Borr Drilling BORR Q4 2023 Earnings Presentation

Summary

The 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

00:00

📈 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.

05:02

💰 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.

10:03

🌐 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.

15:05

🚢 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.

20:05

💸 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.

25:06

🏗️ 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.

30:08

📈 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.

Keywords

💡Board Drilling

Board Drilling refers to the company that is the main subject of the transcript. It is an organization involved in the oil and gas industry, specifically in drilling operations. The video discusses the company's fourth quarter 2023 earnings, operational performance, and future outlook. Board Drilling is highlighted for its strong financial performance, increased revenue, and operational excellence.

💡Earnings Call

An earnings call is a conference call with investors and analysts where a company's management discusses its financial performance over a recent quarter. In the transcript, Board Drilling is hosting such a call for the fourth quarter of 2023, discussing their financial results, future guidance, and operational highlights.

💡Forward-Looking Statements

Forward-looking statements are predictions or projections about future events or outcomes based on current expectations and assumptions. These statements are often made with caution due to the inherent uncertainty involved and may differ from actual results. In the transcript, participants are reminded that some of their statements during the earnings call are forward-looking and subject to risks and uncertainties.

💡Revenue

Revenue refers to the income that a company generates from its business activities, such as sales of goods or services. In the context of the transcript, Board Drilling reports an increase in revenue for the fourth quarter, which is a key indicator of the company's financial health and growth.

💡EBITDA

EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric that measures a company's profitability and is often used as a proxy for cash flow from operations. In the transcript, Board Drilling's adjusted EBITDA is highlighted as an important financial metric, showing an increase and a positive sign of the company's financial performance.

💡Backlog

Backlog refers to the amount of work or orders that a company has on hand but has not yet completed or delivered. A growing backlog is typically seen as a positive sign for a company's future revenue and stability. In the transcript, Board Drilling's backlog growth is mentioned as a significant achievement, indicating a strong demand for their services.

💡Technical Utilization

Technical utilization is a measure of how effectively a company uses its assets, such as drilling rigs, to generate revenue. High technical utilization rates indicate that a company is efficiently deploying its assets and maximizing output. In the transcript, Board Drilling's excellent technical utilization rate of 98.7% for the quarter is emphasized, showcasing the company's operational efficiency.

💡Safety

Safety in the context of the transcript refers to the measures taken to prevent accidents and injuries in the workplace, particularly in the high-risk oil and gas industry. Board Drilling's commitment to safety is evident through its low recordable injury frequency, which is below the industry average.

💡Market Supply

Market supply refers to the availability of goods, services, or in this case, drilling rigs and their capacity to meet the demand in the market. The transcript discusses the tight market supply for drilling rigs and how it affects Board Drilling's operations and future prospects.

💡Day Rate

Day rate in the oil and gas industry refers to the cost per day for renting out a drilling rig or other equipment. It is a crucial financial metric for drilling contractors like Board Drilling. The transcript discusses the improvement in day rates and how it impacts the company's revenue and profitability.

💡Dividend

A dividend is a payment made by a corporation to its shareholders, usually from profits. It is a way for companies to distribute a portion of their earnings back to investors. In the transcript, Board Drilling's decision to implement a regular quarterly dividend is mentioned as a reflection of the company's financial health and commitment to shareholder returns.

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