Q3 2025 Borr Drilling Ltd Earnings Call

Birth, covering the required disclaimers 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 actual results to differ materially from those projected in these statements.

Bruno Morand: No, thanks, Scott. As I mentioned earlier, a lot of the inflection now is basically resulting from the fact that the headwinds experienced earlier, namely Saudi and Pemex, are now starting to revert. If you look at activity levels or if you look at utilization levels at 93%, that number is fairly healthy. With the suspensions now rolling back, the 93% is a real number. It's not a number that requires adjustment. We are in a territory that is quite interesting. Obviously, it takes a little bit of time for some of these dynamics to take place. We expect that as particularly the tenders in the Middle East start to conclude, the push for rigs to come back will start to kind of come through. That rebalancing is what eventually helps us in achieving higher utilization and better day rates in general markets. Now.

Therefore refer you to our latest public filings.

For today's call I'll start with a review of Q3 and highlight key development since quarter end.

<unk> will then review our quarterly financial results.

I'll follow with a deeper look in the market and our commercial execution and we will conclude your questions.

Let's get started.

Our third quarter results were strong.

Spending the rebound delivery in the second quarter.

With 23 or 24 rigs active our commercial team continues to execute at the highest levels delivery strategically and finally contract despite a volatile and dynamic market.

Revenue increased by $9 4 million quarter over quarter, and adjusted EBITDA Rose, 2% to $135 6 million with a margin of 48, 9% confirming the quality of our earnings.

Bruno Morand: I'll say beyond the Middle East, we've seen that most markets have been operating at or very close to balance. That includes, for example, West Africa. We think that obviously the ongoing inflection will support faster recovery in markets like that. On the opposite end, as I mentioned in my remarks, markets such as Southeast Asia, for example, where the demand takes a bit longer to materialize, may take a quarter or two before we see the real impacts of that. I think the way to think about it is we're going to continue to navigate some volatility in the first half of the year, improving. The potential here for a much stronger second half of the year seems to be solidifying based on this development that we see. Now, we said before, in terms of commodity price.

Operational execution continues to be industry, leading with technical utilization of 97, nine and economic utilization of 97, 4% across the fleet.

Subsequent to quarter end in October we are pleased to announce three contract extensions in Mexico <unk>.

Speaker #2: Good day and thank you for standing by . Welcome to the Borr Drilling Limited Q3 2025 results presentation , webcast and conference call .

Mexico remains an important market for more drilling.

Notably collections restarted in September with approximately 19 million received in September and October.

Speaker #2: At this time , all participants are in a listen only mode . After the speaker's presentation , there will be a question and answer session .

These inflows together with our recent government actions to strengthen Pemex finances are the basis for our confidence in continued normalization of payments.

Speaker #2: To ask a question during the session , you will need to press star one and one on your telephone . You will then hear an automated message advising Johannes raised to withdraw your question .

Bruno Morand: Pricing where it is, I believe, is quite healthy for the jack-ups. Jack-ups are very economical barrels for the customers, they're fast barrels to the market, and we think it's actually quite interesting for us to have pricing at that level. I don't think that pricing movements here are needed to spark additional activity. It's really just the time that takes for the development in Saudi, the developments in Mexico, and some of the ongoing tenders to really come through.

Additionally in October newly imposed international sanctions affecting one of our Counterparties in Mexico required us to reshoot termination notices for the OLED and the heme contracts.

Speaker #2: Please press star one and one again . If you wish to ask a question via the webcast , please use the Q&A box available on the webcast link at any time during the conference .

Today, we announced new commitments expanding more drilling footprint into the Gulf of America in Angola.

Speaker #2: Please be advised that today's conference is being recorded . I will now like to hand the conference over to your speaker today , Mr. Bruno Moran , CEO , please go ahead .

These awards strengthen and diversify our customer base and portfolio underscoring our ability to navigate evolving markets.

And minimized our Yokohama proper fleet.

Speaker #3: Good morning , and thank you for participating in Borr Drilling third quarter earnings call on Bruno Moran . And we'll be here today in Bermuda .

We expect fourth quarter of 2025 results to reflect fewer operating days.

Scott Gruber: I appreciate that color. One of the macro themes we're seeing here is rising demand for natural gas around the globe to help power data centers and just generally rising power demand. How do you think that impacts the jack-up market in the years ahead? I particularly think about Southeast Asia. Is there a pull from the gas side that's going to help that market?

Speaker #3: Is Magnus Vaaler , our chief financial officer . First , covering the required disclaimers , I would like to remind all participants that some of the statements will be forward looking .

Due to several rigs transitioning between contracts and the recent impact of sanctioning dos contract termination in Mexico.

Despite these we anticipate full year 2025, adjusted EBITDA in the range of $455 million to $417 million.

Speaker #3: These matters involve risks and uncertainties that could cause actual results to differ materially from those projected in these statements . I therefore refer you to our latest public filings for today's call .

In recent quarters, we've experienced desktop in jackup demand across several international markets absorbing available capacity and providing graduate released to the headwinds from 2024.

Bruno Morand: No, indeed, Scott. We've been participating in several very interesting gas projects around the world. I think in the previous quarters, we named, for instance, the Eni project in Congo, which is a very interesting and large-sized gas development. In Asia, we've been participating in gas projects before. There are a few very interesting projects, particularly in the area of Sarawak, that have been put on hold for now until the situation in Malaysia gets resolved, the political situation in Malaysia gets resolved. Aramco has, over time, obviously expanded their presence in gas, and I think it's been largely onshore-focused. There have been discussions over the last few quarters about Aramco potentially returning to gas in the offshore space in a more meaningful way. Clearly, what you see is true. We do expect that there will be.

Speaker #3: I'll start with a review of Q3 and highlight key developments since quarter end . Magnus will then review our quarterly financial results . I'll follow with a deeper look in the market and our commercial execution , and we'll conclude with your questions .

While near term volatility may persist clear signs of demand inflection in Saudi Arabia, and Mexico, two of the world's largest jackup markets together with incremental activity in other areas provide us with confidence that the market is now past the trough.

Speaker #3: Let's get started . Our third quarter results were strong . Extending the rebound delivered in the second quarter with 23 or 24 rigs active .

We foresee a tightening market in the near to medium term that should support higher utilization and day rate levels.

Speaker #3: Our commercial team continues to execute at the highest levels , delivering strategically and timely contracts despite a volatile and dynamic market . Revenue increased by 9.4 million quarter over quarter and adjusted EBITDA rose 2% to 135.6 million , with a margin of 48.9% .

I'll walk you through that in more golar late in the call, but now I'll hand, the call to Magnus to discuss third quarter financial results.

Thank you Bruno.

I'll now go into some details of the financials for the third quarter.

As Bruno mentioned, we continue the good trend seen in the previous quarter and the results quarter on quarter improved.

Speaker #3: Confirming the quality of our earnings operational execution continues to be industry leading , with technical utilization of 97.9 and economic utilization of 97.4% across the fleet .

Bruno Morand: High interest from our customers to start developing some of these gas projects that are available around the globe.

Total operating revenues increased by $9 4 million due to $2 5 million an increase in base rental revenue and $6 4 million increase in bandwidth charter revenue.

Scott Gruber: That's interesting. We'll definitely be watching. Thank you.

Bruno Morand: Thank you, Scott.

Operator: Thank you. We will now take the next question from the line of Eddie Kim from Barclays. Please go ahead.

Speaker #3: Subsequent to quarter end in October , we're pleased to announce three contract extensions in Mexico . Mexico remains an important market for Borr Drilling , notably , collections restarted in September with approximately 19 million received in September and October .

The $2 5 million increase in <unk> revenue was primarily due to an increase the number of operating days and day rates for Iran and for recognition of day rate revenue for the old and versus previously being recognized as bareboat charter revenue.

Eddie Kim: Hi, good morning. Congratulations on the two separate two-year extensions on the Gillard and Gershomy in Mexico. Just curious, on pricing for those two rigs, I don't know if you can share if the day rates on those two extensions are similar to what they're earning today or higher or at a discount. Just any kind of directional commentary there would be great.

And then increase in Reimbursable revenue Newberg. These.

Speaker #3: These inflows , together with a recent government actions to strengthen Pemex finances , are the basis for our confidence in continued normalization of payments .

These increases were offset by a decrease in the number of operating makes for a prospective work.

The $6 4 million an increase in variable charter revenue is primarily due to the rigs that <unk> and <unk> being fully operational in the quarter compared to being on suspension for parts of the prior quarter.

Speaker #3: Additionally , in October , newly imposed international sanctions affecting one of our counterparties in Mexico required us to issue termination notices for the old and the new contracts .

Bruno Morand: Very good. We haven't disclosed specific numbers for that. What we shared, they are a notch above from where the rigs are operating at the moment, which on itself is very interesting. Equally relevant, as I mentioned in the prepared remarks, is the fact that we were able to negotiate improved contract terms and payment terms for those rigs in particular. What we've seen over in Mexico over the last several quarters has been that collections is being a very relevant topic. We took marked efforts to ensure that we were adjusting these things in this contract, not only to improve the day rate, because that's an important part, but equally important to make sure that those day rates are received in the bank account and we don't have a growing working capital requirement in the country.

This increase was offset by a decrease in variable charter revenue for the olden under bareboat charter contract was terminated effective June 30, and begun the earning better unit revenue in August 2025.

Speaker #3: Today , we announced new commitments expanding Borr Drilling footprint into the Gulf of America and Angola . These awards strengthen and diversify our customer base and portfolio , underscoring our ability to navigate evolving markets and minimizing idle time across the fleet .

Total rig operating and maintenance expenses increased by $6 3 million, which was primarily as a result of the increase in Reimbursable expenses.

Speaker #3: We expect fourth quarter 2020 results to reflect fewer operating days due to several rigs transitioning between contracts and the recent impact of sanctions induced contract terminations in Mexico .

Listen total gives us an operating income of $98 million or $1 5 million an increase from the prior quarter.

Further below the operating income line total financial expenses net increased by $2 2 million, primarily due to foreign exchange loss.

Speaker #3: Despite this , we anticipate full year 2025 adjusted EBITDA in the range of 455 to 470 million . In recent quarters , we've experienced a step up in Jakob demand across several international markets , absorbing available capacity and providing gradual relief to the headwinds from 2024 .

Offset by some higher interest income and lower interest expenses.

