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Edited Transcript of BDRILL.OL earnings conference call or presentation 26-Nov-19 2:00pm GMT

Q3 2019 Borr Drilling Ltd Earnings Call

Nov 29, 2019 (Thomson StreetEvents) -- Edited Transcript of Borr Drilling Ltd earnings conference call or presentation Tuesday, November 26, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Magnus Vaaler

Borr Drilling Limited - IR Officer

* Rune Magnus Lundetræ

Borr Drilling Limited - Deputy CEO & CFO

* Svend Anton Maier

Borr Drilling Limited - CEO

* Tor Olav Trøim

Borr Drilling Limited - Founder & Deputy Chairman

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Conference Call Participants

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* Lillian Starke

Morgan Stanley, Research Division - Research Associate

* Lukas Daul

ABG Sundal Collier Holding ASA, Research Division - Analyst

* Peter Testa

One Investments S.A.G.L. - Analyst

* Tobias Eckbo

Clarksons Platou Securities AS, Research Division - Former Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Borr Drilling Third Quarter Results 2019 Presentation. (Operator Instructions) I must advise you that the conference is being recorded today, Tuesday, the 26th of November 2019.

I'd now like to hand the call over to your first speaker today, Magnus Vaaler. Please go ahead, sir.

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Magnus Vaaler, Borr Drilling Limited - IR Officer [2]

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Thank you very much and welcome to Borr Drilling Limited's Third Quarter 2019 Results Presentation. Present on the call today are the CEO, Svend Anton Maier; CFO, Rune Magnus Lundetræ; Deputy Chairman, Tor Olav Trøim; and Chairman, Paal Kibsgaard.

Our discussion and comments today may include forward-looking statements that involve risks, uncertainties and other factors that could cause actual results to differ materially from these forward-looking statements. We refer you to our earning's press release and our annual report for further information regarding these risk factors.

In today's call, we will cover operational and financial highlights from the quarter and market update and our latest business outlook. Following our prepared remarks, we will conduct a Q&A session.

And with that, I will turn the call over to our CEO, Svend Anton Maier.

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Svend Anton Maier, Borr Drilling Limited - CEO [3]

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Thank you, Magnus, and welcome, everyone, to the Borr Drilling Q3 presentation.

Highlights of the quarter. Operating revenues of $102.7 million, net loss of $79.2 million and adjusted EBITDA of $13.8 million for the third quarter of 2019 versus $1.5 million in second quarter 2019.

Technical utilization for the operating rigs was 99.1% in the third quarter and 99% for the first 9 months of 2019.

In October, Paal Kibsgaard, the former Chairman and CEO of Schlumberger, was appointed as new Chairman of the Board, replacing Tor Olav Trøim, who continues to serve on the Board as Deputy Chairman. Mr. Kibsgaard will, in his initial year, serve as Executive Chairman, focused on strengthening the company's organization, operating processes and its integrated service offering.

Since the previous quarterly results, the company has been awarded contracts, LOAs and extension for 6 rigs, with a combined revenue backlog of approximately $169 million. Total additional backlog added year-to-date is approximately $465 million.

In October 15, the company took delivery of the newbuild jack-up rig Hermod from Keppel FELS shipyard.

In November 2019, the company sold marketable securities, resulting in an estimated total released loss of $16.4 million and improving the liquidity position by $20.2 million.

With this, I would like to turn over the call to Rune Magnus.

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Rune Magnus Lundetræ, Borr Drilling Limited - Deputy CEO & CFO [4]

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Thank you, Svend Anton, and thanks for dialing in, everyone. I will start with the income statement. Total operating revenues were $102.7 million in the quarter, generated by an average of 13.9 rigs operating in the quarter. Compared to last quarter, this is almost 4 more rigs brought into operation in the third quarter alone. This excludes the Grid and the Gersemi working under integrated well services contract for Pemex in Mexico.

In addition, during the quarter, the Odin had reimbursable logistics revenue of approximately $5 million under its contract with PanAmerican Energy.

