管理層發言
Good day, and thank you for standing by. Welcome to the Borr Drilling Limited Second Quarter 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. Patrick Schorn, CEO. Please go ahead.
Good morning, and thank you for participating in the Borr Drilling Second Quarter Earnings Call. I'm Patrick Schorn, and with me here today in Dubai are Bruno Morand, our Chief Commercial Officer; and Magnus Vaaler, our Chief Financial 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. Now before we dive into our second quarter results, I'd like to briefly reference the recent press release announcing both our new financing package and the CEO succession plan. We will cover the financing package in detail during our prepared remarks, as it represents a significant step forward in strengthening our capital position and supporting our long-term strategy.
I will return to the CEO succession towards the end of the call. Our second quarter results were strong with technical utilization of 99.6% and an economic utilization of 97.8%. As anticipated, our activity rebounded in the second quarter with 22 out of 24 rigs active. Revenue increased by $51.1 million this quarter and EBITDA rose by $37 million to $133 million, up by 39% versus the first quarter of this year, underscoring the profitability of the revenue stream. Additionally, $106.5 million free cash flow was generated in the first six months of the year. During the quarter, we have secured significant new awards, including a multi-rig contract in Asia and a new contract for the Arabia II, which is expected to return to our active fleet in September. These contract awards and commitments improve our contract coverage to 84% at an average day rate of $145,000 for 2025 and 47% coverage at an average day rate of $139,000 for 2026.
Last month, we took a decisive step to strengthen Borr Drilling's longer-term financial position through a comprehensive financing package. This initiative, which included a $102.5 million equity raise and amendments to the size and covenants of our revolving credit facilities, effectively increased our liquidity by $200 million and strengthens our balance sheet. We acted proactively to secure financing while market conditions were favorable, reinforcing our ability to execute on our long-term strategy, including disciplined growth and potential industry consolidation. Looking into the third quarter, we see a comparable level of activity as in the second quarter and anticipate a similar performance. As previously indicated in our commentary on 2025 adjusted EBITDA guidance, we are comfortable with the current Bloomberg consensus estimate of approximately $470 million. We are encouraged by the Mexican government's renewed commitment to strengthening Pemex's liquidity and its restated production goal of achieving 1.8 million barrels per day.
These actions should also enhance Borr Drilling's liquidity, enabling us to leverage our proven track record of delivering best-in-class wells and uniquely positioning Borr Drilling to capture incremental drilling activity, particularly under private investment projects that are expected to play an increasingly important role in the future of Mexico's oil and gas production. I'll pass the call now to Magnus for the second quarter financial commentary.
Thank you, Patrick. I will now go into some more details around the results for the quarter, which were positively impacted by an increase in activity and the number of rigs working in comparison to the prior quarter. Total operating revenues were $267.7 million for the second quarter, an increase of $51.1 million or 24% compared to the first quarter. Included in this, our day rate revenues increased by $36.3 million, primarily due to an increase in the number of operating days for the Vale and the Tor. Bareboat charter revenues increased by $12.7 million due to the start-up of Arabia I's contract in Brazil and the commencement of the Galar Grid and Gersemi recommencement in Mexico. And lastly, management contract revenue increased by $2.1 million, primarily due to the recommencement of the Galar. Total operating expenses were $171.2 million for the second quarter, an increase of $14.4 million or 9% compared to the first quarter.
This is also due to the Vale and the Tor rig operating expenses increase of around $12.4 million. This in total gives us an operating income of $96.5 million, which is a $36.3 million or 60% increase from the prior quarter. Further below the operating income line, we saw total financial expenses decreasing by $6.3 million, mainly due to a decrease in financing fees related to the Mexico settlements in the first quarter of 2025 with no comparable in the second quarter, in addition to positive FX movements. Income tax expenses decreased by $7.8 million, primarily due to a one-off deferred tax asset recognized during the quarter and decrease in tax expense in Africa. All of the above resulted in a net income of $35.1 million, an increase of $52 million compared to the previous quarter. Adjusted EBITDA was $133.2 million, an increase of $37.1 million or 39%. Now moving into liquidity. Our free cash position at the end of Q2 was $92.4 million.
