Borr Drilling Ltd

NYSE:BORR

Earnings Call Transcript 2019-Q1

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to the Borr Drilling Limited First Quarter 2019 Results Conference Call. [Operator Instructions] I must advise the conference is being recorded today, Wednesday, the 29th of May 2019. And I would now like to pass the conference over to your first speaker today, Magnus Vaaler. Please go ahead, sir.

[Magnus Vaaler, Investor Relations Officer]

Thank you. Hello, and welcome to Borr Drilling Limited's First Quarter 2019 Results Presentation. The speakers in the call today will be CEO, Svend Anton Maier; CFO, Rune Magnus Lundetrae; and Tor Olav Trøim, Chairman of Borr Drilling Limited.Please remember that our discussions and comments today may include forward-looking statements that include a number of risks and uncertainties and other factors that could cause actual results to differ materially from these forward-looking statements. Please be referred to our earnings release that define forward-looking statements and our annual report of 2018 for information about risk factors. The forward-looking information is based on information as of today, and we assume no obligation to update any of these forward-looking information.Today's call will consist of some highlights from the quarter, some market views and company outlook. We will then open up for participants to ask questions in the Q&A session. I will, with this, turn the call over to our CEO, Svend Anton Maier.

[Svend Anton Maier, Chief Executive Officer]

Thank you, Magnus, and welcome, everyone, to Borr Drilling Limited's First Quarter 2019 Results Presentation. Here are the highlights in the quarter and subsequent events. The operating revenues in the first quarter were $51.9 million. EBITDA was negative with $15.3 million, and net loss was $56.4 million. Technical utilization continued less than the previous quarter at 99.1% in the first quarter. On the 28th of May, we received the final credit-approved commitments from financing in the total amount of $645 million [ credit ] of 3 years from 5 lenders. We were awarded 2 18-month contracts with Pemex in Mexico under the integrated service model with Schlumberger. We purchased a KFELS Super B Bigfoot newbuild rig, Thor, from BOT Lease Co. for $122.1 million. We completed the successful activation and reactivation of 5 rigs on time and below budget. And we have entered into an agreement to sell 3 more standard jack-up rigs to be retired from the international drilling fleet. With this, I would like to turn over the call to Rune Magnus, our CFO.

[Rune Magnus Lundetrae, Deputy CEO & CFO]

Thank you, Svend, and thanks for dialing in, everyone. I will now take you through the financial results for the first quarter of 2019. Operating revenues were $51.9 million in the quarter generated by average of 9.1 operating rigs. 1 rig, the Prospector 1 commenced operation and had a full quarter of operations; while 3 rigs, the Mist, Prospector 5, and the C20051, concluded their contract in the quarter. The Mist and the Prospector 5 commenced new contracts in Q2 this year while the C20051 was sold off in May. This sale will be recorded in the second quarter of 2019.Rig operating and maintenance expenses were $57.1 million in the quarter, includes costs for both operating and stacked rigs. Total OpEx for the rigs in operation was approximately $38 million, including overlap. The EBITDA for the quarter was negative $15.3 million. Depreciation for the quarter was $23.9 million, in line with the previous quarter. Impairment of $11.4 million related to the sale agreement for the cold-stacked standard jack-up rig, Eir, with sales anticipated to be completed early in 2020 subject to certain conditions. The sale price is $3 million. G&A was $10.1 million in the first quarter and includes $2 million in noncash share option costs. The net loss for the quarter was $56.4 million and the loss per share $0.11. Based on signed contracts, the company expects to have a positive cash from operation from Q3 2019. In addition, we expect a growth in EBITDA in Q3 and Q4 from the contacts commencing in Q2 and Q3 of this year. Moving over to the balance sheet. Total assets increased by $184.7 million compared to December 31 to $3.1 billion in total. The increase from last quarter was primarily a result of acquisition of the KFELS Super B Bigfoot rig, named Thor, from BOT Leasing (sic) [ BOT Lease ] and also the delivery of the final newbuilding from PPL Shipyard, the Njord. Total liabilities were $1,626.6 billion through end of March. The increase from year-end was $246.4 million and consists mainly of $87 million in long-term debt related to delivery financings for the newbuilding, Njord; $95 million drawdown on the revolving credit facility; $60 million drawdown on the bridge loan facility related to the acquisition of the Thor. And this was offset by a reduction in the liability pertaining to unrealized losses on the forward contract related to marketable securities of $11.5 million. At the end of the first quarter, the company had $164.4 million of available liquidity, which includes $135 million undrawn amounts under the company's credit facilities.I would like to turn the call back to Svend.

