Q3 2023 Earnings Summary
Reported on Jan 9, 2025 (Before Market Open)
Pre-Earnings Price$6.23Last close (Nov 15, 2023)
Post-Earnings Price$6.51Open (Nov 16, 2023)
Price Change
$0.28(+4.49%)
- Borr Drilling expects to maintain high fleet utilization in 2024 due to strong demand for its modern jack-up rigs, with very limited risk of idle time. The company has already secured significant coverage for 2024 and sees increased urgency from customers to secure capacity, indicating strong revenue visibility.
- Dayrates for modern jack-up rigs are increasing and are expected to continue rising due to a supply-constrained market and increasing demand. The company has recently secured fixtures in the $150,000 to $170,000 per day range and anticipates further rate improvements as activity levels increase in 2024 and 2025.
- Borr Drilling has initiated a regular quarterly dividend starting at $0.05 per share, with expectations to progressively increase dividends over time as cash flows grow. This reflects confidence in the company's financial outlook and commitment to returning value to shareholders.
- Significant Accounts Receivable from Pemex Could Impact Working Capital: Borr Drilling has a current receivable of $90 million from its joint venture in Mexico, where the ultimate customer is Pemex. While the company has received consistent payments in the past, there is a buildup in the balance due to increased activity and higher contract rates. Concerns were raised about potential payment delays and the impact on working capital. The CFO acknowledged the balance but does not see it as an immediate threat. However, any payment delays from Pemex could affect the company's cash flow and working capital position.
- Challenges in Securing Contracts in the North Sea Region: The company expressed a "more muted view on the North Sea" market and is working to find alternative commitments for the P1 rig. The P1 rig is contracted into Q1 (potentially into Q2, subject to options), but finding further contracts in that region may be challenging, which could affect utilization and revenues.
- Dependence on Cash Flows to Finance Newbuilds Amid Market Uncertainties: Borr Drilling plans to finance the remaining $30 million per rig for two newbuild rigs, scheduled for delivery in 2024, from cash generated by operations. This reliance on future cash flows assumes continued strong market conditions. Any market downturn or unexpected operational issues could strain the company's finances and impact its ability to fund these commitments without incurring additional debt.