UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________________________
FORM 20-F
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition periods from ______________________ to______________________
OR
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report ..................
____________________________________________
Commission File Number: 001-39007
____________________________________________
Borr Drilling Limited
(Exact name of registrant as specified in its charter)
____________________________________________
Bermuda
(Jurisdiction of incorporation or organization)
S.E. Pearman Building
2nd Floor 9 Par-la-Ville Road
Hamilton HM11 Bermuda
+1 (441) 542-9234
(Address of principal executive offices)
Mi Hong Yoon
2nd Floor 9 Par-la-Ville Road
Hamilton HM11 Bermuda
+1 (441) 542-9234
James A. McDonald
Skadden, Arps, Slate, Meagher & Flom (UK) LLP
22 Bishopsgate
London EC2N 4BQ England
+44 (0)20 7519 7183
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
____________________________________________
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common shares of par value $0.10 per share
BORR
The New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the
annual report:
As of December 31, 2023, there were 252,582,036 common shares outstanding.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such a shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant
to Section 13(a) of the Exchange Act.    ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to
its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting
firm that prepared or issued its audit report.         ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements  ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☒
International Financial Reporting Standards as issued by the
International Accounting Standards Board ☐
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has
elected to follow:
Item 17 ☐  Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes ☐ No ☐
TABLE OF CONTENTS
C.
F.
ITEM 16J.
INSIDER TRADING POLICIES
ITEM 16K.
CYBERSECURITY
NOTE ON THE PRESENTATION OF INFORMATION
We have prepared this annual report using a number of conventions, which you should consider when reading the information
contained herein. In this annual report, unless the context otherwise requires, (i) references to “Borr Drilling Limited,” “Borr
Drilling,” the “Company,” the “Registrant,” “we,” “us,” “Group,” “our” and words of similar import refer to Borr Drilling
Limited and its consolidated subsidiaries, (ii) references to our “Board” or “Board of Directors” refer to the board of directors of
Borr Drilling Limited and “Director” or “Directors” refers to a member or members of the Board, as applicable, (iii) references to
“Borr Drilling Management UK” refers to our subsidiary Borr Drilling Management (UK) Ltd (iv) references to our
“Memorandum,” or the “Bye-Laws,” each provision thereof a “Bye-Law,” refer to the memorandum of association and the
amended and restated bye-laws of Borr Drilling Limited, respectively, each as in effect from time to time, (v) references to
“Magni” or “Magni Partners” refers to Magni Partners (Bermuda) Limited, (vi) references to “Drew” refer to Drew Holdings Ltd.,
(vii) references to our “2028 Notes” refer to our $1,025.0 million senior secured notes due 2028, (viii) references to our “2030
Notes” refer to our $515.0 million senior secured notes due 2030, (ix) references to the “Notes” refer to the 2028 Notes and 2030
Notes together, (x) references to our “Convertible Bonds” refer to our $250 million convertible bonds due in 2028, (xi) references
to our “Super Senior Credit Facility” refer to our $180 million super senior credit facility, comprised of a $150 million Revolving
Credit Facility and a $30 million Guarantee Facility, with DNB Bank ASA and Citibank N.A, Jersey Branch, (xii) references to
“Mexican JVs” refers to Perforaciones Estrategicas e Integrales Mexicana S.A. de C.V. (“Perfomex”) and Perforaciones
Estrategicas e Integrales Mexicana II, SA de CV (“Perfomex II”) as the context may require, (xiii) references to “Paragon” refer
to Paragon Offshore Limited, (xiv) references to “Seatrium” and “PPL” refer to the shipyards Seatrium New Energy Limited
(formerly known as Keppel FELS Limited) and PPL Shipyard Pte Ltd., respectively, including their respective subsidiaries and
affiliates as the context may require and (xv) references to our “Shares” refer to our outstanding common shares, par value $0.10
per share.
References in this annual report to (i) the "SEC" refer to the US Securities and Exchange Commission and (ii) "U.S. GAAP" refer
to the generally accepted accounting principles in the United States.
Unless otherwise indicated, all share and per share data in this annual report are adjusted to give effect to the December 2021
conversion of each of our shares into 0.5 shares, resulting in a reverse share split at a ratio of 2-for-1 and are approximate due to
rounding.
PRESENTATION OF FINANCIAL INFORMATION
We produce financial statements in accordance with U.S. GAAP and all financial information included in this annual report is
derived from our U.S. GAAP consolidated financial statements, except as otherwise indicated.
Our consolidated financial statements included in this annual report comprise our consolidated statements of operations,
comprehensive income/(loss), changes in shareholders’ equity, and cash flows for the years ended December 31, 2023, 2022 and
2021 and consolidated balance sheets as of December 31, 2023 and 2022 (“Audited Consolidated Financial Statements”). We
present our consolidated financial statements in U.S. dollars.
Unless otherwise indicated, all references to “U.S.$” and “$” in this annual report are to, and amounts are presented in, U.S.
dollars. All references to “€,” “EUR,” or “Euros” are to the single currency of the European Monetary Union, all references to
“£,” “Pounds” or “GBP” are to pounds sterling. All references to “NOK” are to Norwegian Kroner.
NON-U.S. GAAP FINANCIAL INFORMATION
In this annual report, we disclose non-GAAP financial measures, namely Adjusted EBITDA, as defined under "Item 5. Operating
and Financial Review and Prospects". This measure is an important measure that we use to assess financial performance. Adjusted
EBITDA is a non-GAAP financial measure and as used herein represents net income/(loss) adjusted for: depreciation and
impairment of non-current assets, other non-operating income, income from equity method investments, total financial expenses,
net, amortization of deferred mobilization and contract preparation costs, amortization of deferred mobilization, demobilization
and other revenue, and income tax. We present Adjusted EBITDA because we believe that it and other similar measures are
widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance. We
believe Adjusted EBITDA provides meaningful information about the performance of our business and therefore we use it to
supplement our U.S. GAAP reporting. Moreover, our management uses Adjusted EBITDA in presentations to our Board to
provide a consistent basis to measure operating performance of our business, as a measure for planning and forecasting overall
expectations, for evaluation of actual results against such expectations and in communications with our shareholders, lenders,
bondholders, rating agencies and others concerning our financial performance. We believe that Adjusted EBITDA increases the
comparability of year-to-year results and is representative of our underlying performance and against the performance of other
companies by excluding the items discussed above, although Adjusted EBITDA has significant limitations, including not
reflecting our cash requirements for capital or deferred costs, rig reactivation costs, newbuild rig activation costs, taxes or debt
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service. Non-GAAP financial measures may not be comparable to similarly titled measures of other companies and have
limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our net income or other
operating results as reported under U.S. GAAP.
MARKET AND INDUSTRY DATA
In this annual report, we present certain market and industry data. Certain information contained in this annual report regarding
our industry and the markets in which we operate is based on our own internal estimates and research. This information is based
on third party services which we believe to be reliable. Unless otherwise indicated, the basis for any statements regarding our
competitive position in this annual report is based on our own assessment and knowledge of the market in which we operate.
Forward-looking information obtained from third party sources is subject to the same qualifications and the uncertainties
regarding the other forward-looking statements in this annual report.
Market data and statistics are inherently predictive and subject to uncertainty and do not necessarily reflect actual market
conditions. Such statistics are based on market research, which, itself, is based on sampling and subjective judgments by both the
researchers and the respondents, including judgments about what types of products and transactions should be included in the
relevant market. As a result, investors should be aware that statistics, statements and other information relating to markets, market
sizes, market shares, market positions and other industry data set forth in this annual report, including in the section entitled “Item
4.B. Business Overview—Industry Overview” (and projections, assumptions and estimates based on such data) may not be
reliable indicators of our future performance and the future performance of the offshore drilling industry. See the sections entitled
“Item 3.D. Risk Factors” and “Special Note Regarding Forward-Looking Statements.”
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report and any other written or oral statements made by us or on our behalf may include forward-looking statements
that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These
forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of
1995. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results,
performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
Sections of this annual report on Form 20-F entitled "Risk Factors," "Business Overview" and "Operating and Financial Review
and Prospects," among others, discuss factors which could adversely impact our business and financial performance.
You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,”
“estimate,” "goals,", “intend,” “plan,” "projection", “believe,” “likely to” "target", "outlook" or other similar expressions. We
have based these forward-looking statements largely on our current expectations and projections about future events and financial
trends that we believe may affect our financial condition, results of operations, liquidity requirements, strategy and financial
needs. These forward-looking statements include statements about plans, objectives, goals, strategies, outlook, prospects, future
events or performance, underlying assumptions, expected industry trends, including the attractiveness of shallow water drilling
and activity levels in the jack-up rig and oil industry, day rates, market outlook, contract backlog, expected contracting and
operation of our jack-up rigs, drilling contracts, and contract terms, demand for and expected utilization of rigs, and tender
activity and new tenders, oil and gas price trends, plans regarding rig deployment, statements with respect to newbuilds, including
expected delivery dates, expected commencement date and duration of new contracts, statements with respect to our fleet and its
expected capabilities and prospects, expected financial results and performance for periods for which historical financial
information is not available and statements as to expected growth, margin, dividend policy, statements about our share repurchase
program, statements with respect to our JVs, including plans and strategy and expected payments from our JVs’ customers,
climate change matters and energy transition, our commitment to safety and the environment, competitive advantages and
business strategy, including our growing industry footprint, strengthening of our drilling industry relationships, our aim to
establish ourselves as the preferred provider in the industry, compliance with laws and regulations, expected sources of liquidity
and funding, statements about funding requirements and the statements in this report under the heading "—Going concern in Note
1 - General of the Audited Consolidated Financial Statements" included herein, factors affecting results of operations, statements
with respect to our obligations under our financing arrangements, expected adoption of new accounting standards and their
expected impact, the potential impact of Russian military actions across Ukraine, the ongoing conflict in the Middle East, and the
current global economic conditions, on oil prices as well as our business, as well as other statements in the sections entitled “Item
4.B. Business Overview—Industry Overview” and “Item 5.D. Trend Information,” and other non-historical statements, which are
other than statements of historical or present facts or conditions.
The forward-looking statements in this annual report are based upon current estimates, expectations, beliefs and various
assumptions, many of which are based, in turn, upon further assumptions, including, management’s examination of historical
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operating trends, data contained in our records and other data available from third parties. These assumptions are inherently
subject to significant risks, uncertainties, contingencies and factors that are difficult or impossible to predict and are beyond our
control, and that may cause our actual results, performance or achievements to be materially different from those expressed or
implied by the forward-looking statements. Numerous factors could cause our actual results, level of activity, performance or
achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by these
forward-looking statements including: risks relating to our industry and business, including risks relating to industry conditions
and tendering activity, the risk of delays in payments to our JVs and consequent payments to us, the risk that our customers do not
comply with their contractual obligations, risks relating to our liquidity, including the risk that we may not be able to meet our
liquidity requirements from cash flows from operations, and through issuance of additional debt or equity or sale of assets, risks
relating to our debt instruments and rig purchase and finance contracts, including risks relating to our ability to comply with
covenants and obtain any necessary waivers and the risk of cross defaults, risks relating to our ability to meet or refinance our
significant debt obligations including debt maturities and obligations under rig purchase and finance contracts and our other
obligations as they fall due, risks relating to our Convertible Bonds maturing in 2028 and the Notes maturing in 2028 and 2030,
risks relating to future financings including the risk that future financings may not be completed when required and future equity
financings will dilute shareholders and the risk that the foregoing would result in insufficient liquidity to continue our operations
or to operate as a going concern, risks relating to our newbuild purchase and financing agreements, risks related to climate
change, including climate-change or greenhouse gas related legislation or regulations and the impact on our business from
climate-change related physical changes or changes in weather patterns, and the potential impact of new regulations relating to
climate change and the potential impact on the demand for oil and gas, risks relating to the military action in Ukraine and the
Middle East and their impact on our business, and other risks described in “Item 3.D. Risk Factors.” Given these risks and
uncertainties, you should not place undue reliance on forward-looking statements as a prediction of actual results.
Any forward-looking statements that we make in this annual report speak only as of the date of such statements and we caution
readers of this annual report not to place undue reliance on these forward-looking statements. Except as required by law, we
undertake no obligation to update or revise any forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of unanticipated events. The foregoing factors that could
cause our actual results to differ materially from those contemplated in any forward-looking statement included in this annual
report should not be construed as exhaustive. New factors emerge from time to time, and it is not possible for us to predict all of
these factors. Further, we cannot assess the impact of each such factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to be materially different from those contained in any forward-looking statement.
You should read this annual report, and each of the documents filed as exhibits to the annual report, completely, with this
cautionary note in mind, and with the understanding that our actual future results may be materially different from what we
expect.
5
PART I
ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2.  OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3.  KEY INFORMATION
A. [RESERVED]
B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
6
D. RISK FACTORS
Our business, financial condition, results of operations and liquidity can suffer materially as a result of any of the risks
described below. While we have described all of the risks we consider material, these risks are not the only ones we face. We
are also subject to the same risks that affect many other companies, such as technological obsolescence, labor relations,
geopolitical events, climate change and risks related to the conducting of international operations. Additional risks not known
to us or that we currently consider immaterial may also adversely impact our business. Our business routinely encounters and
addresses risks, some of which may cause our future results to be different—sometimes materially different—than we
presently anticipate.
SUMMARY OF KEY RISKS
• Risk factors related to our industry
▪ The offshore drilling industry and jack-up drilling market historically has been highly cyclical, with periods of
low demand and/or over-supply that could result in adverse effects on our business.
▪ The offshore drilling industry and the jack-up drilling market are highly competitive, with periods of excess rig
availability which reduce dayrates and could result in adverse effects on our business.
▪ The success of our business largely depends on the level of activity in the oil and gas industry, which can be
significantly affected by volatile oil and natural gas prices.
▪ Global geopolitical tensions and instability may rise and create heightened volatility in the oil and natural gas
prices that could result in adverse effects on our business.
▪ Down-cycles in the offshore drilling industry and other factors may affect the market value of our jack-up rigs
and the newbuild rigs we have agreed to purchase.
• Risk factors related to our business
▪ We may not be able to renew contracts which expire, and our customers may seek to cancel or renegotiate their
contracts.
▪ We may be unable to obtain favorable contracts for our jack-up rigs.
▪ Our Total Contract Backlog may not be realized.
▪ We may be obligated to fund cash calls from our Joint Ventures in Mexico in order to fund working capital,
capital expenditure outlays or any shortfalls, due to delays in invoices being approved and paid by customers.
▪ We have experienced net losses for most years since inception.
▪ We are exposed to the risk of default or material non-performance by customers.
▪ We are reliant on positive cash flow generation from our Joint Ventures, and we may not receive funds in a
timely manner.
▪ Our drilling contracts contain fixed terms and day rates, and consequently we may not fully recoup our costs in
the event of a rise in expenses, including operating and maintenance costs.
▪ We incur expenses, such as preparation costs, relocation costs, operating costs and maintenance costs, which we
may not fully recoup from our customers, including where our jack-up rigs incur idle time between
assignments.
▪ Inflation may adversely affect our operating results.
▪ The limited availability of qualified personnel in the locations in which we operate may result in higher
operating costs as the offshore drilling industry demands increase.
▪ If we are unable to attract and retain highly skilled personnel who are qualified and able to work in the locations
in which we operate it could adversely affect our operations.
▪ We are exposed to the risk of default or material non-performance by subcontractors.
▪ The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic,
could have a material adverse effect on our business, financial condition, results of operations and cash flows.
7
• Risk factors related to our financing arrangements
▪ We have significant debt maturities in the coming years.
▪ Future cash flows may be insufficient to meet obligations under the terms of our existing bonds and loans and
operate our business.
▪ Liquidity risk could impair our ability to fund operations and jeopardize our financial condition, growth and
prospects.
▪ As a result of our significant cash flow needs, we may be required to raise funds through the issuance of
additional debt or equity, and in the event of lost market access, we may not be successful in doing so.
▪ We are subject to restrictive debt covenants that may limit our ability to finance our future operations and
capital needs and to pursue business opportunities and activities.
▪ We may require additional working capital or capital expenditures, other than our existing bonds and loans,
from time to time and we may not be able to arrange the required or desired financing.
▪ We face risks in connection with the delivery of our newbuild jack-up rigs and related financing arrangements.
• Risk factors related to applicable laws and regulations
▪ Compliance with, and breach of, the complex laws and regulations governing international drilling activity and
trade could be costly, expose us to liability and adversely affect our operations.
▪ Local content requirements may increase the cost of, or restrict our ability to, obtain needed supplies or hire
experienced personnel, or may otherwise affect our operations.
▪ We are subject to complex environmental laws and regulations that can adversely affect us.
▪ Data protection and regulations related to privacy, data protection and information security could increase our
costs, and our failure to comply could result in fines, sanctions or other penalties, as well as have an impact on
our reputation.
▪ A change in tax laws in any country in which we operate could result in higher tax expense.
▪ Climate change and the regulation of greenhouse gases could have a negative impact on our business.
▪ Increasing attention to sustainability, environmental, social and governance matters and climate change may
impact us. 
• Risk factors related to our common shares
▪ The price of our common shares may fluctuate widely in the future, and you could lose all or part of your
investment.
▪ Future sales of our equity securities in the public market, or the perception that such sales may occur, could
reduce our share price, and any additional capital raised by us through the sale of equity or convertible securities
may dilute your ownership in us.
RISK FACTORS RELATED TO OUR INDUSTRY
The offshore drilling industry and jack-up drilling market historically has been highly cyclical, with periods of low demand
and/or over-supply that could result in adverse effects on our business.
The jack-up drilling market historically has been highly cyclical and is primarily related to the demand for, and the available
supply of, jack-up rigs. Demand for jack-up rigs is directly related to the regional and worldwide levels of offshore exploration
and development spending by oil and gas companies, which is beyond our control. It is not unusual for jack-up rigs to be
unutilized or underutilized for significant periods of time and subsequently resume full or near full utilization when business
cycles improve as evidenced by industry trends in recent years. During historical industry periods of high utilization and high
dayrates, industry participants have ordered new jack-up rigs, which has resulted in an over-supply of jack-up rigs worldwide.
During periods of supply exceeding demand, jack-up rigs may be contracted at or near cash breakeven operating rates for
extended periods of time until dayrates increase when the supply/demand balance is restored and in recent years oversupply has
resulted in "stacking" of rigs. In prior years there has been an oversupply of jack-up rigs, which impacted utilization and dayrates,
8
and while this oversupply has ceased recently, we may again face an oversupply of jack-up rigs in the event demand declines.
Offshore exploration and development spending may fluctuate substantially from year-to-year and from region-to-region.
Demand for our contract drilling services and the dayrates for those services impacts our operations and operating results, and any
industry downturn would adversely affect our business, financial condition, results of operations and cash flows.
Volatility in the oil price impacts demand in the offshore drilling industry. The industry downturn in recent years has resulted in
many operators idling rigs and a number of our rigs were not in operation for significant periods in 2021 which in turn impacted
dayrates for those rigs that were active. Since the downturn, the Company has experienced an increase in the number of
contracted rigs, which stood at 21 and 22 on December 31, 2022 and December 31, 2023, respectively. However, several of these
contracts are short term in nature and the number of working and contracted rigs could reduce in the event that industry conditions
deteriorate and/or the Company fails to maintain existing drilling contracts, renew or secure further contracts for these rigs. A
prolonged period of reduced demand and/or excess jack-up rig supply may require us to idle or dispose of jack-up rigs or to enter
into low dayrate contracts or contracts with unfavorable terms. There can be no assurance that the demand for jack-up rigs will
increase or even remain at current levels. Any decline in demand for services of jack-up rigs, could have a material adverse effect
on our business, financial condition, results of operations and cash flows.
The offshore drilling industry and the jack-up drilling market are highly competitive, with periods of excess rig availability
which reduce dayrates and could result in adverse effects on our business.
Our industry is highly competitive, and our contracts are traditionally awarded on a competitive bid basis. Pricing, rig age, safety
records and competency are key factors in determining which qualified contractor is awarded a job. Competitive factors include:
rig availability, rig location, rig operating features and technical capabilities, pricing, workforce experience, operating efficiency,
condition of equipment, contractor experience in a specific area, reputation and customer relationships. If we are not able to
compete successfully, our revenues and profitability may be impacted, which could have a material adverse effect on our
business, financial condition, results of operations and cash flow.
While the jack-up rig industry is currently experiencing a period of limited rig supply, supported by an increase in demand, a
decline in demand could curtail a strengthening, or trigger a reduction, in utilization and dayrates. Eight, nine and six newbuild
jack-up rigs were delivered during 2021, 2022 and 2023, respectively, representing an approximate 2.0%, 2.4% and 1.86%
increase in the total worldwide fleet of competitive offshore jack-up drilling rigs since the end of 2020, 2021 and 2022,
respectively. As of December 31, 2023, there were approximately 17 newbuild jack-up rigs reported to be on order or under
construction (including the two rigs we have agreed to purchase that are still located in shipyards), against the 23 and 32 newbuild
jack-up rigs reported to be on order or under construction at the end of 2022 and 2021, respectively. Most of the newbuild jack-up
rigs under construction, including the newbuild jack-up rigs we have agreed to purchase to be delivered no later than the second
half of 2024, do not have drilling contracts in place. The market in general or a geographic region in particular may not be able to
fully absorb the supply of new rigs in future periods and any over-supply of drilling rigs could have a material adverse effect on
our business, financial condition, results of operations and cash flow.
