Borr Drilling Limited (NYSE:BORR) Q3 2024 Earnings Conference Call November 7, 2024 9:00 AM ET
Company Participants
Patrick Schorn - Chief Executive Officer
Magnus Vaaler - Chief Financial Officer
Bruno Morand - Chief Commercial Officer
Conference Call Participants
Truls Olsen - Fearnley Securities
Fredrik Stene - Clarksons Securities
Chris Lee - Evercore ISI
Patrick Schorn
Good morning and thank you for participating in the Borr Drilling Third Quarter Earnings Call. I'm Patrick Schorn and with me here in Bermuda today, following the Borr Drilling Board meeting, is Bruno Morand, our Chief Commercial Officer; and Magnus Vaaler, our Chief Financial Officer.
Next slide, please. 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. This quarter's results were as expected, though slightly below the prior quarter. Recall that Q2 results were boosted by one-off benefits related to our Mexico contracts and suspension of the Arabia I. Without these one-off items, Q3 adjusted EBITDA of $115 million was essentially flat with Q1. Our core operations performed strongly with a technical utilization of 98.7% and an economic utilization rate of 96.9%.
In terms of contracting, we have commenced new contracts at accretive day rates for the Skald, Norve and Natt. Three other rigs, the Gunnlod, Gerd and Arabia I had fewer operational days quarter-over-quarter as they undergo preparation for upgoing accretive contracts scheduled to start in Q4 and Q1 2025. Our contract portfolio has strong revenue visibility into 2025 with 78% of our fleet contracted through 2025 at an average day rate of $148,000 per day which is 10% higher than in 2024.
With the delivery of the Var next week, our newbuild program will be complete, bringing Borr's fleet to 24 premium rigs, the youngest fleet in the industry and a clear competitive advantage. The Var is now expected to be contracted by early 2025 rather than by the end of 2024 as previously anticipated. The completion of our newbuild program, along with a reduced number of special periodic surveys in 2025 compared to this year is projected to increase cash flow in 2025.
However, the [indiscernible] near-term also exceeding demand and recently driven oil prices lower, leading customers to greater caution in confirming rig contracts and options and in some instances, delaying the start of new projects. This, coupled with the lingering impact of rig suspensions in Saudi earlier this year and potential suspensions in Mexico is creating uncertainties in the jack-up market in specific regions. Consequently, there is a risk of contract delays and potential gaps in activity in the coming quarters.