Good afternoon, all, and a warm welcome to the Boar Drilling Limited Investor Presentation with Patrick Schwan and Magnus Fowler. My name is Louisa, and I'll be coordinating your call today. If you wish to ask the management team a question, I now have the pleasure of handing over to Patrick Schorn, CEO at Borr Drilling to begin. Patrick, please go ahead.
Good morning, and thank you for participating in this investor update of Boar Drilling. I'm Patrick Soren, the CEO, talking to you from London. And on the call with me today is Magnus Fowler, our CFO currently in Oslo. Next slide. For good order, 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. Next slide. In the next 15 minutes or so, we'll be addressing some of the key attributes of ore drilling and some of our achievements thus far. We have the largest fleet of 28 modern jackup rigs, 13 of them being active.
During the first half of the year, we have increased our backlog significantly by about $450,000,000 at an average day rate of 85,000. Our operation with 13 rigs active is cash breakeven. And provided collections remain on track, we have runway until our first debt maturities in 2023. This is enabled by a debt structure that has a low cash interest cost. So even though our overall debt is substantial, the cash cost associated is low and therefore, the overall package very competitive.
Next slide. We currently have operations in Mexico with 5 rigs, and we are in the North Sea, West Africa and in Asia. Apart from the 13 active rigs we have now, an additional 10 rigs are available, plus a further 5 rigs yet to be delivered to us. Of the 10 rigs available today, we can put 5 back in operation at minimal cost as these have been fully activated in the past. Our customer base is diverse and has shifted more and more to become national oil company dominated.
Next slide. The market recovery will provide us with 2 opportunities. In the first place, it will allow us to raise price as the market becomes tighter and the utilization moving towards 85% to 90%. Secondly, it will allow us to gain market share as we are one of the few players with available capacity. When putting new rigs back to work, it is critical to do this efficiently from an operational point of view.
And as you can see from the graph on the right hand side, we have been able to activate new rigs while keeping the operational performance high. Next slide. The market and its drivers are different in this cycle. Where previously, the pace was often set by majors and supermajors, This time around, the larger role is clearly for the national oil companies who also have the largest access to shallow water resource. In the Middle East and China, the demand is already high with every expectation that this will further increase going forward.
For several reasons, it is likely that in the current environment, the national oil companies will increase their market share in the supply of oil and gas. For this reason, we are quite pleased with the makeup of our customer base, which is biased towards national oil companies, as you can see in the graph in the middle. Next slide. The overall activity is underpinned by an improving oil macro with current Brent prices above $75 per barrel. At the same time at which the activity in U.
S. Shale is only slowly recovering with the associated impact on the U. S. Production volumes. With the world slowly but surely dealing with the COVID pandemic, we have seen increased inventory draws that are expected to increase towards the end of the year, making increased production from the few national oil companies that can a necessity.
Next slide. Now what does this mean for the supply and demand of jackup rigs where the number of contracted rigs has already increased to currently 353 rigs? With the anticipated demand, in particular from national oil companies in the Middle East, we are likely to reach over 90% utilization, at which time we expect to see day rates well in excess of $100,000 per day. Let's have a look how the rig rates behaved the last time around at the end of 2019 early 2020 prior to COVID. Next slide.
Looking at the increase in utilization between May 2019 and January 2020, you see that we were just short of 90% utilization in January 2020, at which time the standard rig rates were well in excess of $100,000 per day, which was at that time supported by an oil price of about $64 Brent. Since the trough, we have currently increased to about 353 rigs and are on the way up, supported by an even stronger oil price. With our current projections, we anticipate seeing $100,000 per day rig rates back as early as the beginning of next year. Next slide. The work that has been awarded this year until the end of May 2021 has been equivalent to the total amount of work awarded in the full year 2020.
On the right hand side, you can see that Boar Drilling has won more than its fair share of the work, adding about $450,000,000 to our backlog. Next slide. Normally, when a market gets tight, new assets will enter the market. However, that is highly unlikely in the current environment. Firstly, the yard capacity is strongly reduced.
And given the lead time, any new builds would take several years before it hits the market. Currently, at the yards, there are about 36 to be delivered of all orders. Of these, there are only 20 that will be competitive and uncommitted going forward. War Drilling has contracts on 5 of these 20 rigs, putting us in a position where we can deal with most client demand scenarios going forward. Next slide.
