Borr Drilling Limited Announces Certain Preliminary Results for the Quarter Ended June 30, 2024

Rhea-AI Summary

Borr Drilling (NYSE and OSE: BORR) has announced preliminary unaudited results for Q2 2024. The company expects:

• Total operating revenues of ~$272 million, up 16% from Q1 2024
• Operating income of ~$104 million, up 23% from Q1 2024
• Adjusted EBITDA of ~$136 million, up 17% from Q1 2024

The increase in operating income is primarily due to a contract termination, improved jack-up fleet operations, and changes in Mexico operations. Borr Drilling anticipates positive impacts on adjusted EBITDA from dayrate uplifts and new contracts, offset by one-off impacts. The company will release final Q2 2024 results on August 14, 2024.

Positive

• Total operating revenues increased by 16% to $272 million in Q2 2024
• Operating income rose by 23% to $104 million in Q2 2024
• Adjusted EBITDA grew by 17% to $136 million in Q2 2024
• Expected $99 million annualized uplift in dayrates for five rigs in H2 2024
• New contract for Arabia I expected to add $32 million annualized revenue from early 2025
• Anticipated $61 million annualized revenue from new contract for rig Vali

Negative

• $90 million annualized negative impact due to one-off effects in Q2 2024

Insights

Financial Analyst

Borr Drilling's Q2 2024 preliminary results show strong financial performance. Operating revenues increased by 16% to $272 million, while operating income grew by 23% to $104 million. Adjusted EBITDA rose 17% to $136 million. These improvements are driven by contract terminations, improved jack-up fleet operations and changes in Mexico's operating structure.

The company's liquidity position remains solid with $193.5 million in cash and a $150 million undrawn credit facility. Looking ahead, Borr expects significant annualized EBITDA gains from dayrate increases and new contracts, potentially boosting annual EBITDA by $192 million. However, this is partially offset by a $90 million negative impact from one-off events in Q2.

While these results are promising, investors should note that they are preliminary and subject to change. The full financial report on August 14 will provide a more comprehensive picture of Borr's financial health and future prospects.

Market Research Analyst

Borr Drilling's Q2 2024 results reflect a robust offshore drilling market. The 16% revenue increase and 23% jump in operating income suggest strong demand for jack-up rigs. This aligns with the broader industry trend of increased offshore exploration and production activities.

The company's ability to secure higher dayrates for multiple rigs (Norve, Saga, Skald, Gerd and Natt) indicates a favorable pricing environment. The new contract for Arabia I and the expected contract for Vali further underscore the positive market dynamics. These developments bode well for Borr's future revenue streams and profitability.

However, investors should be cautious about extrapolating these results across the entire sector. Borr's performance may be company-specific and a broader industry analysis is needed to confirm if this growth is widespread or unique to Borr Drilling.

Oil & Gas Industry Expert

Borr Drilling's Q2 2024 results highlight the recovery in the offshore drilling sector, particularly in the jack-up rig segment. The company's ability to secure higher dayrates and new contracts indicates a tightening supply-demand balance in the market. This trend is likely driven by increased offshore activity as oil and gas companies seek to boost production amid higher commodity prices.

The $32 million annualized impact from Arabia I's new contract and $61 million from Vali's expected contract demonstrate strong demand for modern, high-specification rigs. This could lead to further fleet expansion or upgrades across the industry.

However, the change in operating structure in Mexico warrants attention. It could signal evolving regulatory or business environments in key offshore markets, potentially impacting other drilling contractors operating in the region. Investors should monitor how this change affects Borr's long-term operations and profitability in Mexico.

HAMILTON, Bermuda, Aug. 9, 2024 /PRNewswire/ -- Borr Drilling Limited (the "Company") (NYSE and OSE: "BORR") today announced certain preliminary unaudited results for the quarter ended June 30, 2024.

The Company expects for the three months ended June 30, 2024: (i) total operating revenues of approximately $272 million, an increase of $38 million or 16% compared to the first quarter of 2024, (ii) operating income of approximately $104 million, an increase of $19 million or 23% compared to the first quarter of 2024, and (iii) adjusted EBITDA of approximately $136 million, an increase of $19 million or 17% compared to the first quarter of 2024. The Company expects $193.5 million in cash and cash equivalents and $150.0 million undrawn under our RCF as of June 30, 2024.

The increase in operating income of $19 million is primarily comprised of the following: (i) $10 million increase associated with the termination of a contract for "Arabia I" (one-off impact from the amortization of deferred revenue and deferred costs); (ii) $5 million net increase from the improved operations of our jack-up fleet; and (iii) $3 million increase in amortization of deferred revenue as a result of changes to our operating structure in Mexico for jack-up rigs "Galar", "Odin" and "Njord".

