First of all, welcome to the Dolphin Drilling Fourth Quarter 2023 presentation. Today, during the presentation, you have the opportunity to write questions in the box that you see on the screen, so please do that during the presentation. As always, next page here, we have the disclaimer where you can read a little bit more about risk and forward-looking statements. With me today, I have the CFO of Dolphin Drilling, Stephen Cox. I have with me Ingolf Gillesdal, the Chief Finance—sorry, the Vice President of Finance and Investor Relations, and myself, Bjørnar Iversen, the CEO of Dolphin Drilling. A little bit about the agenda for today. I will take you through the Q4 highlights, and Stephen will take us through the Q4 quarterly results and the key financials.
After that, I will share a little bit of thoughts on the company and operational update before we move into the market outlook, and after that, a quick summary of the quarter. Let's then move a little bit about the highlights, including the subsequent events for Q4 2023. It's been a very active quarter for Dolphin Drilling. In many ways, it has been very transformational. We are pleased to inform about several milestones, awards, and closed transactions during the quarter, and particularly the Paul B. Loyd, Jr. and Transocean transaction that was based on strong joint team effort between Dolphin Drilling and Transocean. We closed the acquisition of Paul B. Loyd, Jr. and Transocean Leader, on February 16th. Our transition team had worked close and efficiently together with Transocean to secure a seamless transition with the operating licenses transferred to Dolphin Drilling, and HSE acknowledged this process with no delay.
Typically, in this time of the year, we, of course, ran into some winter weather issues that delayed it a little bit, but as I said, on the 16th, we took over the two assets. That included, of course, personnel, rig licenses, contracts. At the same time, on the 16th, Harbour Energy signed up to a multi-year drilling contract for Paul B. Loyd, Jr., which will stretch that contract up until the end of February 2028. In addition to that, they signed a five times one year option, bringing the rig potentially to February 2032. We also signed, at the same time, on the 16th, a five plus five year master frame agreement with Harbour Energy, allowing us to work intimately to look at the future drilling campaigns for Harbour.
This is important for us since Harbour Energy is the largest oil and gas producer on the U.K. Continental Shelf and is also growing through acquisitions internationally. In connection with the transaction, we also closed a loan transaction of $65 million based on that strong and long-term contract related to the Paul B. Loyd, Jr.. Moving on to the other rigs, Borgland Dolphin first. We had a success there of signing a contract in the U.K. with EnQuest, with a startup of the rig on the U.K. shelf in April 2025. The client will pay a MOB fee that allows us to reactivate the rig from the current status as idle rig in Norway.
Moving on to Blackford, we plan to transit her to India for work starting in Q3 2024 for Oil India, and we also can comment on that, as we commented on earlier in an earlier presentation, we had some issues with the payment from our customer. Stephen will also comment on that a little bit later, but I can say that we are in constructive discussion to agree on a payment plan with GHL that both parties can live with and agree on. We will, of course, come back to that in more detail when that is signed and concluded.
We also, during the quarter, got a U.K. court appeal against us that ruled in favor of HMRC in the U.K. after us winning the first two rounds in court, and we have, after that, appealed this decision to the Supreme Court, and we are currently awaiting a decision of this appeal, I would say, in the coming months. Finally, commenting on the last rig, Bideford, we have probably got to scrap that if we don't find work for her in the short-term picture. So I think that sums up the highlights from the quarter, moving a little bit more in detail into the Paul B. Loyd, Jr. and Transocean transaction. As we see from this, we paid for the Paul B. Loyd, Jr. approximately $44 million, as you see on the bar to the left.
Based on the firm contract, we are getting back around $130 million, which equals 3 x the purchase price on the fixed period, and if we include the optional periods here, we see that we get more than 7 x back our investment. We can also say that Paul B. Loyd, Jr. has been, over the last decade, one of the best performing rigs in the U.K., and we are very pleased to acquire this rig and personnel and integrate that into our Dolphin organization. I would also like to use this opportunity to thank everyone in the transition team, both on the Dolphin and Transocean side, that has basically done an excellent job, and the Dolphin organization has shown strength and depth by taking over this in parallel with all other work that we normally do.