As we have recently made announcements regarding Mexico, I wanted to highlight some of the key changes that we have accomplished. This is an operation where we, together with our Mexican partner, have been providing Pemex with integrated well services, meaning that we deliver completed and producing wells to them. This has been an efficient operation, which provided us with an avenue to generate additional equivalent day rate based on operational efficiency. One of the downsides of this operation is the significant working capital requirement that disposes. We have therefore retracted ourselves from the contracting entity with Pemex, and we remain in the venture providing rigs at a straight day rate.
In these Perfamex I and II ventures, we will be taking a majority position while limiting our future exposure to working capital demands and simultaneously releasing $28,000,000 in gross proceeds. We are very pleased to continue our work for PENEX through our Mexican partner in this new construction. Now let me hand over to Magnus, who will discuss some of the financials.
Thank you, Patrick. Turning to the next slide. We are of the opinion that the company has an attractive cost structure. This is mainly due to Swiss cost control on the operating side in addition to low cash costs related to our debt. What we want to illustrate in this slide is the various net cash flow levels annualized in scenarios of different number of operating rigs at various day rate levels.
We have highlighted the column showing 13 rigs, which is the same number as we currently have contracted. The run rate when these rigs are fully operating shows a cash breakeven day rate level of around $80,000 per day. This number takes into account normalized cash costs for the company in 2021, including long term maintenance and CapEx for the operating rigs and stacking costs for the stacked rigs. The table shows that the operation that we currently have requires minimum to no additional cash at this current stage and also shows the upside potential on various various levels. Worth noting is the column with 18 rigs working.
This includes the 5 rigs, which has previously been activated and is currently warm stacked. And these rigs are rigs the company can bring into the market again at relatively low costs. Turning to Slide 14. Throughout 2020, we showed through 2 major rounds of negotiations with our creditors that capital structure has been flexible. Compared to May last year, we have extended all maturities for loans and newbuilding CapEx commitments to 2023 or later.
In addition, when negotiated to defer the majority of interest payments to DERs, who are our largest creditors, to 2023. These amendments have given us more than EUR 1,000,000,000 liquidity improvement in the period, which we believe will get us through the first of the cycle. Our ambition going forward is to further address the debt maturities to the benefit of all stakeholders. Moving to Slide 15. Here, we would like to bring the debt levels of the company a bit more into perspective.
Using our Q1 2021 balance sheet numbers, we see that the average long term debt per delivery rig is approximately $85,000,000 When we include the undelivered rigs and its CapEx commitments, the number is approximately $93,000,000 per rig. Our fleet age is only around 4 years on average. Taking into account the anticipated useful life of the jackup rig in 30 years, we can calculate the average implied amortization cost per day per week. This calculation shows a number between $9,000 $10,000 per day. When adding on assumed interest expenses using a flat rate of 5% on the current outstanding loan balance, the implied net cost per day is around $20,000 per year.
In the graph to the right, we put this in context to an unpaid estimate of $50,000 per day and compare it to historic period levels and the company's recently achieved rates. We believe that this context shows an interesting perspective of the debt levels and that the interest cost of our debt is relatively low. Moving to the next slide. One of the most valuable aspects of ore drilling is our ability to start generating large amounts of cash once we get majority of our rigs working. In the graph, you will see that for instance, with $100,000 per day, a rig can generate an estimated $17,000,000 of EBITDA per year.
For illustration purposes, we show that what this means is applied to all our 28 rigs if they were to earn the same rates. This potential is quite exciting in combination with the way that we see the market developing at the moment. And with this, I would like to turn it back to Patrick.
Thank you, Magnus. In conclusion, I would like to reemphasize some of the key topics we discussed. Firstly, we have a unique fleet of modern assets, the youngest fleet in the industry and a strong operational team running them. Our active fleet of 13 rigs is sufficient for the operational cash flow to be breakeven, while we have an additional 10 rigs that can enter the market, plus 5 more at the shipyard yet to be delivered. With current activity and collections remaining on track, we have a clear runway to 1st debt maturities in 2023.
At this point, let me mention our ATM as well. As you will have seen, we announced yesterday the launch of an aftermarket program under which we may sell up to $40,000,000 of our common shares. It needs to be understood that this facility is put in place for strategic purposes, such as additional growth over and above the current plans, which includes additional rig activation opportunities, for instance, and for adjustments to our capital structure, including maturity expansions. The ATM is not required to fund our day to day operations. So again, this facility is only intended to meet strategic objectives.
