Borr Drilling Limited · NYSE:BORR
Borr Drilling — Investor Presentation (October 2023)
44 slides from Borr Drilling's investor presentation, Oct 4, 2023
Slide 1: Investor Presentation
Investor Presentation October 4, 2023
Slide 2: Table of contents
Table of contents 1 Executive Summary 2 Company overview 3 Market overview 4 Key Credit Highlights 5 Financial Overview 6 Appendix 2 ©Borr Drilling Ltd. 2023
Slide 3: Executive summary
EXECUTIVE SUMMARY Executive summary • Leading international drilling pure-play jack-up operator that owns and operates a fleet of 24 modern jackuprigs1 • Largest fleet of modern jackup rigs operating globally for National and International Oil Companies like Saudi Aramco, Total, ENI, Qatar Energy, P
Slide 4: Table of contents
Table of contents 1 Executive Summary 2 Company overview 3 Market overview 4 Key Credit Highlights 5 Financial Overview 6 Appendix 4 ©Borr Drilling Ltd. 2023
Slide 5: Delivering high quality drilling operations – safely and efficiently
COMPANY OVERVIEW Delivering high quality drilling operations – safely and efficiently At a Glance Presence in the Key Growing Markets Fleet1 Fleet age2 Pure play jackup company with the youngest fleet in 24 6.0 Years the industry Premium rigs Average age 1 Fleet utilization3 Avg. contract life North
Slide 6: Pure player of premium jackups with the youngest asset fleet
COMPANY OVERVIEW Pure player of premium jackups with the youngest asset fleet Youngest fleet among peers1 Taking Advantage of Higher dayrates # of premium Avg. Fleet Age Jackups dayrates - USDk/day JU in fleet 300 Borr 6.0 Drilling 24 250 200 Noble 11.2 13 Drillling 150 100 Seadrill 11.6 5 Limited 5
Slide 7: Solid backlog, with room to capture market upside
COMPANY OVERVIEW Solid backlog, with room to capture market upside Solid backlog at market leading rates, with strong coverage in the next years and opportunity to capture higher rates Strong backlog increase, consistently improving dayrates High Quality Backlog1 Strong firm backlog of $1.9bn at ind
Slide 8: Recent trading performance
COMPANY OVERVIEW Recent trading performance FY 2022 2023 YTD Delta Current vs. Dec-22 All available rigs currently Contracted Rigs 21 22 contracted ~$625m of backlog added Contracted Backlog1 $1.7bn1 $1.9bn1 Backlog replacement ratio over 1 and higher visibility on cash flows +12% increase in dayrat
Slide 9: Existing Company Capitalization Overview
COMPANY OVERVIEW Existing Company Capitalization Overview $1,609m Includes $871m debt maturing in 2025 and $323m debt maturing in 2026 3.9x $250m The Company is guiding an 3.3x Adjusted EBITDA for FY 2023 of $330-$360m, and for FY 2024 of $500-$550m Total Net Debt: $1,401m $1,651m (LTV : ~51%) $428m
Slide 10: Strong Experience and Portfolio
Strong Experience and Portfolio Increased NOC Exposure Currently 2 out of 3 backlog days are with NOCs (vs. 2 out of 5 in 2019) 10
Slide 11: The Sustainability Journey
COMPANY OVERVIEW The Sustainability Journey Fleet rationalization to focus on efficient assets Modern fleet reduces time on rig and resultingly emission per NOx barrel extracted Focused on shallow water segment, which is ~25% less carbon intensity than onshore drilling1 2016 - 2018 2019 2020 2021 Ac
Slide 12: Table of contents
Table of contents 1 Executive Summary 2 Company overview 3 Market overview 4 Key Credit Highlights 5 Financial Overview 6 Appendix 12 ©Borr Drilling Ltd. 2023
Slide 13: Shallow water production – Key to growth
MARKET OVERVIEW Shallow water production – Key to growth Focus exclusively on shallow water, one of the largest resources with low break even and increasingly preferred by Middle East players Large resources at low breakeven cost Middle East with increased focus on offshore shallow water Breakeven o
Slide 14: Jackup market is tight with modern rigs in short supply
MARKET OVERVIEW Jackup market is tight with modern rigs1 in short supply Utilization reaching the historical maximum levels, with strong preference for modern rigs, which deliver stronger performance Utilization back at 2014 levels Modern rigs taking the lion’s share of demand Modern jackup utilizat
Slide 15: Why Modern Rigs?
