Borr Drilling Q2 2025 Earnings Report

Borr Drilling EPS Results

• Actual EPS: $0.14
• Consensus EPS: $0.11
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: N/A

Borr Drilling Revenue Results

• Actual Revenue: $267.70 million
• Expected Revenue: $265.81 million
• Beat/Miss: Beat by +$1.89 million
• YoY Revenue Growth: N/A

Borr Drilling Announcement Details

• Quarter: Q2 2025
• Date: 8/13/2025
• Time: After Market Closes
• Conference Call Date: Thursday, August 14, 2025
• Conference Call Time: 9:00AM ET

Borr Drilling (NYSE:BORR) operates as an offshore shallow-water drilling contractor to the oil and gas industry worldwide. The company owns, contracts, and operates jack-up drilling rigs for operations in shallow-water areas, including the provision of related equipment and work crews to conduct oil and gas drilling and workover operations for exploration and production. It serves oil and gas exploration and production companies, such as integrated oil companies, state-owned national oil companies, and independent oil and gas companies. The company was formerly known as Magni Drilling Limited and changed its name to Borr Drilling Limited in December 2016. Borr Drilling Limited was incorporated in 2016 and is based in Hamilton, Bermuda.

Borr Drilling Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Company reported strong Q2 performance with 99.6% technical utilization, revenue up $41 million, and EBITDA of $133.2 million, driving $166.5 million in free cash flow year-to-date.
• Positive Sentiment: Bore secured 14 new contract commitments totaling $318 million to backlog, bringing 2025 coverage to 84% at an average day rate of $125k and 2026 coverage to 47% at $190k per day.
• Positive Sentiment: Financing initiative increased liquidity by $200 million through a $102.5 million equity raise, $84 million facility expansion and covenant amendments, lifting pro forma Q2 liquidity to approximately $425 million.
• Positive Sentiment: Mexican government’s $13 billion funding plan for Pemex suppliers is expected to accelerate $65 million of outstanding receivables and support near-term rig contract payments.
• Neutral Sentiment: Effective September 1, Bruno Morant will succeed Patrick Schorn as CEO in a planned leadership transition, with Schorn becoming executive chairman and new board appointments strengthening oversight.

Presentation

[Patrick Schorn, CEO & Director at Borr Drilling]

Morning and thank you for participating the quarter earnings call. I'm Patrick Schorn. I'm Patrick Schorn. With me here today in With the me here today on the line, Bruno Marsan, our Chief Commercial Commercial Officer, and Magnus Fowler, Max Schorn, Chief Financial Officer. Next slide, please.

[Patrick Schorn, CEO & Director at Borr Drilling]

Next slide, please. First, covering the required disclaimers. I would like to remind all of these statements on the forward looking statements will be forward and uncertainties. Actual results should differ materially from those those projected in these I therefore refer you to our latest public filings. Before we dive into our second quarter results, I'd like to briefly reference the recent press release announcing both announcing both financing and the CEO succession We will cover the financing details during our prepared remarks. It represents a significant step forward.

[Patrick Schorn, CEO & Director at Borr Drilling]

Strengthening our capital position and supporting our long term strategy. I will return to the CEO for succession towards the end of the call. Our second quarter results were strong. Technical utilization of 99.6 Economic utilization of 97.8%. As anticipated, we rebounded in the second quarter the second with 22 out of 24 rigs active. Revenue increased by $41,000,000 this quarter. And EBITDA rose by an EBITDA seven rose million to 133,000,000 by 9% versus of first this year. The scoring and the scoring the profitability of the revenue stream. Additionally, $166,500,000 flow in the first six months of the year. The quarter, we have secured significant awards including a mortgage contract and a new contract for the Arabia, which is expected to return to our active fleet in September. These contract 40 awards and commitments coverage will improve our 84% to 84 at an average day rate of 125 of twenty twenty five, 7% coverage. And 47% coverage. Average day rate of one nine hundred and thousand for twenty twenty six. Last month, we took a decisive step towards strengthening the term position through a comprehensive financing debt. This initiative, which included $5,000,000 and $5,000,000 equity amendments to the same amendments covenants of our revolving credit facilities increased our liquidity. $400,000,000 by $200,000,000 and and strengthens our balance sheet. We acted proactively We acted proactively.

[Patrick Schorn, CEO & Director at Borr Drilling]

To secure finances while maintaining favorable position. Were favoring our ability, enforcing our ability on our long term our long term strategy, including growth, disciplined disciplined disciplined consolidation.

[Patrick Schorn, CEO & Director at Borr Drilling]

Into the third quarter, we achieved of comparable a comparable in the second quarter and

[Patrick Schorn, CEO & Director at Borr Drilling]

is the same quarter. And is on 2025 EBITDA guidance adjusted EBITDA guidance of approximately four We 70,000,000 are encouraged by the new government to strengthen It has restated ex gold of point 8,000,000 barrels per day. These actions should hold all drilling and liquidity for drilling's liquidity, enabling us to leverage our proven track record, delivering best in class wells and uniquely I'll pass the call now I'll pass the call now for the second quarter for the second quarter financial commentary.

