Borr Drilling Limited Announces Fourth Quarter and Twelve Months 2023 Results

Rhea-AI Summary

Borr Drilling Limited announces strong financial performance in Q4 2023 with significant revenue growth and new contract commitments. The company also completed refinancing, secured a credit facility, and declared a cash dividend.

Positive

• Total operating revenues increased by 15% to $220.6 million in Q4 2023 compared to the previous quarter.
• Net income surged to $28.4 million, a substantial increase of $28.1 million from the previous quarter.
• Adjusted EBITDA rose by 20% to $105.9 million in Q4 2023.
• The company successfully refinanced all secured debt and established a $180 million revolving credit facility.
• Borr Drilling completed a private placement of new shares, generating gross proceeds of $50.0 million.
• The total contract revenue backlog as of December 31, 2023, stood at $1.75 billion, including Mexico rigs.
• In 2024 year-to-date, the company secured three new contract commitments, totaling 495 days and $82.2 million in potential contract revenue.
• The Board declared a cash dividend of $0.05 per share for the fourth quarter, payable to shareholders of record on March 4, 2024.

Negative

• None.

Insights

Financial Analyst

The reported increase in total operating revenues by 15% and net income surge for Borr Drilling in the fourth quarter of 2023 is a strong indicator of operational efficiency and market demand. This performance, particularly the net income jump from virtually zero in the previous quarter, suggests a significant turnaround in profitability. The substantial rise in adjusted EBITDA by 20% also reflects improved earnings quality and potential for reinvestment and debt servicing.

Moreover, the completion of the refinancing of the company's secured debt, establishment of a $180 million RCF (Revolving Credit Facility) and the execution of a private placement to raise $50 million in capital demonstrates strategic financial management. These moves likely improve the company's liquidity and reduce interest expenses, which can be conducive to shareholder value in the long term.

The disclosure of a $1.75 billion contract revenue backlog offers visibility into future earnings and operational stability. This backlog, coupled with the new contract commitments worth $82.2 million, provides a clear revenue stream and could be a positive signal for investors assessing the company's future performance.

Market Research Analyst

The offshore drilling sector, where Borr Drilling operates, is subject to cyclical demand influenced by oil prices and global energy needs. The announcement of new contract commitments and a robust backlog is indicative of a healthy market environment and Borr Drilling's competitive positioning within the industry. The awarding of contracts for 495 days reflects not only current demand but also confidence in Borr Drilling's operational capabilities.

Additionally, the declaration of a cash dividend, albeit modest at $0.05 per share, is a sign of management's confidence in the company's cash flow and commitment to returning value to shareholders. This could be appealing to income-focused investors and may positively influence the stock's attractiveness in a sector known for its volatility.

Economist

The financial results of Borr Drilling need to be contextualized within the broader economic landscape. The offshore drilling industry is closely tied to global economic conditions and energy markets. The company's ability to increase revenues and secure new contracts may be reflective of a larger trend in increased energy consumption and investment in exploration and production activities.

From an economic standpoint, the successful refinancing and capital raise may allow Borr Drilling to navigate the capital-intensive nature of the drilling industry more effectively. This financial restructuring could mitigate risks associated with volatile commodity prices and enable the company to capitalize on growth opportunities as the global economy recovers from any downturns.

HAMILTON, Bermuda, Feb. 22, 2024 /PRNewswire/ --Borr Drilling Limited ("Borr", "Borr Drilling" or the "Company") announces unaudited  results for the three and twelve months ended December 31, 2023.

Highlights Fourth Quarter of 2023

• Total operating revenues of $220.6 million, an increase of $29.1 million or 15% compared to the third quarter of 2023
• Net income of $28.4 million, an increase of $28.1 million compared to the third quarter of 2023
• Adjusted EBITDA of $105.9 million, an increase of $17.7 million or 20% compared to the third quarter of 2023
• Completed the refinancing of all the Company's secured debt, established a $180 million RCF and completed a  private placement of new shares for gross proceeds of $50.0 million
• Total contract revenue backlog as at December 31, 2023 of $1.75 billion, including Mexico rigs 

Subsequent events

• 2024 year to date, the Company has been awarded three new contract commitments, representing 495 days and $82.2 million of potential contract revenue
• The Board declared a cash dividend of $0.05 per share for the fourth quarter to shareholders of record on March 4, 2024. Payment date will be on or about March 18, 2024.  

