Good day and thank you for standing by. Welcome to the Borr Drilling Limited Q3 2025 Results Presentation Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Bruno Morand, CEO. Please go ahead.

Good morning, and thank you for participating in Borr Drilling third quarter earnings call. I'm Bruno Morand, and with me here today in Bermuda is Magnus Vaaler, our Chief Financial Officer. 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. For today's call, I'll start with a review of Q3 and highlight key developments since quarter end. Magnus will then review our quarterly financial results. I'll follow with a deeper look in the market and our commercial execution, and we'll conclude with your questions. Let's get started. Our third quarter results were strong, extending the rebound delivery in the second quarter. With 23 of our 24 rigs active, our commercial team continues to execute at the highest levels, delivering strategically and timely contract despite a volatile and dynamic market. Revenue increased by $9.4 million quarter-over-quarter and adjusted EBITDA rose 2% to $135.6 million with a margin of 48.9%, confirming the quality of our earnings. Operational execution continues to be industry-leading with technical utilization of 97.9%, and economic utilization of 97.4% across the fleet. Subsequent to quarter end, in October, we are pleased to announce 3 contract extensions in Mexico. Mexico remains an important market for Borr Drilling. Notably, collections restarted in September with approximately $19 million received in September and October. These inflows, together with the recent government actions to strengthen Pemex finances are the basis for our confidence in continued normalization of payments. Additionally, in October, newly imposed international sanctions affecting one of our counterparties in Mexico required us to issue termination notices for the old and the new contracts. Today, we announced new commitments expanding Borr Drilling footprint into the Gulf of America and Angola. These awards strengthen and diversify our customer base and portfolio, underscoring our ability to navigate evolving markets and minimizing idle time across the fleet. We expect fourth quarter 2025 results to reflect fewer operating days due to several rigs transitioning between contracts and the recent impact of sanction-induced contract terminations in Mexico. Despite this, we anticipate full year 2025 adjusted EBITDA in the range of $455 million to $470 million. In recent quarters, we've experienced a step-up in jack-up demand across several international markets, absorbing available capacity and providing gradual relief to the headwinds from 2024. While near-term volatility may persist, clear signs of demand inflection in Saudi Arabia and Mexico, 2 of the world's largest jack-up markets, together with incremental activity in other areas provide us with confidence that the market is now past the trough. We foresee a tightened market in the near to medium term that should support higher utilization and day rate levels. I'll walk you through that in more color later in the call. But now I'll hand the call to Magnus to discuss third quarter financial results.

Thank you, Bruno. I will now go into some details of the financials of the third quarter. As Bruno mentioned, we continued the good trend seen in the previous quarter and the results quarter-on-quarter improved. Total operating revenues increased by $9.4 million due to $2.5 million increase in day rate revenue and $6.4 million increase in bareboat charter revenue. The $2.5 million increase in day rate revenue was primarily due to an increase of the number of operating days and day rates for the Ran and Thor, recognition of day rate revenue for the Odin versus previously being recognized as bareboat charter revenue and an increase in reimbursable revenue for the Balder. These increases were offset by a decrease in the number of operating days for the prospective one. The $6.4 million increase in bareboat charter revenue is primarily due to the rigs Galar, Grid, and Gersemi being fully operational in the quarter compared to being on suspension for part of the prior quarter. This increase was offset by the decrease in bareboat charter revenue for the Odin, and the bareboat charter contract was terminated effective June 30 and begun earning day rate revenue in August 2025. Total rig operating and maintenance expenses increased by $6.3 million, which is primarily as a result of the increase in reimbursable expenses for the Grid. This in total gives us an operating income of $98 million, a $1.5 million increase from the prior quarter. Further, below the operating income line, total financial expenses net increased by $2.2 million, primarily due to foreign exchange loss offset by some higher interest income and lower interest expenses. Income tax expenses increased by $6.5 million, primarily due to a one-off deferred tax benefit recognized during the prior quarter, with no comparable in the current quarter. As a…

