20-F: Borr Drilling Reports 2025 Financials Amid Fleet Expansion

Borr Drilling Limited reported a decrease in net income and operating income for 2025, alongside strategic fleet acquisitions and management changes, while navigating industry volatility and significant debt maturities.

Summary

• Net income attributable to shareholders decreased to $45.0 million in 2025 from $82.1 million in 2024.
• Total operating revenues increased slightly by $10.2 million to $1,020.8 million in 2025 from $1,010.6 million in 2024, primarily due to increased dayrate revenue.
• Operating income decreased to $322.1 million in 2025 from $374.2 million in 2024.
• Total operating expenses increased by $62.2 million to $699.0 million in 2025, driven by higher rig operating and maintenance expenses and depreciation.
• Adjusted EBITDA decreased to $470.1 million in 2025 from $505.4 million in 2024.
• The company completed the acquisition of five premium jack-up rigs from Noble Corporation in January 2026 for $360.0 million.
• A new 50/50 joint venture, BC Ventures Limited, agreed to acquire five additional jack-up rigs for $287.0 million, expected to close in Q3 2026.
• Total contract backlog decreased to $962.9 million as of December 31, 2025, from $1,330.6 million as of December 31, 2024.
• The company has significant debt maturities totaling $2,210.0 million between 2028 and 2030.
• Patrick Schorn transitioned from CEO to Executive Chairman, and Bruno Morand was appointed CEO, effective September 1, 2025.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed report. While strategic fleet expansion and improved operational efficiency are positive, the significant decline in net income, operating income, and contract backlog, coupled with substantial debt maturities and ongoing geopolitical risks, indicate underlying challenges.

Positives

• Total operating revenues increased by $10.2 million to $1,020.8 million in 2025, primarily driven by a $58.5 million increase in dayrate revenue.
• Successfully completed the Five-Rig Acquisition in January 2026, increasing the fleet size from 24 to 29 premium jack-up rigs.
• Entered into an agreement for a New JV Rig Acquisition of five additional jack-up rigs, further expanding the fleet.
• Increased the Super Senior Revolving Credit Facility (SSRCF) to $200.0 million and established a new $34.0 million Senior Secured Revolving Credit Facility (SRCF) in September 2025, enhancing liquidity options.
• Net cash provided by operating activities significantly increased to $251.9 million in 2025 from $77.3 million in 2024.
• Maintained a strong Technical Utilization rate of 98.7% in 2025, reflecting efficient drilling operations.
• Improved Total Recordable-Incident Frequency (TRIF) to 1.95 in 2025 from 2.31 in 2024, indicating enhanced workplace safety.
• Reinstated dual listing on Euronext Growth Oslo in December 2025 due to strong investor interest.
• Management assessed internal control over financial reporting as effective as of December 31, 2025.

Negatives

• Net income decreased by $37.1 million from $82.1 million in 2024 to $45.0 million in 2025.
• Operating income decreased by $52.1 million to $322.1 million in 2025 from $374.2 million in 2024.
• Adjusted EBITDA decreased to $470.1 million in 2025 from $505.4 million in 2024.
• Total contract backlog decreased to $962.9 million as of December 31, 2025, from $1,330.6 million as of December 31, 2024.
• Experienced contract suspensions and terminations for several rigs in 2024 and 2025, including two rigs terminated in 2024 and one terminated in 2025 due to sanctions.
• Loss from equity method investments increased to $2.7 million in 2025 from $1.2 million in 2024, partly due to a loss of tax benefits in Mexico.
• Interest expenses increased by $16.7 million to $228.4 million in 2025 due to debt increases.
• The company has significant debt maturities in the coming years, totaling $2,210.0 million between 2028 and 2030, requiring refinancing.
• Only three of the five Newly Acquired Rigs are currently contracted, and the newbuild rig Var remains uncontracted.
• Potential credit loss exposure of up to $20.0 million from Lime Petroleum Holding AS (LPH) due to its strategic and financial review.
• An incident in late February 2026 impacted the Arabia III rig, leading to a safe shutdown and evacuation, with four rigs in the Middle East down-manned due to general precautionary measures related to geopolitical conflict.

