Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Second quarter EBITDA was significantly impacted by $22.5 million in preparation and regulatory costs for the rig Odin ahead of its U.S.
Performance was further pressured by six rigs transitioning between contracts, which reduced revenue days and increased fuel costs typically borne by the company during moves. The ongoing Middle East conflict has directly increased insurance and fuel expenses while causing a notable slowdown in regional tendering and contracting activity. Management recognized a $10.8 million credit loss to fully provide for a former West African customer, resulting in a net zero receivable balance to de-risk the balance sheet.
Strategic entry into the U.S. Gulf with the Odin is viewed as a long-term play to provide high-spec assets to a region with strong demand, despite initial start-up delays. Operational utilization remained high at 98.4%, demonstrating technical reliability despite the financial headwinds from mobilization and regulatory hurdles.
Management expects a significant EBITDA improvement in Q3 2026, driven by an average of 23 active rigs as transition activities conclude. The Odin is scheduled to commence its firm two-well contract in the U.S. Gulf in Q3, with the deployment sequence revised to mitigate hurricane season risks.
Near-term visibility remains constrained by the Middle East conflict, though management anticipates a rebound in demand once regional stability returns and large tenders materialize. The company is targeting 2026 contract coverage of 73% at an average dayrate of approximately $134,000, with active discussions ongoing for remaining open slots. Future growth is expected to be supported by the Fontis joint venture in Mexico, with three of five acquired rigs expected to be operational by the end of Q3.
Completed a massive $2.035 billion refinancing of senior secured notes, extending the maturity profile to 2032 and 2034 while reducing financing costs. Recognized a $176.3 million loss on debt extinguishment in Q2, primarily consisting of redemption premiums and derecognition of deferred finance charges. Upsized the revolving credit facility to $250 million and extended its maturity to 2031, significantly enhancing the company's liquidity runway.
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