Thank you, Magnus. Year-to-date, we have secured 22 new commitments, adding $625 million to our backlog. Since our last report, we've continued to secure meaningful awards. First, in Mexico, we secured 3 contract extensions. Galar and Gersemi received 2-year extensions on improved commercials and payment terms. These commitments not only strengthen our 2026 utilization, but they also provide visibility well in 2028. Under the revised structures, operating costs will be reimbursed by the customer on a fixed 45-day payment term, materially reducing our working capital needs. Bareboat charter payment terms will be kept at 180 days. And for the Galar, this cap will progressively improve over time. Additionally, we received a short-term extension for the North and continue in active discussions with our customer in Mexico about a long-term deployment for the rig. In Mexico, going forward, we will have a total of 5 rigs working from a previous count of 7, with 2 rigs being reassigned to new work elsewhere, as I'll cover shortly. Regarding the 5 remaining rigs in country, 2 are long-term contracted with payment protection provisions, 2 are contracted with IOCs, and only 1 has direct Pemex payment exposure. This is a significant change in our fleet mix in country. I'm also pleased to report on recent awards in Americas and West Africa, along with several other contracting updates. In the Gulf of America, the Odin received a letter of award for a 6-month campaign with an undisclosed operator. The campaign is expected to commence in January 2026. This will mark our entry into the U.S., and again highlights our team's ability to timely secure work for the rig, following sanction-induced contract termination. In West Africa, the Grid has received a letter of award for a 6-month commitment plus unpriced options with an undisclosed operator in…

[Operator Instructions] We will now take the first question from the line of Scott Gruber from Citigroup.

It's good to hear, obviously, the new contracts in Mexico for you and good to hear Saudi is calling some rigs back. It seems like the market is improving here. But just curious how you view the next 12 to 24 months in the global jack-up market. Is this momentum going to continue? Are we going to see a genuine inflection in demand in the next year or so, even if crude is range bound? Or do we need some improvement in crude to really drive that inflection?

No. Thanks, Scott. As I mentioned earlier, a lot of the inflection now is basically resulting from the fact that the headwinds experienced earlier, namely Saudi and Pemex are now starting to revert. If you look at activity levels or if you look at utilization levels, at 93%, that number is very healthy. And with the suspension now rolling back, the 93% is a real number. It's not a number that requires adjustment. So we are in a territory that is quite interesting. Obviously, it takes a little bit of time for some of these dynamics to take place. We expect that as particularly the tenders in the Middle East start to conclude, the push for rigs to come back will start to kind of come through and that rebalancing is what eventually helps us in achieving higher utilization and better day rates in general markets. Now I say beyond the Middle East, we've seen that most markets have been operating at or very close to balance, and that includes, for example, West Africa. And we think that obviously, the ongoing inflection will support faster recovery in markets like that. On the opposite end, as I mentioned in my remarks, markets such as Southeast Asia, for example, where the demand takes a bit longer to materialize, may take a quarter or 2 before we see the real impact of that. But I think the way to think about it is we're going to continue to navigate some volatility in the first half of the year, improving. The potential here for a much stronger second half of the year seems to be solid defined based on this development that we see. Now we said before, in terms of commodity price, pricing where it is, I believe, is quite healthy for the jack-ups. It is -- jack-ups are very economical barrels for the customers. They are fast barrels to the market. And we think it's actually quite interesting for us to have pricing at that level. So I don't think that pricing movements here are needed to spark additional activity. It's really just the timing that takes for the development in Saudi, the developments in Mexico and some of the ongoing tenders to really come through.

I appreciate that color. And then one of the macro themes we're seeing here is rising demand for natural gas around the globe to help power data centers and just generally rising power demand. How do you think that impacts the jack-up market in the years ahead? And I'm particularly thinking about Southeast Asia. Is there a pull from the gas side that's going to help that market?