[Magnus Vaaler, CFO at Borr Drilling]

Thank you, Patrick. Thank you, Patrick. I will now go into some I will now go into some more details for the quarter results, which 24% compared to the first quarter. Included in this, including day 30 rate $6,300,000 to an increase of operating days for Bali and the fourth Variable charter revenue was 7,000,000,700,000.0 of Arabia One contract and the commencement of the government of the Golar grid recently in recommencement in Mexico. And lastly, management contract contract was 2,100,000.0, primarily due to the recommencement of the Galat.

[Magnus Vaaler, CFO at Borr Drilling]

Total operating expenses were $102,000,000 for the second quarter, an 49 increase $4,000,000 compared to the first quarter. This due to the is volume four rig operating expenses. This operating expense of around $12,400,000 This in total gives us an operating income of $5,000,000 $6,600,000 $6,300,000 an increase from the prior quarter. Total Further below income related to the Mexico 2020 comparable in the comparable in the second quarter of quarter positive of addition FX movements. Income tax expense. Income tax expense decreased by $7.08 $7,000,000 primarily due to one off as deferred recognized the quarter. And decrease in tax expense in Africa. All of the above resulted in above income of $1,000,000 $5,100,000.052000000 dollars compared to $2,000,000 compared to the previous quarter.

[Magnus Vaaler, CFO at Borr Drilling]

Adjusted EBITDA, dollars 133,200,000.0, 3,200,000.0 is $7,100,000 $731,000,000 or 39%. Now moving into liquid free cash position at of Q2 the end of Q2 was $92,400,000 In addition, we had credit facility of two resulting in a $142,400,000 Cash eight decreased by $27,800,000 in comparison to $20 in quarter. Net cash provided by operating were $6,300,000 This was highly impacted by the the $3,000,000 interest payments that we make on our senior secured bonds. Additionally, 20,800,000.0 of income taxes were paid in the quarter. The cash flow from operating activities impacted by working capital. However, this is expected due several reasons.

[Magnus Vaaler, CFO at Borr Drilling]

Of all, we continue delays to in Mexico and Mexico. However, due to recent developments, positive financing initiatives by Mexican government is to improve the second part of the Additionally, we have experienced revenue increased from last experienced and that shows ourselves new contracts the Vale, Arabia one and Arabia Services have been performed, but not yet In addition, certain In addition, rates and rate increased the compared quarter. Net cash used in net cash used in these investing activities, $13,400,000 of jacket addition primarily as a result primarily of maintenance costs and activation. We still expect maintenance CapEx levels for the year around $50,000,000 And in addition to these $50,000,000 a large portion of the contract preparation and activation cost for the rig Vale, we were able to capitalize and classify as CapEx as opposed to deferring expenses as we normally do for contract startup. This is due to the rig being a newbuild commencing its first contract. Lastly, net cash used in financing activities were $70,700,000 which relates to the semiannual debt repayments on our senior secured notes due in 2028 and 2030. It's also worth adding that year to date, our free cash flow generation was $106,500,000 As Patrick summarized, in July, we announced an initiative to significantly strengthen our balance sheet and increase liquidity of approximately $200,000,000 through an equity raise of $102,500,000 and increases in revolving credit facilities of $84,000,000 and a reduction in the minimum liquidity covenants.

[Magnus Vaaler, CFO at Borr Drilling]

With these transactions, the Q2 pro form a liquidity increases to approximately $425,000,000 which consists of $192,000,000 cash and $234,000,000 in available RCS capacity. This strengthened liquidity position provides a solid foundation for pursuing opportunistic transactions and supporting good future growth. With this, I will pass the word over to Bruno.

[Bruno Morand, CCO at Borr Drilling]

Thank you, Magnus. Year to date, Boar Drilling has secured 14 new contract commitments, adding $318,000,000 to our backlog. Several of these new commitments include options with the potential to significantly extend their duration and earnings visibility. Since our last report, we secured high quality contracts backed by our market leading operational performance. In Vietnam, we received a multi rig award from Hong Long for a rig store in Gangbaud totaling approximately five hundred days, including priced options.

[Bruno Morand, CCO at Borr Drilling]

Both contracts are expected to commence in early q four in direct continuation of the rig existing contracts, clearly demonstrating our ability to eliminate idle time and maximize asset utilization. These awards strengthen our market position in Vietnam, where we see near term demand growth in Southeast Asia. In The Middle East, the Rig Arabia too received a five hundred days contract expected to commence in early September, enabling the rig to return to the active fleet. While the standard has been awarded on a competitive basis, the rig's track record of high performance allowed us to collaborate with the customer around certain performance incentives, which could result in day rate uplift of up to 10 to 15%. In Mexico, the run had a hundred day option exercised by ENI, keeping the rig contracted into early twenty six.

[Bruno Morand, CCO at Borr Drilling]

As part of this extension, the parties agreed to add another set of options to their contract that if exercised would result in full year coverage for 2026. And lastly, in June, the Oden received a notice of suspension by Pmax. Following this, we secured a letter of intent from an independent oil company in Mexico for an approximately seventy five day program expected to commence in late August. In addition to these awards, we have converted the previously announced LOAs for the Skow in Thailand and the Norva in West Africa into contracts. As you note in our fleet status report, the award associated with the Norva in West Africa has now been assigned to the NAT, which will enable us to optimize scheduling flexibility and maximize revenue days.

