Borr Drilling Limited Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Operating Revenues: $232.3 million, down 6% from Q1, primarily due to a $21.8 million reduction in dayrate revenue.

Adjusted EBITDA: $43.8 million, a significant decline of $44.7 million compared to Q1.

Net Loss: $241.4 million, an increase in loss of $212.4 million from Q1.

Operating Expenses: $232.1 million, up $31.1 million, driven by increased rig operating and maintenance expenses, particularly related to the Odin.

Liquidity: Cash and cash equivalents were $223.6 million, with total liquidity of $473.6 million, including $250 million of undrawn borrowings.

Technical Utilization: 98.4%; Economic Utilization: 96.4%.

2Strategic Updates and Business Highlights

Safety milestones achieved across several rigs, with multiple rigs reaching significant LTI-free durations.

The Odin rig is preparing for its U.S. Gulf contract, which is expected to provide firm work into mid-2027, with options extending to 2029.

Secured 8 contract commitments since the last earnings report, totaling over 2,100 days of additional work across various regions.

Successfully refinanced most of the company’s debt, extending maturity and reducing financing costs.

Acquired 5 premium jack-up rigs through a joint venture in Mexico, with 3 currently contracted.

3Forward Guidance and Outlook

Anticipate an average of 23 active rigs in Q3, which should significantly improve adjusted EBITDA from Q2.

Contract coverage for 2026 is now at 73% with an average dayrate of approximately $134,000.

The company remains optimistic about demand for rigs, particularly in the U.S. Gulf and Asia, despite ongoing challenges in the Middle East.

4Bad News, Challenges, or Points of Concern

Declining Metrics: Adjusted EBITDA and net loss significantly worsened compared to Q1, indicating operational and financial challenges.

Increased Operating Expenses: Higher costs due to the Odin's preparations and increased insurance and fuel costs related to geopolitical tensions.

Middle East Conflict: Ongoing conflict has led to reduced visibility and delays in tendering and contracting, impacting overall market conditions.

Credit Losses: Recognized a $10.8 million credit loss related to a former customer in West Africa, resulting in net zero receivables from that customer.

5Notable Q&A Insights

Q3 EBITDA Expectations: Management indicated a substantial sequential increase in EBITDA for Q3, driven by the Odin's contract commencement and improved rig utilization.

Acquisition Insights: Discussions are ongoing to deploy the remaining two rigs from the Fontis acquisition, with potential for the fourth rig to resume operations by early next year.

Market Outlook: There is cautious optimism regarding the Middle East market, with ongoing tenders still in the pipeline, but uncertainty remains high due to the conflict.

Geographic Footprint: Management expressed confidence in their current geographic positioning and partnerships, particularly in Mexico and Asia, while remaining vigilant about potential rig relocations based on market demands. This summary encapsulates the key aspects of Borr Drilling's Q2 2026 earnings call, highlighting both the challenges faced and the strategic initiatives undertaken to navigate the current market environment.