Borr Drilling — Earnings Release 2018

Aug 23, 2018

Borr Drilling Limited (BDRILL) Announces Second Quarter 2018 Results

Borr Drilling Limited (BDRILL) Announces Second Quarter 2018 Results

Hamilton, Bermuda, August 23, 2018: Borr Drilling Limited ("Borr", "Borr

Drilling" or the "Company") announces results for the three and six months ended

June 30, 2018

Highlights in the second quarter

· Operating revenues of US$51.1 million, EBITDA* of US$3.2 million and net

loss of US$7.4 million for the second quarter 2018

· Technical utilisation in the quarter for the nine operating rigs was 99.0%

· Signed agreements to acquire five jack-up drilling rigs from Keppel FELS

Limited ("Keppel") for a total consideration of US$742.5 million in May 2018

· Secured contracts for the premium jack-up rigs "Norve", "Prospector 1" and

"Prospector 5", adding total backlog of approximately 17 months

· Took delivery of the premium jack-up rigs "Grid" and "Gunnlod" from PPL

Shipyard Pte Ltd. ("PPL"), and "Skald" from Keppel

· Divested 17 older, non-core jack-up rigs in the quarter, bringing the total

number of divestments to 26 rigs from the beginning of the year in Borr and

Paragon Offshore Limited ("Paragon") combined

· Secured a US$200 million non-amortising revolving bank loan facility with

two-year duration

· Placement of US$350 million in principle amount of convertible bonds with a

five-year tenor, coupon of 3.875% and conversion premium of 37.5%. In addition,

the Company entered into call spread agreement enhancing economic conversion

premium to 75%

Subsequent events

· The premium jack-up "Prospector 5" commenced its new contract in August,

increasing Borr's operating fleet to ten units

· Secured letter of intent for the premium jack-up "Norve" for an estimated

ten months program starting in Q3 2019 and secured contract for the standard

jack-up C20051, starting in Q3 2018 for approximately two months plus options

· Started activation of two newbuild jack-up rigs and reactivation of the

"Ran"

· Took delivery of the premium jack-up "Groa" from PPL Shipyard in July

The Consolidated Financial Statements and the Board of Directors report is

available in the files enclosed.

Management Discussion and analysis

Consolidated Statement of Operations (Financial Performance & Operating Results)

Three months ended June 30, 2018

Operating revenues were US$51.1 million for the three months ended June 30, 2018

(US$ nil in Q2 2017). The project for Total E&P Nigeria Limited ("Total") by the

"Frigg" and the drilling campaign for BW Energy Dussafu B.V. ("BW Energy") by

the "Norve" continued throughout the quarter. In addition, seven jack-up

drilling rigs acquired in the Paragon transaction were operational in the

quarter, contributing US$39.2 million in operating revenue.

Gain on disposals were US$17.5 million for the three months ended June 30, 2018

(US$ nil in Q2 2017). The company sold 17 rigs jack-up drilling rigs during the

second quarter for total proceeds of US$35.2 million.

Total operating expenses were US$93.4 million for the three months ended June

30, 2018 (US$12.9 million in Q2 2017). Total operating expenses consists of rig

operating and maintenance expenses, depreciation, amortisation, general and

administrative expenses, and restructuring costs.

Total rig operating, maintenance expenses, including lay-up costs, were US$52.4

million for the three months ended June 30, 2018 (US$3.1 million in Q2 2017), an

increase by US$49.3 million compared to Q2 2017. The increase is primarily

driven by USD$35.0 million in operating expenses for the rigs "Frigg", "Norve"

and the operating jack-up drilling rigs acquired in the Paragon transaction,

including US$4.4 million relating to amortisation of mobilisation costs.

Total depreciation and impairment of non-current assets, including amortisation

of contract backlog, was US$28.0 million for the three months ended June 30,

2018 (US$3.5 million in Q2 2017). Depreciation in Q2 2018 increased by US$18.5

million compared to Q2 2017 as a result of a larger fleet of jack-up drilling

rigs. In addition, US$6.0 million was recognised as amortisation of revenue

backlog from the Paragon acquisition.

Total general and administrative expenses were US$8.0 million for the three

months ended June 30, 2018 (US$6.3 million in Q2 2017). The increase was

primarily a result of a larger organisation and additional offices due to more

rigs in operations.