Eddie Kim: Understood. Understood. Separately, it's great to hear about the expected activity inflection in Saudi Arabia. Just curious, I mean, two years ago, the Saudi Aramco jack-up rig count was as high as almost 90 jack-ups. Today, it's around 55. Just curious, where do you think we get to sometime in 2027? Probably not back up to that 90 level, but does 70, is that reasonable or even that too high? Just curious your estimate of where their jack-up rig count could get to by 2027.

Income tax expenses increased by $6 5 million, primarily due to a one off deferred tax benefits recognized during the prior quarter with no comparable in the current quarter.

Speaker #3: While near-term volatility may persist , clear signs of demand inflection in Saudi Arabia and Mexico , two of the world's largest Jakob markets , together with incremental activity in other areas , provide us with confidence that the market is now based at trough .

As a result of the before mentioned net income for the quarter was $27 8 million and adjusted EBITDA was $135 6 million, an increase of $2 4 million.

Speaker #3: We foresee a tightening market in the near to medium term that should support higher utilization and day rate levels . I'll walk you through that in more color later in the call , but now I'll hand the call to Magnus to discuss third quarter financial results .

Moving on to cash our free cash position at the end of the Q3 was $227 8 million.

In addition, we have 234 million undrawn under our revolving credit facility, resulting in total available liquidity of $461 8 million.

Speaker #3: Thank you . Bruno . I will now go into .

Speaker #4: Some details of the financials of the third quarter . As Bruno mentioned , we continue the good trend seen in the previous quarter and the results quarter on quarter improved total operating revenues increased by 9.4 million due to 2.5 million increase in day rate revenue .

Bruno Morand: Yeah, Eddie, this is a great question. Probably not a very easy one to be precise. From our depth, we think that a number in the high 60s and 70s is very likely. I think a number in the high 70s is possible. The reality is, in the big scheme of things, as I mentioned in the prepared remarks, even with these callbacks that just took place over the last couple of weeks, capacity in the region is actually already very tight. Whether that number is low 70s or high 70s, I think actually has very little bearing on how the sector is going to respond, because in any case, any leg up from where we are at the moment is very likely to cause an acceleration in utilization and, consequently, in economics in the space.

Cash increased by $135 4 million in comparison to the prior quarter explained by the following.

Net cash provided by operating activities of $72 1 million, which includes $6 million.

Cash interest payments on our convertible bonds and $13 2 million of income taxes paid.

Speaker #4: A $6.4 million increase in charter revenue. The $2.5 million increase in day rate revenue was primarily due to an increase in the number of operating days and day rates for the run, and the Thor recognition of day rate revenue for the Odin, which was previously recognized as bareboat charter revenue. There was also an increase in reimbursable revenue for the Gerd.

Operating cash flow for the quarter was further impacted by a buildup of working capital primarily driven by approximately $42 million increase in trade receivables in Mexico, and a $13 million increase in trade receivables relating to the rig to Bali.

However, subsequent to quarter end in October we received approximately $17 million related to the trade receivables in Mexico and $10 million related to the volume.

Speaker #4: These increases were offset by a decrease in the number of operating days for the prospective one . The 6.4 million increase in bareboat charter revenue is primarily due to the Rigs gallery , grid and being fully operational in the quarter , compared to being on suspension for part of the prior quarter .

We expect to receive furnace settlements for our Mexico received most both in November and December.

Bruno Morand: I think a number in the 70s is very reasonable, but I would probably fall shy of trying to predict Aramco behaviors. We all try in the past. It's definitely not an easy thing. They have a lot of things going on. That's the way to think it. I think anything they do on top of the callbacks that already took place is more than welcome in the sector, and is going to strengthen the space tremendously.

Net cash used in investing activities was $33 9 million and is comprised of objected position, primarily as a result of activation costs and contract commencement before Diwali.

Speaker #4: This increase was offset by the decrease in bareboat charter revenue for the Odin , as its bareboat charter contract was terminated effective June 30th and begun earning daily revenue in August 2025 .

Capital additions for drilling equipment and maintenance costs.

Lastly, net cash provided by financing activities was $97 2 million, primarily due to $96 9 million net proceeds from the Companys July 20% to 25% equity offering.

Speaker #4: Total rig operating and maintenance expenses increased by 6.3 million , which is primarily as a result of the increase in reimbursable expenses for the Gerd .

Eddie Kim: Great. Thanks for the color, Bruno. I'll turn it back.

Bruno Morand: Thank you, Eddie.

Operator: Thank you. We will now take the next question from the line of Frederick Stan from Clarkson Securities. Please go ahead.

Speaker #4: This in total gives us an operating income of 98 million , a 1.5 million increase from the prior quarter . Further below the operating income line .

With this I will pass the word back to <unk>.

Eddie Kim: Hey, Bruno and Magnus. Hope you are well. I have two questions for you today. The first one relates to Mexico and the payments there. Clearly, liquidity in general has been a recurring theme given your historical Mexico exposure, mostly Pemex. Now that you've received some money in October and small sums in September as well, how do you think about potentially? I think historically Pemex has paid suppliers monthly. Should we expect any similar payments as you got in October, and November, and December as well? Do you have any clarity on that, kind of taking our receivables down in that country?

Thank you Michael.

Year to date, we have secured 22, new commitments, adding 625 million into our backlog.

Speaker #4: Total financial expenses . Net increased by 2.2 million , primarily due to foreign exchange loss , offset by some higher interest income and lower interest expenses .

Since our last report we have continued to secure meaningful awards.

First in Mexico, we secured three contract extensions.

Speaker #4: Income tax expenses increased by 6.5 million , primarily due to a one off deferred tax benefit recognized during the prior quarter , with no comparable in the current quarter .

<unk> received two year extensions on improved commercials and payment terms.

These commitments not only strengthen our 2026 utilization, but they also provide visibility well into 2028.

Speaker #4: As a result of the before mentioned net income for the quarter was 27.8 million and adjusted EBITDA was 135.6 million , an increase of 2.4 million .

Under the revised structures operating costs will be reimbursed by the customer on a fixed 45 data and interim materially reducing our working capital needs.

Speaker #4: Moving on to cash . Our free cash position at the end of Q3 was 227.8 million . In addition , we had 234 million undrawn under our revolving credit facilities , resulting in total available liquidity of 461.8 million .

Bareboat charter payment terms will be capped at 180 days and for the Golar. This gap will progressively improve overtime.

Additionally, we received a short term extension for the New York and continuing active discussions with our customer in Mexico about a long term deployment for the rig.

Bruno Morand: Yeah. I'll take that question. Thank you, Frederick. Obviously, very positive to see that what we have predicted, the payments starting to flow in the second half of the year, actually has happened. We received $17 million in October. We have, from what we see in the plans, there are payments to come in both November and December as well. Following that, we would also expect things to return more to normal with monthly settlements. Also, that being said, and Bruno also mentioned the improved payment terms that we have in our two new contracts, which has actually a cap on the number of days we can have outstanding for operating costs that we pay under our own M of 45 days. We expect to get that paid within 45 days, and also a maximum of 180 days outstanding for the bareboat.

Speaker #4: Cash increased by 135.4 million in comparison to the prior quarter explained by the following . Net cash provided by operating activities was 72.1 million , which includes 6 million cash interest payments on our convertible bond and 13.2 million of income taxes paid .

In Mexico going forward. He will have a total of five rigs working from a previous comp of 7% with two rigs being reassigned to new work elsewhere as I'll cover shortly.

Regarding the five remaining rigs in country to our long term contracted with payment protection provisions to our contracted with IOC and only one is direct Phoenix pigment exposure.

Speaker #4: Operating cash flow for the quarter was further impacted by a build-up of working capital, primarily driven by approximately $42 million increase in trade receivables in Mexico and a $13 million increase in trade receivables relating to the Rig Valley.

This is a significant change in our fleet mix in country.

I'm also pleased to report on recent awards in America, and West Africa, along with several other contracting updates.

Speaker #4: However , subsequent to quarter end in October , we received approximately 17 million related to the trade receivables in Mexico and 10 million related to the volume we expect to receive .

In our Gulf of America. The Olden received a letter of award for six months month campaign with an undisclosed operator.

<unk> is expected to commence in January 2026.

Speaker #4: Further settlements for our Mexico receivables , both in November and December . Net cash used in investing activities was 33.9 million and is comprised of Jacob Addition , primarily as a result of activation costs and contract commencement for the Valley Capital .

Bruno Morand: That's also going to improve on our collections as we see it. Since we're not contracting directly with Pemex for these two rigs, but between the intermediaries that we have obtained, those payment terms from them.

This will mark our entry into the west and again highlights our team's ability to timely secure work for the rig following sanction induce contract termination.

In West Africa. The grid has received a letter of award for a six month commitment plus unpriced options with an undisclosed operator in Angola.

Speaker #4: Additions for drilling equipment and maintenance costs . Lastly , net cash provided by financing activities was 97.2 million , primarily due to 96.9 million net proceeds for the company's July 2025 equity offering .

Eddie Kim: Yeah, that's very helpful. For my second question, switching gears a bit, there has been some industry consolidation in the space this year with Aidus likely acquiring Shelf Drilling if everything is checked. Clearly, in almost any type of consolidation, there is room for fleet improvements, scrapping, and whatnot. You guys have a fully premium fleet already, and I'm sure there are some other assets out there that could be an interesting thing for you guys. Have you thought any more actively on how Borr's role could potentially be in any M&A or asset transaction scenario, since you kind of both in the third quarter and in relation to the equity raise in July seemed a bit more open to that particular theme compared to what you have been earlier?

The campaign is expected to commence in the first quarter.

Leaning on our strong relationships, we have collaborated with our partner in Mexico to Reassign wells previously almost came to the grid to our other rigs in country.

Speaker #4: With this , I will pass the word back to Bruno .

These will enable us to conclude operations with agreed in Mexico in November and the REIT will began its mobilization to West Africa in December.

Speaker #3: Thank you . Magnus . Year to date , we have secured 22 new commitments , adding 625 million to our backlog since our last report .

Also related to the grid, we have agreed with new age to reassign. The contract. We previously allocated to the not to deteriorate and expect to commence a one well campaign with new agent combo January prior to commencing the work in Angola.

Speaker #3: We've continued to secure meaningful awards , first in Mexico . We secured three contract extensions . The Galeria Ghassemi received two year extensions on improved commercials and payment terms .

