Business Context and Reporting Period
Company: Borr Drilling Ltd (Bermuda-incorporated, NYSE-listed)
Filing Type: Annual Report on Form 20-F
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: Borr Drilling is a leading offshore shallow-water drilling contractor specializing in premium jack-up rigs. As of December 31, 2025, the company owned 24 rigs. In January 2026, the company completed the acquisition of five additional rigs from Noble Corporation, increasing its fleet to 29 rigs. The company operates globally with a focus on Southeast Asia, West Africa, the Americas, the Middle East, and Europe.
Key Financial Metrics
| Metric (in millions USD) | 2025 | 2024 | Change |
|---|---|---|---|
| Total Operating Revenues | 1,020.8 | 1,010.6 | +10.2 |
| Operating Income | 322.1 | 374.2 | -52.1 |
| Net Income | 45.0 | 82.1 | -37.1 |
| Adjusted EBITDA (Non-GAAP) | 470.1 | 505.4 | -35.3 |
| Net Cash Provided by Operating Activities | 251.9 | 77.3 | +174.6 |
| Total Debt (Principal) | 2,210.0 | 2,044.9 | +165.1 |
| Cash and Cash Equivalents | 379.7 | 61.6 | +318.1 |
| Contract Backlog ($ millions) | 962.9 | 1,330.6 | -367.7 |
Key Ratios & Metrics:
- Technical Utilization: 98.7% (2025) vs 98.9% (2024)
- Economic Utilization: 97.6% (2025) vs 97.7% (2024)
- Weighted Average Operating Rigs: 19.2 (2025) vs 20.1 (2024)
- Effective Tax Rate: 47.6% (2025) vs 41.5% (2024)
Material Changes vs. Prior Period
- Revenue Composition: Total revenue increased slightly, driven by a $58.5 million increase in dayrate revenue due to higher operating days and weighted average earned dayrates. This was partially offset by a $35.0 million decrease in related party revenue following the restructuring of Mexico joint venture operations, and a $12.6 million decrease in bareboat charter revenue.
- Operating Expenses: Total operating expenses increased by $62.2 million to $699.0 million. Rig operating and maintenance expenses rose by $44.2 million, primarily due to new rig operations in the Middle East and West Africa and increased costs in Mexico. Depreciation increased by $16.8 million due to newbuild rig additions and capitalized maintenance.
- Profitability: Net income declined by 45% to $45.0 million. This decrease was driven by higher operating expenses, increased interest expenses ($16.7 million increase), and a higher effective tax rate, despite strong operating cash flow generation.
- Liquidity: Cash and cash equivalents surged from $61.6 million to $379.7 million, fueled by $177.2 million in net proceeds from equity issuances and $159.3 million in net debt proceeds, alongside a significant improvement in operating cash flow.
- Debt Structure: The company issued $165.0 million in additional 2030 Notes in December 2025. Total debt principal increased to $2.21 billion.
Guidance, Outlook, and Risks
Management Commentary & Outlook:
- Management expects to meet short-term liquidity needs through existing cash, operating cash flows, and revolving credit facilities.
- The company anticipates capital expenditures of $60–$70 million for rig maintenance and surveys in the next 12 months, excluding the recently completed Five-Rig Acquisition.
- The offshore drilling market faced lower demand in 2025, impacting day rates, largely due to suspensions by major customers like Saudi Aramco and Pemex. However, global demand is expected to rise over the longer term.
Material Risks & Contingencies:
- Geopolitical Instability: Escalating conflicts in the Middle East (specifically involving Iran, Israel, and the U.S.) have led to the down-manning of four rigs in the region. An incident on the Arabia III rig occurred in March 2026, though personnel were evacuated safely.
- Customer Credit Risk: Customer Lime Petroleum Holding AS (LPH) announced a strategic financial review in February 2026. Borr Drilling has a potential exposure of up to $20.0 million to LPH.
- Debt Maturities: Significant debt maturities are scheduled for 2028 ($1.26 billion) and 2030 ($621.6 million). The company expects to refinance these obligations prior to maturity.
- Contract Backlog: The backlog decreased to $962.9 million (20 rig-years) from $1.33 billion in 2024, reflecting contract expirations and suspensions.
Investor Verification Checklist
- Five-Rig Acquisition Integration: Verify the operational status and contract coverage of the five rigs acquired from Noble Corporation in January 2026 (three contracted, two uncontracted as of filing).
- Geopolitical Exposure: Monitor the impact of the Middle East conflict on the four down-manned rigs and potential revenue losses or additional operating costs in Q1 2026.
- Customer Creditworthiness: Assess the collectability of receivables from Lime Petroleum Holding AS (LPH) following their announcement of financial restructuring.
- Debt Refinancing: Evaluate the company's ability to refinance the $1.26 billion debt maturing in 2028 and $621.6 million in 2030, particularly given the high interest rate environment.
- Tax Implications: Review the impact of the new 15% Bermuda Corporate Income Tax effective January 1, 2026, and the global Pillar Two minimum tax on future effective tax rates.
- Contract Backlog Realization: Scrutinize the $962.9 million backlog for potential suspensions or terminations, noting that actual revenue may differ due to downtime and dayrate adjustments.