Q4 2021 Borr Drilling Ltd Earnings Call
Okay.
Hello, everyone and welcome to the Board drilling Ltd, Q4, 'twenty 'twenty. One results presentation. My name is Bethany and I'll be your operator today, if you would like to ask a question a Q&A. Please press star followed by one on your telephone keypad at any time or if you have joined US online you compress the flag icon on your screen.
I will now hand, the call I've got two highest Patrick Shawn C E O of bore drilling Patrick over to you.
Good morning, and thank you for participating in the board drilling Q4 2021 earnings call. My name is Patrick Schorn, and I'm talking to you from London The U K.
With me on the call today is Matt and his father our CFO .
Next slide.
Offerings Essentials first 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.
<unk> actual results to differ materially from those projected in these statements I. Therefore refer you to our latest public filings.
Next slide.
The fourth quarter has been a very busy quarter in many aspects.
During the quarter, we continued to prepare rigs to be added to our operating fleet to reach the contracts at 18 rigs that we currently have on the books.
We have also achieved good progress with our discussions with the creditors to extend the debt.
This will give you further details on that.
During the quarter, we have seen some delay in the startup of projects it affected our revenue into Florida as it should.
Shown in the table on the right hand side. These projects are back on track now.
The overall Opex has been well controlled and the EBITDA has continued its positive trend throughout the year.
I will comment later in the presentation on how we see 2022 from a revenue and EBITDA perspective. After Magnus will have discuss the particulars of Q4.
Magnus. Please go ahead.
Thank you Patrick.
We are now on the slide key financial Q4 2021.
Q.
Revenue came in at $69 1 million in the quarter, a decrease of $3 9 million or 5% compared to Q3, you're trying to 'twenty one.
This was the result of $6 2 million less in day rate revenues for our rigs on regular contract.
Offset by $2 3 million increase in related party revenue, which is favorable to earnings from our Mexico Joint ventures.
This is following a quarter.
Economic utilization on the rigs in Mexico.
Yeah.
The average number of rigs trading in the quarter for the company in total was between 12 and 13. This number is expected to increase to 18 during the first half of 'twenty to 'twenty two.
The rig operating and maintenance expenses for Q4 decreased by $6 9 million or 15% from the previous quarter.
The decrease is partially a result of fewer rigs on contract during the quarter and we also incurred costs for rigs that are being excavated and preparing for upcoming contract, which had been recognized as deferred mobilization and contract preparation costs.
General and admin expenses flat quarter on quarter at $7 5 million.
And in the level that we have not held for three quarters in a row.
Total financial expenses were $31 4 million in the quarter, which is an increase of $4 8 million from Q3.
$2 8 million other variance is explained by the release of the provision in Q3 that did not occur in Q4.
The level of financial expenses reflects the relatively low capital cost of the company.
I had an average interest rate of four 8% for the full year 2021.
Yes.
Our net loss for the quarter was $46 1 million, which is an increase of 30.
$10 5 million from Q3.
The main reason for the negative developments.
The increase in financial expenses and also an increase in depreciation of 8 million in the quarter.
And adjustments recognized in the fourth quarter.
Adjusted EBITDA for the quarter was $25 million and improvements of 5 million from Q3.
It is mainly due to a decrease of rig operating and maintenance expenses.
We are very pleased to show continued EBITDA improvement throughout 2021, a result of a very good market contracting for our rigs coupled with stringent cost controls.
Yeah.
Our free cash position at the end of Q4 was $34 9 million and our restricted cash $11 1 million.
So the total cash decreased by $22 9 million in the quarter.
As a result of cash used in operation of $24 3 million, which includes 29 million payments I mean, Chris and Downpayments crude cost to the shipyards.
So the interest payments.
Our regular quarterly interest to the senior secured creditors.
It includes the semi annual coupon of the convertible bond and finally.
The annual down payments of accrued costs to the yards, which totaled $12 million in December .
Cash from investing activities included cash received.
$6 3 million.
Dan asked return of shareholder funding from our Mexico JV.
And also we spent $5 2 million.