No, indeed, Scott. And we've been participating in several very interesting gas projects around the world. And I think in the previous quarters, we named, for instance, the ENI project in Congo, which is a very interesting and large-sized gas development. In Asia, we've been participating in gas projects before. There are a few very interesting projects, particularly in the area of Sarawak, that have been put on hold for now until the situation in Malaysia gets resolved, the political situation in Malaysia gets resolved. Aramco has, over time, obviously expanded their presence in gas, and I think it's been largely onshore focused. But there have been discussions over the last few quarters about Aramco potentially returning to gas in the offshore space in a more meaningful way. So clearly, what you see is true. We do expect that there will be high interest from our customers to start developing some of these gas projects that are available around the globe.

We will now take the next question from the line of Eddie Kim from Barclays.

Congratulations on the 2 separate 2-year extensions on the Galar and Gersemi in Mexico. Just curious on pricing for those 2 rigs. I don't know if you can share if the day rates on those 2 extensions are similar to what they're earning today, or higher or at a discount? Just any kind of directional commentary there would be great.

Very good. And we haven't disclosed specific numbers for that. But what we shared, they are a notch above from where the rigs are operating at the moment, which that on itself is very interesting. But equally relevant, as I mentioned in the prepared remarks, is the fact that we were able to negotiate improved contract terms and payment terms for those rigs in particular. What we've seen over in Mexico over the last several quarters has been that collections has been a very relevant topic. So we took marked efforts to ensure that we were adjusting these things in this contract, not only to improve the day rates because that's an important part, but equally important to make sure that those day rates are received in the bank account, and we don't have a growing working capital requirement in the country.

Separately, it's great to hear about the expected activity inflection in Saudi Arabia. Just curious, I mean, 2 years ago, the Saudi Aramco jack-up rig count was as high as almost 90 jack-ups. Today, it's around 55. Just curious, where do you think we get to sometime in 2027? Probably not back up to that 90 level -- but does 70, is that reasonable? Or even that too high? Just curious your estimate of where the jack-up rig count could get to by 2027.

Yes. And Eddie, this is a great question, probably not a very easy one to be precise. I -- from our deck, we think that a number in the high 60s and 70s is very likely. I think a number in the high 70s is possible. The reality is that the big scheme of things, as I mentioned in the prepared remarks, even with this callback that just took place over the last couple of weeks, capacity in the region is actually already very tight, right? So whether that number is low 70s, whether that number is high 70s, I think actually has very little bearing on how the sector is going to respond. Because in any case, any lag up from where we are at the moment is very likely to cause an acceleration in utilization and consequently in economics in the space. I think a number in the 70s is very reasonable, but I would probably fall shy of trying to predict around for behaviors. We all try and the best. It's definitely not an easy thing. They have a lot of things going on. So that's the way to think it. I think anything they do on top of the callbacks that already took place is more than welcome in the sector and kind of strengthen the space tremendously.

We will now take the next question from the line of Fredrik Stene from Clarksons Securities.

I have 2 questions for you today. And the first one relates to Mexico and the payments there. Clearly, liquidity in general has been a recurring theme given your historical or Mexico exposure, mostly Pemex. Now that you've received some money in October and small sum in September as well, how do you think about potentially -- I think historically, Pemex has paid suppliers mostly. Should we expect any similar payments as you got in October in November and December as well? Do you have any clarity on that kind of taking your receivables down?

Thank you, Fredrik. Obviously, very positive to see that what we have predicted payments starting to flow in the second half of the year actually has happened, and we received $17 million in October. We have -- from what we see in the plans, there are payments to come in, in both November and December as well. And following that, we would also expect things to return more to normal with monthly settlements. Also, that being said -- and Bruno, Bruno also mentioned the improved payment terms that we have in our new contracts, which has actually a cap on the number of days we can have outstanding for operating costs that we pay on our O&M of 45 days. So we expect to get that paid within 45 days, and also a maximum of 180 days outstanding for the bareboat. So that's also going to improve on our collections as we see it since we're not contracting directly with Pemex for these 2 rigs, but between the intermediaries, we have obtained payment terms from them.