[Svend Anton Maier, Chief Executive Officer]

Thank you, Rune. We have gone through a rapid expansion for the 9 rigs to work in the last months as follows: April '19, the Odin with PanAmerican; April '19, the Gerd with Exxon; also in April '19, the Natt with First E&P; April '19, the Ran with Spirit Energy; in May '19, the Groa with Exxon; in May, the Prospector 5 with Neptune; and also in May '19, the Mist with Vestigo. We've also started the mobilization of Grid and Gersemi for Pemex. Offsetting the increase of available rig count in May, the company entered into an agreement to sell the 3 standard jack-up rigs, Baug, Eir and the C20051. This is in line with our strategy to sell and retire older units when their contract ends. These divestments bring the total number of rigs being divested and retired from the international jack-up rig fleet to 30 by the company, including those of Paragon since the beginning of 2018. 18 months ago, Borr was celebrating the commencement of the operation of its first unit, the Frigg. Since that time, our contracted fleet has grown exponentially to 13 rigs in May, and 16 rigs are expected to be operating by the end of July. More importantly, the company has been successful in achieving this goal while delivering industry-leading operations and safety performance. Through the first quarter, our operating fleet has achieved a strong technical utilization of 99.1%. On the health, safety and environmental side, we're very proud to share that we have been recently awarded by the IADC as the safest drilling contractor in the North Sea for the jack-up category in 2018. We're proud of this achievement as a young company operating in the mature North Sea markets. Achievements like this continues to solidify Borr's position in one of the world's leading -- as one of the leading operators in the modern, high-specification jack-ups with a strong operational track record. The company expects to generate positive operating cash flow in the third quarter 2019 and has now received commitments for a solid, long-term financing. Turning to the slide to Rune.

[Rune Magnus Lundetrae, Deputy CEO & CFO]

As referred to in the company's fourth quarter 2018 report, the company initiated efforts to secure overall long-term financing and has received an indicative term sheets for a bank loan facility of $500 million. Since the date of the report, the company has received final credit approved commitment in the total amount of $ 645 million from 5 lenders. The finalization of this financing arrangement is subject to normal documentation procedures, and it is anticipated that they will all be drawable on or before June 30 of this year. The new long-term facility of $645 million will replace all the company's short-term credit facilities of a total amount of $510 million and also enable the company to fully finance the remaining newbuilding program and activate further rigs. The new debt facilities include $70 million of guaranteed facility versus the $90 million in the previous financing arrangement, meaning the underlying increase of borrowing capacity of the facilities is $155 million. The company will, after the new financing have been implemented, have no amortization of debt until 2021 and no debt maturities before 2022. We believe that this is a sign of confidence from our lenders that we were able to obtain the financing commitment. This means that we have a solid balance sheet with extended debt maturities and capacity to take out the newbuilding CapEx remaining to be paid in 2020.On Slide 9, we have made an illustration. If you take current day rate witnessed in the market today and look at our expected fully invested net debt per rig, this equates to approximately 4x net debt to EBITDA on a per-rig basis. And now back to you, Svend.

[Svend Anton Maier, Chief Executive Officer]

