $11.1 million quarter-on-quarter increase. Second, six rigs were transitioning between contracts during the quarter, leading to reduced revenue. However, this impact is now largely behind us as these rigs have commenced their contracts. Third, the conflict in the Middle East led to higher insurance and fuel costs contributing to a 7.3 million quarter-on-quarter increase in rig operating expenses. The increase in fuel expenses was primarily driven by a higher number of rigs transition between contracts during the quarter, a period during which we are generally responsible for fuel costs. And finally, we also recognized 10.8 million of credit loss related to a former customer in West Africa. Follow these additional provisions, we carry net zero receivables from this customer in our balance sheet. Looking at the olden, contract preparations took longer than anticipated with regulatory approvals received in mid-July. In light of the operational constraints resulting from the hurricane season, in collaboration with our customers, we agreed to revise the rig deployment sequence to improve overall operating efficiency. The Oldham is currently preparing to mobilize to its first location, where it will commence the previously announced 2L firm contract with an undisclosed customer. Upon its completion, the rig will expect to transition directly to CanTune. We are disappointed with the delays for the Oldham, and the initial startup requirements were greater than we would have typically expected when entering a new market. These resulted in higher costs and delays in revenue. We are taking the learnings from these events very seriously. That being said, our entry into U.S. Gulf was a strategic decision to provide customers with access to one of the most capable rigs in its class. Discussions with our customers leaves us optimistic about the demand for this rig in the region. The oldest current contract provides firm work into mid-2027 with additional options that could extend its contract well into 2029. The elevated rig transition activity experienced during Q2 is now substantially completed. The rigs Idem, Gunlot, Scalp, SIF, Nut and Prospector 5, which were transitioned into and between contract during the quarter, are now fully operational. Together, with the soon to commence holding contract, we expect Q3 to average approximately 23 active rigs and hence adjust the EBITDA to improve significantly from second quarter. Since the last earnings report, we have secured eight contract commitments representing over 2,100 days of additional work. This includes new contracts in Asia, West Africa, North Sea, and Americas. Notably, the rigs Galar and Gersony in Mexico had their contract extended by two years each and are contracted into 2030. During the quarter, we also successfully refinanced substantially all of our debt while also upsizing our RCS. These transactions extend our maturity, reduce financing costs, and further strengthen our liquidity runway, which Magnus will discuss next. In July, our 50-50 joint venture with our long-term Mexican well construction partner completed the purchase of five premium jackups from Fontys and an attractive valuation and with limited equity commitment. Currently, three of these rigs are contracted. with two of them operating and a third expected to commence operation later in the quarter. Our focus now is deploying the remainder rigs and converting the opportunity pipeline into contracted work. I'll walk you through the market in more color later in the call, but now I'll hand the call to Magnus to discuss the second quarter financial results.