Rig operating and maintenance expenses were $87.9 million in the quarter and includes costs for both operating and stacked rigs. Total OpEx for the rigs in operation was approximately $71 million, including overheads. We are running the rigs at normal operating costs well below $50,000 per day and cost for warm stacked rigs between $5,000 and $8,000 per day.

The adjusted EBITDA, which includes amortized mobilization costs, for the quarter was positive with $13.8 million. The company has managed to deliver its first operational quarter with positive EBITDA since the inception of the company. This marks an important milestone for the company on its journey to be the leading offshore drilling company.

Depreciation for the quarter was $25.8 million, slight increase from previous quarter due to a full quarter of depreciation of Thor, which was delivered in May 2019.

G&A was $10.9 million in the third quarter and includes $600,000 in noncash share option costs. The decrease from previous quarter pertained to higher professional fees in the second quarter related to the IPO and refinancing completed in June 2019.

Loss from equity method investments was $1.6 million in the third quarter and is related to a new joint venture structure, where the company owns 49% of 2 Mexican subsidiaries. The joint venture operates the Grid and the Gersemi under an integrated well service model in the Gulf of Mexico under 18 months contracts with Pemex. Integrated well services is a new business model for the company compared to traditional day rate revenue. Revenue for the integrated well service model is recognized based on percentage of completion method on a per well basis compared to traditional day rate contracts where revenue is recognized, straight-lined over the contract period.

Loss in the period is mainly due to only 3 weeks of operation during the quarter and pre-commencement costs of $2.8 million incurred before contract start up.

Other income and expenses includes mark-to-market losses of $16.7 million on forward contracts with shares in Valaris, net interest expenses of $13.1 million, change in unrealized loss on marketable securities of $12 million related to Oro Negro and other financial expenses of $5 million, mainly consisting of the amortization of capitalized debt fees. The net loss for the quarter was $79.2 million and the loss per share $0.72.

Moving over to the balance sheet. Total liabilities increased by $25.5 million, mainly attributable to $10 million in long-term debt and an increase in unrealized loss position on forward contracts with $16.7 million.

Borr Drilling completed its refinancing in June 2019. The financing structure, which was completed with the support of a $450 million syndicated facility from the bank gives the company a stable financing structure with no debt maturities before 2022. All of the 8 delivered rigs which are secured under the bank financing have now been contracted out with an expected net debt-to-EBITDA coverage of around 3x and a loan-to-value ratio of 39%.

The company completed an equity raise of approximately net $50 million in August 2019 in connection with the listing of shares on the New York Stock Exchange. The company is currently in constructive dialogue with the banks to make certain amendments to its covenants, including reducing the required book equity ratio and a reduction to its minimum free liquidity requirement. This will give the company further balance sheet flexibility to manage delivery of the new building program in 2020 and improved liquidity available to activate and contract further rigs.

We expect the ongoing negotiations to be concluded before the year-end of 2019.

With this, I would like to turn the call back to Svend.

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Svend Anton Maier, Borr Drilling Limited - CEO [5]

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Thank you, Rune. I'll now give a fleet update. Since previous quarter, we have secured 11 additional contracts and extensions. The 3-year contract extension for the Dhabi II with ADNOC; we have received a 3, 18 months contract with Pemex for Odin, Galar and Njord; 12 months contract for the Prospector 5; 5 months contract for the Prospector 1 with Total; and 12 months contract extension for the Frigg; 4-month contracts for the Idun with Hoang Long and 2 extensions for a total of 3 to 4 months for the Mist with Vestigo.

In addition, we have received after the last fleet status report, an LOA for 4 months for Idun with JVPC. And we also received an LOI for 3 months for a newbuild Saga with Eni in Vietnam.

We have lived in the volatile oil price environment for the last year. Since the start of 2018, the oil price has fluctuated between $50 to $85 per barrel. In the meantime, U.S. onshore rig count is down by 13%, deepwater rig count is only up by 5%, whereas jack-up rig count is up by 24%. This proves the resilience of the shallow water market. Shallow water offshore is the most competitive oil resource in the world, only after onshore Middle East. A typical Mexican shallow water well will have 6 months from spud to first oil, and the project is cash breakeven after 18 months. This is similar to the U.S. shale. The main difference is that the Mexican oil wells close for 20 years and the breakeven are significantly lower than the U.S. shale.