Thank you. So jack-up utilization levels have continued to improve during the first quarter and stood at 79% at the end of March and is currently at 81%. Repeating a clear trend noticed previously, this increase has been driven primarily by increased utilization of the modern jack-up fleet. That stood at 83% at the end of the quarter and currently at 85%. This represents an increase of 4 percentage points from the end of 2018 until today. Looking at the graph at the bottom of the slide, you will see that there are currently 234 modern jack-ups on contract. This is a historical record and it's an increase of 41 rigs or 21% when compared to the same period in 2014. In the standard jack-up segment, there's been an opposite trend with a number of contracted rigs currently at 130 or almost half of the figures experienced in 2014. The increase in jack-up demand coupled with operators' clear preference for newer rigs continue to drive utilization of modern rigs higher and dramatically reduces the number of rigs available. We have tried to visualize this in the table on the right side of the slide. As of today, there are 41 uncontracted modern jack-ups out of which 18 are owned or controlled by regional drilling contractors with limited access to the international markets. These levels, only 23 rigs available and competitive in the international market, which translates into an adjusted market utilization of 91.1%. We want to highlight that Borr owns 8 out of these 23 rigs.On Slide 12, we see the market utilization for modern rigs in the key regions well above 90%. We expect further contract awards in the Middle East, Mexico, Southeast Asia and Africa. You need to drill to get oil. Due to the lack of investment in Mexico with rig count down more than 50%, the production has fallen 30%. The new government has taken a proactive stance to increase activity and is expected that jack-up rig count in Mexico could grow to double in the next 6 to 9 months. Operators continue to demonstrate their preference for modern rigs. This has been reflected in the inclusion of age and technical specification under several of the leasing tenders Borr has participated in. This preference is a result of the increase in complexity of the wells requiring rigs with modern features and larger capacities. Another driver perhaps of even higher relevance is the operational efficiency realized by the customers while utilizing modern rigs. The graph shows an actual time-depth curve from a well drilled by one of our premium jack-ups compared to a customer's planned time-depth curve for a standard rig. The well is completed in approximately 12 days versus the customer's original plan of slightly over 16 days. Features such as pump line capabilities, large storage capacity and ability to handle dual mud system, among others, have allowed operators to drill wells 25% faster and up to 25% to 30% cheaper, as we show in this slide. The drop in oil prices in the fourth quarter of last year created uncertainty in the stock market, mainly reduction of activities in the offshore drilling markets. These concerns were clearly exaggerated as few drilling programs have been canceled or delayed since then. However, the reality seems to be the quite opposite with a strengthened demand outlook that has continued to put upward pressure on the rigs. According to DNB Market estimates in the last 9 months, jack-up rates have increased between 20% to 40% across the key markets. In the same period, Borr was successful in increasing our contracted rig count of 8 to 16 rigs and benefiting from these rate increases. Based on estimated $40,000 per day EBITDA contribution per rig, the 16 rigs on the contract will generate a total of EBITDA of more than $100 million per year. Recent contract awards supported EBIT and EBITDA ratios of approximately 6x, which is significantly better than the go to market. Within the same 9-month period, with the day rates increased, the Borr share price has been factored approximately 50% to current levels. We remain encouraged by fundamental strengthening of our market and are positive that this will be reflected in the company's share price development going forward.Now I will hand it over to Tor Olav Trøim for closing remarks.

[Tor Olav Trøim, Chairman of the Board]

