Q4 2024 Borr Drilling Ltd Earnings Call
Bruno Moran, our Chief commercial officer, and Magnus Fowler, our Chief Financial Officer.
Next slide please.
Speaker Change: First covering the required disclaimers I would like to remind all participants that some of the statements will be forward looking.
Speaker Change: These matters involve risks and uncertainties that could cause actual results to differ materially from those projected in these statements I, therefore, referring them to a latest public filings.
Speaker Change: This quarter's results were as expected operating revenue increased by 21 5 million over Q3.
Speaker Change: Driven primarily by higher day rates for the net and prospective one.
Speaker Change: The termination of the Arabia, two contract in Saudi and a $5 million net positive effect due to the accelerated amortization of the mobilization fee as a result, adjusted EBITDA for the quarter was $136 7 million.
Speaker Change: Our core operations performed strongly with a technical utilization rate of 98, 9% and an economic utilization rate of 97, 1%.
Speaker Change: Despite the various headwinds experienced during the year, we were still able to deliver to full year adjusted EBITDA within the original guidance range of $500 million to $550 million, which was set back in Q3 2023.
Speaker Change: In the second half of 'twenty four.
Speaker Change: <unk> demand and declining day rates signals potential headwinds for the jackup market heading into 2025.
Speaker Change: And then weaker market was observed with rig suspensions in Saudi in Mexico. However, this was partially offset by incremental demand in West Africa and Southeast Asia.
Speaker Change: We anticipate that the market will continue to face uncertainties. In 2025, However, recent increases in contracting and tendering levels provide some early signs of improving conditions towards the second half of the year as per S&P petrodelta.
Speaker Change: Yeah.
Speaker Change: Despite near term uncertainties, we remain confident in the strong fundamentals of the global Jackup rig market.
Speaker Change: In November 24, we successfully completed our Newbuild program with the delivery of our final rig var.
Speaker Change: Marking the end of our growth capital expenditures as we move into 2025.
Speaker Change: Additionally, with fewer special periodic survey scheduled compared to last year, we anticipate a positive impact on cash flow.
Speaker Change: As a result, our budgeted capital expenditures for 25 are set to be below $50 million 40 year.
Speaker Change: Currently we have approximately 6700 contracted rig days in 2025, representing 77% of our total available rig days in the year at an average day rate of 149000 compared.
Speaker Change: Compared to 136000 in 2024.
Speaker Change: The first quarter of 2025 will be negatively impacted by suspension of three rigs in Mexico. In addition to idle time on Arabia, one and Diwali ahead of the commencement of their respective contracts.
Speaker Change: We expect to receive approximately $44 million in mobilization payments upon their contract Commencements. In addition liquidity in the first quarter will be positively impacted by the previously announced Mexican payments arrangement of $125 million.
Speaker Change: The board has decided to declare a cash distribution of <unk> <unk> per share for the fourth quarter of 2024.
Speaker Change: In addition, the company has an existing share repurchase authorization, which can be used opportunistically.
Speaker Change: This decision reflects the board's focus on maintaining a strong balance sheet and taken a prudent approach to cash conservation and.
Speaker Change: Ensuring the company remains well positioned to navigate market uncertainties, while maintaining a solid financial foundation for future opportunities.
Speaker Change: I'll pass the call now to Magnus for the fourth quarter financial commentary.
Magnus: Thank you Patrick.
Magnus: Total operating revenues increased by $21 5 million, primarily due to a $22 7 million increase in day rate revenue compared to the third quarter.
Magnus: The increase in day rate revenue includes a $5 1 million net increase related to the Arabia too.
Magnus: Price of $8 5 million increase in deferred mobilization revenue offset by a $3 five 4 million decrease in day rate revenue.
Magnus: As a result of the termination of its contract with Aramco.
Magnus: Rig operating and maintenance expenses were in line with the previous quarter. However, it's worth mentioning that the total cost for the quarter includes a $2 3 million acceleration of amortization and more.
Magnus: And.
Magnus: Costs related to Arabia too.