For illustrative purposes, the Company expects the following positive impacts to Q2 2024 adjusted EBITDA on an annualized basis:

1. $99 million on an annualised basis from the uplift in dayrates in the second half of 2024 for the rigs Norve, Saga, Skald, Gerd and Natt;
2. $32 million on an annualised basis from the increase in revenue from the new contract for Arabia I which is expected to commence early 2025; and
3. $61 million on an annualised basis from the expected contract for the rig Vali, which is scheduled for delivery in August 2024 and whose contract is expected to commence by year end

These positive impacts are offset by a $90 million negative impact (annualised) as a result of the positive one-off impacts in Q2 2024 associated with the termination of the Arabia I contract in June 2024, as well as the change in our operating structure in Mexico.

The Company is currently finalizing its financial results for the three and six months ended June 30, 2024, which it plans to release on August 14, 2024 after markets close.

The expected financial results for the three months ended June 30, 2024 presented herein are estimates, based on information available to management as of the date of this release, and are subject to further changes upon completion of the Company's standard quarter end closing procedures. Such preliminary operating results do not represent a comprehensive statement of financial results and actual results may differ materially from these estimates following the completion of Borr Drilling's standard closing procedures, or as a result of other adjustments or developments that may arise before the results for this period are finalized.  The Company does not intend to update such financial information prior to release of its final second quarter 2024 financial information, which is scheduled for August 14, 2024.

This information is considered to be inside information pursuant to the EU Market Abuse Regulation and subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Hamilton, Bermuda
UNAUDITED NON-GAAP MEASURE RECONCILIATION
Set forth below is a reconciliation of the Company's Net Income to Adjusted EBITDA.
(in US$ millions)	Q2 2024	Q1 2024
Net income	31.7	14.4
Depreciation of non-current assets	31.9	31.8
Income from equity method investments	2.5	(5.4)
Total financial expense, net	55.4	57.8
Income tax (credit)/expense	14.9	18.2
Adjusted EBITDA	136.4	116.8

The Company uses certain financial information calculated on a basis other than in accordance with accounting principles generally accepted in the United States (US GAAP) including Adjusted EBITDA. Adjusted EBITDA as presented above represents our periodic net income/(loss) adjusted for: depreciation of noncurrent assets, (income)/loss from equity method investments, total financial (income) expense net and income tax (credit) expense. Adjusted EBITDA is presented here because the Company believes that the measure provides useful information regarding the Company's operational performance.

Due to the forward-looking nature of the expected impact of items described above on adjusted EBITDA for Q2 2024 on an annualized basis, the Company is unable to present a quantitative reconciliation of such forward looking non-GAAP financial measure to the most directly comparable forward-looking GAAP financial measure without unreasonable effort.

Forward-Looking Statements

This document and any other written or oral statements made by us in connection with this document include forward-looking statements that are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995.  You can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "estimate," "intend," "plan," "believe," "likely to" "should," "continue" or other similar expressions. These forward-looking statements include statements about expected results for the second quarter of 2024, the expected impact on Q2 2024 adjusted EBITDA on an annualized basis of certain items included expected increases in contract dayrates, and impact of new contracts and expected contracts, the expected impact of the termination of the contract for Arabia I and expected impact of excluding certain one-off items incurred in Q2 2024, expected contracting and the terms of expected contracts and other non-historical statements. These forward-looking statements are not statements of historical facts and are based upon current estimates, expectations, beliefs and various assumptions, many of which are based, in turn, upon further assumptions. These statements involve significant known and unknown risks, uncertainties, contingencies and factors that are difficult or impossible to predict and are beyond our control, and that may cause our actual results, performance, financial results, position or achievements to be materially different from those expressed or implied by the forward-looking statements. Numerous factors could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these forward-looking statements including: risks relating to our actual results for Q2 2024 and future periods and the risk that actual results may differ materially from those implied by the statements in this release, risks relating to contracts and performance under contracts, including the risk that contracts are not entered into on terms described herein or at all, dayrates received by us, the start dates and termination of contracts and the risks described in Part. I of "Item 3.D. Risk Factors" of our most recent Annual Report on Form 20-F and other filings with the Commission. Any forward-looking statements that we make in this report speak only as of the date of such statements and we caution readers of this report not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no (and expressly disclaim any) obligation to update or revise any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made.  

9 August 2024

CONTACT:

Questions should be directed to: Magnus Vaaler, CFO, +44 1224 289208

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Borr Drilling Limited Preliminary Q2-24 release

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SOURCE Borr Drilling Limited

FAQ

What are Borr Drilling's (BORR) expected Q2 2024 operating revenues?

Borr Drilling expects total operating revenues of approximately $272 million for Q2 2024, representing a 16% increase compared to Q1 2024.

How much did Borr Drilling's (BORR) operating income increase in Q2 2024?

Borr Drilling's operating income is expected to increase by $19 million or 23% to approximately $104 million in Q2 2024 compared to Q1 2024.

What is Borr Drilling's (BORR) projected Adjusted EBITDA for Q2 2024?

Borr Drilling projects an Adjusted EBITDA of approximately $136 million for Q2 2024, an increase of $19 million or 17% compared to Q1 2024.

When will Borr Drilling (BORR) release its final Q2 2024 financial results?

Borr Drilling plans to release its final financial results for Q2 2024 on August 14, 2024, after markets close.