Total restructuring costs were US$5.0 million for the three months ended June

30, 2018 (US$ nil in Q2 2017). This relates to termination payments and close

-down costs linked to the Paragon acquisition. Restructuring costs going forward

are not expected to be material as the integration of the Paragon organisation

is near to being completed.

Financial income was US$17.4 million for the three months ended June 30, 2018

(US$1.1 million in Q2 2017). The financial items relate mainly to unrealised

gain on forward contracts of US$25.3 million and fair value adjustment of the

call spread resulting in loss of US$7.1 million, primarily related to one-off

cost for entering into the position. The position will be recorded at fair value

in the financial statements until maturity.

The quarter ended June 30, 2018 is the first quarter after the Paragon

acquisition where Paragon is included in the consolidated statement of

operations for the entire quarter (three days in Q1 2018). Paragon contributed

with operating revenues of US$39.2 million and rig operating and maintenance

expenses of US$34.1 million.

Six months ended June 30, 2018

Operating revenues were US$61.7 million for the six months ended June 30, 2018

(US$ nil for the six months ending June 30, 2017). This comprise revenues from

the "Frigg" and the "Norve", which commenced operations late in December 2017

and January 2018, respectively, in addition to seven jack-up drilling rigs

acquired in the Paragon transaction, operating since March 29, 2018 and

contributing with US$ 40.3 million in operating revenue.

Gain on disposals were US$17.5 million for the six months ended June 30, 2018

(US$ nil for the six months ending June 30, 2017). The company sold 17 rigs jack

-up drilling rigs during the second quarter for total proceeds of US$35.2

million.

Total operating expenses were US$156.2 million for the six months ended June 30,

2018 (US$17.7 million for the six months ending June 30, 2017). Total operating

expenses consists of rig operating and maintenance expenses, depreciation,

amortisation, general and administrative expenses, and restructuring costs.

Total rig operating, maintenance expenses, including lay-up costs were US$74.9

million for the six months ended June 30, 2018 (US$5.5 million for the six

months ending June 30, 2017), an increase by US$69.4 million primarily driven by

operational expenses for the rigs "Frigg" and "Norve" and the operating jack-up

drilling rigs acquired in the Paragon transaction. Additionally, US$8.6 million

relates to amortisation of mobilisation costs.

Total depreciation, amortisation and impairment of non-current assets, including

amortisation of contract backlog, was US$40.2 million for the six months ended

June 30, 2018 (US$4.4 million for the six months ending June 30, 2017). The

increase of US$35.8 million is a result of a larger fleet of jack-up drilling

rigs. In addition, US$6.0 million were recognised as amortisation of revenue

backlog from the Paragon acquisition.

Total general and administrative expenses were US$18.2 million for the six

months ended June 30, 2018 (US$7.9 million for the six months ending June 30,

2017). The increase compared to the six months ending June 30, 2017 was

primarily a result of a larger organization, additional offices due to more rigs

in operations and the Paragon acquisition.

Total restructuring costs were US$22.9 million for the six months ended June 30,

2018 (US$ nil for the six months ending June 30, 2017). This relates to

termination payments and close-down costs linked to the Paragon acquisition.

Financial expense was US$2.3 million for the six months ended June 30, 2018

(Financial income of US$1.1 million for the six months ending June 30, 2017).

The financial items relate mainly to change in unrealised gain on forward

contracts of US$5.3 million and unrealised loss on the call spread of US$7.1

million.

Consolidated Balance Sheet

The Company had total assets of US$2,652.2 million as of June 30, 2018 (March

31, 2018: US$2,137.3 million). Total assets increased by US$514.9 million

compared to March 31, 2018, primarily as a result of pre-delivery instalment of

US$ 288.0 million for the acquisition of five high spec newbuild jack-up

drilling rigs from Keppel FELS and the delivery of the three newbuildings

"Grid", "Gunnlod" and "Skald".

As of June 30, 2018, total equity was US$1,698.3 million which corresponds to an

equity ratio of 64.0 percent compared to total equity of US$1,670.1 million

(equity ratio of 78.1 percent) on March 31, 2018.