[Bruno Morand, CCO at Borr Drilling]

On the back of the recent contracts, our 2025 fleet coverage has now reached a robust 84% at an average day rate of a 145. This is in line with our earlier targets of achieving 80 to 85% coverage in the year, and we see potential for further improvements as we have line of sight of additional contracts for the rigs not m p one, which still has open capacity this year. Our 2026 coverage, including price options, now stand at 47, a 12 improvement since our last report. Mexico remains a significant and strategically important part of our portfolio, representing circa 20% of our available coverage in 2026. The announcements made by the Mexican government last week provide us with increased confidence in sustained rig demand and contract stability for our rigs in country.

[Bruno Morand, CCO at Borr Drilling]

I'll cover these in more details in a few minutes. From a macro perspective, the oil and gas sector continues to contend with a complex global environment, recently shaped by regional conflicts, uncertainty over global trade tariffs, and OPEC's accelerated rollback of its 2,200,000 barrels per day voluntary gas. Regional conflicts have continued to underwrite the fragility of the global oil and gas supply chains with escalations in The Middle East causing Brent prices to reach highs of 75 in June and revising discussions about the importance of pragmatic government policies as illustrated by the Dutch government's restated commitment to develop local gas and New Zealand's reversal of its prior ban on new offshore licenses. Despite this complex environment, Brent crude prices have remained resilient, averaging approximately 68 in q two, a level that continued to support the development of shallow water projects, which offer some of the lowest breakevens and faster cash flow generation to our customer. Looking specifically at jackups, global utilization has remained generally steady with modern rig market utilization holding above 90%.

[Bruno Morand, CCO at Borr Drilling]

Day rates have continued to experience downwards pressure as the market works to absorb the excess capacity resulting from the salvy suspensions. While more than half of the modern rig capacity from this suspension has been absorbed, we estimated that less than 10 modern units remain available and competitive in international markets. Positively, visible incremental demand in The Middle East, particularly in Kuwait and a neutral zone, points towards a significant part of this oversupply being absorbed in the near future. While we acknowledge that these projects have experienced delays due to supply chain constraints and complex procurement processes, recent orders of long lead items provide increased confidence that they remain on track to materialize in 2026 and 2027. Additionally, we are encouraged by recent data points relating to Aramco ePCI tender awards and nearing awards for an estimated total of $8,000,000,000 surpassing twenty twenty four levels.

[Bruno Morand, CCO at Borr Drilling]

These awards cover key projects such as Zulus and Marjan and are understood to include several wellhead platforms. With jackup activity in Saudi already back to 2019 level, we believe further development of these projects are supportive of long term incremental demand in The kingdom. In Southeast Asia and West Africa, demand has continued to track positively. Since the beginning of the year, contractor jackup count in these regions has increased by 10 rigs. While the inflow of rigs from The Middle East to both regions has pressure raising recent opportunities and more market in Southeast Asia, supply and demand in these regions is fundamentally balanced for modern units.

[Bruno Morand, CCO at Borr Drilling]

In Mexico, we're encouraged by the government's renewed focus on strengthening Pemex liquidity and to restate the goal of achieving 1,800,000 barrels per day in production. The government has laid out a clear plan, including a $12,000,000,000 debt offering to refinance short term obligations and another $13,000,000,000 facility to provide funding for Pemex current and future projects. Given our track records of delivering best in class wells, Orr is uniquely positioned to capture incremental work, especially on private investment projects, which are projected to contribute to one quarter of the country's production by 02/1933. The bottom line is this, stronger liquidity at Pmax is a clear positive for bore drilling. As supply and demand continue to rebalance, retirement activity has now resumed as owner of all assets face challenges to find suitable and economic redeployment opportunities.

[Bruno Morand, CCO at Borr Drilling]

So far this year, according to IHS, four units have been retired and several others have been held for sale. We expect the dynamic to accelerate, particularly in the context of ongoing industry consolidation. In short, while near term volatility may continue, the long term fundamentals of the jackup market remain compelling. Demand for oil and gas to support global energy needs is expected to continue to grow and support investment. Shallow water projects represent a sizable portion of global production, characterized by attractive breakeven prices, short cash flow cycles, and relatively low emissions.

[Bruno Morand, CCO at Borr Drilling]

With an aging global fleet and no new builds in sight, the supply of jackup should continue to supply, supporting high utilization levels and economics. We are consistently delivering our commercial strategy, maximizing twenty twenty five backlog and building twenty twenty six coverage while support our cover our customers through the dynamic cycle. With that, I'll hand the call back to Patrick.

[Patrick Schorn, CEO & Director at Borr Drilling]

Thank you, Bruno. Now I'd like to discuss our CEO succession plan. Effective September 1, Bruno Morant will succeed me as chief executive officer. At that time, I will transition to the role of executive chairman. This is the culmination of a multiyear succession plan, developing close partnership with our board of directors.