The integrated business model used by Pemex in Mexico is progressing well. Together with our partner, Schlumberger and CMB, we have reached a geological target and the first well for one of the rigs. If we can execute on targeted schedules, the profitability of these contracts will exceed the contract time charter rate. With help from our partners, the capabilities we are building in this business segment will provide a big competitive advantage and enable Borr Drilling to get a leading position in the fast-growing market for integrated services, which is expected to increase the efficiencies for oil companies and extract superior profitability for rig owners compared to the traditional drilling contracts.

More than 70% of the jack-up contracts in the world is to NOCs. These companies are driven by both pretax and post-tax returns and are not subject to the same capital constraints as IOCs are currently facing. An example of this is NOCs in the Middle East, which are currently drilling significantly more today than when in 2014, when the oil price was $100 a barrel. We expect NOCs to continue to increase the activity.

In addition, more than 70% of jack-up demand in the world is infill drilling and workover drilling. Time to cash flow in these investments are generally less than 1 year, and is a big driver for jack-up demand. Quick payback and low cash breakeven driving demand for shallow water developments. At the bottom of this cycle, there were more than 100 stranded assets at shipyards in the Far East. As the cycle has improved, most of these assets have been committed. The big driver on this demand has been China, where jack-up activity has doubled. Today, we see less than 50 uncommitted rigs left in China. We are encouraged that this market has been able to absorb a great influx of new capacity. As available supply from the shipyard is diminishing, the outlook for further strengthening of day rates will continue.

Market utilization has now reached 90%. We continue to see modern units being contracted. Number of modern units working is up by 44% versus a number of standard rigs that are down 50%. We're now at the utilization where day rates normally tends to inflect.

From the first rig started operation with Total in Nigeria back in December 2017, we have now got a total of 16 operating rigs and further 3 committed to start operation in the next months. Technical utilization for the operating rigs was at 99.1% in the third quarter and 99% for the first 9 months in 2019. We currently see incremental demand for more than 50 rigs in the Middle East, mainly driven by activity, in the UAE and Qatar. In Mexico, there is still unfilled demand from previously awarded contract, and we also expect further demand to materialize. In Southeast Asia, activity in Thailand and Malaysia is expected to consume up to 9 modern units. West Africa continue to being a growing area with Nigeria as the primary driver. This must be seen in context of only 14 warm-stacked modern units, out of which Borr Drilling controls 5. The cost of activating limited amount of modern cold-stacked units is significant. Depending on the condition and time the units have been cold stacked, the cost will be approximately $30 million.

Looking at history, these rigs tend to return to the market when term contract opportunities is above $120,000.

Q3 marked the first quarter with positive adjusted EBITDA. With the announced contracts, the contract rigs will go to 19. For every rig contract into the current market, the EBITDA should improve by USD 20 million. We still have another 12 rigs left to contract with all 28 modern assets in operation. In the current day rate environment, the company will generate approximately $500 million EBITDA and $330 million free cash flow.

So to sum up, market has reached 90% utilization for modern assets, first time in the cycle. Only 14 modern warm-stacked units, 17 stranded units in the shipyard. Visible demand for more than 50 units, rig count expected to surpass 400 within the next 12 months. Borr has 19 contracted rigs, with another 12 to fix, 5 rigs available and 7 to be delivered. Currently, positive cash generation from operations and financing costs, 1 incremental rig fixed at current rates of 100,000 per day that contributes to 20 million FCF and a strong increase in EBITDA expected in 2020.

And with that, I will turn the call back to Magnus.

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Magnus Vaaler, Borr Drilling Limited - IR Officer [6]

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We are now ready to take questions, operator.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Peter Testa from One Investment.

