Borr Drilling BORR Q4 2023 Earnings Presentation
Summary
TLDRThe board drilling company reported strong Q4 2023 earnings with a 15% revenue increase and a 20% adjusted EBITDA growth. They achieved significant milestones, including a full year adjusted EBITDA of $350 million and a backlog growth. The company's operational excellence was recognized with awards and they maintain a positive outlook for 2024 with an adjusted EBITDA estimate of $500 to $550 million, underpinned by a robust contract portfolio and a strong market demand.
Takeaways
- 📈 Strong Q4 2023 performance with a 15% revenue increase to $220 million and a 20% adjusted EBITDA increase to $105 million.
- 🚀 Full year 2023 adjusted EBITDA reached $350 million, with a 48% adjusted EBITDA margin.
- 📊 Backlog growth in 2023, adding $728 million in revenue with an implied average day rate of $161 per day.
- 🏭 Excellent operational efficiency with a technical utilization of 98.7% for the quarter and a recordable injury frequency of 0.65.
- 🏆 Recognitions include awards from Shell and IADC Southeast Asia for safety and operational excellence.
- 🌍 Board drilling maintains operations in four main hubs: Mexico, West Africa, the Middle East, and Asia, benefiting from economies of scale and diversified activity levels.
- 📝 Focus on controllable factors such as relentless pursuit of safety and operational excellence to deliver value to customers.
- 💰 Adjusted EBITDA estimate for full year 2024 remains between $500 to $550 million, based on a strong contracted fleet coverage.
- 💹 Dividend payment of 5 cents per share approved for Q4, reflecting commitment to shareholder distributions.
- 🛠️ Jackup market update shows increasing utilization levels, particularly for modern rigs, with a total order book representing less than 4% of the global jackup fleet.
- 🔄 Expectations for the market scenario indicate continued demand outpacing supply growth, with a potential increase in demand for 20 to 25 jackup rigs in the next 24 months.
Q & A
What was the revenue increase in the fourth quarter of 2023 for the company?
-The revenue increased by 15% to $220 million in the fourth quarter of 2023.
How much did the adjusted EBITDA increase in the fourth quarter of 2023 compared to the previous quarter?
-The adjusted EBITDA increased by $20 million, which is 20% over the previous quarter, resulting in a $105 million adjusted EBITDA for Q4 2023.
What was the adjusted EBITDA margin for the full year 2023?
-The full year 2023 adjusted EBITDA reached $350 million, with an adjusted EBITDA margin of 48%.
How much did the company's backlog grow in 2023, and what was the average day rate implied by this growth?
-In 2023, the company's backlog grew by $728 million, with an implied average day rate of $161 per day.
What was the total recordable injury frequency for the company in the fourth quarter, and how does it compare to the industry average?
-The total recordable injury frequency was 0.65, which is well below the industry average.
Which awards did the company receive in recognition of its performance?
-The company received the 'Global Jackup Rig of the Year' award from Shell and the 'Best Recordable Incident Rate' award from the IADC Southeast Asia chapter.
How many rigs does the company have in its fleet, and how many are working in the Kingdom of Saudi Arabia?
-The company has a fleet of 24 rigs, out of which three are working in the Kingdom of Saudi Arabia.
What is the company's estimate for adjusted EBITDA for the full year 2024?
-The company maintains its estimate of adjusted EBITDA for the full year 2024 to be between $500 to $550 million.
What was the free cash position at the end of Q4 2023, and how much liquidity was available to the company?
-The free cash position at the end of Q4 2023 was $102.5 million, and the company had an undrawn RCF facility of $150 million, totaling approximately $250 million of available liquidity.
How has the jackup market utilization level changed since the last report, and what is the current utilization level for modern rigs?
-Jackup market utilization levels have continued to increase since the last report, with the market utilization for modern rigs now exceeding 95%.
What is the company's view on the demand for modern jackup rigs over the next 18 to 24 months?
-The company anticipates demand for modern jackup rigs to increase by 20 to 25 rigs over the next 18 to 24 months, with several programs already in the tendering phase.
What is the company's strategy for balancing new rig deployments in the spot market versus term contracts?
