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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 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.
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 the number of 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 suspensions.
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, 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 $4.7 million payment of cash distribution to shareholders.
Operating Rig Count Increased to 22 rigs in May, up from 16 in the first quarter, indicating a ramp-up in operational activity.
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 twelve percentage points since the last report, reflecting ongoing negotiations for future contracts.
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 Vietso Petro 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 twelve percentage points since our last report.
Jackup Utilization: Modern rig market utilization sits at 92%, relatively unchanged quarter on quarter.
Long-term Market Fundamentals: Despite near-term volatility, the long-term fundamentals of the jackup market remain strong.
Operational Performance: Operational performance remained robust with technical utilization at 99.2% and economic utilization at 97.9% for active rigs.
Liquidity Position: Our liquidity position improved during the quarter, supported by the collection of approximately $120 million in outstanding receivables.
Operating Rig Count: Our operating rig count has now increased to twenty-two, laying the foundation for stronger financial performance.
Dividend Suspension: The Board has decided to suspend the dividend to further 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: The company averaged sixteen active rigs out of a twenty-four rig fleet, leading to a significant decrease in day rate revenues and overall operational performance.
Market Uncertainty: The Board decided to suspend the dividend due to uncertain market conditions, indicating potential risks in financial stability and future earnings.
Regulatory and Economic Factors: Recent changes in trade policies and OPEC plus decisions have introduced uncertainty and price volatility in commodity markets, which could affect future activity levels.
Supply Chain Challenges: Older jackups are facing reduced contracting opportunities, while customer preference for modern rigs persists, creating a challenging environment for the fleet.
Production Impact: Pemex’s partial reduction in drilling activities led to a nearly 10% drop in production, highlighting the direct link between rig activity and production levels.
Future Contracting Risks: While the company is optimistic about future contracts, the reliance on the Mexican market and the potential for market volatility pose risks to achieving expected growth.
Operating Rig Count: Increased to twenty-two active rigs, up from sixteen in Q1 2025, laying the foundation for stronger financial performance.
Contract Coverage: Expect to reach 80% to 85% coverage for 2025, with a current coverage of 79% at an average day rate of $147,000.
Focus on 2026: Commercial efforts are increasingly focused on 2026, with significant opportunities in Mexico and ongoing discussions for contract extensions.
Safety Achievements: Recognition for outstanding safety performance, including awards from Qatar Energies and PTT EP.
Adjusted EBITDA Guidance: Comfortable with the Bloomberg consensus estimate of approximately $460 million for 2025.
Dividend Policy: The board has decided to suspend the dividend to reinforce the balance sheet and enhance long-term value creation.
Future Rig Demand: Positive outlook for future 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 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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