Borr Drilling targets 80% to 85% 2025 fleet coverage and shifts focus to 2026 amid dividend suspension
https://www.msn.com/en-us/money/economy/borr-drilling-targets-80-to-85-2025-fleet-coverage-and-shifts-focus-to-2026-amid-dividend-suspension/ar-AA1FiJO9?ocid=BingNewsSerp
Earnings Call Insights: Borr Drilling Limited (BORR) Q1 2025
Management View
CEO Patrick Schorn opened the call by noting, "Our first quarter results were largely as expected, reflecting the impact of temporary rig suspensions and preparatory work for upcoming contracts. Total operating revenue declined by $46.5 million quarter-over-quarter, resulting in adjusted EBITDA of $96.1 million for the period." He emphasized strong operational performance despite lower activity, reporting technical utilization at 99.2% and economic utilization at 97.9%. Safety achievements were highlighted, with several rigs receiving industry and customer recognition.
Schorn announced a ramp-up in Q2 activity: "Three suspended rigs in Mexico have resumed operations, while the Vali and Arabia I have both commenced their contracts. In addition, the Thor and Ran have secured new contracts starting this quarter. As a result, our operating rig count has now increased to 22." Liquidity strengthened following the collection of $120 million in receivables from Mexico and $10 million in mobilization fees for the Vali, plus an additional $35 million received after quarter end.
The CEO stated, "In light of uncertain market conditions, the Board has decided to suspend the dividend to further reinforce the balance sheet and enhance long-term value creation." While not issuing specific adjusted EBITDA guidance, Schorn confirmed comfort with the Bloomberg consensus estimate of approximately $460 million for 2025.
CFO Magnus Vaaler reported, "The results for the first quarter were highly impacted by temporary rig suspensions and mobilization of rigs to commence contracts, which led to us only having sixteen of our 24 rigs working on average during the quarter. The total operating revenues were $216.6 million, a decrease of $46.5 million compared to the fourth quarter." Vaaler detailed lower revenues and expenses, a net loss of $16.9 million, and a free cash position at quarter-end of $170 million with total available liquidity of $320 million after factoring in undrawn credit.
CCO Bruno Morand highlighted, "Year-to-date, Borr Drilling Limited has secured nine new contract commitments, adding $221 million to our backlogs at an average rate of $141,000 per day." He also noted 2025 fleet coverage at 79% and an increase in 2026 coverage to 35%, citing active negotiations and expectations to raise coverage to the 80%-85% range in coming months.
Outlook
Management confirmed comfort with the Bloomberg consensus estimate for adjusted EBITDA of approximately $460 million for 2025, but did not provide explicit guidance. Schorn stated the commercial focus has shifted toward 2026, with increased activity and contract discussions underway in Mexico and other regions. The board’s decision to suspend the dividend was reiterated as a measure to reinforce the balance sheet amid market uncertainty.
Financial Results
Borr Drilling reported first quarter total operating revenues of $216.6 million and adjusted EBITDA of $96.1 million. Net loss for the quarter was $16.9 million. The company ended the quarter with a free cash position of $170 million and total available liquidity of $320 million. Day rate revenues declined due to fewer operating days, while total operating expenses decreased to $156.8 million, driven by lower rig operating expenses and G&A costs.
The company collected $120 million in outstanding Mexican receivables and $10 million in mobilization fees, with a further $35 million received after quarter end. CapEx for Q1 was $25 million, mainly for jackup additions and maintenance, and cash distribution to shareholders totaled $4.7 million.
Q&A
Eddie Kim, Barclays: Asked about the resumption of Mexican rig operations and the likelihood of contract extensions. Schorn responded that it reflects both Mexico’s need to boost production and Borr’s strong track record: "We can generate some of the lowest cost barrels, drill very efficient wells, and have done this approximately just short of a hundred wells offshore at the moment." Regarding extensions, Schorn indicated ongoing discussions and expectation of good opportunities.
Kim followed up on the dividend suspension and market conditions. Schorn described it as a macro precaution: "We have clearly had a lot of discussions around tariffs and what that might do to global GDP. Counter that, we have seen that demand has remained actually quite strong."
Doug Becker, Capital One: Asked about contract coverage and visibility for the Ran rig. Morand and Schorn explained options are being evaluated and active customer engagement is underway, with three rigs representing the gap to 80%-85% coverage.
Fredrik Stene, Clarksons Securities: Inquired about liquidity and the potential use of the RCF. Vaaler responded, "We have received a $120 million payment from Mexico so far this year...The base case looks very, very solid. I do not foresee any reasons for drawing on the RCF as long as collections come in with the forecast that we are currently seeing."
Craig Ross, Bank of America: Sought insight on Saudi market activity and share buybacks. Morand noted Saudi activity is stable at 2019 levels, with early signs of potential recovery. Schorn said share buybacks remain an option pending cash visibility.
Fady Chammas, Triton Partners: Asked about contract termination clauses and CapEx per rig. Morand confirmed most contracts include termination for convenience clauses with payout protections, and Vaaler provided guidance of $50 million in CapEx for 2025, or about $2 million per rig.
Sentiment Analysis
Analysts raised concerns over Mexican contract extensions, payment visibility, and dividend suspension, reflecting a neutral to slightly cautious tone. Several questions probed management on liquidity and future coverage.
Management’s tone was measured and confident during prepared remarks, emphasizing operational resilience and strong liquidity. In Q&A, responses remained constructive but displayed caution regarding macro uncertainties and a focus on prudent cash management. Schorn repeatedly emphasized caution: "I think we want to make sure that we have all options open while remaining cautious for as long as the uncertainty persists."
Compared to the previous quarter, management’s tone shifted from expressing optimism about market recovery and contract coverage to a more guarded approach, particularly with the dividend suspension and focus on strengthening the balance sheet.
Quarter-over-Quarter Comparison
Guidance language changed, with the company now suspending the dividend and reinforcing the balance sheet, whereas last quarter included a cash distribution and mention of share repurchase authorization.
Strategic focus has shifted more heavily toward 2026 contract coverage and prudent liquidity management, while last quarter highlighted completing the newbuild program and achieving leading day rates.
Analysts’ line of questioning evolved from day rate trajectory and Mexico payment confidence to detailed liquidity management, dividend policy, and contract protections.
Key metrics declined, with revenues and adjusted EBITDA down quarter-over-quarter and a net loss reported versus net income previously.
Management’s confidence in contract coverage and liquidity remains, but the tone has become more cautious, emphasizing risk management and cash conservation.
Risks and Concerns
Management cited uncertain market conditions, changes in trade policy, and OPEC+ production decisions as sources of volatility. The decision to suspend the dividend was attributed to these uncertainties.
Payment visibility from customers in Mexico remains a key risk, though management reported improved collections and expects regular payments to resume.
Analysts questioned the stability of key contracts, the ability to secure extensions, and the impact of oil price fluctuations on activity levels.
Contract termination clauses were discussed, with management noting most contracts offer payout protections in case of early termination.
Final Takeaway
Borr Drilling management underscored a shift to cautious liquidity management and long-term resilience, highlighted by the suspension of the dividend amid uncertain market conditions. The company’s operating rig count has increased, backlog coverage for 2025 is nearing 80%-85%, and efforts are focused on building 2026 commitments while maintaining operational excellence. Management expressed confidence in navigating near-term volatility, reinforced by recent contract wins, robust liquidity, and a strong operational record, positioning Borr Drilling to capitalize on future market opportunities.
News 
Market Data 
Discover 
AI
