Truls Olsen

Truls Olsen asked about the improved payment situation with Pemex in Mexico, the confidence in regular payments, and the current level of outstanding balance on Borr Drilling's balance sheet. He also inquired about the wide day rate spread across regions (Asia/Middle East vs. West Africa) and how contract terms, specifically TNIs, are progressing. Finally, he asked about the outlook for Borr Drilling's uncontracted rigs, particularly the Var, and if it's likely to be the last one to find work due to its previous inactivity.

Answer

CFO Magnus Vaaler confirmed that Pemex payments picked up, with $46 million received in Q4 and $23 million in early January, reducing the outstanding balance from an estimated $90-$100 million at quarter-end. He noted positive indications for continued normalization and improved payment terms in new contracts. CEO Bruno Morand clarified that the recently extended New York rig continues on historical contract structure. Mr. Morand stated that contract dynamics are fluid, with a constant push and pull on terms, but terms have been fairly solid, with discussions mainly about rates. He agreed that the Var and Freyja would likely find work later, probably in late 2026 or early 2027, driven by Middle East developments, while expecting commitments for the Hild and Sif sooner.

Truls Olsen inquired about the status of payments from Pemex in Mexico, the current outstanding balance, and the company's confidence in receiving regular payments. He also asked about the day rate spread across regions and the progression of terms and conditions beyond Aramco. Finally, he sought clarification on which rigs, particularly the Var, are expected to be the last to secure new work.

Answer

CFO Magnus Vaaler reported receiving $46 million from Pemex in Q4 2025, with an estimated $90-$100 million outstanding at quarter-end, and a further $23 million in early January. He expressed optimism for continued normalization and new payment plans for 2026. CEO Bruno Morand added that while the New York extension maintains historical contract structure, there are encouraging signs of payment normalization. Mr. Morand noted that contract terms have been solid, with discussions primarily focused on rates. He agreed that the Var and Freya are likely to be the last rigs to find work, probably in late 2026 or early 2027, with Middle East developments as a potential catalyst.

Truls Olsen of Fearnley Securities questioned the operational and cost implications of the new long-term contract in Brazil, noting the market's complexity and the need for a local partner.

Answer

Executive Patrick Arnold Schorn acknowledged Brazil's operational challenges, stating that securing a local partner was essential for their strategy. Chief Commercial Officer Bruno Morand added that the Q1 2025 start date provides ample preparation time, a substantial mobilization fee will help cover costs, and their local partner brings critical expertise. Morand also noted the work scope, focused on P&A and intervention, is relatively straightforward for the high-specification rig.

Truls Olsen inquired about the new long-term contract in Brazil, focusing on the operational challenges, associated costs of entering the market, and the role of Borr's local partner.

Answer

Executive Patrick Arnold Schorn confirmed that entering the complex Brazilian market necessitated a local partner. Chief Commercial Officer Bruno Morand elaborated that the rig is scheduled to start in Q1 2025, allowing ample preparation time. He noted that a substantial mobilization fee will help cover costs and that the partnership with an experienced local company is crucial. The work scope, primarily P&A and intervention, is considered relatively simple for the high-specification rig.

Truls Olsen of Fearnley Securities requested updates on several topics: the CJ70 jack-up market in Norway, the status of the Sete Brasil claim and mediation process, and any color on the day rates for the recently awarded West Vallor and Savan Louisiana contracts.

Answer

President & CEO Simon Johnson reported no material update on the Norway market or the Sete Brasil claim, noting the latter is a complex, long-term process that is not affecting current operations. EVP & CCO Samir Ali commented on day rates, stating the West Vallor's 2025 rate is comparable to what peers are getting for 2026-2027 starts, while the Savan Louisiana's intervention work is at a different, but still EBITDA-positive, price point.