So with this transaction, I think we have proven our in-house capacities, and we have shown that the company has a very, very strong organizational capacity, which we can do in most offshore basins around the world. With that, I think I give the word to you, Stephen. Please.
Yeah, thank you. So briefly running through the financial statements, income statement for Q4 largely in line with the Q3 result, revenue slightly behind as the Blackford was on standby for the entire period. As Bjørn mentioned, we'll touch on the specific situation in Nigeria in a little bit more detail shortly. Our operating costs continue to reduce. Again, predominantly they are driven by the Blackford. We're actually below $100,000 per day cost on the Blackford right now. She is in standby mode today on a reduced crew. The costs for the two rigs stacked in Norway remain consistent, and obviously, the entire Q4 result excludes any impact of Paul B. Loyd, Jr. and Transocean Leader there out with this as that completed post-year end. Our G&A number, however, was slightly higher.
The main driver here is we held a lot of onshore sessions in preparation for the acquisition, so we did a lot of upfront investment there, training people, onboarding the crews. I think we're now seeing that paid dividends as we really had a very seamless transition across and takeover of the operations. We do have a large one-off adjustment, which is the reversal of previously incurred impairments. They were booked at the end of 2022's account, so this is a reversal that impacts 2023, and that's all driven by the Borgland and the contract there, so we reverse that impairment in the 2023 result. You will see those hit the balance sheet in asset values and inventory when we get to those. Then finally, just to summarize at the bottom there, we show an EPS at the unadjusted level of $0.07.
You can obviously do the math on that. When you take the adjustment out, it flips back to a $0.03 per share loss. Moving on to the balance sheet, the receivables position is $47 million gross. Again, with the GHL position, there is VAT and withholding tax. Those are recorded within our balance sheet, albeit they're not our obligation. So the net position on the receivables is just below $38 million. Again, we do have a specific page where we're going to go into some detail on this. The inventory and PPE impairments on the Borgland that we added back, they are now visible, so you can see those there. That's the main driver of the inventory increase that you see. And then the other new item on the balance sheet is the $6.2 million other asset balance.
That represents deposits that we paid to Transocean as part of the SPA. That value will also move as the deal is fully booked in Q1 2024, and obviously, you'll see that in the balance sheet next quarter. Other items to note, the factoring facility that was previously outstanding at the end of Q3, that was fully repaid. It now has closed, and immediately thereafter, we entered into the new loan transaction with MAP, which we obviously utilized when we closed the transaction last week. So all the adjustments related to the new rigs, the Transocean units, will come into the balance sheet next quarter. Moving on to cash flow, obviously, working capital has been very negatively impacted by the situation in Nigeria. Again, we're going to touch on that in a second. The deposits paid to Transocean are also wrapped into working capital for the purposes of this analysis.
So just as you're looking at those numbers, that's where that payment went through. Investment expenditures, they're all historic, essentially. We have very little CapEx going on right now, very little CapEx in terms of current commitments as well, and we're being very careful with the cash that's inside the company. And then the proceeds, the financing proceeds, everybody is well aware of those, being driven by the repair and the placement offering we did back in Q3, the shareholder loan that came in earlier in the year, and there's some FX that runs through that line as well. So net cash at the end of the year, $34 million in total. That includes what we term restricted cash, and restricted cash is predominantly related to the bonding that we have in place, which is related to importing the Blackford into Nigeria.
So that will obviously come back to the company when we export. And there's also a performance bond now in place for the contract in India. We obviously continue to monitor the liquidity situation in the company very carefully. The situation in Nigeria is obviously the biggest driver that we are managing right now. We are looking at various plans and means of backing up and supporting should we need to. But I will note that as at today, we have approximately $11 million of the MAP facility that is undrawn. We have not needed to access that yet, so that is still available to us. Moving on to the Nigeria situation specifically. So obviously, payments have been seriously delayed throughout this contract. It is a source of frustration for us. We have been in daily contact with GHL, really, for the last several months on this topic.