For my second question, switching gears a bit. There has been some industry consolidation in the space this year with ADES likely acquiring Shelf if all -- everything is checked. And clearly, there's -- in almost any type of consolidation, there are room for fleet improvements, scrapping and whatnot. But you guys, you have a premium -- a full premium fleet already. And I'm sure there are some other assets out there that could be an interesting fit for you guys. Have you thought any more actively on how Borr could potentially be in any M&A or asset transaction scenario, since you're kind of both in the third quarter and in relation to the equity raise in July seemed a bit more open to that particular theme compared to what you have been earlier?

Thanks, Fredrik. And see, I hope my answer is probably not too much of a repetition from what I've tried to put across in earlier calls. Consolidation is definitely important for the space. It has been welcomed in general. And you're right, whether result of that consolidation or just the state of the market, we have seen together with it some additional retirements, some additional scrapping, some additional repurposing, which is obviously another very important dynamic for the sector. So those things are indeed interesting. We continue to look -- you're right, as I highlighted in the remarks, we do believe we have a very strong operational platform that can deliver better value for jack-ups than perhaps quite a few of our peers. And that's really what puts us in a position to meaningfully look into how we participate in consolidation if opportunities were to come. But as you said before, and you mentioned that in your question, there are some metrics that are very important for us to consider. And one of those metrics is really the quality of the fleet. We are very proud to have the youngest and the most premium fleet in the water. And obviously, it's important for us to make sure that anything that we're looking to does not come at the expense of diluting the quality of the fleet that we have. Similarly, as we said before, I think a very strong driver for the company at the moment is to make sure that we continuously delever our balance sheet over time. So when we look at any M&A transactions, it has to be something that makes sense from a deleveraging perspective. So when you put these things together, we continue to see what is out there. I do think that we have a great platform to grow -- we don't have to, and we're going to continue to look at that opportunistically. I do think that the sector can do more consolidation. And if it can be part of it, if it is rational, if it fits our strategy, we're definitely open to see what's out there.

We will now take the next question from the line of Doug Becker from Capital One.

Bruno, you've emphasized the expanding Borr footprint. Curious how you're thinking about balancing portfolio diversification versus having scale in particular markets to manage costs? And maybe putting it differently, do you view growing the fleet in the U.S. Gulf, Angola, Saudi Arabia as strategic priorities?

Thanks, Doug. And see, I think you're right. There's a very interesting balance between not stretching ourselves too wide. But the way I see at the moment, our operation, if you look in the markets where we are present, we are in very large scale in these markets. And generally, our expansion has been in adjacent markets. So obviously, Angola is a new place for us, but we have a very strong operation in West Africa and a very strong knowledge of operation in West Africa that will help us to build that up. The U.S. is definitely a new frontier. But on the Mexico side, we're present. We understand the operational challenges. We understand how to be successful in that environment. Certainly, there will be some learnings from the U.S., which is new to our portfolio. But certainly, we feel that we are in a good position to manage that. Frankly, I don't -- I wouldn't say at this time that the U.S. is expected to be a large expanding market for us. Getting rig there, I think, is a good achievement for us. It's a new place that we're going. I do see some of the policies in the U.S. potentially supporting more activity. For now, we see a pipeline that is enough to keep Odin busy for quite a while, and that's what we're targeting. If more opportunities come in the back of changing policies, changing incentives for operators in the U.S. to go forward their projects, we'll be ready to look at that. For now, I think it's probably a rig play.

Then just given the increased confidence that the jack-up market is past the trough, any changes to the capital priorities? I know you mentioned deleveraging over time, still a priority. But just given a better market outlook, is there any shifting in how capital might be allocated?