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Peter Testa, One Investments S.A.G.L. - Analyst [2]

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Yes, just 2 questions, please. One is if you look at the goals you have on deferring rigs to be able to -- and selling assets the 4 rigs that are not used estimated value of $150 million, can you give some sort of sense as to what you're looking to do in terms of increasing your noncommitted cash buffer?

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [3]

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Yes. I think as we stated in the report, we have approached the banks, and we have also approached the yard with a very specific request. I think we have got some good feedback that, that can be done in a pretty quick time. I think what we're really looking for, it depends a little bit on how quickly you bring the rig into operations. I think we have assumed that we need to bring them in through the next kind of 18 to 24 months. And with that thing, I think it's pretty handleable through lowering the equity covenants, through lowering the cash liquidity covenants and through some stretching of particularly Tivar, which is the rig coming in July next year. I think that's the main 3 elements in the package. And with that thing, I think we have -- and we are already generating positive cash flow. So from that point of view, I think that's the 3 key elements. Then, of course, if you want to put every rig into work tomorrow, then you probably need a bit more. But on the same side, I think if you can bring every rig in tomorrow, that also means that day rates probably are a lot higher. I think we are -- we feel that we have the necessary flexibility. We have had good response from the request to the banks and the yard. I think as stated in the report, we hope that we have this thing sorted out within the next 30 days.

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Peter Testa, One Investments S.A.G.L. - Analyst [4]

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Okay. And then the follow-up was just on later on cash as you have this arrangement with Pemex based upon milestones and you've accumulated some capital employed in the joint ventures. Can you just give some sense as to whether you expect to be -- now that you've reached your first geological milestone, whether you expect to be now have payments come in from Pemex or maybe some understanding of how the payments from Pemex will occur?

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [5]

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The agreement with Pemex is that they paid 20% when we commenced the contract and they paid the remainder 80% of the contract award at the day we finished on delivering the well. I'm happy to say that the 20%, which was paid initially came on schedule. So there's no delay in payment from Pemex. And we expect the 80% to be paid the day we finish the well. These wells typically take between 80 and 120 days, so then you get the full payment out. So there's -- so you're bridging effectively kind of 60 to 80 days of cash flow.

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Operator [6]

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And our next question comes from the line of Lillian Starke from Morgan Stanley.

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Lillian Starke, Morgan Stanley, Research Division - Research Associate [7]

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The first one was around the increased adoption of the integrated contracts. Is that more in the sense of Pemex taking more integrated contracts or rather you're seeing adoption elsewhere in other markets? So that would be my first question. And just a follow-up. Also with Mexico, you mentioned there are a few contractors that have been awarded contracts but don't have rigs. When do you expect them to actually start making a decision on how to source these rigs?

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Unidentified Company Representative, [8]

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Yes. So maybe I can answer the first question on the integrated contracts. So Pemex has always extensively used integrated contracts, in particular, on land. And I think they've seen the opportunity to start taking this business model offshore as well. Not for deepwater, there's too much uncertainty and risk there, but for shallow water, where the drilling environment is fairly well known. I think they see the opportunity to bring this business model there. And I think Borr, together with Schlumberger has been quite interested in taking on these type of contracts, where we, together, can cooperate to drive drilling performance for both companies as well as for Pemex. I think this model has global applications, and I would expect to see more customers around the world starting to look into this type of contracting model for shallow water drilling. There hasn't been a major uptake as of yet. But I think as we enter into this cycle, which looks to be led by jack-up drilling and shallow water, I expect to see a further uptake of the business model globally.

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [9]

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I think we have seen [signs], of course, with what Baker is doing down in Abu Dhabi, but they're now doing effectively, going into a more integrated model down there as well and they claim to kind of -- Baker's commented that they saved approximately 30% of the time of market's historic level down. So this is highly economical, both for the drillers and for the oil companies.

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Svend Anton Maier, Borr Drilling Limited - CEO [10]

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And for the question on the additional rigs in Mexico, as you know, we have already 2 rigs operating in Mexico. One more that is getting ready, and 2 additional that will be moved over, but in the next couple of weeks. For the rigs that have not been comped or have been awarded, but no available rigs, we believe that Pemex will most probably retender most of this need in the very near future.

