Prepared remarks
Good day and thank you for standing by. Welcome to the Borr Drilling Limited Q3 2025 Results Presentation Webcast and Conference Call. 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. Bruno Morand, CEO. Please go ahead.
Good morning, and thank you for participating in Borr Drilling's third quarter earnings call. I'm Bruno Morand, and with me here today in Bermuda 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. 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, 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 at the market and our commercial execution, and we'll conclude with your questions. Let's get started. Our third quarter results were strong, extending the rebound delivery in the second quarter.
With 23 of our 24 rigs active, 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%, 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. Subsequent to quarter-end, in October, we are pleased to announce 3 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. These inflows, together with the recent government actions to strengthen Pemex finances, are the basis for our confidence in continued normalization of payments.
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. Today, we announced new commitments expanding Borr Drilling's 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 minimize idle time across the fleet. We expect fourth quarter 2025 results to reflect fewer operating days due to several rigs transitioning between contracts and the recent impact of sanction-induced contract terminations in Mexico. Despite this, we anticipate full year 2025 adjusted EBITDA in the range of $455 million to $470 million. In recent quarters, we've experienced a step-up in jack-up demand across several international markets, absorbing available capacity and providing gradual relief to the headwinds from 2024.
While near-term volatility may persist, clear signs of demand inflection in Saudi Arabia and Mexico, two of the world's largest jack-up markets, together with incremental activity in other areas provide us with confidence that the market is now past the trough. We foresee a tightened 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.
Thank you, Bruno. I will now go into some details of the financials of the third quarter. As Bruno mentioned, we continued 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 a $2.5 million increase in day rate revenue and a $6.4 million increase in bareboat 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 Ran and Thor, recognition of day rate revenue for the Odin versus previously being recognized as bareboat charter revenue, and an increase in reimbursable revenue for the Balder. 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 Galar, Grid, and Gersemi being fully operational in the quarter compared to being on suspension for part of the prior quarter.
This increase was offset by the decrease in bareboat charter revenue for the Odin, as the bareboat charter contract was terminated effective June 30 and began earning day rate revenue in August 2025. Total rig operating and maintenance expenses increased by $6.3 million, which is primarily a result of the increase in reimbursable expenses for the Grid, giving us an operating income of $98 million, a $1.5 million 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 losses offset by some higher interest income and lower interest expenses. 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 figure in the current quarter. As a result of the aforementioned, net income for the quarter was $27.8 million and adjusted EBITDA was $135.6 million, an increase of $2.4 million.
Moving on to cash, our free cash position at the end of Q3 was $227.8 million. In addition, we have $234 million undrawn under our revolving credit facilities, resulting in total available liquidity of $461.8 million. 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 of cash interest payments on our convertible bonds and $13.2 million of income taxes paid. 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 Vali. 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 Vali.
We expect to receive further settlements for our Mexico receivables both in November and December. Net cash used in investing activities was $33.9 million and was comprised of jack-up additions, primarily due to activation costs and contract commencement for the Vali, 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 company's July 2025 equity offering. With this, I will pass the word back to Bruno.
Thank you, Magnus. Year-to-date, we have secured 22 new commitments, adding $625 million to our backlog. Since our last report, we've continued to secure meaningful awards. First, in Mexico, we secured 3 contract extensions. Galar and Gersemi 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. 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. Bareboat charter payment terms will be kept at 180 days, and for the Galar, this cap will progressively improve over time. Additionally, we received a short-term extension for the North and continue in active discussions with our customer in Mexico about a long-term deployment for the rig. In Mexico, going forward, we will have a total of 5 rigs working from a previous count of 7, with 2 rigs being reassigned to new work elsewhere, as I'll cover shortly.
Regarding the 5 remaining rigs in the country, 2 are long-term contracted with payment protection provisions, 2 are contracted with IOCs, and only 1 has direct Pemex payment exposure. This is a significant change in our fleet mix in the country. I'm also pleased to report on recent awards in the Americas and West Africa, along with several other contracting updates. In the Gulf of America, the Odin received a letter of award for a 6-month campaign with an undisclosed operator. The campaign is expected to commence in January 2026. This will mark our entry into the U.S. and again highlights our team's ability to timely secure work for the rig, following sanction-induced contract termination. In West Africa, the Grid has received a letter of award for a 6-month commitment plus unpriced options with an undisclosed operator in Angola. 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 allocated to the Grid to our other rigs in country. 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. Also related to the Grid, we have agreed with New Age to reassign the contract we previously allocated to the NAT to the Grid, and expect to commence a 1-well campaign with New Age in Congo in January, prior to commencing work in Angola. Additionally, in West Africa, we are in discussions with ENI regarding their current well sequence for the NAT in Congo. While there are various scenarios in consideration, we now expect the NAT to stay busy with ENI in Q4 and potentially into early 2026. I'm also pleased to share that we have agreed with Shell in Nigeria to accelerate the NAS campaign originally scheduled to commence in November 2026, now to April 2026.