The success of our business largely depends on the level of activity in the oil and gas industry, which can be significantly
affected by volatile oil and natural gas prices.
The success of our business largely depends on the level of activity in offshore oil and natural gas exploration, development and
production, which may be affected by oil and gas prices and conditions in the worldwide economy. Oil and natural gas prices, and
market expectations of potential changes in these prices, significantly affect the level of drilling activity. Historically, when
drilling activity and operator capital spending decline, utilization and dayrates also decline and drilling may be reduced or
discontinued, resulting in an oversupply of drilling rigs. Over the past decade, crude oil prices have been volatile and started to
steeply decline in late 2014, after reaching prices of over $100 per barrel in 2014, and dropped to as low as approximately $19 per
barrel in April 2020 driven by the impact on demand resulting from the COVID-19 pandemic. Oil prices have recovered since
then, reaching a price of approximately $130 per barrel of Brent Crude on March 7, 2022 but have remained volatile and more
recently declined to approximately $77.9 per barrel in December 2023. Oil prices have continued to experience significant
volatility in part due to global inflation, global economic downturn and volatility in global financial markets, actions of the
Organization of the Petroleum Exporting Countries (“OPEC”) and other oil and gas producers and production cuts, the Russian
invasion of Ukraine and the ongoing conflict between Israel and Hamas. In addition, increases in oil prices do not necessarily
translate into increased drilling activity because our customers take into account a number of considerations when they decide to
invest in offshore oil and gas resources, including expectations regarding future oil prices and demand for hydrocarbons, which
typically have a greater impact on demand for our rigs. The level of oil and gas prices has had, and may have in the future, a
material effect on demand for our rigs.
Although oil prices have recovered since the low levels of early 2020, we may experience insufficient demand if long-term oil
prices decline below current levels and/or rig supply remains at or increases above current levels. A short-lived (or expectation of
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a short-lived) recovery in oil and natural gas prices, continued volatility in prices or further price reductions, may cause our
customers to maintain historically low levels or further reduce their overall level of activity and capital spending, in which case
demand for our services may decline and our results of operations may be adversely affected through lower rig utilization and/or
low dayrates. Numerous factors may affect oil and natural gas prices and demand for our services, including:
• regional and global economic conditions and changes therein, including the effects of inflation, and concerns of a global
recession and volatility in financial markets;
• oil and natural gas supply and demand;
• expectations regarding future energy prices;
• the ability or willingness of OPEC, and other non-member nations, to reach further agreements to set and maintain
production levels and pricing and to implement existing and future agreements;
• any decision of OPEC and other non-member nations to abandon production quotas and/or member-country quota
compliance within OPEC agreement;
• a reduction of capital spending and activities in the oil and gas sector by our customers as they are starting to allocate
resources to green energy projects, leading to less focus on oil and natural gas production growth;
• the level of production by non-OPEC countries;
• inventory levels, and the cost and availability of storage and transportation of oil, gas and their related products;
• capital allocation decisions by our customers, including the relative economics of offshore development versus onshore
prospects;
• the occurrence or threat of epidemic or pandemic diseases and any government response to such occurrence or threat,
including COVID-19, on global economic activity and therefore oil prices, cross border restrictions, employees’ ability
and willingness to work, oil supply and demand, and resource owners' ability to deliver future projects;
• advances in exploration and development technology;
• costs associated with exploration, developing, producing and delivering oil and natural gas;
• the rate of discovery of new oil and gas reserves and the rate of decline of existing oil and gas reserves;
• trade policies and sanctions imposed on oil-producing countries or the lifting of such sanctions, including sanctions
resulting from the Russian military invasion of Ukraine;
• laws and government regulations that limit, restrict or prohibit exploration and development of oil and natural gas in
various jurisdictions, or materially increase the cost of such exploration and development;
• the further development or success of shale technology to exploit oil and gas reserves;
• available pipeline and other oil and gas transportation capacity;
• the development and exploitation of alternative fuels;
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• laws and regulations relating to environmental matters, including those addressing alternative energy sources and the
risks of global climate change such as the variety of tax credits contained in the U.S. Inflation Reduction Act of 2022, to
promote the use of renewable energy sources;
• increased demand for alternative energy and increased emphasis on decarbonization;
• changes in tax laws, regulations and policies;
• merger, acquisition and divestiture activity among exploration and production companies (“E&P Companies”);
• the availability of, and access to, suitable locations from which our customers can explore and produce hydrocarbons;
• activities by non-governmental organizations to restrict the exploration, development and production of oil and gas in
light of environmental considerations;
• disruption to exploration and development activities due to hurricanes and other severe weather conditions and the risk
thereof;
• natural disasters or incidents resulting from operating hazards inherent in offshore drilling, such as oil spills;
• the worldwide social and political environment, including uncertainty or instability resulting from changes in political
leadership and environmental policies;
• geopolitical-social views toward fossil fuels and renewable energy and changes in investors’ expectations regarding
environmental, social and governance matters; and
• the worldwide military and political environment, including uncertainty or instability resulting from an escalation or
additional outbreak of armed hostilities, including the Russian military invasion of Ukraine, the ongoing conflict between
Israel and Hamas, tensions in the Middle East and between the U.S., Russia and China, or other crises in oil or natural
gas producing areas or geographic areas in which we operate, or acts of terrorism.
The industry has experienced significant declines in capital spending and cancelled or deferred drilling programs by many
operators from 2015 to 2021, coupled with declining oil prices to its lowest level in April 2020. Oil prices have increased since
the lows reached in 2020, however higher oil and gas prices may not necessarily translate into sustained increased activity, and
even during periods of high oil and gas prices, customers may cancel or curtail their drilling programs, or reduce their levels of
capital expenditures for exploration and production for a variety of reasons, including their lack of success in exploration efforts.
Although, historically, higher sustained commodity prices have generally resulted in increases in offshore drilling projects, short-
term or temporary increases in the price of oil and gas will not necessarily result in a sustained increase in offshore drilling
activity or a sustained increase in the market demand for our rigs as the timing of commitment to offshore activity in a cycle
depends on project deployment times, reserve replacement needs, availability of capital and alternative options for resource
development, among other things. Timing can also be affected by availability, access to, and cost of equipment to perform work.
Further, any increase or decrease in drilling activity by our customers may not be uniform across different geographic regions.
Locations where costs of drilling and production are relatively higher may be subject to greater reductions in activity or may
recover more slowly. Such variation between regions may lead to the relocation of drilling rigs, concentrating drilling rigs in
regions with relatively fewer reductions in activity leading to greater competition.
Advances in onshore exploration and development technologies, particularly with respect to onshore shale, could also result in our
customers allocating more of their capital expenditure budgets to onshore exploration and production activities and less to
offshore activities.
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Moreover, there has historically been a strong link between the development of the world economy and the demand for energy,
including oil and gas. An extended period of adverse conditions or developments in the outlook for the world economy could
reduce the overall demand for oil and gas and therefore demand for our services. Supply chain disruptions, inflation, rising
interest rates, concerns of a global economic recession and volatility in the financial markets, the war in Ukraine and related
sanctions, the ongoing conflict between Israel and Hamas and related hostilities in the Middle East, including the recent attacks to
marine vessels in the Red Sea by the Houthi movement, which controls parts of Yemen and other impacts have caused, or may
cause, significant adverse impacts on the global economy and we do not know when this trend will improve or how long an
improving trend will last.
These factors could impact our revenues and profits and as a result limit our future growth prospects as well as our liquidity and
ability to meet debt repayment obligations or to comply with covenants in loan agreements. Any significant decline in dayrates or
utilization of our rigs could have a material adverse effect on our business, financial condition, results of operations and cash
flow. In addition, these risks could increase instability in the financial and insurance markets and make it more difficult for us to
access capital and obtain insurance coverage that we consider adequate or are otherwise required by our contracts.
Global geopolitical tensions and instability, supply disruptions, inflation, and concerns of a global recession and volatility in
the financial markets may rise and create heightened volatility in the oil and natural gas prices that could result in adverse
effects on our business.
Global geopolitical tensions and instability, including from the Russian military invasion of Ukraine and the conflict between
Israel and Hamas and related hostilities in the Middle East, supply disruptions, inflation, concerns of a global recession and
volatility in financial markets, have, and may continue to, result in continued or even higher levels of volatility in the oil and gas
prices that could result in an adverse effect on our business, as we largely depend on the level of activity in the oil and gas
industry and such volatility, including market expectations of potential changes in these prices, may significantly affect the level
of drilling activity. The Russian invasion of Ukraine and the Israel-Hamas conflict and related hostilities in the Middle East,
coupled with existing supply disruptions, high interest rates, has and may continue to exacerbate, inflation and significant
volatility in commodity prices, credit and capital markets, as well as supply chain disruptions. The sanctions and other penalties
imposed on Russia by the U.S., E.U. and other countries including restricting imports of Russian oil, liquefied natural gas and
coal have caused supply disruptions in the oil and gas markets and could continue to cause significant volatility in oil prices, and
inflation and may trigger a recession in the U.S., Europe, China, among other areas. This could have a material adverse effect on
our business, financial condition, results of operations and cash flow along with our operating costs, making it difficult to execute
our planned capital expenditure program and meet our debt repayment obligations. The tensions arising from the invasion of
Ukraine and the conflict between Israel and Hamas, including related hostilities in the Middle East, could also increase other
political tensions and international trade and other relations, with a further effect on world oil and gas markets, the supply of jack-
up rigs worldwide, regional and worldwide levels of offshore exploration and development spending by oil and gas companies,
reduce our utilization, dayrates and our revenue. In addition, sanctions imposed as a result of the military actions and related
tensions could impose restrictions on our business and risk of non-compliance. In addition, any increase in the price of oil
resulting from this and other conflicts and related sanctions may not result in increased demand for drilling services or any
increase may not be sustained and may only contribute to the volatility in oil prices.
Global, international and national trends to renewable energy based infrastructure and power supply and generation may
cause long- term demand for our customers products and services to fall, and in turn affect the demand for our services.
Various global and transnational initiatives exist, and continue to be proposed by governments, non-governmental organizations
and power suppliers in particular, which exist to hasten the long-term transition from fossil fuels to low or zero carbon
alternatives, such as wind, water or hydrogen based power or fuel sources. We provide drilling services to customers who own
and produce fossil fuels, and therefore where low or zero-based carbon policies are implemented in territories in which we operate
or may be capable of operating in the future, there exists a risk that demand for our customers' services falls or fails to increase,
and in turn the demand for our rigs and services falls or fails to increase.
Current and future regulations or initiatives relating to low or zero carbon alternatives and renewable energy transition may also
result in increased compliance costs or additional operating restrictions on our business. Furthermore, such initiatives have
resulted in adverse publicity for the oil and gas industry, including for customers to whom we provide services, and could in turn
cause damage to our reputation.
Failure to effectively and timely respond to the impact of energy rebalancing could adversely affect us.
Our long-term success depends on our ability to effectively respond to the impact of energy rebalancing, which could require
adapting our fleet and business to potentially changing government requirements, customer preferences and customer base, as
well as engaging with existing and potential customers and suppliers to develop or implement solutions designed to reduce or to
decarbonize oil and gas operations or to advance renewable and other alternative energy sources. If the energy rebalancing
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landscape changes faster than anticipated or in a manner that we do not anticipate, demand for our services could be adversely
affected. Furthermore, if we fail to, or are perceived not to, effectively implement an energy rebalancing strategy, or if investors
or financial institutions shift funding away from companies in fossil fuel-related industries, our access to capital or the market for
our securities could be negatively impacted.
Down-cycles in the offshore drilling industry and other factors may affect the market value of our jack-up rigs and the
newbuild rigs we have agreed to purchase.
Trends in the price of oil impact the spending for the services of jack-up rigs. Continued volatility in oil prices or further oil price
down-cycles, may negatively impact customer demand. Adverse developments in the offshore drilling industry including negative
movements in the price of oil, can cause the fair market value of our existing and newbuild jack-up rigs to decline. In addition, the
fair market value of the jack-up rigs that we currently own, have agreed to acquire, or may acquire in the future, may decrease
depending on a number of factors, including:
• the general economic and market conditions affecting the offshore contract drilling industry, including competition from
other offshore contract drilling companies;
• developments in the global economy including oil prices and demand in the shallow-water offshore drilling industry, as
well as any resurgence of COVID-19 or other pandemics on the foregoing impact our ability to operate rigs;
• the types, sizes and ages of our jack-up rigs;
• the supply and demand for our jack-up rigs;
• the costs of newbuild jack-up rigs;
• prevailing drilling services contract dayrates;
• government or other regulations; and
• technological advances.
If jack-up rig values fall significantly, we may have to record an impairment in our financial statements, which could affect our
results of operations. Additionally, if we sell one or more of our jack-up rigs at a time when drilling rig prices have fallen, we may
incur a loss on disposal and a reduction in earnings.
Our operations involve risks due to their international nature.
We operate in various regions throughout the world. As a result of our international operations, we may be exposed to political
and other uncertainties, including risks of:
• terrorist acts;
• armed hostilities, war and civil disturbances;
• acts of piracy, which have historically affected marine assets;
• significant governmental influence over many aspects of local economies;
• the seizure, nationalization or expropriation of property or equipment;
• uncertainty of outcome in court proceedings in any jurisdiction where we may be subject to claims;
• the repudiation, nullification, modification or renegotiation of contracts;
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• limitations on insurance coverage, such as war risk coverage, in certain areas;
• political unrest;
• the occurrence or threat of epidemic or pandemic diseases or any governmental or industry response to such occurrence
or threat, which could impact demand and our ability to conduct operations;
• monetary policy and foreign currency fluctuations and devaluations;
• an inability to repatriate income or capital;
• complications associated with repairing and replacing equipment in remote locations;
• import-export quotas, wage and price controls, and the imposition of trade barriers;
• imposition of, or changes in, local content laws and their enforcement, particularly in West Africa and South East Asia,
where the legislatures are active in developing new legislation;
• sanctions or trade embargoes;
• compliance with various jurisdictional regulatory or financial requirements;
• compliance with and changes to tax laws and interpretations;
• other forms of government regulation and economic conditions that are beyond our control; and
• government corruption.
In addition, international drilling operations are subject to various laws and regulations of the countries in which they operate,
including laws and regulating relating to repatriation of foreign earnings, taxation of offshore earnings and the earnings of
expatriate personnel and use and compensation of local employees and suppliers by foreign contractors.
It is difficult to predict whether, and if so, when the risks referred to above may come to fruition and the impact thereof. Future
governmental regulations or government enforcement could adversely affect the international drilling industry. Failure to comply
with, or adapt to, applicable laws, regulations, actions of governments or other disturbances as they occur may subject us to
criminal sanctions, civil remedies or other increases in costs, including fines, the denial of export privileges, injunctions and
seizures of assets. In addition, applicable laws and regulations and government actions may result in an inability to repatriate
income, capital or foreign earnings or to otherwise remove a jack-up rig from the country in which it operates.
We have from time to time been subject to limitations on repatriation of cash derived from earnings in certain of the countries in
which we operate. Such limitations may result in a material adverse effect on our business, financial condition, results of
operations and cash flow and our ability to service our indebtedness, including the Notes.
RISK FACTORS RELATED TO OUR BUSINESS
We may not be able to renew contracts which expire and our customers may seek to cancel or renegotiate their contracts,
particularly in response to unfavorable industry conditions.
Many jack-up drilling contracts are short-term, and oil and natural gas companies tend to reduce activity levels quickly in
response to declining oil and natural gas prices. Our jack-up drilling contracts, including our bareboat contracts with equity
method investments in Mexico, typically range from two months to five years. During periods of volatility in oil prices, our
customers may be unwilling to commit to long-term contracts.
In addition, in difficult market conditions, some of our customers may seek to terminate their agreements with us or to renegotiate
our contracts using various techniques, including threatening breaches of contract, relying on force majeure clauses, and applying
commercial pressure. Some of our customers have the right to terminate their drilling contracts without cause in return for
payment of an early termination fee or compensation to us for costs incurred up to termination. The general principle under our
arrangements with customers typically is that any such early termination payment, where applicable, should compensate us for
lost revenues less operating expenses for the remaining contract period. This typically results in approximately 50% to 100% of
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the outstanding backlog days becoming due upon early termination; however, in some cases, any such payments may not fully
compensate us for the loss of the drilling contract. Under certain circumstances our contracts may permit customers to terminate
contracts early without any termination payment either for convenience or as a result of non-performance, periods of downtime or
impaired performance caused by equipment or operational issues (typically after a specified remedial period), or sustained periods
of downtime due to force majeure events beyond our control. In addition, state-owned oil company customers may have special
termination rights by law. Our customers themselves may have contracts from their customers terminated in reliance on similar
contractual provisions, putting pressure on our customers to terminate or renegotiate their agreements with us.
We are subject to the risk of our (i) customers choosing not to renew short-term contracts or drill option wells, (ii) customers
repudiating contracts or seeking to terminate contracts on grounds including extended force majeure circumstances or on the basis
of assertions of non-compliance by us of our contractual obligations, (iii) customers seeking to renegotiate their contracts to
reduce the agreed dayrates and (iv) cancellation of drilling contracts for convenience (with or without early termination
payments). The Company has experienced such terminations or renegotiations in the past, and in the event of termination of a
contract it is possible that any such early termination payments will not compensate the Company of the loss of the anticipated
revenue from the relevant terminated drilling contract. For instance, in spring 2020, the Company received early terminations,
suspensions and cancellation of contracts for six rigs. Loss of contracts may have a material adverse effect on our business,
financial condition, results of operations and cash flow.
We may be unable to obtain favorable contracts for our jack-up rigs.
If we are unable to secure contracts for our jack-up rigs, as contracts expire, or for the two newbuild rigs, we may idle or stack
these rigs, which means such rigs will not produce revenues but will continue to require cash expenditures for crews, fuel,
insurance, berthing and associated items. We have two newbuild rigs that we have agreed to buy, with a contractual delivery date
of July 2025 and a best efforts expedited delivery date of August 2024 (for "Vale") and September 2025 with a best efforts
expedited delivery date of November 2024 (for "Var"). There is no assurance that we will secure drilling contracts for the
newbuild rigs we have agreed to purchase or our other rigs as contracts expire, and the drilling contracts that we do secure may be
at unattractive dayrates. We may also seek to delay delivery of our newbuild jack-up rigs, which could adversely affect our
revenues and profitability. We have no right to delay delivery of the newbuild rigs we have agreed to purchase on grounds that we
are unable to secure contracts. If we request a delay to the contractual delivery dates, we are dependent upon the outcome of any
negotiations with the shipyard, which may not result in any delay or may lead to an increase in cost to compensate the shipyard.
If new contracts are entered into at dayrates substantially below the existing dayrates or on terms otherwise less favorable
compared to existing contract terms among our then-active fleet, our business could be adversely affected. We may also be
required to accept more risk in areas other than price to secure a contract and we may be unable to push this risk down to other
contractors or be unable or unwilling at competitive prices to insure against this risk, which will mean the risk will have to be
managed by applying other controls. Accepting such increased risk could lead to significant losses or us being unable to meet our
liabilities in the event of a catastrophic event affecting any rig contracted on this basis.
Our Total Contract Backlog may not be realized.
The Total Contract Backlog presented in this annual report is only an estimate. Some of our contracts are short-term. As of
December 31, 2023, our Total Contract Backlog, excluding backlog from joint venture operations on a 100% basis and
mobilization and demobilization revenues, was approximately $1,206.5 million and relates to 26 contracts, letters of intent and
letters of award with firm terms expiring between 2024 and 2028. Actual expiry dates could be earlier or later.
The actual amount of revenues earned and the actual periods during which revenues are earned will be different from our Total
Contract Backlog projections due to various factors, including shipyard and maintenance projects, downtime and other events
within or beyond our control. We do not adjust our Total Contract Backlog for expected or unexpected downtime. In addition,
some of our customers have the right to terminate their drilling contracts without cause upon the payment of an early termination
fee or compensation for costs incurred up to termination. Under certain circumstances our contracts may permit customers to
terminate contracts early without any termination payment either for convenience or as a result of non-performance, periods of
downtime or impaired performance caused by equipment or operational issues (typically after a specified remedial period), or
sustained periods of downtime due to force majeure events beyond our control. In addition, state-owned oil company customers
may have special termination rights by law. If we or our customers are unable to perform under our or their contractual
obligations or if customers exercise termination rights, this could lead to results that vary significantly from those contemplated
by our Total Contract Backlog.