In addition, we had $150 million undrawn under our revolving credit facility, resulting in total available liquidity of $242.4 million. Cash decreased by $77.8 million in comparison to the prior quarter, explained by the following: Net cash provided by operating activities were $6.3 million. This was highly impacted by $98.3 million in cash interest payments, which we make semiannually on our senior secured bonds. Additionally, $20.8 million of income taxes were paid in the quarter. The cash flow from operating activities in the quarter is impacted by working capital build. However, this is expected due to several reasons. First of all, we continue to see delays in collections in Mexico. However, due to recent positive developments through financing initiatives by the Mexican government, we expect this to improve in the second part of the year. Additionally, we have experienced increased accrued revenue as a natural result of the start-up of new contracts for the Vale, Ran and Arabia I, where services have been performed but not yet billed.
In addition, certain rig contract rates increased compared to the previous quarter. Net cash used in investing activities was $13.4 million and is comprised of jack-up additions primarily as a result of long-term maintenance costs and activations. We still expect maintenance CapEx levels for the year around $50 million. And in addition to these $50 million, a large portion of the contract preparation and activation cost for the rig Vale, we were able to capitalize and classify as CapEx as opposed to deferring expenses as we normally do for contract start-up. This is due to the rig being a new build commencing its first contract. Lastly, net cash used in financing activities was $70.7 million, which relates to the semiannual debt repayments on our senior secured notes due in 2028 and 2030. It's also worth adding that year-to-date, our free cash flow generation was $106.5 million. As Patrick summarized, in July, we announced an initiative to significantly strengthen our balance sheet and increase liquidity of approximately $200 million through an equity raise of $102.5 million and increases in revolving credit facilities of $84 million and a reduction in the minimum liquidity covenants.
With these transactions, the Q2 pro forma liquidity increases to approximately $425 million, which consists of $192 million of cash and $234 million in available RCF capacity. This strengthened liquidity position provides a solid foundation for pursuing opportunistic transactions and supporting future growth. With this, I will pass the word over to Bruno.
Thank you, Magnus. Year-to-date, Borr Drilling has secured 14 new contract commitments, adding $318 million to our backlog. Several of these new commitments include options with the potential to significantly extend their duration and earnings visibility. Since our last report, we secured high-quality contracts backed by our market-leading operational performance. In Vietnam, we received a multi-rig award from Hong Kong for rig store and gunboat totaling approximately 500 days, including priced options. Both contracts are expected to commence in early Q4 in direct continuation of the rig's existing contracts, clearly demonstrating our ability to eliminate idle time and maximize asset utilization. These awards strengthen our market position in Vietnam, where we see near-term demand growth in Southeast Asia. In the Middle East, the rig Arabia II received a 500 days contract expected to commence in early September, enabling the rig to return to the active fleet.
While this tender has been awarded on a competitive basis, the rig's track record of high performance allows us to collaborate with the customer around certain performance incentives, which could result in day rate uplift of up to 10% to 15%. In Mexico, the run had a 100-day option exercised by ENI, keeping the rig contracted into early '26. As part of this extension, the parties agreed to add another set of options to that contract that if exercised, would result in full year coverage for 2026. And lastly, in June, the Odin received a notice of suspension by Pemex. Following this, we secured a letter of intent from an independent oil company in Mexico for an approximately 75-day program expected to commence in late August. In addition to these awards, we have converted the previously announced LOAs for the Scout in Thailand and the Norve in West Africa into contracts. As you note in our fleet status report, the award associated with the Norve in West Africa has now been assigned to the Natt, which will enable us to optimize scheduling flexibility and maximize revenue days.
On the back of the recent contracts, our 2025 fleet coverage has now reached a robust 84% at an average day rate of 145. This is in line with our earlier targets of achieving 80% to 85% coverage in the year, and we see potential for further improvements as we have line of sight of additional contracts for the rigs Natt and P1, which we still have open capacity this year. Our 2026 coverage, including price options, now stands at 47%, a 12-point improvement since our last report. Mexico remains a significant and strategically important part of our portfolio, representing circa 20% of our available coverage in 2026. The announcements made by the Mexican government last week provide us with increased confidence in sustained rig demand and contract stability for our rigs in the country. I'll cover these in more details in a few minutes. From a macro perspective, the oil and gas sector continues to contend with a complex global environment recently shaped by regional conflicts, uncertainty over global trade tariffs and OPEC's accelerated rollback of its 2.2 million barrels per day voluntary cuts.