Additionally, in West Africa, we are in discussions with Eni regarding to recruit well sequence, where theyre not in Congo.

Speaker #3: These commitments not only strengthen our 2026 utilization , but they also provide visibility well into 2028 under the revised structures . Operating costs will be reimbursed by the customer on a fixed 45 day payment term , materially reducing our working capital needs .

While there are various scenarios and consideration we now expect that not to stay busy with Eni in Q4 and potentially into early part of 2026.

I'm also pleased to share that we have agreed with shell in Nigeria to accelerate the napkin thing were originally scheduled to commence in November 2026, now to April 2026.

Speaker #3: Bareboat charter payment terms will be capped at 180 days and for the gallery , this camp will progressively improve over time . Additionally , we received a short term extension for the new order and continuing active discussions with our customer in Mexico about a long term deployment for the rig in Mexico .

This significantly reduces potential idle time for the rig and provides <unk> the ability to accelerate their world any reschedule.

Bruno Morand: Thanks, Frederick. Yeah. I hope my answer is probably not too much of a repetition from what I've tried to put across in earlier calls. Consolidation is definitely important for the space. It has been welcome in general. You're right, whether resulting from that consolidation or just the state of the market, we have seen, together with it, some additional retirement, some additional scrapping, some additional repurposing, which is obviously another very important dynamic for the sector. Those things are indeed interesting. We continue to look, you're right, as I highlighted in your remarks, we do believe we have a very strong operational platform that can deliver better value for jack-ups than perhaps quite a few of our peers. That's really what puts us in a position to meaningfully look into how we participate in consolidation if opportunities were to come.

It is clear to me that bore drilling is the preferred partner for shallow water drilling operations.

Speaker #3: Going forward , we will have a total of five rigs working from a previous count of seven , with two rigs being reassigned to new work elsewhere .

In recent months, we have been trusted with commitments from our customer to deliver critical wells globally. For example, shell with their highly anticipated <unk> project offshore Nigeria.

Speaker #3: As I'll cover shortly . Regarding the five remaining rigs in country two , our long term contracted with payment protection provisions , two are contracted with IOCs and only one has direct payment exposure .

<unk> for the first fully electrified offshore drilling company in the Netherlands, and CME in Mexico for their backup Loon project just to name a few.

It is particularly notable that despite the virus market headwinds presented in 2024 and already this year. Our 2025 feet coverage has reached 85% and an average day rate of 145000.

Speaker #3: This is a significant change in our fleet mix in country . I'm also pleased to report on recent awards in Americas and West Africa , along with several other contracting updates in the Gulf of America .

This is in line with our earlier targets of achieving 80% to 85% coverage in the year.

Speaker #3: The Odin received a letter of award for a six month campaign with an undisclosed operator . The campaign is expected to commence in January 2026 .

Our full year 2026 coverage, including price options now stands at 62%.

Bruno Morand: As you said before, and you mentioned that in your question, there are some metrics that are very important for us to consider. One of those metrics is really the quality of the fleet. We are very proud to have the youngest and the most premium fleet in the water. Obviously, it's important for us to make sure that anything that we look into does not come at the expense of diluting the quality of the fleet that we have. Similarly, as we said before, I think a very strong driver for the company at the moment is to make sure that we continuously deliver our balance sheet over time. When we look at any M&A transactions, it has to be something that makes sense from a deleveraging perspective. When you put these things together, we continue to see what is out there.

Speaker #3: This will mark our entry into the US and again highlights our team's ability to secure timely , secure work for the rig following sanction induced contract termination in West Africa .

15 point improvement since our last report.

Taking a closer look into 2026, we had 79% coverage in the first half a solid position to build from as we enter into the year.

Speaker #3: The grid has received a letter of award for a six month commitment , plus unpriced options with an undisclosed operator in Angola . The campaign is expected to commence in the first quarter .

Based on our current pipeline of opportunities and ongoing negotiations, we expect that utilization levels for the first half of 2026 will continue to increase in the coming months.

Speaker #3: Leaning on our strong relationships . We have collaborated with our partner in Mexico to reassign wells previously allocated to the grid to our other rigs in country .

At the same time recent developments in Mexico, and Saudi give us increased confidence in a tightening jackup market and a constructive outlook for the second half of the year.

Speaker #3: This will enable us to conclude operations with the grid in Mexico in November , and the rig will begin its mobilization to West Africa in December .

This should position us well to gradually pull up the covers for 2026, while maintaining a disciplined commercial strategy.

Bruno Morand: I do think that we have a great platform to grow. We don't have to, and we're going to continue to look at that opportunistically. I do think that the sector can do more consolidation, and if we can be part of it, if it is rational, if it fits our strategy, we'll definitely open to see what's out there.

Speaker #3: Also related to the grid , we have agreed with New Age to reassign the contract we previously allocated to the Nat to the grid .

On a commodity from Brent crude has remained volatile but range bound in the mid sixties.

Speaker #3: And expect to commence a one . Well campaign with new age in Congo in January . Prior to commencing the work in Angola .

Current price levels have still allow for meaningful contracting activity this quarter as lower breakeven shallow water projects offer a relatively rapid b two barrels cycle for our customers.

Speaker #3: Additionally , in West Africa , we are in discussions with EMI regarding their current well sequence for the Nat in Congo . While there are various scenarios and consideration , we now expect the not to stay busy with Eni in Q4 and potentially into early part of 2026 .

Scott Gruber: All right. Thank you so much for the commentary. Have a good day, both of you. That's all from me.

Despite several macro uncertainties global utilization has remained resilient in fact increased quarter over quarter with modern rig market utilization at approximately 93%.

Bruno Morand: Thanks, Frederick.

Operator: Thank you. We will now take the next question from the line of Doug Becker from Capital One. Please go ahead.

In Saudi Arabia, we are encouraged by the market reports confirming that <unk> has issued notices calling back several rigs previously suspended in line with our early expectations.

Speaker #3: I'm also pleased to share that we have agreed with shell in Nigeria to accelerate the Nat campaign or scheduled to commence in November 2026 .

Doug Becker: Thank you. Bruno, you've emphasized the expanding Borr footprint. Curious how you're thinking about balancing portfolio diversification versus having scale in particular markets to manage costs. Maybe putting it differently, do you view growing the fleet in the US Gulf, Angola, Saudi Arabia as strategic priorities?

Speaker #3: Now to April 2026 . The significantly reduces potential idle time for the rig and provides shell the ability to accelerate their well delivery schedule .

As of today, our account is at 7% to eight rigs have been pulled back by a ronco effectively taking the majority of the revenue available modern rigs still available for suspensions.

Speaker #3: It is clear to me that Borr Drilling is the preferred partner for shallow water drilling operations . In recent months , we have been entrusted with commitments from our customers to deliver critical wells globally .

The remaining idle rigs are either rumored to be committed elsewhere or have moved to cold stack after suspension of last year.

Bruno Morand: Thanks, Doug. I think you're right. There's a very interesting balance between not stretching yourself too wide. The way I see at the moment our operation, if you look in the markets where we are present, we are in very large scale in these markets. Generally, our expansion has been in adjacent markets. Obviously, Angola is a new place for us. We have a very strong operation in West Africa and a very strong knowledge of operation in West Africa that will help us to build that up. The US is definitely a new frontier. On the Mexico side, we're present. We understand the operational challenge. We understand how to be successful in that environment. Certainly, there will be some learnings from the US, which is new to our portfolio.

The increase of activity levels in Saudi will significantly type of supply and demand balance in the region.

Speaker #3: For example , shell , with their highly anticipated high project offshore Nigeria needs for the first fully electrified offshore drilling campaign in the Netherlands and CMMi in Mexico for their Barka Bloom project .

Equally positive as we highlighted in our last call. We continue to see visible incremental demand in the middle East, particularly Kuwait and the neutral zone with multi rig multi year tenders progressing towards awards.

Speaker #3: Just to name a few . It is particularly notable that despite the various market headwinds presented in 2024 and early this year , our 2025 fleet coverage has reached 85% at an average day rate of 145,000 .

Now coupled with the call backs from a Saudi Aramco there is a real scenario for rigs from outside of the middle east to be required to mobilize into the region to meet the forecasted increased demand in late 'twenty six and into 2027.

Speaker #3: This is in line with our earlier targets of achieving 80 to 85% coverage in the year . Our full year 2026 coverage , including price options , now stands at 62% .

In Southeast Asia demand has remained resilient despite various market obstacles.

Bruno Morand: Certainly, we feel that we are in a good position to manage that. Frankly, I wouldn't say at this time that the US is expected to be a large expanding market for us. Getting one rig there, I think, is a good achievement for us. It's a new place that we're going. I do see some of the policies in the US potentially supporting more activity. For now, we see a pipeline that is enough to keep the Old End busy for quite a while, and that's what we're targeting. If more opportunities come in the back of changing policies, changing incentives for operators in the US to go forward with their projects, we'll be ready to look at that. For now, I think it is probably a one rig play.

As mentioned on past calls weakness in the region has been driven by excess supply targeting opportunities. Following our uncle suspensions. We expect these dynamics to improve in 2026.

Speaker #3: A 15 point improvement since our last report . Taking a closer look into 2026 , we have 79% coverage in the first half .

In West Africa incremental demand has continued to materialize as expected and as evidenced by our mobilization of an additional unit to the region.

Speaker #3: A solid position to build from as we enter into the year based on our current pipeline of opportunities and ongoing negotiations , we expect that utilization levels for the first half of 2026 will continue to increase in the coming months .

Contract activity has continued to accelerate in the past 12 months and we see opportunities developing in areas that historically held a much higher jackup count, particularly in Nigeria and Angola.

Speaker #3: At the same time , recent developments in Mexico and Saudi give us increased confidence in a tightened jackup market and a constructive outlook for the second half of the year .

Mexico is one of the world's most consequential shallow water markets and remains strategically important for boards really.

Speaker #3: This should position us well to gradually fuel up the coverage for 2026 . While maintaining a disciplined commercial strategy on a commodity front .

Doug Becker: Makes sense. Just given the increased confidence that the jack-up market has passed the trough, any changes to the capital priorities? I know you mentioned deleveraging over time is still a priority. Just given a better market outlook, is there any shifting in how capital might be allocated?

Over the past year industry wide payment timing challenges and temporary contract suspension that pemex have affect activity cadence.

