Borr Drilling Sees Growth in Mexico and Middle East Amidst Margin Pressures

Borr Drilling's growth is driven by Mexico's momentum and Middle East demand. The company operates a fleet of shallow-water jack-up rigs for offshore oil and gas producers. Despite high utilization, margin pressures persist. Borr operates in the Middle East, Asia, and Latin America.

Borr Drilling (NYSE: BORR) has been experiencing steady growth, driven by high jack-up utilization and expanding international contracts, particularly in the Middle East and Mexico. The company operates a fleet of shallow-water jack-up rigs for offshore oil and gas producers. Despite high utilization, margin pressures persist, making it crucial for the company to balance international expansion with strong liquidity.

Mexico's renewed push for production and private investment has added significant upside for Borr. The country is boosting Pemex's liquidity with large debt financings and reaffirming its production goal of 1.8 million bpd, which should support drilling activity. Borr is well-positioned to win incremental work, including private projects, which are set to become a bigger part of Mexico's output. Rig retirements in Mexico are also picking up, tightening supply and adding support to market fundamentals Borr Drilling: Mexico Momentum And Middle East Demand Drive Growth^[1].

In the Middle East, Borr has secured long-duration work in Asia and the Middle East, supporting utilization and day rates. The company added 14 new contracts in 2025, boosting its backlog by $318 million and extending earnings visibility. Despite a suspension notice for one rig in June, the steady flow of new awards underscores Borr's ability to limit idle time and strengthen its regional positions Borr Drilling: Mexico Momentum And Middle East Demand Drive Growth^[1].

The company's cash flow surged in 6M 2025, reaching $145 million from $40 million a year ago. Capex increased from $22 million to $39 million due to jack-up maintenance and rig activations, resulting in a free cash flow increase from $18 million to $107 million in 1H 2025. Borr's liquidity (cash balance plus available credit facility) was $261 million as of June 30, 2025, following a recent equity raise and credit expansion Borr Drilling: Mexico Momentum And Middle East Demand Drive Growth^[1].

Borr expects Q3 activity and performance to be similar to Q2, with EBITDA estimates close to $470 million. Despite near-term volatility, long-term jack-up fundamentals look strong, supported by growing global energy demand and the attractiveness of shallow water projects. The company's trailing-12-month adjusted EBITDA of $481 million is expected to increase to ~$540 million in the next four quarters, driven by strong utilization and contract visibility Borr Drilling: Mexico Momentum And Middle East Demand Drive Growth^[1].

Despite the stock's relative overvaluation, a positive outlook and robust drivers validate a "Buy" call for the stock. Wall Street analysts rate Borr a "buy" (including a "strong buy"), with a consensus target price of $3.13, suggesting a 1% upside at the current price. However, the company's operational recovery indicates that the return potential may be underestimated by analysts Borr Drilling: Mexico Momentum And Middle East Demand Drive Growth^[1].

In conclusion, Borr Drilling's growth is driven by Mexico's momentum and Middle East demand. While margin pressures persist, the company's strong liquidity, disciplined spending, and expanding international contracts position it well for future growth. Investors should closely monitor the company's performance and the evolving market conditions to assess its long-term prospects.