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Operator [11]

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And our next question comes from the line of Tobias Eckbo from Clarksons.

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Tobias Eckbo, Clarksons Platou Securities AS, Research Division - Former Research Analyst [12]

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In the report, you're mentioning good visibility on additional work for the Saga in both the Southeast Asia and the Middle East. Can you kind of give some additional color on these markets? And what you're seeing in terms of prospects and then current spot rates?

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Svend Anton Maier, Borr Drilling Limited - CEO [13]

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Yes, we have seen a very positive uptick in the activities in Asia. We have put the Mist to work with Vestigo and that has been extended. We've also put the Idun to work in Vietnam. When it comes to the Saga that we're activating for Eni, they also see further opportunities, of course, depending on the success. And we also see other opportunities in the same area with smaller plays. There's also the activities in Malaysia and Thailand. So there is definitely a significant increase in shorter and longer-term activities in that part of the world.

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Tobias Eckbo, Clarksons Platou Securities AS, Research Division - Former Research Analyst [14]

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That's helpful. And on encumbered rigs, could you shed some more information on the received bids?

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [15]

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I think we have stated in the report that we anticipated value to be in the kind above $150 million. So I think that's a pretty good indication on what we think we can achieve in the current market.

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Operator [16]

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And our next question comes from the line of Lukas Daul from ABG.

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Lukas Daul, ABG Sundal Collier Holding ASA, Research Division - Analyst [17]

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Can you just clarify in terms of the rigs that are yet to go to work, both the existing ones and the newbuild? How many of them do you need to spend roughly $15 million to get them ready for work?

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Svend Anton Maier, Borr Drilling Limited - CEO [18]

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Lucas, these rigs are all in the same bracket, which would need $15 million to $20 million to activate.

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Lukas Daul, ABG Sundal Collier Holding ASA, Research Division - Analyst [19]

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Okay. So it's the 12 rigs?

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Svend Anton Maier, Borr Drilling Limited - CEO [20]

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It's the 12 rigs, correct.

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Lukas Daul, ABG Sundal Collier Holding ASA, Research Division - Analyst [21]

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Okay. And then when you are talking to your clients and utilization is approaching, what you call, the inflection point, et cetera, are the discussions potentially opening up for the clients to compensate you for those activation costs?

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Svend Anton Maier, Borr Drilling Limited - CEO [22]

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Yes. And that's what the positive we see now that we're actually getting mobilization on the latest contracts. So yes.

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Lukas Daul, ABG Sundal Collier Holding ASA, Research Division - Analyst [23]

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And it's an upfront payment?

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Svend Anton Maier, Borr Drilling Limited - CEO [24]

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This is an upfront payment there on commencement on delivery on location.

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Lukas Daul, ABG Sundal Collier Holding ASA, Research Division - Analyst [25]

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Okay, good. And then just on the Mexican JV, once you finish the well and you get the 80% payment for that work, how is the cash from the Mexican JV flowing into your balance sheet?

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Rune Magnus Lundetræ, Borr Drilling Limited - Deputy CEO & CFO [26]

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It's through both the bareboat element and also as dividend from the JV, where we have the 49% ownership.

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Lukas Daul, ABG Sundal Collier Holding ASA, Research Division - Analyst [27]

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Okay. So what would be a fair assumption of a cash contribution for you for a rig working in the Mexican JV?

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [28]

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I think if we stick to the AFE -- if we perform in line with the AFE, we will see a day rate which is significantly higher than what we see in the normal kind of market. So we're building quite a lot of cushion in that system. But that's, of course, totally depending on performance. I think, as we stated, the first well is already on target. I think there, we expect to kind of make more money than we'll make on any other contracts. But this is totally performance-based as we go along. I think we got off to a good start. There's a lot of people who said that we took a high risk in this business. But I think together with Schlumberger and with our partner in Mexico, it seems like we know what we're doing and things are going pretty well. So hopefully, this is more an upside than the downside, the way we look at it today.