-The company aims to find work with volume and longevity for the new rigs, ideally programs that are 18 months or more, to ensure a good balance between attractive day rates and seamless integration into work.
Outlines
📈 Strong Fourth Quarter 2023 Earnings and Milestones
The board drilling company reported a robust fourth quarter in 2023, with a 15% revenue increase to $220 million and a 20% rise in adjusted EBITDA to $105 million. This resulted in a 48% adjusted EBITDA margin. Full-year 2023 adjusted EBITDA reached $350 million. The company's operational excellence was highlighted by a 98.7% technical utilization rate for the quarter and a recordable injury frequency significantly below the industry average. External recognitions included awards for safety and operational excellence. The company's strategic positioning in key regions like Mexico, West Africa, the Middle East, and Asia allowed for economies of scale and diversified operations. Discussions on Saudi Aramco's production targets for 2027 and the company's focus on controllable factors like safety and operational excellence were also covered.
💰 Financial Performance and Dividend Announcement
The financial details of Q4 2023 showed a positive trend with a 15% increase in revenues and a 20% rise in adjusted EBITDA. Operating revenues for the quarter were $220.6 million, a $29.1 million increase from the previous quarter. The company's free cash position at the end of Q4 was $102.5 million, with an undrawn RCF facility of $150 million, totaling approximately $250 million in available liquidity. The company also announced a dividend payment of 5 cents per share for Q4, demonstrating a commitment to shareholder distributions. The full-year 2023 EBITDA was $350.5 million, with 2024 guidance remaining in the range of $500 to $550 million.
🌐 Market Update and Contracting Developments
The jackup market showed increased utilization levels, particularly for modern rigs, with the global order book for new builds at a record low. Shallow water projects were highlighted as economically viable alternatives due to low break-even prices and attractive commodity prices. The company anticipates demand for modern rigs to increase by 20 to 25 rigs in the next 24 months. Regional updates included potential multi-year programs in the Middle East, particularly in Qatar, Kuwait, and the neutral zone between Saudi and Kuwait. The company's positive view on the Asian, Indian, and Middle Eastern markets was supported by data points and customer discussions. New commitments added $82 million to the company's backlog, with a focus on securing work for rigs coming off contract.
🚢 Rig Deployments and New Build Updates
The company's rig deployment strategy was discussed, with a focus on filling the 87% contracted fleet coverage for 2024. The rigs expected to roll off contract in the first half of the year are the Prospector One in the North Sea and the Gun L in Asia. Discussions with customers are ongoing for continued work for these rigs. Updates on the new build units, Veil and VAR, were provided, with expectations of delivery around Q4 of the current year. These units are being marketed for several opportunities and have attracted considerable interest from customers.
💸 Dividend and Share Repurchase Strategy
The company's approach to dividends and share repurchases was discussed, with a focus on balancing deleveraging and shareholder returns. The board's decision to implement a regular quarterly dividend and maintain a share buyback program reflects this balance. The company's commitment to分红 (dividend distribution) was emphasized, with expectations of increasing dividends over time. The board will make determinations on share buybacks or dividends based on cash availability and share price performance.
🏗️ New Builds and Market Opportunities
The company's strategy for integrating new builds into the market was discussed, with a preference for long-term contracts. The new builds are expected to be highly capable and have attracted substantial interest from customers. The company is focused on finding work with volume and longevity, ideally programs of 18 months or more. The company's satisfaction with the size of its fleet was emphasized, with no interest in selling the under-construction rigs and a focus on operating and expanding through its own assets.
📈 Day Rate Trends and Market Outlook
The current market conditions and future expectations for day rates were discussed. The company has seen a flattening of day rates at around $165 to $170 thousand per day, but expects an acceleration in rates as more long-term tenders hit the market. The company's offers are pushing for higher rates and are getting close to $200,000 a day. The second half of the year is anticipated to see a higher acceleration in day rates, with the company maintaining a positive view on the market's direction.