CEO, Patrick Schorn commented:

"Our fourth quarter performance has been strong, enabling us to close the year having achieved several major milestones. 

On the operational front, we finished the year with excellent technical utilization for the quarter at 98.7% and a total recordable injury frequency of 0.65, the latter being well below the industry average. These numbers reflect the professionalism of our operational team, who have activated rigs continuously for the last three years, and who have successfully commenced operations in numerous new countries and regions.

On the contracting front, we closed the year with all of our 22 delivered rigs contracted. Over the course of 2023, we also secured several new contracts adding $728 million, at an implied rate of approximately $161,000 per day, to our revenue backlog, which stood at $1.75 billion at year end. Following the award of three additional contracts in 2024, we have 87% of our available capacity in 2024 already covered by firm contracts and priced options, and we expect this to further increase in the coming months as we progress current negotiations. This strong contract coverage provides both solid near-term revenue and earnings visibility as well as the ability to balance contracts to optimize our market position and earnings. In addition, we have two newbuilds scheduled for delivery later this year. They are already attracting considerable customer interest and come with yard financing in place. 

Our Adjusted EBITDA increased by 20% from the third quarter to $105.9 million, reflecting a close to fully operational fleet. We expect Adjusted EBITDA to continue to increase throughout 2024 as more rigs end their current contracts and commence new ones at higher dayrates and improved contract terms. Based on our positive business outlook and strong fleet coverage, we maintain our estimate of Adjusted EBITDA for the full year 2024 to be between $500 to $550 million.

With the issuance of our $1.54 billion secured bonds in November 2023, the future of the Company is further cemented, and having commenced both our dividend program and share buybacks, our focus is now on how best to return value to shareholders. 

Subsequent to the period covered by this quarter's report, there has been significant focus in the media on the announcements by Saudi Aramco regarding their production targets for 2027. While we fully respect that only Saudi Aramco can give meaningful information about how this will potentially affect the onshore and offshore activity levels going forward, a few comments specifically in relation to Borr Drilling are appropriate. First, out of our fleet of 24 rigs, we have three working in the Kingdom, all of which are on multi-year contracts. Second, regardless of an adjustment in production levels to be pursued going forward, the activity levels required in the Kingdom to maintain current production capacity remain world leading. As such, our approach is to continue focusing on the things we can manage, which is the relentless pursuit of safety and operational excellence in order to deliver value to our customers in the Middle East and elsewhere around the world."

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

The following files are available for download:

https://mb.cision.com/Public/16983/3933554/a506fb0c1b9eabe9.pdf	Borr Drilling Fleet Status Report 22 February 2024
https://mb.cision.com/Public/16983/3933554/a71cfbf2b847c28b.pdf	Borr Drilling Limited Q4 2023 Earnings Release

 

 

 

View original content:https://www.prnewswire.com/news-releases/borr-drilling-limited-announces-fourth-quarter-and-twelve-months-2023-results-302068334.html

SOURCE Borr Drilling Limited

FAQ

What were Borr Drilling's total operating revenues in Q4 2023?

Borr Drilling's total operating revenues in Q4 2023 were $220.6 million, a 15% increase from the previous quarter.

How much was Borr Drilling's net income in Q4 2023?

Borr Drilling's net income in Q4 2023 was $28.4 million, a significant increase of $28.1 million compared to the previous quarter.

What was Borr Drilling's adjusted EBITDA in Q4 2023?

Borr Drilling's adjusted EBITDA in Q4 2023 was $105.9 million, a 20% increase from the previous quarter.

What was the total contract revenue backlog for Borr Drilling as of December 31, 2023?

Borr Drilling's total contract revenue backlog as of December 31, 2023, was $1.75 billion, including Mexico rigs.

How many new contract commitments did Borr Drilling secure in 2024 year-to-date?

Borr Drilling secured three new contract commitments in 2024 year-to-date, totaling 495 days and $82.2 million in potential contract revenue.

What cash dividend per share did Borr Drilling declare for the fourth quarter?

Borr Drilling declared a cash dividend of $0.05 per share for the fourth quarter, payable to shareholders of record on March 4, 2024.