Additions to Jackup rigs, which relates to activations and capex of the rig.
In addition, as mentioned we have $11 1 million classified as restricted cash.
And this is mainly as collateral for performance guarantees for two years.
Rig contracts for $3 2 million of this will be released in Q1 2022.
Yeah.
Total cash received for Mexico in the quarter was $18 million, which is a combination of return of shareholder friendly and repayments of variable income.
Now, let's turn to the next slide.
Another highlight from the quarter was reaching an agreement with our two shipyards to differ in a total of $1 4 billion of debt and delivery installments from 2023 to 2025.
This is the first major steps towards reaching the company's previously announced targets should address debt maturities and commitments currently due in 2023.
In return for the extension of maturities with the yards. The company has committed to make certain additional repayments of our crude costs and capitalized interest during 2002 and three in addition to start paying regular cash interest from the middle of 2023 envelope.
These agreements with yards are contingent on the company refinancing its remaining debt, but in June 2022.
Sure in 2010.
$5 in nature.
Company has.
Agreed to enter into negotiations with the remaining lenders.
Any facilities and use its best efforts to reach a binding agreement on.
The refinancing by the 31st of March.
This will provide the company with a complete long term financing.
Going over to the next slide in the fleet status.
During the course of 2021 the company was awarded four new contracts expansion exercise options and there's always an otherwise representing approximately 8500 days and $717 million of potential back.
Look.
These calculations include complex jv's own 100% basis. In addition to any mobilization compensation in the contracts.
Since the last report the company has secured new contracts and other ways for us to activate rigs nor prospective five and then you have the big four in addition to the warm stacked rigs.
This has increased the companys contract and committed fleets to 18 units.
<unk> is in West Africa.
He is in the North sea one in the Middle East fixed in Southeast Asia and five in Mexico.
Yes.
The backlog in 2021 represented 23 four years of backlog during the year, our operating rigs that consumes approximately 11 eight years of background.
This shows our Bakken DUC replenishment ratio stands at a multiple of two meaning that we added twice as many space backlog is based on <unk> during the same periods.
With this I would like to give the word back to Patrick.
Thank you Magnus.
We've come at this for a while on the Underinvestment in the E&P industry.
It is becoming more and more evident that the impact of the multiyear Underinvestment has started to erode the spare capacity.
Some producers today are not able to fully benefit from the quote us available to them.
This has led to inventory draws as can be seen on the graph on the right hand side.
Currently the OECD inventories are running significantly below the five year average.
The demand.
Regardless of the pandemic or geopolitical issues remains very strong and therefore activity into E&P will have to follow suit to ensure sufficient volumes are available.
The current oil price has been reflective of the tight supply demand.
And is often level fully justifying increased investment and subsequent activity.
Next slide.
Many of the public companies as well as some of the National oil companies have released Skype Capex guidance numbers for the next years, indicating a clear change and significant increase in the investment levels planned for the coming years.
On the right hand side, you see the isolated impact that this will have on the shallow water wells planned to be drilled this year.
Practically a 20% increase.
Z market the board drilling is participating in.
Next slide.
Global competitive Jackup rig utilization stood at 84% at the end of the quarter.
While this is flattish compared to last quarter, we see a continued increase in the contract thats working rigs to 76%, leaving only 30 contracted idle rigs currently in.
In other words.
Any increase will require additional rigs to be contracted as this 30 idle rigs.
The historic low as can be seen from the graph on the left hand side.
Now when it comes to contracting we are currently involved in excess of 10% negotiations that combined equaled 153 rig years of activity.
If comparing that to one year ago, we were involved in tenders for about 68 rig years of activity.
So the contracting and tendering activity has more than doubled in the last 12 months.
Next slide.
Looking more into the rigs that are available to cover the upcoming activity. There are a few things to note.
Firstly looking at the graph on the left hand side. It demonstrates the ability of the industry in the past we're in the period between 2018 and 2020 and additional 70 rigs were contracted.
From the current 357 contracted rigs it only takes 30 more rigs to be at levels that we had prior to the pandemic.
