Borr Drilling Limited (BORR): what the price assumes

boothcheck covers Borr Drilling Limited (BORR) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-29.

Generated: 2026-08-10 · Exported: 2026-08-11 · Source: https://boothcheck.com/report/BORR

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 5: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 9.4% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple; asset-based land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative Families that call it expensive: Asset

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.7%); the inversion above states its own rate.

Per-Model Detail (n=10)

Solvency

Bullet Takeaways

• Borr runs a single-purpose fleet of premium jack-up rigs contracted on a dayrate basis, and the FY2025 20-F describes the whole company as a single operating segment, our dayrate segment, so nothing in the business diversifies away a shallow-water spending pause.
• Contract backlog fell to 962.9 million dollars covering 20 rig years, from 1,330.6 million and 26 rig years a year earlier, while technical utilization slipped from 90.8 percent to 80.0 percent.
• Interest coverage of 1.4 times operating profit is the number to watch, because the company states in its own filing that it does not expect to hold the cash to repay its notes at maturity and will need to refinance.

Bull Case

Borr is a cyclical business at a point in its cycle where the reported figures understate what the assets can do, and reading them any other way produces the wrong answer. FY2025 operating income was 322.1 million dollars on revenue of about 1.02 billion, a 31.6 percent operating margin. That is not a growth-company margin. It is what a modern rig fleet earns when it is working, and it is why the equity is not priced as a distressed asset despite carrying real leverage.

The fleet is the asset, and the 20-F is specific about what it owns: Our drilling fleet currently consists of 29 rigs, all of which are premium jack-up rigs. We define premium jack-up rigs as rigs built in 2000 or later and which are suitable for operations in water depths up to 400 feet with an independent leg cantilever design. Uniformity is worth more than it sounds. Because the rigs share a design, crews, spares and procedures move between them, and the company contrasts that with competitors who operate older, less modern fleets. A driller with one rig class and no legacy deepwater units has a cost structure that a mixed fleet cannot easily copy.

Shallow water is also the part of the offshore market with the shortest payback. The filing makes the customer argument directly, noting that operators have an incentive to invest in shallow-water developments over other offshore production categories, and that the company contracts our jack-up rigs primarily on a dayrate basis to drill wells for our customers, including integrated oil companies, NOCs and independent oil and gas comp anies. National oil companies do not drill on a shale schedule. When one of them recontracts it does so in rig years rather than well counts, and the FY2025 backlog still carries 20 of them.

Then there is what the market is willing to pay. Nine times operating profit is not a price that requires anything to go right. Earnings-power and peer-multiple methods both land near the price, and the cohort position sits in the lower half of the peer multiple range. For an owner that means the bet is not on a boom. It is on the fleet continuing to work at something close to the margin it has already demonstrated, with the recontracting cycle doing the rest.

Bear Case

Offshore drilling is a levered bet on the oil price with a two-year delay, and this balance sheet carries the leverage to prove it. Gross funded borrowings are 2.15 billion dollars against liquid assets of 379.7 million, and FY2025 operating income of 322.1 million covers the interest bill 1.4 times. That is the bear case in one ratio: a fleet that is working, earning a 31.6 percent margin, and still clearing its interest by only a modest margin. A shallow-water spending pause does not need to be severe to make that arithmetic uncomfortable, and the customers who set the pace are national oil companies whose budgets follow policy and crude rather than quarterly demand.

The company does not soften this. Its own filing states that We do not expect we will have cash resources to pay this debt at final maturity so we expect we will need to refinance or extend this debt prior to maturity, and any refinancing could be at higher rates or subject to more onerous restrictions, and there is no assurance that we will be able to refinance our debt at all. Refinancing risk is a rate story before it is a credit story, and every point of additional coupon lands on a coverage figure with little room in it.

The operating trend has already turned. Total contract backlog ran $ 962.9 $ 1,330.6 $ 1,312.6 million across the three reported years, rig years followed at 20 26 25, and technical utilization went 80.0 % 90.8 % 92.4 %. Backlog down 28 percent, six fewer rig years of forward work, and ten points of utilization gone. A dayrate business converts those three lines into revenue almost mechanically, and none of them points the right way.

