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Borr Drilling Limited (BORR)
NYSE:BORR
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Borr Drilling
(NYSE:BORR)
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Rating:67Neutral
Price Target:
$5.50
▲(9.56% Upside)
Action:ReiteratedDate:02/20/26
The score is driven by strong technical momentum and a generally constructive earnings-call outlook (high utilization, liquidity, and improving contract coverage). This is tempered by a higher-risk financial profile—especially leverage and revenue/free-cash-flow volatility—and a less compelling valuation due to the elevated P/E despite the solid dividend yield.
Positive Factors
High fleet utilization
Near‑peak technical and economic utilization demonstrates the company is running its modern jack-up fleet at very high capacity, supporting stable dayrate revenue per rig. Sustained high utilization lowers unit costs, strengthens short-to-medium term cash flow visibility and operational leverage.
Improving cash generation and liquidity
Return to positive operating cash flow and material FCF in 2025, combined with ~ $614M total liquidity, meaningfully improves the company's ability to fund reactivations, service debt, and absorb cyclical downturns. This stronger cash posture increases strategic optionality over coming quarters.
Accretive fleet expansion and contracting momentum
The five‑rig acquisition and recent ~$145M backlog additions expand scale and immediate contract coverage, enhancing commercial flexibility. Accretive fleet growth improves market positioning, raises potential utilization, and increases the company's ability to capture tender opportunities as demand recovers.
Negative Factors
Elevated leverage / refinancing risk
Debt materially exceeding equity creates meaningful refinancing and interest-rate sensitivity for a cyclical drilling contractor. Elevated leverage reduces financial flexibility, increases default/covenant risk in prolonged downturns, and constrains ability to fund opportunistic capex without additional capital.
Sharp revenue volatility and cyclicality
A ~36% revenue drop in 2025 and lumpy free cash flow history highlight the firm's exposure to offshore spending cycles and dayrate swings. Persistent top-line volatility undermines multi-quarter cash flow predictability and complicates planning for debt amortization, capex, and contract pricing.
Idle rigs and reactivation capex burden
Idle or newly acquired rigs lacking firm work create near-term capital and timing risk: large reactivation costs (e.g., Var ~ $56M) and uncertain timelines can erode the benefit of fleet scale, depress margins until rigs return to work, and strain cash if contracting lags market recovery.
Borr Drilling (BORR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.54B
Dividend Yield5.99%
Average Volume (3M)7.60M
Price to Earnings (P/E)23.5
Beta (1Y)1.51
Revenue Growth5.83%
EPS Growth-11.86%
CountryUS
Employees2,087
SectorEnergy
Sector Strength52
IndustryOil & Gas Drilling
Share Statistics
EPS (TTM)0.00
Shares Outstanding306,872,800
10 Day Avg. Volume7,626,679
30 Day Avg. Volume7,599,788
Financial Highlights & Ratios
PEG Ratio-0.48
Price to Book (P/B)0.86
Price to Sales (P/S)1.04
P/FCF Ratio8.30
Enterprise Value/Market Cap1.97
Enterprise Value/Revenue2.97
Enterprise Value/Gross Profit5.02
Enterprise Value/Ebitda6.61
Forecast
1Y Price Target
$5.77Price Target Upside14.94% Upside
Rating ConsensusHold
Number of Analyst Covering3
EPS Forecast (FY)-0.03
Revenue Forecast (FY)$1.07B
Borr Drilling Business Overview & Revenue Model
Company DescriptionBorr Drilling Limited operates as an offshore drilling contractor to the oil and gas industry worldwide. It owns, contracts, and operates jack-up rigs for operations in shallow-water areas, including the provision of related equipment and work crews to conduct oil and gas drilling and workover operations for exploration and production. The company serves oil and gas exploration and production companies, such as integrated oil companies, state-owned national oil companies, and independent oil and gas companies. As of December 31, 2021, it operated a fleet of 23 jack-up drilling rigs. The company was formerly known as Magni Drilling Limited and changed its name to Borr Drilling Limited in December 2016. Borr Drilling Limited was incorporated in 2016 and is based in Hamilton, Bermuda.