Magnus: Depreciation increased by three points.
Magnus: $9 million and led to total operating expenses, increasing by $3 8 million compared to the third.
Magnus: Other movements below the operating income line, that's worth mentioning our total financial expenses increased by $5 7 million, primarily due to interest on the additional $175 million.
Magnus: The issue in November.
Magnus: As well as the $160 million on tap in August 2024.
Magnus: We're both very issued to finance the delivery of our two last neighborhoods.
Magnus: The income tax expense decreased by $5 9 million from Q3 and is mainly due to a one off release of evaluation allowance during Q4.
Magnus: Net income for the fourth quarter was $26 3 million, an increase of $16 6 million, resulting in earnings per share of <unk> 11.
Magnus: Adjusted EBITDA for the fourth quarter was $136 7 million, an increase of $21 2 million or 18%.
Magnus: Compared to the third quarter.
Magnus: Our free cash position at the end of Q4 was $61 6 million. In addition, we had $150 million undrawn under our Rcs facility, resulting in total available liquidity of $211 6 million.
Magnus: Cash decreased by $124 $1 million in comparison to the prior quarter due to the following.
Magnus: Net cash used in operating activities was 48.
Magnus: $8 million, which includes $93 4 million of cash interest paid and $15 5 million of income taxes paid.
Magnus: Net cash used in investing activities was $189 9 million.
Magnus: This includes the delivery installments.
Magnus: Last newbuild the var of $159 9 million.
Magnus: In addition, we spent $11 2 million on activation costs for Newbuild rigs and $18 7 million on other maintenance Capex, primarily specialty special periodic surveys and long term maintenance costs.
Magnus: Net cash from financing activities was $80 6 million and is comprised of $175 million from the issuance of additional senior secured notes to finance the var.
Magnus: We also paid down $78 million of our debt on the regular semi annual amortization of the bonds.
Magnus: Additionally, we used $19 9 million to repurchase the company's shares and $4 7 million or <unk>.
Magnus: With a cash distributions to shareholders.
Magnus: Following quarter end, we announced an agreement with our major Mexican customer to receive payments settlements for approximately $125 million related to our outstanding receivables in February.
Magnus: So far we are.
Magnus: Collected $105 million of this and the remaining $20 million has been released by Pemex and is expected to be received shortly.
Magnus: We are also due to receive $44 million in mobilization payments upon commencement of the contracts for Arabia, one <unk> in the first half of 2025.
Magnus: From a liquidity perspective going forward as Patrick pointed out we have concluded our growth Capex program with our final Newbuild delivered last year.
Magnus: Our 2025, we expect our regular maintenance capex to be below $50.
Bruno: With this I will pass the word over to Bruno.
Bruno: Thank you Mike.
I'll begin with our recent contracts and rig movements before covering global and regional market trends.
Bruno: In 2024, or do any secured $795 million in backlog at an average rate of $177000 per day, which we believe is market leading.
Bruno: These achievement is particularly notable given the year's challenges and underscore the quality of our assets and operations that enable us to achieve strong contracting performance.
Bruno: Since our last quarter, we secured new commitments for four of our rigs.
Bruno: The normal has secured a contract with VAALCO for 320 days commencing in July 25, and extending through April 26.
Bruno: We're pleased to see the re contracted by VAALCO. Following a successful campaign delivered to the customer earlier in 2022.
Bruno: The tour has secured a contract with an undisclosed customer in southeast Asia and is expected to return to the active fleet by May 25.
Bruno: While this is a short term commitment. We're currently in discussions with other customers in the region for further work that could see the re contracted for a significant portion of the year.
Bruno: The GERD has secured a binding letter of award from undisclosed customer in West Africa for our 100 day program starting in June 2025, following C&I contract.
Bruno: Even the strong jackup demand in West Africa, we remain optimistic about securing follow on work for these rigs into 2026.
Bruno: And lastly, the grower.
Bruno: It's less available option exercise by Qatar energy and is now firmly contracted until April 26.