Speaker #3: Brent crude has remained volatile , but rangebound in the mid 60s . Current price levels have still allowed for meaningful contracting activities this quarter as lower break even shallow water projects offer a relatively rapid beat to barrel cycle for our customers .

We responded constructively.

We evolved our Mexico contract portfolio.

Fully diversifying beyond concentrated theme expositions into Ilc's independence, while continuing to partner with Pemex with returns support sustainable operations.

Bruno Morand: No, not at this time, Doug. I think we maintain the view that deleveraging is a priority for us, and it will be for a while. We want to make sure that by the amortizations that we have in our bonds, by the potential cash sweeps that we have in the bonds, we're positioning ourselves to be in a very favorable position to refinance our debt in 2028. That is on the back of, obviously, deleveraging consistently over time. Other priorities, I think, we'll leave it for another day. I think it's a bit too early for us to consider. The momentum is positive. That doesn't drive a changing strategy for now.

Speaker #3: Despite several macro uncertainties , global utilization has remained resilient . In fact , increased quarter over quarter with modern rig market utilization at approximately 93% in Saudi Arabia .

Looking into 2026, we see a market where turbine to begin to ease as the year progresses.

White space for the global modern Jackup fleet is heavily weighted towards Asia, and the middle East and near term a phenomenon. We see reconciled filed the main increases in those regions over the next few quarters.

Speaker #3: We're encouraged by the market reports confirming that Aramco has issued notices calling back several rigs previously suspended in line with our earlier expectations .

Speaker #3: As of today , our account is that 7 to 8 rigs have been called back by Aramco , effectively taking the majority of the readily available modern rigs .

In closing I am pleased to see how bore drilling continues to successfully navigate the dynamic market experienced over the last couple of quarters.

Speaker #3: Still available from suspensions . The remaining idle rigs are either rumored to be committed elsewhere or have moved in cold stack after the suspensions last year .

We secured important contracts, where our premium rigs strengthen our fleet coverage in 2025 and 2026.

Doug Becker: Got it. Thank you.

Operator: Thank you. We will now take the next question from the line of Ben Sommers from BTIG. Please go ahead.

We have continued to partner with our customers to optimize our fleet availability are offer them unique operational schedule flexibility.

Speaker #3: The increase of activity levels in Saudi will significantly tighten the supply and demand balance in the region . Equally positive as we highlighted in our last call , we continue to see visible incremental demand in the Middle East , particularly Kuwait and the neutral zone , with multi rig multi-year tenders progressing towards awards .

Eddie Kim: Hey, good morning. Thank you for taking my question. I know you touched on it a little bit in the press release, but kind of curious how you're looking at the new build market. I know you guys mentioned that there are some supply chain challenges that you think will kind of push out these new build rigs entering the market. Just kind of curious any color there on what you're seeing.

Based on that we now anticipate 2025 full year adjusted EBITDA to be 450 to 470 million aligned with our early expectations and adjusted for the impacts of the recent sanctioning dues terminations.

Speaker #3: Now , coupled with the callbacks from Saudi Aramco . There is a real scenario for rigs from outside of the Middle East to be required to mobilize into the region to meet the forecasted increased demand in late 26 and into 2027 .

Demand for modern Jackup rigs remain resilient the jackup market has bottomed and we are seeing clear inflection in rig demand across key regions, including Saudi in Mexico.

Bruno Morand: Yeah. No, nothing's changed, Ben. I think quite a few quarters ago, we shared a view that we believe that the order book that is namely there, there may be one rig, two rigs maximum that would come to the market. That was several quarters ago. None of these rigs had come out. Obviously, the longer they stay in the shipyard, the more complicated it is. A lot of these rigs were in very early stages of conclusion when they were stopped or abandoned. It's not easy. We haven't seen any one of them coming out. I honestly do not expect that to change as things improve.

And lastly, I want to emphasize the strength of <unk> operating platform.

Speaker #3: In Southeast Asia , demand has remained resilient despite various market obstacles . As mentioned on past calls , weakness in the region has been driven by excess supply targeting opportunities .

It is built on operational excellence anchored by strong focus on safety culture, and streamlined operating model that keeps us efficient and predictable.

Speaker #3: Following Aramco suspensions . We expect this dynamic to improve in 2026 . In West Africa . Incremental demand has continued to materialize as expected and as evidenced by our mobilization of an additional unit to the region contract activity has continued to accelerate in the past 12 months , and we see opportunities developing in areas that historically held a much higher , Jakob count , particularly Nigeria and Angola .

It's relentlessly customer centric informed by intimate knowledge of the shallow water market and strengthened by deep rooted relationships.

It is powered by our premium Jackup fleet and our global footprint.

Eddie Kim: Awesome. Thank you. I know you touched a little bit on the US Gulf entry, but just curious kind of on Angola now bringing a rig there, just kind of any outlook or color on that market.

This platform is our defining competitive advantage and position us uniquely to benefit from ongoing market inflections.

With that I'll now turn the call over to Q&A.

Bruno Morand: Yeah, sure. I mean, it is a new area for us. We have been looking at Angola before, waiting for the right moment, the right opportunity to be in country. As I said earlier, we have a very well-established infrastructure in West Africa. Angola was a bit of a natural growth opportunity for us. Historically, as I mentioned in the remarks, it's a market that had a quite substantial activity level for jack-ups that has been subdued for quite a few years. It seems that the potential is very large. That's not limited to Angola. We see quite a few markets in West Africa that haven't had enough activity for quite a few years now coming back. Being able to penetrate Angola now, have that as an opportunity for our portfolio, I think, strengthens our flexibility going forward.

Thank you.

As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced the.

Speaker #3: Mexico is one of the world's most consequential shallow water markets and remains strategically important for Borr Drilling. Over the past year, industry-wide payment timing challenges and temporary contract suspensions at Pemex have affected activity.

Sir your question please.

One on one again.

We currently ask.

Participants to limit themselves to one question and one follow up per person.

Speaker #3: Cadence . We responded constructively . We evolved our Mexico contract portfolio thoughtfully , diversifying beyond concentrated pmax positions into an IOCs and independents .

We will now take the first question.

From the line of Scott Gruber from Citigroup. Please go ahead.

Speaker #3: While continuing to partner with Pemex with terms support and sustainable operations, looking to 2026, we see a market where turbulence begins to ease as the year progresses. The whitespace for the global modern jackup fleet is heavily weighted towards Asia and the Middle East in the near term, a phenomenon we see reconciled via demand increases in those regions over the next few quarters.

This morning, Brent on the team.

Good morning, Scott.

Let's go here, obviously of the new contracts in Mexico for you and give you here Saudis, calling from Deutsche Bank.

Eddie Kim: Great. Thank you guys for taking my questions.

Bruno Morand: Thank you, Brad.

Operator: Thank you. We will now take the next question from the line of Greg Broady from Bank of America. Please go ahead.

So it seems like the market is.

Proving here.

So just curious how you view the next 12 months to 20 flows months in the global Jackup market.

Greg Broady: Hey, guys. Thanks for the time here. You talked about better collection terms on your new contracts and obviously collected $19 million in October from Pemex. How should we think about what the opportunity to recapture working, sort of, the receivables is over the next year?

It is.

Speaker #3: In closing , I'm pleased to see how Borr Drilling continues to successfully navigate the dynamic market experience over the last couple of quarters with secured important contracts for our premium rigs , strengthen our fleet coverage in 2025 and into 2026 .

So, let's I'm going to continue or are we going to see a genuine inflection.

And demand in the next year, so even if crude is range bound or do we need some improvement in crude.

That disruption.

No. Thanks Paul.

Speaker #3: We have continued to partner with our customers to optimize our fleet availability while offering them unique operational schedule flexibility based on that , we now anticipate 2025 full year adjusted EBITDA to be 450 to 470 million aligned with our early expectations and adjusted for the impacts of recent sanctioned induced terminations .

As I mentioned earlier and a lot of inflection now is basically resulting from the fact that the headwinds experienced earlier, namely <unk> and <unk> are now starting to revert. If you look at activity levels. If you look at utilization levels at 93% number you cited healthy.

Bruno Morand: Sorry, Greg, your question was on how to capture the receivables from Pemex?

Greg Broady: Pemex. That's the main one, yeah.

Bruno Morand: Yeah. No, I think what we've seen now is that Pemex has, and then the government in Mexico has put in place several schemes this year, want to refinance their financial liabilities and also their vendor, our supplier liabilities with a $12 billion setup. That's something we've seen. They've gone through now in the second half, started to repay. We received $17 million so far in October. We see signs of having more payments come in November and December, and expect a return to normality when it comes to payment in Mexico. I think it's looking like they are taking the right steps in Pemex and in the government in Mexico to become more current on their payables, definitely. Greg, just to highlight what we've kind of mentioned earlier, obviously, we have current receivables that we are.

And with the suspension is now rolling back the 93% is a real number is not a number that requires adjustments. So we are in a territory that is quite interesting.

Speaker #3: Demand for modern Jakob rigs remain resilient . The Jackup market has bottomed , and we're seeing clear inflection in rig demand across key regions , including Saudi and Mexico .

Obviously, it takes a little bit of time for some of the dynamics to take place.

Speaker #3: And lastly , I want to emphasize the strength of Borr Drilling operating platform . It is built on operational excellence , anchored by strong focus on safety , culture and streamlined operating model that keeps us efficient and predictable .

We expected <unk>, particularly the tenders in the middle East start to conclude.

The push for rigs to come back, we'll start to kind of come through and that rebalancing is what essentially helps us in achieving higher utilization and better day rates in general markets now.

Speaker #3: It's relentlessly customer centric , informed by intimate knowledge of the shallow water market and strengthened by deep rooted relationships . It is powered by our premium Jackup fleet and our global footprint .

I will say beyond the middle East we've seen that most markets have been operating at or very close to balance. It that includes for example, West Africa, and we think that obviously the October inflection will support faster recovery markets like that on the opposite end as I mentioned in my.

Speaker #3: This platform is our defining , competitive advantage and position us uniquely to benefit from ongoing market inflections . With that , I'll now turn the call over to Q&A .

My remarks markets, such as Southeast Asia for example.

Speaker #2: Thank you . As a reminder to ask a question , please press star one one on your telephone and wait for your name to be announced .

