Borr Drilling’s Turnaround in Sight: Liquidity Gains and Rig Activations Signal Profitability Rebound

Borr Drilling Limited (NYSE: BORR) has emerged from a challenging first quarter with a compelling set of catalysts that position it for a strong rebound in profitability. Despite a net loss in Q1 2025, the company’s improved liquidity, surging rig activation rates, and robust contract backlog suggest that the worst may be behind it. For investors seeking exposure to the offshore drilling sector’s recovery, Borr’s strategic moves and operational resilience now present an attractive entry point.

A Liquidity Lifeline for Growth

Borr’s most striking improvement lies in its liquidity position. As of March 31, 2025, the company’s cash and equivalents surged to $170 million, a staggering 176% increase from Q4 2024. This jump was fueled by the collection of $120 million in Mexican receivables and $10 million in mobilization fees for its Vali rig. Post-quarter, an additional $35 million in mobilization fees for Vali and Arabia I further bolstered its war chest. Combined with an undrawn $150 million revolving credit facility, Borr’s total liquidity reached $320 million, creating a strong buffer against market volatility.

This liquidity boost is critical. With $2.18 billion in debt, Borr faces refinancing challenges in 2028 and 2030. However, its improved cash position and disciplined capital allocation—most notably the decision to forgo dividends—signal a commitment to debt management. The company’s ability to navigate these hurdles without compromising growth is now clearer.

Rig Activations Drive Operational Momentum

Borr’s fleet utilization tells a story of recovery. By the end of Q1, 22 of its 24 rigs were operational, up from an average of 16 during the quarter. The resumption of three suspended Mexican rigs (Galar, Grid, Gersemi) in April 2025—after a temporary shutdown—added crucial capacity. These rigs, now deployed in Mexico’s Bacab-Lum field under private investment-backed contracts, underscore Borr’s strategic focus on high-demand regions.

Technical utilization for active rigs hit 99.2%, while economic utilization reached 97.9%, reflecting strong operational discipline. Newbuild rigs Vali and Arabia I have also begun their contracts, with Vali contributing to revenue growth. Though Var, the third newbuild, remains uncontracted, its eventual placement could amplify future earnings.

The ramp-up in activity aligns with management’s confidence that Adjusted EBITDA will "increase significantly in coming quarters". With Q1’s $96.1 million EBITDA being dragged down by rig suspensions and lower dayrates, the path to profitability is now clearer as more rigs operate at full capacity.

Contract Backlog: A Foundation for Sustained Growth

Borr’s contract backlog stands at $1.38 billion, unchanged from Q4 2024 but bolstered by nine new agreements in Q1 covering 1,550 days and $221 million in revenue. The company’s 2025 contract coverage reached 79%, with an average dayrate of $147,000—up 8% year-over-year. This reflects Borr’s success in securing higher-margin contracts, particularly in Mexico, where private investment projects are driving demand.

Looking ahead, Borr is targeting 2026 contracts, with 7 of its 24 rigs already allocated to Mexico’s booming market. This focus is strategic: Mexico’s government and private entities are accelerating oil and gas projects, creating a steady pipeline of opportunities. With $460 million in Bloomberg consensus EBITDA for 2025, Borr is on track to meet expectations as rig counts rise.

Risks and Rewards: Why Now Is the Time to Act

Borr is not without risks. Oil price volatility (Brent at $75/barrel in Q1) and global jack-up rig oversupply (11 newbuilds under construction) could pressure margins. However, Borr’s liquidity, geographic diversification (Africa, Southeast Asia, and the Middle East), and focus on Mexico’s high-demand projects mitigate these risks.

For investors, the key takeaway is this: Borr’s Q1 results mark a turning point. The company has stabilized its balance sheet, activated its fleet, and secured contracts that will fuel a rebound. With shares trading at 50% below their 2023 highs, the risk-reward calculus now favors aggressive investors.

Conclusion: A Strategic Opportunity

Borr Drilling is primed to capitalize on its liquidity gains, rig productivity, and contract momentum. The company’s focus on Mexico’s growth, its high utilization rates, and its ability to navigate debt challenges position it for a strong EBITDA recovery. For investors seeking exposure to the offshore drilling sector’s rebound, Borr’s current valuation and catalysts make it a compelling buy. The time to act is now—before the market recognizes what Borr’s numbers already reveal.

Disclosure: This analysis is for informational purposes only and does not constitute financial advice.