Mindmap
Keywords
💡Board Drilling
💡Earnings Call
💡Forward-Looking Statements
💡Revenue
💡EBITDA
💡Backlog
💡Technical Utilization
💡Safety
💡Market Supply
💡Day Rate
💡Dividend
Highlights
Introduction of Borr Drilling's Q4 2023 earnings call by Patrick Sha.
Discussion of forward-looking statements and risks.
Q4 Revenue increased by 15% to $220 million.
Adjusted EBITDA increased to $105 million, a 20% increase over the previous quarter.
Full year 2023 adjusted EBITDA reached $350 million.
Significant growth and improvement in backlog quality in 2023.
Technical utilization for Q4 at 98.7% and total recordable injury frequency at 0.65.
Awards received for operational excellence and safety.
Operations maintained in Mexico, West Africa, the Middle East, and Asia.
Discussion on the impact of Saudi Aramco's production targets on Borr Drilling.
Adjusted EBITDA estimate for 2024 between $500 to $550 million.
Q4 dividend payment of 5 cents per share announced.
Financial details of Q4 2023 presented by Magnus Fer.
Strategic focus on safety and operational excellence.
Comprehensive update on the jackup market and fleet developments.
Positive outlook on jackup drilling sector's utilization and economics.
Transcripts
good morning good afternoon and thank
you for participating in the board
drilling fourth quarter 2023 earnings
call I'm Patrick sha and with me here
today is Bruno Moran a chief commercial
officer and Magnus fer a Chief Financial
Officer next slide 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 next
slide our fourth quarter performance has
been strong and we have closed the year
having achieved several major
milestones in the fourth quarter Revenue
increased by 15% to $220 million and our
adjusted eida increased to $105 million
which is 20% over previous quarter
resulting in a 48% adjusted eida
margin full year 2023 adjusted eida
reached $350
million our backlog has grown and
improved significantly in quality during
2023 where we added 728 million to our
Revenue at an implied average day rate
of
$161 per day on the operational front we
have finished the year with excellent
technical U utilization for the quarter
at
98.7% and a total recordable injury
frequency of
0.65 the letter being well below the
industry
average both these numbers reflect the
professionalism of our operational team
who have AC ated rigs continuously for
the last three years and who have
successfully commenced operations in
numerous new
countries this performance has also
resulted in external recognition that is
dear to us and just to name too AR Rick
Saga has been awarded by shell AS Global
jackup Rick of the
Year also we have received the award for
the best recordable incident rate for AR
rck called and board drilling as a
company from the
iadc southeast Asia
chapter on the map on the right hand
side you see that we maintain operations
in four main hubs namely Mexico West
Africa the Middle East and
Asia this allows us to benefit from
economies of scale while remaining
Diversified enough to provide a stable
activity level
there's been significant focus on the
announcement by Saudi aramco regarding
their production targets for
2027 on this I can only comment from a
board drilling perspective and based on
some of the discussions we had in Saudi
a week
ago first we have three rigs out of our
Fleet of 24 rigs working in the Kingdom
all three of which are on multi-year
contracts second maintaining a
production capacity of 12 million
barrels per day versus 13 million
barrels per day still requires a world
leading activity level and an operation
second to none in
size oil just doesn't come out of the
ground by itself not even in Saudi and
as such large volumes of activity will
continue to be required and in order to
remain most relevant to our customer we
continue focusing on the things we can
control which is the Relentless pursuit
of safety and operational excellence in
order to deliver value to our
customers we continue to have a very
tight checkup market supply has dried up
and can only increase once we start to
see new build orders coming in and even
then the impact will be several years
out as it takes multiple years to get
units built and into into the
market on the demand side Bruno will
share some additional information in a
minute but also demand remains solid for
the next two years plus So based on our
view of the business
environment and a strong contracted
Fleet coverage we maintain our estimate
of adjusted eida for the full year 2024
to be between 500 to $550
million we also announced that the board
approved for Q4 as well a dividend
payment of 5 cents per
share Magnus will now step you through
the financial details of the fourth
quarter thank you
Patrick so Q4 2023 was a very good
quarter financially with quarter on
quarter increases in revenues of 15% and
adjusted IA increasing by
20% we continue the sequential increase
that we've had now for eight quarters as
you can see in the graphs and this trend
uh of increases actually goes back even
further reflecting both that we have
been putting more rigs to work and uh an
improvement in day
rates the operating revenues for the