Where the demand takes a bit longer to materialize may take may take a quarter or two before we see the real impactful debt, but I think the way to think about it <unk> going to continue to navigate some volatility in the first half of the year improving the potential here for a much stronger second half of the year seems to be sort of a defined based.

Bruno Morand: We are continuing to work hard to collect them. With the new contract terms that we have and the new allocation of the portfolio in Mexico, effectively, you will continue to have Pemex payment exposure. Of the remainder of the fleet in country, it will now either be working with IOCs or include fixed payment terms that diminish tremendously our exposure to the Pemex payment friction. That does not resolve the current outstanding receivables, and we continue to work very hard, as Magnus says, to lean on the existing facilities in place, the mechanisms that government put in place to accelerate that. Going forward, we expect that very soon the new terms will slow down considerably the accumulation of receivables in Mexico and keep us far more current.

Speaker #2: To withdraw your question , please press Star one on one again . We kindly ask for participants to limit themselves to one question and one follow up per person .

On this.

Speaker #2: We will now take the first question from the line of Scott Grover from Citigroup . Please go ahead .

Development that we see now we said before in terms of commodity price.

Pricing, where it is I believe is quite healthy for the Jackups.

Speaker #5: Yes. Good morning, Bruno and team.

<unk>.

Speaker #3: Good morning .

Speaker #6: Scott .

Jackups are very economical barrels for the customers.

Speaker #5: It's good to hear . Obviously , the new contracts in Mexico for you and good to hear Saudi's calling some rigs back . It seems like the market is improving here , but just curious how you view the next 12 to 24 months in the global Jackup market .

They are fast barrels to the market and we think it is actually quite interesting for us to have pricing at that level. So I don't think that pricing movements here I needed to.

Spark additional activity is really just the timing it takes for the development in Saudi the developments in Mexico, and some of the ongoing vendors to really come through.

Greg Broady: Got it. With the sanctions, obviously, you moved one of the rigs, so that leaves the Hild. What are your expectations for how this plays out, in particular with what I think is the sale to Gone Borr of those assets? What's your expectation for that? How are you thinking about what you do with the Hild from here as a result?

Speaker #5: You know , is , you know , is this momentum going to continue ? Are we going to see a genuine inflexion in demand in the next year or so ?

Well I appreciate that color and then one of the macro themes that we're seeing here is.

Speaker #5: Even if crude is rangebound ? Or do we need some improvement in crude to really drive that inflection ?

Rising demand for natural gas around the globe.

To help power data centers.

Speaker #3: No thanks . Colin . As I mentioned earlier , a lot of inflection . Now is is . Basically resulting from the fact that the headwinds experienced earlier , namely Saudi and Pemex , are now starting to revert .

Rising power demand.

You think that impacts the jackup market in the years ahead of them.

Particularly think about southeast Asia, there sort of a pull from the gas side.

Bruno Morand: Yeah. It's probably early to say, Greg. What we know is we've worked very diligently. As soon as we became aware of the sanctions, we did what we were required to do to make sure that we stick to our governance and comply with international requirements. We are currently winding down operations on those rigs. We're expecting both of them to finish around mid-November, the ongoing activities as allowed by the sanctions. We continue to monitor the situation. It could change if there's a sale, potentially. We don't want to speculate. For now, we're doing what we have to do. It's a customer that, over time, I think we deliver great service for them. They seem to be extremely happy with what we've done over time.

That's going to help that market.

Speaker #3: If you look at activity levels or if you look at utilization levels at 93% , that number is fairly healthy . And with a suspensions now rolling back , the 93% is a real number .

No indeed score and we do participate in several very interesting gas projects around the world and win.

In our previous quarters, we named for instance, the Eni project in Cornwall, which is a very interesting and large sized gas development in Asia, we've been participating in gas projects before there are a few very interesting projects, particularly in the area of <unk> work that had been.

Speaker #3: It's not a number that requires adjustment . So we are in a territory that is quite interesting . Obviously it takes a little bit of time for some of these dynamics to take place .

Speaker #3: We expect that as particularly the tenders in the Middle East start to conclude , the push for rigs to come back will start to kind of come through .

Put on hold for now until the situation in Malaysia gets result of political situation, Malaysia gets resolved.

Ah Ronco, hence overtime will be expanded their presence in gas and I think it's been largely onshore focused but there has been discussions over the last few quarters about our alco potentially returning to gas in the offshore space in a more meaningful way. So clearly what you see is true we do.

Speaker #3: And that rebalancing is what eventually helps us in achieving higher utilization and better day rates in general markets . Now , I'd say beyond the Middle East , we've seen that most markets have been operating at or very close to balance .

Bruno Morand: Provided no sanctions affect our ability to continue working in that field or delivering that program, we definitely would be more than happy to continue to do that. I do not want to speculate. For now, we're sticking to the rules as they apply, and then we'll see if things change as we go along.

Speaker #3: And that includes , for example , West Africa . And we think that obviously the the ongoing inflection will support faster recovery in markets like that .

Do expect that there will be.

Heightened interest from our customers to start developing some of these gas projects there are available around the globe.

Greg Broady: Have you seen this uncertainty with sanctions impact the rig market at all? You're probably a little closer to this than me, but how many others have been affected by the suspensions?

Speaker #3: On the opposite end , as I mentioned in my , my , my remarks , markets such as Southeast Asia , for example , where the demand takes a bit longer to materialize , may take may take a quarter or two before we see the real impacts of that .

It's interesting we'll definitely be watching thank you.

Thank you Scott.

Thank you.

We'll now take the next question from the line of Eddie Kim from Barclays. Please go ahead.

Bruno Morand: Well, I won't comment much about others. I mean, the only thing I think has been in the news recently was a similar impact of a Vantage on the deep water market. In the shallow water market, I haven't seen any other announcements. As far as we are concerned, the impact of that has been limited to Mexico. We'll continue to monitor. The whole topic of sanction is a very dynamic topic at the moment. For now, that's been the only impact to our business, which we disclose, which is a loss of revenue. For the old one, we're very happy to see that the rig has been recontracted now.

Speaker #3: But I think the way to think about it is we're going to continue to navigate some volatility in the first half of the year. Improving the potential here for a much stronger second half of the year seems to be solidifying based on these developments that we see.

Hi, good morning.

Congratulations on the two separate two year extensions on that Golar in Mexico.

Just curious.

On pricing for those two rigs I don't know if you can share it.

Speaker #3: Now , we said before , in terms of commodity price pricing , where it is , I believe is quite healthy for for the Jakobs , it is Jakobs are very economical barrels for the customers .

The day rates on those two expansions are similar to what they're earning today or are higher or at a discount just to any kind of directional commentary.

Okay great.

Very good and we haven't disclosed specific numbers for that but we'll be sure. They are a notch above from where the rigs are operating at the moment, which that would itself is very interesting, but equally relevant as I mentioned in the prepared remarks. The fact that we were able to negotiate improved contract terms and payment terms for those rigs in particular what.

Speaker #3: They're fast barrels to the market . And we think it's actually quite interesting for us to have pricing at that level . So I don't think that pricing movements here are needed to spark additional activity is really just the time that takes for the development in Saudi , the developments in Mexico and some of the ongoing tenders to really come through .

Bruno Morand: For the Hild, we'll continue to see what are the opportunities for the rig, whether it involves returning to the same project once the field is sold, or if the field is sold, or alternative deployments for the rig within and outwith the region.

Greg Broady: Great. One last one. Just what's your expectation for cost trends on the operating side here relative to this quarter going forward? How should we think about that?

We have seen over in Mexico over the last several quarters have been debt collections he's been a very.

Speaker #5: I appreciate that color . And then , you know , one of the macro themes we're seeing here is rising demand for natural gas around the globe to help data centers and just generally rising power demand .

Relevant topic. So we took mark efforts to ensure that we were adjusting these things these contract not only to improve the day rate because that's an important part but equally important to make sure that those day rates RBC for the bank account and we don't have.

Bruno Morand: Sorry, Greg. I'm not sure if I got your question.

Greg Broady: Cost trends on the operating side. What’s your expectations for the directions of your cost up? Or is there opportunities to cut costs? Just wondering how you’re thinking about that going forward.

Speaker #5: How do you think that impacts the Jackup market in the years ahead ? I'm particularly thinking about Southeast Asia . Is there a pull from the gas side that that's going to help that market ?

Our growing working capital requirement in country.

Understood understood.

Separately.

Bruno Morand: Yeah. No, as we said before, we've been seeing operating costs very steady over time. There are differences in operating costs from region to region, from country to country. All in all, we have not seen a significant change in operating costs over the last few quarters. Neither do we have any reasons to believe that that's going to be changing going forward. The team continues to be working focusedly on finding savings in our operations, streamlining operations. That clearly has been more than enough to offset any inflations experienced in the sector. So far, it has been flat. I have no reasons to think that it will change going forward.

Great to hear about.

Speaker #3: No , indeed . Scott , and we've been participating in several very interesting gas projects around the world . And I think in the previous quarters we named , for instance , the Eni project in Congo , which is a very interesting and large size gas development in Asia .

The expected activity inflection in Saudi Arabia.

Just curious.

Two years ago, the Saudi Aramco Jackup rig count was as high as almost 90 jackups.

Speaker #3: We've been participating in gas projects before . There are a few very interesting projects , particularly in the area of Sarawak that have been put on hold for now until the situation in Malaysia gets resolved .

It's around 55.

Just curious.

Where do you think we get to that sometime in 2027, and it probably not back up to that 90 day level, but.

Speaker #3: The political situation in Malaysia gets resolved . Aramco has over time , obviously expanded their presence in gas , and I think it's been largely onshore focused .

Doug.

70.

Is that reasonable or is even that too high just curious your estimate of where.

Speaker #3: But there have been discussions over the last few quarters about Aramco potentially returning to gas in the offshore space in a more meaningful way.

The jackup rig count could get to by 2027.

Greg Broady: I appreciate all the time, guys. Thanks for all the call.

Yeah.

Speaker #3: So clearly , what you see is , is true . We do expect that there will be a high interest from our customers to start developing some of these gas projects that are available around the globe .

This is a great question, probably not a very easy one to be precise.

Bruno Morand: Thanks, Greg.

Operator: Thank you. We will now take the next question from the line of Joshua Jain from Daniel Energy Partners. Please go ahead.

For mining from hours from our debt, we think that a number.

In this high <unk> is very likely I think our number in the high <unk> as possible.

Speaker #3: .