How the Company Makes MoneyBorr Drilling makes money by contracting its jack-up drilling rigs to customers for offshore drilling campaigns under drilling contracts. The core revenue stream is dayrate-based rig hire, where the customer pays a negotiated daily rate for use of a rig and its crew while the rig is working (and, depending on contract terms, potentially during certain non-productive periods). In addition to dayrates, contracts can include reimbursable revenues (costs billed back to the customer for items such as certain consumables, third-party services, logistics, and other customer-specific expenditures) and, where applicable, performance-related components (e.g., bonuses or incentives tied to operational targets) if specified in the contract. The company’s earnings are therefore driven mainly by (1) fleet utilization (how many rigs are contracted and working), (2) achieved dayrates, (3) contract duration and backlog, and (4) operating efficiency and cost control (since operating costs, maintenance, shipyard/upgrade costs, and crew expenses affect margins on contracted revenue). Significant external factors influencing revenue and profitability include offshore oil and gas spending cycles, regional demand for jack-ups, regulatory and safety requirements, rig downtime, and the timing/cost of rig mobilizations and periodic maintenance. Specific named partnerships or customer concentrations are null.
Borr Drilling Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 27, 2026
Earnings Call Sentiment Positive
The call conveyed a constructive operational and financial position: very high utilization, strong liquidity, successful capital markets activity, accretive acquisition of five premium rigs, and tangible contracting momentum (seven commitments and ~$145M backlog additions). These positives were balanced against short-term headwinds — a Q4 revenue decline (-6.4% QoQ), higher operating costs (+7.4% QoQ), a small Q4 net loss, outstanding Pemex receivables (~$90–100M), and material uncontracted exposure in H2 2026 (48% coverage) including several idle rigs that may require reactivation capital. Management’s outlook is optimistic, expecting tender awards by mid-2026 and a dayrate recovery into 2027, and actions taken in 2025 strengthened liquidity and strategic flexibility.Q4-2025 Updates
Positive Updates
Strong Operational Utilization
Technical utilization of 98.8% and economic utilization of 97.8% in Q4, indicating high fleet productivity and effective operations.
Robust Adjusted EBITDA Performance
Q4 adjusted EBITDA of approximately $105.4M and full-year adjusted EBITDA of $470.1M, which was at the top end of guidance despite headwinds.
Solid Liquidity Position
Cash and cash equivalents of $379.7M as of Dec 31 and $234.0M undrawn revolving credit facilities, yielding total liquidity of $613.7M—cash increased by $151.9M QoQ.
Accretive Fleet Expansion
Completed acquisition of five premium jackups from Noble (integration ahead of expectations); January cash consideration of $174.0M plus $150.0M letter of credit for remaining consideration—adds scale and near-term opportunity capacity.
Contracting Momentum and Backlog Additions
Secured seven new commitments since last report, including five year-to-date 2026 commitments adding ~ $145.0M to backlog; notable extensions in Mexico, US, West Africa, Asia and Vietnam.
Improving 2026 Coverage and Market Visibility
2026 fleet coverage stands at 64% overall, 80% for H1 (including acquired rigs); management expects coverage to exceed 70% as negotiations progress and anticipates modestly higher contracting days in 2026 vs 2025.
Favorable Industry Tender Pipeline
Citing Petrodata, management highlighted ~120 rig-years in tender/pre-tender phase for opportunities starting within 12 months and expects awards by mid-2026—supporting a potential utilization and rate recovery into 2027.
Capital Markets Execution
Completed $165M bond issuance (due 2030) and equity offering raising gross $84M in December with strong investor demand; progressed listing on Euronext Growth and planning full uplisting to Oslo in 2026.