Regional conflicts have continued to underwrite the fragility of the global oil and gas supply chains with escalations in the Middle East causing Brent prices to reach highs of $75 in June and revising discussions about the importance of pragmatic government policies as illustrated by the Dutch government's reinstated commitment to develop local gas and New Zealand's reversal of its prior ban on new offshore licenses. Despite this complex environment, Brent crude prices have remained resilient, averaging approximately $68 in Q2, a level that continued to support the development of shallow water projects, which offer some of the lowest breakevens and faster cash flow generation to our customer. Looking specifically at jack-ups, global utilization has remained generally steady with modern rig market utilization holding above 90%. Day rates have continued to experience downward pressure as the market works to absorb the excess capacity resulting from the Saudi suspensions.
While more than half of the modern rig capacity from the suspension has been absorbed, we estimate that less than 10 modern units remain available and competitive in international markets. Positively, visible incremental demand in the Middle East, particularly in Kuwait and the neutral zone, points towards a significant part of this oversupply being absorbed in the near future. While we acknowledge that these projects have experienced delays due to supply chain constraints and complex procurement processes, recent orders of long lead items provide increased confidence that they remain on track to materialize in '26 and '27. Additionally, we are encouraged by recent data points relating to Aramco EPCI tender awards and nearing awards for an estimated total of $8 billion, surpassing 2024 levels. These awards cover key projects such as Zulu and margin and are understood to include several wellhead platforms.
With jack-up activity in Saudi already back to 2019 levels, we believe further development of these projects are supportive of long-term incremental demand in the Kingdom. In Southeast Asia and West Africa, demand has continued to track positively. Since the beginning of the year, contracted jack-up counts in these regions have increased by 10 rigs. While the inflow of rigs from the Middle East to both regions has pressured rates in recent opportunities and more marketing in Southeast Asia, supply and demand in these regions is fundamentally balanced for modern units. In Mexico, we're encouraged by the government's renewed focus on strengthening Pemex's liquidity and its restated goal of achieving 1.8 million barrels per day in production. The government has laid out a clear plan, including a $12 billion debt offering to refinance short-term obligations and another $13 billion facility to provide funding for Pemex's current and future projects.
Given our track record of delivering best-in-class wells, Borr is uniquely positioned to capture incremental work, especially on private investment projects, which are projected to contribute to one-quarter of the country's production by 2033. The bottom line is this, stronger liquidity at Pemex is a clear positive for Borr Drilling. As supply and demand continue to rebalance, retirement activity has now resumed as owners of old assets face challenges to find suitable and economic redeployment opportunities. So far this year, according to IHS, four units have been retired and several others are being held for sale. We expect the dynamic to accelerate, particularly in the context of ongoing industry consolidation. In short, while near-term volatility may continue, the long-term fundamentals of the jack-up market remain compelling. Demand for oil and gas to support global energy needs is expected to continue to grow and support investment.
Shallow water projects represent a sizable portion of global production, characterized by attractive breakeven prices, short cash flow cycles and relatively low emissions. With an aging global fleet and no new builds in sight, the supply of jack-ups should remain tight, supporting high utilization levels and economics. We are consistently delivering in our commercial strategy, maximizing 2025 backlog and building 2026 coverage while supporting our customers through this dynamic cycle. With that, I'll hand the call back to Patrick.
Thank you, Bruno. Now I'd like to discuss our CEO succession plan. Effective September 1, Bruno Morand will succeed me as Chief Executive Officer. At that time, I will transition to the role of Executive Chairman. This is the culmination of a multiyear succession plan developed in close partnership with our Board of Directors. I'm very pleased that the Board has selected Bruno to lead Borr Drilling into its next chapter. While many of you already know him, let me take a moment to highlight his background. Bruno is a 20-year veteran of the offshore drilling industry with a strong track record in operational management, project execution, marketing and customer relationship development. Prior to joining Borr Drilling in 2017, he held senior roles with international offshore drilling companies, giving him broad exposure to global markets and operational complexity. Since joining Borr Drilling, he has been deeply involved in managing the relationships with our key clients and strategic partners and has contributed significantly to our operational and commercial progress.