Speaker #5: That's interesting . We'll definitely be watching . Thank you .

Eddie Kim: Morning. Thanks for taking my questions. I really only have one, which is on rig attrition. Maybe do you have a number in mind with respect to how many incremental rigs could leave the market next year or any insights there? Maybe to put the question differently, could you speak to broadly the capital investment that may be required for a number of operating rigs that are out there today that are older to sort of keep pace with a lot of the newer spec rigs, and how that frames market dynamics? Thanks.

The reality is that the big scheme of things as I mentioned in prepared remarks, even with these callback that just took place over the last couple of weeks capacity in the region is actually already very tight right. So whether that number is low seventy's, whether that number is high seventy's I think actually.

Speaker #3: Thank you .

Speaker #6: Scott .

Speaker #2: Thank you . We will now take the next question from the line of Eddie Kim from Barclays . Please go ahead .

Speaker #7: Hi . Good morning . Congratulations on the the two separate to your extensions on the Gawler and in Mexico . Just curious on pricing for those new rigs .

Has very little bearing on how the sector is going to respond because in any case any leg up from where we are at the moment is very likely to cause a acceleration in utilization and consequently in economics in the space I think a number and it's Anthony is very reasonable, but I would probably fall shy of trying to predict our umpqua behaviors.

Speaker #7: I don't know if you can share if the rates on those two extensions are similar to what they're earning today or higher , or at a discount , just any kind of directional commentary there would be great .

Bruno Morand: Thanks, Josh. We see that the standard rig market, or the older vintage rig market, has been shrinking over time, and they've been limited to a few markets. The rig count on that side, the active rig count on that side, is about 100 rigs at the moment in the water, and the average age is above 40 years old. There's obviously a lot of potential for attrition. Some of this attrition should happen as a result of lack of contracting opportunities for these rigs. Some of the attrition will happen as a result of just the high CapEx required to maintain these rigs active going forward. Rigs are mechanical equipment, and as such, they require capital to stay in good working class. By the time they are 40 years old and beyond the retirement age, that only gets better, only gets worse exponentially.

Speaker #6: Very good .

<unk> is definitely not an easy thing to have a lot of things going on so that's the way to think of anything they do on top of the call backs. It already took place is more than welcome in this sector is going to strengthen the space tremendously.

Speaker #3: And we haven't disclosed specific numbers for that . But what we shared , they are a notch above from where the rigs are operating at the moment , which that on itself is very interesting , but equally relevant .

Speaker #3: As I mentioned in the prepared remarks , is the fact that we were able to negotiate improved contract terms and payment terms for those rigs in particular , what we've seen over in Mexico over the last several quarters has been that collections is being very relevant topic .

Great. Thanks for the color I'll turn it back.

Eddie.

Thank you.

We will now take the next question from the line of Frederic <unk> from Clarksons <unk> Securities. Please go ahead.

Speaker #3: So we took marked efforts to ensure that we were adjusting these things in this contract , not only to improve the day rate , because that's an important part , but equally important to make sure that those day rates are received in the bank account .

And then on minus hope you're well.

I have two questions for you today.

Bruno Morand: I don't know how many rigs I’ll say can get out of the market. Clearly, there's a potential for a lot of the rigs to go out of the market. We're seeing that trend accelerating. We're seeing rigs now converted to or sold for conversion to more pool, including quite a few of the rigs that came out of Saudi. We'll continue to look. Obviously, for us, we expect owners to act diligently in that and discipline on that. For us, it's a bit of a muted point. Our rigs are all very new. It's the youngest fleet in the industry. Let's see what happens.

The first one relates to Mexico.

Speaker #3: And we don't have a growing working capital requirement in country .

Payments there.

Kenny.

The Queen's Athene General Hospital.

Speaker #7: Understood , understood . Separately , it's it's great to hear about the expected activity inflection in Saudi Arabia . Just curious . I mean , two years ago , the Saudi Aramco jackup rig count was as high as almost 90 jack ups .

The recurring theme given your historical.

Our Mexico exposure, mostly pemex.

Now that you've received some money in October.

Small sum in September as well.

How do you think about.

Sure.

Potentially.

Speaker #7: Today it's around 55 . Just curious , where do you think we get to ? Sometime in 2027 ? Probably not . Back up to that 90 level .

Pemex has paid <unk> monthly.

Eddie Kim: Thanks. I'll turn it back.

Monthly.

Should we expect any similar payments that you've got in October and November and December as well do you have any clarity.

Bruno Morand: Thanks, Josh.

Operator: Thank you. That's all the time we have for questions today. I would now like to turn the conference back to Bruno Morand for closing remarks.

Speaker #7: But does 70 . Is that reasonable or is even that too high ? Just just curious . Your your estimate of where there Jack could get to by 2027 .

On that.

Kind of taking on receivables down.

Bruno Morand: Very good. Thanks for participating in today's call, and I look forward to speaking to you guys soon.

Yes.

Taking my question. Thank you for that.

It's very positive to see that.

Predicted.

Speaker #3: Yeah . And Eddie , this is a great question . Probably not a very easy one to be precise . I from my from our from our desk , we think that a number in this high 60s and 70 is , is very likely .

Starting to flow in the second half of the air access.

Happens.

C $17 million in October.

We have.

What we see in the plants.

Speaker #3: I think a number in the high 70s is possible . The reality is that the big scheme of things , as I mentioned , the prepared remarks , even with these coal banks that just took place over the last couple of weeks , capacity in the region is actually already very tight .

There are payments.

To come in both November and December as well.

And following that we would also expect soon.

To return to.

Normal weather it was amongst the settlements.

So that takes that and Bruno Britain also mentioned improved payment terms that we have in our juniors.

Speaker #3: Right ? So whether that number is low 70s , whether that number is high 70s , I think actually has very little bearing on how the sector is going to respond , because in any case , any leg up from where we are at the moment is very likely to cause an acceleration in in utilization and consequently in economics in the space .

<unk>, which has actually.

From a number of days, we can our outstandings for operating cost that we pay on our O&M a 45 basis are expected.

45 days and also a maximum of 180 days outstanding for the bareboat.

Speaker #3: I think a number in the 70s is very reasonable , but I would probably fall shy of trying to predict Aramco behaviors . We know we all trying to pass is definitely not an easy thing .

So that's also going to improve on our collections do we see.

Since we are not contracting directly with Pemex for these two rigs but between the media areas.

Speaker #3: They have a lot of things going on . So that's the way to think it . I think anything they do on top of the callbacks that already took place is more than welcome in a sector , is going to strengthen the the space tremendously .

Okay.

The payment terms from from that.

Okay, that's very helpful.

Speaker #7: Great . Thanks for the color , Bruno . I'll turn it back .

And for my second question switching gears a bit.

Speaker #3: Thank you Eddie .

There's been some industry consolidation.

Speaker #2: Thank you . We will now take the next question from the line of Frederick Stern from Clarkson Securities . Please go ahead .

And the.

And then space this year.

<unk>.

Like to acquiring shell.

Speaker #8: Everyone on Magnus . Hope you are well . I have two questions for you today . And the first one relates to Mexico and the payments there .

Shelf.

All right.

Everything is tech.

And clearly there is an almost any type of consolidation there are room for.

Speaker #8: You know , clearly liquidity in general has been recurring theme given your your historical or Mexico exposure , mostly Pemex . Now that you've received some money in October and small sum in September as well , how do you think about , you potentially I think historically Pemex has paid suppliers monthly should be expected any similar payments as you got in October and November and December as well .

Fleet improvements scrapping and whatnot.

But.

You guys you have a premium fully premium.

I'm sure there are some other.

Assets out there that could be an interesting thing for you guys.

Have you.

Salt anymore.

Maybe on how <unk> could potentially be in any M&A or asset.

Selection scenario since you're.

Kind of bump in the third quarter in relation to the equity.

Speaker #8: Do you have any clarity on that kind of taking our receivables down in that country ?

Rates in July seemed a bit more open.

That particular theme compared to.

To what.

Speaker #4: Yeah , I've take that question . Thank you . Frederick , obviously very positive to see that what we have predicted payments starting to flow in the second half of the year actually has has happened .

<unk> been earlier.

That's correct.

See I hope my answer is probably not too much of a reputation from.

What I've tried to put across in earlier calls.

Consolidation is definitely important for the space has been welcomed in general.

Speaker #4: And we received 17 million in October . We have from what we see in the plants , there are payments to come in in both November and December as well .

And you're right.

The result of that consolidation or just the state of the market we have seen.

Together with it some additional requirements from additional scrapping some additional repurposing, which is obviously another very important dynamic for the sector. So those things are indeed interesting.

Speaker #4: And following that , we will also expect things to to return more to , to normal with , with monthly settlements also . That being said , and Bruno Bruno also mentioned improved payment terms that we have in our two new new contracts , which has actually a cap on number of days .

We continue to look you're right as I highlighted in the remarks, we do believe we have a very strong operational platform that can deliver better value for for Jackups in.

Speaker #4: We can have outstanding for for operating costs that we pay on our own of 45 days . So we expect to get that paid within 45 days .

Yes.

Quite a few of our peers and that's really what puts us in a position to meaningfully looking to how we participate in consolidation if opportunities were to come but as you said before and you mentioned that in your question. There are some metrics that are very important for us to consider and one of those metrics. These re to the quality of the fleet we are.

Speaker #4: And also a maximum of 180 days outstanding for the bareboat . So so that's that's also going to improve on on our collections as we see it , since we're not contracting directly with Pemex for these two rigs , but between the intermediaries we have obtained payment terms from , from them .

Proud to have the youngest in the <unk>.

Premium fleet in the water and Elbit is important for us to make sure that anything that we're looking to does not come at the expense of diluting the quality of the fleet that we have.

Speaker #8: Okay . That's that's very helpful . And for my second question , switching gears a bit , there's been some industry consolidation in the in the space .

Similarly, as we said before.

A very strong driver for the company the more we need to make sure that we continuously.

Delever, our balance sheet overtime. So when we look at any M&A transactions. It has to be something that makes sense from a deleveraging perspective. So when you put these things together, we continue to see what is out there I do think that we have a great platform to grow we don't have to and we're going to continue to look at that Opportunistically I do think that the sector can do it.

Speaker #8: This year with Adas likely acquiring , you know , shelf with all everything is checked and clearly there's in almost any type of consolidation .

