BORR 6-K
Borr Drilling Ltd (BORR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
September 11, 2024
Commission File Number 001-39007
Borr Drilling Limited
S. E. Pearman Building
2nd Floor 9 Par-la-Ville Road
Hamilton HM11
Bermuda
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K on paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K on paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Exhibits
| 99.1 | Press Release |
|---|---|
| 99.2 | Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BORR DRILLING LIMITED | ||
|---|---|---|
| Date: September 11, 2024 | By: | /s/ Mi Hong Yoon |
| Name: | Mi Hong Yoon | |
| Title: | Director |
Exhibit 99.1
Borr Drilling Limited to Present at the Pareto Securities' 31st Annual Energy Conference
Chief Executive Officer, Patrick Schorn, of Borr Drilling Limited (the “Company”) (NYSE and OSE: BORR) will present at the Pareto Securities' 31st Annual Energy Conference in Oslo, Norway, today, Wednesday 11 September 2024, at 1:50 pm CET.
A copy of the presentation to be held is available on the Company’s website at www.borrdrilling.com and enclosed to this release.
11 September 2024
Exhibit 99.2
Pareto Securities' 31st Annual Energy Conference Patrick Schorn, CEO September 11, 2024
Forward Looking Statement This announcement and related discussions include forward looking statements made under the "safe harbour" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements do not reflect historical facts and may be identified by words such as "anticipate", "believe", "continue", "estimate", "expect", "intends", "may", "should", "will", "likely", "aim", "plan", "guidance" and similar expressions and include statements regarding industry trends and market outlook, including expected trends and supply demand expectations and activity levels in the jack-up rig and oil industry, expected Adjusted EBITDA for 2024, contract backlog, expected contracts and contract start dates and rates including expected rate increases and contract extensions, options, LOIs and LOAs, contract coverage for 2024 and, expected changes to the economics of our contracts, and potential revenue, focus on return to shareholders, including rates that may be achieved, expected trends in dayrates, market conditions, statements about dividends and share buybacks, statements about expected delivery of the newbuilding rig “Var”, expected utilization of the global jack-up fleet, number of rigs contracted and available and expected to be available and expected trends in the global fleet including expected new deliveries and expected timing of new rigs entering the market, statements made under “Market” and "Risk and uncertainties" above, statements about our financing strategy and evaluation of options to improve our capital structure, the optimization of our liquidity and other non-historical statements. The forward-looking statements in this announcement are based upon current expectations and various assumptions, which are, by their nature, uncertain and subject to significant known and unknown risks, contingencies and other important factors which are difficult or impossible to predict and are beyond our control. Such risks, uncertainties, contingencies and other factors could cause our actual results, level of activity, performance, financial results or position, liquidity or achievements to differ materially from the ones expressed or implied by these forward-looking statements including risks relating to our industry, business, the risk that our actual results of operations in future periods may differ materially from the expected results or guidance discussed herein, the risk of delays in payments to our JVs and payments from our JVs to us, the risk that our customers do not comply with their contractual obligations, risks relating to industry conditions, risks relating to geopolitical events and inflation, risks relating to global economic uncertainty and energy commodity prices, risks relating to contracting, including our ability to convert LOIs and LOAs into contracts, the risk that options will not be exercised, the risk that contract backlog and revenue potential will not materialize as expected, risks relating to the operations of our rigs and ability to achieve expected dates of operation and delivery of rigs and commencement dates, dayrates and duration of contracts and the terms of contracts and the risk that we may not enter into contracts as expected, risks relating to market trends, tender activity and rates, risks relating to customer demand and contracting activity and suspension of operations, risks relating to our liquidity and cash flows, risks relating to our indebtedness including risks relating to our ability to repay or refinance our debt at maturity, including our notes maturing in 2028 and 2030, our Convertible Bonds due 2028, and debt under our revolving credit facility and shipyard financing available for the newbuild rig “Var” and risks relating to our other payment obligations on these debt instruments including interest, amortization and cash sweeps, risks relating to our ability to comply with covenants under our revolving credit facility and other debt instruments and obtain any necessary waivers and the risk of cross defaults, risks relating to our ability to pay dividends and repurchase shares