Bruno: Regarding fleet movements, the body and Arabia, one have complete the mobilizations and are undergoing acceptance for long term contracts with may lead to Petrobras.
Bruno: Both rigs are expected to begin operations in March strengthening our revenue stream and enabling us to collect meaningful mobilization payments as highlighted by markets.
Bruno: On a global basis Jackup utilization levels have remained steady since last quarter.
Bruno: Modern rig rig market utilization stands at 93% and just under 90% if adjusted for the net around <unk> suspensions.
Bruno: While utilization levels will remain relatively flat in the last couple of months. It is positive to note that 12 of the rigs previously under contract suspensions. We had around call have now been re contracted elsewhere, which includes our Arabia one.
Bruno: Looking at regional dynamics in Southeast Asia demand is expected to rise slightly with increased activity in Vietnam, and Indonesia offsetting reductions in Malaysia due to the Petronas et cetera. These skewed.
Bruno: As a resolution to be skewed nears.
Bruno: <unk> could increase more substantially in 2026.
Bruno: While we anticipate that these market will remain competitive our fleet capabilities performance and well established local alliances position well for upcoming contracts, although intermediate idle periods are likely.
Bruno: In the Middle East, we're encouraged to see some of the anticipated multi rig multi year tenders finally coming to the market.
Bruno: J J O. The joint operated zone between Saudi and Kuwait has launched a four rig tender for work commencing throughout 2026.
Bruno: These tender combined with other requirements from the same customers as we understand could represent an incremental demand of up to six rigs for long term contracts.
Bruno: Similarly, we anticipate another multi rig multi year thunder to be launched by key youll see in the coming months.
These programs combined have a potential to absorb a significant portion of the regional supply overhang, resulting from their uncle suspensions.
Bruno: In West Africa strong demand persist with multiple short and long term prospects across the region from Angola to Ivory coast.
Bruno: We believe our fleet is well positioned to capture the incremental demand bolstering our backlog for 25 and 26.
Bruno: In Mexico overall activity levels have been impacted by Pemex temporary suspensions that started in Q4 24.
Bruno: Including our thesis spend they're raising January we estimate that approximately 12 rigs or 45% of Pemex contracted fleet is currently suspended.
Bruno: This reduction in activity has quickly affected the country's production, which has dropped below $1 7 million barrels per day in December down over 100.
Bruno: <unk> 20000 barrels per day from September.
Bruno: Positively.
Bruno: The government and <unk> continued to reaffirm commitments to stabilized data vendor payments and restore production to 185 million barrels per day.
Bruno: We remain optimistic that such commitments will result in a strong rebound during the second half of 'twenty, five and pave the way for long term extensions for our rigs in country.
Bruno: At this time, we anticipate that our theory suspending Mexico will gradually returned to work during the second quarter.
Bruno: In 2024, the headwinds, resulting from a ronco changing production target and broader market uncertainties resulted in a significant contraction in rig fixtures, particularly in the first half of the year.
Bruno: However, H two so a gradual recovery, especially for modern rigs.
Bruno: With increasing number of open tenders, we see early signs of strengthening contract activity in 2025, primarily for programs commencing the later part of the year and 2026.
Bruno: While near term volatility is expected to persist the long term fundamentals of the Jackup market remained strong.
Bruno: Entering 2025, we had strong contract coverage at leading rates provide us with a solid foundation.
Bruno: As opportunities to expand we now turn our focus to reducing idle periods of the year and strengthening of our backlog visibility into 2026.
Patrick: With that I would like to turn the call back over to Patrick.
Patrick: Thank you Bruno.
So in conclusion.
Patrick: The business. We have built is quite resilience, we have dealt with numerous headwinds in 2024 and still delivered the year within the original guidance given to the market.
Patrick: Successful execution in a quite volatile environment.
Patrick: In 2025, we have had a good contract coverage to get us through the year.
Not only from a coverage perspective.
Patrick: But also considering the quality of the revenue in the backlog.
We have some open capacity to deal with an opportunity to get the contract coverage further up which will be our focus going forward.