We may be obligated to fund cash calls from our Joint Ventures in Mexico in order to fund working capital, capital
expenditure outlays or any shortfalls, due to delays in invoices being approved and paid by customers.
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Effective October 20, 2022, we provide five jack-up rigs on bareboat charters to our joint venture in Mexico, Perfomex, which is
owned 51% by us, and which provides the jack-up rigs under traditional dayrate drilling and technical service agreements to
OPEX Perforadora S.A. de C.V. ("Opex") and Perforadora Profesional AKAL I, S.A. de C.V. (“Akal”). As a 51% shareholder in
each of the Joint Ventures, we are obligated to fund any capital shortfall where the boards of Perfomex or Perfomex II make a
cash call to the shareholders under the provisions of certain shareholder agreements. If the Joint Ventures do not have sufficient
working capital to operate the rigs, due to delays in invoice approval and payments from customers or other reasons, we may have
to fund working capital or capital expenditure outlays for the operation of our five jack-up rigs. In particular, Opex and Akal,
which were previously 49% owned by us, have experienced delays in invoices being approved and paid by PEMEX, the ultimate
customer, which delays had a significant impact on our liquidity at various times in 2020. The situation improved in 2021 through
2023 with more regular payments, however if Opex or Akal are nonetheless unable to receive payment from PEMEX in a timely
fashion going forward, we may be required to fund working capital or capital expenditure outlays to our Joint Ventures as
shareholders, or we may not be paid related party revenues, dividends or any other distributions in a timely manner or at all. This
could have a significant adverse effect on our operations and liquidity.
We have experienced net losses for most years since inception.
We are continuing to establish and strengthen our history as an operator of jack-up rigs and as a result, the revenue and income
potential of our business is still developing. We have experienced net losses in each of our fiscal years since inception other than
in the fiscal year ending December 31, 2023, and we cannot rule out the possibility of experiencing further losses in the future.
We may not be able to generate significant additional revenues in the future. We will be subject to the risks, uncertainties and
difficulties frequently encountered by early-stage companies in evolving markets. We may not be able to successfully address any
or all of these risks and uncertainties. Failure to adequately do so may have a material adverse effect on our business, financial
condition, results of operations and cash flow.
We rely on a limited number of customers.
We have a limited number of customers and potential customers for our services. Mergers among oil and gas exploration and
production companies have further reduced the number of available customers, which may increase the ability of potential
customers to achieve pricing terms favorable to them as the jack-up drilling market recovers. Our five largest customers by
revenue, Perfomex, Saudi Arabian Oil Company, ENI Congo S.A., Brunei Shell Petroleum Company Sendiran Berhad and BW
Energy Gabon S.A. comprised 56% of our revenue, including related party revenue, for the year ended December 31, 2023. As a
result, a loss of one or more customers could have a significant adverse effect on our business.
We are exposed to the risk of default or material non-performance by customers.
We are subject to the risk of late payment, non-payment or non-performance by our customers. Certain of our customers may be
highly leveraged and subject to their own operating and regulatory risks and liquidity risk, and such risks could lead them to seek
to cancel, repudiate or seek to renegotiate our drilling contracts or fail to fulfill their commitments to us under those contracts.
These risks are heightened in periods of depressed market conditions. If we experience payment delays or non-payments, we may
be unable to make scheduled payments under our debt instruments.
Our drilling contracts provide for varying levels of indemnification and allocation of liabilities between our customers and us,
including with respect to (i) well-control, reservoir liability and pollution, (ii) loss or damage to property, (iii) injury and death to
persons arising from the drilling operations we perform and (iv) each respective parties’ consequential losses, if any.
Apportionment of these liabilities is generally dictated by standard industry practice and the particular requirements of a
customer. Under our drilling contracts, liability with respect to personnel and property customarily is generally allocated so that
we and our customers each assume liability for our respective personnel and property, or a “knock-for-knock” basis but that may
not always be the case.
Customers have historically assumed most of the responsibility for, and agreed to indemnify contractors from, any loss, damage
or other liability resulting from pollution or contamination, including clean-up and removal and third-party damages arising from
operations under the contract when the source of the pollution originates from the well or reservoir; damages resulting from blow-
outs or cratering of the well; and regaining control of, or re-drilling, the well and any associated pollution. However, there can be
no assurance that these customers will be willing, or financially able, to indemnify us against all these risks. Customers may seek
to cap or otherwise limit indemnities or narrow the scope of their coverage, reducing our level of contractual protection. Under the
laws of certain jurisdictions, such indemnities may not be enforceable in all circumstances, for example if the cause of the damage
was our gross negligence or willful misconduct. If that were the case, we may incur liabilities in excess of those agreed in our
contracts. Although we maintain certain insurance policies, the policy may not respond or insurance proceeds, if paid, may not
fully compensate us in the event any key customers or potential customers default on their indemnity obligations to us. Our
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insurance policies do not cover damages arising from the willful misconduct or gross negligence of our personnel (which may
include our subcontractors in some cases). In the event of a default or other material non-payment or non-performance by any
customers, our business, financial condition, results of operations and cash flow could be adversely affected.
In addition, customers tend to request that we assume a limited amount of liability for pollution damage when such damage
originates from our jack-up rigs and/or equipment above the surface of the water or is caused by our negligence, which liability
generally has caps for ordinary negligence, with much higher caps or unlimited liability where the damage is caused by our gross
negligence or willful misconduct, respectively. We may also be exposed to a risk of liability for reservoir or formation damage or
loss of hydrocarbons when we provide, directly or indirectly (for example through our participation in joint ventures where there
are parent company guarantees granted to the ultimate customer), integrated well services.
We are reliant on positive cash flow generation from our Joint Ventures, and we may not receive funds in a timely manner.
Our Mexican Joint Venture businesses operate five of our rigs, which we provide to them on bareboat lease contracts. These rigs
are bundled with other services from other providers by the two customers of our Joint Venture businesses (Opex and Akal) and
the customers in turn provide integrated drilling services to PEMEX, who is their sole ultimate customer. Within our operating
and liquidity assumptions for 2024 and future years, we have made certain assumptions around the profitability, timing and
amounts of receipts of cash from the Joint Venture businesses, whether by repayment of loans, payment of the bareboat or
proposed distributions to shareholders, if declared. In addition, we had outstanding receivables due from the Joint Venture
businesses on our balance sheet of $95.0 million as of December 31, 2023, collection of which is dependent on the customers of
our Joint Venture businesses collecting amounts due to them from PEMEX.
The timing of payments made by PEMEX to suppliers, including the two customers of our Joint Venture businesses, has
historically often been later than contractual terms and this has impacted our liquidity and continues to do so. Should PEMEX
continue to not pay our Joint Venture businesses’ customers in a timely manner, the Joint Venture businesses in turn will continue
to not be able to settle receivable balances with us in a timely manner which would continue to adversely affect our working
capital, and may necessitate seeking additional funding and there is no assurance that we will be able to obtain such funding on
reasonable terms or at all.
Our drilling contracts contain fixed terms and dayrates, and consequently we may not fully recoup our costs in the event of a
rise in expenses, including operating and maintenance costs.
Our operating costs are generally related to the number of rigs in operation and the cost level in each country or region where the
rigs are located, which may increase depending on the circumstances. In contrast, the majority of our contracts have dayrates that
are fixed over the contract term. These provisions allow us to adjust the dayrates based on stipulated cost increases, including
wages, insurance and maintenance costs. However, actual cost increases may result from events or conditions that do not cause
correlative changes to the applicable indices. The adjustments are typically performed on a semi-annual or annual basis. For these
reasons, the timing and amount awarded as a result of such adjustments may differ from our actual cost increases, which could
result in us being unable to recoup incurred costs.
Some long-term drilling contracts may contain rate adjustment provisions based on market dayrate fluctuations rather than cost
increases. In such contracts, the dayrate could be adjusted lower during a period when costs of operation rise, which could
adversely affect our financial performance. Shorter-term contracts normally do not contain escalation provisions. In addition,
although our contracts typically contain provisions for either fixed or dayrate compensation during mobilization, these rates may
not fully cover our costs of mobilization, and mobilization may be delayed for reasons beyond our control, increasing our costs,
without additional compensation from the customer.
We incur expenses, such as preparation costs, relocation costs, operating costs and maintenance costs, which we may not fully
recoup from our customers, including where our jack-up rigs incur idle time between assignments.
Our operating expenses and maintenance costs depend on a variety of factors, including crew costs, provisions, equipment,
insurance, maintenance and repairs, and shipyard costs, many of which are beyond our control. Operating and maintenance costs
will not necessarily fluctuate in proportion to changes in operating revenues and are affected by many factors, including inflation.
In connection with new contracts or contract extensions, we incur expenses relating to preparation for operations, particularly
when a jack-up rig moves to a new geographic location. These expenses may be significant. Expenses may vary based on the
scope and length of such required preparations and the duration of the contractual period over which such expenditures are
amortized. In addition, equipment maintenance costs fluctuate depending upon the type of activity that the jack-up rig is
performing and the age and condition of the equipment. In situations where our jack-up rigs incur idle time between assignments,
the opportunity to reduce the size of our crews on those jack-up rigs is limited, as the crews will be engaged in preparing the rig
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for its next contract, which could affect our ability to make reductions in crew costs, provisions, equipment, insurance,
maintenance and repairs or shipyard costs.
When a jack-up rig faces longer idle periods, reductions in costs may not be immediate as some of the crew may be required to
prepare the jack-up rig for stacking and maintenance in the stacking period. When idled or stacked, jack-up rigs do not earn
revenues, but continue to require cash expenditures for crews, fuel, insurance, berthing and associated items. These expenses may
be significant. Should units be idle for a longer period, we may be unable to reduce these expenses. This could have a material
adverse effect on our business, financial condition, results of operations and cash flow.
We incur activation and reactivation costs, which we may not fully recoup from our customers.
We have incurred, and may further incur, significant costs activating, reactivating and mobilizing our fleet as contracts have been
secured. We have an agreement with Seatrium to acquire two newbuild jack-up rigs with contractual delivery in 2025 and a best
efforts expedited delivery date in 2024. In connection with contract commencement of any of these newbuild jack-up rigs, we will
incur costs relating to the activation of such newbuild rigs. These costs are significant and historically have been in the range of
$11 million to $20 million per newbuild jack-up rig activated and may be higher dependent upon the circumstances of the rig
activation. Costs vary based on the scope and length of such required preparations and fluctuate depending upon the type of
activity that the rig is intended to perform. Further, additional costs related to mobilization and demobilization will be incurred
when rigs move between contracts. The Company historically has not been able to recoup all these costs and may not be able to
do so in the future. Extensive capital expenditure related to the commencement of contracts has, and could continue to have, an
effect on our cash flow.
In addition, construction of our newbuild jack-up rigs and maintenance of our active fleet are subject to risks of delay or cost
overruns, including inherent cost in any large construction project from numerous factors, including shortages of equipment,
materials or skilled labor, unscheduled delays in the delivery of ordered materials and equipment or shipyard construction, the
failure of equipment to meet quality and/or performance standards, financial or operating difficulties experienced by equipment
vendors or the shipyard, unanticipated actual or purported change orders, the inability to obtain required permits or approvals,
unanticipated cost increases between order and delivery, design or engineering changes, and work stoppages and other labor
disputes. Risks include adverse weather conditions or any other events such as yard closures due to epidemics or pandemics,
terrorist acts, war, piracy or civil unrest (which may or may not qualify as force majeure events in the relevant contract).
Significant cost overruns or delays could have a material adverse effect on our business, financial condition, results of operations
and cash flow. Additionally, failure to deliver a newbuild rig or to reactivate a rig on time may result in the delay of revenue from
that rig. Newbuild jack-up rigs and recently reactivated rigs may also experience difficulties following delivery or reactivation or
other unexpected operational problems that could result in uncompensated downtime or the cancellation or termination of drilling
contracts, which could have a material adverse effect on our business, financial condition, results of operations and cash flow.
Inflation may adversely affect our operating results.
Inflationary factors such as increases in the labor costs, material costs and overhead costs may adversely affect our operating
results. Inflation has increased significantly across the globe in 2022 and 2023 and the high levels of inflation continue, which
impact our costs, as well as the global economy which can therefore impact oil prices and therefore demand for our services.
Although we do not believe that inflation has had a material impact on our results of operations to date, a continued high rate of
inflation may have an adverse effect on our ability to maintain current levels of gross margin and general and administrative
expenses as a percentage of total revenue, if our dayrates do not increase with these increased costs and can impact overall
demand for drilling services.
The limited availability of qualified personnel in the locations in which we operate may result in higher operating costs as the
offshore drilling industry demands increase.
Competition for labor, both skilled and other, required for our drilling operations will continue to increase as the number of rigs
that are activated or added to worldwide fleets continues to grow. In some regions, the limited availability of qualified personnel
in combination with local regulations focusing on crew composition are expected to further impact the supply of qualified
offshore drilling crews.
Personnel salaries across the jack-up drilling market are affected by the cyclical nature of the offshore drilling industry,
particularly during industry up-cycles. As the jack-up drilling market grows, the tightness of labor supply within the industry
creates upward pressure on wages and makes it more difficult or costly for us to staff and service our rigs. Inflation levels can
exacerbate the impact on wages. As a result of any increased competition for qualified personnel, we may experience a reduction
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in the experience level of our personnel, which could lead to higher downtime and more operating incidents. Such developments
could have a material adverse effect on our business, financial condition, results of operations and cash flow.
Offshore drilling personnel (both employees and contractors) in certain regions, including those personnel who are employed on
rigs operating for example in West Africa, Middle East, Mexico and Europe, are represented by collective bargaining agreements.
Pursuant to these agreements, we are required to contribute certain amounts to retirement funds and pension plans and are
restricted in our ability to terminate employment. In addition, individuals covered by these collective bargaining agreements may
be working under agreements that are subject to salary negotiation. These negotiations could result in higher personnel or other
increased costs or increased operating restrictions.
If we are unable to attract and retain highly skilled personnel who are qualified and able to work in the locations in which we
operate it could adversely affect our operations.
We require highly skilled personnel in the right locations to operate and provide technical services and support for our business
globally. At a minimum, all offshore personnel are required to complete Basic Offshore Safety Induction and Emergency Training
(“BOSIET”) or a similar offshore survival and training course. We may also require additional training certifications prior to
employment with us, depending on the position of each personnel, location of the drilling and related technical requirements. In
addition to direct costs associated with BOSIET, other training courses and required training materials, there may be indirect costs
to personnel (such as travel costs and opportunity costs) which have the effect of limiting the flow of new qualified personnel into
the offshore drilling industry.
In addition to the technical certification requirements, our ability to operate worldwide depends on our ability to obtain the
necessary visas and work permits for such personnel to travel in and out of, and to work in, the jurisdictions in which we operate.
Governmental actions in some of the jurisdictions in which we operate may make it difficult for us to move our personnel in and
out of these jurisdictions by delaying or withholding the approval of these permits. This includes local content laws which restrict
or otherwise effect our crew composition. If we are not able to obtain visas and work permits for the employees we need for
operating our rigs on a timely basis, or for third-party technicians needed for maintenance or repairs, we might not be able to
perform our obligations under our drilling contracts, which could allow our customers to cancel the contracts. These factors could
increase competition for highly-skilled personnel throughout the offshore drilling industry, which may indirectly affect our
business, financial condition, results of operations and cash flow. Furthermore, the unexpected loss of members of management,
qualified personnel or a significant number of employees due to disease, disability or death, could have a material adverse effect
on us.
We have established, and may from time to time be a party to certain joint venture or other contractual arrangements with
partners that introduce additional risks to our business.
We have established, and may again in the future establish, relationships with partners, whether through the formation of joint
ventures with local participation or through other contractual arrangements. For example, in Mexico, our operations have been
structured through the Joint Venture structures with our local partner Proyectos Globales de Energia y Servicios CME, S.A. DE
C.V. (“CME”) to provide operations and maintenance services of the rigs to OPEX with integrated well services to PEMEX,
pursuant to integrated well services contracts (“PEMEX Contracts”). We commenced operations under the first PEMEX Contract
in August 2019 and under the second contract in March 2020.
We believe that opportunities involving partners may arise from time to time and we may enter into such arrangements. We may
not realize the expected benefits of any such arrangements and such arrangements may introduce additional risks to our business.
In order to establish or preserve our relationship with our partners, we may agree to bear risks and make contributions of
resources that are proportionately greater than the returns we could receive, which could reduce our income and return on our
investment in such arrangements and increase our risks and costs. In certain joint ventures or other contractual relationships with
our partners, we may transfer certain ownership stakes in one or more of our rig-owning subsidiaries and/or accept having less
control over decisions made in the ordinary course of business. In certain arrangements with our local partners we may guarantee
the performance of their obligations under the relevant contract and we may not be able to enforce any contractual
indemnifications we obtain from such parties. Any reduction in our ownership of our rig-owning subsidiaries and/or control over
decisions made in the ordinary course of business could significantly reduce our income and return on our investment in such
arrangements.
Our operations involving partners are subject to risks, including (i) disagreement with our partner as to how to manage the drilling
operations being conducted; (ii) the inability of our partner to meet their obligations to us, the joint venture or our customer, as
applicable; (iii) litigation between our partner and us regarding joint-operational matters and (iv) failure of a partner to comply
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with applicable laws, including sanctions and anti-money laundering laws and regulations, and indemnity obligations. The
occurrence of any of the foregoing events may have a material adverse effect on our business, financial condition, results of
operations and cash flow.
In addition, we rely on the internal controls and financial reporting controls of our subsidiaries and if any of our subsidiaries,
including joint ventures which are subsidiaries, fail to maintain effective controls or to comply with applicable standards, this
could make it difficult to comply with applicable reporting and audit standards. For example, the preparation of our consolidated
financial statements requires the prompt receipt of financial statements from each of our subsidiaries and associated companies,
some of whom rely on the prompt receipt of financial statements from each of their subsidiaries and associated companies.
Additionally, in certain circumstances, we may be required to file with our annual report on Form 20-F, or a registration statement
filed with the SEC, financial information of associated companies which has been audited in conformity with SEC rules and
regulations and applicable audit standards. If we are unable for any reason to procure such financial statements or audited
financial statements, as applicable, from our subsidiaries and associated companies, we may be unable to comply with applicable
SEC reporting standards.
We are exposed to the risk of default or material non-performance by subcontractors.
In order to provide drilling services to our customers, we rely on subcontractors to perform certain services. We may be liable to
our customers in the event of non-performance by any such subcontractor. Our back-to-back arrangements with our
subcontractors, contractual indemnities or insurance arrangements may not provide adequate protection for the risks we face. To
the extent that there is any back-to-back arrangement, contractual indemnity and/or receipt of evidence of insurance from a
subcontractor, there can be no assurance that our subcontractors will be in a financial position to honor such arrangements in the
event a claim is made against us by a customer and we seek to pass on the related damages to the subcontractor. In addition, under
the laws of certain jurisdictions, there may be circumstances in which such indemnities are not enforceable. The foregoing could
result in us having to assume liabilities in excess of those agreed in our contracts, which may have a material adverse effect on our
business, financial condition, results of operations and cash flow.
The impact and effects of public health crises, pandemics and epidemics, such as the COVID-19 pandemic, could have a
material adverse effect on our business, financial condition, results of operations and cash flow.
Public health crises, pandemics and epidemics, such as the COVID-19 pandemic, and fear of an outbreak or resurgence of such
events have adversely impacted and may in the future adversely impact our operations, the operations of our customers and the
global economy, including the worldwide demand for oil and natural gas and the level of demand for our services. Other effects of
such public health crises, pandemics and epidemics, including the COVID-19 pandemic, have included and, in the event of an
outbreak or resurgence, may in the future include significant volatility and disruption of the global financial markets, continued
volatility of crude oil prices and related uncertainties around OPEC+ production, disruption of our operations, including
suspension of drilling activities, impact to costs, loss of workers, labor shortages, supply chain disruptions or equipment
shortages, logistics constraints, customer demand for our services and industry demand generally, capital spending by oil and
natural gas companies, our liquidity, the price of our securities and trading markets with respect thereto, our ability to access
capital markets, asset impairments and other accounting changes, certain of our customers experiencing bankruptcy or otherwise
becoming unable to pay vendors, including us, and employee impacts from illness, travel restrictions, including border closures
and other community response measures. Such public health crises, pandemics and epidemics are continuously evolving and the
extent to which our business operations and financial results have been affected and may continue to be affected depends on
various factors beyond our control, such as the duration, severity and sustained geographic resurgence or emergence of new
variants of the COVID-19 pandemic and the impact and effectiveness of governmental actions to contain and treat such outbreaks.
We rely on a limited number of suppliers and may be unable to obtain needed supplies on a timely basis or at all.
We rely on certain third parties to provide supplies and services necessary for our offshore drilling operations, including drilling
equipment suppliers, catering and machinery suppliers. There is a limited number of available suppliers throughout the offshore
drilling industry and past consolidation among suppliers, combined with a high volume of drilling rigs under construction, may
result in a shortage of supplies and services, thereby increasing the cost of supplies and/or potentially inhibiting the ability of
suppliers to deliver on time.