including the risk that we may not have available liquidity or distributable reserves or the ability under our debt instruments to pay such dividends, or repurchase shares and the risk that we may not complete share repurchase programs in full, and risks relating to the amount and timing of any dividends we declare, risks relating to future financings including the risk that future financings may not be completed when required, risks relating to our newbuild purchase and financing agreements, risks relating to our financing strategy, risk related to climate change, including climate-change or greenhouse gas related legislation or regulations and the impact on our business from physical climate-change related to changes in weather patterns, and the potential impact of new regulations relating to climate change and the potential impact on the demand for oil and gas, risk relating to military actions including in Ukraine and the Middle East and their impact on our business and industry, and other risks factors set forth under “Risk Factors” in our most recent annual report on Form 20-F and other filings with the U.S. Securities and Exchange Commission and prospectuses filed with the Financial Supervisory Authority of Norway. These forwardlooking statements are made only as of the date of this document. We undertake no (and expressly disclaim any) obligation to update any forward-looking statements after the date of this report or to conform such statements to actual results or revised expectations, except as required by law Non-GAAP Financial Measures The Company uses certain financial information calculated on a basis other than in accordance with accounting principles generally accepted in the United States (US GAAP) including Adjusted EBITDA. Adjusted EBITDA as presented above represents our periodic net income/(loss) adjusted for: depreciation and impairment of non-current assets, other non-operating income; (income)/loss from equity method investments, total financial (income) expense net and income tax expense. Adjusted EBITDA is presented here because the Company believes that the measure provides useful information regarding the Company’s operational performance. The Company provides guidance on expected Adjusted EBITDA, which is a non-GAAP financial measure. Management evaluates the Company's financial performance in part based on the basis of actual and expected Adjusted EBITDA, which management believes enhances investors' understanding of the Company's overall financial performance by providing them with an additional meaningful relevant comparison of current and anticipated future results across periods. Due to the forward-looking nature of Adjusted EBITDA, management cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measure. Accordingly, the Company is unable to present a quantitative reconciliation of such forward looking non-GAAP financial measure to the most directly comparable forwardlooking GAAP financial measure without unreasonable effort. The Company disclaims any current intention to update such guidance, except as required by law 2
Borr Drilling – the premium jack-up rig company Data as of Q2 2024 quarter end 1 Contracted fleet based on delivered fleet of 23 rigs as of August 15th, 2024 2 Adj. EBITDA margin is calculated by Adjusted EBITDA divided by Total Operating Revenues 3 Liquidity includes undrawn RCF of $150 million 4 Dividends per share declared quarterly, $0.10 for Q2 2024 3 International Footprint and Diversified Portfolio Asia 7 Contracted 23 Middle East 4 Africa 4 1 North Sea Mexico 1 6 2 1 Youngest premium jack-up rig fleet in the industry Fleet 24 Modern Rigs Highlights Available 0 SouthAmerica 1 Under Construction Market leading dayrates driving strong EBITDA growth Q2 2024 Adj. EBITDA $136.4M Adj. EBITDA Margin2 50.2% Good performance High utilization rates Technical Utilization99.2% Economic Utilization 98.4% Solid liquidity position Focus on capital returns Quarterly Dividend4 $0.10 Liquidity3 $343.5M Contracted Fleet1 100%
Strong Experience and Portfolio 4 Increased NOC Exposure Currently 2 out of 3 backlog days are with NOCs (vs. 2 out of 5 in 2019)
Shallow water is key Favorable fundamentals Source: Rystad Energy 1 Based on data from Rystad Energy for oil and gas production in millions of barrels of oil equivalent per day 5 Global offshore production of 31.7 mboe1 Shallow water represents ~66% of offshore production Cost competitive Breakeven oil price second only to onshore Middle East NOCs represent ~66% of shallow water activity Strategic customers with long planning horizon and stable outlook Shorter cycle barrels Time to production often in <1 year Shallow Water Significant production at attractive breakeven costs Largely focused on brownfield projects Lower geological risk and faster cashflows
Jackup market is tight with modern rigs preferred Utilisation remain strong and back at 2014 levels Modern rigs taking the lion’s share of demand Source: Petrodata by S&P Global Modern rigs are units delivered in 2000 or after 6 BORR’s fleet competitive advantage: Offline capable 400ft water depth Superior designs Leading performance Dayrate premium Strong utilisation