Patrick: The collections in Mexico have given renewed confidence in Pemex and the Mexican government to put the country's oil and gas industry on a dependable long term trajectory from a collections perspective.
Given the decline in the production volumes. It is clear that drilling activity will have to be restarted.
Patrick: Despite these short term headwinds the global Jackup market fundamentals remained strong with 30% of the global fleet over 35 years old and no new rig orders in the past decade.
Patrick: Retirements, I expect us to tightened supply, creating a favorable market for our premium rigs going forward.
Patrick: With that we can now move to the Q&A.
Patrick: Thank you Sir.
Speaker Change: Reminder, to ask a question. Please press star one and one on your telephone and wait for your name to be announced until we until your question. Please press star one and one again once again, please press star one and one on your telephone with PNM to be announced.
Speaker Change: Please kindly ask one question and possibly a follow up question at the time to give room for the other participants.
Speaker Change: If you do have any further questions you can please rejoin the queue and if you wish to ask a question via the webcast. Please type them in the question box and click submit.
Speaker Change: We are now going to proceed with our first question.
Speaker Change: Yes.
Speaker Change: Our question comes from the line of Eddie came from Barclays. Please ask your question. Your line is open.
Speaker Change: Hi, Good morning, just wanted to ask about.
Speaker Change: Leading edge day rates.
Speaker Change: Could you remind us where leading edge day rates for benign market jackups have been kind of over the past six or 12 months or so and in your prepared remarks, you highlighted some some market uncertainty this year.
Speaker Change: So in light of that do you expect.
Speaker Change: To see some day rate pressure kind of industry wide in the Jackup market this year before.
Speaker Change: Revamping, perhaps in 2026 just.
Speaker Change: Overall thoughts on kind of the trajectory from here Okay great.
Speaker Change: Very good thanks for the question.
Speaker Change: Probably not walk you through region by region, because I think our views on only the end market is part of our commercial strategy, but in line with what we discussed earlier, we've seen a few markets that suffered a bit more with the competitive pressure and I think it's fair to say that Asia has been one of those markets.
Speaker Change: Seen some of the competitor features fixtures.
Speaker Change: Coming close or just under $100000, a day, but leading edge rates staying kind of.
Speaker Change: $131 $21 30 range.
Speaker Change: Conversely, if you go into market that suffered less with competitive pressure as West Africa, we have seen number that still hover and often above the kind of 150 range. So that we do have a fair spread here.
Speaker Change: We see now going forward.
Speaker Change: Income increasing number of tenders and I think that alone would help the industry and who help the peer group and reducing a little bit of a competitive pressure in addition to that.
Speaker Change: Some of the players that have been more aggressively chasing work seem to have achieved full utilization of pre close to full utilization, which should take a little bit of the edge as well from these competitive pressure now.
Speaker Change: I think that.
Speaker Change: Dynamic will remain some markets that are a bit more benign will be subject to higher competition and that will keep the rates a bit.
Speaker Change: Breath other markets, where it takes a lot of a lot of.
Speaker Change: History, a lot of competency to kind of penetrate will be a bit more insulated.
Speaker Change: I don't see.
Speaker Change: For now a scenario where the rates fall off the bottom I think we have we are in a range that activity level <unk> should start to stabilize or potentially go up as the months go by.
Speaker Change: Understood understood that's helpful.
Speaker Change: And then just my follow up is not involved in Mexico, a lot of good color there.
Speaker Change: Firstly, you have three rigs with Pemex honored.
Speaker Change: Probably temporarily suspended and two that are contracted through here and I believe I heard that the three that are temporarily suspended.
Speaker Change: Do you expect those rigs to return to work in the second quarter.
Speaker Change: And I hear that correctly.
Speaker Change: I guess, what's your what's your confidence level around that.
Speaker Change: And if.
If that's the case I mean, it seems like Youre fairly confident that your other two jackups that are currently still contracted will continue to work until the end of their contracts later this year.
Speaker Change: So just.
