Dolphin Drilling As

Good morning everyone and welcome to our second quarter earnings call. My name is Michael Boyd and I'm the CEO of Dolphin Drilling. I am joined today by Ingolf Gillestahl, our Chief Financial Officer. For today's agenda, I will open with the quarter's highlights. Ingolf will take us through the financial results in detail before I return to cover the fleet, a market overview and our outlook. Thereafter, at the end of the presentation, we'll open up for Q&A. The headline for Q2 is that we have made significant progress in repositioning Dolphin Drilling as a platform for growth. Two multi-year contract awards signed in the quarter have taken this business from a series of short campaigns to visible, contracted earnings extending into 2030 and 2031, and that the equity raise that we completed in May has given us a balance sheet and the financial flexibility that can support it. Before we begin though, a brief word on the disclaimer. This presentation contains forward-looking statements regarding contract awards, backlog conversion, reactivation timing and market conditions. These reflect our current expectations and are subject to risk and uncertainty, and actual outcomes may differ materially. We would ask you to review the disclaimer in full and to read this presentation together with the quarterly report published this morning. Our agenda this morning has four parts. We'll begin with the key company highlights and the financial update for the second quarter. Secondly, we'll walk through our rig fleet, including the contract status and an update on the Borglund Special Periodic Survey, which represents a significant organisational project for the company over the next few months. Next, we'll discuss the drilling market and how, in our view, Dolphin Drilling's over 60 years of operational experience specialising in moored semi-submersible rigs worldwide continues to position us well to capitalize on the considerable upside potential that can be generated using our platform for growth. And finally, we'll provide a short summary of our value proposition and deliverables to date. Let me first start with the highlights before handing over to Ingolf for the numbers behind them. So this slide essentially represents the quarter in one page, and it is organized around the commitments we made to the market, starting with safety. We continue to perform exceptionally well and recently passed a thousand days lost time injury free for Blackford. This is testament to the safety culture at Dolphin Drilling, which is the foundation everything else is built on. Operationally, performance remains strong with high uptime and earnings efficiency. Paul B. Lloyd Jr. delivered 99.8% uptime in the quarter and Blackford Dolphin just over 90%. This high uptime is essential to us in converting day rates into cash. and is also a key metric for our clients in comparing performance and awarding or renewing contracts. On backlog, we end the quarter with 557 million of firm revenue with substantial options in addition to this. This clearly improves our earnings visibility with two of our rigs now contracted through 2030 and 2031 respectively. This is a structural change in the story. We have moved from campaign to campaign visibility to multi-year contracted revenue. On the balance sheet, cash stands at 55.1 million following the equity raise completed in May, and our remaining debt levels are manageable. Additionally, through good cost discipline and operational efficiency, our earnings in the first half of 2026 delivered EBITDA of 15.3 million against 10.4 million in the first half of last year. A comparable improvement of roughly 47% versus the same two rigs earnings this time last year. These deliverables come directly from the goals we set for the year. And with three rigs contracted and a repaired balance sheet, they position us for growth rather than survival. I'll now hand over to Ingolf to walk us through the financials.