[Patrick Schorn, CEO & Director at Borr Drilling]

I'm very pleased that the board has selected Bruno to lead board drilling into its next chapter. While many of you already know him, let me take a moment to highlight his background. Bruno is a twenty year veteran of the offshore drilling industry with a strong track record in operational management, project execution, marketing and customer relationship development. Prior to joining Bored Drilling in 2017, he held senior roles with international offshore drilling companies, giving him broad exposure to global markets and operational complexity. Since joining Bored Drilling, he has been deeply involved in managing the relationships with our key clients and strategic partners, and has contributed significantly to our operational and commercial progress.

[Patrick Schorn, CEO & Director at Borr Drilling]

His dynamic leadership, customer focus and strategic insight position him to advance our current priorities and unlock new growth. To our shareholders, I want to underscore that this transition is not just about continuity. It's also about accelerating our momentum. Bruno brings a fresh yet experienced perspective that will be invaluable as we navigate evolving market dynamics and pursue new avenues of growth. Alongside this leadership change, I'm pleased to share updates to our board composition.

[Patrick Schorn, CEO & Director at Borr Drilling]

Firstly, our founder and current chairman, mister Torolev Troym, will remain on the board as a director, ensuring continuity of our founding vision. Mister Dan Rabin will become our lead independent director, ensuring continuity of objective and independent governance. And mister Tiago Morajvili, founder and chief investment officer of Granular Capital and a long standing shareholder, will be joining our board. Mister Morajvili brings deep financial acumen and a strong shareholder perspective, which will help to further sharpen our focus on long term value creation. These changes significantly strengthen our board's capabilities and align with our strategic vision for long term success.

[Patrick Schorn, CEO & Director at Borr Drilling]

The combined experience and diverse expertise of this group will support the leadership team in driving innovation, performance and shareholder returns. Now as I reflect on the past seven years, initially as a director and subsequently as CEO, I'm incredibly proud of what we have built together. During that time, we have assembled a world class leadership team, expanded our presence in key markets, and established Boar Drilling as the leading international jackup drilling contractor. The strong foundation we stand on today is a direct result of the hard work and dedication of our employees, the continued support of our customers, and the confidence of our shareholders. And I sincerely thank each one of them for that.

[Patrick Schorn, CEO & Director at Borr Drilling]

Looking ahead to this next chapter, I'm excited about the path ahead for Boer Drilling, and I'm confident in our ability to deliver on our long term vision and create value for our shareholders. Thank you. Ladies and gentlemen, we are now ready to go to Q and A.

[Operator]

Thank you. To withdraw your question, please press star one one again. Please kindly ask one question and possibly a follow-up question at a time to leave room for other participants. If you do not have any further questions, you can please rejoin the queue. If you wish to ask the question via the webcast, please type it in into the question box and submit.

[Operator]

One moment for our first question, please. It's coming from the line of Eddie Kim with Barclays. Please proceed.

[Eddie Kim, VP - Equity Research at Barclays]

Hi. Good morning. Just wanted to to get an update on on where things stand in Mexico. It's it's certainly great to to see the Mexican government raising debt so so Pemex can hopefully pay the suppliers like yourselves. But from an operational perspective, do you think the worst is is sort of behind us in Mexico?

[Eddie Kim, VP - Equity Research at Barclays]

You have, I believe, five jackups drilling for Pemex currently, most of which are off contract in the first half of next year. Just curious, what's your confidence level on on extensions for these jackups? And and looking even further ahead, how do you see maybe your Pemex rig count trending from here over over the next, let's say, twelve to eighteen months?

[Bruno Morand, CCO at Borr Drilling]

Very good, Eddie. Thanks for the question. Bruno here. So let me tackle that in in small chunks here. But indeed, positive, what we know is the government announced this $13,000,000,000 facility, which is clearly earmarked, to support vendor payments for projects that are current and future in the PMAC portfolio.

[Bruno Morand, CCO at Borr Drilling]

And there has been a hint that in 2026, there will be a similar facility that will come to support PMAC in getting back behind the strategy. So that is positive. It's hard to comment more. I think it's going to take a little bit of time for agreements to be put in place. There's obviously banking agreements associated before revenues or or, or revenues start to come through, but, there seem to be a very clear pathway for that.

[Bruno Morand, CCO at Borr Drilling]

So that is very positive, very positive for us. In terms of activity, what we see in Mexico at the moment is being less about Pemex desire to continue with activity, and it's more about their ability to continue to pay vendors and sustainably continue operation. I think with the funding, the desire and the work scope has been there and that the payment should enable now some of that activity to return in in quite short near term. It is indeed positive. I think it does paint a better picture in a clear environment for us in Mexico going forward.

[Bruno Morand, CCO at Borr Drilling]

We do have ongoing discussions about new contracts for, multiyear work on our rigs, and we are quite optimistic and positive that we'll see those coming to a conclusion in very short term. So we'll update you more as as we move along, but I think the optimism is is certainly there.

[Eddie Kim, VP - Equity Research at Barclays]

Great. Great. Thank you. My follow-up is just on potential M and A. So so you have a lot more dry powder now than you did three months ago.