Then there is what shareholders paid for the balance sheet holding up. The share count compounded 18.4 percent a year from the end of 2021 to the end of 2025, and the filing counts 307,701,075 common shares outstanding as of March 17, 2026. Equity issued into a downcycle is the quiet cost of a levered fleet: the rigs survive the trough and the per-share claim on them does not. Anyone underwriting the recovery should assume that mechanism stays available to management, because the refinancing language says it may be needed.

Valuation

Nine times company-wide operating profit is low enough that the arithmetic runs backwards. Rather than requiring growth, the price sits below what even a 5 percent annual decline in operating profit would warrant, computed at a 9.3 percent cost of capital over a five-year stage. That is a bound rather than a solved point, and it is the most useful single fact here: the market is not asking this fleet to expand, it is asking whether it keeps earning at all.

The concrete version of what has to be true is the margin. FY2025 operating income of 322.1 million dollars on roughly 1.02 billion of revenue is a 31.6 percent operating margin, and the price requires only about 10.6 percent to hold. The period matters and is worth naming: this is the filed fiscal year, not a trailing twelve months ending mid-quarter, because the company reports annually and tags one quarter-length figure per year. Two thirds of the demonstrated margin can disappear before the price stops making sense on its own terms.

The methods disagree in a way that is informative rather than alarming. Earnings power and peer multiples each sit at a premium of roughly a fifth above their family central estimate. The asset family is the outlier, with the price standing at a premium of about 140 percent above where book-based methods land, and no forward-growth method reaches a result at all. Read together that is a value and asset-supported profile rather than a growth bet, and the gap a buyer accepts is between what the rigs cost to replace on paper and what they earn in service.

Solvency is where the case is decided. Net funded borrowings of 1.77 billion dollars run 5.5 times operating profit on the pre-tax basis and 6.96 times on the after-tax one, and coverage of 1.4 leaves the equity holding the residual behind a fixed claim that does not flex with the cycle. Backlog of 962.9 million dollars covering 20 rig years is what stands between that interest bill and the recontracting market, and it is 28 percent smaller than a year ago. Where dayrates settle decides the rest, and the FY2025 filing does not answer it.

Catalysts

Backlog is the near-term signal, and the FY2025 20-F puts the mechanism plainly: the company entered into a number of new contracts, letters of award and options exercises, increasing our total contract backlog during the year, and the ending figure still fell to 962.9 million dollars from 1,330.6 million. Awards are arriving. They are not arriving fast enough to replace what rolled off. The next meaningful datapoint is whether the award pace closes that gap or merely slows the decline, and it shows up in backlog and rig years well before it shows up in revenue.

The refinancing timeline is the other event that matters, and it is disclosed rather than speculative. The filing states the company does not expect to hold the cash to repay the notes at final maturity, so a refinancing or extension should be expected ahead of that date at whatever rate the credit market offers. A completed refinancing at a manageable coupon removes the sharpest edge from the bear case. One at a materially higher rate lands straight on coverage of 1.4 times operating profit.