Thank you, Michael. Let me take you through the key financials, starting with the income statement. Total revenue for the quarter was $44.9 million, on par with last quarter's revenues, and marginally reduced from $47.4 million in the second quarter of last year. All of the charter revenues relate to the two rig contracts for Blackford Dolphin and Poyle B. Lloyd Jr., with the additional $10.5 million in other revenues related to services managed towards the Oil India contract. The modest year-on-year decline reflects recording of less mobilization revenues and the fact that we commenced a new multi-year contract for Paul B. Lloyd Jr. in May, which provides important earning visibility for the company, but at the same time at a lower day rate. Borglund Dolphin was in layup and preparing for the reactivation through the period with no revenue contribution. Underpinning that revenue, Paul B. Lloyd Jr. achieved 99.8% uptime and 96% earning efficiency and Blackford Dolphin 90.2% uptime and 89.8% earning efficiency. The gap between the uptime and earning efficiency on Paul B. Lloyd is due to adjusting for periods or waiting on weather although this was at a much lower number of days versus last quarter. On operating expenses We have made a significant improvement as total operating expense was $32.7 million against $36.2 million a year ago, a 9% improvement. On a daily basis, Paul Beloyed Jr. ran at a cost of $90,000 and Blackford Dolphin at $143,000. Both marginally improved on the previous quarter and within guidance. Borglund Dolphin's stacking cost was $26,000 per day, marginally up as we have started on the actual preparation work for the reactivation and cost renewal. The daily cost should increase to an average of $80,000 for the period ahead of contract startup and thereafter the operating cost when in Spain should run at $110,000 per day. G&A totaled $5.2 million, marginally reduced from last year's cost base. Adjusting for the refinancing expenses and fees, underlying G&A cost was at $4.3 million. That is the number to carry forward in your models as the approximate run rate. This delivers an EBITDA of $7 million for the quarter against $5.5 million last year. For the first half, this is an improvement of close to 50%. Below EBITDA, depreciation and amortization was $3.5 million, which includes a reversal worth $3.5 million in the quarter. So the underlying charge should be higher than the reported line. Net financial items totaled $4.5 million, materially better than the $10.8 million a year ago. The total comprises interest expense of $3.5 million plus non-recurring fees representing $3.5 million. offset by a positive foreign exchange movement of $2.5 million. That leaves a net loss of $2.3 million compared with a net loss of $26.2 million in the same quarter last year. So in brief, high revenue generation from the two rigs on the contract, real cost improvement, EBTA up year on year, and the remaining loss driven largely by one of financing costs rather than operations. Then on to the balance sheet. We had cash worth $55.1 million at the end of June against $30.5 million at year end and significantly higher cash position versus same time last year as we completed an equity race in May and continue to deliver an operation efficiencies. The book values of our rigs are as follows. $36.8 million for Paul B. Lloyd, $31.5 million for Borglund, and $80 million for Blackford. Goodwill relating to the historic Paul B. Lloyd Jr. acquisition has been reduced to $9.2 million. Capital expenditure was $0.9 million in a quarter and $2.1 million for the first half of 2026. I would draw your attention to that. These are low CapEx numbers. and they reflect the fact that Paul Beloyed Special Periodic Survey was completed in September 25, and this rig is not anticipated to require any major investments for the next four years. On the liability side, current portion have returned to normalized levels. We had previously been carrying over costs related to the Paul Beloyed Rig Survey, and those have now worked through. Accounts payable are $14 million against $31.6 million at the year end. which is the clearest evidence of that normalization. On interest-bearing debt, no debt repayments are due this year, as we have agreed and stretched out debt repayments, starting up again from January 2027. The long-term portion of debt totals $67.3 million, which represents the loan facility and the bond, with both having final expiry dates in March 2028. The rigs are pledged as security to the group's long-term facilities. As we now have a much improved financial position and a multi-year contract backlog, we do receive proposals indicating much improved terms and conditions versus what we have today. Total shareholder equity is $76.9 million against $22 million at the year-end. As we have shown by our achievements year-to-date, we have moved from a balance sheet that constrained the business to one that can support contract execution, the Borglund Dolphin reactivation, and overtime fleet growth. I would refer you to the quarterly report for the detailed movements between periods. With that, I will hand back to Michael.