Speaker Change: I guess, if you could confirm that.
Speaker Change: Platform for me that would be great.
Speaker Change: I think that your.
Speaker Change: The numbers that you have are correct. We do indeed expect these rigs to go back to work in the second quarter, but quite frankly, we don't know exactly when in the quarter that is going to be that is at the moment a working assumption and the main reason for that is is that we have seen that there is a lot of actions that <unk>.
Speaker Change: Taken place and Pemex, if you think about the last few months since the New administration is in play the amount of work that has been done and getting people pay and now a aggressive plan on our activity needs to be restarted we still having a very strong commitment on getting production up.
Speaker Change: I think that based on the production data as we see it.
Speaker Change: The strong declined it otherwise you would see in Mexico, I would assume that there is going to be a significant focus in getting rigs back to work, particularly the ones that already our contract. So that is our working assumption obviously the future. He will have to Dell, but those are kind of the.
Speaker Change: The guidelines that we havent reasoning for us to be.
Speaker Change: Fairly positive about the business environment there.
Speaker Change: Got it great. Thank you very much I'll turn it back thank you.
Speaker Change: We are now going to proceed with our next question.
Our question comes from the line of Doug Becker from capital one please ask your question.
Speaker Change: Thank you.
I was maybe hoping you could expand on the way to spin Saudi Arabia, just looking at some industry data. It did seem like one of the suspended rigs actually did return to work.
Speaker Change: With the Ram co a competitor a rig.
Speaker Change: The latest you're seeing in Saudi Arabia.
Doug: Alright, thanks, Thanks, Doug.
Doug: Yes, Indeed, there was some reports earlier about a rig returning to work I'm not sure. If that was a new story I think that was actually a rig swap done by one of our competitors.
Doug: The situation in Saudi remains steady state at the moment, where we see quite a bit of focus on their end is in relation to the offshore gas work.
Doug: <unk> has been quite vocal on the companies on the country's focus on on expanding on the gas side and that's where some of the conversations are taking place at the moment.
Doug: In addition to that Doug I think interesting to note is in the last couple of months now there has been an increased talk about aramco awarding large EPC contracts for projects like Zulu for soften year that war or regionally planned to be put on hold right as that progresses.
Doug: Increases our level of confidence that the pipeline start to four in Saudi Aramco now the other interesting discussion that we seen country. He's a revamped interest from from a ronco talking to service companies about lump sum turnkey or integrator projects offshore. This has been something that they looked in the past.
Doug: They see that as a good way to improve efficiency and the overall ability of the country to deliver wells those conversations seem to be resuming at the moment I think is going to take some time.
Doug: Combined with the EPC awards in the pipeline gives us some hope that.
Doug: As the year progresses, the pipeline from around the world should start to fuel at the moment I think situation is steady state.
Doug: No that's encouraging.
Doug: It looks like the store did get some incremental work for the second quarter, just any color you could provide around that.
Doug: Are there potential extensions related to that or is this more of a one off.
Doug: Yes no.
Doug: The rig came off contract the back end of last year, obviously, we've been working hard to see it going back to work.
Doug: Reality is that in Asia, a lot of the programs that we see at the moment not exclusively but a lot of the programs. We see are short term in nature. So the challenge that we have he's also put a rig back to work and streamed a sequence of programs that will maintain the rig working so that's obviously something that we're working with the team is working quite hard to deliver.
Doug: It is a short term program, we will see the rig working we have.
Doug: Except that that commitment on the back of feasibility of other programs. So we'll have to work through it.
Doug: Do believe as I mentioned in my early remarks that there is a good chance that we can be contracted for the remainder of the year or a large portion of the large portion of the year.
Doug: Got it thank you.
Doug: My pleasure.
Doug: Now going to proceed with our next question.
Speaker Change: The question has come from the line of Frederic <unk> from Clarksons <unk> Securities. Please ask your question.
Doug: Yes.
Speaker Change: Hey, Patrick and team Hope you are all well.
Doug: I wanted to circle, a bit back to Mexico.
