Q2 FY2026
Filed Aug 13, 2026Second Quarter total operating revenues of $232.3 million, a decrease of $14.7 million or 6% compared to the first quarter of 2026, while net loss widened to $241.4 million and Adjusted EBITDA declined to $43.8 million.
Operating revenue and Adjusted EBITDA declined sequentially amid rig transitions, Odin preparation costs, higher insurance and fuel costs, and credit losses. The reported net loss was also affected by a $176.3 million debt extinguishment charge, while the company refinanced debt, expanded its revolving facility, and expects activity and Adjusted EBITDA to improve in Q3.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total operating revenuesother | $232.3 million | a decrease of $14.7 million or 6% | – |
| Net lossother | $241.4 million | – | – |
| Adjusted EBITDAnon-GAAP | $43.8 million | a decrease of $44.7 million or 51% | – |
| Technical utilizationother | 98.4% | – | – |
| Economic utilizationother | 96.4% | – | – |
| Average number of rigs operatingother | 21.2 | – | – |
| Odin operating expensesother | $22.5 million | a $11.1 million quarter-on-quarter increase | – |
| Credit losses related to a former customer in West Africaother | $10.8 million | an increase of $4.8 million compared to the prior quarter | – |
Q3 2026 outlook
- Noteexpect to average approximately 23 active rigs during Q3
- Noteexpect Adjusted EBITDA for Q3 to improve significantly from the second quarter
- Notethe third [joint-venture rig] expected to commence operations later in Q3 2026
What drove it
- The average number of rigs operating declined from 22.4 in Q1 to 21.2 in Q2.
- Six rigs were transitioning between contracts during the quarter, reducing revenue. The company said this impact is now largely behind it as the rigs have commenced their contracts.
- Odin preparation work and regulatory approval activities generated $22.5 million of operating expenses during the quarter.
- The Middle East conflict drove higher insurance and fuel costs. Fuel costs were also affected by rig transitions, together resulting in a $7.3 million quarter-on-quarter increase in rig operating expenses.
- The company recognized $10.8 million of credit losses related to a former customer in West Africa and stated that it carries no net receivables from this customer.
- The net loss was primarily driven by a $176.3 million debt extinguishment charge related to refinancing senior secured notes due 2028 and 2030 and convertible bonds due 2028.
- Year-to-date 2026, the company was awarded 21 contract commitments representing approximately 4,350 days and $541 million of Dayrate Equivalent Backlog.
- Since the last earnings report, the company secured eight contract commitments representing over 2,100 days of additional firm work.
- 2026 contract coverage is 73% at an average dayrate of approximately $134,000 per day, with second-half coverage of 70%.
Concerns
- Contract preparation for the Odin took longer than anticipated, with regulatory approvals received in mid-July.
- The Odin delays resulted in higher cost and delayed revenue.
- The Middle East conflict reduced near-term visibility, delayed tenders and contract start dates, and delayed the region's recovery.
- The company said the uncertainty is affecting several other offshore markets and makes it difficult to provide a crisp outlook for activity.
- The company incurred credit losses related to a former customer in West Africa.
What to watch
- Commencement of the Odin's previously announced two-well firm contract and its expected subsequent transition to Cantium.
- Execution against the expectation to average approximately 23 active rigs during Q3.
- Whether the expected significant Q3 improvement in Adjusted EBITDA materializes as rig-transition activity becomes substantially complete.
- Deployment of the remaining rigs in the five-rig joint venture and conversion of the opportunity pipeline into contracted work.
- The effects of Middle East conflict-related disruption on tenders, contract start dates, insurance costs, fuel costs, and offshore market visibility.
Balance sheet and cash flow
- Refinanced substantially all existing debt through the issuance of senior secured notes due 2032 and 2034 and convertible notes due 2033.
- Issued $300 million of convertible notes and $2,035 million of senior secured notes.
- Amended super senior revolving credit facility, increasing the commitments to $250.0 million, reducing the margin, and extending the maturity date.
- Subsequent to quarter end, completed the acquisition of five premium jack-up rigs via a new 50/50 joint venture for a total purchase price of $287 million. The company stated that the transaction had limited equity committed.
Analysis
Borr Drilling reported second-quarter total operating revenues of $232.3 million, down $14.7 million, or 6%, from the first quarter of 2026. The company attributed the sequential revenue decline to a lower average number of rigs operating, which fell from 22.4 in Q1 to 21.2 in Q2, and to six rigs transitioning between contracts. Operational uptime remained high, with technical utilization of 98.4% and economic utilization of 96.4%.
Adjusted EBITDA was $43.8 million, down $44.7 million, or 51%, sequentially. Management identified four principal contributors: elevated Odin preparation and regulatory costs, revenue lost during rig transitions, higher insurance and fuel costs associated with the Middle East conflict and rig movements, and $10.8 million of credit losses tied to a former West African customer. The Odin alone incurred $22.5 million of operating expenses, a $11.1 million quarter-on-quarter increase.
The company reported a net loss of $241.4 million, compared with a net loss of $29.0 million in the first quarter. Management said the principal driver was a $176.3 million debt extinguishment charge associated with refinancing its senior secured notes due 2028 and 2030 and convertible bonds due 2028. The refinancing included $300 million of convertible notes and $2,035 million of senior secured notes, and the company increased commitments under its super senior revolving credit facility to $250.0 million.
Management's operating outlook is tied to the completion of the transition cycle. The Idun, Gunnlod, Skald, Sif, Natt and Prospector 5 are now fully operational, while Odin is preparing to mobilize following regulatory approvals received in mid-July. Borr expects to average approximately 23 active rigs during Q3 and expects Adjusted EBITDA to improve significantly from the second quarter. Contracting activity remains material, with 21 year-to-date commitments representing approximately 4,350 days and $541 million of Dayrate Equivalent Backlog, but management highlighted that the Middle East conflict is reducing near-term visibility and delaying tenders and contract start dates.
Subsequent to quarter end, Borr's 50/50 joint venture completed the purchase of five premium jack-ups for a total purchase price of $287 million. Three of these rigs are contracted, two are operating, and a third is expected to commence operations later in Q3 2026. The key execution priorities are deploying the remaining joint-venture rigs, starting Odin's work, and translating the anticipated increase in active-rig count into improved earnings while managing the continuing effects of regional disruption.
Management, verbatim
Our operational performance in the second quarter of 2026 resulted in technical utilization of 98.4% and economic utilization of 96.4%.
Bruno Morand, Chief Executive Officer
Based on this projected activity level, we expect Adjusted EBITDA for Q3 to improve significantly from the second quarter.
Bruno Morand, Chief Executive Officer
In closing, the Middle East conflict has reduced near-term visibility, delaying tenders, contract start dates, and the region’s recovery.
Bruno Morand, Chief Executive Officer
Not in the filing
stated, not guessed- Accounting basis, including whether results are reported under IFRS or another accounting framework
- Prior-year total operating revenues, net loss, Adjusted EBITDA, utilization, and rig operating count
- GAAP gross profit and gross margin
- GAAP operating income or loss
- GAAP and adjusted earnings or loss per share
- Non-GAAP net income or loss and non-GAAP earnings or loss per share
- Operating cash flow
- Free cash flow
- Cash balance
- Total debt balance following the refinancing
- Interest expense
- Capital expenditures
- Dividend declarations or payments
- Share repurchases
- Reportable segment revenue and profitability
- Numeric Q3 revenue, gross margin, operating expense, tax-rate, or Adjusted EBITDA guidance
- Previous-release outlook for comparison with reported results
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.