Risks

• The offshore drilling industry and jack-up drilling market are highly cyclical, with periods of low demand and/or oversupply potentially resulting in adverse effects on the business.
• The offshore drilling industry and the jack-up drilling market are highly competitive, with periods of excess rig availability which reduce dayrates and could result in adverse effects on the business.
• The success of the business largely depends on the level of activity in the oil and gas industry, which can be significantly affected by volatile oil and natural gas prices.
• Global geopolitical tensions and instability, supply disruptions, inflation, global economic conditions and volatility in the financial markets create heightened volatility in oil and natural gas prices that could result in adverse effects on the business.
• Global, international and national trends in renewable energy-based infrastructure and power supply and generation may cause long-term demand for customers' products to fall, and in turn affect the demand for services.
• Down-cycles in the offshore drilling industry and other factors may affect the market value of jack-up rigs.
• Growing importance of Artificial Intelligence in the oil and gas industry could adversely affect operations, competitive position, and profitability if the company fails to keep pace or integrate effectively, or due to increased cybersecurity threats.
• The company may not be able to renew contracts as they expire, and customers may seek to cancel, suspend or renegotiate their contracts, particularly in response to unfavorable industry conditions.
• The company may be unable to obtain favorable contracts for its jack-up rigs, leading to idling or stacking.
• Contract Backlog may not be realized due to various factors, including shipyard and maintenance projects, downtime, and customer termination rights.
• The company may be obligated to fund cash calls from its joint ventures in Mexico to cover working capital, capital expenditure outlays, or shortfalls due to delays in invoice approval and payments from customers.
• Mergers, acquisitions and divestiture activity among oil and gas industry participants could impact the business by reducing the number of available customers or altering industry competition.
• The company is exposed to the risk of default or material non-performance by customers, especially in periods of depressed market conditions.
• Drilling contracts contain fixed terms and dayrates, and consequently the company may not fully recoup costs in the event of a rise in expenses, including preparation, relocation, operating, maintenance, and reactivation costs, or during idle time.
• Inflation may adversely affect operating results by increasing labor, material, and overhead costs.
• The limited availability of qualified personnel in operating locations may result in higher operating costs as offshore drilling industry demands increase.
• If the company is unable to attract and retain highly skilled personnel who are qualified and able to work in the locations in which it operates, it could adversely affect operations.
• The company is exposed to the risk of default or material non-performance by subcontractors.
• The recent acquisition of five new rigs will increase the size of the fleet and the risks faced in the business, including those related to industry cyclicality, oil price levels, indebtedness, and liquidity.
• The company faces risks in connection with the recently announced agreement to acquire five rigs through a new joint venture, including completion risk, unanticipated costs for reactivation or maintenance, and significant indebtedness at the joint venture.
• Compliance with, and breach of, the complex laws and regulations (including applicable economic sanctions) governing international drilling trade could be costly, expose the company to liability, and adversely affect operations.
• Local content requirements may increase the cost of, or restrict the company's ability to, obtain needed supplies or hire experienced personnel, or may otherwise affect operations.
• The obligations of being a public company, including compliance with reporting requirements of the Exchange Act and rules of the New York Stock Exchange (NYSE) Listed Company Manual, the Norwegian Securities Trading Act and the Euronext Growth Oslo Rules require certain resources and causes the company to incur additional costs.
• The company is subject to complex environmental laws and regulations that can adversely affect it, including strict liability for remediation of spills and releases.
• Privacy, data protection and information security regulations could increase costs, and failure to comply could result in fines, sanctions or other penalties, as well as have an impact on reputation.
• A change in tax laws in any country in which the company operates may adversely affect financial results, including the new Bermuda Corporate Income Tax Act 2023 and OECD Pillar Two initiatives.
• Climate change and the regulation of greenhouse gases could have a negative impact on the business by increasing costs, reducing demand for oil and gas, and affecting access to capital.
• Increasing attention to sustainability, environmental, social and governance matters may impact the company's access to capital and reputation.
• Any violation of anti-bribery or anti-corruption laws and regulations could have a negative impact on the company.
• If jack-up rigs are located in countries that are subject to, or targeted by, economic sanctions, export restrictions or other operating restrictions imposed by the U.S. or other governments, the company's reputation and the market for its debt and common shares could be adversely affected.
• Changing laws and reporting requirements (e.g., U.K. Modern Slavery Act 2015, GDPR) could have an adverse impact on the business.
• The company has significant debt maturities in the coming years, totaling $2,210.0 million in principal amount between 2028 and 2030, requiring refinancing or extension.
• Future cashflows may be insufficient to meet obligations under the terms of existing bonds and loans and could impact the company's ability to operate its business.
• Liquidity risk could impair the company's ability to fund operations and jeopardize its financial condition, growth and prospects.
• As a result of significant cash flow needs, the company may be required to raise funds through the issuance of additional debt or equity, and in the event of lost market access, may not be successful in doing so.
• The company is subject to restrictive debt covenants that may limit its ability to finance future operations and capital needs and to pursue business opportunities and activities.
• The company may require additional financing for working capital or other requirements and may not be able to arrange the required or desired financing.
• An economic downturn could have an adverse effect on the company's ability to access the capital markets.
• The company is subject to fluctuations in exchange rates and limitations on repatriation of earnings which could negatively impact it.
• The price of common shares has fluctuated widely, and investors could lose all or part of their investment.
• Future sales of equity securities in the public market, or the perception that such sales may occur, could reduce share price, and any additional capital raised through equity or convertible securities may dilute ownership.
• The company cannot guarantee it will pay dividends/cash distributions in any specified amounts or particular frequency or at all.
• If the company is a passive foreign investment company (PFIC) for U.S. federal income tax purposes for any taxable year, U.S. Holders of common shares may be subject to adverse tax consequences.
• As a foreign corporation, shareholders may not have the same rights that a shareholder in a U.S. corporation may have.

