Borr Drilling (BORR -7.09%) reported its second quarter 2025 results on Aug. 13, 2025, delivering strong operational performance, a significant liquidity boost, and improved contract coverage. The following analysis highlights three pivotal developments shaping the long-term investment outlook for the offshore drilling contractor.
Liquidity rises as Borr Drilling secures new financing
Borr Drilling ended the quarter with $92.4 million in cash and $150 million undrawn on its revolving credit facility, resulting in total available liquidity of $242.4 million. In July, the company completed a $102.5 million equity raise and expanded its revolving credit facilities, increasing pro forma liquidity to $425 million and positioning the balance sheet for future growth and opportunistic transactions.
"Last month, we took a decisive step to strengthen Borr Drilling Limited's longer-term financial position through a comprehensive financing package. This initiative, which included a $102.5 million equity raise, and amendments to the size and covenants of our revolving credit facilities effectively increase our liquidity by $200 million and strengthens our balance sheet. We acted proactively to secure financing while market conditions were favorable, reinforcing our ability to execute on our long-term strategy including disciplined growth and potential industry consolidation."
-- Patrick Schorn, CEO
This enhanced liquidity provides Borr Drilling with the flexibility to pursue strategic growth, manage debt, and capitalize on industry consolidation opportunities as market conditions evolve.
Mexico receivables risk offset by government action and private projects
At quarter-end, Borr Drilling had $65 million in outstanding receivables from Mexican operations, but the Mexican government has announced a $13 billion facility to support vendor payments for Pemex projects. The company is also expanding into private investment projects in Mexico, which are projected to represent 25% of the country's oil output by 2033, reducing reliance on Pemex's credit profile and diversifying revenue streams.
"What we know is the government announced this $13 billion facility, which is clearly earmarked to support vendor payments for projects that are current and future in the Pemex portfolio. There has been a hint that in 2026, there will be a similar facility that will come to support Pemex in getting back behind the strategy. So that is positive. It's hard to comment more. I think it's going to take a little bit of time for agreements to be put in place. There's obviously banking agreements associated before revenues start to come through. But there seems to be a very clear pathway for that. So that is very positive. Very positive for us."
-- Bruno Morand, incoming CEO
Government-backed funding and the growth of private sector drilling in Mexico are expected to accelerate customer payments and improve short-term working capital, while also mitigating future payment risk.
Borr Drilling maintains high utilization amid global jackup market shifts
Modern jackup rig utilization remained above 90% globally, with Borr Drilling achieving 84% contract coverage for 2025 at an average day rate of $145,000 and 47% for 2026, including price options. Four competitive rig retirements year-to-date and minimal newbuild activity are tightening supply, while incremental demand from the Middle East and West Africa is helping absorb excess capacity from Saudi suspensions.
"Day rates have continued to experience downwards pressure as the market works to absorb the excess capacity resulting from the Saudi suspensions. While more than half of the modern rig capacity from this suspension has been absorbed, we estimated that less than 10 modern units remain available and competitive in international markets. Positively, visible incremental demand in The Middle East particularly in Kuwait and a neutral zone, points towards a significant part of this oversupply being absorbed in the near future."
-- Bruno Morand, incoming CEO
With limited available competitive rigs and an aging global fleet, Borr Drilling is positioned to sustain high asset deployment and maintain pricing power, reducing the risk of cyclical overcapacity that has historically pressured sector returns.
Looking Ahead
Management reaffirmed full-year 2025 adjusted EBITDA guidance at approximately $470 million (non-GAAP) and expects third-quarter activity and performance to mirror the second quarter. Contract coverage is anticipated to improve further with additional awards, particularly for rigs with open capacity such as NAAT and P1. The CEO transition to Bruno Morand and the addition of new board members are intended to accelerate strategic execution and support future growth and industry consolidation.
