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Magnus Vaaler

Thank you, Patrick. The results for the first quarter were highly impacted by temporary rig suspensions and mobilization of rigs to commence contracts, which led to us only having 16 out of 24 rigs working on average during the quarter.
The total operating revenues were $216.6 million, a decrease of $46.5 million compared to the fourth quarter. Day rate revenues decreased by $22.6 billion, primarily due to a decrease in the number of operating days for Arabia II, Iran, and the Tor, partly offset by an increase in operating days for GERD, Gunlo and Valley.
The overall decrease in day rate revenue also includes an $11.5 million decrease in deferred mobilization revenue related to Arabia II due to the recognition of accelerated amortization of deferred mobilization revenue in the prior quarter, linked to its contract termination in Saudi Arabia in Q4.
Bearable charter revenue decreased by $17.9 million as a result of the temporary suspension of the rigs Galar grid in Ghsemi in Mexico who were suspended effective January 8, and management contract revenue decreased by $6 million due to the suspension of the.
Total operating expenses for Q1 were $156.8 million, a decrease of $5.1 million compared to Q4. This is primarily due to $4.2 million decrease in rig OpEx and $1.1 million decrease in G&A.
The decrease in rig OpEx consists of $10.2 million or lower expenses due to the decrease in operating days, partially offset by a $5.2 million increase in costs associated with grid and Gerssemmi as a result of the company assuming their operating expenses and stacking costs during their temporary suspension period.
Prior to the temporary suspension and during operations, these costs are borne by the baby.
Net loss for the first quarter was $16.9 million, a decrease of $43.2 million compared to the net income in the fourth quarter, and adjusted EBITDA was $96.1 million, a decrease of $40.6 million from the previous quarter.
Now moving into our cash, our free cash position at the end of Q1 was $170 million. In addition, we have $150 million unrawn under our RCF facility, resulting in total available liquidity of $320 million. Cash increased by $108.4 million in the quarter compared comparison to the previous quarter.
Net cash from operating activities was $138.7 million, which included approximately $120 million in settlements of outstanding receivables from customers in Mexico and $10 million organization fees received for the value. We paid $6.1 million cash interest and $16.9 million cash taxes.
Net cash used in investing activities was $25.1 million, of which $25 million related to cash used on jacket editions, primarily as a result of activation costs for the valley and long-term maintenance costs. Net cash used in financing activities was $4.9 million and can be explained mainly by the $4.7 million payment of cash distribution to shareholders.
And subsequent to court rent, we have received approximately $35 million in mobilization fees following commencement of the contracts for the Arabia One and the Valli.
With this, I will pass the word on to Bruno.