No, not at this time, Doug. I think we maintain the view that deleveraging is a priority for us, and it will be for a while. So we want to make sure that by the amortization that we have in our bonds, by the potential cash sweeps that we have in the bonds, we're positioning ourselves to be in a very favorable position to refinance our debt in 2028. That is on the back of obviously, deleveraging consistently over time. Other priorities, I think we'll leave it for another day. I think it's a bit too early for us to consider. The momentum is positive. That doesn't drive a change in strategy for now.

We will now take the next question from the line of Ben Sommers from BTIG.

I know you touched on it a little bit in the press release, but kind of curious how you're looking at the new build market. I know you guys mentioned that there's some supply chain challenges that you think will kind of push out these new build rigs entering the market. So just kind of curious any color there on what you're seeing.

Yes. No, nothing's changed, Ben. We -- I think quite a few quarters ago, we shared a view that we believe that the order book that is namely there, there may be 1 rig, 2 rigs maximum that would come to the market. That was several quarters ago. None of these rigs have come out. And obviously, the longer they stay in the shipyard, the more complicated it is. A lot of these rigs are very -- were in very early stages of conclusion when they were stopped or abandoned, is not easy. We haven't seen any one of them coming out. I honestly do not expect that to change as things improve.

Awesome. Then I know you touched a little bit on the U.S. Gulf entry, but just curious kind of on Angola, now bringing a rig there, just kind of any outlook or color on that market.

Yes, sure. I mean, it is a new area for us. We have been looking at Angola before and waiting for the right moment and the right opportunity to be in country. As I said earlier, we have a very well-established infrastructure in West Africa. So Angola was a bit of a natural growth opportunity for us. Historically, as I mentioned in the remarks, it is a market that had a quite substantial activity level for jack-ups that has been subdued for quite a few years. It seems that the potential is very large. And that's not limited to Angola. We see quite a few markets in West Africa that haven't had enough activity for quite a few years now coming back and being able to penetrate Angola now. Having that as an opportunity for our portfolio, I think strengthens our flexibility going forward.

We will now take the next question from the line of Greg Brody from Bank of America.

Just you talked about better collection terms on your new contracts and obviously, collected $19 million in October from Pemex. How should we think about what the opportunity to recapture sort of that -- the receivables is over the next year?

Sorry, your question was on how to capture the receivables from Pemex?

Pemex, that's the main one, yes. Yes.

No. I think what we've seen now is that Pemex has -- and the government of Mexico has put in place several schemes this year, want to refinance their financial liabilities and also their vendor or supplier liabilities with a $12 billion setup. And that's something we've seen they've gone through now in the second half started to repay, and we received $17 million so far in October. We see times of having more payments come in, in November and December and expect a return to normality when it comes to payments in Mexico. So I think it's looking like they are taking the right steps in Pemex and the government in Mexico to become more current on their payables definitely. Greg, just to highlight what we've kind of mentioned earlier, obviously, we have current receivables that we are -- and we will continue to work hard to collect them. With the new contract terms that we have and the new allocation of the portfolio in Mexico, effectively, then York will continue to have Pemex payment exposure, while the remainder of the fleet in country will now either be working on IOCs or include fixed payment terms that diminishes tremendously our exposure to the Pemex payment friction. So that doesn't resolve the current outstanding receivables, and we continue to work very hard, as Magnus said, to lean on the existing facilities in place, the mechanism the government put in place to accelerate that. But going forward, we expect that very soon the new terms will slow down considerably the accumulation of receivables in Mexico and keeps us far more current.

Then just with the sanctions, you -- obviously, you moved one of the rigs, so that leaves the hill. What are your expectations for how this plays out, in particular with what I think is the sale to Gunnlod of those assets. But what's your expectation for that? And how are you thinking about what you do with the Hill from here as a result?

