Borr Drilling Limited is an offshore shallow water drilling contractor providing worldwide offshore drilling services to the oil and gas industry. The company’s primary business is the ownership, contracting and operation of jack up rigs for operations in water depths up to approximately 400 feet, including the supply of related equipment and work crews to conduct drilling and workover operations for exploration and production customers. As of the end of 2025 Borr Drilling…
Borr Drilling Limited is an offshore shallow water drilling contractor providing worldwide offshore drilling services to the oil and gas industry. The company’s primary business is the ownership, contracting and operation of jack up rigs for operations in water depths up to approximately 400 feet, including the supply of related equipment and work crews to conduct drilling and workover operations for exploration and production customers. As of the end of 2025 Borr Drilling Limited owned a fleet of 29 jack up rigs, all built in 2008 or later, with an average age of 9.4 years. The firm operates in key offshore regions including Southeast Asia, West Africa, the Americas, the Middle East and North Africa, and Europe.
Borr Drilling Limited generates revenue mainly by contracting its jack up rigs on a dayrate basis to drill wells for customers. Dayrate contracts may cover the drilling of a single well or a group of wells, or extend over a specified term, and may include fees for mobilizing and demobilizing the rig. The company’s customers are integrated oil companies, state owned national oil companies, and independent oil and gas exploration and production firms.
Borr Drilling Limited ranks among the largest international operators of jack up rigs, distinguished by one of the youngest and most uniform fleets in the sector. The company’s competitive advantages stem from its low average fleet age, high technical utilization rate of 98.7%, and a strong safety record reflected by a Total Recordable Incident Frequency of 1.95 in 2025. Competitors range from large global oilfield service companies to smaller regional players, but Borr Drilling Limited’s standardized equipment and experienced management team enable it to secure contracts and maintain high utilization levels.
Borr Drilling Limited serves a customer base comprised of exploration and production companies, including integrated oil firms, state owned national oil companies, and independent operators. For the year ended 2025 the company’s largest customers by total revenue were Eni S.p. A, PTT Exploration and Production Public Company Limited, Irish Energy Drilling Asset, DAC, and Saudi Arabian Oil Company.
Sector:EnergySector rationaleBorr Drilling operates as an offshore drilling contractor providing jack-up rigs and crews specifically for the oil and gas industry. Its revenue is generated from dayrate contracts with integrated oil companies and national oil companies to drill exploration and production wells, which falls directly under the 'Land Drilling' or 'Offshore Drilling' industries within the Energy sector.Industry:Offshore DrillingEnergyPrimaryBorr Drilling is an offshore drilling contractor that owns and operates a fleet of 29 jack up rigs. It generates revenue by contracting these rigs on a dayrate basis to customers such as Eni S.p.A. and Saudi Arabian Oil Company.Classified using BQ-MICSCIK: 0001715497
Investment Thesis
▲ Bull case
Borr Drilling's strategic acquisition of five premium jack-up rigs through the Paratus joint venture expands its fleet to 34 rigs, significantly enhancing its presence in Mexico and adding two higher-specification units with broad redeployment potential, which positions the company to capitalize on increasing shallow water demand in core markets as global energy security concerns drive long-term upstream investment, particularly as PEMEX seeks to boost production and international contractors show renewed interest in Mexico's conventional offshore capacity, creating a structural tailwind for utilization and dayrate growth beyond near-term disruptions.
The company's successful upsized $300 million convertible senior notes offering due in 2033, used to repurchase a significant portion of its 2028 convertible bonds, meaningfully extends its debt maturity profile and strengthens its capital structure ahead of an expected market recovery, reducing near-term refinancing risk and providing financial flexibility to pursue opportunistic growth or weather prolonged volatility, while the improved conversion price to $8 per share and lower 3.5% coupon versus the previous 5% enhance shareholder value potential as equity upside is unlocked in a recovering cycle.
Borr Drilling's contracting momentum, with year-to-date 2026 securing 13 new commitments adding approximately $274 million to backlog and full-year 2026 coverage increasing to 71% at an average day rate of $137,000, demonstrates resilient demand capture despite Middle East disruptions, with particular strength in second-half 2026 coverage rising to 65% from 48% in the prior report, supported by repeat customer contracts in Suriname, Gabon, Malaysia, and Vietnam, indicating that the company's relationship-driven model and high-spec fleet are effectively converting pent-up demand into firm work as customers progress through planning and budgeting cycles with a 6-12 month lag to oil price improvements.