Bruno Morand

Thank you, Magnus. Let me start with our recent commercial highlights before moving on to the market trends. Here today, Borr Drilling has secured nine new contract commitments, adding $221 million to our backlog at an average rate of $141,000 per day. We're pleased to see the continued execution of our commercial strategy.
Since our last report, we secured high quality contracts at attractive day rates backed by our strong operational reputation. In Asia, the SCAP received a binding LOA from Medco in Thailand for a 170 day program starting in October following the completion of its current PTTEP contract.
The tour has been awarded a 75 day contract Vietro Petro in Vietnam, which has begun in late April. This allowed the rig to return to work earlier than previously expected, and the rig is now contracted in Q3, and we're pursuing active opportunities for work for the tour into 2026.
In Mexico, the Rigalar, grit, and Gersonmi had been extended by a combined term of approximately 390 days. These extensions offset the suspension periods experienced early this year and preserve our regional backlog.
Further, the run has been awarded a 140 day contract with ENI in Mexico, which commenced in May. The contract includes options that could extend the rig into Q126.
In West Africa, the Nova has received a letter of award for an 11 month program expected to commence in the second half of 206. And finally, the GERD has secured a one year contract with Foxtrot International in Ivory Coast, expected to commence in Q4.
These recent fleet developments combined with the commencement of the contract for the Valli and Arabia I have increased our operating recount to 22 in May.
Our 2025 fleet coverage now stands at 79% and an average day rate of 147,000. We're actively working with our customers on numerous opportunities and based on advanced stage of negotiations, we expect the coverage to rise towards the 80% to 85% range in the coming months. Our 2026 coverage has also grown.
We're now at 35%, an increase of 12% points since our last report. In line with the normal tendering cycles for jack ups, we see an increasing number of tenders being launched for working 26, and our teams remain focused on firming up the coverage for the year.
Additionally, several of our customers have expressed interest in discussing potential extensions to their existing contracts.
We remain actively engaged with the customers and believe our strong operational track record, high quality fleet, and incumbent status will support further progress in building our 2026 coverage. This includes Mexico, where we believe the resumption of work on our three suspended rigs, including the private investment project should create a favorable environment for potential renewals.
Looking at the broader market, jack up utilization has remained steady. Modern rate market utilization sits at 92%, relatively unchanged quarter on quarter. Adjusting for the net impact of the Aramco suspensions, modern utilization still sits just under 90%, which we see as a healthy level.
Recent changes in trade policies and OPEC's decision to unwind production cuts have introduced some uncertainty in price volatility in commodity markets. We're actively monitoring these developments and engaging with our customers to assess how this may affect future activity levels. Importantly, we continue to see shallow water projects as resilient.
The projects are primarily related to brownfields, offering attractive economics at the current oil price and faster cash flow cycles to our customers.
Despite the recent market volatility, Jacob tenders and awards have remained largely on track, as evidenced by our recent fixtures.
On the rig supply side, is volatility continues to create a challenging environment for older jack ups with reduced contracting opportunities as customer preference for modern rigs persist. We've seen the resumption in rig retirement in 2025 and expect this trend to continue.
Conversely, with a limited number of new builds in the pipeline and no immediate prospects for further deliveries, we do not anticipate any future additions in the foreseeable future.
Meanwhile, global demand outside the Middle East remains resilient. Regions like West Africa, Southeast Asia, and America are gradually absorbing some of the excess capacity resulting from Aramco's recent adjustments.
At the same time, recent fixtures suggest that Aramco may be preparing to secure additional long term jack up capacity and create an optionality. Current jack up activity levels in Saudi Arabia are in the mid-50s, a level consistent with 2019.
Looking at Mexico, recent developments clearly show the link between rig activity and production. Since Q424, PME's partial reduction in drilling activities led to nearly 10% drop in production in this period.
We're pleased that our three rigs have now resumed operations in May and are again contributing to Mexico's goal of restoring production to 1.85 million barrels per day.
In short, while near term volatility may continue, we remain confident in the long term fundamentals for the Jacob market. We are consistently delivering our strategy, maximizing 2025 backlog and building 2026 coverage while supporting our customers through the dynamic market. With that, I'll hand the call back to Patrick.

Patrick Schorn

Thank you, Bruno. So in conclusion, in 2025 we've made solid progress expanding our contract coverage through a series of awards, and we now expect to reach 80% to 85% coverage for the full year.
While we're still actively pursuing near term opportunities, our commercial focus is now shifting towards 2026.
Our operating recount has grown to 22, up from 16 in the first quarter, giving us a solid foundation for earnings growth in the quarters ahead.
In Mexico, all of our rigs are currently active, including one under a private investment contract supporting Pemex's production initiatives. This return to full operation positions as well for contract renewal discussions with Mexico representing a meaningful share of our available rig days for 2026 and beyond.
While we continue to navigate some short term uncertainty, the business we have built is resilient. The long term fundamentals of the market remain strong and bored with its premium rig fleet is well positioned to capture future growth.
Finally, in light of uncertain market conditions, the board has decided not to pay a dividend to reinforce the balance sheet and enhance long term value creation.
And with regards to adjusted EBITDA, we're on track to deliver 2025 consensus of approximately $460 million.
Thank you, and ladies and gentlemen, we are now ready to go to Q&A.

Question and Answer Session

Operator

(Operator Instructions) Eddie Kim, Barclays.

Eddie Kim

Hi, good morning. I wanted to start off in Mexico. I think many were surprised that your 3 suspended rigs have now resumed operations, especially given the challenges in that market. Is this a sign that Penax is finally getting their act together, or does it speak more to the quality of your rigs specifically? And and separately, you have two of your Pendax jack ups coming off contract by by year end this year. What's the likelihood that you think that those will be extended beyond that period?
Thank you.