On the graph on the right hand side it shows that only 28 modern rigs.
<unk> currently when we adjust for several factors under which rigs that are cold stacked for over three years or a built prior to 2010 and.
And also take out those rigs that have been tainted history due to sanctions.
And our less marketable because of that.
And take out those rigs that have less desirable designs for instance, shorter lateral lengths.
This limited rig supply combined with the anticipated demands of over 30 additional rigs when considering only the national oil companies requirements.
It makes us very confident in a strong market going forward.
Next slide.
Based on the 2021 performance and having made some fundamental changes to the business. We are confident we can further grow our business and improve returns in the year in the year ahead of us.
On the graph on the left hand side, you see the quarterly performance in 2021 now.
Now taking into consideration the contracts, we've been awarded already and the further development of the market during the year.
We are anticipating generating revenues in the range of $375 million to $400 million.
And then adjusted EBITDA in the range of $115 million to $140 million.
It should be noted that the.
The revenue and earnings will be increasing throughout the year such that the earnings in the fourth quarter of 2022 are expected to be double dose of the fourth quarter of 2021.
Magnus will give you some further insight what this means from a cash perspective.
Yeah.
Thanks, Patrick turning to the next slide.
Yeah.
One of the most valuable aspect of the board really is our ability to start generating large amounts of cash once again, all our rigs working.
This slide shows the higher cash generation potential of the company at various day rate levels.
At the current level of our 18 contracted and committed rates, which we expect to start working in the first half of 2022.
An average rate of just $80000 per day from EBITDA potential.
$117 million annually.
This increases by more than $120 million.
Around 300 million, we just a $20000 per day increase in day rates on average.
Yes.
We've also added examples of the 20 year average day rates of $140000 per day.
And in that instance, Avon rates can generate 550 million EBIT.
We have already guided that we expect to have all our 23 delivered rigs to be contracted and committed by the end of 2022.
This adds further to the earnings potential.
We view this table is quite exciting in combination with what we see the market developing at the moment.
And I'll turn it back to Patrick.
Thank you Magnus so in conclusion.
We have 18 out of the 23 delivered rigs contracted and during Q4 and into Q1 of this year. Our operational team has been very focused getting these rigs excavated and operating a tight budgets and within minimum downtime.
The market for modern rigs as tight even more so when considering the units that are able to start work within this year.
Units that have been cold stacked for several years require a lot of work and investment to get ready. This in combination with a challenged industry supply chain.
With our modern young fleet with a significant competitive advantage as such we remain confident that we're able to have all of the 23 delivered rigs contracted by the end of.
For the year 2022.
Together with our main creditors, we are working to construct a long term capital structure, which would take us well beyond the current Q1 2023 maturities. We have achieved the first milestone was the shipyards and anticipating having a solution with all remaining creditors.
In the next quarter.
For the full year 2022, we expect to be increasing our revenue by approximately 50% versus 2021, and we anticipate the adjusted EBITDA to continue to improve to the extent that Q4 2022 will be double.
The Q4 2021 adjusted EBITDA.
With this we trust we have given you a clear view of our expectations for 2022, and I Hope you share our enthusiasm when it comes to the upside potentials.
Ladies and gentlemen, thank you very much we will now go to Q&A.
Okay.
If you would like to ask a question. Please press star one on your telephone keypad or if he has joined online you compress the flag icon on your screen when preparing to ask your question. Please ensure you were on mute locally and please limit yourself to one question one follow up.
Our first question comes from Fredrik Stene Clarksons Plateau Securities Project. Your line is open.
Hey, guys and congratulations on the quarter.
Quarter here, a strong performance overall I would have to say.
Uh huh.
Choose.
Question here.
The first thing I would like to just deep dive a little deeper than it is in the market dynamics that you're seeing obviously debate that with me and the rest of the market. That's available is kind of limited to what it's been.
But.
There's no doubt that if we say that there are a series of Marpol tenders now going on for example in Saudi there is deep down in Southeast Asia.
Was wondering if you could.