Thank you, Bruno. I will now go through some details of the financials for the second quarter. Total operating revenues for Q2 were 232.3 million, a decrease of 14.7 million or 6% compared to Q1. The total operating revenues consisted of 187.7 million in day rate revenue, 32.9 million in bearable charter revenue and 11.7 million in management contract revenue. The overall decrease was primarily driven by 21.8 million reduction in day rate revenue mainly due to fewer operating days and lower average day rates for the rigs Iden, Gunload and Skald, lower recognition of mobilization and demobilization revenue for the valley and fewer operating days for the grower. These decreases were partly offset by increased recognition of mobilization and demobilization revenue for the grid. The decrease in day rate revenue was partially offset by a 6.3 million increase in variable charter revenue due to an increased number An increase in operating days. The total operating expenses were 232.1 million, an increase of 31.1 million compared to Q1. The increase was primarily due to a 30.4 million increase in rig operating and maintenance expenses. The largest driver of the overall increase was the Odin, which incurred 22.5 million of costs during the quarter, an increase of 11.1 million compared to Q1. The costs were primarily related to the preparations for his upcoming contract in the US Gulf, including significant repair and maintenance activities. We expect regular rig OPEX, once the rig is fully operational, to be approximately in the mid $70,000 per day range. However, we anticipate some additional incremental operating expenses also in the third quarter related to the preparations of between $6 to $9 million. In addition to the ODIN, the increase in operating expenses was driven by overall costs associated with a higher number of operating days for the grid, including amortization of deferred costs, expenses related to the five rings acquired in January from Noble, and an increase in the provision for credit losses. We recognize 10.8 million of credit losses related to a former customer in West Africa, an increase of 4.8 million compared to Q1. Following this additional provision, The receivable from this customer was fully provided for, resulting in a net zero receivable balance as of June 30. The total operating expenses also included a 5.1 million increase in fuel costs due to higher fuel prices and rigs transitioning between contracts, and a 2.2 million increase in insurance costs related to the ongoing conflict in the Middle East. Other non-operating income in Q2 was 6 million, related to compensation received to remove certain operating restrictions associated with the sale of a rig in a prior period, with no comparable income in Q1. Total financial expenses net were 236.5 million, an increase of 173.8 million compared to Q1, and this increase was primarily related to our refinancing during the quarter as we recognized 176.3 million loss on the extinguishment of the senior secured notes due 2028 and 2030 and the partial extinguishment of our convertible bonds due 2028. The loss on debt extinguishment consisted of 123.7 million in redemption premium payments and 52.6 million from the derecognized The recognition of the unadvertised portion of deferred finance charges associated with the repaid facilities. Net loss for Q2 was 241.4 million, an increase in loss of 212.4 million compared to Q1. And adjusted EBITDA was 43.8 billion, a decrease of 44.7 million compared to Q1. Turning to liquidity, cash and cash equivalents as of June 30th were 223.6 million, a decrease of 22.4 million from March 31st. In addition, we had 250 million of undrawn available borrowings under our revolving credit facility, resulting in total liquidity of 473.6 million at the end of the quarter. Net cash used in operating activities for Q2 was 21.8 million, This includes 115.8 million of cash interest payments and 15.1 million of income taxes paid. Net cash used in investing activities was 2.3 million, which related to 8.3 million spent on additions to the jack-up rigs, primarily long-term maintenance costs and capital additions, partially offset by the 6 million proceeds received, as noted earlier, in non-operating income. Net cash provided by financing activities was 1.8 million. This was the result of net proceeds from new issuances offset by the cash used for repayment of the original notes due 2028 and 2030 and the 2028 convertible bonds. Before giving the word back to Bruno, I will also touch on some recent transactions that we have completed. In July, we completed the previously announced Fonte's acquisition of five premium jacket rigs located in Mexico through our 50-50 joint venture with our long-term well construction partner in Mexico. The total purchase price was 287 million and was financed through a 237 million non-recourse seller credit in the joint venture and 25 million equity contributions from each partner. In addition to this, we expect to fund approximately 15 million of working capital in the third quarter for the acquired rigs through a shareholder loan. Turning to the next page and the refinancing activity completed during the quarter. This was a significant step in extending our maturity profile and strengthening our liquidity position. In April, we issued 300 million of 3.5% convertible notes in 2033 and used part of the proceeds to repurchase and cancel 195.2 million of our 2028 convertible bonds. In June, we completed the issuance of 2.035 billion of senior secured notes in two series, 1.1 billion of eight and three quarter percent notes due 2032, and 935 million of 9% notes due in 2034. The new notes amortize at 5% per annum equating to 101.75 million on a full year basis. Amortization is payable semi-annually and beginning July 2027 at the price of 102.5%. The proceeds from the new senior secured notes were primarily used to redeem and purchase the 2028 and 2030 senior secured notes in full. Overall, these transactions extend maturity significantly and reduce our financing costs going forward. In addition, we amended and restated our super senior secure revolving credit facility during the quarter, increasing the commitments to 250 million, reducing the base margin to keep 3% per annum and extending the maturity to 2031. Now with this, I will pass the word back to Bruno.