Just going back a little bit in time, initially, before we got down to Nigeria, all invoices were paid on time, and we did collect a large advance. The situation has obviously declined in its status over a period of time. We're at just below $38 million in net due to us as at the end of the year. We did collect $5 million subsequent to the end of the year, and we have announced on those, but no drilling has taken place, and we continue in discussions with the client. As Bjørnar mentioned, we do believe we're close to an agreement that will be satisfactory to both parties, and there is some time left in the contract to do the drilling work that GHL would like us to do. Clearly, we are robustly ensuring that funds come in too often.
With Nigeria as well, just to note separately, the contract with Peak was terminated, and again, this has been announced previously. Peak did not make their contractual payments for mobilization on time, and Peak did or has pursued us through a court process. We are disputing that process. We believe jurisdictionally that was incorrect as the contract calls for arbitration to be run, and we believe our position is very well defended. And indeed, we've made those representations to court, and as noted, there is another hearing at court on the 13th of March. We expect to continue our defense of that position, and no challenges to exist thereafter. The other issue that was, and I will call this a surprise to us, during early January was the result of the latest round of court process with HMRC.
So obviously, we've disclosed this several times, and indeed, it's been an issue in the company for many, many years, and this is related to the tax treatment of income from the now scrapped Borgsten Dolphin. The Borgsten was a TSV, a tender support vessel in the U.K., providing non-drilling services to Total, and this dispute centers purely around the fact that the client utilized the accommodation on the TSV. And HMRC have attested that because of the use of the accommodation, the income related to the unit effectively falls within what's called the Offshore Contractors Ring Fence rules, which means we're not allowed to deduct the expense for this asset in calculating our tax return. In effect, claiming that the Borgsten was a floatel. That's the effect of the argument here. So we obviously have the opposite view to that and continue to maintain that.
As people will be aware, it has been through several rounds of court. We were very successful in the first two rounds, and unfortunately, as we hit the third round at the Court of Appeal, the opposite was found. Now, as I said, we were very surprised by this. Our advisors were very surprised by this as well, and there are a number of, let's call it, strengths of rulings in fact that were found in the first two hearings in the courts that made us surprised as that result was there. We have obviously appealed this. As Bjørn mentioned, this is now at the Supreme Court level, so the highest court in the U.K.. There is uncertainty as to what the outcome will be here and how long that is going to take.
All we can really say at this point is it's going to take several months. We very much believe there are compelling reasons as to why our appeal should be heard by the Supreme Court, and that's not least because the interpretation of the rules here and this potential change that could be gleaned from this court case could have a significant impact. There's over 500 offshore vessels that provide some form of accommodation today in U.K. waters. So clearly, that could be a very wide impact on the industry, and because of that, we believe the case has a good chance of being heard and indeed being successful. There is a note there about the quantum of this claim.
Clearly, it's a big number, and we will continue to vigorously defend our position. Obviously, we will keep you fully informed as things develop. With that, I will hand back to Bjørn.
Thank you. Okay, let's then jump into the company update and the operational updates. If we look at this page, we see the segment that we are focusing on. Dolphin Drilling strategy is to concentrate on the standard moored semi-submersible rig fleet. The company has extensive experience operating semi-submersible rigs for more than 65 years in most of the offshore basins around the world. This segment has, in many ways, been ignored by many competitors, and due to this reason, they have focused on their, let's say, premium drill ships that we see to the right, the premium jack-up segment, and the DP semi-submersible segment, which has made it so we are one of the few that are focusing on the moored semi-submersible segment.
We have proven our strategy that this carries substantial value through recontracting all of our rigs and at very favorable day rates and with strong cash flows. For the next years and foreseeable future within the offshore drilling market, we see superior economics in this, and we see very few or, if any, newbuilds coming into the market. Moving to the next page, we see our fleet here. This is more or less the fleet status, and we see to the right there, in Q3 2022, when we listed the company, we had a firm order backlog of $85 million, and today, with letters of award and letters of intent and with options, we have a backlog of $1.1 billion, which is 13x the volume that we had a little bit over a year ago.