Thank you, Ingolf. So I'm on slide eight now. This chart is the reason we believe this quarter is a step change rather than an incremental improvement. The existing fleet is now contracted through to 2030 and 2031 respectively. and that translates into a firm revenue and EBITDA backlog profile that is stable across the next five years rather than front-loaded. On the left chart, you see revenue backlog by year, split between firm backlog and options. Firm revenue sits in a band of roughly $100 to $120 million per year across 2027 through to 2029, before the mix shifts towards option years in 2030 and 2031. where you can see an uplift as exercising options will come with a rate increase to justify another set of class renewals. The right chart shows the same structure for RIG EBITDA backlog, running around $50 million in the firm years. Two key points. First, Paul B. Lloyd Jr. and Borglund Dolphin both signed multi-year awards in the second quarter, and those are what create the flat firm profile as targeted. And second, The value related to the option shown is based on higher rates as the client pays for the class renewal at the time through either a higher day rate or direct contribution. Reviewing our fleet now, rig by rig begins to resemble a diversified portfolio as each unit offers a unique combination of cash flow visibility, revenue potential, and risk versus reward. Paul B. Lloyd is our contracted cash generator. Borglund Dolphin currently being reactivated is the largest single source of incremental earnings, and Blackford Dolphin is the near-term re-contracting opportunity. So taking Paul Beloyed Jr. first, the rig is contracted to September 2030 with a firm revenue backlog of $247 million. Beyond that, there are options for either two years or five years, subject to a special periodic survey contribution which would be added to the day rate. That structure matters, The option years are not dilutive to margin because of the client contribution to survey costs through the rate. The last special periodic survey was completed in September 2025 and we have limited investment planned over the next four years. In cash flow terms, this is close to four years of contracted revenue against a low level capital requirement. The rig operates offshore UK with Harbour Energy and is currently on assignment to Ithaca Energy. Operational performance has been strong, with above 98% uptime since we purchased the rig in January 2024, and 99.8% in this quarter. Paul B. Lloyd Jr. is also considered one of the larger semi-submersible rigs in the UK, a competitive advantage given how few units of this capability remain in the basin. Borglund Dolphin is where the growth comes from. The rig is contracted through to November 2031 with a firm revenue backlog of $291 million and options thereafter for five years estimated at a further $287 million. On that option figure, please note that this is an estimate using the starting day rate so as a conservative reference rather than an escalated projection. The rig is expected to complete its class renewal by November 26, and the remaining capital expenditure on that survey is estimated at $12 million. This is the principal cash outflow in front of us this year, and it is a defined, budgeted number against $291 million of firm revenue. One further point on risk allocation. Should the client exercise the option period, the company is compensated for the expected class renewal cost. On deployment, the rig is scheduled to operate offshore Spain and thereafter offshore UK. Given the importance of Borglund to the earnings profile, we want to provide visibility on project execution. The left hand side here shows a high level project plan, whilst the right side shows actual project progress against planned. And as you can see, we are running slightly ahead of plan at roughly 70% complete. and we remain on track against both time and budget for a contract commencement in November 26. And now Blackford Dolphin. The rig remains on contract in India and Blackford is on the final well of a three-well exploration campaign for oil India in the Andaman Sea and it is the only moored semi-submersible operating in India. Regarding follow-on work, we continue to market Blackford and identify opportunities that would justify a further class renewal survey. And as we continue to see a tight supply of moored semi-submersibles worldwide, several active discussions have been held regarding potential contract opportunities for Blackford. However, as the next required class renewal survey is due in April 27, any contract needs to be evaluated against next year's survey cost and funding scenarios available to us. The following slide summarizes fleet contract status. Firm revenue contract backlog stands at $557 million. with a further £446 million in options, counted from the end of the reporting period 30 June 2026. Rooting across the bars, Paul B. Lloyd Jr. is contracted with Harbour Energy in the UK, Borglund Dolphin is currently undergoing the Special Periodic Survey and reactivation ahead of work with Repsol in Spain before transiting to the UK, and Blackford Dolphin is contracted with Oil India in India. As you can see, the fleet