Borr Drilling's Reset Quarter: Odin Delays and a Refinanced Future

Borr Drilling's Reset Quarter

Borr Drilling's second-quarter 2026 earnings call was a study in contrasts. The company reported a technical utilization of 98.4% and yet adjusted EBITDA fell to $43.8 million, a sequential decline of $44.7 million. The culprit was a cluster of one-off items: the delayed start-up of the high-specification rig Hurricane season related operational constraints, elevated fuel and insurance costs tied to the Middle East conflict, and a $10.8 million credit loss provision for a former West African customer. These were not operational slippages; they were the cost of repositioning the fleet and navigating a volatile macro environment.

The most significant negative surprise was the Odin. Initially slated to commence a two-well contract in the U.S. Gulf, the rig faced prolonged regulatory approvals and preparation work that cost $22.5 million in the quarter. As Bruno Morand explained, “The Odin is currently preparing to mobilize its first location where it will commence the previously announced two-well firm contract with an undisclosed customer.” — Bruno Morand, Executive (likely CEO) · 2026-08-12 But the path was anything but smooth.

We are disappointed with the delays for the Odin and the initial start-up requirements were greater than we have typically expected when entering a new market.

The contract transitions of six rigs during the quarter also weighed on revenue, though management emphasized that the impact is now behind. The rigs have commenced their contracts, and the company expects to average 23 active rigs in Q3. As Bruno noted, “we expect Q3 to average approximately 23 active rigs and hence, adjusted EBITDA to improve significantly from second quarter.” — Bruno Morand, Executive (likely CEO) · 2026-08-12 That confidence is underpinned by a flurry of new contracts: 8 commitments representing over 2,100 days of work, including two-year extensions for the Galar and Gersemi in Mexico into 2030. The joint venture with a long-term Mexican partner also closed on five premium jack-ups for $287 million, with three already contracted.

Nowhere is the changed market tone more visible than in the Middle East. The conflict has delayed tendering, and backlog additions in the region hit a 25-year low in the first half of 2026. Yet Bruno Morand struck a patient note: “The prolonged conflict and lack of clarity around its resolution have continued to delay tendering and contracting activity.” — Bruno Morand, Executive (likely CEO) · 2026-08-12 This is a notable shift from the earlier part of the year, when the company was more optimistic about a rapid recovery. In the prior quarter's call, he had said, “I think that the landscape is quite interesting here. The timing remains obviously a bit variable considering this conflict.” — Bruno Morand, Unknown (likely CEO or senior executive) · 2026-05-21 And in February, on the Middle East tenders, he described them as “very actual. This is very real, very tangible.” — Bruno Morand, Chief Executive Officer · 2026-02-19 The reality now is that the timeline has stretched, but the demand is still there—anchored by low global inventory levels and the need for short-cycle barrels.

The balance sheet is the other major story. Q2 saw a $176.3 million loss on debt extinguishment as part of a comprehensive refinancing. Magnus Vaaler detailed the issuance of $2.035 billion in senior secured notes and $300 million of convertible notes, extending maturities and cutting financing costs. “Net loss for Q2 was $241.4 million, an increase in loss of $212.4 million compared to Q1.” — Magnus Vaaler, Chief Financial Officer · 2026-08-12 That headline loss masks the fact that the company now has $473.6 million in total liquidity and a mature debt stack. The credit losses from West Africa were also fully provided for, removing a lingering overhang.

Looking ahead, Borr is not out of the woods. The Middle East conflict continues to cap visibility, and the company refrained from giving precise EBITDA guidance. But the combination of a healthier balance sheet, a fully utilized fleet in Q3, and a contract book that now covers 73% of 2026 at an average dayrate of $134,000 suggests the worst of the operational turbulence is behind. The market is taking note—the stock may have been volatile, but the underlying thesis of a premium jack-up fleet with leverage to a demand recovery remains intact.