Borr Drilling(US:BORR)2024-11-09 16:17Financial Data and Key Metrics Changes - Q3 2024 total operating revenues were $241.6 million, a decrease of $30.3 million compared to Q2 2024, primarily due to one-off items in Q2 that did not repeat in Q3 [10] - Adjusted EBITDA for Q3 2024 was $115.5 million, a decrease of $20.9 million or 15% compared to Q2 2024 [12] - Net income for Q3 2024 was $9.7 million, a decrease of $22 million compared to Q2 2024 [12] - Total liquidity at the end of Q3 2024 was approximately $335 million, including $185 million in cash and $150 million undrawn under the revolving credit facility [7][12] Business Line Data and Key Metrics Changes - Technical utilization was 98.7% and economic utilization was 96.9% for the quarter, indicating strong core operations [2] - The contract portfolio has strong revenue visibility into 2025, with 78% of the fleet contracted at an average day rate of $148,000 per day, which is 10% higher than in 2024 [3] Market Data and Key Metrics Changes - Modern rig utilization levels remain strong, above 94%, with around 90% adjusted for Aramco suspensions [19] - Regional utilization and day rates across Africa, North Sea, and Americas have remained steady, while Asia and Middle East have experienced a softer environment [20] Company Strategy and Development Direction - The completion of the newbuild program will increase cash flow in 2025, with the fleet reaching 24 premium rigs, the youngest in the industry [4] - The company is focused on maintaining strong operational efficiency and consistent revenues through contract extensions and securing new contracts [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged uncertainties in the jack-up market due to recent oil price declines and customer caution in confirming contracts [5] - The company updated its full-year 2024 adjusted EBITDA guidance to be at or above the lower end of the range of $500 million to $550 million [6] - Management remains optimistic about the long-term demand in the jack-up rig market, driven by an aging global fleet and no new orders in a decade [8] Other Important Information - The Board declared a cash distribution of $0.02 per share for a total of $4.8 million for Q3 2024 and committed to buy back $20 million in shares before the end of 2024 [7][26] - The company will maintain a single listing on the New York Stock Exchange after delisting from the Euronext Oslo Stock Exchange on December 30, 2024 [9] Q&A Session Summary Question: How has the dynamic with clients changed throughout the year regarding tenders? - Management noted that programs have shifted to the right, but the pipeline continues to grow positively, with some regions maintaining strong rig fixing levels [29] Question: Where do you see the strongest incremental demand heading into 2025 and 2026? - Management identified interesting pockets of activity in the Middle East, West Africa, and the Americas, with expectations of increased demand in 2025 [31][33] Question: Why was there a shift from cash dividends to share buybacks? - The Board believed it was more attractive to buy back shares at low levels rather than maintain cash dividends, while the gross amount of shareholder returns remains the same [36][37] Question: What is the current status of accounts receivable, particularly related to Pemex? - Management confirmed that lower payments from Pemex contributed to the increase in accounts receivable, and they are exploring options to monetize these receivables [39][40] Question: Will Pemex rigs potentially get extensions if there are no major changes to their capital plans for 2025? - Management expressed optimism about the long-term future of rigs in Mexico, given the government's commitment to maintain production levels [43]