Speaker Change: The discussions that I'm, having with.
Doug: And my clients.
Doug: The situation there, even though you've been able to.
Doug: <unk> collected a good chunk of the $125 million alright there.
Doug: I think.
Doug: Getting proper confidence.
Doug: For future payment is still be card in one of the kind of risks that is currently weighing.
Doug: Onto the stock so.
Doug: As a side note.
Doug: Being a bit lower on the dividend.
Doug: Final kind of itself.
Doug: Not necessarily what the investors want to think it was what.
Doug: Investors want but in this case just to make sure that youre prudent with our balance sheet.
Doug: But on the Mexico situation.
Speaker Change: Have they given any signals.
Speaker Change: How future payment schedules can look at or should we expect.
Speaker Change: From time to time, you have to renegotiate came under.
Speaker Change: Kind of receivable fields that have been done now I guess, some sort of regularity.
Speaker Change: Frequencies of these payments would be.
Speaker Change: Great in terms of it's a beta date. So anything you can share on that front would be super helpful. Thanks.
Speaker Change: Thank you and I mean, I think it is clear that if.
Speaker Change: If it were to be clock work, yes, it would be easier to run our basis Youre, absolutely right I think though that given where we have come from the business in Mexico. The way. It has grown and also delay that we have always been paid I think we have to give you a bit.
Speaker Change: Bit of a credit to the management team that is now in place and the government of what they have been able to pull off in what is essentially four months. So I think that tremendous efforts are being made to get suppliers fade. It was immediately seen as one of the key priorities, which in the past maybe wasn't.
Speaker Change: S prevalent but looking at the overall picture I would say, it's a market that has a decent rig rate. It is a market where we have ultimately always been paid we have a strong setup in a very good local partner to works through ultimately for Pemex.
Speaker Change: So would I like it to be all more clockwork like absolutely is that realistic I don't think so now there are a few things that are changing the market in Mexico, and I will definitely points towards the increased private investments that we are likely to see going offshore.
Speaker Change: Which therefore means that we are in essence are going to have a different counter party a counterparty that is having a different cash flow than let's call. It that makes had in the past so I'm quite encouraged by that and I think that the mechanism that is set up for that word private investor.
Speaker Change: <unk> is going to be the direct beneficiary of the commercialization of the oil that they produce and therefore in a position to deal let's call. It differently with their suppliers I think is a very positive sign is that all going to be in place in next month's node it will take a bit of time, but.
Speaker Change: I can't say that I see far more positive movements in the Mexican business, then I would see negative movements.
Speaker Change: That's a really comprehensive answer Patrick Thank you and just as a follow up on that I'm, sorry, if I missed it but.
Speaker Change: Because of a trophy non here Brendan did you say anything about.
Speaker Change: Youre thinking around extending the rig the five rigs that are currently with <unk>.
With Pemex.
Speaker Change: It would be like that.
Speaker Change: Could eventually look like and again ultimately I guess it depends on you guys, having enough confidence that youll.
Speaker Change: Get paid if you extend that.
Speaker Change: Securing those rigs for longer would be.
Speaker Change: A meaningful chunk of your 2026 and beyond coverage fixed already.
Speaker Change: Most definitely Brad I mean, Mexico is a key component to our basis is something that we are looking quite closely but.
Speaker Change: Picking up from where Patrick left we do see a tremendous amount of effort being put by the government to stabilize the situation in Mexico and that includes <unk>.
Speaker Change: Reinforced commitment to maintain production level and as you can clearly see from from the current amount from the current levels with the current data is dropping so we do anticipate that these.
Speaker Change: Reduced activity level is going to have to be reversed.
Speaker Change: And very soon.
Speaker Change: And not only not only that they will have to do some catch up work to get back to where they were a few months back. So that is kind of where my comment came from an earlier notes that we think that that's going to strengthen activity levels as we kind of move through the second half of the year and.
Speaker Change: Thank you very likely create a venue for us to.
Speaker Change: Extending rigs further in the future.