Patrick Schorn

Yeah, thank you, Eddie. So I think it is maybe a combination of a few aspects here. I think firstly, I think there's a very strong realization in Mexico that with very low or no activity production takes a very strong drop to that. And there is a lot of work going on to make sure that activity plans are drawn up to make sure that additional production is created going forward, which means putting putting rigs back to work.
Now clearly where we benefit is on one side on the quality of the rigs, but more importantly, the well construction work that we are involved in in Mexico has over the last few years demonstrated that we can generate some of the lowest cost barrels, drill very efficient wells, and have done this.
Approximately just short of 100 wells offshore at the moment, so I think that the concept work. I think that we have a fairly long history of performing well in the environment and being very cost efficient and therefore I think we are benefiting from being some of the, let's say, first weeks to go back.
So I think that that certainly has helped us now as to your question regarding the contract extension. I think that that is something that we will be discussing with our customer and Pemex here over the following months.
I certainly expect that we have good contract extension opportunities in Mexico. The exact. The size of that is difficult to estimate at this moment, but I'm sure that we get more clarity in that towards the later part of this year, and clearly based on the performance that we have had over the last three years in this contract, I would expect that we do reasonably well in that, but I'm very happy to kind of keep you up to date as soon as we have more information on that.

Eddie Kim

Understood, thank you for that. My follow up is just on, the uncertain market conditions you highlighted as the reason for suspension of the dividend. Could you just expand on this a bit more for? Are you seeing customers in certain regions getting increasingly more cautious about about the outlook in your, your conversations with them? And perhaps pushing back, drilling programs or does it reflect more of your expectations for the oil oil price declines due to OEC or maybe a combination of both, if you could just expand on that comment for us.

Patrick Schorn

Yeah, Eddie, I think it is, it's a little bit more a macro situation where I think that we have all tried to Get a good understanding of what the latest micro developments really are going to mean to the market. I mean, we have clearly had a lot of discussions around tariffs and what that might do to global GDP and as a result to oil demand, counter that we have seen that demand has remained actually quite strong. Overall we see a lot of customers that do relative short contracts, so from that I can see that they are certainly.
Keeping a little bit their finger on the trigger, which I think is understandable as there is just quite a few items on the uncertainty list. Now what we also see is that when it comes to 26 and beyond, there are some larger packages of work.
I think when we start to see that. Being tendered and actively negotiated and ultimately being awarded, I think we start to all have a much better feel for it. So I think it is purely a question of trying to be cautious, making sure that we have options on what to do with the cash. Obviously dividend is not the only option that we have, but also working on the debt is at the moment quite attractive. So I think we want to make sure that we have all options open while remaining cautious for as long as the uncertainty persists.

Operator

Doug Becker, Capital One

Doug Becker

Thank you. Patrick, your commentary on Mexico sounds encouraging. Do you have any visibility on the option for the run to be exercised and then outside of Mexico, the prospector?

Patrick Schorn

Yeah, I'll turn that to to Bruno and thanks, Doug. I mean we we have indeed options there.

Bruno Morand

Indeed, it's early days. The rig just basically just gone to work about a week ago, so we're still monitoring that.
Conversations with the customers so far are encouraging, but we do see opportunities outside of that customer as well for the rig in Mexico. There's some other work with IOC that could potentially keep that rig occupied well into 2026. So we'll see. It's definitely a good timing to get the rig back to work.
As we get closer to the end of '25 and early '26, we do see an outlook that is more favorable to see that rig continue to work, but I'll probably leave it at that early days. The rig just went to work. We're pretty happy with that.

Doug Becker

No, fair enough. Are there, are you able to provide any color in which rigs are expected to increase the contract coverage to 80%, 85%? Are there, one or two rigs, or is it kind of a risked opportunity to set?

Bruno Morand

Yeah, no, we were looking at. The moment about 3 of our rigs representing that GAAP at the moment, and we're encouraged, we're quoting that number, not out of the thin air. We do have very active conversations with the customers at the moment, including some non-binding LOIs that we're working to progress. I wouldn't want to share more details at this time, but I'm pretty convinced that in the next couple of weeks we'll be able to say something more about it.

Operator

Fredrik Stene, Clarksons Securities.

Fredrik Stene

So I want to touch a bit upon, liquidity in general, because at least from, the discussions that I've had with clients recently, I think it's it's very thematic and some of these ties to Mexico, Pemex, and the lack of payment visibility from them, and the second comes to, 2026 coverage and beyond and, you've obviously given good commentary on that already.
But I was hoping that you could potentially, provide a bit more color on how you see your own liquidity situation going forward and and and by extension of that if you Or how you feel you're kind of position to call it weather, short to medium term storm, and also if you envision to to touch the RCF either this year or next year in in some of they call it more adverse scenarios that you might be running within your own sensitivity analysis.

Patrick Schorn

Oh, very good. I'll ask Magnus to comment on that.