The delayed start-up of the Odin rig in the U.S. Gulf, while impacting near-term results, represents a strategic long-term play to address a critical market gap in high-specification shallow water capacity, as the rig brings advanced capabilities like factory drilling that are lacking in the aging U.S. offshore fleet, and early customer engagement with Cantium and Exxon shows strong interest in well efficiencies, suggesting that once operational, the Odin could unlock premium dayrates and follow-on work that significantly exceeds current expectations, turning a near-term drag into a multi-year catalyst for U.S. Gulf penetration and margin expansion.
Management's observation that 8% to 10% of global oil supply remains shut in due to Middle East disruptions, combined with the need to restore shut-in wells and replenish Strategic Petroleum Reserves (SPRs) at all-time lows, creates a credible pathway for substantial incremental recovery-related demand once conditions normalize, and Borr Drilling's expanded, high-spec fleet is uniquely positioned to serve this surge in intervention and production restart work, which could drive utilization and dayrates well above current consensus estimates for 2027-2028 as the cycle develops beyond the current conflict horizon.
Borr Drilling's strategic acquisition of five premium jack-up rigs through the Paratus joint venture expands its fleet to 34 rigs, significantly enhancing its presence in Mexico and adding two higher-specification units with broad redeployment potential, which positions the company to capitalize on increasing shallow water demand in core markets as global energy security concerns drive long-term upstream investment, particularly as PEMEX seeks to boost production and international contractors show renewed interest in Mexico's conventional offshore capacity, creating a structural tailwind for utilization and dayrate growth beyond near-term disruptions.
The company's successful upsized $300 million convertible senior notes offering due in 2033, used to repurchase a significant portion of its 2028 convertible bonds, meaningfully extends its debt maturity profile and strengthens its capital structure ahead of an expected market recovery, reducing near-term refinancing risk and providing financial flexibility to pursue opportunistic growth or weather prolonged volatility, while the improved conversion price to $8 per share and lower 3.5% coupon versus the previous 5% enhance shareholder value potential as equity upside is unlocked in a recovering cycle.
Borr Drilling's contracting momentum, with year-to-date 2026 securing 13 new commitments adding approximately $274 million to backlog and full-year 2026 coverage increasing to 71% at an average day rate of $137,000, demonstrates resilient demand capture despite Middle East disruptions, with particular strength in second-half 2026 coverage rising to 65% from 48% in the prior report, supported by repeat customer contracts in Suriname, Gabon, Malaysia, and Vietnam, indicating that the company's relationship-driven model and high-spec fleet are effectively converting pent-up demand into firm work as customers progress through planning and budgeting cycles with a 6-12 month lag to oil price improvements.
The delayed start-up of the Odin rig in the U.S. Gulf, while impacting near-term results, represents a strategic long-term play to address a critical market gap in high-specification shallow water capacity, as the rig brings advanced capabilities like factory drilling that are lacking in the aging U.S. offshore fleet, and early customer engagement with Cantium and Exxon shows strong interest in well efficiencies, suggesting that once operational, the Odin could unlock premium dayrates and follow-on work that significantly exceeds current expectations, turning a near-term drag into a multi-year catalyst for U.S. Gulf penetration and margin expansion.
Management's observation that 8% to 10% of global oil supply remains shut in due to Middle East disruptions, combined with the need to restore shut-in wells and replenish Strategic Petroleum Reserves (SPRs) at all-time lows, creates a credible pathway for substantial incremental recovery-related demand once conditions normalize, and Borr Drilling's expanded, high-spec fleet is uniquely positioned to serve this surge in intervention and production restart work, which could drive utilization and dayrates well above current consensus estimates for 2027-2028 as the cycle develops beyond the current conflict horizon.
Borr Drilling's first-quarter adjusted EBITDA of $88.5 million was significantly impaired by an $8.4 million credit loss provision tied to the Odin rig's delayed U.S. Gulf start-up, revealing ongoing execution risks in new market entries where regulatory approvals, contract preparation, and transit disruptions can lead to substantial unanticipated costs and revenue delays, with the company now expecting an additional $10 million in contract preparation expenses before operations commence in late June, suggesting that the U.S. Gulf expansion may continue to drag on profitability and divert management focus from core markets where returns are more predictable.
Despite securing 8 contract commitments representing over 1,100 days of firm work since the last earnings report, Borr Drilling's full-year 2026 coverage remains at only 71% at an average day rate of $137,000, leaving nearly 30% of the fleet exposed to volatile spot market rates, and with second-half 2026 coverage at 65% (up from 48%), the company remains heavily reliant on future contracting success to avoid utilization downturns, particularly as rising tensions in the Middle East continue to create near-term uncertainty that could delay tender conversions and disrupt planned mobilizations, as evidenced by the Groa and Forseti completing Qatar contracts only after suspensions and the ongoing bareboat charter of the Forseti into December 2026 limiting immediate redeployment flexibility.