His dynamic leadership, customer focus and strategic insight position him to advance our current priorities and unlock new growth. To our shareholders, I want to underscore that this transition is not just about continuity. It's also about accelerating our momentum. Bruno brings a fresh yet experienced perspective that will be invaluable as we navigate evolving market dynamics and pursue new avenues of growth. Alongside this leadership change, I'm pleased to share updates to our Board composition. Firstly, our Founder and current Chairman, Mr. Tor Olav Troim, will remain on the Board as a Director, ensuring continuity of our founding vision. Mr. Dan Rabin will become our Lead Independent Director, ensuring continuity of objective and independent governance. And Mr. Thiago Mordehachvili, Founder and Chief Investment Officer of Granular Capital and a long-standing shareholder will be joining our Board.
Mr. Mordehachvili brings deep financial acumen and a strong shareholder perspective, which will help to further sharpen our focus on long-term value creation. These changes significantly strengthen our Board's capabilities and align with our strategic vision for long-term success. The combined experience and diverse expertise of this group will support the leadership team in driving innovation, performance and shareholder returns. Now as I reflect on the past seven years, initially as a director and subsequently as CEO, I'm incredibly proud of what we have built together. During that time, we have assembled a world-class leadership team, expanded our presence in key markets and established Borr Drilling as the leading international jack-up drilling contractor. The strong foundation we stand on today is a direct result of the hard work and dedication of our employees, the continued support of our customers and the confidence of our shareholders, and I sincerely thank each one of them for that.
Looking ahead to this next chapter, I'm excited about the path ahead for Borr Drilling, and I'm confident in our ability to deliver on our long-term vision and create value for our shareholders. Thank you. Ladies and gentlemen, we are now ready to go to Q&A.
分析師問答
It's coming from the line of Eddie Kim with Barclays.
Just wanted to get an update on where things stand in Mexico. It's certainly great to see the Mexican government raising debt, so Pemex can hopefully pay their suppliers like yourselves. But from an operational perspective, do you think the worst is sort of behind us in Mexico? You have, I believe, five jack-ups drilling for Pemex currently, most of which are coming off contract in the first half of next year. Just curious, what's your confidence level on extensions for these jack-ups? And looking even further ahead, how do you see maybe your Pemex rig count trending from here over the next, let's say, 12 to 18 months?
Very good Eddie. Bruno here. So let me tackle that in small chunks here. But indeed, it is positive; what we know is the government announced this $13 billion facility, which is clearly earmarked to support vendor payments for projects that are current and future in the Pemex portfolio. And there has been a hint that in 2026, there will be a similar facility that will come to support Pemex in getting back behind the strategy. So that is positive. It's hard to comment more. I think it's going to take a little bit of time for agreements to be put in place. There's obviously banking agreements associated before revenues or revenues start to come through. But there seems to be a very clear pathway for that. So that is very positive, very positive for us. In terms of activity, what we see in Mexico at the moment has been less about Pemex's desire to continue with activity and it's more about their ability to continue to pay vendors and sustainably continue operations.
I think with the funding, the desire and the work scope has been there and that the payment should enable now some of that activity to return in quite short near term. It is indeed positive. I think it does paint a better picture and a clear environment for us in Mexico going forward. We do have ongoing discussions about new contracts for multiyear work on our rigs, and we are quite optimistic and positive that we'll see those coming to a conclusion in a very short term. So we'll update you more as we move along, but I think the optimism is certainly there.
Great. Great. My follow-up is just on potential M&A. So you have a lot more dry powder now than you did three months ago. You mentioned potentially targeting some opportunistic transactions. Could you expand on that a bit for us? Are you looking to target maybe some larger corporate M&A? I know we had a big merger announcement recently in the sector or more targeting smaller kind of asset purchases? And are you looking to target specific regions? Just curious on your thoughts on the opportunities and what you're looking for.
Yes, Eddie, part of the answer is likely what you mentioned regarding the recent announcements. Any insights we provide may clarify our direction and the candidates we are considering. Given the recent movements and signs of consolidation in the market, it's hard to elaborate further. The key takeaway is that we anticipate more consolidation in the industry, as we believe the timing is favorable. This may align with actions we expect to occur in the deepwater sector as well. From this situation, there could be intriguing assets that might become available and could be of interest to us. As you may recall from the Paragon acquisition, we don't hesitate to divest a significant number of rigs that no longer match our fleet profile, provided the valuation is appropriate. We're also examining parts of the market where further rationalization is possible. However, I'll refrain from providing additional commentary since the market we are in is quite small, and some players have already taken action. We'll need to stay vigilant in the coming months to see how the landscape evolves.