Total liabilities as of June 30, 2018, were US$953.9 million (March 31, 2018:

US$467.2 million). The increase is mainly attributable to the issuance of US$350

million convertible bonds, US$174.0 million in long-term debt related to the

delivery financing for the two newbuildings "Grid" and "Gunnlod" and drawdown of

US$30 million under the revolving credit facility.

Consolidated Statement of Cash Flows

Three months ended June 30, 2018

Net cash flows used in operating activities were US$39.9 million for the three

months ended June 30, 2018 (US$ 1.4 million in Q1, 2017) and is explained mainly

by change in working capital and the operating loss in the period.

Net cash flows used in investing activities were US$305.8 million for the three

months ended June 30, 2018 (US$359.5 million in Q2 2017). The investment

activities primarily relate to US$288.0 million in pre-delivery instalment for

acquiring five high spec jack-up drilling rigs from Keppel FELS and the delivery

instalment of "Skald" for US$72.4 million, offset by proceeds of US$37.2 million

relating to sale of 17 jack-up drilling rigs and equipment, and decrease of

US$22.9 million in restricted cash.

Net cash flows provided by financing activities were US$348.2 million (US$ nil

in Q2 2017) during the three months ended June 30, 2018 and relates to

finalising the March 2018 Private Placement raising net proceeds of US$7.4

million (Tranche 2) and the placing of US$350 in convertible bonds resulting in

net proceeds of US$344.4 million. In addition, US$30.0 million was drawn on the

US$200.0 million bank facility.

As of June 30, 2018, the Company's cash and cash equivalents amounted to US$54.0

million (US$193.8 million in Q2 2017). Total available free liquidity at the end

of the second quarter was US$224.0 million, including undrawn revolving credit

facility of US$170.0 million.

Outstanding shares

As of June 30, 2018, the Company has a share capital of USD 5,326,403.27,

divided into 532,640,327 shares, of which the Company owns 2,470,000 treasury

shares.

In total, the Board has approved up to 16,855,000 options to be used as a long

-term incentive program for the Company's employees, of which 2.28 million

options remain unallocated for further awards and recruitments.

Borr Q2 2018 BoD

Report (http://mb.cision.com/Public/16983/2598997/b901cda82852737b.pdf)

Consolidated Financial Statements Q2 2018 -

Final (http://mb.cision.com/Public/16983/2598997/88c0e6036a7d55bd.pdf)

August 23, 2018

The Board of Directors

Borr Drilling Limited

Hamilton, Bermuda

Questions should be directed to:

Svend Anton Maier: Chief Executive Officer, Borr Drilling Management DMCC

+ 971 4 448 7501

Rune Magnus Lundetræ: Chief Financial Officer, Borr Drilling Management DMCC

+47 22 48 30 00

Forward looking statements

This announcement includes forward looking statements. Forward looking

statements are, typically, statements that do not reflect historical facts and

may be identified by words such as "anticipate", "believe", "continue",

"estimate", "expect", "intends", "may", "should", "will" and similar

expressions. The forward-looking statements in this announcement are based upon

various assumptions, many of which are based, in turn, upon further assumptions.

Although Borr Drilling Limited believes that these assumptions are reasonable,

they are, by their nature, uncertain and subject to significant known and

unknown risks, contingencies and other factors which are difficult or impossible

to predict and which are beyond our control. Such risks, uncertainties,

contingencies and other factors could cause actual events to differ materially

from the expectations expressed or implied by the forward-looking statements

included herein.

The information, opinions and forward-looking statements contained in this

announcement speak only as of the date hereof and are subject to change without

notice."

Responsibility Statement

We confirm that, to the best of our knowledge, the interim consolidated

financial statements for the first half year of 2018, which has been prepared in

accordance with USGAAP gives a true and fair view of the Company's consolidated

assets, liabilities, financial position and result of operations, and that the

first half 2018 report includes a fair review of the information required under

the Norwegian Securities Trading Act section 5-6 fourth paragraph.

About Borr Drilling

Borr Drilling Limited is an international drilling contractor incorporated in

Bermuda in 2016 and listed on the Oslo Stock Exchange from August 30, 2017. The

Company owns and operates jack-up drilling rigs of modern and high specification

designs and provides services focused on the shallow water segment to the

offshore oil and gas industry worldwide.