With respect to certain items, such as blow-out preventers and drilling packages, we are dependent on the original equipment
manufacturer for repair and replacement of the item or its spare parts. We maintain limited inventory of certain items, such as
spare parts, and sourcing such items may involve long-lead times (six months or longer). Standardization across our fleet assists
with our inventory management, however the inability to obtain certain items may be exacerbated if such items are required on
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multiple jack-up rigs simultaneously. Furthermore, our suppliers may experience disruptions and delays in light of the current
global geopolitical tensions and instabilities, which could result in delays in receipt of supplies and services and/or force majeure
notices.
If we are unable to source certain items from the original equipment manufacturer for any reason, including as a result of
disruptions experienced by our suppliers, or if our inventory is rendered unusable by the original equipment manufacturer due to
safety concerns, resulting delays could have a material adverse effect on our results of operations and result in rig downtime and
delays in the repair and maintenance of our jack-up rigs. In addition, we may be unable to activate our jack-up rigs in response to
market opportunities.
We may be unable to obtain, maintain and/or renew the permits necessary for our operations or experience delays in obtaining
such permits, including the class certifications of rigs.
The operation of our jack-up rigs requires certain governmental approvals, the number and prerequisites of which vary, depending
on the jurisdictions in which we operate our jack-up rigs. Depending on the jurisdiction, these governmental approvals may
involve public hearings and costly undertakings on our part. We may not be able to obtain such approvals or such approvals may
not be obtained in a timely manner. If we fail to secure the necessary approvals or permits in a timely manner, our customers may
have the right to terminate or seek to renegotiate their drilling contracts to our detriment.
Offshore drilling rigs, although not self-propelled units, are nevertheless registered in international shipping or maritime registers
and are subject to the rules of a classification society, which allows such rigs to be registered in an international shipping or
maritime register. The classification society certifies that a drilling rig is “in-class,” signifying that such drilling rig has been built
and maintained in accordance with the rules of the relevant classification society and complies with applicable rules and
regulations of the drilling rig’s country of registry, or flag state, and the international conventions to which that country is a party.
In addition, where surveys are required by international conventions and corresponding laws and ordinances of a flag state, the
classification society will undertake them on application or by official order, acting on behalf of the authorities concerned.
Our jack-up rigs are built and maintained in accordance with the rules of a classification society, currently being American
Bureau of Shipping. The class status varies depending on a jack-up rig’s status (stacked or in operation). Operational rigs are
certified by the relevant classification society as being in compliance with the mandatory requirements of the relevant national
authorities in the countries in which our jack-up rigs are flagged and other applicable international rules and regulations. If any
jack-up rig does not maintain the appropriate class certificates for its present status, fails any periodic survey or special survey
and/or fails to comply with mandatory requirements of the relevant national authorities of its flag state, the jack-up rig may be
unable to carry on operations and, depending on its status, may not be insured or insurable. Any such inability to carry on
operations or be employed could have a material adverse effect on our business, financial condition, results of operations and cash
flow.
We are a holding company and are dependent upon cash flow from subsidiaries and equity method investments to meet our
obligations. If our operating subsidiaries or equity method investments experience sufficiently adverse changes in their
financial condition or results of operations, or we otherwise become unable to arrange further financing to satisfy our debt or
other obligations as they become due, we may become subject to insolvency proceedings.
We are a holding company with no independent business operations and no significant assets and our only material assets are our
interests in our subsidiaries. We conduct our operations through, and all of our assets are owned by, our subsidiaries and our
operating revenues and cash flow are generated by our subsidiaries. As a result, cash we obtain from our subsidiaries is the
principal source of liquidity that we use to meet our obligations and we are dependent upon cash flow from our subsidiaries in the
form of intercompany loans, dividends or other distributions or payments to meet our obligations. Given our international
operations, we have a large number of subsidiaries and business participations, which individually contribute to our results. The
amounts of dividends and distributions or loans and contributions available to us will depend on the profitability and cash flow of
the operating subsidiaries and the ability of each of those operating subsidiaries to declare dividends. Contractual provisions and/
or local laws, as well as our subsidiaries’ financial condition, operating requirements and debt requirements, may limit our ability
to obtain cash from subsidiaries that we require to pay our expenses or otherwise meet our obligations when due. Various
agreements governing our debt restrict and, in some cases may actually prohibit, our ability to move cash within the group.
Applicable tax laws may also subject such payments to us by subsidiaries to further taxation. Applicable law as well as profit and
loss transfer agreements between subsidiaries may also limit the amounts that some of our subsidiaries will be permitted to pay as
dividends or distributions on their equity interests, or even prevent such payments. In particular, the ability of our holding
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companies’ subsidiaries to pay dividends to the relevant holding company will generally be limited to the amount of distributable
reserves available to each of them and the ability to pay their respective debt when due.
If we are unable to transfer cash from our subsidiaries, then even if we have sufficient resources on a consolidated basis to meet
our obligations when due, we may not be permitted to make the necessary transfers from our subsidiaries to meet our debt and
other obligations when due. The terms of certain of our existing bonds and loans, which are described under “Item 5. Operating
and Financial Review and Prospects—Our Existing Indebtedness,” limit our ability to incur additional debt, including new
secured financing. In addition, certain of our loans require us to maintain a minimum liquidity ratio on particular test dates and
during particular periods which could inhibit our ability to meet our debt and other obligations when due.
Our business and operations involve numerous operating hazards.
Our operations are subject to hazards inherent in the drilling industry, such as blowouts, reservoir damage, loss of production, loss
of well control, lost or stuck drill strings, equipment defects, punch-throughs, craterings, fires, explosions and pollution. Contract
drilling and well servicing require the use of heavy equipment and exposure to hazardous conditions, which may subject us to
liability claims by employees, customers, subcontractors and third parties. These hazards can cause personal injury or loss of life,
severe damage to or destruction of property and equipment, pollution or environmental damage, claims by jack-up rig personnel,
third parties or customers and suspension of operations. Our fleet is also subject to hazards inherent in marine operations, either
while on-site or during mobilization, such as capsizing, sinking, grounding, collision, damage from or due to severe weather,
including hurricanes, and marine life infestations. Operations may also be suspended because of machinery breakdowns,
abnormal drilling conditions, failure of subcontractors to perform or supply goods or services or personnel shortages. We
customarily provide contractual indemnities to our customers and subcontractors for claims that could be asserted by us relating to
damage to or loss of our equipment, including rigs, and claims that could be asserted by us or our employees relating to personal
injury or loss of life.
Damage to the environment could also result from our operations, particularly through spillage of fuel, lubricants or other
chemicals and substances used in drilling operations, or extensive uncontrolled fires. We may also be subject to fines and
penalties and to property, environmental, natural resource and other damage claims, and we may not be able to limit our exposure
through contractual indemnities, insurance or otherwise.
Consistent with standard industry practice, customers have historically assumed, and indemnified contractors against, any loss,
damage or other liability resulting from pollution or contamination when the source of the pollution originates from the well or
reservoir, including damages resulting from blow-outs or cratering of the well, regaining control of, or re-drilling, the well and
any associated pollution. However, there can be no assurances that these customers will be willing or financially able to
indemnify us against all these risks. Customers may seek to cap indemnities or narrow the scope of their coverage, reducing a
contractor’s level of contractual protection. In addition, customers tend to request that contractors assume (i) limited liability for
pollution damage above the water when such damage has been caused by the contractor’s jack-up rigs and/or equipment and (ii)
liability for pollution damage when pollution has been caused by the negligence or willful misconduct of the contractor or its
personnel. Consistent with standard industry practice, we may therefore assume a limited amount of liability for pollution damage
when such damage originates from our jack-up rigs and/or equipment above the surface of the water or is caused by our
negligence, in which case such liability generally has caps for ordinary negligence, with much higher caps or unlimited liability
where the damage is caused by our gross negligence. When we provide integrated well services, we may also be exposed to a risk
of liability for reservoir or formation damage or loss of hydrocarbons.
In addition, a court may decide that certain indemnities in our current or future contracts are not enforceable.
If a significant accident or other event occurs that is not fully covered by our insurance or an enforceable or recoverable indemnity
from a customer, the occurrence could adversely affect us. Moreover, pollution and environmental risks generally are not totally
insurable.
Our insurance policies and contractual rights to indemnity may not adequately cover losses, and we do not have insurance
coverage or rights to indemnification for all risks. In addition, where we do have such insurance coverage, the amount recoverable
under insurance may be less than the related impact on enterprise value after a loss or not cover all potential consequences of an
incident and include annual aggregate policy limits. As a result, we retain the risk through self-insurance for any losses in excess
of these limits or that are not insurable. Any such lack of reimbursement may cause us to incur substantial costs or may otherwise
result in losses. No assurance can be made that we will be able to maintain adequate insurance in the future at rates that we
consider reasonable, or that we will be able to obtain insurance against certain risks. We could decide to retain more risk through
self-insurance in the future. This self-insurance results in a higher risk of losses, which could be material.
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Our business could be materially and adversely affected by severe or unseasonable weather where we have operations.
Our business could be materially and adversely affected by severe weather, particularly in the Gulf of Mexico and the North Sea.
Many experts believe global climate change could increase the frequency and severity of extreme weather conditions.
Repercussions of severe or unseasonable weather conditions may include:
• evacuation of personnel and inoperability of equipment resulting in curtailment of services;
• weather-related damage to offshore drilling rigs resulting in suspension of operations;
• weather-related damage to our facilities and project work sites;
• inability to deliver materials to jobsites in accordance with contract schedules;
• fluctuations in demand for oil and natural gas, including possible decreases during unseasonably warm winters; and
• loss of productivity.
In addition, acute or chronic physical impacts of climate change, such as sea level rise, coastal storm surge and hurricane-strength
winds may damage our jack-up rigs. Any such extreme weather events may result in increased operating costs or decreases in
revenue, which could adversely affect our financial condition, results of operations and cash flow.
Our information technology systems are subject to cybersecurity risks and threats and failure to protect these systems could
have a material adverse effect on us.
We increasingly depend on digital technology systems that we manage, and other systems that our third parties, such as our
service providers, vendors, and equipment providers, manage, including critical systems to conduct our offshore and onshore
operations, collect payments from customers and pay vendors and employees.
Our data protection measures and measures taken by our customers and vendors may not prevent unauthorized access of
information technology systems, and when such unauthorized access occurs, we, our customer or vendors may not detect the
incident in time to prevent harm or damage. Threats to our information technology systems and the systems of our customers and
vendors, associated with cybersecurity risks or attacks continue to grow. Such threats may derive from human error, power
outages, computer and telecommunication failures, natural disasters, fraud or malice, social engineering or phishing attacks,
viruses or malware, and other cyberattacks, such as denial-of-service or ransomware attacks. Our drilling operations or other
business operations could also be targeted by individuals or groups including cybercriminals, competitors, and nation state actors
seeking to sabotage, disable or disrupt our information technology systems and networks, or to steal data. A successful
cyberattack could materially disrupt our operations, including the safety of our operations, or lead to an unauthorized release of
information or alteration of information on our systems. In addition, breaches to our systems and systems of our customers and
vendors could go unnoticed for some period of time. A breach could also originate from, or compromise, our customers’ and
vendors’ or other third-party networks outside of our control. A breach may also result in legal claims or proceedings against us
by our shareholders, employees, customers, vendors and governmental authorities, both US and non-US. Any such attack or other
breach of our information technology systems, or failure to effectively comply with applicable laws and regulations concerning
privacy, data protection and information security, could have a material adverse effect on our business and financial results.
Remote working increases the risk of cyber security issues as it enables employees to work outside of our physical corporate
offices and, in some cases, use their own personal devices. We have been subject to cyberattacks. For example, we have been
targeted by parties using fraudulent “spoof” and “phishing” emails and other means to misappropriate information or to introduce
viruses or other malware through “trojan horse” programs to our computers. In response to these attacks and to prevent future
attacks, we have engaged, and may in the future engage, third party vendors to review and supplement our defensive measures
and assist us in our effort to eliminate, detect, prevent, remediate, mitigate or alleviate cyber or other security problems, although
such measures may not be effective.
Given the increasing sophistication and evolving nature of the above mentioned threats, we cannot rule out the possibility of them
occurring in the future. The costs to us to detect, prevent, remediate, mitigate or alleviate cyber or other security problems,
viruses, worms, malicious software programs, phishing schemes and security vulnerabilities could be significant and our efforts to
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address these problems may not be successful. We continue to face the risk of cybersecurity attacks or breaches which could
disrupt our operations and result in downtime, loss of revenue, harm to the Company’s reputation, or the loss, theft, corruption or
unauthorized release of critical data of us or those with whom we do business, as well as result in higher costs to correct and
remedy the effects of such incidents, including potential extortion payments associated with ransomware or ransom demands and
have a material impact on us and could have a material impact on our business or operations.
In addition, laws and regulations governing, or proposed to govern, cybersecurity, data privacy and protection, and the
unauthorized disclosure of confidential or protected information, including the U.K. Data Protection Act, the GDPR (as defined
herein), Bermuda Personal Information Protection Act 2016, the California Consumer Privacy Act, the Cyber Incident Reporting
for Critical Infrastructure Act, and other similar legislation in domestic and international jurisdictions pose increasingly complex
compliance challenges and potentially elevate costs, and any failure to comply with these laws and regulations could result in
significant penalties and legal liability.
We may be subject to litigation, arbitration and other proceedings that could have an adverse effect on us.
We are from time to time involved in various litigation matters, and we anticipate that we will be involved in litigation matters
from time to time in the future. The operating hazards inherent in our business expose us to litigation, including personal injury
and employment-dispute litigation, environmental and climate change litigation, contractual litigation with customers,
subcontractors and/or suppliers, intellectual property litigation, litigation regarding historical liabilities of acquired companies, tax
or securities litigation and maritime lawsuits, including the possible arrest of our jack-up rigs. For example, we have appealed an
award judgment currently set at a maximum of $11.5 million, originating from a 2017 accident involving a drillship owned by a
Paragon subsidiary. during Hurricane Harvey in the Gulf of Mexico. The Company’s maximum exposure in connection with such
award judgment is $2.7 million taking into account legal costs reimbursements covered by the self-insured retention (SIR) of our
insurance policy. Risks associated with litigation include potential negative outcomes, the costs associated with asserting our
claims or defending against such litigation, and the diversion of management’s attention to these matters. Accordingly, current
and future litigation and the outcome of such litigation could adversely affect our business, financial condition, results of
operations and cash flow.
We may be subject to claims related to Paragon and the financial restructuring of its predecessor.
Paragon was incorporated on July 18, 2017 as part of the financial restructuring of its predecessor, Paragon Offshore plc, which
commenced proceedings under Chapter 11 of the U.S. Bankruptcy Code on February 14, 2016. We believe that substantially all of
the material claims against Paragon Offshore plc that arose prior to the date of the bankruptcy filing were addressed during the
Chapter 11 proceedings and have been or will be resolved in accordance with the plan of reorganization and the order of the
Bankruptcy Court confirming such plan. If, however, we are subject to claims that are attributable to Paragon Offshore plc, or any
of its subsidiary undertakings, including in accordance with certain litigation arrangements in place prior to the acquisition of
Paragon, our business, financial condition, results of operations and cash flow could be adversely affected.
RISK FACTORS RELATED TO OUR FINANCING ARRANGEMENTS
We have significant debt maturities in the coming years.
As of December 31, 2023, all of our debt, totaling $1,790.0 million in principal amount, has scheduled final maturity dates
between 2028 and 2030. In addition, under our Notes, we have amortization payments of approximately $100 million per year
(which increased to $114.6 million per year with the issuance in March 2024 of $200 million principal amount of additional 10%
senior secured notes due in 2028) at a price of 105% of principal amount, plus accrued interest and an excess cash flow repayment
offer requirement, starting in 2024. We do not expect we will have cash resources to pay this debt at final maturity so we expect
we will need to refinance or extend this debt by 2028, and any refinancing could be at higher rates or subject to more onerous
restrictions and if we are unable to extend or refinance our secured debt this could result in enforcement by creditors and
insolvency for us.
Future cash flow may be insufficient to meet obligations under the terms of our existing bonds and loans and operate our
business.
As of December 31, 2023, we had $1,790.0 million in principal amount of debt outstanding (excluding deferred finance charges
and debt discount), representing 58.1% of our assets. As of December 31, 2023, our principal debt instruments included the
following:
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• $1,540 million outstanding under our Senior Secured Notes, consisting of $1,025 million principal amount of senior
secured notes due 2028, bearing a coupon of 10% per annum and $515.0 million aggregate principal amount of senior
secured notes due 2030, bearing a coupon of 10.375% per annum (of which $100.0 million is due annually);
• $180 million Super Senior Credit Facility, comprised of a $150 million Revolving Credit Facility ("RCF") and a $30
million Guarantee Facility. As of December 31, 2023, $29 million was drawn under the Guarantee Facility, and the $150
million under the RCF was undrawn.
• $250 million outstanding under our Convertible Bonds.
In March 2024, we issued $200 million principal amount of additional 10% senior secured notes due in 2028, with $14.6 million
of amortization payable per year.
We also have agreed to acquire two new rigs from Seatrium for an aggregate purchase price of $159.9 million per rig, including
$12.5 million acceleration cost per rig to expedite the contractual delivery dates on a best efforts basis from July 2025 and
September 2025 for the "Vale" and "Var", respectively, to August 2024 and November 2024, respectively, with a $130.0 million
yard finance facility available per each rig at the Company’s option with a four-year maturity, subject to a right for the lender to
call the loan after three years. Upon delivery of these rigs, our debt obligations will increase accordingly and if we utilize the
financing for each of such two rigs, our indebtedness will increase by $260 million.
The Notes are guaranteed by the Company and most of its subsidiaries and secured on a first-priority basis by liens on
substantially all of the assets of the Company and Subsidiary Guarantors, including our 22 delivered jack-up rigs, pledges over
shares of our rig-owning subsidiaries, assignment of certain receivables, earnings and insurances held by the subsidiary
guarantors.
Our RCF and the Guarantee Facility are guaranteed by the Company and its subsidiaries that guarantee the Notes and secured on a
super senior basis by the same security that secures the Notes.
The Convertible Bonds are unsecured and not guaranteed by any subsidiary of the Company.
Our 2028 Notes mature on November 15, 2028, our 2030 Notes mature on November 15, 2030 and our Convertible Bonds mature
on February 8, 2028.
In November 2023, the Company and certain of its subsidiaries issued the Notes to repay all of our outstanding secured debt,
including the $175 million facility with DNB Bank ASA, the $195 million facility with Hayfin Services LLP, the shipyard
delivery financing arrangement with PPL and Seatrium, the $150 million principal amount of Norwegian law senior secured
bonds, and to pay related premiums, fees, accrued interest and expenses. While we have refinanced substantially all of our debt to
2028 and later, a substantial portion falls due in 2028 and we will need to refinance that debt. There is no assurance that we will
be able to refinance our debt before it falls due on reasonable terms, or at all. In addition, we have annual amortization payments
due under our Notes and starting in 2024, an obligation to use certain excess cash flow to offer to repay our Notes. Please see –
“Item 5.B. Liquidity and Capital Resources – Our Existing Indebtedness.”
These obligations will require significant cash payments, or we will need to refinance such debt. Our future cash flow, which
depends on many factors beyond our control, may be insufficient to meet all of these debt obligations and contractual
commitments and we do not expect to have sufficient cash to repay all of these facilities at their currently scheduled due dates or
other obligations or to fund our other liquidity needs, or have future borrowings available under the RCF, and we expect we will
need to refinance at least some of these facilities, and if we are unable to repay or refinance our debt and make other debt service
payments as they fall due, we would face defaults under such debt instruments which could result in cross-defaults under other
debt instruments.
Our ability to fund planned expenditures and amortization payments and cash sweep obligations under our Notes, will be
dependent upon our future operating performance and ability to generate sufficient cash, which will be subject, to some extent, to
the success of our business strategy, to prevailing economic conditions, industry cycles and financial, business, regulatory and
other factors affecting our operations, many of which are beyond our control. We also experience seasonal fluctuations in our cash
flow.
We expect that a significant portion of our cash flow from operations will be dedicated to the payment of interest and principal on
our debt, and consequently will not be available for other purposes. We cannot assure that our business will generate sufficient
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cash flow from operations, that anticipated revenues growth, cost savings and operating improvements will be realized and will be
sufficient to enable us to pay our debts when due. If we are unable to repay our indebtedness as it becomes due (including
pursuant to amortization and cash sweep provisions in our Notes), we may need to refinance our debt, raise new debt, sell assets
or repay the debt with the proceeds from equity offerings—however, covenants in certain of our existing bonds and loans limit
our ability to take some of these actions without consent, subject to several exceptions and qualifications. If we are not able to
borrow additional funds, raise other capital or utilize available cash on hand, a default could occur under certain or all of our
existing bonds and loans. If we are able to refinance our debt or raise new debt or equity financing, such financing might not be
on favorable terms and could be at higher interest rates and could require us to comply with more onerous covenants, which could
further restrict our business, financial condition, results of operations and cash.