So the market, as we see it, has improved significantly, and of course, with this growth in order backlog proving it. When we listed the company a year ago, we said that we were to bring back the rigs, and so we did. So here we see the Blackford, the Borgland, the Paul B. Loyd, Jr., and the Dolphin Leader. And as I said, Blackford, per today, on contract in Nigeria, then moving down to India. The Borgland, on contract with EnQuest in the U.K., will be there end of first quarter 2025, and the Paul B. Loyd, Jr. on that long contract with Harbour in the U.K., 4.3-year firm, but then plus five years of options, and in there also, Harbour has decided to pay a big chunk of other SPS or reclassification cost.
So through this acquisition, we have taken a more proactive role in the U.K. as a consolidator, and we are, of course, currently marketing other moored rigs also in multiple other offshore basins. But I can say that we are very happy about the order intake over the quarter, and it's, in many ways, a game changer for the company. Looking at the fleet report in a different way, here we see our contracts laid out. We see the GHL there on the Blackford. We see mobilization to India, and we see Oil India kicking in from late third quarter 2024, and we see 14 months firm. We see also seven months with option taking the company or taking the rig into 2026.
Focusing on the Borgland, we see the mobilization and the SPS work there in late part of 2024, and we see the mobilization to EnQuest there early 2025 with commencement around of April 1st, 2025. We see in there there's one letter of intent and some options as well, and we expect those to be called within second quarter this year. So basically, that is what we have around the Borgland, is filling her up for the next years to come, which we are also very happy about. On Paul B. Loyd Jr., as I have mentioned several times, we see a very long string with work taking the rig, including options, to 2032.
And of course, this creates from early 2025, we have three rigs on longer contracts with a significant EBITDA generation that will, in many ways, change the company as we see it, and we also have the Leader and the Bideford in addition to that as upside potential. And as I said initially, if we do not get anything on Bideford shortly, we are considering to scrap the Bideford. A little bit more on the backlog, looking at that backlog in a different way, we see that the estimated backlog here is approximately around $300 on the firm part of the contract, pure rig EBITDA backlog, not including the options. And to the right there, we see the visibility.
We still have some operational leverage from, I would say, from 2026 and onwards, but we have a significant, what should I say, part of the total capacity booked for the years to come. So in many years, we see the market is improving, and we will be able to take part in that from 2026 and onward with our current rig fleet. Looking a little bit on the Borgland and the preparation for the contract startup in the U.K., here we see the timeline for the Borgland. We are currently preparing for a transit over to Las Palmas, where we also did the Blackford in January, February last year with great success, both on cost and time, and we plan to do the same with the same vendor or same yard there this time as we did with the Blackford.
We see that the transit back to the U.K. is planned around February 2025 with a commencement of the Borgland Dolphin in the U.K. for EnQuest of April 1st. Total budget of that work is $20 million. Then let's move to the market outlook, and this is a little bit taking us back to when we listed the company. We had three headlines for that listing. That was "Return the Rigs Back to Work." We had then currently signed, as I said, $85 million in order backlog, as we see to the one in the middle there, and we said that our strategy was to bring current steel back to work. And number two, sign as much order backlog as possible, and then also look for opportunistic growth. We feel, in many ways, that we have ticked off all those, partly at least, ticked off all those three boxes.
To the left there, we see that we are now, and as I mentioned earlier, we have three rigs on relatively long contracts, lifting the company into a different status, building the revenue backlog in the middle there from $84 million to $1.1 billion, which is 13 x the same backlog of that $480 million in firm backlog and $634 million in LOAs, LOIs, and in options.
And of course, to the right there, with the Paul B. Loyd, Jr. acquisition from Transocean, we also were able to conclude, as we see it, a very, very good transaction where we, if you look at the firm period, are getting back 3 x the purchase price, and if you look at the options, which we think will be executed due to the need of rigs within the Harbour portfolio, 7 x the initial investment, which is, if not unprecedented, at least it's an excellent, excellent deal for us. Looking on the market more holistically, we see 10 requests for information or tenders in the, I would say, in the North Sea basin currently ongoing, and I think there were two new tenders out the last two weeks in that region. So we still see positive momentum within the standard moored segment.