[Eddie Kim, VP - Equity Research at Barclays]

You you mentioned potentially targeting some opportunistic transactions. Could could you expand on that a bit for us? Or are you looking to target maybe, you know, some larger corporate m and a? I know we had a big merger announcement recently in the sector or or more targeting smaller kinda asset purchases. And are you looking to target specific regions?

[Eddie Kim, VP - Equity Research at Barclays]

Just just curious on on your thoughts on on the opportunities and and what you're looking for.

[Patrick Schorn, CEO & Director at Borr Drilling]

Yeah, Eddie. I I think I mean, part of the answer is probably already what you said in that with the recent announcements that have been done, any bit of color that we give probably immediately identifies exact direction and candidates of where we're thinking and how we're thinking about it. So given the fact that there have been some moves and some signs of consolidation in the market already, I think it's very difficult to comment in further detail. I think that the the key maybe takeaway is that we look forward to see more consolidation in the space. We believe that the time is right for it, and we believe that that will go hand in hand potentially with actions that we will see happening in the deepwater space as well.

[Patrick Schorn, CEO & Director at Borr Drilling]

Out of all of that, I do think that there is going to be some interesting assets that might fall off, and that might be interesting for us as well. As you maybe remember from the Paragon acquisition that we did, when we acquire, we also have no problem provided that the valuation is right, that we cut up, in some case, a significant amount of rigs that are not off the profile any longer that fit with our fleet. So we certainly look as well at parts of the market where we could rationalize further. But I think we'll have to leave it at that as additionally commentary just because, I mean, the space where we operate in is relatively small, and some others have made moves already. So, I think we'll just have to keep our eye open here in the months to come and see how this space develops further.

[Eddie Kim, VP - Equity Research at Barclays]

Understood. Sounds good. Patrick, you navigated company through some very challenging times. So a job well done, and wish you the best in your next chapter.

[Patrick Schorn, CEO & Director at Borr Drilling]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Doug Becker with Capital One.

[Douglas Becker, Analyst at Capital One]

Patrick, you mentioned private investment projects are expected to play an increasing role in Mexico. Just wanted some color on the current status of private projects. Historically, it's been able to find it's just been difficult to find agreements that are suitable for all the parties. So just a little color in what milestones should we be keeping an eye out for that might show a broader acceleration here?

[Patrick Schorn, CEO & Director at Borr Drilling]

Yeah. I'll ask Bruno to give a bit more color on this, Doug.

[Bruno Morand, CCO at Borr Drilling]

Very good. Thanks for the question, Doug. No. The private investment is a a reality in Mexico at the moment. If you look at our fleet, one of our rigs in Mexico, as we speak, is operating in a field called the Baca Blue, which is a private investment project.

[Bruno Morand, CCO at Borr Drilling]

And the way to think about it, these are basically, in general, fields that are already identified by PMACs and sometimes relatively mature that are then assigned to a private investment, group that has a fifteen year timeline to develop these fumes and get remunerated for the additional production that they can get out of these fumes. So it seems to be a quite attractive value proposition. Proposition. It's It's one one that that incentivize performance and at the same time reduces a bit of the strain on Pmax balance sheet to fund some of these projects. Equally important is that these projects allow the investment group to actually get paid from production and consequently minimizing as well some of the exposure to the PMAC payment cycle.

[Bruno Morand, CCO at Borr Drilling]

So that's a quite interesting thing. In terms of scale, the one that we're participating at the moment is the first one in country, and and and started very successfully. In the recent plans from PMACs that were released last week, they have now a target and ambition to see those projects represent about a quarter of the total country production by 2033 and about 450,000 barrels a day at that point in time. So there's quite a significant growth expected and certainly a type of project that will value or benefit performance oriented contractors like ourselves.

[Douglas Becker, Analyst at Capital One]

No. That definitely sounds encouraging. Maybe a quick one for Magnus. It wasn't clear to me. Are you currently having conversations around the the Pemex accounts receivable being paid, or is it just that the funding's coming in? And, obviously, that bodes well.

[Magnus Vaaler, CFO at Borr Drilling]

Yes. Thanks, Doug. So I think, it is the recent signals we have received from, from Mexico through, through the announcements they have made. And we clearly stated they have $13,000,000,000 of financing program now to to pay their suppliers. And then there's for work conducted in 2025, which makes us believe in the and that the the payments will will pick up in Mexico because we have seen that that they have actually, actioned this this financing now.

[Magnus Vaaler, CFO at Borr Drilling]

Although they have talked about it for a long time, at least now we see the the actions.

[Douglas Becker, Analyst at Capital One]

No. And that's what I was getting at. No. Thank you very much.

[Magnus Vaaler, CFO at Borr Drilling]

Thanks.

[Bruno Morand, CCO at Borr Drilling]

Thanks,

[Operator]

Eduardo. Thank you. One moment for our next question. That comes from Frederic Steen with Clarkson Securities. Please proceed.