If we fail to make a payment when due under our newbuilding contracts, fail to take delivery of our newbuild jack-up rigs in
accordance with the relevant contract terms or otherwise breach the terms of any of our newbuilding contracts, we could be liable
for penalties and damages under such contracts in which case our business, financial condition, results of operations and cash flow
could be adversely affected.
Liquidity risk could impair our ability to fund operations and jeopardize our financial condition, growth and prospects.
We are largely dependent on cash generated by our operations, cash on hand, borrowings under our RCF and potential issuances
of equity or long-term debt to cover our operating expenses, capital expenses, service our indebtedness and fund our other
liquidity needs. The level of cash available to us depends on numerous factors, including the dayrates we are paid by our
customers, the price of oil and global economic conditions, demand for our services and the level of utilization of our drilling rigs,
our ability to control and reduce costs, our access to capital markets and amounts available to us under our RCF and amounts
received from our JVs. One or more of such factors could be negatively impacted and our sources of liquidity could be
insufficient to fund our operations and service our obligations such that we may require capital in excess of the amount available
from those sources. Our access to funding sources in amounts adequate to finance our operations and planned capital expenditures
and repay our indebtedness on terms that are acceptable could be impaired by factors such as negative views and expectations
about us, the oil and gas industry or the economy in general and disruptions in the financial markets.
Our financial flexibility will be severely constrained if we experience a significant decrease in cash generated from our operations
or are unable to maintain our access to or secure new sources of financing. In such case, where additional financing sources are
unavailable, or not available on reasonable terms, our financial condition, growth and future prospects could be materially
adversely affected, and we may be unable to meet our debt service obligations. As such, we cannot assure you that cash flow
generated from our business and other sources of cash, including future borrowings under our RCF and debt financings and new
debt and equity financings, will be sufficient to enable us to pay our indebtedness and to fund our other liquidity needs.
We are currently subject to a minimum liquidity covenant in our RCF. Please see “Item 5.B. Liquidity and Capital Resources –
Our Existing Indebtedness.” for further details of the agreed terms. We have significant debt maturities in 2028 and 2030 and
amortization payments due each year and cash sweep repayment offer provisions applicable from 2024 which may require us to
raise additional financing and/or extend maturities and there is no assurance that we will be able to do so.
As a result of our significant cash flow needs, we may be required to raise funds through the issuance of additional debt or
equity, and in the event of lost market access, we may not be successful in doing so.
Our cash flow needs, both in the short-term and long-term, include:
• normal recurring operating expenses;
• planned and discretionary capital expenditures; and
• repayment of debt and interest including amortization payments and amounts payable under the cash sweep repayment
offer provisions in our Notes.
We may require additional financing in order to meet our capital expenditure commitments and further execute on our planned
capital expenditure program and to meet interest and principal payments due under our existing bonds and loans.
We have significant debt maturities in 2028 and 2030, as well as amortization, capital expenditures and other payment
requirements applicable before then. These maturities may require us to raise additional financing.
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We may seek to raise additional capital in a number of ways, including accessing capital markets, obtaining additional lines of
credit or disposing of assets. We may also issue additional securities and our subsidiaries may also issue securities in order to fund
working capital, capital expenditures, such as activation, reactivation and mobilization costs, or other needs. Any such equity
issuance would have the effect of diluting our existing shareholders. We can provide no assurance that any of these options will
be available to us on acceptable terms, or at all. Capital market conditions as well as industry conditions and our debt levels could
make it very difficult or impossible to raise capital until conditions improve. The current global economic conditions and related
concerns of a global economic recession, instability in the global financial markets, financial turmoil and the current military
action in Ukraine and sanctions implemented in response to that, in addition to the related global tensions, and the ongoing Israel-
Hamas conflict and related hostilities in the Middle East have impacted capital markets and this may continue.
We may delay or cancel discretionary capital expenditures as a result of our cash flow needs or otherwise, which could have
certain adverse consequences, including delaying upgrades or equipment purchases that could make the affected rigs less
competitive, adversely affect customer relationships and negatively impact our ability to contract such rigs.
We are subject to restrictive debt covenants that may limit our ability to finance our future operations and capital needs and to
pursue business opportunities and activities.
Our existing bonds and loans impose operating and financial restrictions on us, including, among other things, our ability to:
• incur or guarantee additional indebtedness;
• pay dividends or make other distributions or purchase or redeem our stock;
• make investments or other restricted payments;
• enter into agreements that restrict the ability of certain of our subsidiaries to pay dividends;
• transfer or sell assets;
• engage in transactions with affiliates;
• create liens on assets to secure indebtedness; and
• merge or consolidate with or into another company.
Even though all of these limitations are subject to significant exceptions and qualifications, they could still limit our ability to
finance our future operations and capital needs and our ability to pursue business opportunities and activities that may be in our
interest.
Furthermore, under certain circumstances, the RCF requires us to comply with a number of financial covenants. Our ability to
comply with these financial covenants may be affected by events beyond our control, and we cannot assure you that we will
comply with such financial covenants. A default under the RCF, could lead to an acceleration of amounts due thereunder and a
cancellation of available funds under the facility which could lead to an event of default and acceleration under other debt
instruments that contain cross default or cross acceleration provisions, including the indenture governing the Notes, which has a
cross acceleration provision.
We may require additional funds or liquidity for working capital or capital expenditures, other than our existing bonds and
loans, from time to time and we may not be able to arrange the required or desired financing.
Our business is capital intensive and to the extent we do not generate sufficient cash from operations and to the extent we are
unable to draw under our credit facilities, we may need to raise additional funds through public or private debt or equity offerings
or through bank, shipyard or other financing arrangements to fund our capital expenditures, and in industry down cycles, our
operating expenses. We may need to borrow from time to time to fund working capital and capital expenditures, such as
activation, reactivation and mobilization costs and/or to fund the issuance of guarantees required for temporary import of rigs,
customs bonds, performance guarantees or other needs, subject to compliance with the covenants in our existing bonds and loans.
We may not be able to raise additional indebtedness as this is dependent on numerous factors as set out below. Any additional
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indebtedness which we are able to raise may include additional revolving credit facilities, term loans, bonds, refinancing of our
existing bonds and loans or other forms of indebtedness. We may also issue additional common shares or other securities and our
subsidiaries may also issue securities in order to fund working capital, capital expenditures, such as activation, reactivation and
mobilization costs, or other needs. Any such equity issuance would have the effect of diluting our existing shareholders.
Our ability to incur additional indebtedness or refinance our existing bonds and loans will depend on a number of factors,
including the general condition of the lending markets and capital markets, credit availability from banks and other financial
institutions, investors' confidence in us, and our financial position at such time, our financial performance, cash flow generation,
our indebtedness and compliance with covenants in debt agreements, among others. Any additional indebtedness or refinancing of
our existing bonds and loans may result in higher interest rates or further encumbrances on our jack-up rigs and may require us to
comply with more onerous covenants, which could further restrict our business operations. Increases in interest rates will increase
interest costs on our variable interest rate debt instruments, which would reduce our cash flow. If we are not able to maintain a
level of cash flow sufficient to operate our business in the ordinary course according to our business plan and are unable to incur
additional indebtedness or refinance our existing bonds and loans, our business and financial condition would be adversely
affected.
We face risks in connection with the delivery of our newbuild jack-up rigs and related financing arrangements.
We have an order with Seatrium for two newbuild jack-up rigs as of December 31, 2023, for a purchase price of $159.9 million
per rig, including $12.5 million acceleration cost per rig to expedite the delivery date, from a contractual delivery date in July
2025 to a best efforts expedited delivery date of August 2024 (for "Vale") and September 2025 with a best efforts expedited
delivery date of November 2024 (for "Var"). There is a $130.0 million yard finance facility per each newbuild jack-up at the
purchaser’s option with a four-year maturity, subject to a right for the lender to call the loan after three years. Accordingly, as the
new rigs are delivered, our indebtedness will increase, as will our debt service payments, and we will be required to comply with
the covenants in such facilities. In addition, we have not secured financing for the full purchase price of the "Vale" and "Var".
We have not been provided with refund guarantees from third party banks as security for Seatrium’s obligation to refund
predelivery installment payments in the event of a default by Seatrium. If we are not able to secure financing for "Vale" and "Var"
and/or Seatrium is unable to honor its obligations to us, subject to certain conditions, including the obligation to refund
installment payments under certain circumstances or provide the underlying financing for our delivery financing arrangements,
and we are not able to borrow additional funds, raise other capital and available current cash on hand is not sufficient to pay the
remaining installments related to our contracted commitments for our newbuild jack-up rigs, we may not be able to acquire these
jack-up rigs and/or may be subject to lengthy arbitral or court proceedings, any of which may have a material adverse effect on
our business, financial condition, results of operations and cash flow.
We are also required to meet conditions to draw the loans to be provided under these delivery financing facilities, including giving
customary representations and confirmation at the time of borrowing, and if we are unable to meet such conditions, we would
need to obtain alternative financing, which may not be available on favorable terms (or at all). A failure to meet draw conditions
and an absence of alternative financing could result in a breach of contract to acquire the rig, and loss of deposit, which could
impact other financing arrangements.
An economic downturn could have an adverse effect on our ability to access the capital markets.
Negative developments in worldwide financial and economic conditions could impact our ability to access the lending and capital
markets, which could impact our ability to react to changing economic and business conditions. Worldwide economic conditions
could in the future impact lenders' willingness to provide credit facilities to us, or our customers, causing them to fail to meet their
obligations to us. The current global economic conditions and related concerns of a global recession, instability in the global
financial markets, financial turmoil and military action in Ukraine and sanctions implemented in response as well as the related
global tensions, and the ongoing Israel-Hamas conflict and related hostilities in the Middle East, coupled with rising inflation and
interest rates, have impacted capital markets and lending markets. This impact may continue, which could impact our ability to
refinance our significant indebtedness which falls due in the coming years.
A renewed period of adverse development in the outlook for the financial stability of European, Middle Eastern or other countries,
or market perceptions concerning these and related issues, could reduce the overall demand for oil and natural gas and for our
services and thereby could affect our business, financial condition, results of operations and cash flow. Brexit, or similar events in
other jurisdictions, can impact global markets, which may have an adverse impact on our ability to access the capital markets. In
addition, turmoil and hostilities in various geographic areas and countries around the world add to the overall risk picture.
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Our RCF is provided jointly by European and British banking and financing institutions. In addition, our delivery contracts and
financing arrangements are provided by Seatrium and Offshore Partners PTE. LTD., respectively, a Singaporean company that
may be highly leveraged, is not capitalized in the same manner as a financial institution and that is subject to its own operating,
liquidity or regulatory risks. These risks could lead Seatrium to seek to cancel, repudiate or renegotiate our construction contracts
or fail to fulfill or challenge its commitments to us under those contracts, including the obligation to refund installment payments.
The risks of liquidity concerns are heightened in periods of depressed market conditions. If economic conditions in European or
British markets preclude or limit financing from these banking institutions, or if financial conditions in the Republic of Singapore
impair the ability of Offshore Partners PTE. LTD. to honor its obligations to us, we may not be able to obtain financing from
other institutions on terms that are acceptable to us, or at all, even if conditions outside Europe or the United Kingdom remain
favorable for lending. If our ability to access the debt or capital markets is affected by general economic conditions and
contingencies and uncertainties that are beyond our control, there may be a material adverse effect on our business and financial
condition.
We are subject to fluctuations in exchange rates and limitations on repatriation of earnings which could negatively impact us.
We use the U.S. dollar as our functional currency because the majority of our revenues and expenses are denominated in U.S.
dollars. Accordingly, our reporting currency is also U.S. dollars. As a result of our international operations, we may be exposed to
fluctuations in foreign exchange rates due to revenues being received and operating expenses paid in currencies other than U.S.
dollars. Notably, with respect to jack-up drilling contracts in the North Sea, revenues may be received, and salaries generally paid,
in Euros or Pounds. In addition, we may receive revenue or incur expenses in other currencies, including the Malaysian Ringgit,
Mexican Pesos, Thai Baht, Central African CFA Franc (the common currency of the trading bloc of the Central African Economic
and Monetary Community (CEMAC)) and the Saudi Riyal. Accordingly, we may experience currency exchange losses if we have
not hedged, or adequately hedged our exposure to a foreign currency. Moreover, we may experience adverse tax consequences
attributable to currency fluctuations. As we earn revenues and incur expenses in currencies other than our reporting currency,
there is a risk that currency fluctuations could have an adverse effect on our statements of operations and cash flow.
Additionally, given the evolving and strict regulatory environment in some regions, notably within the CEMAC region, we may
face challenges in repatriating our contract revenues, including foreign exchange regulations imposed by certain central banks of
the countries in which we operate. Regulations, such as those imposed by the Bank of Central African States (BEAC), may
introduce substantial hurdles in transferring money out of our bank accounts in the CEMAC region. This could affect our liquidity
and operational flexibility. We have from time to time been subject to limitations on repatriating cash derived from income,
capital or foreign earnings in certain of the countries in which we operate. Such limitations may result in a material adverse effect
on our financial condition and cash flow and our ability to service our indebtedness.
RISK FACTORS RELATED TO APPLICABLE LAWS AND REGULATIONS
Compliance with, and breach of, the complex laws and regulations governing international drilling activity and trade could be
costly, expose us to liability and adversely affect our operations.
We are directly affected by the adoption and entry into force of national and international laws and regulations that, for economic,
environmental or other policy reasons, curtail, or impose restrictions, obligations or liabilities in connection with, exploration and
development drilling for oil and gas in the geographic areas in which we operate. If legislative, regulatory or other governmental
action is taken that restricts or prohibits offshore drilling in our current or anticipated future areas of operation we could be
materially and adversely affected. Given the long-term trend towards increasing regulation, we may be required to make
significant capital expenditures or operational changes to comply with governmental laws and regulations. It is also possible that
these laws and regulations may, in the future, add significantly to our operating costs or significantly limit drilling activity.
The laws and regulations concerning import activity, export recordkeeping and reporting, export control and economic sanctions
are complex and constantly changing. Import activities are governed by unique customs laws and regulations in each of the
countries of operation. Moreover, many countries, including the United States, control the export and re-export, and in-country
transfer of certain goods, services and technology and impose related export recordkeeping and reporting obligations. Shipments
can be delayed and denied export or entry for a variety of reasons, some of which are outside our control and some of which may
result from the failure to comply with existing legal and regulatory regimes. Delays or denials of shipments of parts and
equipment that we need could cause unscheduled operational downtime. Future earnings may be negatively affected by
compliance with any such new legislation or regulations.
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Any failure to comply with applicable legal and regulatory trading obligations, including as a result of changed or amended
interpretations or enforcement policies, could also result in administrative, criminal and civil penalties and sanctions, such as
fines, imprisonment, debarment from government contracts, the seizure of shipments, the loss of import and export privileges and
the suspension or termination of operations. New laws, the amendment or modification of existing laws and regulations or other
governmental actions that prohibit or restrict offshore drilling or impose additional environmental protection requirements that
result in increased costs to the oil and gas industry, in general, or to the offshore drilling industry, in particular, could adversely
affect our performance.
Local content requirements may increase the cost of, or restrict our ability to, obtain needed supplies or hire experienced
personnel, or may otherwise affect our operations.
Local content requirements are policies imposed by governments that require companies who operate within their jurisdiction to
use domestically supplied goods and services or work with a domestic partner in order to operate within the jurisdiction.
Governments in some countries in which we operate, or may operate in the future, have become increasingly active in the
requirements with respect to the ownership of drilling companies, local content requirements for equipment used in operations
within the country and other aspects of the oil and gas industries in their countries. In addition, national oil companies may
impose restrictions on the submission of tenders, including eligibility criteria, which effectively require the use of domestically
supplied goods and services or a local partner.
Some foreign governments and/or national oil companies favor or effectively require (i) the awarding of drilling contracts to local
contractors or to drilling rigs owned by their own citizens, (ii) the use of a local agent or (iii) foreign contractors to employ
citizens of, or purchase supplies from, a particular jurisdiction. For example, in Mexico, where we have significant activities,
there are no foreign investment restrictions for the operation of jack-up rigs for drilling operations in Mexico but the particular
tender rules or the nature of the contractual obligations may make it necessary or prudent for these activities to be performed with
a Mexican partner. We conduct our activities in Mexico through joint venture entities with a local Mexican partner experienced in
providing services to PEMEX and use local labor and resources in order to comply with the contractual obligations to PEMEX.
These practices may adversely affect our ability to compete in those regions and could result in increased costs and impact our
ability to effectively control and operate our jack-up rigs, which could have a material impact on our earnings, operations and
financial condition in the future.
As a company limited by shares incorporated under the laws of Bermuda with subsidiaries in certain offshore jurisdictions,
our operations are subject to economic substance requirements.
Certain of our subsidiaries may from time to time be organized in other jurisdictions identified by the Code of Conduct Group for
Business Taxation of the European Union (the “COCG”), based on global standards set by the Organization for Economic Co-
operation and Development ("OECD") with the objective of preventing low-tax jurisdictions from attracting profits from certain
activities, as non-cooperative jurisdictions or jurisdictions having tax regimes that facilitate offshore structures that attract profits
without real economic activity.
Beginning on December 5, 2017, following an assessment of the tax policies of various countries by the COCG, economic
substance laws and regulations were enacted in these jurisdictions requiring that certain entities carrying out particular activities
comply with an economic substance test whereby the entity must show, for example, that it (i) carries out activities that are of
central importance to the entity from the jurisdiction, (ii) has held an adequate number of its board meetings in the jurisdiction
when judged against the level of decision-making required and (iii) has an adequate (a) amount of operating expenditures, (b)
physical presence and (c) number of full-time employees in the jurisdiction.
If we fail to comply with our obligations under applicable economic substance legislation or any similar law applicable to us in
any other jurisdictions, we could be subject to financial penalties and spontaneous disclosure of information to foreign tax
officials in related jurisdictions and may be struck from the register of companies in that jurisdiction. Any of these actions could
have a material adverse effect on our business, financial condition, results of operations and cash flow.
The obligations of being a public company, including compliance with the reporting requirements of the Norwegian Securities
Trading Act, the Oslo Stock Exchange Rules, the Exchange Act and NYSE Listed Company Manual, require certain resources
and has caused us to incur additional costs.
We are subject to reporting and other requirements as a result of our listing on the Oslo Børs and on the New York Stock
Exchange, or NYSE. As a result of these listings, we incur significant costs associated with corporate governance and reporting
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requirements that are applicable to us as a public company, including the Securities Act and the Exchange Act, rules of the NYSE,
the European Union Corporate Sustainability Reporting Directive (the "CSRD") and the rules and regulations of the SEC, under
the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Customer Protection Act of 2010. These rules and regulations
significantly increase our accounting, legal and financial compliance costs and make some activities more time consuming. For
example, the SEC has adopted new rules that require us to provide greater disclosures around cybersecurity risk management,
strategy and governance, as well as disclose the occurrence of material cybersecurity incidents; whereas the CSRD, will require us
to include in our next annual report for the 2024 fiscal year certain information necessary to understand our impact on
sustainability matters, as well as how these matters affect our own development, performance and position. We cannot predict or
estimate the amount of additional costs we will incur in order to comply with these or other new rules or directives, as applicable
to us, or the timing of such costs. For more information relating to the CSRD, please see the section entitled “Item 3.D. Risk
Factors — Risk Factors Related to Applicable Laws and Regulations — Increasing attention to sustainability, environmental,
social and governance matters and climate change may impact us.”
We are obligated to maintain proper and effective internal controls over financial reporting and any failure to maintain the
adequacy of these internal controls may adversely affect investor confidence in our Company and, as a result, the value of our
common shares may be negatively affected.
As a public company whose common shares are listed in the United States, we are subject to an extensive regulatory regime,
requiring us, among other things, to maintain various internal controls and facilities and to prepare and file periodic and current
reports and statements. Complying with these requirements is costly and time consuming. In the event that we are unable to
demonstrate ongoing compliance with our obligations as a public company, or are unable to produce timely or accurate financial
statements, we may be subject to sanctions or investigations by regulatory authorities and investors may lose confidence in our
operating results, and the price of our common shares could decline.
We have lost our status as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”)
because we have raised more than $1 billion in non-convertible bonds and because as of December 31, 2023, we are deemed a
“large accelerated filer”.
As a result of losing our “emerging growth company” status, we are no longer entitled to the exemption provided in the JOBS Act
and pursuant to Section 404 of the Sarbanes-Oxley Act (“Section 404”), our independent registered public accounting firm is now
required to provide an attestation report on the effectiveness of our internal control over financial reporting on an annual basis
beginning with this Annual Report on form 20-F and on an annual basis thereafter. Our compliance with Section 404 requires us
to incur additional costs and expend significant management efforts.