This significantly reduces potential idle time for the rig and provides Shell with the ability to accelerate their well delivery schedule. It is clear to me that Borr Drilling is the preferred partner for shallow water drilling operations. In recent months, we have been trusted with commitments from our customer to deliver critical wells globally. For example, Shell with their highly anticipated HI project offshore Nigeria, ONE-Dyas for the first fully electrified offshore drilling campaign in the Netherlands, and CME in Mexico for their Bacab-Lum project, 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. 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%, a 15-point improvement since our last report.
Taking a closer look into 2026, we have 79% coverage in the first half, 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. At the same time, recent developments in Mexico and Saudi give us increased confidence in a tightening jack-up market and a constructive outlook for the second half of the year. This should position us well to gradually fill up the coverage for 2026, while maintaining a disciplined commercial strategy. On the commodity front, Brent crude has remained volatile, but range-bound in the mid-60s. Current price levels have still allowed for meaningful contracting activity this quarter as lower breakeven shallow water projects offer a relatively rapid B2 barrel cycle for our customers. 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, 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. As of today, our count is that 7 to 8 rigs have been called back by Aramco, effectively taking the majority of the readily available modern rigs still available from suspensions. The remaining idle rigs are either rumored to be committed elsewhere or have moved to cold stacked after the suspension last year. 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, multiyear tenders progressing towards awards. 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.
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 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 jack-up count, particularly in Nigeria and Angola. 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 cadence. We responded constructively.
We evolved our Mexico contract portfolio, thoughtfully diversifying beyond concentrated Pemex positions into IOCs and independents while continuing to partner with Pemex for terms to support sustainable operations. Looking into 2026, we see a market where turbulence will begin to ease as the year progresses. White space for the global modern jack-up fleet is heavily weighted towards Asia and the Middle East in the near term, a phenomenon we see reconciled by demand increases in those regions over the next few quarters. In closing, I'm pleased to see how Borr Drilling continues to successfully navigate the dynamic market experienced over the last couple of quarters. We secured important contracts for our premium rigs, strengthened our fleet coverage in 2025 and into 2026. We have continued to partner with our customers to optimize our fleet availability or offer them unique operational schedule flexibility.
Based on that, we now anticipate 2025 full year adjusted EBITDA to be $450 million to $470 million, aligned with our early expectations and adjusted for the impact of the recent sanction-induced terminations. Demand for modern jack-up rigs remains resilient. The jack-up market has bottomed, and we're seeing clear inflection in rig demand across key regions, including Saudi Arabia and Mexico. Lastly, I want to emphasize the strength of our drilling operating platform. It is built on operational excellence, anchored by a strong focus on safety culture and streamlined operating model that keeps us efficient and predictable. 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 jack-up fleet and our global footprint. This platform is our defining competitive advantage and positions us uniquely to benefit from ongoing market inflections. With that, I'll now turn the call over to Q&A.
Questions and answers
We will now take the first question from the line of Scott Gruber from Citigroup.
It's good to hear, obviously, the new contracts in Mexico for you and good to hear Saudi is 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 jack-up market. Is this momentum going to continue? Are we going to see a genuine inflection in demand in the next year or so, even if crude is range-bound? Or do we need some improvement in crude to really drive that inflection?
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 Arabia 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 very healthy. And with the suspension now rolling back, the 93% is a real number. It's not a number that requires adjustment. So we are in 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 come through, and that rebalancing is what eventually helps us in achieving higher utilization and better day rates in general markets. Now I say beyond the Middle East, we've seen that most markets have been operating at or very close to balance, and that includes, for example, West Africa.
And 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 impact of that. 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 solidly defined based on this development that we see. Now we said before, in terms of commodity price pricing, where it is, I believe, is quite healthy for the jack-ups. Jack-ups are very economical barrels for the customers. They are 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. It's really just the timing that takes for the development in Saudi Arabia, the developments in Mexico, and some of the ongoing tenders to really come through.
I appreciate that color. And then 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? And I'm particularly thinking about Southeast Asia. Is there a pull from the gas side that's going to help that market?
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-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 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. 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. So clearly, what you see is true. We do expect that there will be high interest from our customers to start developing some of these gas projects that are available around the globe.
We will now take the next question from the line of Eddie Kim from Barclays.