quarter was 220.6 Million an increase of
29.1 million compared to the third
quarter this is split in an increase of
day rate revenues uh of 24.4 million
increase primarily due to two more rigs
starting up in the quarter and an
increase of bareboat income from our
Mexico joint ventures of 4.7 million
mainly related to higher economic
utilization for one rig and the release
of an operational cost
provision the rig operating and
maintenance expenses increased by 12.7
million uh or
15% an increase that follows naturally
from the increase in number of rigs uh
increasing by two for the quarter in
addition we had an increase of
amortization of deferred costs of 3.8
million in the
quarter the operating income increase
quarter on quarter was
26% below the operating income line the
numbers were driven by total Financial
expenses net of 59.1 million which was
impacted largely by oneof expenses of
8.9 million recorded related to our
refinancing and repayment of all debt
the income tax expense for the fourth
quarter was a credit of 9.3 million
impacted by a 16.5 million release of a
valuation allowance on deferred tax
assets as well as a 9.3 million release
of an uncertain tax
provision that gives us a net income for
the fourth quarter of 28.4 million and
increase of 28.1 million compared to the
third quarter and an adjusted IA for the
fourth quarter of 105.9 million yielding
48% IA
margin our free cash position at the end
of Q4 was 102.5 million in addition we
had undrawn RCF facility of 150 million
so in total we have approximately 250
million of available
liquidity the cash in the quarter
increased by 8.1 million and this was
affected by cash used in operating
activities of 7 9.6
million this number includes 99.2
million related to interest paid and
approximately 10 million of income taxes
paid and this includes both cash
interest incurred during the quarter and
the repayment of capitalized interest on
our Legacy
debt in addition the number was impacted
by cash costs related to our financing
and timing differences of working
capital
movements net cash used in investing
investing activities 35.5 million
primarily consisting of 34 million used
on jackup editions which is the
activation cost for Hill and Arabia 3
and also some capex additions uh over
the uh Fleet uh as such and 1.3 million
used on new build
additions the net net cash provided by
financing activities was 1203.2 Million
primarily as a result from the net
proceeds of the issuance of the your
secured notes and the net proceeds from
our private placement offset by
repayment of the
debt next slide
please our 2023 full year eitaa came in
at 350. 5 million and our 20 24 EA
guidance remains in the range 500 to 550
million at the midpoint of this range
this um shows an increase of
approximately 50% from
2023 we're also very pleased to have
completed our refinancing of all the
company secure debt in November 2023 and
we now have all our debt maturities in
2028 and
2030 the delivery installments for our
two remaining new builds in 2024 are
largely funded by a commitment of
delivery financing by the seller uh in
the size of 130 million per rig and
additionally we have secured 180 million
senior secured facility which includes
150 million RCF and a 30 million
guarantee
facility the refinancing provides a
stable foundation for the company going
forward with a fixed amortization
profile that allows us to delever our
debts in addition it also provides us
the possibility of distributions to
shareholders as evidenced by our
implementation of a regular quarterly
dividend which we now have declared for
two consecutive quarters of five
cents with this I would like to turn the
word over to
Bruno thanks Magus now i' like to
provide a brief update on the jackup
market and our most recent Contracting
and Fleet
developments jackup utilization levels
have continued to increase since our
last report in particular the market
utilization for modern rigs has now
exceeded 95% in line with our urgent
projections it is noteworthy that
utilization levels have continued to
improve while the market absorbed a few
additional new build rigs currently the
shipyard order book stands of 15 rigs
one of each has a future contract and
two are owned by board drilling the
total order book represents less than 4%
of the global jacket Fleet a record low
level we highlight again the shallow
water projects on average have some of
the lowest Break Even prices and
continue to be a viable and attractive
alternative for our customers at the
current commodity
prices underlining that and according to
recent data by rice. energy Global
investments in shallow water projects
are expected to experience double digit
growth in 2024 compared to last year
these factors support our views that the
jackup drilling sector should continue
to benefit from strong utilization and
improving
economics looking forward we see a
market scenario whereby incremental
demand should continue to outpace any
potential Supply growth from a supply
side based on a study conducted by FES
offshore it is anticipated that only six
of the 15 rigs under construction could
reasonably brought into the market in