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Lukas Daul, ABG Sundal Collier Holding ASA, Research Division - Analyst [29]

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And with Pemex considering to or retendering some of the jobs in the future, I mean, how many more rigs do you think you can put into that market?

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Svend Anton Maier, Borr Drilling Limited - CEO [30]

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There's still -- like I said, Lukas, there's still outstanding needs. We don't know when they will retender. For the time being, we're active with 5 of our rigs and 2 of our partners' rigs, so that's a total of 7, but we still believe there will be a significant increase going forward once they go for retender. When that is? I can't really tell you. But it will probably be in the very near future.

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Operator [31]

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And our last question comes from the line of (inaudible).

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Unidentified Analyst, [32]

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I had a couple of clarifications on the cash flow. One of them was, it's a little bit difficult to work out the working capital in the quarter. So I wondered if you could tell me what the movement was. And linked to that, obviously, you're in discussions with banks. And I wanted to ask what you think working capital will look like in the fourth quarter because you're obviously going to be starting up new contracts? And if the revolver is available in the interim, what the availability on that revolver is? That's my first question.

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Rune Magnus Lundetræ, Borr Drilling Limited - Deputy CEO & CFO [33]

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I think the first part of your first question, I think is more suitable for off-line discussion. So please get in touch with me and Magnus after the call. But -- because it's not straightforward to predict working capital in future quarter.

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Unidentified Analyst, [34]

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But just sort of a range?

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Rune Magnus Lundetræ, Borr Drilling Limited - Deputy CEO & CFO [35]

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I think on the second part, so we -- per end of Q3, there is undrawn $150 million plus the cash on balance sheet. And of that, some of it is related to the newbuild. And then there's also uncommitted debt and then most of the RCF is available.

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Unidentified Analyst, [36]

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Sorry. Of the $150 million, how much is available for general corporate purposes?

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Rune Magnus Lundetræ, Borr Drilling Limited - Deputy CEO & CFO [37]

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That's the $65 million.

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Unidentified Analyst, [38]

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Okay, $65 million. And then just one other item...

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [39]

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And I think part of the solution we're working on here now, is also kind of -- as we have said, it's one of the main target areas to push Tivar out. $50 million of that facility is obviously converted to Tivar -- or committed to Tivar. I think what we're trying to do is to kind of rearrange that into one of the other packages, and thereby get more liquidity out of it on the short-term basis while we're still building the company and putting more rigs to work. And I think the important thing here, if you look at this company compared to some of our competitors, which currently are losing close to $1 million a day in cash, we are now in a situation where we're generating from operating cash flow kind of close to between $200,000 and $300,000 when these rigs are out. So I think the banks look a bit differently on us today than they looked at us 6 months ago when we failed on the targeting which had the kind of certain consequences for the credibility versus the bank and investors. We have now replaced those contracts with more profitable ones that's starting earlier. We have a bank package, which is the only one with covenants, which is extremely well secured with an EBITDA factor -- net debt-to-EBITDA of less than 3x, a bit less than 40% leverage. I think you have the necessary kind of fuel in the tank to get this thing going in a pretty efficient way. Obviously, it has cost -- you can say, why did you do it that way? Probably because we took cost effectively 16 newbuildings into operation. If we have been less aggressive, of course, the balance sheet would have looked differently. But when we can take out rigs and make money, we think that's a pretty sensible thing to do. We didn't do it when rates was 50, 60, 70, we decided to hold on, but we've gone pretty aggressively in the last couple of months by building the long-term cash flow there.

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Unidentified Analyst, [40]

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Okay. And then on the cash flow statement, just to count -- as a line item here and change in financial instruments, which is $29.5 million positive. And it's a bit unclear from the footnote, what exactly does that relate to, in your operating activities?

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Unidentified Company Representative, [41]

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It's basically the marketable securities, the investments in Oro Negro bonds and the Valaris investments that's covered in the -- explained in the financial statements.

