Borr Drilling Limited (BORR) Earnings

Management highlights

### Safety Performance - Multiple rigs achieved significant safety milestones: GERD, NAT, and MIST each reached seven years LTI-free; SAGA and Arabia III reached six and three years LTI-free respectively; NORVA attained two years recordable incident-free. - These results reflect a company-wide strong safety culture focused on zero-harm operations. ### Operational Performance - Delivered 99.4% technical utilization and 97% economic utilization in the first quarter. - The Odin rig's mobilization from Mexico to the U.S. Gulf of Mexico was delayed by transit disruptions and extended contract preparation/regulatory approval processes; startup is now expected in late June. - Near-term disruptions from Middle East hostilities were navigated with no material financial impact, all personnel remained safe, and all temporarily suspended rigs have returned to work. ### Contracting and Backlog Growth - Since the last earnings report, the company secured 8 new contract commitments totaling over 1,100 days of firm work. - Full-year 2026 fleet coverage increased to 71% at an average day rate of ~$137,000, with second half 2026 coverage rising to 65% from 48% in the prior quarter. - Year-to-date 2026, 13 new commitments have added ~$274 million to the company's backlog, with new contract wins across the Americas, West Africa, Europe, and Asia. ### Strategic and Capital Developments - Completed the acquisition of 5 premium jackup rigs from Paratus via a 50-50 joint venture with a Mexican partner for $287 million, expanding the total fleet from 29 to 34 rigs and strengthening the company's position in Mexico. - Completed a $300 million convertible senior notes offering due 2030, using proceeds to repurchase a significant portion of outstanding 2028 convertible bonds. This extended the company's debt maturity profile by five years, reduced average coupon from 5% to 3.5%, and strengthened the balance sheet. - The company's contracting strategy remains focused on increasing long-term coverage while balancing day rate levels and contract tenor.

Guidance

- Second quarter 2024 results will continue to be negatively impacted by the delayed startup of the Odin rig, which will incur an additional $10 million in contract preparation expenses plus standard operating costs before commencing operations. - The company expects improved offshore drilling activity and day rates to follow oil price increases with a 6 to 12 month lag, consistent with historical patterns (such as the 2022 Ukraine invasion response). - Management is increasingly confident in the company's growth prospects for 2027 and 2028, as Middle East conflict disruptions are expected to drive sustained long-term sector strength. - Near-term Middle East activity may face modest delays, but management expects pent-up deferred demand and post-conflict recovery work to drive meaningful incremental demand once regional conditions normalize. - The company will prioritize securing contracts for its recently acquired rigs before pursuing any further fleet expansion.

Segment performance

The transcript does not break out financial performance for distinct product segments, only company-wide aggregate results for the first quarter. Total company operating revenue was $247 million, a 4.8% decrease ($12.4 million) quarter-over-quarter from Q4. Day rate revenue decreased by $15.5 million QoQ, offset by a $3 million increase in bareboat charter revenue. Total operating expenses were $201 million, a 4.6% increase ($8.9 million) QoQ. The company reported a net loss of $29 million and adjusted EBITDA of $88.5 million, a $16.7 million decrease QoQ. Adjusted EBITDA was heavily impacted by an $8.4 million credit loss provision and delayed startup of the Odin rig.

Risks & headwinds

- Forward-looking statements are inherently uncertain, and actual results may differ materially from projections due to known and unknown risks. - Prolonged conflict in the Middle East and extended closure of the Strait of Hormuz could suppress regional drilling demand by leaving Middle East production landlocked and unable to export. - Entry into the new U.S. Gulf of Mexico market has encountered unanticipated regulatory and operational challenges that have delayed the Odin rig's startup beyond initial expectations. - Near-term sector demand and activity timing remain uncertain due to ongoing Middle East hostilities. - The jackup drilling sector remains fragmented, which can create competitive pressures that limit pricing upside.

Analyst Q&A

• Q: After recent fleet expansion, what is the company's approach to further fleet growth, and what is the demand outlook for West Africa? /

  A: Management is satisfied with the current 34-rig fleet size; further expansion is a strategic option, not a mandatory near-term goal. The current priority is securing contracts for the newly acquired rigs. In West Africa, demand has grown consistently driven by activity in Angola and Nigeria, with customers accelerating planned programs amid supportive oil prices. The regional supply-demand balance is healthy, and Board Drilling controls a large share of 400-foot capable flexible rigs, positioning it well to secure contracts at improving rates.

• Q: How is Board Drilling's high-specification fleet positioned to benefit from incremental non-Middle East demand driven by new energy security priorities? /

  A: The high-spec fleet is a strategic advantage, not a limitation: the rigs can compete effectively across all types of drilling work globally, giving the company exceptional flexibility. Modern jackup utilization remains near 90% globally, indicating limited available supply, and total visible Middle East demand has grown since last quarter. Post-conflict, significant work will be required to restore shut-in production, and SPR rebuilding across most countries will add additional near-term demand, benefiting the company's flexible high-spec fleet.

• Q: What is the outlook for activity in the UAE following its OPEC exit, and how does this benefit Board Drilling? /

  A: The UAE remains committed to its target of expanding sustainable production capacity to 5 million barrels per day, which will require additional jackup capacity. As one of the few foreign contract drillers with an existing operating presence in the UAE, Board Drilling is well positioned to capture any incremental demand that is opened to non-national contractors. Shallow water development will be a core component of the UAE's growth plans.

• Q: What have been the causes of the Odin rig's delay in the U.S. Gulf, and what is the outlook for additional rig entries into this new market? /

  A: The Odin project faced more challenges than expected, including a 40-day weather-related delay during transit from Mexico and extended regulatory and contract preparation timelines for entering a new region. The U.S. Gulf currently lacks high-specification shallow water capacity, and the Odin's advanced factory drilling capabilities have generated significant customer interest, with follow-on opportunities already visible with major operators. The company will implement lessons learned from Odin's startup before evaluating moving a second rig into the region.