We have added substantially to our backlog and increased it with about $450,000,000 as of May 2021. The increased demand we see from our key customers going forward provides opportunities that we are uniquely placed to capitalize on based on our available rigs. Together with our creditors, we intend to work through the second half of this year optimizing our capital structure, including extending maturities to generate a solution that brings value to all our stakeholders. And lastly, the improving market environment, in combination with our strong operational team and modern assets, provides us with an exciting opportunity going forward. Ladies and gentlemen, thank you very much.
We will now go to Q and A.
Thank you very much. Our first question comes from Frederic Steen from Clarksons Platou Securities. Your line is open. Please go ahead.
Hey, guys. Frederic here. Thanks for the update. I was I wanted to focus a bit on the ATM offering since that was, well, obviously, a nonstick, but that is only briefly mentioned here on the last slide. So Patrick Magnus, in particular to what you're saying about this being a strategic way or a way that you can strategically or accelerate your strategic ambitions.
Could you elaborate a bit maybe around how you would think about that ITM program, for example, in relation to reactivations? Are you still going to need some sort of contracts maybe in addition to this money? Or what type of flexibility on top of what you already have do you think this will kind of add to in that mix?
Okay. So Frederic, thanks for the question. Indeed, the ATM program clearly is an important one. So I think firstly, what we tried to emphasize was the fact that for running our normal day to day operation, we absolutely don't need it. But we are sufficiently optimistic about the future that we want to place ourselves in a position that we can react on any further uptick in the market.
And if that would require significant amount of cash to activate rigs over and above the plans that we have today. We want to have that ability to do that relatively easy. Secondly, there is clearly a desire to work with our creditors to see what we can do on the maturities and push them out further, which also will likely require some cash. So I'll ask Magnus to maybe go a little bit further into the details regarding the program. But to me, one of the key takeaways is that this is really related to growth and further opportunities versus running our day to day business for which we don't need it.
Magnus, could you maybe add some color to this?
Yes. Sure, Patrick. That is true what Patrick says. The ATM program is a possibility to issue shares. It's not the same as issuing the full amount, and it goes over a long period of the 3 years.
So as Patrick has mentioned, we will use this as a tool in our strategic toolbox. And currently, at this stage, with the current share price, as stated in our press release, first of all, there's no intention to sell shares at the moment at these levels. And secondly, there is no particular need for it when it comes to operations. As we state, we with the 13 rigs that we have now currently operating, we should be breakeven in cash from operations and to have a runway until the debt maturities in 2023.
Okay. Just going back to the rig activations in particular. If you should use this program, would you or would you use it to reactivate any rigs on spec? Or do you think that you would still need to kind of tie it towards a contract, but you can do more rigs within a shorter period of time now that you have this in place?
Yes, Frederic. So I think that at this moment, there is no need to do anything on spec. I think we are very cautious with our cash, and we'll put it towards contracts and opportunities that are confirmed and signed. On the 10 rigs that we have available, we have 5 of them that are already activated. So with a very small amount of cash, we can put these back to work without any issue.
If we need to do further activations on top of that, then we might require some additional cash. What we will only do so for day rates that are accretive to what we currently have, and this would be significantly over the current plan. So I think what we want to say is we want to be in every position to optimize and jump on opportunities that we see going forward, but we would not start to speculative activate more rigs than what we have currently in the plan.
Thanks. I have one more question, if that's okay, relating to the market instead. I saw here on one of your slides, Slide number 8, you were quite positive on the Middle East here and the additional anticipated demand of 30 rigs in 20222023. For the Ramco, they have suspended or they did suspend quite a few rigs last year. None of them have come back.
Do you have any color on the progress there when we're going to see, call it, marginal demand out of Aramco? Is there anything firm in the works there? And if it is, are you positioning yourself either for Aramco or other NLCs in the Middle East?
Yes. So you are correct that on Slide 8, we are talking about the Middle East. And I would just limit myself to talk about the Middle East in general. Our customers are the best placed to talk about their own activity and inform the market when they feel is right and with the information that they feel is correct. So it would be, for me, better to just talk about the Middle East.