[Fredrik Stene, Head - Research at Clarksons Securities]

Hey, Patrick and and team. And, yeah, Patrick and and Bruno, I I guess, it's fair to say congrats to you both if you view it as a double promotion here. So looking forward to, you know, continuing discussions in in the years ahead as well, although in, you know, slightly different roles for for the two of you. With that said, I wanted I think Mexico has been been well covered already, but just maybe to Magnus before I I move to my main question. What's the amount of, quote, outstanding receivables that relates to Pemex on your balance sheet at the moment?

[Magnus Vaaler, CFO at Borr Drilling]

Yeah. So currently, we have around $60,000,000 $65,000,000 of outstanding variable payments from from Mexico, which follows our comment in in the first quarter when we received 120,000,000 of cash receivables, which took down our receivable balance by approximately 75% and then adding on the the variables that we have earned in the meantime. So that gets you to mid $60,000,000.

[Fredrik Stene, Head - Research at Clarksons Securities]

Okay. No. That's that's very helpful. Thanks. Then to with with Mexico out of the way, I wanted to talk about go to market in general and through that focusing a bit on Saudi.

[Fredrik Stene, Head - Research at Clarksons Securities]

I think you said in the prepared remarks that you feel quite comfortable that there's some incremental demand in The Middle East in other countries than than Saudi. But at some point, Saudi will also, you know, add incrementally to its rig count. There's been some, I think, market reports over the last week that Saudi has contacted, I think, all their eight rig owners that have supplied offshore rigs for them to to inquire about rig availability on suspended rigs. And just wanted to, you know, hear if if you have any commentary around that because there's not that much, you know, that's needed on the demand side to to potentially accelerate rates a bit. So, you know, any anything helps on that front.

[Bruno Morand, CCO at Borr Drilling]

Yeah. Indeed. Indeed, Frederic. And so you've heard the commentaries, and and they reflect what we've seen as well. I think at operational level, we have had previous discussions with Aramco about updating them the status of the rig that operated with them earlier and and what it would take to have them back.

[Bruno Morand, CCO at Borr Drilling]

But I must say that this conversation so far have been very much on an operational level and and not in a in a contractual basis. Obviously, we we've said before that we expected Aramco to eventually come back to the market. Aramco is a very strong engineering company. At one point in time, when they designed that they needed another 40 rigs, certainly wasn't by a mistake in a calculation. They know that that demand is there, and I think that they encountered some issues with timing maybe related to capital constraints in the kingdom.

[Bruno Morand, CCO at Borr Drilling]

And when we said before in several occasions that we expected that demand to eventually come back, it's fair to say that estimating Aramco's actions and timeline is is far from an easy thing, and and I think we're not gonna be the ones trying to put a prediction on what happens. But indeed, I think the talks about the status of the rigs as well as the positive new flows on the EPCI side in terms of award starts to give us a bit of a brighter picture for for the kingdom. We we are aware of reports talking about Aramco potentially look bring rigs in the first quarter next year. That's not something we have particularly heard from Aramco. We'll have to watch.

[Bruno Morand, CCO at Borr Drilling]

I think the moment seems to be coming closer and closer to the time that Aramco could be hitting rigs. And as you said, I think any movements from Aramco at this stage with an oversupply that is not that significant will be very welcomed and supportive to the market. So we'll have to see what happens in the coming weeks and months.

[Fredrik Stene, Head - Research at Clarksons Securities]

Yeah. No. Thank you. That's that's very good color. Just a bit more broadly on your 2026 coverage, including options now, you're close to 50% at rates that, you know, I would be to be higher than where the the market is today.

[Fredrik Stene, Head - Research at Clarksons Securities]

I see you're working and and Mexico is definitely a part of this, of course. But as you're working with your coverage for 2026, how are you, you know, prioritizing utilization versus pushing day rates in the environment that you're in at the moment?

[Bruno Morand, CCO at Borr Drilling]

Yeah. And and nothing changed in terms of our strategy, Freddie. We we're still we're still looking at optimizing the utilization of our assets. We know that a rig idle has a significant impact to our economics, and it's important that we optimize the earnings potential of of these rigs, and and utilization remains king in a current environment. We do have a fair bit of rollovers as we walk into 2026.

[Bruno Morand, CCO at Borr Drilling]

So irrespective of the improvement sentiment about the market, being in a upwards or in a potentially start an upward trend. I think we're well positioned to capture an upside as it comes, but we'll focus at the moment in making sure that we have the best possible utilization for our fleet.

[Fredrik Stene, Head - Research at Clarksons Securities]

Alright. And and just one super quick follow-up on on some rig specifics. You, you know, you you said that the NUT will now take the place of the for the work starting in late twenty twenty six. The has options at that point. Should we interpret the rig swap as the there's a high likelihood that those options will be executed, or is there some other factors to to consider? Thanks.

[Bruno Morand, CCO at Borr Drilling]

Well, there there is that, Freddie. I I think that the work that we've been doing on anorba has a has a good potential for the option to be exercised. And we said before that we think quite a few of our options has a potential to be exercised. Now what equally is important as well is that the customer that has that recontract on the knot now has indicated a desire to potentially move that work earlier subject to a few constraints and long lead items. So obviously having that work moved to the knot allows us to potentially bring that forward if the customer is able to achieve an accelerated schedule, and that obviously would be very beneficial for the customer in terms of earlier production, but it would be very beneficial for us in terms of improving our coverage for the year.

