Borr Drilling Limited Announces Second Quarter 2024 Results

Rhea-AI Summary

Borr Drilling reported Q2 2024 results with total operating revenues of $271.9 million, up 16% from Q1 2024. Net income was $31.7 million, a 120% increase. Adjusted EBITDA reached $136.4 million, a 17% rise. Year-to-date, Borr secured fourteen new contracts, totaling 3,537 days and $651 million in potential revenue. In August, Borr raised $150 million in debt for the delivery of the newbuild "Vali." A cash dividend of $0.10 per share for Q2 2024 was declared, payable on September 6, 2024.

The company saw a strong operational performance with technical utilization at 99.2% and economic utilization at 98.4%. Borr plans to meet its FY 2024 Adjusted EBITDA guidance of $500-$550 million. Borr's newbuild "Vali" is set for delivery soon, and the final newbuild "Var" is on schedule for Q4 2024. Financially, Borr is stable with $200 million in cash and undrawn credit facilities.

Positive

• Total operating revenues increased by 16% to $271.9 million.
• Net income rose by 120% to $31.7 million.
• Adjusted EBITDA grew by 17% to $136.4 million.
• Secured fourteen new contracts worth $651 million.
• Raised $150 million in debt for newbuild delivery.
• Declared a $0.10 per share dividend.

Negative

• None.

Insights

Financial Analyst

Borr Drilling's Q2 2024 results show robust financial performance. Total operating revenues increased by 16% to $271.9 million, while net income surged by 120% to $31.7 million. The Adjusted EBITDA of $136.4 million represents a 17% increase from Q1. These figures indicate strong operational efficiency and market demand.

The company's contracting success, with 14 new commitments worth $651 million, demonstrates a healthy backlog. The 73% capacity contracted for 2025 provides good visibility for future earnings. The $150 million debt raise for the "Vali" newbuild delivery shows strategic financial management, balancing growth with cost-effectiveness.

The $0.10 per share dividend, doubled from Q1, signals confidence in sustained cash flow. With an undrawn $150 million RCF and $200 million cash on hand, Borr's liquidity position is strong, supporting future shareholder returns and potential share buybacks.

Oil & Gas Industry Expert

Borr Drilling's Q2 results reflect a robust jack-up rig market. The 99.2% technical utilization and 98.4% economic utilization rates are exceptionally high, indicating strong operational performance and demand for their premium rigs. The company's success in securing new contracts at higher day rates, despite the Saudi Arabia suspension, demonstrates the tight market for high-quality assets.

The industry dynamics are favorable for Borr. With 30% of the global jack-up fleet over 35 years old and no new rigs ordered in the past decade, Borr's young fleet of 24 premium rigs is well-positioned. This aging fleet scenario is likely to drive further rig retirements, potentially leading to supply constraints and supporting higher day rates.

The company's ability to quickly replace the suspended Saudi contract with a more advantageous one highlights the strong demand for modern rigs. The optimistic outlook for securing contracts for newbuilds "Vali" and "Var" further underscores the market's strength and Borr's competitive position.

Market Strategist

Borr Drilling's Q2 2024 results and outlook present a compelling investment case. The company is capitalizing on a tightening jack-up rig market, evidenced by its ability to secure contracts at accretive day rates. The full contract coverage for 2024 and 73% coverage for 2025 provide earnings visibility and stability.

The company's financial strategy is balanced, focusing on growth while enhancing shareholder returns. The doubling of the dividend to $0.10 per share quarterly ($100 million annually) demonstrates confidence in sustained cash flow. The $100 million remaining share buyback authorization offers flexibility for additional returns.

Borr's young fleet positions it well in an aging market, potentially leading to pricing power and market share gains. The company's ability to navigate market turbulence, as seen with the Saudi Arabia contract replacement, showcases operational agility. With the capex program for newbuilds nearing completion, Borr is poised for increased free cash flow generation, supporting its growth and shareholder return initiatives.

HAMILTON, Bermuda, Aug. 14, 2024 /PRNewswire/ -- Borr Drilling Limited ("Borr", "Borr Drilling" or the "Company") announces unaudited results for the three and six months ended June 30, 2024.

Highlights

• Total operating revenues of $271.9 million, an increase of $37.9 million or 16% compared to the first quarter of 2024
• Net income of $31.7 million, an increase of $17.3 million or 120% compared to the first quarter of 2024
• Adjusted EBITDA1 of $136.4 million, an increase of $19.6 million or 17% compared to the first quarter of 2024
• Year to date of report, the Company has been awarded fourteen new contract commitments, representing 3,537 days and $651 million of potential contract revenue
• In August, the Company raised $150 million of additional principal amount of debt under the 2028 Senior Secured Notes to finance the delivery of the newbuild "Vali"
• On August 14, 2024, the Board declared a cash dividend of $0.10 per share for the second quarter of 2024 to be paid on or about September 6, 2024

CEO, Patrick Schorn commented:

"The second quarter operational performance has been strong, with a technical utilization rate of 99.2% and an economic utilization rate of 98.4%. As a result, we have generated $253 million in adjusted EBITDA year-to-date, positioning us well to meet our full-year 2024 Adjusted EBITDA guidance of $500 to $550 million.