Thanks, Svend. Thank you for giving me this opportunity to round out this call. In market where rumors and speculative stories on shares seem to dominate the news stories, I think it's important to conclude with some facts and observations. Point one, the world has a total energy consumption of more than [ 270 million ] barrels of oil equivalent every day. 85% of this is hydrocarbons. It comes more energy from shallow-water oil and gas production than it comes from wind and solar altogether. It comes twice as much production from jack-up drilling areas as it comes from total shale oil production. Shallow-water production is low cost energy with a cash breakeven typically between $20 and $30, and approximately 50% of the shale cost. Point two. We started this company in the end of 2016, and our share market already have collapsed. We have bought approximately [ 30 ] -- or we have bought 30 modern rigs, high specification assets in average price of $120 million, and we have paid approximately 50% to 60% of what they were ordered for and significantly cheaper than the current newbuilding prices. We have now taken delivery of 20 rigs, built after 2010, of the which 12 already have been successfully put to work. We have gone from 0 rigs in operation to 16 rigs in operation in July, and our 2 integrated service rigs with our major shareholder, Schlumberger, commenced in July. With 8 rigs commencing between April and July, we will have strong growth in quarter EBITDA in the next quarters. We have gone from a net cash flows per day of approximately $250,000 per day cost and interest cost to a situation where in Q3, we're going to have net free cash after all financial and operating cost and labor cost. Point four. We are going through rapid growth with full control of our cost, reactivation expenses and with technical uptime of around 99%. I'm very proud of what Svend and the team have done operationally. We have successfully hired more than 1,200 people and we have secured contracts with oil majors like Exxon, Shell, Total and Pemex. And we have gotten extremely good feedback from the client for the services we are delivering. We are disappointed that 2 of the LOIs we have awarded and which were announced after an 8-month tender process lately was withdrawn and given to local competitors. We learned a lot from that process. We are, however, based on our ongoing discussion with specific clients, comfortable that we, in the next months, are able to replace those 2 lost opportunities and more so. We find it interesting development that several contracts around the world have been given to companies who don't even have rigs available. We are confident with our earlier statement that most of our open capacity by the end of the year will be sold off before year-end. We have the $645 million committed financing facility yesterday, increased our liquidity position to $135 million on top of the $164 million we had in free cash liquidity in the end of March. We have, thereby, refinanced all short-term debt facilities of $510 million and are still financing for delivery of all newbuildings. We have no major debt repayments in the next 2 years. The speed under which the financing was arranged and the support we've got is a strong indication of the solid position Borr has in the banking and the financing market.To sum up, we have in 2 years taken on the role as the market-leading position in the jack-up market. We have done it based on brand-new asset acquired at the fairest prices. We have a solid balance sheet fully financed with no significant debt maturities for the next 2 years. We are exposed in part to the offshore market, where utilization already have reached 85% and rates and activity have gained momentum. New contracts already support 6x EBITDA. With pure focus on the jack-up market, with modern assets and with low debt and strong growth in EBITDA, we are in more way a very different drilling company than the other ones. Having been an investor in this market since the last 3 offshore cycles started in '84, '85, I learnt a lot. What you learn very quickly is the time it takes to turn around a corner is normally longer than you anticipate. Especially with this cycle is that 40% of the fleet in the jack-up market is more than 30 years old. But the oil market balance if actually talking about 1 million to 2 million excess capacity, and that Saudi Arabia, as the biggest producer of oil in the world until U.S. has taken over that role lately, has actually increased the jack-up drilling with approximately 20% since the oil price collapsed in 2014. It doesn't become easier to get oil out of the ground. We have a Board member in Borr, which we are proud of, and that's Jan Rask. Jan Rask has been probably the most successful investors and chief executive in the oilfield services over the last 3 cycles. He has entered at the right time, and he had exited at the right time over the last 3 business cycle. And he's done it with great gains for investors. I think we learned a lot from Jan. And I think one of the things we learned is if you have the right assets at the right -- acquired at the right prices. And if you kick those assets out on term contract as the cycle develop, you will make money. Actually, we'll make a lot of money looking at the last 3 cycles he made between 600% and 1,500% in those cycles. We have, sadly enough, not made any money for our shareholders, including myself so far. To the contrary, we have, where we are today lost money. However, we hope that if you sit down and study what we are building and how this market is developing that you will find value there. There are clearly humps in the road, some of them are big and the underlying market is -- even if the underlying market is showing a normal cyclical recovery. We are hopefully -- I'm hopeful that what we have built to date and the increasing momentum we now see in the recovery will give a solid reward to the shareholders in the next 1 to 2 years. Four things are needed to get there: good asset, first-class operation, solid financing and good contracts. I think when it comes to assets and financing operation, we are delivering on that. When it comes to contracts, we are halfway there. I'm hopeful that the last piece of the puzzle, fairly attractive contracts, will be reported in the next coming months and quarters. In the racing market, it normally has historically paid off to be a little bit patient. But thank you for your patience. I'm sorry that we haven't performed, but then we have from a share price point of view. But I hope that effectively what have been created over the last few years give us a unique possibility to benefit in a cyclical recovery which now takes place. Thanks, and I give the word back to Svend and the management.

[Magnus Vaaler, Investor Relations Officer]

We are now ready to take questions, operator.

[Operator]

[Operator Instructions] Okay. We'll now take our first question. It comes from the line of Gregg Lewis from BTIG.

[Gregory Robert Lewis, MD and Energy & Shipping Analyst]

I mean, clearly, there are some positive dynamics that are happening in the jack-up market right now. And I guess, I have 2 questions here. One is you have a couple of rigs rolling off contract in the near term, I guess, you have the one in the North Sea where there's an option, a customer option. I'm curious if that rig -- and that rig, I believe, is the Prospector 1. I'm curious if that option has already been extended? When we could expect it to be extended? And then on the other rig that is rolling off also in July, any update on that or is that Dhabi II with ADOC?