Understood. Sounds good. And Patrick, you navigated the company through some very challenging times. So a job well done and wish you the best in your next chapter.
Our next question comes from the line of Doug Becker with Capital One.
Patrick, you mentioned that private investment projects are expected to become more significant in Mexico. Can you provide an update on the current state of private projects? It has historically been challenging to reach agreements that work for everyone. What milestones should we be watching for that could indicate a broader acceleration in this area?
Yes, I'll ask Bruno to give a bit more color on this, Doug.
Very good. No, the private investment is a reality in Mexico at the moment. If you look at our fleet, one of our rigs in Mexico, as we speak, is operating in a field called Bacab-Lum, which is a private investment project. And the way to think about it, these are basically in general fields that are already identified by Pemex and sometimes relatively mature that are then assigned to a private investment group that has a 15-year timeline to develop these fields and get remunerated for the additional production that they can get out of these fields. So it seems to be quite an attractive value proposition. It's one that incentivizes performance and at the same time, reduces a bit of the strain on Pemex's balance sheet to fund some of these projects. Equally important is that these projects allow the investment group to actually get paid from production and consequently minimizing as well some of the exposure to the Pemex payment cycle.
So that's a quite interesting thing. In terms of scale, the one that we're participating in at the moment is the first one in the country and started very successfully. In the recent plans from Pemex that were released last week, they have now a target and ambition to see those projects represent about one-quarter of the total country production by 2033 and about 450,000 barrels a day at that point in time. So there's quite a significant growth expected and certainly a type of project that will value or benefit performance-oriented contractors like ourselves.
No, it definitely sounds encouraging. Maybe a quick one for Magnus. It wasn't clear to me, are you currently having conversations around the Pemex accounts receivable being paid? Or is it just that the funding is coming in and obviously that bodes well?
I think it is the recent signals we have received from Mexico through the announcements they have made and clearly stated they have $13 billion of financing program now to pay their suppliers and vendors for work conducted in 2025, which makes us believe that the payments will pick up in Mexico because we have seen that they have actually actioned this financing now. Although they have talked about it for a long time, at least now we see the actions.
One moment for our next question that comes from Fredrik Stene with Clarksons Securities.
Yes, Patrick and Bruno, congratulations to both of you on what can be seen as a double promotion. I'm looking forward to ongoing discussions in the coming years, even though you will be in slightly different roles. That said, I know Mexico has been discussed thoroughly, but before moving to my main question, Magnus, could you share the current amount of outstanding receivables related to Pemex on your balance sheet?
Yes. So currently, we have around $60 million, $65 million of outstanding bareboat payments from Mexico, which follows our comment in the first quarter where we received $120 million of cash receivables, which took down our receivable balance by approximately 75% and then adding on the variables that we have burned in the meantime. So that gets you to mid-$60 million.
Okay. That's very helpful. Now that Mexico is settled, I wanted to discuss the market in general, particularly focusing on Saudi Arabia. In your prepared remarks, you mentioned that you feel there is some additional demand in the Middle East beyond just Saudi Arabia, but at some point, Saudi Arabia will also increase its rig count. There have been some recent market reports suggesting that Saudi Arabia has reached out to all eight rig owners who have supplied offshore rigs to inquire about the availability of suspended rigs. I would like to hear your thoughts on that, as only a small increase in demand could potentially boost rates. Do you have any additional insights on this?
Yes. Indeed, Fredrik. And so you've heard the commentaries and they reflect what we've seen as well. I think at an operational level, we have had previous discussions with Aramco about updating them the status of the rigs that operated with them earlier and what it would take to have them back. But I must say that these conversations so far have been very much on an operational level and not in a contractual basis. Obviously, we've said before that we expected Aramco to eventually come back to the market. Aramco is a very strong engineering company. At one point in time, when they designed they needed another 40 rigs, certainly it wasn't by a mistake in a calculation. They know that demand is there. And I think that they encountered some issues with timing maybe related to capital constraints in the Kingdom. And when we said before in several occasions that we expected that demand to eventually come back.
It's fair to say that estimating Aramco's actions and timeline is far from an easy thing. And I think we're not going to be the ones trying to put a prediction on what happens. But indeed, I think the talks about the status of the rigs as well as the positive new flows on the EPCI side in terms of award starts to give us a bit of a brighter picture for the Kingdom. We are aware of reports talking about Aramco potentially bringing rigs in the first quarter next year. That's not something we have particularly heard from Aramco. We'll have to watch. I think the moment seems to be coming closer and closer to the time that Aramco could be needing rigs. And as you said, I think any movements from Aramco at this stage with an oversupply that is not that significant will be very welcome and supportive to the market. So we'll have to see what happens in the coming weeks and months.