Safety and Operational Recognition
Multiple rigs achieved notable LTI-free milestones (Idun 6 years, Grid 3 years, Gunnlod and Gerd 1 year) and Arabia 3 received Aramco offshore award for best safety score in 2025.
Negative Updates
Quarterly Revenue Decline
Q4 operating revenues were $259.4M, down $17.7M or 6.4% vs Q3, primarily driven by a $16.0M decrease in dayrate revenue as rigs transitioned into lower-dayrate contracts.
Rising Operating Costs
Total operating expenses in Q4 were $192.1M, an increase of $13.2M or 7.4% QoQ, mainly due to $11.6M higher rig operating and maintenance expenses from personnel cost increases, accelerated amortization (Hild) and reimbursables.
Q4 Net Loss and YoY EBITDA Decline
Recorded a small net loss of $1.0M in Q4; full-year adjusted EBITDA of $470.1M represented a 7% decrease vs 2024.
Concentration of Uncontracted Days in H2 2026
While H1 2026 coverage is strong (80%), second-half coverage stood at 48%, creating execution and utilization risk if tender awards/contracting do not materialize as expected.
Receivables and Payment Risk in Mexico
Estimated outstanding receivables from Mexico (Pemex) of ~$90–100M at quarter end (received ~$46M in Q4 and a further $23M in January), indicating continued but improving collection risk.
Idle/Stacked Rigs and Reactivation Costs
Several acquired/idle rigs (Sif, Freya, Var) remain without firm work; Var estimated to require significant reactivation CapEx (~$56M), and timelines for Freya may extend into late 2026/early 2027.
Cash Outflow for Acquisition and High Interest Costs
Post-quarter cash outflow included $174.0M cash payment for the five-rig acquisition; Q4 interest payments totaled $94.7M and $70.8M of debt was repaid in the quarter—interest burden remains notable.
Dayrate Pressure and Regional Rate Dispersion
Dayrates have been largely sideways with regional dispersion (Asia softer, Middle East competitive); Q4 movement to lower-dayrate contracts contributed to revenue decline and leaves sensitivity to rate recovery timing.
Company Guidance
Management reiterated that full‑year 2025 adjusted EBITDA finished at $470.1m (top of guidance) with Q4 operational revenues of $259.4m, technical utilization 98.8% and economic utilization 97.8%, Q4 adjusted EBITDA ~ $105m and a Q4 net loss of $1m; looking to 2026 they stopped short of formal EBITDA guidance but said fleet coverage stands at 64% for 2026 (80% in H1 and 48% in H2, noting H1 would have been ~85% before the five‑rig acquisition), they have secured seven new commitments since the last report (five YTD adding ~ $145m to backlog), expect contracting days in 2026 to modestly exceed 2025 and to lift coverage above 70% in coming months, and see awards from a ~120 rig‑year Petrodata tender pipeline by mid‑2026 with dayrate recovery expected into 2027; they also highlighted balance‑sheet strength to support this (cash $379.7m, undrawn RCF $234.0m, total liquidity $613.7m), the accretive five‑rig purchase (paid $174m cash + $150m L/C), and recent capital market activity (issued $165m bonds, raised ~$84m equity).Borr Drilling Financial Statement Overview
Summary
Turnaround to sustained profitability and positive operating cash flow, with 2025 positive free cash flow. Offsetting this are sharp revenue volatility (notably a steep 2025 decline), highly uneven historical free cash flow, and elevated leverage (debt materially exceeding equity), which increases downturn/refinancing risk.Income Statement
