Business Context and Reporting Period
Company: Borr Drilling Ltd (Bermuda-incorporated offshore drilling contractor)
Reporting Period: Unaudited interim results for the three and six months ended June 30, 2026.
Operations: The Company owns and operates a fleet of premium jack-up rigs for shallow-water drilling. As of June 30, 2026, the fleet consisted of 29 rigs. Subsequent to the period end (July 2026), the Company completed a joint venture acquisition of five additional rigs in Mexico.
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | Value (USD Millions) |
|---|---|
| Operating Revenues | 479.3 |
| Operating Income | 46.3 |
| Net Loss Attributable to Shareholders | (270.4) |
| Adjusted EBITDA (Non-GAAP) | 132.3 |
| Net Cash Provided by Operating Activities | 26.3 |
| Cash and Cash Equivalents | 223.6 |
| Total Outstanding Borrowings | 2,529.2 |
Material Changes vs. Prior Period
- Revenue: Total operating revenues decreased slightly by 1% ($5.0 million) to $479.3 million. This was driven by a 10% decline in dayrate revenue ($43.5 million) due to lower weighted average earned dayrates and a sanctions-related contract termination in the Americas. This was partially offset by a 113% increase in bareboat charter revenue.
- Profitability: Operating income fell 70% to $46.3 million from $156.7 million. The Net Loss widened significantly to $270.4 million from a Net Income of $18.2 million in the prior year.
- Expenses: Total operating expenses increased 32% to $433.1 million. Rig operating and maintenance expenses rose 38% ($87.8 million), primarily due to the addition of five rigs acquired in January 2026, increased repair costs, and a $19.9 million provision for credit losses.
- Financial Expenses: Net financial expenses surged 151% to $299.2 million. This was largely due to a $176.3 million loss on debt extinguishment related to the refinancing of senior secured notes and convertible bonds.
- Cash Flow: Operating cash flow decreased 82% to $26.3 million, impacted by higher operating expenses and the absence of a $119.9 million cash settlement from Mexico operations that occurred in the prior year.
Guidance, Outlook, and Material Events
- Debt Refinancing: In June 2026, the Company issued $2.035 billion in new senior secured notes (8.75% due 2032 and 9.00% due 2034) and $300 million in convertible notes due 2033. Proceeds were used to redeem all outstanding 2028 and 2030 senior secured notes and repurchase a significant portion of convertible bonds due 2028.
- Subsequent Acquisition: On July 29, 2026, a 50/50 joint venture acquired five jack-up rigs in Mexico for $287.0 million ($237.0 million seller's credit, $50.0 million cash).
- Liquidity: As of June 30, 2026, the Company held $223.6 million in cash and cash equivalents. No debt matures within the next 12 months.
- Risks: Key risks include geopolitical tensions (specifically in the Middle East and Mexico), potential contract suspensions or terminations, credit losses from customers, and the impact of oil and gas price fluctuations. The Company noted a $19.9 million provision for credit losses in the current period.
- Outlook: Management highlighted the successful up-listing to the Oslo Stock Exchange main market and the expansion of the fleet through the January and July acquisitions. However, the Company cautioned that forward-looking statements are subject to significant risks regarding market conditions and contract realization.
Investor Verification Checklist
- Debt Structure: Verify the terms and covenants of the new $2.035 billion senior secured notes and the $300 million convertible notes issued in June 2026.
- Credit Loss Provision: Review the specific customers and jurisdictions driving the $19.9 million provision for credit losses recorded in Q2 2026.
- Contract Backlog: Assess the stability of the contract backlog, particularly regarding rigs in the Americas and Mexico, given the history of sanctions-related terminations and payment delays.
- Joint Venture Exposure: Evaluate the financial health and operational status of the new Mexico-based joint venture (BC Ventures Limited) and the existing Perfomex/Perfomex II ventures.
- Liquidity Runway: Confirm the sufficiency of the $223.6 million cash balance against upcoming debt service obligations and capital expenditure requirements for rig maintenance and reactivation.