Borr Drilling — Earnings Release 2019

Feb 28, 2020

Borr Drilling Limited Announces Preliminary Results for the Fourth Quarter and Year Ended 2019

Borr Drilling Limited Announces Preliminary Results for the Fourth Quarter and Year Ended 2019

Hamilton, Bermuda, February 28, 2020: Borr Drilling Limited ("Borr", "Borr

Drilling" or the "Company") announces unaudited results for the three- and

twelve-months ended December 31, 2019.

Highlights in the fourth quarter 2019 and full year 2019

. Total operating revenues of $92.9 million, net loss of $69.3 million and

Adjusted EBITDA  of $1.8 million for the fourth quarter of 2019

. Total operating revenues of $334.1 million, net loss of $308.1 million and

Adjusted EBITDA  of $(2.6) million for the full year 2019

. The net loss in the quarter includes $16.4 million accounting loss in equity

method investments. This relates mainly to an unplanned geological event which

led to a change in the drilling programme for a well in Mexico. Based on

contractual provisions, we expect to be compensated for the additional costs

associated with this change

. Technical utilisation was 99.5% in the fourth quarter and 99.0% for 2019

. Economical utilisation was 95.9% in the fourth quarter and 95.9% for 2019

. The Company sold its marketable securities in Oro Negro debt securities with

total proceeds of $27.1 million, resulting in an estimated total realised loss

of $15.4 million since initial purchase

. The Company agreed amendments in bank loan covenants to adjust minimum book

equity ratio from 40% to 33.3%, and the minimum free liquidity covenant from

4.0% to 3.0% of net interest bearing debt

. Neil Glass was appointed as Director and Audit Committee member

Subsequent events

. The Company entered into a new $100 million financing arrangement for the

newbuild jack-up rig Tivar, scheduled to be delivered from the yard in July

2020, maturing on December 31, 2021. As part of the agreement the delivery of

the jack up rigs Vale and Var are expected to be postponed to Q1 2022.

. Francis Millet was appointed as Chief Financial Officer.

The Chairman of the Board, Paal Kibsgaard, commented:

"The trend of increasing utilisation and higher jack-up dayrates seen in the

first nine months of 2019, continued into the fourth quarter. In 2019, 420 rig

years have been contracted in the jack-up market, beating the 2013 peak of 410

rig years. In spite of the volatility seen in the global oil and equity markets

so far this year, the growth in shallow water drilling is set to continue in

2020. This is driven by customers who have attractive shallow water acreage and

are managing their resource base with a long-term view. Based on ongoing

tendering activity and customer interactions, more than 40 additional rigs are

required in 2020 to address the planned activity. This will likely consume most

of the available modern jack-up capacity, setting the stage for further

increases in utilisation and dayrates as the year progresses.

Our operational and financial results for the fourth quarter were solid but

impacted by schedule gaps, one-off G&A expenses, and conservative cost

recognition in connection with the integrated drilling contracts in Mexico.

Looking at the full year of 2019, Borr doubled revenues compared to 2018, as we

activated eight incremental rigs and we added $517 million of revenue backlog.

The progress we made in 2019 in building out our business, means that we now

have established critical mass in all four operating regions. Therefore, going

forward, we will only activate new rigs when dayrates and mobilisation

compensation meet our new requirements for cashflow and profitability. With

activity at critical mass, a stringent rig activation strategy and tight control

of both operating costs and working capital, we expect to deliver positive

operating income for the full year of 2020, together with a significant

improvement in cashflow from operations.

Over the past year, our cash position has been challenging, mainly driven by rig

deliveries and activation costs. However, we have, with the strong support of

our partner banks and shipyard, recently obtained amended terms to both loans

and rig delivery schedules, which significantly improves our liquidity position.

In addition, we are in discussions to sell a limited number of our modern rigs,

as part of creating a long term business relationship in a key operating region,

which will free up additional cash. Based on all of this, the Board is confident

that we have created a clear financial path that will enable the Company to

execute on the established business plan while continuing to deliver best-in

-class rig services to our customers.

Lastly, we are also actively pursuing options to reduce our risk profile in

Mexico by lowering our participation in the integrated well services joint

venture, and instead focus our attention on the core rig operations in the

country. This will also allow the company to focus even more on the execution of

our global, core business, as the jack-up market continues to tighten in the

coming year. We intend to continue to operate five rigs in Mexico in close

cooperation with our partner, and we remain committed to serving the sizable

Mexican shallow water market going forward."

The full report can be found in the enclosed file.

February 28, 2020

The Board of Directors

Borr Drilling Limited

Hamilton, Bermuda