In terms of contracting, we've continued to secure new contracts at accretive day rates, including the recently announced long-term contract for the "Arabia I" in Brazil. I'm particularly pleased that, following the unexpected suspension in Saudi Arabia, we successfully obtained a replacement contract that should be advantageous for the coming four years due to its higher day rate and longer contract duration. As a result, all our 22 delivered rigs are again contracted, with only a few days left remaining available in 2024. Looking ahead to 2025, we currently have about 73% of our capacity contracted, which aligns with our expectations for this time of the year.

Regarding our newbuilds, we anticipate taking delivery of the "Vali" later this week. We're pleased to report that we are in the final stages of assigning this rig to a previously announced contract in Africa. The "Var", our final newbuild, remains on schedule for delivery in late Q4 2024, and we remain optimistic about securing a contract for it by the time of delivery.

From a financial perspective, the year is progressing largely as we anticipated. While the suspensions in Saudi Arabia have had some negative impact, this has been more than compensated by better-than-expected pricing on our new contracts. Additionally, the market is gradually absorbing the excess supply caused by these suspensions. Looking ahead, we foresee a continued tight market for premium assets, leading to sustained better pricing. The global jack-up rig fleet's age profile, with 30% of the rigs being over 35 years old, is expected to drive incremental retirements. Coupled with the fact that no new rigs have been ordered in the past decade, these conditions create a favourable environment for our company, which operates the youngest fleet of 24 premium rigs in the industry.

From a cash standpoint, we are well-positioned for the future. We have an undrawn $150 million revolving credit facility (RCF), a $45 million guarantee facility, and nearly $200 million in cash at the end of the quarter. In 2024, we will complete our capex program related to the newbuild rigs, enabling us to further enhance shareholder returns through additional dividends and/or share buybacks, with $100 million still available under the current buyback authorization. The Board has approved a quarterly dividend of $0.10 per share for Q2 2024, which was doubled in Q1 2024, amounting to approximately $100 million in annual dividends.

After the close of the quarter, we secured an additional $150 million loan through our 2028 Senior Secured Notes to fund the delivery of the newbuild "VaIi". Although seller's financing was an available alternative, leveraging our existing bond proved to be a more cost-effective solution. This approach also helps maintain a streamlined capital structure, with a single bond covering both the 2028 and 2030 maturities.

While the market has experienced some turbulence, we have successfully maintained steady and predictable performance. Our outlook for 2025 and beyond remains unchanged, and we are confident this will enable us to consistently deliver increased earnings and incremental returns for our shareholders."

Conference Call 

A conference call and webcast is scheduled for 15:00 CEST (9:00 AM New York Time) on Thursday 15 August, 2024 and participants are encouraged to dial in 10 minutes before the start of the call.

In order to listen to the presentation, you may do one of the following:

a)    Webcast

To access the webcast, please go to the following link: https://edge.media-server.com/mmc/p/oog8fcz6

b)    Conference Call

Please use the below link to register for the conference call, https://register.vevent.com/register/BI5537d561434e4a0482d85516e384dbe1.

Participants will then receive dial-in details on screen and via email and can then choose to dial in with their unique pin or select "Call me" and provide telephone details for the system to link them automatically.

The complete Earnings Report and Fleet Status Report are enclosed.

CONTACT:

Questions should be directed to: Magnus Vaaler, CFO, +44 1224 289208

This information was brought to you by Cision http://news.cision.com

https://news.cision.com/borr-drilling-limited/r/borr-drilling-limited-announces-second-quarter-2024-results,c4024431

The following files are available for download:

https://mb.cision.com/Public/16983/4024431/8d049a3054c28ee4.pdf	Borr Drilling Limited Fleet Status Report Aug-24
https://mb.cision.com/Public/16983/4024431/b57126545fe1201f.pdf	Borr Drilling Limited Q2-24 Earnings Release

 

View original content:https://www.prnewswire.com/news-releases/borr-drilling-limited-announces-second-quarter-2024-results-302222818.html

SOURCE CISION AB

FAQ

What were Borr Drilling's total operating revenues for Q2 2024?

Borr Drilling's total operating revenues for Q2 2024 were $271.9 million, a 16% increase compared to Q1 2024.

How much did Borr Drilling's net income increase in Q2 2024?

Borr Drilling's net income increased by 120% to $31.7 million in Q2 2024.

What is Borr Drilling's Adjusted EBITDA for Q2 2024?

Borr Drilling reported an Adjusted EBITDA of $136.4 million for Q2 2024, a 17% increase.

How many new contracts has Borr Drilling secured year-to-date in 2024?

Borr Drilling has secured fourteen new contracts year-to-date, representing 3,537 days and $651 million in potential revenue.

When will Borr Drilling pay the declared Q2 2024 dividend?

Borr Drilling will pay the declared Q2 2024 dividend of $0.10 per share on or about September 6, 2024.

What is Borr Drilling's 2024 Adjusted EBITDA guidance?

Borr Drilling's 2024 Adjusted EBITDA guidance is between $500 and $550 million.