20-F: Borr Drilling Reports Fiscal Year 2024 Results, Highlights Contract Backlog and Fleet Modernization

Borr Drilling Limited files its 20-F, reporting financial results for the year ended December 31, 2024, and detailing its operations, risk factors, and future outlook.

Summary

• Borr Drilling Limited has filed its Form 20-F for the fiscal year ended December 31, 2024.
• The company owns 24 premium jack-up rigs, making it one of the largest international operators in the shallow-water market.
• As of December 31, 2024, the Total Contract Backlog, excluding joint venture operations, was approximately $1,382.8 million.
• The company experienced net losses for most years since inception, but reported net income for the fiscal years ending December 31, 2023 and December 31, 2024.
• The company's five largest customers accounted for 55% of its revenue for the year ended December 31, 2024.
• The company has significant debt maturities between 2028 and 2030.
• The company delisted its shares from the Oslo Stock Exchange on December 30, 2024, and now maintains a sole listing on the New York Stock Exchange.
• The company's Board of Directors approved a share repurchase program for up to $100.0 million.
• The company approved and paid cash distributions of $0.10 per share for the first and second quarters of 2024 and $0.02 per share for the third and fourth quarters of 2024.

Sentiment

Score: 7

Explanation: The document presents a mixed picture. While the company reports positive financial results and a strong contract backlog, it also faces significant risks and challenges, including debt maturities and industry cyclicality. The sentiment is cautiously optimistic.

Positives

• The company has one of the youngest and largest fleets in the jack-up drilling market.
• The company has a strong commitment to safety and the environment.
• The company has strong and diverse customer relationships.
• The company's management team and Board members have extensive experience in the drilling industry.
• The company's Economic Utilization, excluding joint venture operations, was 97.7% during 2024.

Negatives

• The offshore drilling industry is highly cyclical and competitive.
• The company is exposed to the risk of default or material non-performance by customers.
• The company has significant debt maturities in the coming years.
• The price of the company's common shares has fluctuated widely.
• The company is subject to complex environmental laws and regulations.

Risks

• The offshore drilling industry and jack-up drilling market historically has been highly cyclical, with periods of low demand and/or over-supply that could result in adverse effects on our 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 our business.
• The success of our 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.
• We may not be able to renew contracts as they expire, and our customers may seek to cancel, suspend or renegotiate their contracts.
• We may be obligated to fund cash calls from our joint ventures in Mexico in order to fund working capital, capital expenditure outlays or any shortfalls, due to delays in invoices being approved and paid by customers.
• We have significant debt maturities in the coming years.
• Liquidity risk could impair our ability to fund operations and jeopardize our financial condition, growth and prospects.
• Compliance with, and breach of, the complex laws and regulations governing international drilling activity and trade could be costly, expose us to liability and adversely affect our operations.
• Climate change and the regulation of greenhouse gases could have a negative impact on our business.
• Our information technology systems are subject to cybersecurity risks and threats and failure to protect these systems could have a material adverse effect on us.

Future Outlook

The company expects that its cash flow from operations, together with its cash and cash equivalents, will meet its anticipated capital expenditure commitments, working capital requirements, its debt obligations and its debt covenants, for the next 12 months.

Industry Context

The offshore drilling industry has seen contracting activity and dayrates increase into 2024, but the market has been impacted by recent contract suspensions. The company remains optimistic about the offshore drilling market in the foreseeable future, predicated on continued strength in the demand for hydrocarbons.

Comparison to Industry Standards

• The company's average fleet age of 7.4 years is among the lowest in the industry.
• The company's Technical Utilization rate of 98.9% in 2024 is a strong indicator of operational efficiency.

Related Party Transactions

• The company has commercial relationships with Related Parties, including advisory arrangements.
• The company conducts activities in Mexico through joint venture entities with a local Mexican partner experienced in providing services to PEMEX and use local labor and resources in order to comply with the contractual obligations to PEMEX.

Stakeholder Impact

• The company's performance and strategies will impact shareholders, customers, employees, and other stakeholders.
• The company's commitment to safety and the environment is important to its stakeholders.

Next Steps

• The company will continue to strive to meet its primary business objective of continuing to be a preferred operator to its customers in the jack-up drilling market while also maximizing the return to its shareholders.
• The company will continue to deploy high-quality rigs to service the industry.
• The company will continue to establish high-quality, cost-efficient operations.

Key Dates

Keywords

drilling, jack-up rigs, offshore, contracts, oil and gas, Borr Drilling, financial results, backlog