[Fredrik Stene, Head - Research at Clarksons Securities]

Alright. That's very clear. Then I, you know, say thank you to you all, congrats again, Bruno, in particular, on the role, new role.

[Bruno Morand, CCO at Borr Drilling]

Thanks, Roger.

[Operator]

Thank you. Our next question comes from the line of Dan Katz with Morgan Stanley. Please proceed.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Hey. Thank you, and and congrats, Bruno and Patrick. Best of luck in in the new roles. So wanted to ask about a a a couple of, I guess, a bit more emerging opportunities in in the shallow water space or at least areas that, you know, historically haven't been thought of as as growth areas. The first is is on gas activity.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

So are are there any four rigs that are doing work in in gas plays currently? And I I I think, Bruno, you'd mentioned a couple of positive developments, one of which was the Dutch government looking to develop more local gas and, mentioned New Zealand as well. I'm I'm not sure if that was a gas or oil opportunity or both, but just basically trying to get a sense of any work you're doing now in gas basins and and any customer conversations or or opportunities you see, for for gas work moving forward. Thank you.

[Bruno Morand, CCO at Borr Drilling]

Very good, Dan. And and indeed, we we do have a a sizable portion of our fleet that has been working gas. I think if you think specifically about larger pockets, we have done significant amount of work with in Congo that is largely focused on LNG and a very interesting project. We, at some point in time, had three rigs operating with ENI in that project. And then we do have other projects around the globe that involve gas, including the North Sea, in The Netherlands specifically, as I mentioned, which has a restated commitment to support the local gas development.

[Bruno Morand, CCO at Borr Drilling]

We have been working very closely with ONEDIAs in the North Sea on a very interesting development, one of the largest gas fumes to be developed in North Sea in recent years. While the news flow is positive, the project has faced some challenges on permitting timeline, but we do expect that to be back in a schedule very, very soon. So gas is part of what we do around the globe. Our rigs are very capable and suitable for that, and it it is a a a decent chunk of our portfolio.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Great. That's really helpful. You for that. And then, next one probably for Bruno as well. It's more on the type of work that the the bore fleet or or that the the shallow water fleet globally more broadly is doing and any kind of trends that that you're seeing there.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

But, basically, it's it's you know, as as kind of global oil and gas basins mature, you're hearing a lot more service companies talking about mature field work or or, you know, more greenfield versus brownfield. But, yeah, I was just wondering if if you could share any thoughts on what you're seeing in terms of trends and, you know, development versus that kind of more mature focused infill and Yeah. Attention on type work. Thanks.

[Bruno Morand, CCO at Borr Drilling]

Yeah. Fair. And and it's fair to say that a large chunk or the largest the lion's share of the work that we do is development work, so basically in in discovered and and somewhat mature fields. And I think that that's going to stay. I think that's one of the beauties of the shallow water market is that a lot of these projects have infrastructure in place.

[Bruno Morand, CCO at Borr Drilling]

And even if you're doing some near few developments, we can bring barrels to the pipeline relatively quick. We have seen though an increase, an uptick in investment for exploration projects in some areas more so than others. So if you think about Asia, we do see now more and more coming to the pipeline in terms of future exploration work in places such as, for example, Malaysia. And equally in West Africa, has been a quite significant part of our portfolio, whether it's complete greenfield developments or whether it's near field new exploration programs as we've seen, for instance, with BWE in West Africa. So we are participating in both.

[Bruno Morand, CCO at Borr Drilling]

We do think that in the coming years, more investment in exploration will be required. There has been very subdued investment in in exploration in the last couple of years, but we we are placed to to basically develop work both in in exploration and development work.

[Daniel Kutz, VP & Equity Analyst at Morgan Stanley]

Great. Really helpful, and and congrats again to you both. I'll turn it back.

[Bruno Morand, CCO at Borr Drilling]

Thank you so much.

[Operator]

Thank you. Our next question comes from Greg Brody with Bank of America. Please proceed.

[Gregg Brody, High Yield Research Analyst at Bank of America Merrill Lynch]

Hey, guys. Just a few, sort of subtle questions as a lot was covered. You alluded to that the net has some opportunity to move up some work. But there's as the way the contract stands today, there's there's a decent amount of white space, between the inclusion of of of the current contract. How do you think about, the use of that rig and options there?

[Gregg Brody, High Yield Research Analyst at Bank of America Merrill Lynch]

You mentioned the opportunity to to have it go to work early. Curious how much early, and and then if are there other opportunities?

[Bruno Morand, CCO at Borr Drilling]

Very good. And and we we're working on, set of opportunities, not one only, but a set of opportunities, Greg. And we have been working on both a project that could have a commencement this year, optimizing our coverage for this year, as well as some projects in the region for the earlier part of 2026. So if we're successful on these and we've been inching closer and closer, that would provide a very nice bridge over to the work that we already have assigned for the rig. But we'll have to see as things materialize in the coming weeks.

[Bruno Morand, CCO at Borr Drilling]

I feel optimistic that we'll be able to have most of that white space, if not all of it, contracted for the rig and and and a nice utilization for that rig in West Africa.