Our testing, or the subsequent testing (if required) by our independent registered public accounting firm, may reveal deficiencies
in our internal controls over financial reporting that are deemed to be material weaknesses. If our independent registered public
accounting firm identifies any deficiencies in connection with the issuance of their attestation report, we may encounter problems
or delays in completing the appropriate remediation.
If we identify one or more material weaknesses in our internal control over financial reporting, our management will be unable to
conclude that our internal control over financial reporting is effective. Moreover, even if our management concludes that our
internal control over financial reporting is effective, our independent registered public accounting firm may conclude that there
are material weaknesses with respect to our internal controls or the level at which our internal controls are documented, designed,
implemented or reviewed. If we are unable to conclude that our internal control over financial reporting is effective, or if our
independent registered public accounting firm were to express an adverse opinion on the effectiveness of our internal control over
financial reporting because we had one or more material weaknesses, investors could lose confidence in the accuracy and
completeness of our financial disclosures, which could cause the price of our common shares to decline. Internal control
deficiencies could also result in a restatement of our financial results in the future or restrict our future access to the capital
markets.
We are subject to complex environmental laws and regulations that can adversely affect us.
Our business is subject to international, national and local, environmental and safety laws, regulations, treaties and conventions in
force from time to time including:
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• the United Nation’s International Maritime Organization, or the “IMO,” International Convention for the Prevention of
Pollution from Ships of 1973, as from time to time amended, or “MARPOL,” including the designation of Emission
Control Areas, or “ECAs” thereunder;
• the IMO International Convention on Civil Liability for Oil Pollution Damage of 1969, as from time to time amended, or
the “CLC”;
• the International Convention on Civil Liability for Bunker Oil Pollution Damage, or the “Bunker Convention”;
• the International Convention for the Safety of Life at Sea of 1974, as from time to time amended, or “SOLAS”;
• the IMO International Convention on Load Lines, 1966, as from time to time amended;
• the International Convention for the Control and Management of Ships’ Ballast Water and Sediments in February 2004;
• the Code for the Construction and Equipment of Mobile Offshore Drilling Units, 2009, or the “MODU Code 2009”;
• the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, or the
“Basel Convention”;
• the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009, or the
“Hong Kong Convention”; and
• certain regulations of the European Union, including Regulation (EC) No 1013/2006 on Shipments of Waste and
Regulation (E.U.) No 1257/2013 on Ship Recycling.
Compliance with applicable laws, regulations and conventions may require us to incur capital costs or implement operational
changes and may affect the value or useful life of our jack-up rigs which could have a material adverse effect on our profitability.
A failure to comply with applicable laws, regulations and conventions may result in administrative and civil penalties, criminal
sanctions or the suspension or termination of our operations. Conventions, laws and regulations are often revised and may only
apply in certain jurisdictions with the effect that we cannot predict the ultimate cost of complying with them or their impact on the
value or useful lives of our rigs. New conventions, laws and regulations may be adopted that could limit our ability to do business
or increase the cost of our doing business and that may materially adversely affect our operations.
Environmental laws often impose strict liability for the remediation of spills and releases of oil and hazardous substances, which
could subject us to liability irrespective of any negligence or fault on our part. Under the US Oil Pollution Act of 1990, for
example, owners, operators and bareboat charterers are jointly and severally strictly liable for the discharge of oil within the 200-
mile exclusive economic zone around the United States. If we were to operate in these areas, an oil or chemical spill could result
in us incurring significant liability, including fines, penalties, criminal liability and remediation costs for natural resource damages
under other federal, state and local laws, as well as third-party damages, which could have a material adverse effect on our
business, financial condition, results of operations and cash flow. Furthermore, future major environmental incidents involving the
offshore drilling industry, such as the 2010 Deepwater Horizon Incident (to which we were not a party) may result in further
regulation of the offshore industry and modifications to statutory liability schemes, thus exposing us to further potential financial
risk in the event of any such oil or chemical spill in areas in which we operate.
Our jack-up rigs could cause the release of oil or hazardous substances. We are required by various governmental and quasi-
governmental agencies to obtain certain permits, licenses and certificates with respect to our operations, and to satisfy insurance
and financial responsibility requirements for potential oil (including marine fuel) spills and other pollution incidents. Any releases
may be large in quantity, above permitted limits or occur in protected or sensitive areas where public interest groups or
governmental authorities have special interests. Any releases of oil or hazardous substances could result in fines and other costs to
us, such as costs to upgrade our jack-up rigs, clean up the releases, compensate for natural resource damages and comply with
more stringent requirements in our permits. Moreover, such releases may result in our customers or governmental authorities
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suspending or terminating our operations in the affected area, which could have a material adverse effect on our business, results
of operations and financial condition.
Our jack-up rigs are owned by separate single-purpose subsidiaries, but certain obligations of these subsidiaries are and may in
the future be guaranteed by the parent company.
Even if we are able to obtain contractual indemnification from our customers against pollution and environmental damages in our
contracts, such indemnification may not be enforceable in all instances or the customer may not be financially able to comply with
its indemnity obligations in all cases. We do not have full contractual indemnification under all of our current contracts, and we
may not be able to obtain such indemnification agreements in the future. In addition, a court may decide that certain indemnities
in our current or future contracts are not enforceable.
Although we have insurance to cover certain environmental risks, there can be no assurance that such insurance will respond and
if it does, that the proceeds will be sufficient to cover all such risks or that any claims will not have a material adverse effect on
our business, results of operations, cash flow and financial condition.
In the future, insurance coverage protecting us against damages incurred or fines imposed as a result of our violation of applicable
environmental laws may not be available or we may choose not to obtain such insurance, and this could have a material adverse
effect on our business, results of operations and financial condition.
Future government regulations may adversely affect the offshore drilling industry.
International contract drilling operations are subject to various laws and regulations of the countries in which we operate,
including laws and regulations relating to:
• the equipping and operation of drilling rigs;
• exchange rates or exchange controls;
• oil and gas exploration and development;
• the taxation of earnings;
• the ability to receive drilling contract revenue outside the country of operation;
• the ability to move income or capital;
• the environment and climate change;
• the taxation of the earnings of expatriate personnel; and
• the use and compensation of local employees and suppliers by foreign contractors.
It is difficult to predict what government regulations may be enacted in the future that could adversely affect the offshore drilling
industry. Failure to comply with applicable laws and regulations, including those relating to sanctions and export restrictions, may
subject us to criminal sanctions or civil remedies, including fines, the denial of export privileges, injunctions or the seizures of
assets.
Data protection and regulations related to privacy, data protection and information security could increase our costs, and our
failure to comply could result in fines, sanctions or other penalties, as well as have an impact on our reputation.
We rely on information technology systems and networks in our operations and administration of our business and are bound by
national and international regulations related to privacy, data protection and information security.
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Increasing regulatory enforcement and litigation activity in these areas of privacy, data protection and information security in the
U.S., the European Union and other relevant jurisdictions are increasingly adopting or revising privacy, data protection and
information security laws. For example, the General Data Protection Regulations of the European Union (“GDPR”), which
became enforceable in all 27 E.U. member states as of May 25, 2018, requires us to undertake enhanced data protection
safeguards, with fines for noncompliance up to 4% of global total annual worldwide turnover or €20 million (whichever is
higher), depending on the type and severity of the breach. Compliance with current or future privacy, data protection and
information security laws could significantly impact our current and planned privacy, data protection and information security
related practices, our collection, use, sharing, retention and safeguarding of customer and/or employee information, and some of
our current or planned business activities.
As our business grows, our compliance costs may increase, particularly in the context of ensuring that adequate data protection
and data transfer mechanisms are in place and adapted to development in the laws and regulations in all of the relevant
jurisdictions. Failure to comply with applicable privacy, data protection and information security laws could affect our results of
operations and overall business, as well as have an impact on our reputation.
A change in tax laws in any country in which we operate could result in higher tax expense.
We conduct our operations through various subsidiaries and branches in countries around the world. Our operations are subject to
tax laws, regulations and treaties which are highly complex, subject to interpretation, frequent changes and have generally become
more stringent over time. Consequently, there is substantial uncertainty with respect to tax laws, regulations, treaties and the
interpretation and enforcement thereof. The base erosion and profit shifting project established by the OECD which targeted
profits earned in low tax jurisdictions or transactions between affiliates where payments are made from jurisdictions with high tax
rates to jurisdictions with lower tax rates, called for member states to take action against base erosion and profit shifting. In
response to the OECD recommendations, a 15% worldwide minimum tax (Pillar 2) implemented on a country-by-country basis
has been introduced with many jurisdictions committed to a January 1, 2024 effective date. These rules may have an adverse
effect on our financial position and cash flow as well as material impact on our effective tax rate.
Effective from January 1, 2020, Mexico enacted a tax reform which has the potential to materially increase our tax expense.
In December 2023, Bermuda passed into law the Corporate Income Tax 2023 in response to the OECD’s Pillar 2 to impose a 15%
corporate income tax that will be effective for fiscal years beginning on or after 1 January 2025, providing in scope Bermuda
multinational groups time to transition and make the necessary adjustments.
Our income tax expense is based on our interpretation of the tax laws in effect in the countries that we operate in, at the time that
the expense was incurred. If a taxing authority successfully challenges our tax structure or if a change in these tax laws,
regulations or treaties, or in the interpretation thereof occurs in a manner that is adverse to our structure, this could result in a
materially higher tax expense or a higher effective tax rate on our worldwide earnings.
Given the dynamic nature of our business and frequent shifts in the taxing jurisdictions where we operate, our consolidated
effective income tax rate may undergo substantial variations from one period to another. The movement of rigs between operating
locations might necessitate the transfer of rig ownership within the group, potentially leading to transfer taxes.  Additionally, the
diverse tax bases applicable to our operating companies, coupled with instances where income tax is levied on gross revenue or a
deemed profit basis in certain jurisdictions, could result in tax rates remaining unchanged despite lower profitability. This,
coupled with the uncertainty in tax law changes and tax audits could result in an increase in our effective tax rate.
A loss of a major tax dispute or a successful tax challenge to our operating structure, intercompany pricing policies or the
taxable presence of our subsidiaries in certain countries could result in a higher tax rate on our worldwide earnings, which
could result in a significant negative impact on our earnings and cash flow from operations.
Our income tax returns are subject to review and examination by the relevant authorities in the countries in which we operate. We
do not recognize the benefit of income tax positions which we believe are more likely than not to be disallowed upon challenge by
a tax authority. If any tax authority successfully challenges positions we have taken in tax filings related to our operational
structure, intercompany pricing policies, the taxable presence of our subsidiaries in certain countries or any other situation, or if
the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure, or if we lose a material tax
dispute in any country, our effective tax rate on our worldwide earnings could increase substantially and our earnings and cash
flow from operations could be materially adversely affected.
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Climate change and the regulation of greenhouse gases could have a negative impact on our business.
Due to concern over the risk of climate change, a number of countries, the EU and the IMO (as defined herein) have adopted, or
are considering the adoption of, regulatory frameworks to reduce greenhouse gas emissions in the shipping industry. For example,
as of January 1, 2013, all ships (including jack up rigs) must comply with mandatory requirements adopted by the IMO’s
Maritime Environment Protection Committee, or the “MEPC,” in July 2011 relating to greenhouse gas emissions. In April 2018,
the IMO adopted a strategy to, among other things, reduce the 2008 level of greenhouse gas emissions from the shipping industry
by 50% by the year 2050. Other governmental bodies may begin regulating greenhouse gas emissions from shipping sources in
the future, but the future of such regulations is difficult to predict. Compliance with existing regulations and changes in laws,
regulations and obligations relating to climate change could increase our costs to operate and maintain our assets, and might also
require us to install new emission controls, acquire allowances or pay taxes related to our greenhouse gas emissions, or administer
and manage a greenhouse gas emissions program. Any passage of climate control legislation or other regulatory initiatives by the
IMO, the EU, the United States or other jurisdictions in which we operate, or any treaty or agreement adopted at the international
level, such as the Kyoto Protocol or Glasgow Climate Pact, which restricts emissions of greenhouse gases could require us to
make significant financial expenditures which we cannot predict with certainty at this time.
Additionally, adverse effects upon the oil and gas industry relating to climate change, including growing public concern about the
environmental impact of climate change, may also adversely affect demand for our services. For example, increased regulation of
greenhouse gases or other concerns relating to climate change may reduce the demand for oil and gas in the future or create
greater incentives for the use of alternative energy sources. In addition, parties concerned about the potential effects of climate
change have directed their attention at sources of funding for energy companies, which has resulted in certain financial
institutions, funds and other sources of capital, restricting or eliminating their investment in or lending to oil and gas activities.
Any material adverse effect on the oil and gas industry relating to climate change concerns could have a significant adverse
financial and operational impact on our business and operations.
Finally, the impacts of severe weather, such as hurricanes, monsoons and other catastrophic storms, resulting from climate change
could cause damage to our equipment and disruption to our operations and cause other financial and operational impacts,
including impacts on our major customers.
Increasing attention to sustainability, environmental, social and governance matters and climate change may impact us.
Companies across all industries are facing increasing scrutiny relating to their sustainability policies, including their
Environmental, Social and Governance (“ESG”) policies. Governments across the globe and investor advocacy groups, certain
institutional investors, investment funds, lenders and other market participants are increasingly focused on sustainability and ESG
practices and in recent years have placed growing importance on the implications and social cost of their investments. The
increased focus and activism related to sustainability and ESG and similar matters may hinder access to capital, as investors and
lenders may decide to reallocate capital or not to commit capital as a result of their assessment of a company’s sustainability and
ESG practices. Companies that do not adapt to or comply with governmental, investor, lender or other industry shareholder rules,
expectations and standards, as applicable, which are evolving, or which are perceived to have not responded appropriately to the
growing concern for sustainability and ESG issues, whether there is a legal requirement to do so, may suffer from reputational
damage and the business, financial condition or share price of such a company could be materially and adversely affected.
By way of example, on January 5, 2023, the CSRD entered into force. Among other things, the CSRD expands the number of
companies required to publicly report sustainability and ESG-related information on their management report, to understand their
impact on sustainability matters as well as how sustainability matters affect their own development, performance and position,
and defines the related information that companies are required to report in accordance with European Sustainability Reporting
Standards (“ESRS”). The CSRD raises the bar on ESG matters and requires a "double materiality" analysis, meaning companies
will have to detail both their impacts on the environment (e.g. the impact of corporate activity on sustainability matters from
perspective of citizens, consumers, employees, etc.) and the climate-related risks they face (e.g. sustainability matters which from
the investor perspective are material the company's development, performance and position). Impacts, risks and opportunities are
material if they satisfy one or both of these materiality tests. As a public company listed on the Oslo Stock Exchange, we fall
under the scope of application of such new reporting requirements under the CSRD, effective January 1, 2024, and we are
required to provide such information with our next management report for the 2024 financial year. This will involve
implementing processes to gather the relevant data, conduct materiality assessments and prepare a CSRD-compliant report, which
will likely be a time-consuming and costly exercise and in the event that our disclosures prove incorrect we may incur liabilities.
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We may face increasing pressures from investors, lenders and other market participants, who are increasingly focused on climate
change, to prioritize sustainable energy practices, reduce our carbon footprint and promote sustainability. As a result, we may be
required to implement more stringent ESG procedures or standards so that our existing and future investors and lenders remain
invested in us and make further investments in us. If we do not meet these standards, our business or our ability to access capital
could be harmed.
Additionally, certain investors and lenders may exclude companies engaged in the fossil fuel industry, such as us, from their
investing or loan portfolios altogether due to ESG factors. These limitations in both the debt and equity capital markets may affect
our ability to grow as our plans for growth may include accessing those markets. If those markets are unavailable, or if we are
unable to access alternative means of financing on acceptable terms, or at all, we may be unable to implement our business
strategy, which would have a material adverse effect on our financial condition and results of operations and impair our ability to
refinance our indebtedness. Further, it is likely that we will incur additional costs and require additional resources to monitor,
report and comply with wide-ranging ESG requirements and goals, targets or objectives set in connection therewith. Similarly,
these policies may negatively impact the ability of other businesses in our supply chain to access debt and capital markets. The
occurrence of any of the foregoing could have a material adverse effect on our business and financial condition.
Any violation of anti-bribery or anti-corruption laws and regulations could have a negative impact on us.
We operate in a number of countries around the world. We are subject to the risk that we or, our affiliated entities or their
respective officers, directors, employees and agents may take actions determined to be in violation of anti-corruption laws,
including the Foreign Corrupt Practices Act of 1977 (the “FCPA”), the United Kingdom Bribery Act 2010 (the “UK Bribery
Act”), the Bermuda Bribery Act 2016 or other anti-bribery laws to which we may be subject (together, the “ABC Legislation”)
and similar laws in other countries. Any violation of the FCPA, UK Bribery Act, the ABC Legislation or other applicable anti-
corruption laws could result in substantial fines, sanctions, civil and/or criminal penalties, and curtailment of operations in certain
jurisdictions, and might adversely affect our business, financial condition, results of operations and cash flow. In addition, actual
or alleged violations could damage our reputation and ability to do business. Furthermore, detecting, investigating and resolving
actual or alleged violations is expensive and can consume significant time and attention of our senior management.
If our jack-up rigs are located in countries that are subject to, or targeted by, economic sanctions, export restrictions or other
operating restrictions imposed by the United States or other governments, our reputation and the market for our debt and
common shares could be adversely affected.
The U.S. and other governments may impose economic sanctions against certain countries, persons and other entities that restrict
or prohibit transactions involving such countries, persons and entities. U.S. sanctions in particular are targeted against countries
(such as Russia, Venezuela, Iran and others) that are heavily involved in the petroleum and petrochemical industries, which
includes drilling activities. In connection with the Russian military actions across Ukraine which began in February 2022, the
United States, U.K. and the European Union have imposed aggressive sanctions against Russia and certain Russian controlled
regions of Ukraine. U.S. and other economic sanctions change frequently, and enforcement of economic sanctions worldwide is
increasing. Subject to certain limited exceptions, U.S. law continues to restrict U.S.-owned or -controlled entities from doing
business with Iran and Cuba, and various U.S. sanctions have certain other extraterritorial effects that need to be considered by
non-U.S. companies. Moreover, any U.S. persons who serve as officers, directors or employees of our subsidiaries would be fully
subject to U.S. sanctions. It should also be noted that other governments are more frequently implementing and enforcing
sanctions regimes.
From time to time, we may be party to drilling contracts with countries or government-controlled entities that become subject to
sanctions and embargoes imposed by the U.S. government and/or identified by the U.S. government as state sponsors of
terrorism. Even in cases where the investment would not violate U.S. law, potential investors could view any such contracts
negatively, which could adversely affect our reputation and the market for our common shares. We do not currently have any
drilling contracts or plans to initiate any drilling contracts involving operations in countries or with government-controlled entities
that are subject to sanctions and embargoes imposed by the U.S. government and/or identified by the U.S. government as state
sponsors of terrorism.
There can be no assurance that we will be in compliance with all applicable economic sanctions and embargo laws and
regulations, particularly as the scope of certain laws may be unclear and may be subject to changing interpretations. Rapid
changes in the scope of global sanctions may also make it more difficult for us to remain in compliance. Any violation of
applicable economic sanctions could result in civil or criminal penalties, fines, enforcement actions, legal costs, reputational
damage or other penalties and could result in some investors deciding, or being required, to divest their interest, or not to invest,
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in our common shares or other securities. Additionally, some investors may decide to divest their interest, or not to invest, in our
common shares and other securities simply because we may do business with companies that do business in sanctioned countries.
Moreover, our drilling contracts may violate applicable sanctions and embargo laws and regulations as a result of actions that do
not involve us, or our jack-up rigs, and those violations could in turn negatively affect our reputation. Investor perception of the
value of our common shares and other securities may also be adversely affected by the consequences of war, the effects of
terrorism, civil unrest and governmental actions in these and surrounding countries.
Changing corporate laws and reporting requirements could have an adverse impact on our business.
We may face greater reporting obligations and compliance requirements as a result of changing laws, regulations and standards
such as the UK Modern Slavery Act 2015 and GDPR. We have invested in, and intend to continue to invest in, reasonable
resources to address evolving standards and to maintain high standards of corporate governance and disclosure, including our
Whistleblowing Policy and Procedures. Non-compliance with such regulations could result in governmental or other regulatory
claims or significant fines that could have an adverse effect on our business, financial condition, results of operations, cash flow,
and ability to make distributions.
The United Kingdom’s withdrawal from the European Union might have uncertain effects and could adversely impact the
offshore drilling industry.
0.9% of our total revenues were generated in the U.K. for the year ended December 31, 2023. In addition, certain of our jack-up
rigs may from time to time move into territorial waters of the U.K. In 2019, some of our management team relocated to the U.K.
and certain of our onshore employees may from time to time be employed by Borr Drilling Management UK, which is based in
the U.K.