Yes. That's very good color. Just a bit more broadly on your 2026 coverage, including options, now you're close to 50% at rates that would be higher than where the market is today. As you're working and Mexico is definitely a part of this, of course. But as you're working with your coverage for 2026, how are you prioritizing utilization versus pushing day rates in the environment that you're in at the moment?
Yes. Nothing changed in terms of our strategy, Freddie. We're still looking at optimizing the utilization of our assets. We know that a rig idle has a significant impact on our economics, and it's important that we optimize the earnings potential of these rigs and utilization remains king in the current environment. We do have a fair bit of rollovers as we walk into 2026. So irrespective of the improvement sentiment about the market being in an upwards or in the potential starting an upward trend, I think we're well positioned to capture an upside as it comes, but we'll focus at the moment on making sure that we have the best possible utilization for our fleet.
Alright. And just one super quick follow-up on some rig specifics. You said that the Natt will now take the place of the Norve for the work starting in late 2026. Norve has options at that point. Should we interpret the rig swap as that there's a high likelihood that those options will be executed? Or is there some other factors to consider?
Well, there is that, Freddie. I think that the work that we've been doing on the Norve has a good potential for the options to be exercised. And we said before that we think quite a few of our options have a potential to be exercised. Now what equally is important as well is that the customer that has that rig contract on the Natt now has indicated a desire to potentially move that work earlier, subject to a few constraints and long lead items. So obviously, having that work moved to the Natt allows us to potentially bring that forward if the customer is able to achieve an accelerated schedule. And that obviously would be very beneficial for the customer in terms of earlier production, but equally very beneficial for us in terms of improving our coverage for the year.
Our next question comes from the line of Dan Kutz with Morgan Stanley.
Congrats, Bruno and Patrick. Best of luck in the new roles. So I wanted to ask about a couple of, I guess, a bit more emerging opportunities in the shallow water space or at least areas that historically haven't been thought of as growth areas. The first is on gas activity. So are there any rigs that are doing work in gas plays currently? And I think, Bruno, you mentioned a couple of positive developments, one of which was the Dutch government looking to develop more local gas and you mentioned New Zealand as well. I'm not sure if that was a gas or oil opportunity or both. But just basically trying to get a sense of any work you're doing now in gas basins and any customer conversations or opportunities you see for gas work moving forward?
Very good. And indeed, we do have a sizable portion of our fleet that has been working gas. I think if you think specifically about larger pockets, we have done a significant amount of work with ENI in Congo that is largely focused on LNG and a very interesting project. We at some point in time had three rigs operating with ENI in that project. And then we do have other projects around the globe that involve gas, including the North Sea, in the Netherlands, specifically, as I mentioned, which has a restated commitment to support the local gas development. We have been working very closely with ONE-Dyas in the North Sea on a very interesting development, one of the largest gas fields to be developed in the North Sea in recent years. While the news flow is positive, the project has faced some challenges on permitting timelines, but we do expect that to be back in a schedule very, very soon. So gas is part of what we do around the globe. Our rigs are very capable and suitable for that. And it is a decent chunk of our portfolio.
That's really helpful. I have another question for Bruno regarding the work being done by the bore fleet and the shallow water fleet globally. I'm curious about any trends you might be observing in this area. As global oil and gas basins mature, it seems like more service companies are discussing mature field work as opposed to greenfield versus brownfield projects. Could you share your insights on the trends in development, particularly in comparison to the focus on mature infill and related work?
Yes, it's fair to say that a significant portion of our work is focused on development, primarily in discovered and somewhat mature fields. I believe this trend will continue. One of the advantages of the shallow water market is that many projects already have infrastructure in place. Even when we engage in near-field developments, we can quickly connect barrels to the pipeline. We have observed an uptick in investment in exploration projects, with varying levels of activity across different regions. For example, in Asia, there is increasing activity in future exploration projects, particularly in Malaysia. Similarly, West Africa has become a substantial part of our portfolio, whether through complete greenfield developments or new exploration programs, as seen with BWE in West Africa. We are involved in both types of work and expect that increased investment in exploration will be necessary in the coming years, particularly given the subdued exploration investment in recent years. We are well-positioned to handle both exploration and development initiatives.