A structurally tight market 7 ~10 = 328 Aramco suspensions3 (15 to 20) Source: Petrodata by S&P Global as on 12 Aug 2024, Fearnley Offshore and Company data 1 Uncompetitive are units stacked for over 3 years, affected by sanctions or geographically stranded 2 Incremental Demand: 12 to 18 months outlook based on company data considering customer open tender, market surveys and indications 3 Aramco suspension based on announced and anticipated suspension 4 Newbuilds data based on Fearnley Offshore projected number of 3 to 6 newbuild rigs expected to reach the market within 18-24 months Illustrative Utilization ~97% 1 2 Shipyard Orderbook4 Utilization 95% Modern Jackups (#)
Our high quality and future proof fleet The industry’s youngest fleet … amidst an aging global fleet Source: Petrodata by S&P Global 8 Average Age Fleet Size 24 13 2 35 10 4 42 36 # of rigs Over 30% of global fleet is beyond retirement age Age
Orderbook insufficient to address future rig demand Source: Petrodata by S&P Global 9 No new jackup orders for approx. a decade 12 rigs in the orderbook (~3% of total fleet), a record low since early 2000’s Only ~4 newbuilds perceived as available and competitive in the next 12 to 18 months Low newbuild jackup orderbook Limited yard building slots as orderbooks are filled by other vessel types (FPSO, FSRU, LNGC, etc.) Delivery times at 3+ years for new order Shipyards will struggle to handle large orders Limited yard capacity for new orders Price for new orders expected to exceed prior cycle prices at ~$300 million ready-to-drill Limited financing available will require long-term underlying contract (7 to 10 years) Newbuild economics will require day rates in excess of $200,000 for usable asset life (25 years) Newbuild economics are challenging
Strong revenue visibility 10 Contract Prep Contract Prep Mob 1 Backlog Revenue includes new contracts, LOIs and LOAs including mobilization and demobilization revenues, and includes bareboat charter contracts adjusted to a gross dayrate-equivalent basis. 2 Average dayrate is derived from Backlog Revenue divided by the number of estimated contracted days. Adding backlog1 at attractive rates $184k/d Avg. dayrate2 $641M YTD 2024 Full year 2024 $135k/d Avg. dayrate2 92% Coverage Full year 2025 $148k/d Avg. dayrate2 73% Coverage
Strong incremental cashflow in 2025 and beyond Illustrative reduction in capex requirements Delta 2024 to 2025 Net decrease newbuild capex 1 $80 million Illustrative lower annual Maintenance/SPS capex2 $20 million Illustrative reduction in cash requirement ~$100 million Illustrative improvements in cash from revenues Delta 2024 - 2025 Average secured dayrate, $/day $135,000 – $148,0003 Average active rigs3 22 - 24 Illustrative Incremental cashflow3 ~$100 million 1 Newbuild cashflow for the remaining 2 newbuilds delivered in 2024, includes the contractual delivery instalments totaling $320 million ($160m/rig), less committed total financing of $280 million, and estimated approximately $20 million of activation cost per rig = net $80 million. 2 A higher number of rigs due for SPS scopes in 2024 than expected in 2025, estimated to lead to at least $20 million improvement in cashflows in 2025 vs 2024 3 73% contracted for 2025 as of August 15, 2024 – calculation is assuming remaining open days in 2025 are contracted at same dayrate as current backlog and at 90% contract utilisation Illustrative incremental cash flow in 2025 versus 2024 of ~$200 million Strong cash flow as percentage of market cap Incremental cashflow drivers 2024 vs 2025 11
Streamlined capital structure with deleveraging Debt maturity profile ($m) Note: The company made a voluntary convertible bond repurchase in 2024. This is not a scheduled amortization and as such no further repurchases are shown in the graph. 1 Cash sweep mechanism in bond optional for bondholders at 105%, 25 – 75% of “free cashflow to equity” depending on leverage ratio 12 11 25 2024 15 25 2025 15 25 2026 25 2027 25 2028 2029 2030 131 141 141 176 1,292 Newbuild Financing Commitment Convertible Bond Secured Bond 2030 Secured Bond 2028 the largest offshore rig bond at issuance Comprehensively refinanced in Nov. 2023 more economic terms than available yard financing Bond upsized for newbuild “Vali” same documentation and maturities in 2028 and 2030 $1,890m senior secured bonds reducing gross debt per rig from $80m to $55m in five years, and additional cash sweep mechanism1 Deleveraging c.$125m annually on bonds currently undrawn and matures in 2028 $150m available revolving credit facility $0.10/share quarterly dividend, ~$100m annualised Flexibility for shareholder distributions
Capital allocation framework 1 Replacement cost based on newbuild parity of $300 million for a newbuild, and 30 years expected life 2 Cash sweep mechanism in bond optional for bondholders at 105%, 25 – 75% of “free cashflow to equity” depending on leverage ratio 13
14 In Conclusion Fundamentally no newbuild supply and over ~30% of fleet above 35 years old Structurally tight supply Supported by higher average dayrate and lower capex requirements Solid cashflow outlook for 2025 and beyond Delivering operational excellence and capturing dayrate premium Premium jackup fleet with a global reach Including deleveraging Long-term capital structure in place Currently $0.10/share per quarter (~$100 million per year) Quarterly dividend distributions established 1 2 3 4 5
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