There's approximately 10, or there's 10 live rigs in Africa/South Americas, and we have five tenders live in Asia, India/Asia, and including Oceania. So in total there, we have approximately 25 live tenders, and I think if we comment on the status, the ultra-deep water market, I think has flattened out a little bit. The moored rig demand is still there with increasing momentum. Then, back to the summary, and of course, if we look to the right there, the $1.1 billion backlog is a game changer for the company, and if we look at number one, returning back to work, rigs back to work, we have now three rigs on contract or longer contracts. Two, we have booked more than $1.1 billion in revenue backlog, including letters of intent.
Three, we have closed out the Transocean rig purchase or the Paul B. Loyd Jr. rig purchase, and we have taken an active role in consolidating the moored rig segment, particularly in the U.K.. We have also brought back Borgland into the market and into the U.K.. So what we are now going to focus on, bullet five or number five there, we will focus on converting the current backlog back to cash flow, which will put us in a position where we can start to pay dividends to our shareholders. On that, I think I'm concluding my or our presentation, and we are opening up for Q&As or questions and answers, please.
Yeah, so as Bjørnar mentioned, if you can please submit questions through your screen, we do have a couple come in here, so we're just going to put them into some form of order, and then we'll run through them quickly. So let me take a couple of these to you, Bjørnar, and then I'll answer some of these as well. So there's one question here about the Blackford, India timing to firm up that contract. If you could elaborate slightly on how we see that.
Yeah, what we see there is that all the practicalities related to the rig will be firmed up within, I would say, weeks, and of course, it's how we exit Nigeria, and when we arrive in India, it has to be some sort of a back-to-back arrangement, and I think all the practicalities there, we are just days within sorting that out, I would say.
And then there are sort of the related questions really around the GHL contract and the timelines that we have there, so I'll maybe touch on that in terms of what we're working on right now? And obviously, we will disclose the final agreement there, but as people are very much aware, GHL are very far behind in payments. We're working through a payment plan.
There's been various payment plans proposed to us back and forth, but we want to ensure that we get out of this the maximum recovery possible, which is 100% in our mind. The timing of all of this is relatively soon. The rig is on location still. She is in a status where she can commence work at any point in time. If we choose to do work there, we may stay there slightly longer than the original contract date, but it's not expected to interfere at all with the timing of the India contract. Sorry, there's a few questions just popping here, so I'm going to try and do this in logical order. Maybe we can talk about the MSA with Harbour in terms of how should people think about that. Is it specific to Paul B. Loyd, Jr., or is it bigger? It's bigger.
The Master Service Agreement opened up almost like a first go-to opportunity where you're being invited early in the conversations where opportunities arise. And of course, Harbour is growing as a company, and they are growing in other areas and segments than the U.K., and the market is covering that segment called moored standard, same as immersible rigs, and it opens up for all other rigs or the full rig portfolio.
Perfect. So there's a few questions here just around sort of the status regarding the timing of the close of the transaction and where we are in liquidity and cash and net interest-bearing debt.
So without going into too much detail around it, but effectively, the number you should think about is around about $50 million net interest-bearing debt as at February, as at now, and sufficient cash on hand that we haven't had to go and draw the entire amount of the MAP facility. We are, however, exploring various options around how to secure liquidity against the contracts that Bjørnar has mentioned there for the Blackford and the Borgland. And equally, you will have noted in the report, we have strong support from our shareholders in extending the shareholder loan for another 12 months as we see how things evolve, in particular with what comes from Nigeria. And there are some people asking questions about timing of dividends, but I think the fair thing to say there would be, "Let us resolve the situation in Nigeria.
That solves how liquidity will look and what steps we take next."
After that, take out the Borgland, and then I think we are in start to approach that position for dividend.
Yes. On the Borgland specifically, there's a few questions around when you expect the LOI in the U.K. for Borgland to be converted. I think we talked about Q2 for that one at some point in that window. That's correct. There's a question on what is the plan for the Leader, and do we have good estimates for reactivation?