status slide is now much healthier compared to versions shown earlier in the year where our contract cover was measured in months and it now extends across the back half of the decade with option coverage layered on top. Turning now to the market, we see three main market drivers that support our positive outlook. The first is energy security. Two leading industry sources IEA and Wood Mackenzie put total energy investment at around $3.4 to $3.8 trillion in 2026, of which approximately one-third goes to oil, gas and coal, with growth trends expected to continue now that production curves have been moved further out in time. The important point is not the absolute number, but the direction and the motivation. Energy security has become a primary driver of capital allocation across importing economies. and that supports long cycle offshore commitment rather than short cycle discretionary spend. The second is the UK Plug and Abandonment Wave. The NSTA estimates several hundred wells still require decommissioning. Well P&A is the single largest cost component at 40 to 50% of field decommissioning cost over the next decade. What makes this different from ordinary drilling demand is that it is non-discretionary and regulator driven. The NSTA has recently named 13 operators with 153 wells already past their decommissioning consent deadlines. For a moored semi-operator in the UK, that is a demand floor that does not move with oil price. And thirdly, is the marketed supply of moored semi-submersibles, which has fallen from around 140 units to as low as 15 today. Moving to the next slide, we will consider this very important point in more detail. This slide shows the marketed supply of moored semi-submersibles by region, comparing 2010 with today. The global fleet has fallen from around 140 units to fewer than 15. That is a contraction of close to 90%. And looking at how broad-based that decline is, we can see that the UK has gone from 12 to 5, whilst many other regions have no active moored units operating. Brazil and Norway have both moved away from moored units to dynamically positioned rigs wherever possible, or rigs equipped with both moored and DP systems. Among the small amounts showing an increase is Spain, from 0 to 1, where our own Borglund Dolphin will be on its way later this year. Two takeaways follow from this. Firstly, conventionally moored supply cannot return quickly. There are no new build programs for standard moored semis. and the units that have left the fleet have been scrapped, converted, or allowed to lapse out of class, whilst reactivating a cold stacked rig is expensive, slow, and increasingly difficult to finance. And secondly, energy security and P&A liabilities are demand drivers in mature basins where the marketed fleet is fewer than 15 rigs worldwide. That is the pricing and duration environment in which we signed the Paul B. Lloyd and Borglund Awards this quarter. and it is why we believe contract fleet cover into 2030 and 2031 is defensible rather than opportunistic. So to summarize the situation at Dolphin Drilling in three main points from an investment perspective. Firstly, we are a reputable offshore drilling platform. We have extensive international experience with demonstrated safety and uptime records having operated across all key offshore basins. Secondly, We have firm revenue streams from the existing rigs with all three units contracted with visibility extending into 2030 and 2031. And thirdly, with a limited supply of semi-submersible rigs globally, we operate an extremely tight supply and demand market balance. Essentially, we are an established platform with long-term contracted earnings operating in a structurally short market. We believe this quarter represents a structural change in Dolphin Drilling's position. We are delivering on our commitments with a strong safety record demonstrated by recently surpassing over a thousand days lost time injury free for Blackford and solid overall operational performance across the fleet. We have stabilized the company with long-term earnings visibility now secured through the multi-year awards signed in the quarter and we have improved financial flexibility with cash of 55.1 million and a strengthened equity base which allows us to pursue fleet growth opportunities. On the shareholder register, Swelling Capital, as our cornerstone shareholder, holds 39%, with the remaining 61% held across approximately 1,400 shareholders. We would note that the free float has broadened following the recent private placement, and we regard continued development of the register and of trading liquidity as an ongoing priority. That concludes the formal presentation. We are listed in Oslo under the ticker DDRL. For follow-up, please contact Ingolf Gillisdahl for any questions you may have about dolphin drilling. Thank you for your time. We will now open the line for questions.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. If you wish to ask a question via the webcast, please type it into the box and click submit. We will now go to our first phone question. One moment, please. And our first question comes from the line of James West from Milius Research. Please go ahead.