the next 18 to 24
months on the demand side we anticipate
demand for mod than rigs to increase by
20 to 25 rigs in the next 24 months or
so several of these programs are already
in tendering Phase While others are
expected to be tendered
quarters in support of our views data
from S&P Global in their latest World R
forecast project that Global jackup
demand will be increase by 36 units by
me
2025 and based on the recent market
trends and customer preferences we
anticipate the Lion Share of this
incremental demand will be fulfilled by
modern
Raks we maintain a constructive view on
the Asian Indian and Middle Eastern
markets and let me provide you some data
points that support our views
in the Middle East recent announcements
by nl's indicate the potential for
several multi-year multi- programs
particularly in Qatar Kuwait and the
neutral zone between Saud and Kuwait
where the large Aldora Fu development is
expected to be tendered soon and should
alone require four additional High
specification
jackups in India we note onc stated
plans of securing SI new rigs as part of
their Fleet renewal strategy noting that
the average age of their current Fleet
is approximately 40 years old this
requirement is over over and above om's
open tenders and unfulfill demand from
prior tenders including the recent hphd
requirement similar F renewal Ambitions
have been recently indicated by adnoc
and
cop in Asia Pon activity Outlook
indicates incremental demand of two to
three rigs in Malaysia within the next
24 months similar activity levels are
projected to increase in Vietnam and
Indonesia outside these areas we see
pockets of long-term activity developing
in places such Angola Libya Americas and
Australia to name a few this theend
Outlook coupled our customer discussions
support our positive view of the
strength duration and resilient
resilience of the
cycle in 2024 to date we have received
three new commitments adding a total of
$82 million in backlog to the company at
an average of
$166,000 per day these commitments
include contract extensions for the
Norva with bwe in the bond contract
extension for the Mist with valura in
Thailand and a binding letter of award
for the tour with an undisclosed
customer in Southeast
Asia following these Awards our Fleet
coverage for 2024 has further increased
to
87% considering our prospects and based
on ongoing discussions with our
customers we remain positive about our
ability to secure follow foll work for
our rigs rolling off contract during the
year with limited wi spaces if
any our only rigs expected to roll off
contract in the first half of the year
are the prospector one in the North Sea
and the gun l in Asia we're currently in
advance discussions with customers about
continued work for these Rigs and will
provide further details in due course
in relation to our new buil units Veil
and VAR we continue to make progress
with the completion of their
construction and commissioning and
remain on track to have these units
delivered around the fourth quarter this
year these units are currently being
offered for several opportunities and
are attracting considerable interest
from our customers we remain positive
about our ability to secure meaningful
term work for these units ahead of their
delivery on this note i' like to hand a
call back to Patrick thank you
Bruno so in conclusion Bruno has walked
you through the current
utilization our view of the demand
increase over the next 18 to 24
months and the corroboration of these
numbers by ihmp
global we are in a supply constraint
Market with continued demand increases
which is the basis for further day rate
increases going
forward our 2024 adjusted eida remains
unchanged at 500 to $550 million this is
underpinned by a strong contract
portfolio which is covered currently at
87% the refinance of our 2025 debt
maturities has been successfully
completed with the issuance of 1.54
billion of secured notes with maturities
in 2028 and 2030 this completes the
refinancing of all our secure debt and
provides the company with a solid
long-term capital
structure lastly we have delivered on
the commitment to become a dividend
Distributing Company the board approved
for Q4 as well a dividend payment of 5
cents per
share ending on what for board Drilling
and our customers is the most important
performance indicator which is
delivering operational excellence
safely this will continue to have our
utmost attention going
forward ladies and gentlemen I would
like to end here our prepared remarks
and we can go to
Q&A thank you as a reminder to ask a
question you will need to press star one
and then one on your telephone and wait
for your name to be announced to with
through your question please press star
one one again please kindly ask one
question and possibly a follow-up
question at a time to leave leave room
for other the participants if you do
have any further questions you can
please rejoin the queue if you wish to
ask a question via the webcast please
type it into the question box and click
submit we will now take the first
question coming from the line of
Frederick and from Clark on Securities
please go