MARKET OVERVIEW Why Modern Rigs? Customers prefer modern young rigs over standard rigs, due to higher specifications, efficiency and potential to deliver meaningful savings and stronger operational KPIs Superior Performance1 Preferred by key Customers Key Performance Indicators by Petronas Aramco Co
Slide 16: The market is expected to become even tighter given aging of assets
MARKET OVERVIEW The market is expected to become even tighter given aging of assets Overview of Rigs Age # rigs Age Range of Borr Rigs Over 30% 90 A third of the fleet has reached the 83 typical retirement age…. of the jackup fleet is 30+ years 80 70 60 58 53 53 54 56 Over 150 50 jackups retired fro
Slide 17: Fundamentals supporting 'stronger for longer'
MARKET OVERVIEW Fundamentals supporting ‘stronger for longer’ Modern rigs are currently high in demand, in a market with reduced supply, expected to remain tight for longer Demand upside for modern rigs Modern rig supply all but gone Order book “non-existent” # Contracted Rigs Modern rigs utilizatio
Slide 18: Set to deliver strong results taking advantage of dayrate recovery
MARKET OVERVIEW Set to deliver strong results taking advantage of dayrate recovery Market Rates Sharply Improving for Modern Rigs, back to 2014 levels Expected a further acceleration given current utilization levels Premium Jackup Dayrates (not adjusted for inflation) Jackup Dayrates USDk/day (infla
Slide 19: Table of contents
Table of contents 1 Executive Summary 2 Company overview 3 Market overview 4 Key Credit Highlights 5 Financial Overview 6 Appendix 19 ©Borr Drilling Ltd. 2023
Slide 20: Key credit highlights
KEY CREDIT HIGHLIGHTS Key credit highlights 1 Leading pure play jackup company with best-in-class assets • Borr Drilling is one of the largest pure-play jackup operators, owning a fleet of 241 modern and high-specification offshore drilling units focusing on the shallow water segment of the offshore
Slide 21: Leading pure play jackup company with best-in-class assets
KEY CREDIT HIGHLIGHTS 1 Leading pure play jackup company with best-in-class assets Operating efficiently one of the largest premium jack up fleets in the regions that will drive the upstream investments in the next years Technical Utilization of operational fleet The youngest fleet of premium jackup
Slide 22: Modern fleet with limited need for capital expenditures
KEY CREDIT HIGHLIGHTS 2 Modern fleet with limited need for capital expenditures The youngest asset base in the sector with best-in-class fleet of 22 delivered rigs (+2 under construction) Premium fleet with historical cost of $210-290m per jackup Key Considerations Borr’s fleet of modern rigs with p
Slide 23: Solid backlog differentiated by region and type of customers
KEY CREDIT HIGHLIGHTS 3 Solid backlog differentiated by region and type of customers Backlog summary1 Recent contracts at best-in-class rates Revenue backlog Implied Date Announced Rig Contract length2 contracted $1.9bn announced revenue backlog dayrate3 LOI Idun 2 years $124m ~$170k 1,307 days4 Nat
Slide 24: Predictable and strong profit growth and cash flow generation
KEY CREDIT HIGHLIGHTS 4 Predictable and strong profit growth and cash flow generation Illustrative daily cost build-up per rig1 High Quality Backlog3 - Forward contract coverage Fleet Coverage (% of Available Days) Unlevered Cash break-even cost below $60k dayrates Total Firm Backlog of $1.9b 100% 9
Slide 25: Significant upside to Adjusted EBITDA profile
KEY CREDIT HIGHLIGHTS 5 Significant upside to Adjusted EBITDA profile Potential for significant Adjusted EBITDA upside in the projected period, taking advantage of the strong operating leverage when dayrates increase Illustrative Outlook 2024 2025 2026 Covered Revenues Available Days 1,320 1,482 1,2
Slide 26: Prudent financial policy
KEY CREDIT HIGHLIGHTS 6 Prudent financial policy Borr Drilling Financial Policy Highlights • Primary focus on deleveraging from strong cashflow generation Leverage Target • Target to delever to 2x in near to medium term and longer term steady state leverage target of 1.5x or below • Intention to hav
Slide 27: Strong management team
KEY CREDIT HIGHLIGHTS 7 Strong management team Patrick Schorn Magnus Vaaler Harvey Snowling Chief Executive Officer Chief Financial Officer Chief Operations Officer • 30+ years of experience in the Oil and Gas industry • 9 years of experience in the Oil and Gas industry • 40+ years of experience in
Slide 28: Experienced board of directors
KEY CREDIT HIGHLIGHTS 7 Experienced board of directors Tor Olav Trøim Neil Glass Chairman of the Board / Founder Director • Has been serving on our Board since founding the company. He served as the Chairman of the Board from August 2017 until September • Has been serving as a Director on our Board
Slide 29: Table of contents