Future Outlook

The company anticipates global demand for modern jack-up rigs to rise further over the longer term, absorbing excess supply caused by rig suspensions. Growth in rig supply is expected to be restrained, with the order book of new rigs at a 20-year record low of approximately 2% of the current fleet. Offshore oil and gas are expected to play an important and sustainable role in meeting global energy demand for the foreseeable future, despite accelerating energy rebalancing trends and increased investment in sustainable energy sources by customers. The company expects to carry out a full up-listing on Euronext Oslo Brs within the first half of 2026. Bermuda income tax will become applicable to the company beginning January 1, 2026, at a 15% rate if the revenue threshold is met.

Management Comments

• "We are strongly committed to conducting our business fairly, ethically and in compliance with all relevant laws and regulations." (Bruno Morand, CEO)
• "Our ethical business culture is central to our success and therefore this Code of Conduct includes mandatory requirements for everyone who works on our behalf anywhere in the world and sets out our expectations of all Borr employees and business partners." (Bruno Morand, CEO)
• "We believe that our modern fleet provides a competitive advantage that yields higher utilization and higher daily rates for our jack-up rigs, particularly as compared to older rigs."
• "We believe, based on our young fleet and proven operational track record of efficiency and safety, that we are better placed to secure new drilling contracts as offshore drilling demand rises than our competitors who operate older, less modern fleets."
• "We believe that we are responsive and flexible in addressing our customers specific needs and seek collaborative solutions to achieve customer objectives."
• "We strive to meet our primary business objective of being a preferred operator to our customers in the jack-up drilling market while also maximizing the return to our shareholders."
• "Management continues to regularly monitor the Company’s ability to finance the needs of its business and activities."
• "We believe that our cash and cash equivalent balances, expected cash flows from operations and availability under our revolving credit facilities will enable us to meet our cash needs including, anticipated working capital requirements, capital expenditure commitments, and debt obligations, and to meet the requirements in our debt covenants, for at least the next 12 months, as of the date of this report."

Industry Context

StockSavvy.ai notes that Borr Drilling operates in a highly cyclical and competitive offshore drilling industry, which has seen a shift in demand towards modern jack-up rigs. The company's strategy of exclusively owning and operating a young, largely uniform fleet of premium jack-up rigs positions it to capitalize on this trend. While the market experienced lower demand in 2025 due to contract suspensions by major customers like Saudi Aramco and Pemex, global demand is expected to rise, absorbing excess supply. The low newbuild order book (2% of the current fleet) suggests limited future supply growth, which could support dayrates. However, the industry faces ongoing challenges from volatile oil and gas prices, geopolitical instability, inflation, and the accelerating energy transition towards sustainable sources, which could divert capital investments from traditional oil and gas exploration.

Comparison to Industry Standards

• Borr Drilling's average fleet age of 9.4 years (as of December 31, 2025, including newly acquired rigs) is stated to be among the lowest in the industry, indicating a competitive advantage over operators with older, less modern fleets.
• The global competitive jack-up rig utilization was approximately 88% in March 2026. Borr Drilling's Rig Utilization was 80.0% in 2025, which is below the reported global average, suggesting potential for improvement or impact from uncontracted rigs.
• Average global modern jack-up day rates for contracts executed in 2025 declined approximately 19% compared to 2024, indicating a challenging pricing environment that Borr Drilling also navigates.
• The order book of new rigs as a percentage of the current jack-up fleet has reached a 20-year record low at approximately 2%, which is a positive long-term supply-side indicator for the industry, including Borr Drilling.
• The company's Technical Utilization rate of 98.7% in 2025 (excluding joint ventures) reflects high operational efficiency, which is a key competitive factor in the industry.
• The TRIF of 1.95 in 2025 is an improvement from 2.31 in 2024, demonstrating a commitment to safety, a critical factor for customers in the drilling industry.

Management Changes

Corporate Governance

Legal Proceedings

• The company is from time to time involved in various civil litigation matters, including personal injury, employment-dispute, environmental and climate change, contractual, intellectual property, tax or securities litigation, and maritime lawsuits.
• The company may be subject to claims related to Paragon Offshore plc, its predecessor, which underwent financial restructuring in 2016.
• The company is exposed to litigation risks from operating hazards inherent in the drilling industry (e.g., blow-outs, pollution, equipment damage).