ahead hey Patrick my is bro hope is well
and and thank you for for taking my
question uh I wanted to to start with uh
2024 guidance U ebta reiterated between
uh 500 and 550 u based on the contracts
you announced earlier this month you
have reached 87% of a fet coverage as
you say so I was wondering can you give
you know some color
on on on how we would end up in you know
either uh on either side of that range
uh with 87% would we still you know see
500 minimum or what's the the moving
Parts here to u to kind of uh
underperform or outperform versus the
mid all right so Frederick thanks for
your for your questions I mean at the
end of the day we are still in February
so I think that the range that we have
is appropriate what it depends on is
that we we fill the 87% as we expect the
more we fill it the more we will be
towards the upper range uh the more we
are with day rates over
$150,000 per day the more we will be at
the upper range of that right so I think
that those are the moving pieces so it
is really filling up the 87% uh further
to 100 and as Bruno mentioned to you we
have many discussions ongoing and we
expect to be
able to manage any wi spaces very well
and we expect minimal for the year and
secondly you've seen from the day rates
that in the contracts that we have
announced so far that we are at the
higher range of what we would normally
have considered when making this type of
forecast so the more you see is announc
a higher day rates uh of the 170 plus
the more that is going to make us end up
in the upper range of our guidance but
that's probably all I can say this early
in the
year you know thank you Patrick and and
just on the rig seor um you mentioned
the prospector one and the g that the
two rigs coming off contract now the
first half of this year prospector
that's the only rig you have in the
North Sea currently um is it fair to
assume that it will remain in the North
Sea uh or are those discussions for
elsewhere
um I don't want to give you fully our uh
commercial
uh um envelope at the moment but um we
have always said that the North Sea is
not a key market for us however there is
interesting bits of work and if we can
tie enough of that together you could
have a scenario in where we would remain
around the North Sea so to say um and
there's other scenarios as well but um I
would say that we intend to be
announcing relatively soon um the
outlook for the P1 for the rest of the
year and on the Lo asking um I think
that Bruno you want to say a few things
about the gun L yeah sure Patrick and
and I think the gun LW is a rig that has
been performing very well in the region
where it's located it's one that has
unique features and certainly one that I
think our customers would like to
maintain the region um we obviously
acknowledge that moving rigs across
regions comes with with certain
efficiencies and and we remain positive
that the rig will remain operating in
Asia perfect thank you and just finally
uh you're declaring dividends uh 5 cents
this quarter uh you also have a Sher rep
purchase program in place for 100
million but you haven't really used uh I
think it's less than a million if my
math was correctly on that can you um
give any color on how you would you know
think about the trade of between higher
dividends or more Shar purchases uh
initially since at least on my numbers
that the real kicker on on cash flow is
is coming you know 2025 and Beyond so it
would be interesting to hear what you're
thinking now for 2024 uh if if higher
dividends or more cash allocated to
sharing purchases would make the most
sense for
you no so I think firstly you are right
that uh clearly the larger amounts of
cash are going to be available in
25 but it's also clear from the way that
we see the year shape up that um there
is opportunities to also in 24 continue
to distribute to the shareholders you
know that we are focused on deleveraging
and that at the same time we want to
make sure that there is a return for the
shareholders as well um at this moment
uh I can tell you that the board wanted
to uh have both instruments available
meaning n share buyback as well as um a
divident distribution which is currently
in place um I think that there is as a
second gu guidance where there is going
to be focus on that with more Surplus
cash becoming available I would expect
the dividends uh to be increasing over
time and then I think on a quarterly
basis based on where the share price
might be the board will make a
determination on where we are going to
go whether on the share buyback side or
more towards dividend but I think you
have seen the the Cur current uh
sentiment is very much towards dividend
being the second uh consecutive quarter
in which the board continues to uh focus
on dividend um apart from that I would
say um follow us here in the quarters to
come and uh we we'll be able to give you
more info on
that thank you very much Patrick and
team that's all from me uh have a good
day thank you thank you
we will now take the next
question from the line of Greg LS from
bti please go
ahead yeah hey thanks and good afternoon
everybody and thanks for taking my
questions um you know hey Patrick I I