Give us any color on how you feel like you're positioned to get the get some awards in those tenders.
Can you also provide some color maybe on what you believe are the leading edge day rates in the contract discussions that you're currently in that would be super helpful.
Hi, Frederic.
So let me try to give you a bit of an idea of what we're up against so certainly as you were mentioning there is a variety of.
Larger tenders.
And.
We also have existing contracts rolling over so the rolling over is happening at this moment.
Usually at higher rates than we previously had.
Which is very much a function of.
The lack of short term availability, meaning there is not a whole lot of additional rigs that can go to work very quickly and I think that that is also one of the things that we start seeing affecting some of the larger tenders because obviously some of the larger tenders are anticipating a lot of interest and I think there are certain.
Really is from all providers across the market interest in these tenders. There is however, very few people.
That have rigs ready to go and ready to be deployed after.
Certain contract preparation that they might need so I think that what you are seeing is that one side. It is the utilization that starts to drive more and more the day rates going up but it is in particularly the short term availability a thing that if you go a year plus out there is people that could get rigs.
Eddie.
The position that we have at this moment with the five rigs that are delivered and that we have available for this type of work plus the five that we have sitting at the shipyard puts us in a very unique position to benefit.
From the increased activity and more importantly be able to deliver rigs at the time that the customers need it. So when it comes to day rates I can tell you that they are continuously going up.
And depending on which area you were talking about it can be in percentage wise quite quite substantial.
And obviously that is on one side understandable.
Are you thinking about where we come from and what is kind of been the average that the jackup market has been working with I think most importantly, when you start looking at some of the forward projections of what this business could deliver I think it is important to realize that day rates of the last call. It two years are not going to be very.
Representative of what we will be seeing going forward and therefore, I think we need to to keep their finger on the poles and very much. We are on track to participate in all the large tenders that we can and we do think that we have a very credible offering for most of them.
Of the operators out there so I would think that you see us.
Taking more and more active rigs into our fleet with the day rates increasing that it maybe the best way how I can give you some idea on the market dynamics and obviously from a competitive perspective I don't think you expect me to talk anything about the detailed day rates how much they have gone up but I can tell you that.
On a percentage wise across the board, meaning in every region, we started to see increases coming forward.
That's super helpful. I'm totally understand that's a complicated set of specifics.
Just in terms of as a follow up to that in terms of the you.
Youre talking about bringing rigs back and you seem very confident and that's at least reading. Your report. So I was wondering if.
And then also based on your guidance you said there at the end of Q4 'twenty to 'twenty two EBITDA is effectively doubling what you reported.
One so I thought I was wondering what's the basis.
Basis for that assumption that you.
At that point, we'll have all those rigs have been material increase in day rate could you just give some color on my on the calculations there that would be helpful as well.
Yes so.
Firstly I think it is important to realize that of course revenue and EBIT is going to be increasing throughout the year and therefore, we wanted to give you a bit of an idea on the exit rate of 2022 versus the exit rate of 2021 and that is why we have chosen to report it to you in this particular matter.
The other thing that the thing is important to realize that the number of let's call. It $50 million of EBITDA in Q4 of 2022 is not dependent on having all 'twenty two 'twenty three rigs.
Working at their full potential for the full quarter.
As you as you well know some of our rigs are at the moment on a bareboat charter type of arrangements. So that is actually part of that calculation. So it does anticipate.
We anticipate that we have everything.
Contracted and.
Starting to work towards the end of the fourth quarter, but the $50 million is not representative of the full potential of <unk>. If I. If I explained it clear to you. So I think that that is important and then the other thing I think is good to realize that we have obviously at the moment 18 rigs contracted so.
We have a very good idea for a large part of the year on how the year will be shaping up and if we look at the call. It the forces in the market right now than we expect certain revisions going forward, but quite frankly, the revisions that I expect our go into.
Upward revisions to the numbers that we've shown you and not downward.
What we see in the market and.
I think that.
From what we have contracts in hand to date, we are comfortable giving you this guidance.
Yeah.
