Borr Drilling Limited (BORR): SWOT Analysis [Nov-2025 Updated]

You're tracking Borr Drilling Limited (BORR) because their operating story is compelling, but the balance sheet is what keeps you up at night. The good news is their premium jack-up fleet is driving a strong 2025, with Adjusted EBITDA guidance hitting up to $470 million and a substantial contract backlog of $1.33 billion. But, honestly, that near-term strength is battling a massive anchor: $2,179.6 million in principal debt, which creates a huge refinancing risk with maturities starting in 2028. Can their secured 2026 average dayrate of $140,000 truly outpace that debt load and geopolitical threats? We map the clear risks and opportunities you need to act on below.

Borr Drilling Limited (BORR) - SWOT Analysis: Strengths

Premium fleet of 24 modern jack-up rigs, all built after 2010.

Borr Drilling operates a fleet that is defintely a key competitive advantage. You're looking at 24 modern, high-specification jack-up rigs, and every single one was built after 2010. This focus on new assets means lower maintenance costs and higher operational reliability compared to competitors running older fleets.

This modern fleet is crucial because it meets the increasing demand from major oil and gas companies for safer, more efficient drilling units. Older rigs often face regulatory hurdles or are simply less attractive for complex, modern offshore projects. Borr Drilling avoids that problem entirely.

Here's a quick breakdown of the fleet's age profile:

• Total Rigs: 24
• Average Age: Less than 15 years (since all are post-2010 builds)
• Operational Focus: Shallow-water, harsh-environment drilling

High operational efficiency: Q3 2025 technical utilization was 97.9%.

Operational efficiency is where the rubber meets the road in the drilling business, and Borr Drilling is delivering. For the third quarter of 2025, their technical utilization rate hit an impressive 97.9%. Technical utilization measures the time a rig is physically capable of drilling, excluding downtime for scheduled maintenance or transit. This is a very strong number.

A rate near 98% tells me two things: first, the premium, modern fleet is holding up well-fewer breakdowns. Second, their maintenance and operational teams are executing flawlessly. This high utilization directly translates into more revenue days and higher profitability, which is what you want to see.

It's simple: a rig that isn't working isn't making money. Borr Drilling's rigs are working.

Strong near-term earnings: Full-year 2025 Adjusted EBITDA guidance is $455 million to $470 million.

The near-term financial outlook is robust, driven by the strong day rates and high utilization. The company's full-year 2025 Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) guidance is projected to be between $455 million and $470 million. This metric is a solid proxy for cash flow from operations, and this guidance range shows significant earnings power.

This guidance is a clear signal that the market recovery for jack-up rigs is translating directly into Borr Drilling's bottom line. The demand is there, and their fleet is positioned to capture it. To be fair, this estimate is based on current contract coverage and expected operating expenses, but it sets a high bar for the year.

Here's the quick math on the expected range:

Substantial contract backlog: Total contract revenue backlog was $1.33 billion as of June 30, 2025.

A substantial contract backlog provides excellent revenue visibility and stability, reducing the risk of idle time. As of June 30, 2025, Borr Drilling's total contract revenue backlog stood at a significant $1.33 billion. This backlog represents future revenue already secured under existing drilling contracts, essentially guaranteeing work for a large portion of the fleet over the next few years.

This backlog is a cushion against short-term market volatility and allows the company to plan capital expenditures and debt management with greater certainty. Plus, as older contracts roll off, the company is securing new ones at higher prevailing day rates, which should continue to drive that Adjusted EBITDA guidance higher in future periods.

The size of the backlog, $1.33 billion, is a powerful indicator of client confidence in their high-spec rigs and operational performance.

Borr Drilling Limited (BORR) - SWOT Analysis: Weaknesses

You're looking at Borr Drilling Limited and wondering about the financial foundation behind the strong operational performance. Honestly, the core weakness is a familiar one in this industry: the debt load. That high leverage, plus the recurring payment issues in a key market like Mexico, creates a real headwind for cash flow, even with a strong rig market.

High Leverage

Borr Drilling operates with a significant debt burden, which is a major financial risk. As of March 31, 2025, the total principal amount of debt outstanding was $2,179.6 million. While the company has managed to slightly reduce this to $2,112.3 million by September 30, 2025, the total figure still represents a substantial claim on future earnings and limits financial flexibility for opportunistic growth or weathering a market downturn.

A large portion of this debt is structured as senior secured notes and convertible bonds, with $134.7 million of the principal debt maturing within the next twelve months as of March 31, 2025. This constant need to service or refinance debt is a drag on free cash flow, even as the jack-up market recovers.

