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01/10 21:35
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call revealed a decline in revenue and EBITDA, a net loss, and a suspension of dividends due to macroeconomic uncertainties. While there is optimism about future rig operations and potential contract extensions, the Q&A highlighted concerns about market conditions and customer caution. The market cap of $1.63 billion suggests moderate sensitivity to these factors, leading to a likely stock price decline of -2% to -8% over the next two weeks.
Total Operating Revenue $216.6 million, a decrease of $46.5 million compared to the previous quarter due to temporary rig suspensions and a decrease in operating days for certain rigs.
Adjusted EBITDA $96.1 million, a decrease of $40.6 million from the previous quarter, impacted by lower operating revenue and rig activity.
Net Loss $16.9 million, a decrease of $43.2 million compared to the net income in the fourth quarter, primarily due to reduced revenues from rig operations.
Total Operating Expenses $156.8 million, a decrease of $5.1 million compared to the previous quarter, mainly due to lower rig operating expenses and general & administrative costs.
Free Cash Position $170 million at the end of Q1, with total available liquidity of $320 million, reflecting an increase of $108.4 million in cash during the quarter.
Net Cash from Operating Activities $138.7 million, including approximately $120 million in settlement of outstanding receivables from a customer in Mexico.
Net Cash Used in Investing Activities $25.1 million, primarily related to cash used on jackup additions and long-term maintenance costs.
Net Cash Used in Financing Activities $4.9 million, mainly due to a cash distribution payment to shareholders.
Day Rate Revenue Decreased by $22.6 million, primarily due to a decrease in the number of operating days for certain rigs, partially offset by an increase in operating days for others.
Bareboat Charter Revenue Decreased by $17.9 million due to the temporary suspension of rigs in Mexico.
Bareboat Charter Contracted Revenue Decreased by $6 million due to the suspension of the Galar rig.
Operating Rig Count Increased to 22 rigs in May from 16 in the first quarter, laying the foundation for stronger financial performance.
2025 Fleet Coverage 79% at an average day rate of $147,000, with expectations to rise towards 80% to 85% in the coming months.
2026 Coverage 35%, an increase of 12 percentage points since the last report.
New Contracts: Borr Drilling Limited has secured nine new contract commitments, adding $221 million to our backlogs at an average rate of $141,000 per day.
Contract Extensions: In Mexico, the rigs Galar, Gerd, and Gersemi have been extended by a combined term of approximately 390 days.
New Contracts in Asia: The Skald received a binding LOA from Medco in Thailand for a 170-day program starting in October.
New Contracts in Vietnam: The Thor has been awarded a 75-day contract with Vietsovpetro in Vietnam, which began in late April.
New Contracts in West Africa: The Norve has received a letter of award for an eleven-month program expected to commence in the second half of 2026.
New Contracts in Ivory Coast: The Gerd secured a one-year contract with Foxtrot International in Ivory Coast, expected to commence in Q4.
Market Positioning in Mexico: The combination of increased activity in Q2 and the advancement of private investment projects in Mexico are positive for future rig demand.
2025 Fleet Coverage: Our 2025 fleet coverage now stands at 79% at an average day rate of $147,000.
2026 Coverage: Our 2026 coverage has also grown to 35%, an increase of 12 percentage points since our last report.
Market Utilization: Modern rig market utilization sits at 92%, relatively unchanged quarter on quarter.
Operational Performance: Despite lower activity, operational performance remained robust with technical utilization at 99.2% and economic utilization at 97.9%.
Liquidity Position: Our liquidity position improved with total available liquidity of $320 million.
Cash Position: Free cash position at the end of Q1 was $170 million.
Dividend Suspension: The Board has decided to suspend the dividend to reinforce the balance sheet and enhance long-term value creation.
Focus Shift to 2026: Our commercial efforts are now increasingly focused on 2026.
Operating Revenue Decline: Total operating revenue declined by $46.5 million quarter-over-quarter, primarily due to temporary rig suspensions and a decrease in the number of operating days.
Rig Suspension Impact: Temporary suspension of rigs Galar and Gersemi in Mexico led to a decrease in bareboat charter revenue by $17.9 million.
Market Uncertainty: Recent changes in trade policies and OPEC+ decisions have introduced uncertainty and price volatility in commodity markets, affecting future activity levels.
Economic Factors: Pemex's partial reduction in drilling activities resulted in nearly a 10% drop in production, highlighting the link between rig activity and production levels.
Dividend Suspension: The Board decided to suspend the dividend due to uncertain market conditions to reinforce the balance sheet and enhance long-term value creation.
Rig Utilization Challenges: Older jackups face reduced contracting opportunities as customer preference shifts towards modern rigs, creating a challenging environment for older units.
Future Demand Risks: While demand remains resilient, the potential for future rig supply increases is limited due to a lack of new builds and ongoing rig retirements.
Operating Rig Count: Increased to 22 rigs in May from 16 in Q1 2025, laying the foundation for stronger financial performance.
Contract Coverage: Expecting to reach 80% to 85% coverage for 2025, with a focus on securing contracts for 2026.
New Contracts: Secured nine new contract commitments year-to-date, adding $221 million to backlog at an average rate of $141,000 per day.
Safety Achievements: Several rigs received industry recognition for outstanding safety performance, enhancing operational reputation.
Adjusted EBITDA Guidance: Confirming comfort with the Bloomberg consensus estimate of approximately $460 million for 2025.
Dividend Policy: Board decided to suspend the dividend to reinforce the balance sheet and enhance long-term value creation.
Future Rig Demand: Positive outlook for rig demand in Mexico due to increased activity and private investment projects.
Market Conditions: Despite near-term volatility, long-term fundamentals of the jackup market remain strong.
Dividend Status: The Board has decided to suspend the dividend to further reinforce the balance sheet and enhance long-term value creation.
Cash Distribution to Shareholders: $4.7 million payment of cash distribution to shareholders.
The company's earnings call highlights strong market fundamentals, with high utilization rates and strategic positioning in Mexico and West Africa. Positive developments include improved payment terms with Pemex, potential growth in Angola, and rising demand for natural gas. While management was vague on some specifics, the overall sentiment is optimistic. With a market cap of $1.63 billion, the stock is likely to see a positive movement of 2% to 8% over the next two weeks due to these favorable conditions and strategic initiatives.
The earnings call highlights strong financial performance with increased operating income and net income, alongside a robust cash position. The strategic focus on securing contracts and optimizing fleet utilization, coupled with optimism in Mexico and potential M&A opportunities, adds positive sentiment. However, the suspension of dividends and lack of specific M&A details slightly temper enthusiasm. Given the company's small-cap status, the overall sentiment is positive, likely resulting in a stock price increase of 2% to 8% over the next two weeks.
The earnings call reveals a negative sentiment due to a significant decline in operating revenue and EBITDA, a net loss, and the suspension of dividends. Although there is a slight increase in operating rig count and liquidity, the challenges with Pemex and reliance on the Mexican market pose risks. The Q&A section highlights uncertainties and cautious customer behavior, further dampening sentiment. Given the company's market cap, the stock price is likely to react negatively, falling between -2% to -8% over the next two weeks.
The earnings call revealed a decline in revenue and EBITDA, a net loss, and a suspension of dividends due to macroeconomic uncertainties. While there is optimism about future rig operations and potential contract extensions, the Q&A highlighted concerns about market conditions and customer caution. The market cap of $1.63 billion suggests moderate sensitivity to these factors, leading to a likely stock price decline of -2% to -8% over the next two weeks.
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