[Svend Anton Maier, Chief Executive Officer]

Okay. I think I can answer that one. On the Prospector 1, we have gotten indication for the extensions. It's just a matter of getting some final approvals, so we are very confident that, that rig will continue to work. When it comes to the work with ADOC, we are in the middle of finalizing the extension on that one, and it's looking like a long-term extension. So both are very positive and it's just about to get closed.

[Gregory Robert Lewis, MD and Energy & Shipping Analyst]

Okay, great. And then just so -- I mean, so with those 2 working rigs kind of -- it sounds like they're pretty much put to bed at this point. As we think about the ones or the available rigs, exclusive of the newbuilds and I guess you're taking delivery of a newbuild in the near term, how should we think about the opportunity set for some of those rigs? I mean is there a possibility that it sounds like there will be contracts out there. Could we see any of these rigs be working in the second half of this year?

[Svend Anton Maier, Chief Executive Officer]

Working, maybe not. But definitely we believe that there's a strong chance that they will be committed in the very near future. Like I said in my presentation, we see an uptick in activity definitely in Asia and all other parts of the world. So we are very positive that these rigs will be contracted. If not working, but at least they will be committed.

[Gregory Robert Lewis, MD and Energy & Shipping Analyst]

Okay. Great. And then also I think there was a little bit of a change in your prepared -- in the press release about -- at this point, the fleet is where we need it to be and you kind of alluded that you're done looking at buying additional assets in the market. Could you just talk a little bit about that? Is that a function of at this point there aren't really any assets available? Was that part of bringing the credit facility to completion? Just sort of curious on that was definitely a change in tenor from you about the secondhand market.

[Svend Anton Maier, Chief Executive Officer]

I think, I mean, I think we are in a very good position with the fleet that we have today. We have achieved most of the options that we looked at. Yes, there's always going to be some opportunities. If I look at the current market and what is available, I think we're in a very comfortable position and should not now continue to buy but try to put these rigs to work and harvest from what we already have done so far.

[Tor Olav Trøim, Chairman of the Board]

I think I'd like to add to that, Svend. I think we have been around the market looking at assets. We know there are probably 4 rigs left in Singapore. They are at significant higher prices than what we're talking about. I think if you want to get them, you need to pay $160 million, $170 million. I think when it comes to the Chinese rig, we have stayed away from them, and I think we're going to continue to stay away from them. We now see the people who reactivate the rigs, which not come from the first-class rigs in Singapore, first-class rigs in Singapore, they will pay more and they are significant. I think we have seen both Ensco and Noble running up pretty big bills in kind of getting equipment out, which kind of was meant to be bought very cheap, off the shelf. So I think we'll stay to the good equipment and after that, there's only 4 rigs left, and they're too expensive. So I think it's a natural evolution of the cycle that the good stuff is gone and I think the prices they're asking for the remaining one is too high for us to reach, particularly at this kind of prices we have on the equity right now.

[Operator]

Your next question is from the line of Lillian Starke from Morgan Stanley.

[Lillian Starke, Research Associate]

I was wondering if you could provide a bit more color on what do you think is holding back clients from moving forward on the tendering given that probably, they are looking at the thinner number that you mentioned on the availability of rigs or in jack-up specifically. One has limited them to sort of push forward on tendering. And the other question I have as a follow-up maybe to the previous one. You have no interest on buying, but if you could share some color on whether you see any options for disposing any additional noncore rigs within your feet.

[Svend Anton Maier, Chief Executive Officer]

Okay. Well, I mean when it comes to holding -- clients holding back, I would say it's the opposite. We see a significant increase in tender activities and request from clients. I think we're sitting at mid-70 -- in the mid-70s when it comes to unconcluded tenders, and we keep getting requests on a regular basis. So that increase is there. I think it's been realized at the markets are getting tighter. So now it's definitely picking up in speed. So there's no holdback when we see that from those parts of the world, all the way from Mexico, Africa, Middle East and Asia. So that is definitely coming and it's coming faster.

[Lillian Starke, Research Associate]

Okay. Perfect. And then just on the potential disposals that you could have from your -- the existing fleet as you did with the 3 rigs you mentioned on -- for this quarter?