Congratulations on the 2 separate 2-year extensions on the Galar and Gersemi in Mexico. Just curious on pricing for those 2 rigs. I don't know if you can share if the day rates on those 2 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.
Very good. And we haven't disclosed specific numbers for that. But what we've shared is they are a notch above from where the rigs are operating at the moment, which is very interesting. But 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 in Mexico over the last several quarters has been that collections have been a very relevant topic. So we took marked efforts to ensure that we were adjusting these things in this contract, not only to improve the day rates 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.
It's encouraging to hear about the anticipated increase in activity in Saudi Arabia. I remember that about two years ago, the Saudi Aramco jack-up rig count was close to 90, and now it's approximately 55. I wonder where the count might be around 2027. While reaching 90 seems unlikely, do you think a count of 70 is reasonable, or is that too optimistic? I'd like to know your estimation for the jack-up rig count by 2027.
Yes, Eddie, that's a great question, though it's not easy to answer precisely. From our analysis, we believe a number in the high 60s and 70s is very likely, with the possibility of reaching the high 70s. However, overall capacity in the region is already quite tight, as I noted in my earlier comments. Whether the figure ends up being in the low 70s or high 70s will have minimal impact on how the sector responds. Any increase from the current levels is expected to push utilization and economic performance in the space. A number in the 70s seems reasonable, but predicting specific behaviors is challenging. There are many variables at play. Any additional actions beyond the callbacks that have already occurred would be beneficial for the sector and significantly strengthen the space.
We will now take the next question from the line of Fredrik Stene from Clarksons Securities.
I have two questions for you today. The first one is about Mexico and the payments there. Liquidity has been a recurring theme given your historical exposure in Mexico, particularly with Pemex. Now that you've received some money in October and a smaller amount in September, how do you see the possibility of receiving similar payments in November and December? Do you have any insights on reducing your receivables?
Thank you, Fredrik. It is quite encouraging to see that our predictions about payments starting to come in during the second half of the year have materialized, as we received $17 million in October. Based on our current plans, we anticipate additional payments in November and December. Following this, we expect our monthly settlements to normalize. Additionally, as Bruno noted, we now have better payment terms in our new contracts, which limit the number of days we can hold outstanding operating costs to 45 days. Therefore, we expect to receive payment within that timeframe, with a maximum of 180 days for bareboat transactions. This should enhance our collections since our agreements are with intermediaries rather than directly with Pemex for these two rigs, and we have secured favorable payment terms with them.
For my second question, I want to switch topics a bit. This year, there has been some consolidation in the industry, with ADES potentially acquiring Shelf if all goes well. In most cases of consolidation, there are opportunities for improving fleets, asset scrapping, and so on. However, you already have a full premium fleet. I assume there are other assets out there that could fit your needs. Have you considered more actively how Borr could be involved in any mergers and acquisitions or asset transactions? In the third quarter and regarding the equity raise in July, you seem more open to this idea compared to earlier.
Thank you, Fredrik. I hope my response isn't too repetitive from what I've mentioned in previous calls. Consolidation is certainly significant for the industry and has generally been embraced. You're correct that whether it's due to consolidation or the current market state, we've witnessed some additional retirements, scrapping, and repurposing, which are all vital factors for the sector. These elements are indeed noteworthy. We maintain a robust operational platform that can provide greater value for jack-ups compared to many of our competitors. This positions us well to consider how we can engage in consolidation if opportunities arise. However, as you noted in your question, there are key metrics we need to assess, one of which is the quality of the fleet. We take pride in having the youngest and most premium fleet on the water, so it’s crucial that any potential opportunities do not compromise that quality. Additionally, we believe it’s essential to continuously reduce our debt over time. Therefore, any mergers or acquisitions must make sense for our deleveraging strategy. Considering all this, we are still exploring what’s available. I believe there is potential for further consolidation in the sector, and if we find rational opportunities that align with our strategy, we are definitely open to exploring them.
We will now take the next question from the line of Doug Becker from Capital One.
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? And maybe putting it differently, do you view growing the fleet in the U.S. Gulf, Angola, Saudi Arabia as strategic priorities?
Thanks, Doug. I think you're correct. There's an interesting balance between not overextending ourselves. Currently, if we look at the markets where we operate, we have a significant presence. Typically, our growth has been in nearby markets. Angola is obviously new for us, but we have a strong operation and understanding in West Africa that will assist us in establishing ourselves there. The U.S. represents a new opportunity. However, we are already active in Mexico and are familiar with the operational challenges there. We know how to succeed in that environment. There will undoubtedly be some lessons from our experiences in the U.S., which is new for us, but we believe we are well-positioned to handle that. Right now, I wouldn't say the U.S. is anticipated to become a major expanding market for us. Securing a rig there is a significant achievement. It's a new venture for us. I do see some potential U.S. policies that could encourage more activity. For the time being, we have a pipeline that should keep Odin engaged for a considerable time, which is our focus. If additional opportunities arise due to shifting policies and incentives for U.S. operators to advance their projects, we'll be prepared to consider those. For now, it seems primarily focused on rig operations.
