Operator: Good day, and thank you for standing by. Welcome to the Borr Drilling Limited Third Quarter 2023 Results Presentation Webcast and Conference Call [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mr. Patrick Schorn, CEO. Please go ahead.
Patrick Schorn: Thank you. Good morning. And thank you for participating in the Borr Drilling third quarter 2023 earnings call. I'm Patrick Schorn, talking to you from Bermuda. And with me here today is Magnus Vaaler, our Chief Financial Officer; and Bruno Morand, our Chief Commercial Officer. Next slide, please. First, 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. I, therefore, refer you to our latest public filings. Next slide, please. The third quarter was characterized by strong operational performance with technical utilization for the quarter above 99%, revenue increasing by 2% and our adjusted EBITDA increasing to $88.2 million, which is 5% over the second quarter's results.
Our backlog quality continues to improve. Year-to-date, we have secured 12 new commitments, adding $728 million to our revenue backlog at an implied average day rate of $161,000 per day. We continue to experience positive developments in utilization in the global jack-up market, particularly for modern rigs where marketed utilization stands at approximately 94%. Dayrates have continued to appreciate as demonstrated by our latest previously announced fixtures for the Prospector 5, the Natt and the Idun. In addition, we are pleased to announce a 15 month extension for the Skald at a daily rate of $165,000 per day. The Ran and Hild have recently commenced their new contracts, bringing the operating fleet to 21 rigs. We expect Gerd to commence its new contract in early December 2023, at which point all of our 22 delivered rigs will be operating.
I'm also pleased with the conclusion of our refinancing and the issuance of 1.54 billion of secured notes, with maturities in 2028 and 2030. This completes the refinancing of all our secured debt and provides the company with a solid long term capital structure. We've also announced that the Board intends to implement a regular quarterly dividend starting at $0.05 per share, which is subject to required approvals in a special general meeting to be held at the December 22, 2023. For 2024, we maintain our estimated range of adjusted EBITDA for full year '24 to be between $500 million to $550 million. Magnus will now step you through the financial details of the third quarter.
Magnus Vaaler: Thank you, Patrick. We're now on the slide, key financial Q3. The Q3 2023 revenues were $191.5 million, an increase of $4 million or 2% from the second quarter. The $4 million increase comprised of an increase in dayrate revenues of $5.3 million, offset by a decrease in payable income from Mexico joint ventures of $1.3 million. So the overall increase in the revenues were primarily due to higher dayrates for our rigs. Rig operating and maintenance expenses were $85.8 million for the third quarter, a decrease of $3.7 million compared to the second quarter. The decrease is primarily a result of a decrease in amortization of deferred costs. The total financial expenses net were $50 million for the quarter, which is in line with the previous quarter.
And the net income for the quarter was $0.3 million. Our adjusted EBITDA was $88.2 million, an increase of $4.2 million or 5% compared to Q2. Our free cash position at the end of Q3 was $94.4 million. Cash increased by $10.6 million in comparison to the prior quarter and is primarily a result of $34.5 million cash provided in operating activities, $9.6 million net proceeds from the sale of shares under our ATM program, $10.3 million repayment of debt and $23.4 million cash costs for additions to jack-up rigs, which is primarily activation costs for our rigs Hild and Arabia II. Then moving into the next slide. As Patrick said, we are very pleased to have completed our refinancing for all the company's secured debt now in November 2023 by the issuance of a total of $1.54 billion secured notes with a duration of five and seven years.
Following this, our main debt maturities are in 2028 and 2030. The refinancing provides stable foundation for the company going forward and increased flexibility from an operational point of view and provides the possibility for distributions to our shareholders. Additionally, we have secured an $180 million senior secured facility, which includes $150 million revolving credit facility and a $30 million guarantee facility. Lastly, the delivery installment for our two remaining newbuilds, Vale and Var in 2024 are largely funded by a commitment from the shipyard of $130 million of debt per rig. With this, I would like to turn the word over to Bruno Morand, our Chief Commercial Officer.
Bruno Morand: Thanks, Magnus. I'd like to provide a brief update on the jack-up market and our most recent contracting and fleet developments. Jack-up utilization levels have continued to increase since our last report. In particular, the market utilization for modern rigs has now reached 94% with a total number of contracted rigs climbing to 300. Modern rig availability continues to tighten and is now in high single digit territory, excluding regionally stranded and sanction tainted assets. Amidst this tight market, we continue to experience a marked recovery in day rate levels from modern jack-ups. I'll later provide some commentary about our most recent fixtures that illustrate that. Based on the current tenders and discussions with our customers about their future requirements, we see strong indications of an undersupplied market condition developing in the second half of 2024 and into 2025.