The company's reliance on external financing for growth, highlighted by the $150 million seller credit used in the Noble rig acquisition and the recent $300 million convertible note offering, increases financial leverage and interest rate sensitivity, with financial expenses rising $6.9 million quarter-on-quarter due to seller credit financing and bond taps, and while the maturity extension to 2033 is positive, the 3.5% coupon on the new notes still represents a fixed cost burden that could constrain free cash flow generation if dayrate recovery lags or operating expenses remain elevated due to inflationary pressures in crew, maintenance, and regulatory compliance across its expanded fleet.
Borr Drilling's concentration in the Middle East, with four rigs currently deployed there, exposes it to protracted geopolitical risks where prolonged strait closures or sustained kinetic activity could suppress demand for extended periods, and management's own acknowledgment that improved offshore activity lags oil price increases by 6 to 12 months means that even if prices rise due to conflict, the translation into contracted work may be delayed, leaving the company vulnerable to a scenario where elevated oil prices do not translate into near-term revenue growth, especially as customers complete planning and budgeting cycles that are slow to respond to volatile macro conditions.
The company's strategic shift toward higher-specification rigs, while framed as a strength, may limit its ability to compete effectively in price-sensitive markets like West Africa and Southeast Asia where lower-spec rigs dominate demand, and despite claims of operational flexibility, the higher maintenance and operating costs associated with premium jack-ups could erode margins if dayrates fail to keep pace with cost inflation, particularly as the company acknowledges that it is prioritizing employment for newly acquired rigs over further fleet expansion, suggesting that the current fleet size may already be approaching the limits of sustainable demand absorption in its core operating regions without a corresponding uptick in dayrates.
Borr Drilling's first-quarter adjusted EBITDA of $88.5 million was significantly impaired by an $8.4 million credit loss provision tied to the Odin rig's delayed U.S. Gulf start-up, revealing ongoing execution risks in new market entries where regulatory approvals, contract preparation, and transit disruptions can lead to substantial unanticipated costs and revenue delays, with the company now expecting an additional $10 million in contract preparation expenses before operations commence in late June, suggesting that the U.S. Gulf expansion may continue to drag on profitability and divert management focus from core markets where returns are more predictable.
Despite securing 8 contract commitments representing over 1,100 days of firm work since the last earnings report, Borr Drilling's full-year 2026 coverage remains at only 71% at an average day rate of $137,000, leaving nearly 30% of the fleet exposed to volatile spot market rates, and with second-half 2026 coverage at 65% (up from 48%), the company remains heavily reliant on future contracting success to avoid utilization downturns, particularly as rising tensions in the Middle East continue to create near-term uncertainty that could delay tender conversions and disrupt planned mobilizations, as evidenced by the Groa and Forseti completing Qatar contracts only after suspensions and the ongoing bareboat charter of the Forseti into December 2026 limiting immediate redeployment flexibility.
The company's reliance on external financing for growth, highlighted by the $150 million seller credit used in the Noble rig acquisition and the recent $300 million convertible note offering, increases financial leverage and interest rate sensitivity, with financial expenses rising $6.9 million quarter-on-quarter due to seller credit financing and bond taps, and while the maturity extension to 2033 is positive, the 3.5% coupon on the new notes still represents a fixed cost burden that could constrain free cash flow generation if dayrate recovery lags or operating expenses remain elevated due to inflationary pressures in crew, maintenance, and regulatory compliance across its expanded fleet.
Borr Drilling's concentration in the Middle East, with four rigs currently deployed there, exposes it to protracted geopolitical risks where prolonged strait closures or sustained kinetic activity could suppress demand for extended periods, and management's own acknowledgment that improved offshore activity lags oil price increases by 6 to 12 months means that even if prices rise due to conflict, the translation into contracted work may be delayed, leaving the company vulnerable to a scenario where elevated oil prices do not translate into near-term revenue growth, especially as customers complete planning and budgeting cycles that are slow to respond to volatile macro conditions.
The company's strategic shift toward higher-specification rigs, while framed as a strength, may limit its ability to compete effectively in price-sensitive markets like West Africa and Southeast Asia where lower-spec rigs dominate demand, and despite claims of operational flexibility, the higher maintenance and operating costs associated with premium jack-ups could erode margins if dayrates fail to keep pace with cost inflation, particularly as the company acknowledges that it is prioritizing employment for newly acquired rigs over further fleet expansion, suggesting that the current fleet size may already be approaching the limits of sustainable demand absorption in its core operating regions without a corresponding uptick in dayrates.