On what the full year is going to bring but more is obviously possible if things are getting even stronger than we anticipate at this moment.
Yeah.
That's super helpful. So the $50 million is more like a run rate expectation with potential further upside momentum into 2000 and freedom sorry, Yeah, I would say, particularly the latter with upside potential because as I have said it is not the full potential of <unk>.
The full quarter at the day rates, we expect at that time, which you may be also can thinking back about this slide.
Was presented here on a different day rates you see how incredibly sensitive it is to.
Two the EBITDA generation, and therefore, I would say.
Look at that and you get a good feel of what's what is possible.
Thank you very much that's all for me.
Thank you.
The next question comes from Carl Peterson at a B G.
Okay.
Hi, guys. Thank you for taking my question.
Got it and following up on the question on 2020 guidance.
You didn't operate on how much of that guidance is linked to either currently contracted or particularly for tenders that you all have participated in and how much is dependent on.
Your market view.
So.
So obviously it is very heavily dependent on the contracts that we have in hand, and there is a certain expectation on some additional rigs and work that we anticipate getting.
But mostly it is contracts in hand, and it is less dependent on future contracts going forward now having said that we from the numbers that we have presented it is clear that we have a significant amount of rigs being tendered at this moment. So there is.
Is upward potential but also for US there is going to be a timeframe. It what it takes for us to put out another five rigs or even more if we wanted to be more aggressive and start taking out some of the additional rigs that are still at the shipyard, which will be much more complicated in time, so what we're having right now in the numbers that we have.
<unk> is heavily dependent on the contracts that we have in hand, and the rigs that we have been activating during the fourth quarter that are getting into operation right now and to a much lesser extent.
Future potential and tenders that we're currently participating in.
Okay. Thank you Anthony.
Uh huh.
I guess, what would be kind of the main.
Sure Pete.
Related to your guidance range.
Should we look for us to kind of main mover.
Well I think that even if there.
Where do we have black Swan that is going to significantly upset the worldwide economy, and therefore change demand, yes that might change our guidance, but from the way that we are looking at the macro today and particularly when we look at the supply demand.
As it is being projected today the inventory draws that we have seen that it is very clear that additional capacity will need to be created and the only way to this can be created is through drilling. So from that perspective, I would say that there is a large certainty that additional work needs to be done and.
Therefore, we anticipate the overall market to increase for us and we anticipate E&P expenditure. Therefore to go up so I would say the only thing that could really change everything if there is a black swan, but I guess for that reason, it's a black Swan. So I don't think we can plan any food afford it we plan.
For the things that we know right now and the things that we can control yeah sure. Thank you so much.
Hi, good afternoon.
Thank you.
The next question comes from Richard Ronit T. I G. Richard Your line is open.
Hi, Thank you for taking my question I wanted to know the Hum on your current stack.
Stack of rigs with what is the average day rate that youre seeing now and.
What is the average that you anticipate for 2022 on.
On average on all your contracted rigs.
Our current oil prices, which are closing in on 100, we've seen day rates exceed 100000 per day.
Hum back in I think 2015, and 16 and average.
Why our day rates lagging oil prices today. That's my first question. My second question is on the on.
On the refinancing issue.
You said you had some news to to.
So say next quarter on our negotiations with creditors that includes the bank creditors as well as the convertible bondholders.
In terms of the converts what what can you offer convertible bondholders to exchange to extend their maturity.
Sure.
Our.
The bonds currently or are Noncallable and maybe.
And very much out of the money is there anything you can do there.
Alright, well certainly.
Two very different directions, Richard let me first start on the day rates. So we don't.
Publicize our average day rates as such the only thing that we did speak in the past.
Is that we have given an insight into the additional backlog that we created and we have said at that time. It was around $85000 per day, I would say that.
Where we are going now as we start to see this.
Increasing rapidly and where do you see that is in two things you see that in the increases in day rates that we are putting in the tenders that going forward, but also in the options being higher priced than before and sometimes the absence of options and contracts completely. So when you see that it's not only today right, but the overall piece and <unk>.