The U.K. formally exited the EU on January 31, 2020 (commonly referred to as “Brexit”). On December 24, 2020, both parties
entered into a trade and cooperation agreement (the “Trade and Cooperation Agreement”), which offers U.K. and E.U. companies
preferential access to each other’s markets, ensuring imported goods will be free of tariffs and quotas (subject to rules of origin
requirements). Uncertainty exists regarding the ultimate impact of the Trade and Cooperation Agreement, as well as the extent of
possible financial, trade, regulatory and legal implications of Brexit. Brexit also contributes to global political and economic
uncertainty, which may cause, among other consequences, volatility in exchange rates and interest rates, and changes in
regulations.
RISK FACTORS RELATED TO OUR COMMON SHARES
The price of our common shares may fluctuate widely in the future, and you could lose all or part of your investment.
The market price of our common shares has fluctuated widely and may continue to do so as a result of many factors, such as
actual or anticipated fluctuations in our operating results, changes in financial estimates by securities analysts, and economic
trends. The following is a non-exhaustive list of factors that could affect our share price:
• our operating and financial performance;
• quarterly variations in the rate of growth of our financial indicators, such as net income per share, net income and
revenues;
• the public reaction to our press releases, our other public announcements and our filings with the SEC;
• strategic actions by our competitors;
• our failure to meet revenue or earnings estimates by research analysts or other investors;
• changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity
research analysts;
• speculation in the press or investment community;
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• the failure of research analysts to cover our common shares;
• sales of our common shares by us or shareholders, or the perception that such sales may occur;
• changes in accounting principles, policies, guidance, interpretations or standards;
• additions or departures of key management personnel;
• actions by our shareholders;
• general market conditions, including fluctuations in oil and gas prices;
• domestic and international economic, legal and regulatory factors unrelated to our performance; and
• the realization of any risks described in this section “Item 3.D. Risk Factors.”
In addition, the stock markets in general have experienced extreme volatility that has often been unrelated to the operating
performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common
shares.
We are permitted to follow certain home country practices in relation to our corporate governance instead of certain NYSE
rules, which may afford you less protection.
As a foreign private issuer, we are permitted to adopt certain home country practices in relation to our corporate governance
matters that differ significantly from the NYSE corporate governance listing standards. These practices may afford less protection
to shareholders than they would enjoy if we complied fully with corporate governance listing standards.
As an issuer whose shares are listed on the NYSE, we are subject to corporate governance listing standards of the NYSE.
However, NYSE rules permit a foreign private issuer like us to follow the corporate governance practices of its home country.
Certain corporate governance practices in Bermuda, which is our home country, may differ significantly from NYSE corporate
governance listing standards. We follow certain home country practices instead of the relevant NYSE rules. See the section
entitled “Item 16.G. Corporate Governance.” Therefore, our shareholders may be afforded less protection than they otherwise
would have under NYSE corporate governance listing standards applicable to U.S. domestic issuers.
Future sales of our equity securities in the public market, or the perception that such sales may occur, could reduce our share
price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in
us.
In light of current market conditions, and the trading price of our common shares, any issuance of new equity securities could be
at prices that are significantly lower than the purchase price of such common shares by other investors, thereby resulting in
dilution of our existing shareholders.
As of the date of this filing, we have 252,996,439 common shares outstanding, and the Related Parties (as defined below)
collectively owned 17,787,506 of our common shares or approximately 7.0% of our total outstanding common shares. Such
common shares, as well as common shares held by our employees and others are eligible for sale in the United States under Rule
144 under the Securities Act (“Rule 144”) and are generally freely tradable on the Oslo Børs. In addition, our two largest
shareholders Granular Capital Ltd and Allan & Gill Gray Foundation, in the aggregate, hold 28.1% of our total outstanding
common shares.
Future issuances by us and sales of common shares by significant shareholders may have a negative impact on the market price of
our common shares. In particular, sales of substantial amounts of our common shares (including common shares issued in
connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of
our common shares.
We depend on directors who are associated with affiliated companies, which may create conflicts of interest.
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Our shareholders include Drew and affiliates thereof, including Magni Partners (collectively, the “Related Parties”). We maintain
commercial relationships with our Related Parties, including advisory arrangements that are currently in place and under which
services continue to be provided to us. Certain of our Related Parties have, in the past, provided foundational loans to us.
The chairman of our Board, Mr. Tor Olav Trøim, also serves as a director of one of our Related Parties. This position may conflict
with his duties as one of our directors regarding business dealings and other matters between each of the Related Parties and us.
Our Directors owe fiduciary duties to both us and each respective Related Party and may have conflicts of interest. The resolution
of these conflicts may not always be in our or our shareholders’ best interests. 
Please see the section entitled “Item 7.B. Related Party Transactions” for more information, including information on the
commercial arrangements between us and the Related Parties.
If securities or industry analysts do not publish research reports or publish unfavorable research about our business, the price
and trading volume of our common shares could decline.
The trading market for our common shares may depend in part on the research reports that securities or industry analysts publish
about us or our business. We may never obtain significant research coverage by securities and industry analysts. If limited
securities or industry analysts continue coverage of us, the trading price for our common shares and other securities would be
negatively affected. In the event we obtain significant securities or industry analyst coverage, and one or more of the analysts who
covers us downgrades our securities, the price of our common shares would likely decline. If one or more of these analysts ceases
to cover us or fails to publish regular reports on us, interest in the purchase of our common shares could decrease, which could
cause the price of our common shares and other securities and their trading volume to decline.
We cannot guarantee we will pay dividends in any specified amounts or particular frequency or at all.
In the fourth quarter of 2023 and the first quarter of 2024, we announced that our Board had approved a cash distribution of $0.05
per share for the third quarter of 2023 and the fourth quarter of 2023 respectively. Under our Bye-Laws, any further dividends
declared will be in the sole discretion of our Board and will depend upon earnings, market prospects, current capital expenditure
programs and investment opportunities, although the payment of certain dividends is restricted by the covenants in certain of our
existing bonds and loans. Under Bermuda law, we may not declare or pay a dividend, or make a distribution out of contributed
surplus, if there are reasonable grounds for believing that (a) we are, or would after the payment be, unable to pay our liabilities as
they become due or (b) the realizable value of our assets would thereby be less than our liabilities. In addition, since we are a
holding company with no material assets other than the shares of our subsidiaries through which we conduct our operations, our
ability to pay dividends will depend on our subsidiaries distributing to us their earnings and cash flow and liquidity. Any future
declaration, amount and payment of dividends will be at our sole discretion and depend upon factors, such as our results of
operations, financial condition, earnings, capital requirements, restrictions in our debt instruments (including the indenture for our
Notes, which restricts dividends) and legal requirements. Although we currently intend to pay regular quarterly cash dividends,
we cannot provide any assurances that any such regular dividends will be paid in any specified amount or at any particular
frequency, or at all.
Because we are a foreign corporation, you may not have the same rights that a shareholder in a U.S. corporation may have.
We are incorporated under the laws of Bermuda, and substantially all of our assets are located outside of the United States. In
addition, our directors and officers generally are or will be nonresidents of the United States, and all or a substantial portion of the
assets of these nonresidents are located outside the United States As a result, it may be difficult or impossible for you to effect
service of process on these individuals in the United States or to enforce in the United States judgments obtained in U.S. courts
against us or our Directors and Officers based on the civil liability provisions of applicable U.S. securities laws.
In addition, you should not assume that courts in the countries in which we are incorporated or where our assets are located (1)
would enforce judgments of U.S. courts obtained in actions against us based upon the civil liability provisions of applicable U.S.
securities laws or (2) would enforce, in original actions, liabilities against us based on those laws.
If we are a “passive foreign investment company” for U.S. federal income tax purposes for any taxable year, U.S. Holders of
our common shares may be subject to adverse tax consequences.
A non-U.S. corporation, such as the Company, will be treated as a “passive foreign investment company,” or PFIC, for U.S.
federal income tax purposes for a taxable year if either (1) at least 75% of its gross income for such taxable year consists of
certain types of “passive income” or (2) at least 50% of the value of the corporation’s assets (generally determined on the basis of
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a quarterly average) during such year produce or are held for the production of passive income. For purposes of these tests,
“passive income” includes dividends, interest, net gains from the sale or exchange of investment property and rents and royalties
other than rents and royalties that are received from unrelated parties in connection with the active conduct of a trade or business
but does not generally include income derived from the performance of services. In addition, a non-U.S. corporation is treated as
holding directly and receiving directly its proportionate share of the assets and income of any other corporation in which it
directly or indirectly owns at least 25% (by value) of such corporation’s stock.
Based on the composition of our income and assets, we believe we were not a PFIC for the taxable year ended December 31, 2023
and we do not anticipate being a PFIC for the current taxable year or foreseeable future taxable years. There can be no assurance,
however, that we were not a PFIC for the taxable year ended December 31, 2023 or that we will not be a PFIC for the current
taxable year or foreseeable future taxable years. The application of the PFIC rules is subject to uncertainty in several respects, and
we must make a separate determination after the close of each taxable year as to whether we were a PFIC for such year.
Moreover, we believe that any income we receive from offshore drilling service contracts should not be treated as passive income
under the PFIC rules and that the assets we own and utilize to generate this income should not be treated as passive assets.
Because there are uncertainties in the application of the relevant rules, however, it is possible that the Internal Revenue Service
(the “IRS”) may challenge our classification of such income or assets as non-passive, which could cause us to become classified
as a PFIC for the current or subsequent taxable years.
If we were treated as a PFIC for any taxable year during which a U.S. Holder (as defined in “Item 10.E. Taxation—U.S. Federal
Income Tax Considerations—General”) held a common share, certain adverse U.S. federal income tax consequences could apply
to such U.S. Holder. See “Item 10.E. Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company
Considerations” for a more comprehensive discussion.
ITEM 4.  INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Borr Drilling Limited was incorporated in Bermuda on August 8, 2016, pursuant to the Companies Act 1981 of Bermuda (the
“Companies Act”), as an exempted company limited by shares. On December 19, 2016, our shares were introduced to the
Norwegian OTC market. On August 30, 2017, our shares were listed on the Oslo Børs under the symbol “BDRILL” and on
November 30, 2020 we changed our symbol to "BORR". On July 31, 2019, our shares were listed on the New York Stock
Exchange under the symbol “BORR.”
Our current agent in the U.S. is Puglisi & Associates upon whom process may be served in any action brought against us under
the laws of the United States.
Our principal executive offices are located at S. E. Pearman Building, 2nd Floor, 9 Par-la-Ville Road, Hamilton HM11, Bermuda
and our telephone number is +1 (441) 542-9234.
For further information on important events in the development of our business, please see the section entitled “Item 4.B.
Business Overview—Our Business.” For further information on our principal capital expenditures and divestitures, including the
distribution of these investments geographically and the method of financing, please see the section entitled “Item 5.B. Liquidity
and Capital Resources.” We have not been the subject of any public takeover offers by any third party.
The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC, which can be found at http://www.sec.gov. Our internet address is http://
www.borrdrilling.com. The information contained on our website is not incorporated by reference and does not form part of this
annual report.
B. BUSINESS OVERVIEW
We are an offshore shallow-water drilling contractor providing worldwide offshore drilling services to the oil and gas industry.
Our primary business is the ownership, contracting and operation of jack-up rigs for operations in shallow-water areas (i.e., in
water depths up to approximately 400 feet), including the provision of related equipment and work crews to conduct oil and gas
drilling and workover operations for exploration and production customers. We currently own 22 rigs with an additional two jack-
up rigs scheduled to be delivered by the end of 2024. Upon delivery of these newbuild jack-up rigs, we will have a fleet of 24
premium jack-up rigs, which refers to rigs delivered from the yard in 2000 or later.
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We are one of the largest international operators of drilling rigs within the jack-up segment and the shallow-water market is our
operational focus. Jack-up rigs can, in principle, be used to drill (i) exploration wells, i.e. explore for new sources of oil and gas or
(ii) new production wells in an area where oil and gas is already produced; the latter activity is referred to as development drilling
and constitutes the vast majority of current activity. Shallow-water oil and gas production is generally a lower-cost production, in
terms of cost per barrel of oil, as compared to other offshore production. As a result, and due to the shorter period from
investment decision to cash flow, E&P Companies have an incentive to invest in shallow-water developments over other offshore
production categories.
We contract our jack-up rigs primarily on a dayrate basis to drill wells for our customers, including integrated oil companies,
state-owned national oil companies and independent oil and gas companies. During 2023, our top five customers by revenue,
including related party revenue were Perfomex, Saudi Arabian Oil Company, ENI Congo S.A., Brunei Shell Petroleum Company
Sendiran Berhad and BW Energy Gabon S.A.. A dayrate drilling contract generally extends over a period of time covering either
the drilling of a single well or group of wells, or covering a stated term. Our Total Contract Backlog (excluding backlog from
joint venture operations which earn related party revenue) was $1,206.5 million as of December 31, 2023 and $929.8 million as of
December 31, 2022. We currently operate in significant oil-producing geographies throughout the world, including the Middle
East, the North Sea, Mexico, West Africa and South East Asia. We continue to operate our business with a competitive cost base,
driven by a strong and experienced organizational culture and an actively managed capital structure.
The following chart illustrates the development in our fleet since inception:
 
As of December 31,
 
2023
2022
2021
2020
2019
2018
2017
Total fleet as of January 1,
22
23
24
28
27
13
—
Jack-up rigs acquired (1)
—
—
—
—
1
23
12
Newbuild jack-up rigs delivered from
shipyards
—
—
—
2
2
9
1
Jack-up rigs disposed
—
(1)
(1)
(6)
(2)
(18)
—
Total fleet as of December 31,
22
22
23
24
28
27
13
Newbuild jack-up rigs not yet delivered
as of December 31, (2)
2
5
5
5
7
9
13
Total fleet as of December 31,
24
27
28
29
35
36
26
(1) Includes the acquisition of one semi-submersible rig in 2018 which was subsequently sold in 2020.
(2) During the year ended December 31, 2022, the Company agreed to sell three newbuild rigs which the Company had previously
agreed to purchase from Seatrium to an undisclosed third-party. As of December 31, 2023, we had two newbuild jack-up rigs not
yet delivered, resulting in a total fleet of 24 rigs (giving effect to delivery of the newbuilds).
Our History
Important events in the development of our business include the following.
(i) Acquisition of Hercules Rigs
On December 2, 2016, we agreed to purchase two premium jack-up rigs (the “Hercules Rigs”) from Hercules British Offshore
Limited (“Hercules”). The transaction was completed on January 23, 2017 (the “Hercules Acquisition”). The Hercules Rigs,
“Frigg” (in 2023 renamed "Arabia III") and “Ran,” were acquired for a total price of $130.0 million. Each rig is a premium jack-
up rig.
(ii) Acquisition from Transocean
On March 15, 2017, we signed a letter of intent with Transocean Inc. (“Transocean”) for the purchase of certain Transocean
subsidiaries owning 10 jack-up rigs and the rights under five newbuilding contracts (the “Transocean Transaction”). On May 31,
2017, we completed the Transocean Transaction for a total price of $1,240.5 million. Since the acquisition closed, two of the rigs
under the newbuilding contracts have been delivered, “Saga” and “Skald,” one rig under newbuilding contract "Tivar" was sold in
the fourth quarter of 2022, and an additional two rigs with a contractual delivery in July 2025 and a best efforts expedited delivery
41
date of August 2024 (for "Vale") and September 2025 with a best efforts expedited delivery date of November 2024 (for "Var").
Of the rigs initially delivered at closing, four were standard jack-up rigs and six were premium jack-up rigs. Since the closing of
the Transocean Transaction, we have divested all of the four standard jack-up rigs and two cold stacked premium jack-up rigs, as
there was no economic incentive to reactivate these rigs.
(iii) Acquisition from PPL
On October 6, 2017, we entered into a master agreement with PPL for six premium jack-up drilling rigs and three premium jack-
up drilling rigs under construction at its yard in Singapore (together, the “PPL Rigs”). The consideration in the transaction with
PPL (the “PPL Acquisition”) was $1,300 million, of which $55.8 million was paid per rig on October 31, 2017, and we entered
into loans for delivery financing for a portion of the purchase price equal to $87.0 million per rig from PPL. All of the PPL Rigs
have been delivered and one rig, "Gyme", was sold in 2022.
(iv) Acquisition of Paragon
On March 29, 2018, we concluded the Paragon Transaction, subsequently acquiring the majority of the remaining shares in July
2018. At the closing of the Paragon Transaction, Paragon owned two premium jack-up rigs, 20 standard jack-up rigs (built before
2000) and one semi-submersible (built in 1979) (the “Paragon Rigs”). As part of the acquisition, Paragon became a subsidiary of
Borr Drilling. Subsequent to the acquisition, we divested all standard jack-up rigs and the one semi-submersible rig in the Paragon
Transaction as there was no economic incentive to reactivate these rigs.
(v) Acquisition from Seatrium
On May 16, 2018, we entered into an agreement with Seatrium to acquire five premium jack-up rigs under construction from
Seatrium (the “Seatrium Acquisition”). The purchase price for the Seatrium Rigs was $742.5 million. We took delivery of the
newbuild jack-up rigs "Hermod", “Heimdal” (in 2022 renamed "Arabia I" and "Arabia II"), and “Hild” in October 2019, January
2020 and April 2020, respectively. We were due to take delivery of the remaining two newbuild jack-up rigs "Huldra" and
"Heidrun" under the agreement in 2020, however, the delivery of these rigs was initially deferred to 2022 and subsequently to
2023. In the fourth quarter of 2022, we sold "Huldra" and "Heidrun" to a third party, and in 2023 the rigs were delivered to the
buyer.
(vi) Acquisition of Seatrium’s Hull B378
In March 2019, we entered into an assignment agreement with BOTL Lease Co. Ltd. for the assignment of the rights and
obligations under a construction contract to take delivery of one KFELS Super B Bigfoot premium jack-up rig identified as
Seatrium’s Hull No. B378 from Seatrium for a purchase price of $122.1 million. The construction contract was, at the same time,
novated to our subsidiary, Borr Jack-Up XXXII Inc., and amended. We took delivery of the jack-up rig on May 9, 2019 and the
rig was subsequently renamed “Thor.”
Divestments
From time to time we consider opportunities to sell our jack-up rigs. Set forth below is an overview of the rig divestments since
the beginning of 2022.
In September 2022, we entered into an agreement with a third party to sell the three rigs under construction "Tivar", "Heidrun"
and "Huldra" for total consideration of $320.0 million. The Company and Seatrium agreed to novate the rights and obligations
under the newbuilding contracts for the three rigs from the Company to the buyer, thereby releasing the Company from all
obligations under these contracts. The "Tivar" was delivered to the buyer in November 2022, and the "Huldra" and "Heidrun"
were delivered to the buyer in July 2023 and October 2023, respectively.
In November 2022, we sold the "Gyme" for a price of $120.0 million, pursuant to an undertaking by the Company under its most
recent refinancing with PPL completed in October 2022.
OUR BUSINESS
Our Competitive Strengths
We believe that our competitive strengths include the following:
42
One of the largest jack-up drilling rig contractors with one of the youngest fleets
We have one of the youngest and largest fleets in the jack-up drilling market. All of our rigs were built in or after 2011 and, as of
December 31, 2023 , the average age of our premium fleet (excluding our newbuilds not yet delivered) is 7.0 years (implying an
average building year of 2017), which we believe is among the lowest average fleet age in the industry. New and modern rigs that
offer technically capable, operationally flexible, safe and reliable contracting are increasingly preferred by customers. We
compete for and secure new drilling contracts from new tenders as well as privately negotiated transactions. We believe, based on
our young fleet and growing operational track record, that we are better placed to secure new drilling contracts as offshore drilling
demand rises, than our competitors who operate older, less modern fleets.
Largely uniform and modern fleet
As our fleet is one of the youngest and largest jack-up drilling fleets, and the operating capability of our jack-up rigs is largely
uniform, we have the capacity to bid for multiple contracts simultaneously, including those requiring active employment of
multiple rigs over the same period, as in the case of our operations for PEMEX in Mexico and Saudi Aramco in Saudi Arabia. We
have acquired (including newbuilds not yet delivered) a fleet of premium jack-up rigs from shipyards with a reputation for quality
and reliability. Moreover, due to the uniformity of the jack-up rigs in our fleet, we have been able to achieve operational and
administrative efficiencies.
Commitment to safety and the environment
We are focused on developing a strong quality, health, safety and environment ("QHSE"), culture and performance history. We
believe that the combination of quality jack-up rigs and experienced and skilled employees contributes to the safety and
effectiveness of our operations. Since the 2010 Deepwater Horizon Incident (to which we were not a party to), there has been an
increased focus on offshore drilling QHSE issues by regulators as well as by the industry. As a result, E&P Companies have
imposed increasingly stringent QHSE rules on their contractors, especially when working on challenging wells and operations
where the QHSE risks are higher. Our commitment to strong QHSE culture and performance is reflected in our Technical
Utilization rate, excluding our joint venture operations, of 98.3% in 2023 (98.9% in 2022), and our excellent safety record over
the same period. We believe our focus on providing safe and efficient drilling services will enhance our growth prospects as we
work towards becoming one of the preferred providers in the industry as the market continues to improve.