Our next question comes from Gregg Brody with Bank of America.
I have a few questions since a lot was discussed. You mentioned that the Natt has potential to take on some additional work. However, based on the current contract, there’s a considerable gap between the end of this contract. How do you view the use of that rig and what options are available? You brought up the possibility of it starting work earlier. I'm curious about the extent of that early work and if there are any other opportunities.
Very good. And we are working on a set of opportunities, not one only, but a set of opportunities, Gregg. And we have been working on both projects that could have a commencement this year, optimizing our coverage for this year as well as some projects in the region for the earlier part of 2026. So if we're successful on these and we've been inching closer and closer, that would provide a very nice bridge over to the work that we already have assigned for the rig, but we'll have to see as things materialize in the coming weeks. I feel optimistic that we'll be able to have most of that white space, if not all of it contracted for the rig and a nice utilization for that rig in West Africa.
You mentioned the increase in exploration activity. One of your competitors suggested that some of this may be an attempt to capitalize on the short-term availability of rigs to pursue certain concepts. Do you see these opportunities potentially at lower day rates to utilize more rigs in the interim? Or do you think the day rates are stable for those opportunities?
Yes. And indeed, I think the theme in the industry has been obviously protecting coverage, and that has led, as I mentioned in the early notes, to more aggressive behaviors in different regions, more marked than others. If I think about the region that we were talking about in West Africa, it's important to note that in West Africa, what we have experienced over the quarters is that a lot of the customers are extremely focused on getting rigs that are in the region and particularly have a very strong reputation for operational delivery. We oftentimes are looking at programs that are slightly shorter in nature. And I think our customers understand that predictable results, good operational efficiency stack up higher than costing and the risk that sometimes comes with taking a less-known name or maybe a rig outside of the region. So we will continue to balance that. I feel confident that for now, the rate structure that we see in West Africa is pretty well maintained.
Got it. Just moving to Mexico, I know there are many questions about it. I appreciate that all the capital raised and the facility established there aim to promote oil production and growth. Has the government communicated with you directly regarding the timing of resuming payables or receivables, or are you simply observing their general policy statements and actions?
Yes. No, we have not discussed anything directly with the government. Obviously, keeping in mind that our work in Mexico is not directly through Pemex. It's through a local conglomerate that we have been partners with. And therefore, I wouldn't expect that communication to have come directly to us. What we know is that they have been talking to local banks and institutions to start putting things in place. And the government themselves have indicated that they expect payments to be starting now in Q3. So we have to watch. Obviously, they've been working on a quite comprehensive solution for Mexico. We know that the regulatory and the bureaucratic state of the country sometimes force these things to take a bit more time than what we hoped for. But nonetheless, the indications are positive that the flow of money should be sooner rather than later.
And then just the last one. Obviously, the equity raise has created a lot of optionality for you. I'm curious if you think about that capital raise to potentially address some debt opportunistically. Is that a possibility?
I believe we will see how our liquidity evolves over the year, particularly considering Mexico and the transition from day rates leading into 2026 and how we manage our coverage. This situation certainly gives us a tool in our capital allocation strategy and we will take it into account. Lately, our debt has been trading below par, which presents an appealing opportunity for us to consider buying back bonds. Following our recent capital raise, the bonds have returned to par, which we view positively. Additionally, having strong liquidity on our balance sheet gives us a strategic advantage, allowing us to pursue other opportunities that may arise. We have been discussing potential acquisitions or mergers and acquisitions. Therefore, it's invaluable for us to maintain a robust balance sheet position as we currently do.
And this concludes the Q&A session. I will pass it back to Patrick Schorn for closing remarks.
Thank you, operator. So a few comments in conclusion. We delivered a strong Q2 adjusted EBITDA of $133.2 million and expect a similar activity and performance for the third quarter. In July, we have proactively strengthened the balance sheet and are now well positioned to execute on our long-term strategy. For the full year 2025, we're on track to deliver the consensus estimate of approximately $470 million in adjusted EBITDA. And Bruno Morand will be the CEO effective September 1, and I wish him all the best in doing that. Ladies and gentlemen, thank you very much.
And this concludes our conference. Thank you for participating. You may now disconnect.