(Idea) Borr Drilling - Priced For A Recovery That Hasn't Arrived
By: Jon Costello
Borr Drilling BORR 0.00%↑ has nearly tripled from its lows, with shares trading at $5.04.
The driver of the stock’s recovery was a year of methodical execution on a highly levered balance sheet.
In July 2025, the company raised $102.5 million of equity at $2.05, with management and the board personally purchasing 22.6% of the offering. It was followed in December 2025 by an oversubscribed issuance of $165 million in 2030 senior secured notes and $84 million in follow-on equity. In April of this year, it refinanced $195.2 million of 2028 convertibles into $300 million of new 3.5% paper due 2033 at a higher conversion price. The move extended the front of the maturity wall while cutting the coupon. All this balance-sheet execution drove the rally in the shares.
To be sure, these measures reduced the risk of imminent bankruptcy and/or equity dilution, which led me to avoid the shares when I last covered Borr in July 2025. They allowed the market to shift its view of Borr from a high-risk refinancing case to a jackup operator in the midst of a cyclical recovery, causing its shares to re-rate.
Borr’s situation has clearly improved, and management should be commended. But the financial and operating recovery has not kept pace with the company’s share price. Dayrates, leverage, and looming debt maturities continue to pose significant risks to shareholders. With these risks in mind, I believe the upside in the shares is less than that of Borr’s deepwater offshore peers. I therefore continue to avoid the name in favor of Transocean (RIG).