Speaker Change: Super Thank you very much.
Speaker Change: Have a good day.
Speaker Change: Thank you.
Speaker Change: Now going to proceed with our next question.
Speaker Change: Our question comes from the line of tools Olson from Fearnley Securities. Please ask your question.
Speaker Change: Afternoon, guys.
Speaker Change: Corporate questions for me.
Speaker Change: Brendan or I think.
Speaker Change: Probably for you.
Speaker Change: What's the.
Speaker Change: Kind of like.
Speaker Change: With clients at the moment, I mean, what's sort of that call. It depressing point, if you will.
Speaker Change: And in terms of.
Speaker Change: Did anything from <unk>.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: It takes time.
Kirk: Yes, Kirk is it fair to rules and we normally.
Speaker Change: Work with kind of the.
Speaker Change: A leading period of four to six months ahead of contracts right. So obviously, what we see now is obviously a lot of customers are quite a few customers organize themselves for further working 25 in 2026.
Speaker Change: We have a variety of constructive discussions with customers at the moment I think it's fair to say that the larger names like.
Speaker Change: <unk> are a bit more flexibility in their schedules and maybe sometimes a bit more leeway in delaying programs I think of that nature.
Speaker Change: We see a variety of IOC is in general quite committed to certain scheduled quite can meet the two.
Using the opportunity where there is capacity in the market to drew some of these companies.
Speaker Change: When coming to the market a year ago, or so had limitations on finding acts the rigs and they seem to be team on coming to the market now.
Speaker Change: What I think is quite interesting is that the.
Speaker Change: The customers, particularly the customers with programs that are not.
Speaker Change: Multiyear in nature.
Speaker Change: They obviously understand very clearly the importance of having a high performing contractor right. When you have a smaller campaign you cannot really afford delays or issues with the program quite a few of these customers seem to be very keen to engage with the often discussed and understand how we can benefit from the proven performance of our rigs and it is a very very bad.
Speaker Change: <unk> showing that same spot. So that's kind of where we are in terms of the discussions rules and we.
Speaker Change: We do see pipeline, increasing it's fair to say that is obviously focus on the second half of the year because as you said it takes volume for some of these programs to get going but we do see a increasing number of opportunities now building off of the pipeline.
Speaker Change: I Hope I address your question.
Speaker Change: Yes, yes.
Speaker Change: Thanks.
Yes, and as a follow up to that I mean, I guess, there's nothing really much meaning in terms of the P&C on the contracted some of our bonds.
Speaker Change: I mean, it's.
Speaker Change: I'm not about to really be economical.
Speaker Change: Bob.
Speaker Change: Pardon me.
Speaker Change: General liquidity level.
Speaker Change: Yes.
Speaker Change: 2024, with a year that we are observing.
Speaker Change: Our focus on increasing our backlog elevate the quality of backlog and I think we've achieved a lot as we as we go now into 2025.
Speaker Change: We don't necessarily ship the focus I think we have an extremely competent commercial group that does a great job maximizing the commercial value of these negotiations and discussions.
Speaker Change: Certainly customers, we use leverage that they have at the moment to try to claw back some of the Ts and CS in the contract that is part of the natural flow.
Speaker Change: As the cycle progresses, but.
Speaker Change: At the moment, our focus is really making sure that we don't leave idle time on rigs unnecessarily, we increased our backlog visibility to 2026 for sure.
Speaker Change: Thanks.
Speaker Change: Lastly, and sorry, if I missed this.
Speaker Change: 25 garden.
Speaker Change: Yes.
Speaker Change: He is a good point, Charles and obviously I would have been quite keen to give you more visibility on that but I think that deploying dish that's today.
Speaker Change: Visibility is somewhat limited during in parts the suspension in Mexico, the lingering impact of the Saudi suspensions and there is just too wide a range of outcomes currently with many moving pieces.
Speaker Change: The only thing I can tell you is that as soon as there is more clarity in the market as some of the suspension impacts are resolved and ambitious visibility then improve.