We're getting much tighter probably a little bit more in favor of the supplier versus what had previously was so those are all interesting improvements into the economics for us so.
That I would say on the day rates specifically the other thing as you were mentioning a little bit around the economics for our customers and particularly when you start thinking about 90% to $100 oil I think it is very interesting to look at some of the production that you see offshore in.
The shallow water and what average wells are giving you and then.
Look at.
Even a doubling of the day rates.
And what kind of impact that has on well cost and how if any of these changes the economics for the operator and you see very quickly that for operators that need to do activity.
<unk> oil price of 90 to $100. The day rate is not going to be the point that holds them back so from that perspective, we are not.
In the critical path for them or upsetting the economics in any in any way I think going forward what is going to be driving it is that there is capacity that needs to be generated there is a large variety of companies that are looking to be adding.
Production through drilling at this moment some of them through some very elaborate and large programs and that is just going to take a lot of the availability and that is going to drive the oil.
Day rates on the rigs very very quickly so from that perspective, I think it is that utilization in the absence of a large fleet that is ready to go.
When it comes to the refinancing.
Ask Magnus to make a few comments regarding that because you were asking specifically around the convertible bonds, maybe one comment I can make before that is that in this whole process. We obviously have to make sure that we get a solution that is working for everybody in the equal.
Ration in one side you have our creditors on the other side you have the existing shareholders that are.
Very willing and have been very supportive throughout.
The last few years, but of course increasingly now with the markets turning to support the company and make sure that any possible dilution is minimized to the absolute maximum so I think what we did see.
In the last few weeks is a ever stronger support from the existing shareholder base, which obviously then allows for many more different options on how we deal in the restructuring of the refinance but I'll ask Martinez to more specific and give you some ideas of what is being worse.
Don.
Thanks, Patrick.
I think obviously this discussion.
We are having with our creditors that are not public I can't go into too many details of it but what I can say and what we've said in the press release two is that we have had.
Already a dialogue with the other creditor parties.
First of all because they add to accept the agreement that we have made with the shipyards.
And secondly, because they are also an important part of <unk>.
Creating this.
Long term.
Long term financing structure of the company. So so our priority is to continue those.
That dialogue and also to reach an agreement that all parties.
Okay and can live with.
And do that through.
Collaboration with.
With the parties.
Okay.
On a follow up to that.
Is something so so Kevin given this illustrative cash flow potential, which is interesting and exciting for the company and shareholders.
It's very conceivable dayrates.
In excess of 100000, a day migrating towards a 150000, a day that the company can actually grow into their highly levered capital structure.
Which would seem improbable only a year ago.
Given that's the case shareholders would benefit immensely from that scenario, which is why they've been so supportive and which is fantastic for the company in order to effectuate. This refinancing I'm wondering if convertible bondholders, which are deeply out of the money.
Although not by maturity, but boy participation in the equity upside if that can if those terms can be amended such that they participate in the equity upside as well without severely diluting current shareholders.
Yes.
Totally agree that.
With with day rate levels going up into.
$100000 plus.
As we have emphasized.
Several times.
And those day rate environment.
Managing the debt levels that we have not historically been been to too high and also.
Currently with our.
Low capital cost on the debt as well.
Being just below 5% on average.
Capital and cash costs on the debt.
Interest being low and there is no amortization, which is especially important on our cash flow.
Pretty good capital structure as you said, Florida.
Or to stakeholders.
And then up the earning in markets. So we just have to then figure out together with the share with.
The bondholders and the other creditors or find a solution.
We can reach in order for.
You are seeing from our.
Previous refinancings, we want to make a deal. It's overall good for for creditors and also shareholders and focus on.
All of the parties.
Avoid massive dilution.
So that's definitely something we will have to bring into the negotiations with them.
So maybe one point to add to Richard.
Clearly because you were talking about having the bondholder share in the equity upside.
Think that if you look at the performance of the different instruments than probably the equity holders today, we would like to participate in their own equity upside first a little bit which has been lagging in every metric that you want to look at so I would say that there is likely if something needs to be done with the convertible bonds I would think that.
