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Borr Drilling: A Look At Q4 2020 Report

Mar. 04, 2021 5:06 PM ETBorr Drilling Limited (BORR)11 Comments
Vladimir Zernov profile picture
Vladimir Zernov


  • Borr Drilling used plenty of cash in operations in Q4 2020, but managed to boost its cash position by selling shares and rigs.
  • The company made another equity offering in 2021 and noted that it saw some opportunities to further improve its liquidity position.
  • Fears of dilution put pressure on the stock, and it missed the recent oil rally.

Borr Drilling (NYSE:BORR) has recently released its fourth-quarter results and provided fleet status report, giving investors a chance to take a look at how the company performed in the challenging market environment. Without further ado, let's look at the report and the latest contract news.

In the fourth quarter, Borr generated $60.2 million of revenue and a net loss of $46.7 million, or $0.22 per share. The company used $38.4 million of cash in operating activities but managed to offset this loss by $16.9 million asset sale proceeds and $31.4 million of proceeds from share issuance. As a result, Borr's cash position improved from $12.5 million at the end of the third quarter to $19.2 million at the end of the fourth quarter.

Borr has subsequently raised gross proceeds of $46 million in an equity offering which was a part of the liquidity improvement plan. The company sold 54.1 million shares at a price of $0.85 per share.

In 2020 and early 2021, Borr made a number of deals which helped it to push debt maturities into 2023 and beyond, as well as re-schedule the remaining rig deliveries (5 newbuild jack-ups) for 2023. While the company has no near-term liquidity problems after another equity raise, the significant negative operating cash flow in the fourth quarter is a concern.

Interestingly, Borr stated: "Even though we received broad support for the liquidity improvement plan, concluded in January, we are convinced that some opportunities remain to further improve our capital structure and liquidity in 2021". Borr stated that it wanted to improve cash distributions from its joint-venture operations in Mexico, but the above-mentioned statement is still concerning for investors who have lived through three rounds of dilution in less than a year.

The company's fleet status report contained several developments:

  • The letter of

This article was written by

Vladimir Zernov profile picture
I'm a trader who trades both short-term and long-term. I started my career as a day-trader for a trading firm, but then turned to longer time frames and went on my own to manage my portfolio. I use technical analysis as well as fundamental analysis in my research.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I may trade any of the above-mentioned stocks.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (11)

Spot on analysis. Always appreciate your perspective
the company's shares outstanding doubled during the pandemic. before the pandemic. the share price is nine dollars. so to go back the the pre pandemic level,the share price should be 4.5 dollars. it is better not to short this stock. in particular when the money wave is going to drive to small caps
Henrik Alex profile picture
Borr still suffers from the PEMEX JVs as the Mexican oil giant continues to delay payments to service providers. I don't see a near-term solution to this issue and fully expect Borr to raise more capital as shares are now trading solidly above $1.

Should the oil price rally continue, the stock is likely to follow suit.
Vladimir Zernov profile picture
Yes, they look ready to raise more capital. They are stuck in Mexico, in the current market, there's nothing they can do about it.
@Vladimir Zernov could you shed a light on this JV/Pemex issue, how big would the impact be, and can they move somewhere else with the rigs?
I was calculating how the company's market value has developed recently. To keep it simple, I checked the amount of shares and the NOK price after the reverse split 5:1 on June 2019. At that time it had already halved from a year ago. Here are the main emission events. Company has had smaller emissions and repurhaces as well.

So if I got it even almost right, we are almost about 1/3 of the market cap compared to 6/2019 (and about 1/6 from 2018) In absolute stock price term the performance is of course even worse because of dilution.

I would say market is looking much better than 6/2020, and we are still up only 35%.

6/2019 106.5 M shares @80Nok MCAP= 8520 MNOK
6/2020 158 M shares @13NOK MCAP=2054 MNOK
8/2020 201 M shares @8 NOK MCAP=1608 MNOK
10/2020 220 M shares @4 NOK MCAP=880 MNOK
1/2021 275M Shares @ 7.5NOK MCAP=2063 MNOK
TODAY 275 M shares @10.2 NOK MCAP =2805 MNOK
ramgaana profile picture
Fair points, well made. Just the facts, no fear mongering. Kudos and thank you for outlining the picture so succinctly.
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