Magnus Vaaler

Yeah, thank you. Thanks for the question, Frederick. I think we're in a good position going into this year with almost 80% of our days covered at just below $150,000 per day, so it's a very solid. Solid day rate as sort of the fundament of our liquidity going into the air and also as you see, Bruno here is now starting to fill up the beginning of 2026 also with with backlog at rates that are above our cash break even rates which are de-risking, I think our liquidity any any liquidity issues for us.
We have received 120 million payments from Mexico so far this year, which is about one year of receivables or earnings, so that's obviously also very positive and fills up our bank account. We do expect that Penex should go back to regular payments now throughout in 2025. Invoicing seems to be progressing as planned. And the signals that we are seeing is that Mexico should come back to their regular payments that they have shown over the past few years up until mid last year, I would say. So all in all, I think the base case looks very solid.
I do not foresee any reasons for drawing on the RCF as long as collections come in with the forecast that we are currently seeing. That being said, in scenarios where, there are delays in payments, from our customers or, that we have experienced before from Mexico, we have the RCF $150 million which provides us with additional comfort, there. I would also maybe lastly add that when you saw.
The regular payments stopped from Pemex last year we were also able to find alternative ways of getting paid with this financing or factoring agreement which released almost 75% of our receivables on the balance sheet from Pemex.
So I think we have a lot of Lot of opportunities to also, to monetize on the receivables should not the the base case, go through.

Patrick Schorn

Maybe I can add a few things because, of course it starts all with proper quality of revenue, and I think we have shown that we can generate that in 24 where we ended up with $500 million of adjusted.
We are indicating a number now that is along the lines of Bloomberg consensus for '25 or $460 million.
Where you also see that we are still in an environment where it's very competitive and where jobs are not easy to find, we're able to continue to fill up the coverage for '25 as well up to what we have indicated the 80 to 85%.
We have no different intention to do with '26, so you see that we have 35% at a very decent day rate. If you think about what Mexico represents on top of that, it's about 20%. So you could say that with that you're already starting to talk, getting to the 55% to 60% of coverage, and we intend to continue to fill that throughout the year and try to be.
Getting the right balance as we get this year between pricing and utilization, and I think as long as we can continue to be very focused on starting off with the right quality of revenue and keeping the cost under control, then I think with the efforts on collections we can do a good job on liquidity as well, at least that's what we've been doing so far, and we intend to approach it no different for '26.

Fredrik Stene

Thank you. And, I think Patrick, you kind of started to touch upon my follow up here because as you're building either the rest of 2025 and also to 2026, and maybe this one goes to Bruno first part of that would be, the discussions with your your clients, are you still able and confident that you can secure, premium rates, or rates with a premium above market for your your high capabilities, or are you, in the current market getting pushback on that, I guess what you've found so far proves that you can, but interested to hear, how how how that looking forward and maybe for for for Magnus on the cost side also in the context of liquidity here.
If you're faced with Idle time on some of these rigs and you know that pertains to to Arabia to war for that matter, how, quickly are you able to ramp costs down and up if if if there's open capacity in between contracts.

Bruno Morand

All right, Frederick, so in terms of your question, and probably difficult to provide a single answer to that and whether we can get a premium on every job going forward. I think it depends a lot on the specifics of the projects.
We're very well aware of the value that we bring to the customers with our high-end rigs, offline capabilities and features like that, and to the tune that we know we create value for our customers. We think it's fair that we continue to claim a bit of a premium for rigs and have been doing so for a while now. That all said.
As we've been repeating for the last couple of quarters, at the moment, coverage is obviously just as important, if not more important than the premium. So we keep an eye when we when we deliver value for the customer because of projects, we certainly are very keen in driving to get. And I think we have continued to do so.
Maybe a bit more projects and a bit more cookie cutter where we don't necessarily add an immense amount of value to the customer. We compete with the market trend. So we're comfortable with that. I think what is important is that The quality of our fleet still means that a lot of our customers default back to us and look at us as kind of the preferred alternative, and that should give us a chance to fuel up the coverage better than our peers or at a faster pace than our peers, and that's really the focus that we have at the moment.

Magnus Vaaler

Yeah, was your question on on cost side of things when we have our rigs rigs stacked. We currently have a rigs worm stack, so they are relatively easy to get back to work as you saw from the rigs that we have suspended in Mexico and Iran.
We keep keep warm enough that there will not be a lot of cost to bring the rigs out. And I would say a typical stacking costs for those rigs are in the mid $20,000 per day approximately.
The exception is the bar, which is a new build coming out of the shipyard where we can actually have a lower cost while it's sitting idle, and that's more in the area of $15,000 per day, so.
If we look at stacking periods of up to more than one year, you would probably go into a cold stacking mode where where you need to do more preservation, but you could also have a lower per day cost while stacked, but we have not gone to those stages yet as we are. Very optimistic that we actually will get work for them in in less than one year.