There is a tremendous support from the equity holders today to be dealing with that through cash and making sure that the equity upside remains at the.
Side of the balance of the equity holders right. So that's what I would expect but listen it is a bit premature to try to talk here about the solution. When we are in the midst of the discussions.
And clearly you understand very well, where the different values lie and we just want to make sure that what we end up is a workable solution for the company, we definitely see constructive and willingness on every site that we are dealing with and we hope that we get this wrapped up relatively quickly and.
As soon as we do we obviously will be out talking to you again in informing the market.
Okay.
Thank you very much for those answers.
The final question comes from Kim <unk> at Seb Kim Your line is open.
Yes, Hi, gentlemen, and this came from Seb.
Let's start with a question on your guidance going from 18% to three active rigs.
Associated costs of the dose Escalations and is that pure capex or is some of that included in your EBITDA guidance.
So what we are.
Previously guided on this.
And activation of a new build rigs would typically cost between $12 million to $14 million.
And that caused this.
Relevant and valid.
However.
Yeah.
We have been looking at various.
Solutions offering.
Offering our rigs to two customers.
Customers, where they participate in.
The upfront costs or covered a whole upfront cost.
Potential new contracts.
And that we offer the newbuild rigs that we have also on the basis that another party with.
We operate them and takes the whole.
Upgrade job prior to the rigs commencing the context, so that would obviously be a great help.
On financing and the activation of the Newbuild rigs that are.
In the yards.
Hmm mm.
The follow up.
If I start with kind of the top end of your EBITDA range.
The 104 for media and we adjust for non cash interest that you're having in the third payments you have agreed to make to you okay.
<unk>.
And.
<unk> kind of $12 million to $15 million in reactivation costs.
Steve will get to a kind of a negative free cash flow also for 'twenty two so again.
Do you agree that there is still negative free cash flow in 2000, and how comfortable are you between liquidity position.
Given this outlook, we're giving you your own guidance.
Yes, So let me let me take the first part of that I mean is it is absolutely clear.
We have dealt with the liquidity here over.
The last I would say six seven quarters. So that is not something that is disappearing one to the other day.
So that is something that we will continue to deal with and we activate at the speed that we can obviously also limited in certain aspects by the liquidity and the cash that is available to do so now it is very clear that in the refinancing that we are doing we are also creating some liquidity.
To making sure that we have the funds available to activate the rigs during 'twenty two as we need. So it is very clear that some of the activations are going to take some capital over and above what we can generate but put us in a position where we can generate significant revenue.
Going forward in.
In 'twenty, three and beyond so from a company perspective, it's the right time in the markets to do it and therefore, we have made the provisions for that in the discussions that we're having with the creditors to actually create the space that we can properly do that and get the best out of the asset fleet that we have.
So your logic is fully valid.
We are fully prepared to deal with that.
Okay. Thank you.
Youre welcome.
So with that being the last question, maybe let me in conclusion say a few things.
Around the rates and the guidance we have given the guidance has been there because we do think that there is that many significant changes in the market that we feel we needed to give you an indication of.
Where we see the market going and we are.
Preferring to be precise communicator, and therefore have given you this level of insight with the understanding that we.
Rather be precise than over promise and under deliver and therefore as the market will change we will update you further on our revenues and EBITDA, but based on our current outlook I would expect that these updates are going to be upward revisions.
So the rig rates across the board are increasing driven by utilization.
Large tenders that are likely to drain to market from the available capacity and a lack of already.
Short term availability the day rates over the past two years are not the ones. We will see going forward. It will go up and we expect that to be relatively fast.
Not yet contracted three to five delivered rigs.
Plus another five sitting in the shipyard is a tremendous competitive advantage.
Which allows us to meet customer demands very efficiently and faster than most of our competitors will be able to do.
We expect this competitive advantage to be a major differentiator in the performance bore drilling going forward.
Ladies and gentlemen, thank you very much.
Yeah.
This concludes today's conference call. Thank you for joining you may now disconnect your lines.
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