Speaker #8: There are room for fleet improvements , scrapping and whatnot . But you know , you guys you have a premium fully premium fleet already .

Our consolidation and if it can be part of it if it is rationale as it fits our strategy, we're definitely open to see what's out there.

Speaker #8: And I'm sure there are some other , you know , assets out there that that could be an interesting fit for you guys .

Alright.

So much for the commentary.

Have a good day both of you.

Speaker #8: Have you thought any more , you know , actively on on how Boarstall could potentially be in any M&A or asset transaction scenario since you're kind of both in the third quarter and in relation to the equity race in July , seemed a bit more open to that particular theme compared to to what you have been earlier .

Thanks, Greg.

Thank you we will now take the next question from the line of Doug Becker from capital One. Please go ahead.

Thank you Greg.

You've.

Emphasized expanding <unk> footprint curious, how you're thinking about balancing portfolio diversification versus having scale in particular markets to manage costs and maybe putting it differently do you view growing the fleet in the U S Gulf Angola, Saudi Arabia as strategic priorities.

Speaker #3: Thanks , Frederick . Yeah , and I hope my answer is probably not too much of a repetition from what I've tried to put across in earlier calls .

No. Thanks, Doug I think you're right. There is a very interesting balance between not stretching ourselves too wide, but.

Speaker #3: Consolidated consolidation is definitely important for the space it has been welcomed in general , and you're right , whether result of consolidation or just the state of the market , we have seen together with it some additional retirements , some additional scrapping , some additional repurposing , which is obviously another very important dynamic for the sector .

The way I see at the moment our operation if you look in the markets, where we are present, we are in very large scale in these markets and generally our expansion has been in adjacent market. So obviously angola, the new place for us, but we have a very strong operation in West Africa, and a very strong knowledge of operation in West Africa that.

Speaker #3: So those things are indeed interesting . We continue to look , you're right . As I highlighted in the remarks , we do believe we have a very strong operational platform that can deliver better value for for Jakobs than perhaps quite a few of our peers .

Help us with you got all the U S is definitely a new frontier, but on the Mexico side. We're present, we understand the operational challenges, we understand how to be successful in that environment, certainly there'll be some learnings from the U S, which is which is new to our portfolio, but certainly we feel that we are in a good position to manage that frac.

Speaker #3: And that's really what puts us in a position to meaningfully look into how we participate in consolidation . If opportunities were to come .

Speaker #3: But as you said before , and you mentioned that in your question , there are some metrics that are very important for us to consider .

I don't I wouldn't I wouldn't say at this time that the U S is expected to be a large expanding market for us getting one rig there I think is a good achievement for US is a new place that were going I do see some of the policies in the U S. But they should support more activity for now.

Speaker #3: And one of those metrics is really the quality of the fleet . We are very proud to have the youngest and the most premium fleet in the water , and obviously it's important for us to make sure that anything that we look into does not come at the expense of diluting the quality of the fleet that we have .

<unk> that is enough to keep the old and busy for.

Speaker #3: Similarly , as we said before , I think a very strong driver for the company at the moment is to make sure that we continuously deliver our balance sheet over time .

Quite a while and Thats what were targeting if more opportunities come in tobacco changing policies change incentives for operators in the U S too.

To go forward their projects will be ready to look at that for now I think it is probably a water replay.

Speaker #3: So when we look at any M&A transactions , it has to be something that makes sense from a bridging perspective . So when you put these things together , we continue to see what is out there .

Yeah.

That makes sense and then just given the increased confidence that the jackup market is past the trough any changes to the capital priorities.

Speaker #3: I do think that we have a great platform to grow . We don't have to and we're going to continue to look at that opportunistically .

You mentioned deleveraging over time still a priority but.

Speaker #3: I do think that the sector can do it more consolidation and if it can be part of it , if it is rational , if it fits our strategy , we'll definitely open to see what's out there .

Just given a better market outlook is there any shifting and how capital might be allocated.

No not at this time, Doug I think we maintain the view that deleveraging is a priority for off and it will be for a while so.

Speaker #8: All . right . Thank you so much for the commentary . Have a good day . Both of you . That's all for me .

Speaker #9: Thanks , Frederick .

Speaker #2: Thank you . We will now take the next question from the line of Doug Becker from Capital One . Please go ahead .

We want to make sure that.

By the amortization that we have in our bonds by the potential cash leaps that we have in our bonds were positioning ourselves to be very very favorable position to refinance our debt in 2028 that is on the back of.

Speaker #5: Thank you . Bruno , you've emphasized the expanding bore footprint . Curious how you thinking about balancing portfolio . diversification versus having scale in particular markets to manage costs and maybe putting it differently .

Obviously deleveraging consistently overtime.

All the priorities I think we'll leave it for another day I think is a bit too early for us to consider the momentum is positive that doesn't that doesn't drive a change in strategy for now.

Speaker #5: Do you view growing the fleet in the US Gulf , Angola , Saudi Arabia , as . strategic priorities ?

Got it thank you.

Speaker #3: No thanks . Doug , and see , I think you're right . There's a there's a very interesting balance between not stretching yourself too wide .

Thank you.

We'll now take the next question.

From the line of Ben <unk> from <unk>. Please go ahead.

Speaker #3: But the way I see at the moment , our operation , if you look in the markets where we are present , we are in very large scale in these markets and generally our expansion has been in adjacent markets .

Hey, good morning, and thank you for taking my question. So I know you touched on it a little bit in the press release, but kind of curious how you are looking at the Newbuild market. I know you guys mentioned that there are some supply chain challenges that you think will kind of push out these new build rigs entering the market. So just kind of curious any color there on what you're saying.

Speaker #3: So obviously Angola is a new place for us , but we have a very strong operation in West Africa and a very strong knowledge of operation in West Africa that will help us to build that up .

No nothing's changed there.

Speaker #3: The US is definitely a new frontier , but on the Mexico side , we're present . We understand the operational challenges . We understand how to be successful in that environment .

Quite a few quarters ago, we shared a view that we believe the order book that east, namely there there may be one rig two rigs maximum that would come to the market that was several quarters ago. None of these rigs that come out and obviously the longer they stay in the shipyard and more complicated at east a lot of these reading very it was very early stages of <unk>.

Speaker #3: Certainly there will be some learnings from the US , which is which is new to our portfolio , but certainly we feel that we are in a good position to manage that .

Speaker #3: Frankly , I don't I wouldn't , I wouldn't say at this time that the US is expected to be a large expanding market for us , getting one rig there , I think is a is a good achievement for us .

Illusion, when they were stopped or abandoned.

Is not easy we havent seen any one of them coming out I honestly do not expect that to change as things.

Speaker #3: It's a new place that we're going . I do see some of the policies in the US potentially supporting more activity for now , we see a pipeline that is enough to keep the old and busy for quite a while , and that's what we're targeting .

Things improve.

Awesome. Thank you and then I know you touched a little bit on the U S. Gulf I'm, sorry, but just curious kind of on Angola, now, bringing a rig there just kind of any outlook or color on that market.

Speaker #3: If more opportunities come in the back of changing policies , changing centers for operators in the US to to go forward with their projects , we'll be ready to look at that .

Yes sure.

<unk> new area for us.

We have been looking at Angola, before and waiting for the right move in the right opportunity to be in country.

Speaker #3: For now . I think it is probably a warm replay .

As I said earlier, we have a very well established infrastructure in West Africa. So Angola was a bit of a natural growth opportunity for us.

Speaker #5: Makes sense . And then just given the increased confidence that the Jackup market has passed , the trough , any changes to the capital priorities ?

Historically as I mentioned in the remarks is a market that had a quite substantial activity level for jackups has been subdued for quite a few years. It seems that the potential is very large it and that's not limited to Angola, we see quite a few markets in West Africa that Havent had enough activity for quite a few years now coming back and being able to penetrate and rollout.

Speaker #5: I know you mentioned deleveraging over time . Still a priority , but just given a better market outlook . Is there any shifting in how capital might be allocated ?

Speaker #3: No , not at this time . I think we we maintain the view that deleveraging is a priority for us , and it will be for a while .

That is an opportunity for our portfolio I think strengthens our flexibility going forward.

Speaker #3: So we want to make sure that , you know , by the amortizations that we have in our bonds , by the potential cash sweeps that we have in the bonds , we're position ourselves to be very , very favorable position to refinance our debt in 2028 .

Great. Thanks, guys for taking my questions.

You bet.

Thank you.

Now take the next question.

From the line of Gregg Brody from Bank of America. Please go ahead.

Speaker #3: That is on the back of obviously deleveraging consistently over time . Other priorities , I think , we'll leave it for another day .

Hey, guys.

Thanks for the time here.

You talked about better question terms.

Speaker #3: I think it's a bit too early for us to consider . The momentum is positive . That doesn't that doesn't drive a change in strategy for now .

On your NIM contraction, obviously hard to make $2 million in October from Pemex.

How should we think about what's the opportunity.

Speaker #5: Got it . Thank you .

To recapture.

Speaker #2: Thank you . We will now take the next question from the line of Ben Somers from Btig . Please go ahead .

Sort of that the receivables is.

Over the next year.

Sorry, Greg the question I assume.

Speaker #10: Hey , good morning and thank you for taking my questions . I know you touched on it a little bit in the press release , but kind of curious how you're looking at the new build market .

Capture the receivables from Pemex.

Panamax.

That's the main one yet.

Yes, I think what we're seeing now is that that makes us.

Speaker #10: I know you guys mentioned that there's some , you know , supply chain challenges that you think will kind of push out , you know , these new build rigs entering the market .

And then the government in Mexico has put in place federal schemes.

Speaker #10: So just kind of curious , any color there on what you're seeing .

This year, we want to refinance.

Speaker #3: Yeah . No , nothing's changed . We've I think quite a few quarters ago we shared a view that we believe that the order book that is namely there there may be one rig , two rigs maximum that would come to the market .

Financial liabilities and also their vendor or supplier and liabilities for the $12 million.

Setup.

And that's something we've seen.

Speaker #3: That was several quarters ago . None of these rigs have come out . And obviously the longer they stay in the shipyard , the more complicated it is .

Gone through.

The second half started to repay and we received $7 $17 million. So far in October we see.

Speaker #3: A lot of these rigs are in very working , early stages of conclusion . When they were stopped or abandoned is not easy .

Having more payments come in November and December and expect a return to.