Utilization is the third line, and the fastest-moving of the three. It ran 80.0 % 90.8 % 92.4 % across the reported years. A dayrate business earns on rigs that are working, so a recovery there reaches the income statement long before contracts signed today convert into revenue.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• PUMP (ProPetro Holding Corp.)
• FY2025 10-K: …operate are highly competitive. To be successful, an energy service company must provide services and equipment that meet the specific needs of oil and natural gas E&P companies at competitive prices. Competitive factors impacting sales of our services are price, reputation, technical expertise, emissions profile,…
• FY2025 10-K: .9%, 13.7%, 12.1%, and 11.2%, respectively, of total revenue. No o ther customer accounted for more than 10% of our total revenue for the year ended December 31, 2025. There have been many recent mergers and acquisitions in the oil and gas industry. In May 2024, Pioneer Natural Resources USA, Inc. ("Pioneer") merged…
• NESR (NATIONAL ENERGY SERVICES REUNITED CORP.)
• FY2025 10-K: …We operate in highly competitive markets across the MENA region, where our competitors include both large multinational corporations and smaller local service providers. Our revenues and earnings are influenced by various factors, including competitive dynamics, fluctuations in drilling and completion activity,…
• FY2025 10-K: …losses. In addition, we depend on a small number of customers for a significant portion of our revenues. Therefore, the loss of any of these customers could result in a decline in our revenues and adversely affect our financial condition, results of operations or cash flows. Our operations and our primary customers…
• SDRL (SEADRILL Ltd)
• FY2025 10-K: …to the risks associated with having a limited number of customers for our services. For the year ended December 31, 2025 , our largest custom ers, which individually contributed more than 10% of our total revenues, were Petrobras, Sonadrill, Talos and LLOG and a ccounted for approximately 79% of our total revenues in…
• FY2025 10-K: …in those regions. Consolidation in our industry may impact our results of operations. In the past several years, the pace of consolidation in our industry has increased, and may continue to increase, leading to the creation of a number of larger and financially stronger competitors. For example, in February 2026, two…
• XPRO (Expro Group Holdings N.V.)
• FY2025 10-K: …to their approved annual budgets and higher or lower activity in the first quarter of the year based on whether the new year's budget has been approved. Customers We derive our revenue from services and product sales to customers primarily in the oil and gas industry. No single customer accounted for more than 10% of…
• FY2025 10-K: …occurring transactions which, in management's view, do not provide useful measures of the underlying operating performance of the business. Selected Unaudited Financial Information for the Three Months Ended December 31, 2025 and September 30, 2025 We evaluate our business segment operating performance using segment…
• OII (OCEANEERING INTERNATIONAL INC)
• FY2025 10-K: …we do. Our businesses operate in highly competitive industry segments. Some of our competitors or potential competitors have greater financial, technical, personnel or other resources than we have. Our operations may be adversely affected if our current competitors or new market entrants introduce new products or…
• FY2025 10-K: …regulations favoring or requiring the awarding of contracts to local contractors or requiring foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. These regulations may adversely affect our ability to compete. Subsea Robotics. We believe we are the world's largest owner and…
• HP (Helmerich & Payne, Inc.)
• FY2025 10-K: …various stages of commercial testing. Markets and Competition Our business largely depends on the level of capital spending by oil and gas companies for exploration and production activities. The level of capital spending has traditionally been correlated to oil and gas prices. Oil and gas prices can be volatile at…
• FY2025 10-K: …to maintain our pricing and to increase our pricing as costs increase to offset rising costs and capital expenditures could adversely affect our rig utilization and profit margins. Various factors within our industry could cause there to be substantially more drilling rigs available than necessary to meet demand even…
• LBRT (Liberty Energy Inc.)
• FY2025 10-K: …We believe that the principal competitive factors in the markets we serve are technical expertise, equipment capacity, work force competency, efficiency, safety record, reputation, experience and price. Additionally, projects are often awarded on a bid basis, which tends to create a highly competitive environment. We…
• FY2025 10-K: 634.1 million for the year ended December 31, 2025 compared to $921.6 million for the year ended December 31, 2024. The decreases in EBITDA and Adjusted EBITDA primarily resulted from lower pricing and changes in activity levels in 2025 as described above under the captions Revenue , Cost of Services, and General and…
• PTEN (PATTERSON UTI ENERGY INC)
• FY2025 10-K: , have incurred losses during the downturn periods. We cannot predict either the future level of demand for our oil and natural gas services or future conditions in the oil and natural gas service businesses. In addition to the dependence on oil and natural gas prices and demand for our services, we are highly…
• FY2025 10-K: …has frequently exceeded demand, particularly in an industry downturn. The price for our services is a key competitive factor, in part because equipment used in these businesses can be moved from one area to another in response to market conditions. In addition to price, we believe availability, condition and…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.