was hoping you could provide a little
bit more color around the new builds um
it it sounded like in your prepared
remarks these are looking at potentially
uh going on term War kind of kind of
curious just a couple things here how
you're kind of thinking about balancing
these rigs into the market in the spot
Market versus term and and and and
really then I'll also ask is is is is
are we assuming any any Revenue
contribution in 24 from uh maybe the rig
that's supposed to be available later
this
year no that is uh Fair Craig uh so let
me say a few things although I leave the
Lion Share of this for
Bruno um so the way that it looks at
this moment one of the rigs will
potentially two maybe three months be
available uh for service in 2024 the
second one is only going to be really
available to drill called it January
25 um and I think that uh what we were
talking about seeing the additional
demand of of 24 to 20 five rigs from our
perspective uh there is some interesting
term work in that and for us it is
really a matter that we want to see that
these rigs get on some interesting
contracts that have a bit of longevity
in them so term IND this is important uh
but Bruno maybe you can talk a little
bit more about what you're seeing and
where we're focused on and I guess that
people are quite interested when we
would be interested in
uh committing to award any work to these
thanks Patrick Yeah Greg and we mention
a little bit in the last quarter um
these rigs that are being delivered late
in the year are probably some of the
most capable rigs that we have in our
Fleet and and because of that and
because the prior um track record
success of the sister rigs operating in
Asia they have been attracting a
substantial interest from from customers
particularly ones that are very
performance perform
focused um obviously taking a rig out of
the yard and everything that comes with
it is not a small commitment we're
looking OB preferably to find work that
um has volume and volume I would say you
know programs that are 18 months plus um
ideally to take them out out of the yard
we're not concerned obviously about them
finding contined work but I think it's
it's obviously preferable if we can find
a good balance between attractive day
rates and a third
that um makes it easy for us to phas the
rig into into
work okay super helpful thanks and then
and then I you know I guess just really
given that um you know you provided some
some great detail on um you know the the
Indian market realizing that's not not a
not a primary market for you guys um and
and just because it's timely around the
um you know the you know the decisions
by Saudi Arabia last year January around
you know raining in some capex you know
clearly Saudi Arabia is a huge Market um
you know I I can go and look at the you
know the 80 plus rigs there and look at
different ages and quality of rig um do
you have any sense for um you know maybe
H you know as as we look at Saudi Arabia
you know you know how we think you know
how we could see maybe some
uh rigs kind of move out of there and
where they could go or or is it
something where you know a lot of those
rigs are kind of nearing their useful
life and maybe some of those rigs in
Saudi you know probably aren't working
in three to five
years no so I think Craig it is it is a
a question clearly Saudi is a
tremendously large Market that does
govern what happens in the rest of the
world so I mean all I can tell is from
the discussions that we had and I think
from everybody in the drilling
Department it is quite clear that even
with a nonp pursuing 13 million barrels
but staying at 12 million barrels the
amount of work and the amount of wealth
that need to be drilled is drill
extraordinary large that requires a
tremendous amount of rigs on land as
well as offshore so I think that that is
the key thing in it overall I think that
it is possible that some rigs at a
certain moment roll of contract and are
possibly not getting their contracts
renewed it's absolutely possible and it
is clear that the decision criteria that
aramco in General Uses are performance
safety and cost so I think that all of
these things are understood it is
possible that they um call some of these
rigs but I think that that is not going
to be tremendous amounts and I think we
should all take uh at least some
information that there wasn't after the
announcement a knee-jerk reaction or
where Ricks came falling out of the
woodwor and a lot of Works was being
stopped so I think that we just need to
let it work through the system whatever
comes out of Saudi and if there is some
rig that are coming out from the
description that Bruno gave of the
market these rigs are going to be
absorbed quite easily and as you have
stated some of them could be
significantly old and operative might
just decide not to further invest and
maybe write some of them off but I think
let's just um we focus on what we can we
just want to keep performing as well as
we can and I don't think that there is
an enormous amount of rigs coming out of
Asia out of aramco that could wouldn't
be absorbed in the market as we see the
