BORR — Borr Drilling Limited

Borr Drilling Limited Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Q4 Operational Performance:
  • Technical utilization: 98.8%
  • Economic utilization: 97.8%
  • Operational revenues: $259.4 million (down 6.4% from Q3)
  • Adjusted EBITDA: $105.4 million (full year: $470.1 million, down 7% from 2024)
  • Net loss for Q4: $1 million
  • Cash and cash equivalents: $379.7 million, with total liquidity of $613.7 million.

2. Strategic Updates and Business Highlights

• Safety Achievements: Several rigs reached significant safety milestones, including awards for best safety scores.
• Fleet Expansion: Acquired five premium rigs from Noble, enhancing fleet capabilities and operational flexibility.
• Contracting Success: Secured new commitments for seven rigs since the last report, increasing 2026 coverage to 80% in H1 and 48% in H2.
• Market Recovery: Positive indicators in the jackup market, particularly in the Middle East and Mexico, with increased upstream CapEx from Pemex.

3. Forward Guidance and Outlook

• 2026 Projections: Anticipate modestly higher contracting days compared to 2025, with a focus on filling idle capacity.
• Market Dynamics: Expect improvements in day rates and earnings visibility into 2027, driven by a robust tender pipeline and increased demand.
• Contracting Strategy: A mix of short and long-term contracts will be pursued to optimize fleet utilization and financial performance.

4. Bad News, Challenges, or Points of Concern

• Revenue Decline: Q4 revenues decreased primarily due to lower day rates as rigs transitioned to less lucrative contracts.
• Operational Costs: Total operating expenses rose by 7.4% in Q4, driven by increased rig operating and maintenance costs.
• Market Pressures: Some regions, particularly Asia, are experiencing competitive pricing pressures, which may impact future day rates.
• Outstanding Payments: While there is improvement in collections from Pemex, approximately $90 million to $100 million remained outstanding at the end of Q4.

5. Notable Q&A Insights

• Acquired Rigs: Confidence in securing contracts for idle rigs, particularly Sif, with expectations for Freya to take longer.
• EBITDA Guidance: While consensus for 2026 EBITDA is around $440 million, management remains cautious and will provide clearer guidance as market conditions evolve.
• Middle East Tenders: Anticipated awards from major tenders in the Middle East by mid-2026, which could tighten the market and improve pricing dynamics.
• Contracting Strategy: Management is focused on balancing short-term contracts with longer-term commitments based on market conditions and rig capabilities.

Overall, Borr Drilling Limited reported solid operational performance in Q4 2025, with strategic fleet expansions and positive market signals, though challenges remain in revenue and operational costs. The outlook for 2026 appears optimistic, contingent on successful contract negotiations and market recovery.