Then just given the increased confidence that the jack-up market is past the trough, any changes to the capital priorities? I know you mentioned deleveraging over time is still a priority. But just given a better market outlook, is there any shifting in how capital might be allocated?
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. So we want to make sure that by the amortization 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 change in strategy for now.
We will now take the next question from the line of Ben Sommers from BTIG.
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's 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 seeing.
Yes. 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 1 rig, 2 rigs maximum that would come to the market. 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. A lot of these rigs were at very early stages of conclusion when they were stopped or abandoned, is not easy. We haven't seen any one of them coming out. I honestly do not expect that to change as things improve.
Awesome. Then I know you touched a little bit on the U.S. Gulf entry, but just curious kind of on Angola, now bringing a rig there, just kind of any outlook or color on that market.
Yes, sure. I mean, it is a new area for us. We have been looking at Angola before and waiting for the right moment and the right opportunity to be in country. 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, as I mentioned in the remarks, it is a market that had quite a substantial activity level for jack-ups that has been subdued for quite a few years. It seems that the potential 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 coming back and being able to penetrate Angola now. Having that as an opportunity for our portfolio, I think strengthens our flexibility going forward.
We will now take the next question from the line of Greg Brody from Bank of America.
You mentioned improved collection terms on your new contracts and that you collected $19 million in October from Pemex. How should we view the opportunity to recapture the receivables over the next year?
Sorry, your question was on how to capture the receivables from Pemex?
Pemex, that's the main one, yes. Yes.
No. I think what we've seen now is that Pemex and the government of Mexico have implemented several schemes this year to refinance their financial and supplier liabilities with a $12 billion setup. They have started to repay in the second half of the year, and we received $17 million so far in October. We expect to see more payments coming in November and December, and anticipate a return to normalcy regarding payments in Mexico. It seems they are taking the right steps at Pemex and with the government in Mexico to become more current on their payables. Just to highlight what we mentioned earlier, we have current receivables that we are actively working to collect. With the new contract terms and the new allocation of the portfolio in Mexico, York will continue to have exposure to Pemex payments, while the remainder of the fleet in the country will be working with international oil companies or under fixed payment terms that significantly reduce our exposure to payment issues with Pemex. Although this does not resolve the current outstanding receivables, we are making significant efforts to leverage the existing facilities put in place by the government to expedite collection. Moving forward, we expect the new terms will greatly reduce the accumulation of receivables in Mexico and help us stay more current.
Given the sanctions, you moved one of the rigs, leaving the Hild. What are your expectations for how this situation will unfold, particularly regarding the sale of those assets to Gunnlod? Additionally, how are you planning to proceed with the Hild moving forward as a result?
Yes. 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. And 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; and provided no sanctions affect our ability to continue working in that field or delivering that 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 if things change as we go along.
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?
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 on the deepwater 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, which is a very dynamic topic at the moment. For now, that's been the only impact on our business, which we disclosed, which is the loss of revenue. For the Odin, we're very happy to see that the rig has been re-contracted now. 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 the region.
Great. And 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?
Yes. No. And 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. But all in all, we have not seen a significant change in operating costs over the last few quarters, nor do we have any reason to believe that that's going to be changing going forward. The team continues to be focused on finding savings in our operations, streamlining operations, and that clearly has been more than enough to offset any inflation experienced in the sector. But so far, it has been flat. I have no reason to think that will change going forward.
We will now take the next question from the line of Joshua Jain from Daniel Energy Partners.
Just 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 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, 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 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. So there's obviously a lot of potential for attrition. Some of the 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 order. And by the time they are 40 years old and beyond the retirement age, that only gets worse exponentially. So I don't know how many rigs I’ll say can get out of the market. Clearly, there's potential for a lot of the rigs to go. We're seeing that trend accelerating; we're seeing rigs now converted to or sold for conversion to MOPU, 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 exercise discipline on that. For us, it's a bit of a muted point. Our rigs are all very new, with the youngest fleet in the industry. So let's see what happens.
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.
Very good. Thanks for participating in today's call, and I look forward to speaking to you all soon. This concludes today's conference call. Thank you for participating. You may now disconnect.