Operator

Greg Rossi, Bank of America.

Greg Rossi

Morning everybody, or I guess good afternoon for you. Just, can you talk a little bit about the Saudi market? Just, I -- you mentioned on the long-term demand there, but we've been hearing, what's been out in the press about about rates potentially being dropped. Can you help us understand what you're seeing and how that may be affecting the Saudi market and just other adjacent markets?

Patrick Schorn

Bruno, could you take that Saudi.

Bruno Morand

Question? Sure. And thanks, Greg. Looking at the Saudi market and we managed, I mentioned in the earlier remarks, we saw over the cycle Saudi going from about 50 rigs to 90 rigs and then following the suspension we're now back down to levels in the 50s. So activity level offshore is now back at the same levels as 2019 as we understand, the land operation in Saudi has seen a significant Reduction in activity as well.
Clearly the kingdom at the moment is resolving for cash. They seem to think that there is production available at their fingertip, and I think optimizing that as being in the forefront. Now. Interestingly, in the last couple of quarters, there's a few things that would indicate that we could be at a trough and possibly working towards a reverse.
So one of those indications has been the increased interest from. Saudi about lump sum turnkey projects offshore. They've been quite successful with that onshore over time, not so much offshore, and now they seem to be exploring those opportunities and wanting to discuss these opportunities with the with the service companies and consequently the. The jack up provider.
So let's see how things mature over time. And then equally they've been now securing long term rigs for some of the rigs that long term contracts some of the rigs that had been previously suspended in the part of the kingdom indicating that they're starting to build some long term capacity or potentially optionality. So that's what we see at the moment when Saudi's going to be back in the market. I think we will see. Certainly we do feel that at the current activity level, going back to the same levels of 2019.
Meaningful reduction activity are unlikely, and we start to see some signs of that potentially reversing going forward, but we'll see. Time will tell. I'll probably leave it at that. I guess we try to predict Aram steps in the past and I think people have been proven wrong, so we'll just monitor that going forward.

Greg Rossi

And just, I appreciate all the commentary on liquidity and and the purgency of suspending the base dividend. What, how should we think about share buybacks? Is that, is that a possibility in this environment or is that also off the table?

Patrick Schorn

Clearly I think that is something that at a certain moment is clearly attractive where equity pricing is currently. I think that there is a variety of things that we can do. I think everything is on the table at the time that we have a good visibility on.
The cash coming out of the business and that would include everything from buybacks from retiring debt from straight dividends. I think that there is a whole slew of things you can think of that all will be appropriately evaluated and be looked at at what would be the most appropriate at that moment in time. But yeah, I think that there is nothing that is.
Excluded, we will diligently work through it to make sure that we have the cash work in the best interest of the company.

Operator

Fady Chammas, Triton Partners.

Fady Chammas

Here is who covering for. Quick quick question about the backlog. How does the backlog work? Does it have a clause for termination for convenience? Can the customers just stop the contract? Are there any penalty payments? Yeah, any caller about that would be great.

Bruno Morand

And if you look at it probably difficult to give you a single answer for all the contracts, but our contracts in its vast majority, probably close to totality at the moment, if it includes a clause clause for termination for convenience, it comes with a level of payout. The payout varies from contract to contract, but in general terms it's equivalent to the backlog expectation of that of the remaining term.
So if the customer decides to to to exercise that option, we do recover the profit expectation that we have for the contract. And that's that's the general terms for the contract. It varies a little bit from contract to contract, but they are fairly similar.

Fady Chammas

Okay, so just double check, you say that the bulk of the backlog is kind of protected, i.e., even if oil prices drop materially, you wouldn't expect customers just to cancel contracts, and you guys wouldn't get anything. That is correct, yes.
Okay, and then one quick follow up is around the CapEx per rig? Like, how do you guys think about it and how should we think about it, like average CapEx per week per year. Can you also please give some guidance around that?

Magnus Vaaler

Yeah, sure, as we've now last year filed our new build programs, so there's no further growth CapEx, and what we're left with then is maintenance CapEx, special periodic surveys, long term maintenance.
We have already indicated we expect around $50 million in 2025 on on CapEx. Which equates to around $2 million per per rig, and I think that is a decent number to to also use going forward for for modeling purposes and into the next couple of years as well.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.