Table of contents 1 Executive Summary 2 Company overview 3 Market overview 4 Key Credit Highlights 5 Financial Overview 6 Appendix 29 ©Borr Drilling Ltd. 2023
Slide 30: Historical Performance
FINANCIAL PROFILE Historical Performance Revenues ($m) Commentaries Y-o-Y Growth (%) Q-o-Q Growth (%) QoQ revenues increased by $15.5m (9%), primarily a result of an increase day rates earned (20%) 81% 9% Despite revenues increasing by 9.0%, operating expenses increased by only 1.3%, demonstrating h
Slide 31: Historical Performance
FINANCIAL PROFILE Historical Performance Capex Additions1 ($m) Commentaries Capex spend in 2023 thus far mainly attributable to activations and reactivations 100.2 Majority of capex in 2022 and 2023 from activation and re-activation of rigs. With 37.4 23.8 84.5 34.4 30.8 all the 22 delivered rigs op
Slide 32: Annualized Q2 Adjusted run-rate EBITDA Bridge
FINANCIAL PROFILE Annualized Q2 Adjusted run-rate EBITDA Bridge1 Key Assumptions Q2 Annualized Adjusted Run-rate EBITDA2 $m Arabia III commenced operations in September at a 250 dayrate of $138k / day1 428 Hild (currently idle), expected 200 to commence operations in Based on 20 rigs New rigs, not o
Slide 33: Table of contents
Table of contents 1 Executive Summary 2 Company overview 3 Market overview 4 Key Credit Highlights 5 Financial Overview 6 Appendix 33 ©Borr Drilling Ltd. 2023
Slide 34: Solid Backlog Differentiated by Region and Type of Customers
OTHER APPENDIX MATERIAL Solid Backlog Differentiated by Region and Type of Customers Very strong visibility for the next 3 years, in particular 2024 and 2025, given firm contracts and options Fleet Status Report 2023 2024 2025 2026 Rig Name Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Gunnlod Nor
Slide 35: Illustrative loan-to-value delivered rigs
OTHER APPENDIX MATERIAL Illustrative loan-to-value 22 delivered rigs Approximate 67% 48% 46% 23% Loan-to-value 22 rigs x $295m $6,490m Trading levels are slightly below where 3rd party appraisal has come out at $156m per rig Implied $148m per rig 22 rigs x $140m $3,260m $3,080m $1,609m $2,213m (Shar
Slide 36: 24 premium jackup rigs in excellent condition (1/2)
OTHER APPENDIX MATERIAL 24 premium jackup rigs in excellent condition (1/2) Arabia I Arabia II Arabia III Galar Gerd Gersemi Grid Groa Gunnlod Hild Idun Mist Build year 2020 2019 2013 2017 2018 2018 2018 2018 2018 2020 2013 2013 Keppel FELS Keppel FELS Keppel FELS B Keppel FELS B Keppel FELS PPL Shi
Slide 37: 24 premium jackup rigs in excellent condition (2/2)
OTHER APPENDIX MATERIAL 24 premium jackup rigs in excellent condition (2/2) Not included in delivered rigs Natt Njord Norve Odin Prospector 1 Prospector 5 Ran Saga Skald Thor Vale Var Build year 2018 2019 2011 2013 2013 2014 2013 2019 2018 2019 2025 2025 Keppel FELS Friede & Friede & Keppel FELS Kep
Slide 38: Market leading ESG credentials
COMPANY OVERVIEW Market leading ESG credentials Voluntary Disclosures Improved and audited ESG records Streamlined and third-party verified ESG B reporting system, aligned with best-in-class industry reporting standards and future proof (i.e.: SEC reporting requirements) Company score (vs. C sector
Slide 39: Significant Upside to EBITDA profile
OTHER APPENDIX MATERIAL Significant Upside to EBITDA profile Illustrative Adjusted EBITDA Outlook 2024 2025 2026 Illustrative rig days available days 8,143 8,760 8,760 Contracted Coverage 1 pct. 79% 57% 18% Average Backlog Dayrate 2 $/day 131 133 125 Contracted Revenue Backlog 3 $m 805 634 185 Illus
Slide 40: Building Quality Backlog
OTHER APPENDIX MATERIAL Building Quality Backlog Total Contract Backlog Premium Fleet commanding premium rates4 NW Europe BORR Others Contracted 1 23 Market Util. 100% 79% $1.9 38.3 $135k Leading Rate $120k $135k billion1 years Avg Rate2 +139% y-o-y +83% y-o-y +30% y-o-y Middle East BORR Others Cont
Slide 41: Built to make a difference
BUILT TO MAKE A ; DIFFERENCE * » Borr ” Drilling < » <
Slide 42: Disclaimer (1/3)
Disclaimer (1/3) This presentation is strictly confidential and is being furnished to you solely for your information. It may not be reproduced or redistributed to any other person, and it may not be published, in whole or in part, for any purpose. By attending this presentation and receiving this p
Slide 43: Disclaimer (2/3)
Disclaimer (2/3) This presentation and related discussions includes forward looking statements as defined in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which may be i
Slide 44: Disclaimer (3/3)
Disclaimer (3/3) This presentation contains the following selected financial measures on basis other than U.S. generally accepted accounting principles (“GAAP”): Adjusted EBITDA, Adjusted EBITDA margin, illustrative Adjusted EBITDA, including Q2 2023 Adjusted EBITDA, Annualized Adjusted EBITDA and A