But clearly, we have sufficient information that we see quite a few opportunities come up and that we want to make sure that we appropriately praise. So yes, we are touching base with all our customers in the region. And the big advantage that we have that we're one of the few players that has a fairly significant availability of new rigs. And therefore, we think we are having something to offer where few others can offer the same. So from that perspective, it is interesting.
But clearly, the Middle East is going to be one of the areas that has quite a bit of untapped demand going forward. So yes, we are excited about the opportunity there. We are having our contacts and are working with all the players in the area, but I would refrain from wanting to talk for any of our individual customers.
Thank you, Patrick. We have a question from Richard Rollnick from ETIG. Please go ahead. Your line is open.
Hi. Thank you for the call. Firstly, I wanted to know about the debt facilities. Is the newbuild facility is the large component of the 2023? Is it Q1 or second quarter of 'twenty three that it becomes due now?
And then the second question is your convertible bonds are trading at very distressed levels around between $0.40 $0.50 on the dollar. Is there any should there be any intent to capture discounts on that for bondholders and some sort of exchange offer that would be attractive to all parties, debt and equity holders?
No. So it is good questions, and I'll ask Magnus too to follow-up. But you are clearly right. I mean, yes, it is true that the facilities in general all mature in the Q1 in 2023, at least the lion's share of it. And there is, of course, by the construction that we have.
And just to maybe say a few things around it, our largest debt is held by the shipyards. But on top of that, we do have also some bank debt and convertible bonds. And clearly, there some of this is trading at distressed levels, and there might be opportunities to create value out of that for all stakeholders. I think it needs to be clear that our intent is to make sure that we have a deal that works for all our creditors. We've had and enjoyed support from many of our stakeholders.
And therefore, what we are looking forward to create as a future solution is one that, over time, creates value for all of them. So therefore, we do see the opportunities. And clearly, it is something that needs to fit in the overall package that we are trying to discuss with creditors going forward. Magnus, could you give some additional color to this?
Yes. No, I completely agree to that question. I know it's a Part 2 other question. And to address your Part 1 question, Richard, on the newbuild facilities are they sold due in the Q2 of 2023?
Yes. I want to just follow-up. It just seems like the utilizations with oil prices elevated and you gave some very good color on the dynamics in the jackup rig market. It just seems with higher utilization rates and higher day rates, there's tremendous operating upside for ore, particularly. And I think at some point in the near future, you mentioned maybe the beginning of next year, it's going to be very difficult to capture any sort of discounts on the debt.
And so there's a timing element involved where all parties could be particularly happy. But I also do want to follow-up. You mentioned strategic opportunities for the ATM facility. Would might that include a merger with some of the competitors to consolidate the market? And does the market need to be consolidated?
So let me start with the last part. I think that the market would benefit from some consolidation, but the intent of the ATM is not that. The intent of the ATM is really to look at what we need to do, first to potentially activate more rigs than we currently have in the plan and secondly, to work with our creditors on moving out the maturities, which might involve some cash payments to make the whole picture work for everybody. So I think you need to see a bit in that light. Clearly, this market could benefit and would benefit from some overall M and A, but that is not what we focus on at this moment.
We clearly remain focused on our own business, and that is why we have put it forward like that. And I think that one of the things you were talking about regarding the convertible bonds and clearly when day rates go up and business gets better, those discounts disappear. And that is absolutely right. When the overall business gets better, on one side, we should be happy. The opportunities for maybe certain discounts on certain parts of our debt disappear.
That is absolutely well understood. So I think it is one of those things that every time in the cycle there are opportunities. We are trying to do the best we can to capture those opportunities and do well for all of our stakeholders. So this is what we continue to focus on. But you are right that certain of these opportunities have a shelf life, and we're very aware of that.
Thank you very much for your answers, and appreciate the information during the presentation.
Thank you. Is there any further question at this moment?
We currently have no further questions.
So Luisa, since I don't see any further questions on the web, I would like to thank all the participants and really appreciate the time you've spent with Boar Drilling. We are clearly excited about a very interesting next few quarters that are coming up. We'll be very focused on the items we have highlighted in the presentation, and we'll continue to update you should we have new information regarding our business. And thank you very much for your time. This will then conclude our investor presentation.
Thank you all for joining today's Board Drilling Limited presentation. Special thanks to Magnus and Patrick for joining. Have a lovely day. You may now disconnect your lines.