BORR

Business Context and Reporting Period

Company: Borr Drilling Ltd (Bermuda-incorporated offshore drilling contractor)

Reporting Period: Three months ended March 31, 2026 (Q1 2026)

Filing Type: Form 6-K (Unaudited Interim Financial Report)

Operations: The Company owns and operates a fleet of 29 premium jack-up rigs for shallow-water oil and gas drilling. Revenue is generated through dayrate, bareboat charter, and management contracts across West Africa, Southeast Asia, the Middle East, the Americas, and Europe.

Key Financial Metrics

Note: Total debt of $2,360.0 million includes $143.6 million maturing within 12 months. Interest expense was $63.2 million for Q1 2026.

Material Changes vs. Prior Period

• Revenue Growth: Operating revenues increased 14% ($30.4 million) driven by a 250% surge in bareboat charter revenue (6 rigs active vs. 2 in prior year) and higher dayrate revenue from increased operating days in the Middle East and North Africa.
• Expense Increases: Total operating expenses rose 28% ($44.2 million). Rig operating costs increased $34.9 million, primarily due to an $8.4 million provision for credit losses, costs associated with five rigs acquired in January 2026, and higher personnel costs.
• Profitability Decline: Operating income decreased 24% to $46.0 million. Net loss widened 72% to $29.0 million, largely due to higher operating expenses and a $1.2 million loss from equity method investments (Mexico-based joint ventures).
• Cash Flow Volatility: Operating cash flow dropped 65% to $48.1 million. This decrease was primarily due to the absence of a one-time $117.0 million cash settlement from Mexico operations received in Q1 2025.
• Investing Activity: Net cash used in investing activities surged to $182.9 million, driven by the $175.1 million completion of the five-rig acquisition from Noble Corporation.

Guidance, Outlook, and Risks

Recent Developments & Outlook

• Debt Refinancing (Subsequent Event): In April 2026, the Company issued $300.0 million of 3.50% Convertible Senior Notes due 2033. Proceeds were used to repurchase $195.2 million of Convertible Bonds due 2028.
• New Acquisition: Entered a 50/50 joint venture to acquire five additional jack-up rigs in Mexico for $287.0 million ($50 million cash, $237 million seller's credit). Closing expected in 2026.
• Listing: Shares listed on Euronext Growth Oslo; up-listing to the main Oslo Stock Exchange market expected by end of May 2026.

Risks and Contingencies

• Liquidity: Significant debt maturities exist, with $143.6 million due within 12 months. The Company relies on cash flows, debt issuance, and equity offerings to meet obligations.
• Geopolitical & Credit Risk: Risks include military actions in the Middle East, sanctions, and credit deterioration from customers (evidenced by the $8.4 million credit loss provision).
• Regulatory: Subject to new Bermuda Corporate Income Tax (15%) and OECD Global Minimum Tax (15%) effective January 1, 2026.
• Contractual: Risks related to rig suspensions, contract cancellations, and the impact of new rigs entering the market on day rates.

Investor Verification Checklist

• Debt Structure: Verify the impact of the April 2026 $300M convertible note issuance and the $195.2M repurchase of 2028 notes on future interest obligations and dilution.
• Credit Loss Provision: Investigate the specific customers contributing to the $8.4 million credit loss provision and the likelihood of recovery.
• Liquidity Runway: Assess the sufficiency of the $246.0 million cash balance against the $143.6 million debt maturing in 2026 and ongoing capital expenditures.
• Joint Venture Closing: Monitor the closing conditions for the $287 million Mexico rig acquisition and the terms of the $237 million seller's credit.
• Tax Impact: Review the financial impact of the new 15% Bermuda corporate tax and global minimum tax on future net income.