Speaker #3: We haven't seen any one of them coming out . I honestly do not expect that to change as things improve .

To normality.

When it comes to payments in Mexico, So I think.

Speaker #10: Awesome . Thank you . And then I know you touched a little bit on on the US Gulf entry , but just curious kind of on Angola , you know , now bringing a rig there , just kind of any outlook or color on that market .

Looking like they are taking the steps in.

And makes them then.

And the government in Mexico too.

Some more current on their on their payables.

Speaker #3: Yeah , sure . I mean it is a new new area for us . We have been looking at Angola before and waiting for the right moment , the right opportunity to be in country .

And Greg just to highlight.

What we've kind of mentioned earlier, obviously, we have current receivables that we are continuing and we will continue to work hard to collect them with a new contract terms that we have in our new allocation of the portfolio in Mexico effectively in Europe will continue to add the next payment exposure, while the remainder of this meeting country.

Speaker #3: As I said earlier, we have a very well-established infrastructure in West Africa. So, Angola was a bit of a natural growth opportunity for us historically.

Speaker #3: As I mentioned in the remarks , is a market that had a quite substantial activity level for Jakobs that has been subdued for quite a few years .

Speaker #3: It seems that the potential is is very large , and that's not limited to Angola . We see quite a few markets in West Africa that haven't had enough activity for quite a few years now .

Either be working with <unk> or include fixed payment terms that day.

Diminishes tremendous media exposure to the <unk> payment friction so that doesn't resolve the current outstanding receivables and we continue to work very hard and legacy to lean on the existing facilities in place the mechanisms of Goldman put in place to accelerate that but going forward. We expect that very soon the new terms will slow down.

Speaker #3: Coming back and being able to penetrate Angola now have that as an opportunity for our portfolio . I think strengthens our flexibility going forward .

Speaker #10: Great . Thank you guys for taking my questions .

Speaker #9: Thank you . Ben .

Speaker #2: Thank you . We will now take the next question from the line of Greg Brody from Bank of America . Please go ahead .

See considerably the accumulation of receivables in Mexico, and it keeps us far more correct.

Got it and then.

Speaker #11: Hey guys . And thanks for the time here . Just you talked about better collection terms and on your new contracts . And obviously you collected 19 million in October from Pemex .

Just.

But with the sanctions.

You, obviously can move to one of the rigs so that leads to held.

What should we what are your expert practitioner to how this plays out particularly with.

Speaker #11: How how should we think about what the opportunity of to recapture working sort of that those receivables is over the next year .

But I think as the silicon galore.

Of those assets, but what's your expectation for that how are you thinking about what you do with the help from here as a result.

Speaker #9: It's very good question . .

Yes, it's probably early to say Greg what we know is we've worked very diligently as soon as we became more of the sanctions. We did what we were required to do to make sure that we stick to our governance and comply with international requirements.

Speaker #4: How to capture the receivables from Pemex .

Speaker #11: Pemex . And that's the main one . Yeah , yeah .

Speaker #4: No . So I think what we see now is that Pemex has and then the government in Mexico has put in place several schemes this year , one to , to refinance their financial liabilities .

We are currently winding down operations on those rigs were expecting both of them to finish around mid November the ongoing activities as allowed by by the sanctions.

Speaker #4: And also their , their vendor or supplier liabilities with a $12 billion . Set up . And that's something we see in the gone through now in the second half started to to repay .

And we continue to monitor the situation it could change if there is a sale potentially we don't want to speculate for now we're doing what we have to do it's a customer that over time I think we deliver great service for them they seem to be extremely happy with what we've done over time and provided no sanctions affect our ability to continue working in that field are delivering there.

Speaker #4: And we received seven , 17 million so far in October . We see signs of having more payments coming in November and December .

Speaker #4: And expect return to to normality when it comes to payment in Mexico . So so I think it's looking like they are taking the right steps in , in Pemex and in in the government in Mexico to to become more current on their , on their payables .

Program, we definitely will be more than happy to continue to do that but I don't want to speculate for now we're sticking to the rules as they apply and then we'll see some change as we go along.

And have you seen the sun.

Uncertainty.

Sanctions impact the brick market at all.

Probably a lot of questions on SMA, but how many others.

Speaker #4: Definitely .

Speaker #3: And Greg , just to highlight what we've kind of mentioned earlier , obviously we have current receivables that we are continuing and we are continuing to work hard to collect them with the new contract terms that we have and the new allocation of the portfolio in Mexico , effectively , the new world will continue to have Pemex payment exposure while the remainder of the fleet in country will now either be working with IOCs or include fixed payment terms that diminishes tremendously or exposure to the Pemex payment friction .

And if that's about the suspensions.

Well I won't comment much about others.

The only thing I think is being is being in the news recently was a similar impact of advantage on the deepwater market in as shown on the shallow water market I haven't seen.

Any other announcements as far as we're concerned.

The impact of that has been limited to Mexico.

Continuing to monitor the whole topic of sanction is a very dynamic topic at the moment.

Speaker #3: So that doesn't resolve the current outstanding receivables . And we continue to work very hard , as Magnus says , to lean on the existing facilities in place .

For now that's been the only impact to our business, which we disclose which is our most of our revenue for the old then we're very happy to see EBIT. The rig is being re contracted now for the Heald will continue to see what are the opportunities for the rig whether it evolves.

Speaker #3: The mechanisms that government put in place to accelerate that . But going forward , we expect that very soon the new terms will slow down considerably .

Return at the same projects once.

The theory sold are east of fuel sold or other alternative deployments, where the rig within that out with the region.

Speaker #3: The accumulation of receivables in Mexico and keeps us far more current .

Speaker #11: Got it . And then just just with the sanctions , you obviously you moved one of the rigs . So that leaves the hill .

Great and one last one just.

What's your expectation for cost trends on the operating side here.

Relative to this quarter going forward.

Speaker #11: What what should we what are your expectations for how this plays out , particularly with the what I think is the sale to Gunvor of those assets .

How should we think about that.

Sorry, Greg I'm not sure if I got your question.

Cost trends on the operating side.

Speaker #11: But what's your expectations for that and how are you thinking about what you do with the Hill from here as a result ?

What's your expectations for a directional.

Your cost up.

There is there are opportunities.

Speaker #9: Yeah , it's .

Cut costs.

Speaker #3: Probably early to say . Greg , what we know is , is we've worked very diligently as soon as we became aware of the sanctions , we we did what we were required to do to make sure that we stick to our governance and comply with international requirements .

Just wondering how youre thinking about that going forward.

Yes.

As we said before we've been seeing.

<unk> very steady.

Over time, there is differences in operating costs from region to region from country to country, but all in all we have not seen a significant change in operating cost over the last few quarters and neither we have any reason to believe that that's going to be changing going forward. The team continues to be working focused on finding savings in our operations streamlining.

Speaker #3: We are currently winding down operations on those rigs . We're expecting both of them to finish around mid November . The ongoing activities as allowed by by the sanctions , and we continue to monitor the situation .

Speaker #3: It could change if there is a sale potentially . We don't want to speculate . For now . We're doing what we have to do .

Speaker #3: It's a customer that over time I think we deliver great service for them . They seem to be extremely happy with what we've done over time and provide that no sanctions affect our ability to continue working in that field or delivering that program .

Asians and that clearly has been more than enough to offset.

Any inflation experienced in our sector, but so far it has been flat I have no reasons to think they will change going forward.

Speaker #3: We definitely would be more than happy to continue to do that . But I don't want to speculate for now . We're we're sticking to the rules as they apply , and then we'll see if things change as we go along .

I appreciate all the time guys. Thanks for all the color.

Thanks Roger.

Thank you we will now take the next question.

From the line of Joshua Jayne from Danielle Energy Partners. Please go ahead.

Speaker #11: And if you seen this uncertainty with sanctions impact the rig market at all , I you're probably a little closer to this than me , but how many others have been affected by the suspensions ?

Hi.

Good morning, Thanks for taking my questions.

I really only have one which is on rig attrition maybe do you have a number in mind with respect to how many incremental rigs could leave the market next year or any insights there or maybe to put the question differently could you just speak to broadly the capital investment that may be required for a number of operating rigs that are out there today that are older.

Speaker #9: Well .

Speaker #3: I won't comment much about others . I mean , the only thing I think is being is being in the news recently was a similar impact of a on the Deepwater market in a shallow , shallow water market .

Speaker #3: I haven't seen any other announcements . As far as we are concerned , the impact of that has been limited to Mexico . We'll continue to monitor the whole topic of sanctions is a very dynamic topic at the moment .

Sort of keep pace with a lot of the newer spec rigs and how that France market dynamics. Thanks.

Thanks, Josh.

So we see that.

Standard rig market the older vintage rig market has been shrinking over time and they have been limited to a few market. The recall net side active rig count in that size about 100 rigs at the moment in the water and the average age is above 40 years old. So there's obviously a lot of potential for accretion some of these attrition should happen is.

Speaker #3: For now , that's been the only impact to our business , which we disclosed , which is the loss of revenue for the Odin .

Speaker #3: We're very happy to see that the rig has been recontracted now for the healed . We'll continue to see what are the opportunities for the rig , whether involves returning to the same project once the field is sold , or if the field is sold or other alternative deployments for the rig within and outwith the region .

Or lack of contracting opportunities for these rigs.

Some of the attrition will happen as a result of just the high capex required to maintain these rigs active going forward.

Speaker #11: Great . And one last one just what's your expectations for cost trends on the operating side here relative to this quarter ? Going forward , how should we think about that ?

Rigs are mechanical equipment and.

Such they require capital to stay in good working glass and by the time. They are 40 years old and beyond the retirement age that only gets better government gets worse exponentially. So.

Speaker #9: Sorry , Greg , I'm .

I don't know how many rigs will say can get out of the market. Clearly there is there is a potential for a lot of the rigs to go out of the market. We're seeing that trend accelerating we've seen right now converted to ore sold for conversion to more pool, including quite a few of the rig that came out of Saudi will continue to look at before us.

We expect owners to act.

<unk> in that and discipline on that for us is a bit of a mute point our rigs are all very new is the youngest fleet in the industry. So let's see what happens.

Thanks, I'll turn it back.

Thank you Josh.

Thank you that's all the time, we have for questions today I would now like to turn the conference back to <unk> for closing remarks.

Very good thanks for participating in today's call and I look forward to speaking to you guys soon.