Related Party Transactions

• The company holds a 51% equity ownership interest in two Mexico-based joint ventures, Perfomex and Perfomex II, with Proyectos Globales de Energia y Servicos CME, S.A. DE C.V. (CME) owning the remaining 49%.
• Historically provided rigs on a bareboat charter (BBC) basis to joint ventures in Mexico (no rigs in 2025, three rigs for part of 2024, five rigs in 2023).
• Perfomex provides onshore operational and technical support services to the company for certain rigs in the Americas, with expenses recognized as rig operating and maintenance expenses.
• Related party revenue from Perfomex was $35.0 million in 2024 and $129.6 million in 2023, but zero in 2025 due to a new operating structure.
• Accounts receivable from Perfomex were $2.3 million as of December 31, 2025, down from $85.1 million in 2024.
• Front End Limited Company, a minority owner in a consolidated subsidiary, acts as an agent and party to a management agreement in Saudi Arabia, receiving a management fee. Operating expenses to Front End were $1.7 million in 2025.
• Magni Partners Limited, solely owned by Board member Tor Olav Trim, provides corporate services, strategic advice, and assistance in sourcing investment opportunities and financing. Fixed element of the agreement terminated effective January 1, 2024. Professional fees from Magni related to debt and equity offerings were $0.8 million in 2025.
• Drew Holdings Limited, wholly owned by a trust where Board member Tor Olav Trim is the beneficiary, was involved in a Share Lending Agreement (SLA) with DNB Markets in 2023, making common shares available for lending to Convertible Bond holders. Drew ceased to be a party to the SLA on April 19, 2023.
• Certain Directors and executive officers participated in public equity offerings at terms identical to third-party participants.

Stakeholder Impact

• Shareholders face potential dilution from future equity issuances, impact on share price from market volatility and financial performance, and no guarantee of future dividends. They may benefit from strategic fleet expansion and potential long-term growth.
• Employees are affected by changes in management, the ongoing need for highly skilled personnel, and potential impacts on morale/productivity from AI adoption or workforce displacement.
• Customers are impacted by contract suspensions/terminations, but also benefit from a modern, efficient fleet and strong operational performance. Geopolitical conflicts and oil price volatility affect their capital spending.
• Creditors/Bondholders are exposed to significant debt maturities and the company's ability to refinance. Security interests on rigs provide some protection.
• Suppliers/Subcontractors face risks if the company's customers default or delay payments, potentially impacting the company's ability to pay them. Supply chain disruptions could affect operations.
• Regulatory Authorities impose extensive regulatory regimes (SEC, NYSE, Euronext Growth Oslo, environmental, tax, anti-corruption), requiring significant compliance efforts and costs from the company.

Next Steps

• Complete the Five-Rig Acquisition in January 2026 (already completed as of filing date).
• Add two newly acquired rigs to the security for senior secured obligations on or before April 28, 2026.
• Complete the New JV Rig Acquisition in the third quarter of 2026, subject to customary closing conditions including merger control approvals.
• Carry out a full up-listing on Euronext Oslo Brs (Oslo Stock Exchange) within the first half of 2026.
• Monitor the impact of the Middle East conflict on operations, including lost revenues and additional operating costs.
• Evaluate the effect of Lime Petroleum Holding AS's financial review on the collectability of amounts owed.
• Refinance or extend significant debt maturities between 2028 and 2030.
• Continue to monitor Company, market, and asset-specific factors for indications that the carrying amounts of long-lived assets may not be recoverable.
• Comply with the Bermuda Corporate Income Tax Act 2023 and OECD Pillar Two initiatives, with Bermuda income tax becoming applicable from January 1, 2026.
• Directors and officers of foreign private issuers to comply with Section 16(a) insider reporting requirements beginning March 18, 2026.

Key Dates

Recommendation

Borr Drilling's strategic fleet expansion and strong operational metrics (Technical Utilization, TRIF) are positive indicators for long-term competitive positioning in the jack-up market. However, the decline in net income, operating income, and contract backlog for 2025, coupled with substantial debt maturities in the near future and ongoing geopolitical and market volatility, present significant headwinds. The company's ability to successfully refinance its debt and secure new contracts for its expanded fleet will be critical. Given the mixed financial performance and the balance of strategic growth against significant financial and operational risks, a "hold" recommendation is appropriate for a seasoned investor, awaiting clearer signs of sustained financial improvement and successful debt management.

Keywords

Offshore drilling, Jack-up rigs, Oil and gas industry, Financial results, Debt maturities, Fleet expansion, Contract backlog, Risk factors, Corporate governance, Sustainability, Geopolitical risk, Capital raise, Borr Drilling, SEC filing