Increased Financial Burden

The high debt principal directly translates into a heavier interest expense, which is eating into the bottom line. For the six months ended June 30, 2025 (H1 2025), the total net financial expenses increased by $5.9 million to $119.1 million, compared to the same period in 2024.

The primary driver of this increase wasn't just a small change, but a significant $14.3 million rise in interest expense alone. This shows that despite an improving operational backdrop, the cost of capital is still rising, making it harder to convert revenue growth into net profit. This is the quick math on why net income remains volatile.

Exposure to Payment Risk in the Mexican Market

Mexico remains a critical, yet volatile, market for Borr Drilling, primarily due to the state-owned customer, Pemex. The risk is twofold: delayed payments and contract instability.

While the company has made progress, the issue is recurring. In January 2025, Borr Drilling had to negotiate a payment settlement of approximately $125 million for outstanding receivables from this major customer as of December 31, 2024, accepting a mid-single digit financing fee to get the cash. This kind of fee is essentially a cost of doing business in a high-risk environment. Over the nine months ended September 30, 2025, the company collected approximately $122.8 million in cash settlements from its Mexico operations, highlighting the ongoing collection challenges.

More recently, in October 2025, the company terminated two drilling contracts in Mexico for the rigs Odin and Hild because of international sanctions affecting a counterparty. The Odin contract was firm until November 2025, and the Hild contract until March 2026. Losing firm revenue like this is a sudden, unbudgeted hit.

• $125 million in outstanding receivables settled in January 2025, subject to a financing fee.
• Contracts for Odin (firm until November 2025) and Hild (firm until March 2026) terminated in October 2025 due to sanctions.
• Temporary suspension of three rigs (Galar, Grid, Gersemi) in Q1 2025, which later resumed operations.

Expected Near-Term Operational Dip

The operational momentum, while strong in Q2 and Q3 2025, faces a near-term dip due to rig transitions and contract loss. The termination of the Odin and Hild contracts in October 2025 creates immediate idle time and a loss of firm revenue that was scheduled to run through Q4 2025 and Q1 2026, respectively.

Also, the Gerd rig secured a new one-year program in West Africa, but this is scheduled to begin in late Q4 2025. This transition period, coupled with the unexpected contract terminations, means the company will likely see a temporary drop in its economic utilization rate and revenue days in the near term, before the new contracts fully ramp up. This is a classic operational weakness: the gap between contracts.

Borr Drilling Limited (BORR) - SWOT Analysis: Opportunities

Jack-up Market Inflection: Demand is Increasing in Key Regions Like Saudi Arabia and Mexico

You're looking for where the market is actually turning, and for Borr Drilling Limited, the signs of a demand inflection point are clear in the world's two largest jack-up markets: Saudi Arabia and Mexico. This isn't just a hopeful forecast; it's a tangible shift that should support higher utilization and dayrates in the near to medium term.

The market is past the trough, and incremental jack-up demand has been absorbing available capacity across several international markets. In Mexico, for example, the company has successfully secured contract extensions for three rigs-Galar, Gersemi, and Njord-which is a strong signal of continued activity from the National Oil Company (NOC), Petróleos Mexicanos (Pemex). Collections from Pemex also restarted in September 2025, with approximately $19 million received in September and October alone, which helps normalize payments and reduces working capital risk.

Higher Dayrates: Secured 2026 Coverage at 62% with an Average Dayrate of $140,000

The most compelling financial opportunity is the pricing power Borr Drilling Limited is demonstrating for its future contracts. The company has already secured significant revenue visibility for the next year.

As of the Q3 2025 reporting, the firm contract coverage for 2026 stands at a strong 62%. More importantly, the average dayrate for this 2026 coverage is locked in at $140,000, including priced options. This is a critical metric because it shows that the market is willing to pay a premium for the company's modern, high-specification rigs, even as some near-term volatility persists.

Here's a quick look at the forward contract visibility:

Global Diversification: Announced New Commitments Expanding into the Gulf of America and Angola

The strategy of geographic diversification is paying off by minimizing idle time and shielding the business from single-market risks, like the sanctions-induced contract terminations seen recently in Mexico. The company's commercial team is actively expanding its footprint into new, high-value regions.

Announcements in late 2025 confirmed new commitments for the rigs Odin and Grid, which will expand operations into the Gulf of America and Angola. This move not only diversifies the customer and market portfolio but also reflects the company's ability to navigate dynamic market conditions by strategically deploying assets. The active fleet already covers a wide international footprint:

• Middle East: Three rigs contracted
• Africa: Five rigs contracted
• Southeast Asia: Six rigs contracted
• Mexico: Seven rigs contracted
• South America: One rig contracted

Fleet Replacement Cycle: Modern Rigs are Poised to Replace the Aging Global Fleet

Borr Drilling Limited has a defining competitive advantage: its fleet is the most modern in the business, with all rigs built after 2010. This positions the company perfectly to capitalize on the global fleet replacement cycle, which is a massive, long-term opportunity.