Hey, good afternoon, gentlemen. How are you?

Good afternoon.

Good afternoon. So a quick question for me, but there were some, and you highlighted this in your prepared remarks, but I wanted to dig into more detail. In the North Sea, the regulatory authority there has gone out and fined at least one firm for not doing P&A work. And I think you mentioned a large number of wells that were highlighted to them that were past their due date. What does this do for, as Paul B. Lloyd, you know, Re-enters that market. What does that do for the market outlook and does that extend the runway of really potential? Wells that have to be taken care of that are as you highlighted non-boiling gas price sensitive Yeah Good question.

I mean, I think we would hopefully see this as a A positive, not necessarily that an operator has been fined, but that it should encourage the operators to take care of these liabilities. And with our asset classes, we believe being particularly suited to that type of work, we would hope that that would create further opportunity. And that would, you know, we talk about this P&A demand in the UK, that as the regulator tightens requirements and operators to do this work, that does translate into firm work for the supply chain.

Gotcha. And then with the Blackford Dolphin, it's been extended multiple times with Little India and others in India, but it's the only rig you don't have on, I guess, that I'm aware of, a longer-term contract. Is there potential to lock that rig up for Longer Term Or Would You Rather Because The Market Is Structurally Short You Know Stay Short The Market And Kind Of Go From Well To Well Programs As You Move Pricing Higher There Is Our

I think with Blackford, we continue to evaluate the opportunities that are in the market. The RIG has a renewal survey coming up into next year, so any decision that we make there has to be relative to the capital expenditure that's required and therefore will be a factor of the terms of any new contract, the duration and anticipated day rate and the financing that we can get at the time. So we do continue to evaluate things we do see demand for the unit but they can be shorter in duration so it would require potentially having to put a series of smaller opportunities together which isn't impossible but but can be challenging but there are some longer term ones there so we just continue to evaluate At the moment, as you've correctly mentioned, we continue on with Oil India. So, you know, we still have some time as that contract continues, but we are actively monitoring the available opportunities to assess what is the best fit for Blackford moving forward.

And with the Blackford, maybe just the last question from me, sorry, with Blackford, with the survey coming up, Coming Up Is This Something You Can Negotiate Into A Contract To Get You Paid For Paid Back For That In Order To Relieve Some Of The Financial Burden Of Having That Survey Coming Up

Yeah, potentially. We would certainly be more favourable towards that type of contract and they do exist. But yeah, it would be of significant benefit to us if we could get financing from the contribution from the client rather to finance the renewal survey.

Got it. Great. Thanks, guys.

Thank you. Thank you. We will now go to our next question. And the question comes from the line of Frederick Stenner from Clarkson Securities. Please go ahead.

Hey, there. Thank you for taking my question. I think my questions around the Blackford was already answered. But the second theme I wanted to touch a bit on was growth initiatives. I think I recall from the first quarter report you were you know writing and talking about exploring growth initiatives and as I saw it in today's report you seem to maybe have taken that step further saying that you're engaged in preliminary non-binding discussions concerning certain growth opportunities and potential business combinations So just on a high-level basis, I don't understand that you can't comment on specifics here, but can you say something about the development of these discussions over the quarter? If new discussions have come to fruition, the scale of potential growth and business combination opportunities and how those opportunities would fit with your current profile, would it be Drilling, management, all the type of verticals, any core that you could provide would be very helpful. Thank you.

Yeah, I mean, as you mentioned, I can't get into specifics of what we're looking at there. But we've been clear from the start of the year that this year has been about preparing the dolphin drilling platform for growth. And we believe we are well on the way to doing that with the contract backlog, the refinancing that has been done. And that is allowing us now to evaluate opportunities in the market, some of which we have been monitoring for a while and some are newer. There are a handful of different things. We just have to be careful, selective with what we believe are the best fits to take the company forward. Of course, we have growth in mind, but what that growth it comes from which exact opportunity you know it has to be relative to where we believe will generate the best shareholder value so we're continuing to evaluate a few different opportunities in the market but at the same time continuing to ready the platform for growth that we would hope for Thank you and then just one quick one on the Borgland and the work that's being done there at the moment you're

Just north of 70% Completed Aiming for 12 million dollars Of remaining CapEx Are there any Specific hurdles For those remaining 30% Or things that can go wrong timing wise Or you know Long or short paid Items that you're Still waiting for or is the path To getting that rigged employment In November relatively Be risky at this point

I mean, with a renewal survey, you're always managing risks associated with scope, creep, suppliers, delivery dates, et cetera. But we have a very robust plan and a very experienced team. And at the moment, we are comfortable that we are on track to meet the commencement window in November.

All right. Thank you so much. That's all from me. Have a good day. Thank you.

Thank you. As a reminder, if you would like to ask a question, please press star 1 and 1 on your telephone. To withdraw your question, please press star 1 and 1 again. If you wish to ask a question via the webcast, please type it into the box and click Submit. I will now hand over to Ingolf for webcast questions.

Thank you. Yeah, we have a few questions on the web. This one on Blackford. Question is related to the downtime in April. Please can you elaborate on the downtime and will this be a problem going forward? Michael?

Okay, so yeah, we had a period of downtime then associated with the BOP and the Top Drive and there was a crane cylinder we had to change out, which was actually planned. We just couldn't do it in the transit, so we did it at the same time as the downtime on the BOP control pod, all of which were closed out in a timely manner, and we don't anticipate any further issues associated with those events.