[Svend Anton Maier, Chief Executive Officer]

I think the current fleet that is operating, yes, we have a couple of older assets that are operating. As long as we can keep them running at reasonable rates and don't spend too much money on keeping them going, we will do so. Once they roll off contract, we will then, of course, evaluate if they're still are good. If not, I think we will just stick to our strategy in divesting all rigs and focus on new assets.

[Lillian Starke, Research Associate]

Okay. And just one final question, if I may. You mentioned that you expect positive operating cash flow. I wonder if you could provide a bit of -- sort of what quantum that could be of -- or what sort of range are you expecting for that positive operating cash flow.

[Rune Magnus Lundetrae, Deputy CEO & CFO]

I don't think we should give any specific numbers on it. But given the growth in number of contracted units that has commenced during second quarter and will continue to commence when we get into the third quarter, we have pretty high confidence in our ability to be cash positive when you take out the operating cost and also the interest rate into account.

[Operator]

And our next question is from the line of Lukas Daul from ABG.

[Lukas Daul, Analyst]

I was wondering if you look at the utilization levels on the rig count, et cetera, including the tendering activity, it all points out to, I would say, pretty rapidly improving market. But on the other hand, the development in day rates, even though they have come up has been, I would say, lackluster. So I was wondering what do you think is the cause for that? Is it always a person coming and under bidding or lack of discipline? And where do you think that this can put a lid on pricing going forward because that's certainly been lagging?

[Svend Anton Maier, Chief Executive Officer]

It's been lagging and it's been quite long if you look at the last cycle, there comes a certain point in utilization where it will definitely increase. So I think the numbers we are looking at utilization now is definitely a strong indicator that these prices will go up. And I think also if you look at our presentation, you can see a clear sign that prices have gone up in all key markets all the way from Asia and specifically on high-end jack-ups and modern rigs. So I think you will see going forward an increase in day rates and that will move quite fast, and we have moved very fast since it started to pick up.

[Lukas Daul, Analyst]

Okay. And I guess some of the investors are sort of concerned about your relatively lower contract coverage 1 or 2 year forward. So hypothetical question would be if you had the opportunity to sort of fix your entire premium fleet at around $100,000 per day, would you be inclined to do that? Or would you sort of want to squeeze a little bit more out of it?

[Svend Anton Maier, Chief Executive Officer]

I think that sounds like a very hypothetical question to do that. But I think the natural way is we can only put that many rigs to work at one time, so I think we'll just follow the cycle up. And we -- it's hard to put all the rigs to work. I think that is, yes, that's a question that's really hard to answer.

[Tor Olav Trøim, Chairman of the Board]

I think as an indication, we have -- we typically have bid -- we have given a reasonable rate for 1 or 2 years. And then if you are forced to give an option rate for the third or fourth year becoming pretty dramatic is. I think we see this cycle as more or less 1 to 2 year, if I really want to cover. And then you want to be as open as possible if this cycle is like all the other cycles have been. So no, I don't think the Board will support the strategy, they will fix out everything and don't let us know always -- I think we are more - we're looking for higher numbers as the cycle develops.

[Lukas Daul, Analyst]

Okay. And will you be sort of activating rigs on a speculative basis? Or would you like to have some sort of a visibility on them, putting them to work come 2020?

[Svend Anton Maier, Chief Executive Officer]

I think we would like to have visibility. When we contract rigs and we start reactivation, that's quite a high number. It's high cost to do that. We would like to see if we can cover the cost in the first part or in the contract when we do the reactivation.

[Operator]

Our next question is from Stian Malterudbakken from Arctic Securities.

[Stian Malterudbakken, Lead Analyst]

Just 2 questions on the financing. Number one, is the full amount of the new financing available for cash draw? Or a part of it related to letter of credits? And number two, can you add some flavor on the interest rate?

[Rune Magnus Lundetrae, Deputy CEO & CFO]

So I think on the first one, I think I said in my notes. In the current facilities that we refinanced, $90 million related to guarantee tranche. $70 million in the new facilities will be related to guarantees. So it's all -- we're better off in the new facility versus the older one. Then on terms -- I mean, I think the flavor we could add is that this is based on market terms then. We've seen news just in the last couple of days what these terms typically are. So you can just assume that we are in that ballpark.