Profitability has improved materially versus 2020–2022 losses, with positive EBIT and net income in 2023–2025. Margins in 2023–2024 were strong (2024 net margin ~8% and solid operating profitability), but 2025 net income fell versus 2024 and revenue declined sharply in 2025 (about -36% year-over-year), highlighting cyclicality and less consistent earnings momentum.66
Positive
Balance Sheet
The balance sheet is asset-backed and equity has grown since 2021–2022, but leverage remains elevated: debt is ~2.15B against ~1.22B equity in 2025 (and debt-to-equity was ~1.73–2.15 in 2021–2024). Returns on equity improved into positive territory in 2023–2024, yet the capital structure still leaves the company more exposed to downturns and refinancing risk than a typical industrial peer.48
Neutral
Cash Flow
Cash generation is improving but remains uneven. Operating cash flow turned positive in 2024–2025 and stepped up meaningfully in 2025 (~252M), supporting positive free cash flow in 2025 (~127M). However, the prior two years included large free-cash-flow deficits (notably 2024 at about -332M and 2023 at about -165M), and free cash flow growth is highly volatile, suggesting working-capital swings and/or lumpy capital spending.52
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.02B | 1.01B | 771.60M | 443.80M | 245.30M |
| Gross Profit | 372.20M | 879.40M | 654.20M | 327.30M | 125.70M |
| EBITDA | 469.80M | 473.00M | 331.90M | -32.50M | 29.20M |
| Net Income | 45.00M | 82.10M | 22.10M | -292.80M | -193.00M |
Balance Sheet | |||||
| Total Assets | 3.63B | 3.42B | 3.08B | 3.00B | 3.08B |
| Cash, Cash Equivalents and Short-Term Investments | 380.70M | 61.60M | 102.50M | 108.00M | 34.90M |
| Total Debt | 2.15B | 2.11B | 1.70B | 1.60B | 1.92B |
| Total Liabilities | 2.40B | 2.43B | 2.10B | 2.10B | 2.19B |
| Stockholders Equity | 1.22B | 993.30M | 984.00M | 897.80M | 889.90M |
Cash Flow | |||||
| Free Cash Flow | 127.40M | -332.10M | -164.70M | -20.80M | -77.80M |
| Operating Cash Flow | 251.90M | 77.30M | -50.70M | 62.50M | -58.90M |
| Investing Cash Flow | -124.50M | -409.40M | -104.20M | -82.60M | 40.90M |
| Financing Cash Flow | 190.80M | 292.00M | 139.00M | 92.60M | 44.80M |
Borr Drilling Technical Analysis
Neutral
5.02
Price Trends
5.10
Negative
4.30
Positive
3.36
Positive
Market Momentum
-0.03
Positive
39.85
Neutral
9.31
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BORR, the sentiment is Neutral. The current price of 5.02 is below the 20-day moving average (MA) of 5.68, below the 50-day MA of 5.10, and above the 200-day MA of 3.36, indicating a neutral trend. The MACD of -0.03 indicates Positive momentum. The RSI at 39.85 is Neutral, neither overbought nor oversold. The STOCH value of 9.31 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for BORR.
Borr Drilling Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $1.54B | 23.49 | 4.41% | 5.99% | 5.83% | -11.86% | |
67 Neutral | $1.40B | 30.17 | 1.97% | ― | -1.95% | 530.91% | |
65 Neutral | $15.17B | 7.61 | 4.09% | 5.20% | 3.87% | -62.32% | |
65 Neutral | $4.07B | -25.02 | -2.83% | 5.42% | -16.59% | 83.95% | |
65 Neutral | $7.26B | -1.36 | -32.62% | ― | 16.93% | -335.82% | |
64 Neutral | $1.17B | 2.88 | 57.72% | ― | 6.52% | ― | |
58 Neutral | $2.81B | -54.06 | -2.68% | ― | -9.31% | -91.57% |
* Energy Sector Average
BORR
Borr Drilling
5.02
2.70
116.38%
HLX
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9.48
1.15
13.81%
NBR
Nabors Industries
79.85
36.77
85.35%
PTEN
Patterson-UTI
10.72
3.22
42.90%
RIG
Transocean
6.58
3.38
105.62%
SDRL
Seadrill Limited
45.12
20.16
80.77%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.