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [42]

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Both those two are pretty well described in the report. It stated there that the total -- also the total losses we have had on financial position to be sorted. It's also stated that it's not still the part of the long-term strategy. It's stated there that total Oro Negro bonds now have been sold. And it's also stated that we still are left with Valaris position, but that marks down to market as of the end of the quarter. So I think it's pretty well defined. And I think I can assure the shareholders that this is not the major -- with the current share price we currently see in Borr, we don't see any kind of arbitrage opportunity or opportunistic opportunity. We just want to build the core Borr. But the fact that the numbers are pretty well-defined in report when you read it.

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Unidentified Analyst, [43]

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That's in the other financial -- no, no, as I said, it's just that we didn't -- we got it quite late, so we have to go through it. That's in the other financial expenses line in the P&L, is that right?

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Unidentified Company Representative, [44]

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We're just going to take up the page just to make sure we are on the same line here.

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Rune Magnus Lundetræ, Borr Drilling Limited - Deputy CEO & CFO [45]

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It's in -- yes, other income expense.

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Unidentified Company Representative, [46]

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In other financial expenses.

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Unidentified Analyst, [47]

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Yes, yes, that's right.

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Unidentified Company Representative, [48]

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Yes, yes. You have the -- that's where we are. We have broken that down and also in the slide that we went through it on Oro Negro bonds.

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Unidentified Analyst, [49]

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And I was just trying to -- and you still have those bonds?

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [50]

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The bonds have been sold. They are kind of the junior part of the bonds that Oro Negro bonds have. The senior bonds, which yielding 12%, which are the first lien on the rigs are still kept by us and the total amount we have there is $6.7 million, so that's what's left.

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Unidentified Analyst, [51]

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Okay. Great.

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Unidentified Company Representative, [52]

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I think you are more than welcome to dial in -- call us up after this call, and we can go through the design by which...

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Unidentified Analyst, [53]

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I will.

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [54]

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I don't think I have a problem whether you have the facts or not with you. The $6.7 million left of the position in Oro, which is the senior bonds yielding 12%, which trades apart and then there is this remaining Valaris position, where we have decided not to liquidate at current level because we think there are kind of -- you get some more value out of it. But it's not a strategic investment any longer. And effectively, it's a financial investment, which over time, will be disposed of, and it's marked down to market.

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Operator [55]

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There are no further questions at this time. I would now like to turn the call back to the company for closing remarks.

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Tor Olav Trøim, Borr Drilling Limited - Founder & Deputy Chairman [56]

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I think as kind of outgoing chairman of this company, I just kind of -- I'd like to thank the investors for having the patience with us. I think we're building a great company. Obviously, we don't believe in great share price for a time being, but I think we're doing what we said we do. We put rigs to work. We get the best clients you can get in the world, including the Exxon, the Total and the Shell.

I think I'm super happy as outgoing chairman to have got the new help into the company. Paal Kibsgaard, obviously, have all the experience in the world, running an oil and service company. Paal has really contributed over the last weeks to kind of professionalize this company. Of course, when you make a company from scratch in 3 years, and you're growing it by buying 64 rigs in less than 3 years, and you're putting a lot of it to work, it's done in a very entrepreneurial area. What Paal gives to this company now is he gives more governance, he gives more kind of routine, he brings the professional to a certain other level. And I'm very happy that we've convinced Paal by hard work to effectively jump in here for the next 6 to 12 months as an Executive Chairman and spend significant time improving the company when it comes to the governance thing.

And when it comes to the operation, I'm super happy with the way the company is today. I think we are performing. We're getting contracts and we're waiting for the market to improve, which happens every day these days. But when it comes to the kind of the framework around it, I think there's still a room for improvement. And I think Paal is major kind of contributor in that. I'm thankful. I think that shareholders will see the result of that over the next months -- weeks, months and certainly in the next half year to 6 months to 12 months.

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Svend Anton Maier, Borr Drilling Limited - CEO [57]

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Okay. With that, I will thank you -- thank all participants, participating in this call, and we'll talk to you next time. Thank you very much.

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Operator [58]

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Thank you. That does conclude our conference today. You may now disconnect.