[Gregg Brody, High Yield Research Analyst at Bank of America Merrill Lynch]

And one of you you mentioned the exploration uptick. One of your one of your peers has alluded to the fact that some of that may be trying to take advantage of of short term availability of rigs to go after some concepts. Do you see those opportunities potentially in lower day rates just to put more rigs to work in the interim? Or do you feel like the day rates are holding up for those opportunities?

[Bruno Morand, CCO at Borr Drilling]

Yeah. And indeed, I think the the team in the industry has been obviously protecting coverage, and that has led, as I mentioned in early notes, to more aggressive behaviors in different regions more markedly than others. If I think about the knot specifically that we were talking about in West Africa, it's important to note that in West Africa, what we have experienced over the quarters is that a lot of the customers are extremely focused on getting rigs that are in the region and particularly have a very strong reputation for operational delivery. We oftentimes are looking at programs that are slightly shorter in nature, and I think our customers understand that predictable results, good operational efficiency, stacks up higher than costing and the risk that sometimes comes with taking, a less known name or maybe a rig outside of the region. So we will continue to balance that.

[Bruno Morand, CCO at Borr Drilling]

I feel confident that, for now, the rate structure that we see in West Africa is pretty well maintained.

[Gregg Brody, High Yield Research Analyst at Bank of America Merrill Lynch]

Got it. And just just turning to Mexico. I I know there's a lot of questions asked there. I I appreciate that all these all the the capital raise and the and the facility they set up, and their goals of Mexico are to, encourage oil production and growth. What's your has the government communicated to you directly on sort of timing around paying resuming payables or, excuse me, receivables?

[Gregg Brody, High Yield Research Analyst at Bank of America Merrill Lynch]

Anything like that, or is this or is this more you looking at the general policy statements and and actions?

[Bruno Morand, CCO at Borr Drilling]

Yeah. No. We we have not discussed anything directly with the government. Obviously, keeping in mind that our work in Mexico is not directly through Pemex. It's through a local conglomerate that we, have been partners with, and and therefore, I wouldn't expect that communication to have come directly to us.

[Bruno Morand, CCO at Borr Drilling]

What we know is that they have been talking to, local banks and institutions to start, putting things in place, and the government themselves have indicated that they expect payments to be starting now in q three. So we have to watch. Obviously, they've been working on a quite comprehensive solution for for Mexico. We know that the regulatory and the bureaucratic state of the country sometimes force these things to take a bit more time than what we hope for. But, nonetheless, the indications are positive that the flow of money should be sooner rather than later.

[Gregg Brody, High Yield Research Analyst at Bank of America Merrill Lynch]

And then just the last one. Obviously, the equity raises create a lot of optionality for you. I'm I'm curious if you think about that capital, raise to potentially address some debt opportunistically. Is that a possibility?

[Magnus Vaaler, CFO at Borr Drilling]

I think we will obviously see how our liquidity will will evolve throughout the year, especially with Mexico in mind and North Lumber day rates going into into 2026 and and how we we fill up our coverage. But it's definitely something that we have as a tool in our capital allocation box and that we will consider. And recently, the debt has been trading below par, and it's obviously very attractive for us to to look at buying back bonds after the capital raise in the recent weeks that the bonds are back at par, which we obviously view as as positive. I think it's also good for us to have this strength of good liquidity on the balance sheet. It puts us in a position of strength where we can can act on other strategic opportunities that might come up.

[Magnus Vaaler, CFO at Borr Drilling]

We've been talking about potential acquisitions or or m and a. So so I think it's it's just we we see see a it's valuable to have a a strong position with our with our balance sheet as we have it today.

[Gregg Brody, High Yield Research Analyst at Bank of America Merrill Lynch]

Makes sense. Thanks for the time, guys.

[Operator]

Thank you. And this concludes the q and a session. I will pass it back to Patrick Schorn for closing remarks.

[Patrick Schorn, CEO & Director at Borr Drilling]

Thank you, operator. So a few comments in conclusion. We delivered a strong Q2 adjusted EBITDA of EUR 133,200,000.0 and expect a similar activity and performance for the third quarter. In July, we have proactively strengthened the balance sheet and are now well positioned to execute on our long term strategy. For the full year 2025, we're on track to deliver the consensus estimate of approximately $470,000,000 in adjusted EBITDA.

[Patrick Schorn, CEO & Director at Borr Drilling]

And Bruno Morant will be the CEO effective September 1, and I wish him all the best in doing that. Ladies and gentlemen, thank you very much.

[Operator]

And this concludes our conference. Thank you for participating. You may now disconnect.

Participants

Executives

• Patrick Schorn, CEO & Director
• Magnus Vaaler, CFO
• Bruno Morand, CCO

Analysts

• Eddie Kim, VP - Equity Research at Barclays
• Douglas Becker, Analyst at Capital One
• Fredrik Stene, Head - Research at Clarksons Securities
• Daniel Kutz, VP & Equity Analyst at Morgan Stanley
• Gregg Brody, High Yield Research Analyst at Bank of America Merrill Lynch