Yes. It's probably early to say, Greg. What we know is we've worked very diligently. As soon as we became of the sanctions, we did what we were required to do to make sure that we stick to our governance and comply with international requirements. We are currently winding down operations on those rigs. We're expecting both of them to finish around mid-November, the ongoing activities as allowed by the sanctions. And we continue to monitor the situation. It could change if there's a sale potentially. We don't want to speculate. For now, we're doing what we have to do. It's a customer that, over time, I think we deliver great service for them. They seem to be extremely happy with what we've done over time; and provided no sanctions affect our ability to continue working in that field or delivering that program, we definitely will be more than happy to continue to do that. But I don't want to speculate for now. We're sticking to the rules as they apply, and then we'll see if things change as we go along.

Have you seen this uncertainty with sanctions impact the rig market at all? You're probably a little closer to this than me, but how many others have been affected by the suspensions?

Well, I won't comment much about others. I mean, the only thing I think has been in the news recently was a similar impact of advantage on the deepwater market. In the shallow water market, I haven't seen any other announcements. As far as we are concerned, the impact of that has been limited to Mexico. We'll continue to monitor the whole topic of sanction is a very dynamic topic at the moment. For now, that's been the only impact to our business, which we disclosed, which is the loss of revenue. For the Odin, we're very happy to see that the rig has been re-contracted now. For the Hild, we'll continue to see what are the opportunities for the rig, whether it involves returning to the same project once the field is sold or if the field is sold or alternative deployments for the rig within with the region.

Great. And one last one. Just what's your expectation for cost trends on the operating side here relative to this quarter going forward? How should we think about that?

Sorry, Greg, I'm not sure if I got your question. Cost trends on the operating side.

What's your expectations for the direction of your cost up -- or is there opportunities to cut costs? Just wondering how you're thinking about that going forward.

Yes. No. And as we said before, we've been seeing operating costs very steady over time. There are differences in operating costs from region to region, from country to country. But all in all, we have not seen a significant change in operating costs over the last few quarters and neither we have any reason to believe that that's going to be changing going forward. The team continues to be working focusedly on finding savings in our operations, streamlining operations, and that clearly has been more than enough to offset any inflation experienced in the sector. But so far, it has been flat. I have no reason to think that will change going forward.

We will now take the next question from the line of Joshua Jain from Daniel Energy Partners.

Just I really only have one, which is on rig attrition. Maybe do you have a number in mind with respect to how many incremental rigs could leave the market next year or any insights there? Or maybe to put the question differently, could you speak to broadly the capital investment that may be required for a number of operating rigs that are out there today that are older to sort of keep pace with a lot of the newer spec rigs and how that frames market dynamics?

Thanks, Josh. We see that standard rig market or the older vintage rig market has been shrinking over time, and they've been limited to a few markets. The rig count in that side, the active rig count in that side is about 100 rigs at the moment in the water and the average age is above 40 years old. So there's obviously, a lot of potential for attrition. Some of the attrition should happen as a result of lack of contracting opportunities for these rigs. Some of the attrition will happen as a result of just the high CapEx required to maintain these rigs active going forward. Rigs are mechanical equipment and as such, they require capital to stay in good working class. And by the time they are 40 years old and beyond the retirement age, that only gets better -- only gets worse exponentially. So I don't know how many rigs I'll say can get out of the market. Clearly, there's a potential for a lot of the rigs to go out of the market. We're seeing that trend accelerating, we're seeing rigs now converted to -- or sold for conversion to MOPU, including quite a few of the rigs that came out of Saudi. We'll continue to look obviously for us. We expect owners to act diligently in that and discipline on that. For us, it's a bit of a muted point. Our rigs are all very new with the youngest fleet in the industry. So let's see what happens.

Thank you. That's all the time we have for questions today. I would now like to turn the conference back to Bruno Morand for closing remarks.

Very good. Thanks for participating in today's call, and I look forward to speaking to you guys soon. This concludes today's conference call. Thank you for participating. You may now disconnect.