[Operator]

And the next question is from [ Lelo Dela Rathioni ] from One Investment.

[Unknown Analyst]

Just 2 from my side. On the warm stack rigs and the one that you are taking delivery, just bit of understanding on your comments on the division organization and bidding by year-end. Can you give us an idea on how many of these are under renegotiation or tendering process just so I have a feeling of how the – if the process is evolving?And the other one relates to the comment on contractor [indiscernible] capability at the moment. In the first, you said that you have received approach by those type of company. What is your approach on this? It means that are you considering accepting some of these offer or the rates are not attractive at all at this point in time?

[Svend Anton Maier, Chief Executive Officer]

First of all, the rig that we've taken delivery on that are warm stack, they are participating in all tenders so we use them where we see they fit, and more or less all of these rigs fit into the tenders where we're participating. They're all actively being offered. And when it comes to the clients that are bidding rigs where they don't have rigs themselves, we have been asked by several providers if we are interested. And of course, we are evaluating every opportunity, but it has to make sense to us to do so. So we are in negotiations and talk with several players that have been bidding rigs with no capacity themselves and nothing has been concluded.

[Unknown Analyst]

So on this side, if your assumption in the graph on the daily rates is consistent in terms of trend and those will -- are willing to accept these, you have no issue whatsoever in accepting a contract from them at the right rate, correct?

[Svend Anton Maier, Chief Executive Officer]

Can you repeat that please? I didn't get that.

[Unknown Analyst]

I was just trying to understand if this is just on pricing at this point on time.

[Svend Anton Maier, Chief Executive Officer]

I am struggling a bit to hear the question to understand.

[Unknown Analyst]

Hello?

[Svend Anton Maier, Chief Executive Officer]

Your line is very poor.

[Unknown Analyst]

Just trying to understand if at the right rate, you're willing to accept even demand coming from these kind of contracts. There is no issue other than price on that. Correct?

[Svend Anton Maier, Chief Executive Officer]

It'll be the right contract terms and price, of course. It's a combination.

[Operator]

And our final question is from [indiscernible] from Pictet.

[Unknown Analyst]

I just wondered if you could give us a little bit more clarity on the financing line and the cost for this. I mean because obviously, to talk about financing, what did you pay for the line in -- the line that's just been refinanced? I mean is it in line with this cost?

[Rune Magnus Lundetrae, Deputy CEO & CFO]

Was the question what we pay for the new financing?

[Unknown Analyst]

Yes. I mean just give us a ballpark. I mean obviously, you're talking about where the -- you said it's in line with the market. But obviously this is a very diverse market. I mean Odfjell was refinanced yesterday for about LIBOR plus 450. So the question was if your cost to financing has gone up sequentially, or if it's the same to where it was before. Because I don't remember what the original line cost.

[Rune Magnus Lundetrae, Deputy CEO & CFO]

I think it's in line with what we do refinance. Of course, we have -- the facilities we do refinance have been entered into at various points. So it's slightly above on average but not significantly.

[Unknown Analyst]

I'm sorry, I didn't catch the last part.

[Rune Magnus Lundetrae, Deputy CEO & CFO]

No, I said it's slightly above the blended average of the 3 facilities we refinanced, but not significantly.

[Unknown Analyst]

And did we have -- was that publicly disclosed, the level on the 3 facilities?

[Rune Magnus Lundetrae, Deputy CEO & CFO]

Say again?

[Unknown Analyst]

Was the level of the 3 facilities that have been refinanced disclosed publicly?

[Rune Magnus Lundetrae, Deputy CEO & CFO]

Yes.

[Unknown Analyst]

Can you say what it was?

[Rune Magnus Lundetrae, Deputy CEO & CFO]

You can find that in the documentation that is out there or we can take it offline, yes.

[Operator]

And there appear to be no further questions at this time. Speaker, please continue.

[Svend Anton Maier, Chief Executive Officer]

Okay. That concludes the first quarter results call, and we'd like to thank everyone for dialing in.

[Rune Magnus Lundetrae, Deputy CEO & CFO]

Thank you.

[Operator]

Thank you. That does conclude the conference for today. Thank you all for participating, and you may now disconnect.