Thank you. A couple of other questions. I'll bundle it together regarding Blackford. Blackford is, as we announced, we have announced Blackford to end its contract at least or beyond August. How do you assess the contracting opportunities for Blackford following the expiry of the current contract? And is there an opportunity to find follow-up contracts directly after the Oil India contract?

Okay, yeah, kind of covered a little bit of this with one of the other questions, but we continue to look at all opportunities that might suit Blackford. There is demand for the rig, as I mentioned previously. Some of them are... Shorter in duration Asia India is clearly a market that we are focused on given the location of the rig and there is some demand there again it's just whether those projects in isolation are enough to justify the reactivation or whether we can put some back to back there but it's good to see there is demand and that demand isn't just in that region there is demand globally

But They Tend To Be Shorter Term At The Moment Thank You There Is A Few Questions On Nigeria Claim And Information For All Of You We Haven't Mentioned It In The Report We Have An Arbitration Award From Last Year Above More Than 100 Million Dollars And They're Basically Asking Questions On The Realism For Collecting Anything On That Claim And I Will Start Out Saying That We Are We are following these opportunities. We are we are doing what we can to to get any reward from the claim But we are not indicating any let's say probability at this stage At least we are not This is not something that we will fight hard on for the long term, but we have time to pursue it anything more Michael

No, I think that's fairing off. It's being monitored continually by our legal team and they are continuing to progress our claim through the appropriate channels.

Another question on growth. What type of rigs are you looking to acquire and will it reduce fleet age? Michael?

I mean we would be looking to as I mentioned we're looking at different opportunities for growth here and ideally we may look to bring in rigs that are complementary to what we currently have but not necessarily but you know logically we have extensive experience in the harsh environment mid-water sphere. But it is relative to the opportunities that are available in the market. And as for whether it would reduce the fleet age, well, we do own some of the older rigs, so the likelihood of that is yes. But again, it depends on what we are able to identify that is value accretive for our shareholders.

Just add that We have for the last years Let's say been been focusing on one segment of the offshore drilling space where we see limited competition Most of our larger listed pairs focus on the high-end deep border segment and basically leaving this segment for us to grow in and and we see clearly opportunities within this space and if we can capitalize on consolidating within this space and use our structural let's say economic power this should be good for our shareholders. I think we have been through most of the questions clearly we will address Blackford in the in the next in the in the near term as it has a contract coming up coming off soon except for that we are pursuing let's say opportunities to see how we can grow the company back to the operator thank you we have one further phone question one moment please

And your phone question comes from the line of Truls Olsson from Fernley Securities. Please go ahead.

Thank you. Hi, guys. Just a follow-up on Blackford, really. If you think about the SPS now in April and the Required Or Likely Or Needed Lead Times What Kind Of Window Does This Leave You In Terms Of Securing A Contract Within A Certain Date Or Month Where You Need To Have Something Set in Stone, if you will, to be able to execute on the SPS. And secondly, or as a follow-up, what alternatives do you have if you're unable to find the suitable work within that time window, if you will? Thank you.

Regarding the SPS, we have a pretty good handle on all the equipment that's necessary for the renewal and the associated lead times. Nothing that would particularly scare us there, but obviously clearly we wouldn't commit any capital to those lead times until we had an opportunity and decided to progress with the renewal survey. So there is a time there in advance that we would need, but relative to the opportunities that we've got there, the renewal survey would all be factored into the commencement window there. So we think that we could absorb any lead time challenges within the renewal survey and commencement window with any future contracts. And so the second question was, what would we do in the event that we didn't find continuation for the work? Was that the question, Jules?

Yes. I mean, if you end up in a position where you haven't secured quality work, are you able to, will you push the SPS? Is that a sort of pause and start? Or yeah, how do you think about that? Or how should we think about that?

Yeah I mean again we're really looking at all available opportunities in front of us or scenarios rather is probably a better word for Blackford and that you know may include Drilling As what do we believe is the best use of funds for the company relative to the strength of the market and if there's opportunities there we may have confidence to hold Blackford but we would generally only commit if we have opportunities that would justify the further capital expenditure Thank you guys Thank you There are no further questions I will now hand back to Michael for closing remarks Okay, that I think brings the Q&A to an end. I would just thank you all for your participation and for listening. Thank you.