Speaker Change: We will update you at that time, but for right now the best thing. We can do is give you an idea of contract coverage.
Speaker Change: And then give you a I'd only EBITDA when it really when we're in a position to give you some credible data points.
Speaker Change: Otherwise, we'd be just making everybody more confusion.
Speaker Change: Fair enough. Thank you guys.
Thank you.
Speaker Change: We are now going to proceed with our next question.
Speaker Change: Our question comes from the line of Nikhil <unk> from Jpmorgan. Please ask your question.
Nikhil: Alright. Thank you for taking my question I have two if you don't mind for 2025 right now. Please stay at this report to see that there are three available rigs, including your the new new bid.
Nikhil: Can you please update us on the sort of current discussions you're having with clients about these rigs and especially.
Nikhil: The new Bill in terms of sort of region or are you looking to contract. This out too and the second question is more about how should we think about your financial policy going forward given that.
Nikhil: What is expected to generate significant free cash flow this year.
Nikhil: Would you be looking to prioritize some debt repayment.
Nikhil: In the near term.
Speaker Change: Very good Nick I'll take the first part of the question and I'll hand, it over to Magnus for.
Nikhil: Your second part.
Nikhil: Thinking about the fleet you are right. We have three weeks currently available one in Mexico recently finished a contract one in the middle East that has been suspended by <unk> subsequently terminated in December and the new builds.
Nikhil: At the moment, we do have these rigs operating in a variety of tenders around the globe.
Nikhil: As I said earlier generally speaking we're looking at a lead time for these for these contracts that are somewhere between $4 six months at the short end. So it's fair to indicate that the likelihood of these rigs returning to work.
Nikhil: Is definitely towards the.
Nikhil: The second half of the year right and.
Nikhil: Regional deployment, where they go to work I think we're considering the opportunities available at the moment, we do see we do have one rig in Americas, we do see a set of opportunities for the rig in the region I don't think were constrained to that.
Nikhil: West Africa continues to be a market showing some potential upsides in and at some point in time to support the inflow of rigs into similar thing goes to to the Arabia too that just finished contract with <unk>, it's warm and ready so that we could be deployed including for some opportunities that we now see in the middle East coming up in 2025.
Nikhil: In relation to the new build it's fair to say that I think we were quite optimistic.
Nikhil: During 2024 to have it working in the early part of 2025, obviously with US now having the Arabia too as an additional rig available we are in our toolbox here to deploy near term that has less of a focus that rig is in Singapore, who will continue to market our rig, but I think at the moment the immediate priority is to see if.
Nikhil: You can find homes for the run and they are <unk>.
Nikhil: Let me go through enough to Microsoft secondhand expression.
Nikhil: And thanks.
Nikhil: So.
Nikhil: I think for this quarter. The board has continued the dividend too.
Nikhil: <unk>.
Nikhil: But the focus is very much now given the <unk>.
Nikhil: Short term.
Nikhil: Uncertainties to build.
Nikhil: Our strengthening balance sheet conserve cash and then we will see.
Nikhil: During the year.
Nikhil: Later in the year, what would be most beneficial for the company whether that is too.
Nikhil: To buyback debt.
Nikhil: And debt levels.
Nikhil: Or whether it is too.
Nikhil: Apply.
Nikhil: Share buyback program or our path to dividend I think it's important to emphasize again that our bonds they do already to amortize.
Nikhil: $35 million per year. So we are already very much focused on on the deleveraging of the company as a function of that.
Nikhil: Of how the bumps are are structured so nothing right about now the board us.
Nikhil: So it is prudent.
Nikhil: To continue to.
Nikhil: To build the balance sheet and focus on preserving cash to see what's most beneficial going forward.
Nikhil: Thank you.
Nikhil: Thank you.
Nikhil: Okay.
Nikhil: So we.
Nikhil: We have come to the last question if I understood it correctly.
Speaker Change: Yes, that's right. This concludes our question and answer session. So I'll hand back to you for closing remarks.
Nikhil: No further closing remarks.
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