market developing
today perfect super helpful thank you
very
much all right thank
you we will now take the next
question from the line of Michael Bam
from Sona asset M management please go
ahead actually all of my questions have
been answered already thank you very
much no
problem thank you there are no further
phone questions turning the call over
for webcast
questions thank you uh are you seeing
any changes in the length of contracts
being asked for by
clients all right Bruno you want to take
this question sure um really we see as I
mentioned in my my uh previous remarks
we do see now now an increasing number
of long-term tenders um either on the
market or coming to the market soon um
certainly in the jackup space you always
going to have a substantial number of
smaller programs in places like
southeast Asia for example you will um
inevitably have programs that are short
in nature and I think the the the beauty
of this Market is really the combination
of both things we will focus on
obviously having visibility of our
backlog for the fleet but not ignoring
that shortterm opportunities provide as
well attractive opportunities to reprice
in a tip Market as we are in the big
scheme of things um we do see the the
the contract durations of the holding um
and in in different regions you have
different profiles obviously and and I
think this is a bit of a nature of the
particular geographies but in general we
do see the the contract durations
holding and potentially elongating a
little bit with the standards coming up
in the market
now thanks
bero what is the opportunity set looking
like in terms of expansion of the fleet
and what about the under construction
rigs seeking buyers what is B's view on
this
opportunity so we are very happy with
the size of our Fleet as we have stated
many times so I don't see a scenario
where we'd be interested in selling the
two rigs that are on
construction uh Bruno mentioned earlier
we have very fruitful discussion with a
variety of parties that are interested
to contract them um and that's really
the business we're in us being the
drilling contractor and um using our
rigs so I don't see selling as one of
the preferred or likely Avenues when it
comes to overall expansion of the fleet
um I think that there is as we have said
in the past there's always opportunities
and we will look look at them uh
carefully but we will want to make sure
that some of the key strengths that we
have remain intact meaning that we want
to make sure that we continue to have a
very solid Financial footing that any
assets that would be added to the fleet
are very similar in age and Equipment as
what we currently operate um which that
if you set that as your parameters your
opportunity set actually becomes fairly
small and might be a rig here or there
so I would say at this moment we focus
very much on our own Fleet and um as
some opportunities come up we will
evaluate them but they are not the main
focus of the management
team thanks
Patrick last one the leading AG day
rates have been flat at around 165 to7
$7,000 a day for the last 6 months when
do you think we are seeing the next leg
up potentially hitting the 200k
mark yeah I think that that is a fair
question that obviously I will hand over
to Bruno but I think that it is um the
the flattening of the level is we have
been at a very high level and actually
we have been able to get these level of
contract contracts across the world in
every region you know I think that that
is a major step forward what we have and
Bruno maybe you can comment a bit on
what we are tendering today and the rate
you are expecting and therefore when you
think you be getting towards the 200,000
sure sure Patrick in um when we look at
the market at the moment and as I
mentioned in my my remarks um we do see
a lot of lot of opportunities now hit in
the market and more to come right and
and it goes out saying that um it a
market about utilization is a market
about tightness with these additional
requirements particularly multi-year
requirements potentially soaking some of
the remaining capacity then is when we
would expect um day rates to accelerate
further um I would fall short of
providing more details on on our
particular beaing rates but it's fair to
say that our offers continue to push on
the upside and frequently are um getting
very close to the higher end of the
hundreds and and and not shy not too far
shy of the $200,000 a day I think in the
second half of the year as a lot of
these standards come to the market
that's when we expect a a higher
acceleration but it continues to move in
the right direction I mean as an average
we were at 161 during last year this
beginning of the year we are at 166 and
as Patrick highlighted this is not
hanging on one fixture and neither
hanging in one region it's been a
development that is happening across the
globe which is which is very positive to
see okay then I understand that we have
reached the end of our
questions so thank you very much for
your attention and we look forward again
talking to you real soon um with the
next updates thank
you
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