Okay, I can comment on that. Of course, we closed the deal here on the 16th. That's just days ago. We are currently doing an inspection, trying to look at an SBS or a special periodic survey budget and an upgrade budget, and before we see that, I cannot comment on any figure. That would be guesswork, and I'm not paid to guess. So we will come back to that, but as of today, we are in, let's call it, an analysis situation, and but I can say there's been two or three incoming clients that has been interesting to start to talk to us about her. So let's see how that evolves. It's all about capital discipline, and it has to be the right deal for us. If we are going to take her out, we're definitely not going to do anything speculative on that.
There's another question here, interesting topic. Are Dolphin looking for rig acquisitions? I think what we had in our strategy was bring current steel back to work. That's the first thing we think about when we get up in the morning in Dolphin Drilling. Secondly, it's to have, of course, safe and efficient operations where we are on contract, so that is number two. And as we had in that strategy when we listed the company, we opportunistically look for good deals, and of course, if the deal is extremely good, then it might be considered, but that is more on an ad hoc basis. We are focusing on generating cash on the steel we have.
So another question here. Are there still receivables outstanding with Peak Petroleum? So Peak do owe us the mobilization fee for the Blackford. That is an outstanding balance. That does not feature in our balance sheet. We have removed it at this point in time, but obviously, it's still something we will pursue as and when that court process evolves. Jump around here. So back to Borgland, timing of reactivation payments.
Well, I think what we can say about that is Bjørnar showed the timeline of what we expect to do with the unit, and that involves taking her from Norway down to Las Palmas. So that will incur $1 million-$1.5 million worth of cost to get down there. We then have time on our side for reactivation, and again, we're very much going to be balancing that against the Nigeria situation, how liquidity evolves, and what we do with any potential additional financing around about that Borgland, which if we do something there, it will obviously be on the debt side. What we did with MAP, we think, worked quite well, and should we need to do something more, that's certainly the option that we would be exploring. There's a question about healthy demand in the U.K.. What type of opportunities are these?
Yeah, I can comment on that. There's several opportunities in the U.K., and I can say that this week, we are again submitting two tenders to U.K. operators. So I would say that there's between five and six relatively large demands in the U.K. still, which is not being awarded or pinned down. So the U.K. market is there. There's been a little bit of noise around tax position and stuff, but it doesn't seem to cool down, at least the tenders that we're currently bidding. So I think all in all, I would say the U.K. market, it's encouraging. We also have a question here related to the Borgland, reactivation timing and budget.
As we wrote in the presentation, we have a budget of $20 million for the total reactivation, and the timing of that, as Stephen said, will be, I would say, we are mobilizing the rig to the U.K. to meet a commencement date of April 1st, so probably first quarter 2024, the bulk part of the cost will occur, normally then with 30 days or 45 days payment later than that.
I think, sorry, I'll add on a little bit to the U.K. market. I think one of the things to consider is, although you may well have seen the literature that's come out about the U.K. opposition government potentially increasing the windfall tax in that market, the work scopes, which are largely P&A, are not going away. Those projects exist. So the exploration drilling, we saw that coming back.
We see now some potential delay in those processes, but the P&A is still there. So those projects still have to be done. Yeah, and the fields that are decided to be executed seem to go through as well. Then we've got a final question around the Blackford. The gross backlog for Blackford with Oil India, which includes add-on services, implies a day rate relatively much higher than previously indicated. I think as we think about that, there is a large amount of other services within that day rate, so I think we are roughly within the numbers that we've previously talked about. We have not released those numbers yet, so we will do that once things firm up. And I think that is it. We've covered all the questions, so.
Okay, so then let's round up the session.
Thanks to all of you guys for calling into our fourth quarter 2023 presentation. It's been a pleasure to go through this status of the company with you guys. So the takeaway, the company is accelerating with three rigs back to operations, and we expect to have that up and running end of first quarter 2025. Before that, we are taking Blackford out of Nigeria and sending her to India, and the Paul B. Loyd Jr. was taken over on the 16th and steadily generating cash, and then we are digging into Leader to see what and how we can bring her back to life, but with a headline capital discipline and early prepayments from customers if we're going to go down that route. I think with that comment, I would like to thank you all for joining us today.