A modern offshore drilling vessel navigating the seas with equipment mounted on its decks.
Incremental demand is visible across most regions and specifically strong in Southeast Asia, India, Middle East and West Africa. But we note as well some interesting pockets of activity developing in the Mediterranean. In line with the views we have shared in our earlier presentations, shipyard order books remain at record low levels and unlikely to provide any relief to supply and demand imbalance. The remaining competitive newbuild units in China are largely expected to be absorbed by the domestic market. We believe these conditions will continue to support an increasing dayrate environment, particularly for young and high performing rigs, placing Borr Drilling in a unique position to benefit from these developments. Year-to-date, we have secured 12 new mutual contracts, LOIs and LOAs, adding $728 million in total revenues and 12.3 rig years to our backlog.
This represents a weighted average day rate of $161,000 per day, which continues to be industry leading. In addition to the long term commitments previously disclosed for the rig Prospector 5 and Natt in Congo, Thor in Indonesia and Idun in Thailand, I would like to highlight new commitments recently secured for our rigs Gunnlod and Skald. The Gunnlod, which is due to complete its current contract in January '24, has now secured a binding LOA for a 120-day program in Malaysia with an undisclosed customer. This new commitment will start in direct continuation to this current contract and should maintain the rig contracted until May 2024. We have ongoing discussions with customers in the region and anticipate further commitment for the Gunnlod in the near future.
The Skald has secured a 15 month extension with PTT Thailand at a rate of $165,000 per day. This extension will maintain the rig firm contracted until September 2025. I highlight that Idun and Skald are both modern rigs with extensive offline capabilities, which combined with our experienced crews, enable our customers to materially reduce their well size and cost. The recent awards by PTTEP for these rigs at market leading rates are strong testament of the superior performance and value creation enabled by our modern rig fleets. Beyond these recent awards, I would like to note that the rigs Arabia III, Hild and Ran have recently commenced new contracts, increasing our operating rig count to 21. The Gerd is in final stages of contract preparation and is expected to commence a new contract in early December.
At which point, all of our delivered rigs will be operating and generating revenues for the company. For further information about our fleet, I'll refer you to the latest fleet status report made available on our company's Web site. The company's total revenue backlog currently stands at approximately $1.9 billion, at an equivalent rate of $137,000 per day. The recent contract awards secured by the company contribute to improve our backlog, both in total volume and quality. In terms of future fleet coverage, our firm contract and price options cover approximately 84% of our available days in 2024, providing strong revenue visibility for the year. With a positive the main outlook for our rigs and continue to improve rate environment, our near term revenue visibility and long term operating leverage places Borr Drilling in a unique position to benefit from this market dynamic and create significant value for our shareholders.
On this note, I'd like to hand the call back over to Patrick.
Patrick Schorn: Thank you, Bruno. So in conclusion, we finished Q3 with continued strong earnings and operational performance. The average dayrate of our backlog and therefore, the long term quality of our revenue is increasing by adding contracts at market leading rates. Our 22 delivered rigs are contracted with all of them operating before year end. The supply of jack-ups to the market will remain constrained as no newbuild orders are placed. The industry is depending on a finite fleet where our rigs are the youngest with excellent operational capabilities. This absence of newbuild is likely to keep the utilization in the mid-90% with dayrates continue to increase. The refinance of our 2025 debt maturity has been successfully completed with the issuance of 1.54 billion of secured notes with maturities in 2028 and 2030.
This completes the refinancing of all our secured debt and provides the company with a solid long term capital structure. Lastly, we are delivering on the commitment to become a dividend distributing company with the Board intending to implement a regular quarterly dividend starting at $0.05 per share, subject to required approvals in a special general meeting to be held December 22, 2023. In closing, I'm very pleased with the results of the third quarter. The team has delivered on every front, strong operational performance and excellent effort on the refinance, preparing the company for the long term. This all combined with a business environment that looks bright for the offshore shallow water drilling business. Rest mean nothing else, but to sincerely thank our employees, customers and partners for the milestones achieved this quarter, and we will do our best to continue to deliver at the highest standard.
Ladies and gentlemen, I would like to end here our prepared remarks, and we can go to Q&A.