The global jack-up fleet is aging fast. The average age of the marketed jack-up fleet is around 20 years, and a significant portion of the global supply is nearing retirement age. Specifically, 32% of the world's jack-up rigs are already more than 30 years old. Four jack-ups were retired in 2025 alone, averaging 43.3 years in age. This aging supply creates a structural demand for modern, high-specification units like Borr Drilling Limited's, as operators increasingly stipulate rigs no more than 15 years old for their complex drilling programs. The company's premium, modern assets are defintely poised to capture the lion's share of this replacement demand.

Next step: Operations team should immediately model the cost-benefit analysis of deploying an additional rig to the Gulf of America or Angola based on the new contract terms.

Borr Drilling Limited (BORR) - SWOT Analysis: Threats

You're looking at Borr Drilling Limited's debt stack and the softening jack-up market, and you're right to be concerned about the near-term volatility. The biggest threats are clustered around capital structure and geopolitical risk, which can change the cash flow picture overnight. We need to focus on the refinancing cliff and the immediate impact of sanctions.

Debt Refinancing Risk: Significant Secured Notes Mature in 2028 and 2030

The primary financial threat is the sheer quantum of debt maturing in the next few years. Borr Drilling has a significant principal amount of secured notes coming due, demanding a clear and timely refinancing strategy. As of March 31, 2025, the company had two major tranches of senior secured notes outstanding:

• The 2028 notes have an aggregate principal amount of $1,279.6 million and carry a 10.000% coupon.
• The 2030 notes have an aggregate principal amount of $660.6 million and carry a 10.375% coupon.

The total principal debt is approximately $2.18 billion, which includes the unsecured Convertible Bonds due 2028 of $239.4 million. The annual cash interest paid on this debt is substantial, totaling $104.4 million just for the six months ended June 30, 2025. This high-yield debt structure magnifies any operational hiccup. The company is highly leveraged, with its enterprise value composed of roughly 65% debt. That's a huge hurdle to clear, even with a modern fleet.

Geopolitical and Sanction Risk: Recent Contract Terminations in Mexico

Geopolitical maneuvering has translated directly into lost revenue. In October 2025, Borr Drilling terminated two drilling contracts in Mexico for the jack-up rigs Odin and Hild. This was a direct result of international sanctions affecting an unnamed counterparty, forcing the company to adhere to compliance frameworks. The financial impact is immediate because these rigs had firm commitments until November 2025 and March 2026, respectively. Losing a rig commitment for a year or more means the rig is now 'white space' on the schedule, incurring stacking costs instead of generating revenue. This is a clear, unhedged risk in the offshore sector.

Market Utilization Decline: Global Jack-Up Marketed Utilization Dipped

While the jack-up market remains relatively tight, the upward momentum is slowing, which puts pressure on dayrates. For 2025, the global marketed committed utilization rate for jack-up rigs is forecast to be 89%, a decline from 92% in 2024. This slight softening indicates a market correction is underway, driven by a slowdown in global rig demand and delays in drilling campaigns. For a company with 24 modern jack-up rigs, like Borr Drilling, even a small drop in utilization can significantly impact cash flow, especially as dayrates are expected to remain flat or even dip in the near term. The market is entering a correction phase, not a collapse, but it's a correction that hits highly leveraged companies the hardest.

Future EPS Forecasts: Guidance Indicates Potential Challenges

The market is signaling caution through its earnings estimates. Analysts anticipate a significant challenge in the near-term profitability of Borr Drilling, which directly impacts investor confidence and the company's ability to raise equity at favorable terms. The consensus Earnings Per Share (EPS) forecast for the full fiscal year 2025 is only $0.17. More acutely, the forecast for the upcoming quarter (Q4 2025) is a projected loss of -$0.02 per share. Looking further out, the consensus EPS for the full fiscal year 2026 drops sharply to just $0.01. This outlook suggests that the current high dayrates are insufficient to fully offset rising costs, amortization, and the heavy interest burden, leading to a period of minimal or negative profitability.

Here's the quick math on dayrate sensitivity:

What this estimate hides is the fact that a 10% rise in dayrates-a massive operational win-would generate an extra $130.55 million in annual revenue, but that still doesn't fully cover the estimated $196.51 million in annual secured interest payments. The equity value is defintely sensitive to dayrate movements, but the debt service is the real anchor.

Your next step is simple: model the impact of a 10% increase in average dayrates against the debt service cost for the $2.18 billion principal debt. That will defintely clarify the true equity value.