Strong and diverse customer relationships
We have strong relationships with our customers rooted in our employees’ expertise, reputation and history in the offshore drilling
industry, as well as our growing operational track record and the quality of our fleet. Our customers are oil and gas E&P
Companies, including integrated oil companies, state-owned national oil companies and independent oil and gas companies. For
the year ended December 31, 2023, our five largest customers in terms of revenue, including related party revenue were
Perfomex, Saudi Arabian Oil Company, ENI Congo S.A., Brunei Shell Petroleum Company Sendiran Berhad and BW Energy
Gabon S.A. We believe that we are responsive and flexible in addressing our customers’ specific needs and seek collaborative
solutions to achieve customer objectives. We focus on strong operational performance and close alignment with our customers’
interests, which we believe provides us with a competitive advantage and will contribute to contracting success and rig utilization.
Management team and Board members with extensive experience in the drilling industry
Our management team and Board of Directors have extensive experience in the oil and gas industry in general and in the drilling
industry in particular. In addition, members of our management team have extensive experience with drilling companies and
companies in the oil and gas industry operating in the jack-up drilling market. Members of our management team and Board have
held leadership positions at prominent offshore drilling and oilfield services companies, including Schlumberger Limited, Marine
Drilling Companies, Inc., Seadrill Limited, Noble Corporation, Valaris Limited and North Atlantic Drilling Ltd and have
experience which complements one another and have assisted, and continue to assist, in our ongoing development.
Our Business Strategies
We intend to continue to strive to meet our primary business objective of continuing to be a preferred operator to our customers in
the jack-up drilling market while also maximizing the return to our shareholders. To achieve this, our strategies include the
following:
Deploy high-quality rigs to service the industry
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We have one of the leading jack-up rig fleets in the industry. We believe that shallow-water drilling, as performed by our jack-up
rigs, has a shorter lifecycle between exploration and first oil and lower capital expenditure than other forms of drilling performed
by mobile offshore drilling units, such as drillships. We believe this makes shallow-water drilling more attractive than deep-water
projects in the current economic and industry climates. We believe our footprint in the industry is growing. Between April 1,
2018, and December 31, 2023, (excluding backlog from joint venture operations which earns related party revenue) we signed 76
contracts (64 as at December 31, 2022) for drilling services with an aggregate value of approximately $2,445.7 million
($1,713.0 million as at December 31, 2022), including 39 (35 as at December 31, 2022) with new customers. During this period,
we also signed seven extensions and have had 36 options exercised. As of March 22, 2024, all of our 22 rigs are under contract or
committed for future contracts. Our Economic Utilization, which reflects the proportion of the potential full contractual dayrate
that each contracted jack-up rig actually earned each day, excluding joint venture operations, for the year ended December 31,
2023 was 97.9% (98.1% in 2022).
Be a preferred provider in the industry
We have established strong and long-term relationships with key participants and customers in the offshore drilling industry, and
we seek to deepen and strengthen these relationships as part of our strategy. This involves identifying value add services for our
customers. Based on our premium, young and largely uniform fleet, our experienced team and a solid industry network, we
believe that we are well-positioned to capitalize on improving trends as we seek to continue to establish ourselves as a preferred
provider to these customers.
Establish high-quality, cost-efficient operations
We intend to establish ourselves as a leading offshore shallow-water drilling company by operating with a competitive cost base
while continuing to grow our reputation as a high-quality contractor. Our key objective is to deliver the best operations possible—
both in terms of Technical Utilization and QHSE culture and performance while maximizing deployment of our rigs and
maintaining a competitive cost structure.
To facilitate our strategy, we have one of the most modern and uniform fleets in the industry, with experienced and skilled
individuals across the organization and on our Board. We believe we have an advantage with regard to operating expenditures as a
result of our largely standardized fleet.
Our Fleet
We believe that we have one of the most modern jack-up fleets in the offshore drilling industry. Our drilling fleet currently
consists of 22 rigs, of which all are premium jack-up rigs. In addition, we have agreed to purchase two additional premium jack-
up rigs which are expected to be delivered in the second half of 2024. We define premium jack-up rigs as rigs built in 2000 or
later and which are suitable for operations in water depths up to 400 feet with an independent leg cantilever design. All but one of
our rigs were built after 2013 and as of December 31, 2023, the average age of our fleet was 7.0 years.
Jack-up rigs are mobile, self-elevating drilling platforms equipped with legs that are lowered to the seabed. A jack-up rig is towed
to the drill site with its hull riding in the water and its legs raised. At the drill site, the jack-up rigs' legs are lowered until they
penetrate the seabed. Its hull is then elevated (jacked-up) until it is above the surface of the water. After the completion of drilling
operations at a drill site, the hull is lowered until it rests on the water and the legs are raised at which point the rig can then be
relocated to another drill site. Jack-up rigs typically operate in shallow water, generally in water depths of less than 400 feet and
with crews of 90 to 150 people. We believe that our modern fleet allows us to enjoy better utilization and higher daily rates for
our jack-up rigs than competitors with older rigs.
Each rig in our fleet is certified by the American Bureau of Shipping ("ABS"), enabling universal recognition of our equipment as
qualified for international operations. The key characteristics of our rigs owned but not under contract which may yield
differences in their marketability or readiness for use include age of the rig, geographic location, technical specifications and
whether such rigs are warm stacked or cold stacked.
The following table sets forth additional information regarding our consolidated jack-up rig fleet as of March 22, 2024:
PREMIUM JACK-UP RIGS
Rig Name
Rig
Design
Rig Water
Depth (ft)
Year Built
Customer/
Status
Contract
Start
Contract
End
Location
Comments
44
PREMIUM JACK-UP RIGS
Skald
KFELS
Super B
Bigfoot
Class
400 ft
2018
PTT Exploration
and Production
Public Company
Limited
("PTTEP")
Jun 2021
Jun 2024
Thailand
Operating
PTTEP
July 2024
Sept 2025
Thailand
Committed with option to extend
Groa
PPL
Pacific
Class 400
400 ft
2018
Qatar Energy
Apr 2022
Apr 2024
Qatar
Operating with option to extend
Idun
KFELS
Super B
Bigfoot
Class
350 ft
2013
PTTEP
Feb 2024
Feb 2026
Thailand
Operating with option to extend
Thor
KFELS
Super B
Bigfoot
Class
400 ft
2019
PETRONAS
Carigali Sdn Bhd
Jan 2024
June 2024
Indonesia
Operating
Undisclosed
July 2024
Sept 2024
South East
Asia
Letter of Award
Norve
PPL
Pacific
Class 400
400 ft
2011
BW Energy
Dec 2022
May 2024
Gabon
Operating
Jun 2024
July 2024
Gabon
Committed
Gerd
PPL
Pacific
Class 400
400 ft
2018
Bunduq
Dec 2023
Aug 2024
United
Arab
Emirates
Operating with option to extend
Natt
PPL
Pacific
Class 400
400 ft
2018
ENI
Jan 2022
March
2024
Congo
Operating
Apr 2024
Dec 2025
Congo
Letter of Award
Ran (1)
KFELS
Super A
Class
400 ft
2013
Total Energies
Nov 2023
Sep 2024
Mexico
Operating with option to extend
Wintershall
Oct 2024
Dec 2024
Mexico
Committed
Odin
KFELS
Super B
Bigfoot
Class
350 ft
2013
(Opex
Perforadora)
PEMEX
Oct 2022
Dec 2025
Mexico
Operating
Gersemi
PPL
Pacific
Class 400
400 ft
2018
(Opex
Perforadora)
PEMEX
Oct 2022
Dec 2025
Mexico
Operating
Grid
PPL
Pacific
Class 400
400 ft
2018
(Opex
Perforadora)
PEMEX
Oct 2022
Dec 2025
Mexico
Operating
Galar
PPL
Pacific
Class 400
400 ft
2017
(Opex
Perforadora)
PEMEX
Oct 2022
Dec 2025
Mexico
Operating
Njord
PPL
Pacific
Class 400
400 ft
2019
(Opex
Perforadora)
PEMEX
Oct 2022
Dec 2025
Mexico
Operating
Prospector
1 (1)
F&G,
JU2000E
400 ft
2013
Neptune Energy
Sep 2023
March
2024
Netherlands 
North Sea
Operating
Saga
KFELS
Super B
Bigfoot
Class
400 ft
2018
Brunei Shell
Petroleum
Nov 2022
Nov 2026
Brunei
Operating with option to extend
45
PREMIUM JACK-UP RIGS
Prospector
5 (1)
F&G,
JU2000E
400 ft
2014
ENI
Nov 2022
March
2024
Congo
Operating with option to extend
Apr 2024
May 2026
Congo
Letter of Award
Mist
KFELS
Super B
Bigfoot
Class
350 ft
2013
Valeura Energy
Dec 2023
Aug 2024
Thailand
Operating
Sept 2024
Aug 2025
Thailand
Committed with option to extend
Gunnlod
PPL
Pacific
Class 400
400 ft
2018
ROC Oil
Jan 2024
May 2024
Malaysia
Operating
Arabia III(4)
KFELS
Super A
400 ft
2013
Saudi Arabian
Oil Company
Sept 2023
Sept 2028
Saudi
Arabia
Operating with option to extend
Arabia I(2)
KFELS B
Class
400 ft
2020
Saudi Arabian
Oil Company
Oct 2022
Oct 2025
Saudi
Arabia
Operating with option to extend
Arabia II(3)
KFELS B
Class
400 ft
2019
Saudi Arabian
Oil Company
Oct 2022
Oct 2025
Saudi
Arabia
Operating with option to extend
Hild
KFELS
Super B
Class
400 ft
2020
Fieldwood
Energy
Oct 2023
Oct 2025
Mexico
Operating
(1) HD/HE Capability
(2) Rig previously known as 'Heimdal'
(3) Rig previously known as 'Hermod'
(4) Rig previously known as 'Frigg''
PREMIUM JACK-UP RIGS UNDER CONSTRUCTION
Rig Name
Rig Design
Rig
Water
Depth (ft)
Customer/Status
Location
Comments
Vale
KFELS Super B Bigfoot Class
400 ft
Under Construction
KFELS shipyard,
Singapore
Rig delivery expected in August
2024
Var
KFELS Super B Bigfoot Class
400 ft
Under Construction
KFELS shipyard,
Singapore
Rig delivery expected in
November 2024
46
Customer and Contract Backlog
Our customers are oil and gas exploration and production companies, including integrated oil companies, state-owned national oil
companies and independent oil and gas companies. As of December 31, 2023, our largest customers in terms of revenue were
Perfomex, Saudi Arabian Oil Company, ENI Congo S.A., Brunei Shell Petroleum Company Sendiran Berhad and BW Energy
Gabon S.A. Our jack-up rigs are contracted to customers for periods between a couple of months, to several years.
As of December 31, 2023, excluding our joint venture operations in Mexico, we had 17 operating or committed jack-up rigs in
total, including six in South East Asia, five in the Middle East, three in West Africa, two in Mexico, and one in the North Sea. The
Technical Utilization and Economic Utilization for our drilling fleet, excluding our joint venture operations in Mexico, was 98.3%
and 97.9%, respectively, during 2023.
During the year ended December 31, 2023, we received a number of new contracts, letters of award and options exercised,
increasing our total contract backlog, excluding our joint venture operations in Mexico, to $1,206.5 million as at December 31,
2023, a significant increase from $929.8 million as at December 31, 2022. Amounts of actual revenues earned and the periods for
which revenues are earned may be different from those implied by the Total Contract Backlog due to several factors, including
shipyard and maintenance projects, downtime or standby time, and various other factors which may result in lower revenues than
implied by our total contract backlog. For example, downtime, caused by unscheduled repairs, maintenance, weather and other
operating factors, may result in lower applicable daily rates than the full contractual operating daily rate.
Contractual Terms
Our drilling contracts are individually negotiated and vary in their terms and provisions. We obtain most of our drilling contracts
through competitive bidding against other contractors and direct negotiations with operators.
Our drilling contracts provide for payment on a dayrate basis, with higher rates for periods while the jack-up rig is operating. A
dayrate drilling contract generally extends over a period of time covering either the drilling of a single well or group of wells or
covering a stated term. We currently only have dayrate contracts for which the customer bears substantially all of the ancillary
costs of constructing the well and supporting drilling operations, as well as the economic risk relative to the success of the well. In
addition, dayrate contracts may provide for a lump sum amount or dayrate for mobilizing or demobilizing the rig to and from the
operating location, which is usually lower than the contractual dayrate for uptime services, and a reduced dayrate when drilling
operations are interrupted or restricted by equipment breakdowns, adverse weather conditions or other conditions beyond our
control.
Certain of our drilling contracts contain terms which allow them to be terminated at the option of the customer, in some cases
upon payment of an early termination fee or compensation for costs incurred up to termination. Any such payments, however,
may not fully compensate us for the loss of the contract. Contracts also customarily provide for either automatic termination or
termination at the option of the customer, typically without any termination payment, in certain circumstances such as non-
performance, in the event of extended downtime or impaired performance caused by equipment or operational issues or periods of
extended downtime due to other conditions beyond our control, of which there are many. A number of our customers have
contractual rights to terminate their contracts with us if performance is prevented for a prolonged period due to force majeure
events. We may also be affected by force majeure provisions in contracts between our customers or suppliers and third parties.
We may also face contract suspension due to prevailing market conditions.
The contract term in some instances may be extended by the customer exercising options for the drilling of additional wells or for
an additional term. Our contracts also typically include a provision that allows the customer to extend the contract to finish
drilling a well-in-progress. During periods of depressed market conditions, our customers may seek to renegotiate firm drilling
contracts to reduce the term of their obligations or the average dayrate through term extensions, or may seek to suspend, terminate
or repudiate their contracts. If our customers cancel some of our contracts and we are unable to secure new contracts on a timely
basis and on substantially similar terms, or if contracts are suspended for an extended period of time or if a number of our
contracts are renegotiated, it could adversely affect our business, financial condition and results of operations. See "Item 5.
Operating and Financial Review and Prospects—Material Factors Affecting Results of Operations and Future Results" for more
information.
Consistent with standard industry practice, our customers generally assume, and indemnify us against, well control and subsurface
risks under dayrate drilling contracts. Under all of our current drilling contracts, our customers, as the operators, indemnify us for
pollution damages in connection with reservoir fluids stemming from operations under the contract and we indemnify the operator
for pollution from substances in our control that originate from the rig, such as diesel used onboard the rig or other fluids stored
47
onboard the rig and above the water surface. In addition, under all of our current drilling contracts, the operator indemnifies us
against damage to the well or reservoir and loss of subsurface oil and gas and the cost of bringing the well under control.
However, our drilling contracts are individually negotiated, and the degree of indemnification we receive from the operator
against the liabilities discussed above can vary from contract to contract, based on market conditions and customer requirements
existing when the contract is negotiated. In some instances, we have contractually agreed upon certain limits to our
indemnification rights and can be responsible for damages up to a specified maximum dollar amount. The nature of our liability
and the prevailing market conditions, among other factors, can influence such contractual terms. In most instances in which we
are indemnified for damages to the well, we have the responsibility to redrill the well at a reduced dayrate as the customer’s sole
and exclusive remedy if such well damages are due to our negligence. Notwithstanding a contractual indemnity from a customer,
there can be no assurance that our customers will be financially able to indemnify us or will otherwise honor their contractual
indemnity obligations.
Although our drilling contracts are the result of negotiations with our customers, our drilling contracts may also contain, among
other things, the following commercial terms: (i) payment by us of the operating expenses of the drilling rig, including crew labor
and incidental rig supply costs; (ii) provisions entitling us to adjustments of dayrates (or revenue escalation payments) in
accordance with published indices, changes in law or otherwise; (iii) provisions requiring us to provide a performance guarantee;
and (iv) provisions permitting the assignment to a third party with our prior consent, such consent not to be unreasonably
withheld.
Joint Venture and Partner Relationships
In some areas of the world, local content requirements, customs and practices, necessitate the formation of joint ventures with
local participation. Local laws or customs or customer requirements in some jurisdictions also effectively mandate the
establishment of a relationship with a local agent or partner. For more information regarding certain local content requirements
that may be applicable to our operations from time to time, please see the section entitled “Item 4.B. Business Overview —
Regulation — Environmental And Other Regulations in the Offshore Drilling Industry — Local Content Requirements.” When
appropriate in these jurisdictions, we will enter into agency or other contractual arrangements. We may or may not control these
joint ventures. We participate in joint venture drilling operations in Mexico and may participate in additional joint venture drilling
operations in the future. We may also enter into joint ventures even if not required, where we seek to partner with another party.
Mexico
We, along with our local partner in Mexico, CME, are party to a contract to provide integrated well services ("IWS") to Pemex.
On March 20, 2019, our subsidiary, Borr Drilling Mexico S. de R.L. de C.V. (“BDM”), and a CME subsidiary, Opex (together
with BDM, the “Contractor”), entered into a contract for the provision of IWS to Pemex (the “Cluster 2 Contract”). Borr Drilling
Limited guaranteed the performance of the Contractor’s obligations under the first Pemex Contract and our subsidiary, Borr
Mexico Ventures Limited ("BMV") is a shareholder in the joint venture arrangements in connection with the Cluster 2 Contract
(the “IWS JVs”). With effect from June 28, 2019, BMV owned a 49% interest in both Opex and a second joint venture entity,
Perfomex and CME owned the remaining 51%. Operations under the first Pemex Contract commenced in August 2019. The
Pemex Cluster 2 Contract was extended in December 2019 to include a third rig. In December 2019, with CME, we were assigned
a second integrated contract with Pemex under a similar structure for two further rigs (the “Cluster 3 Contract” and, together with
the Cluster 2 Contract, the “Pemex Contracts”). For the purposes of these additional contracts, two new subsidiaries were
incorporated with the same shareholding interests as Opex and Perfomex; Akal was established to deliver IWS to Pemex, and
Perfomex II to deliver drilling, technical, management and logistics services to Akal. Operations under the Cluster 3 Contract
commenced in March 2020.
Opex and Akal were IWS contractors under the Pemex Contracts and within the structure of the IWS JVs. Opex and Akal entered
into contracts with Schlumberger, and certain of its affiliates, and other third party contractors for the provision of IWS. Perfomex
and Perfomex II were the entities subcontracted by Opex and Akal, respectively, to provide the other services required by Opex
and Akal in order to comply with their respective obligations under the Pemex Contracts. In connection with the provision of
drilling services by Perfomex and Perfomex II, our rigs “Grid”, “Gersemi” and “Galar” (for the Cluster 2 Contract) and “Odin”
and “Njord” (for the Cluster 3 Contract) were chartered to Perfomex and Perfomex II, respectively, under bareboat charter
agreements. In addition to the rigs, we provided technical and operational management for all jack-up rigs being operated through
the IWS JVs.
On August 4, 2021, the Company's subsidiary BMV executed a Stock Purchase Agreement with Operadora Productora y
Exploradora Mexicana, S.A. de C.V. (“Operadora”) for the sale of the Company's 49% interest in each of Opex and Akal joint
ventures, representing the Company's disposal of the IWS operating segment, as well as the acquisition of a 2% incremental
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interest in each of Perfomex and Perfomex II joint ventures. The sale enabled us to streamline our operations in Mexico, and focus
on our dayrate drilling services provided by the remaining Mexican Joint Ventures. Connected with the sale, we received cash
consideration of $10.6 million, and a repayment of funding of $5.4 million.
Effective October 20, 2022, all five jack-up rigs "Grid", "Gersemi", "Galar", "Odin" and "Njord" are contracted to Perfomex on
bareboat charters, thereby consolidating activities for Perfomex's provision of traditional dayrate drilling and technical services to
Opex. Effective from this date, Perfomex II continues to provide technical services to Opex, in addition to rig management
services to external parties.
Our Mexican Joint Ventures may be used to provide drilling services utilizing other rigs owned by our subsidiaries and/or
subsidiaries of CME and, if we enter into further contracts with Pemex to provide drilling services, we may enter into other joint
venture structures with CME in order to provide such services.
Geographical Focus
We bid for contracts globally, however our current geographical focus is the Middle East, South East Asia, Europe, Mexico, and
West Africa. This is based on our current assessment of potential contracting opportunities, including, pre-tender and tender
activity. Several countries within these regions, such as Nigeria and Malaysia, have laws that regulate operations and/or
ownership of rigs operating within their jurisdiction, including local content and/or local partner requirements. In order to comply
with these regulations, and successfully secure contracts to operate in these regions, we have employed personnel with significant
experience in countries within these regions. Adapting to the above-mentioned factors is, and will continue to be, part of our
business. See Note 4 - Segments of our Audited Consolidated Financial Statements included herein for the amount of operating
revenues earned by each geographical region for the years ended December 31, 2023, 2022 and 2021.
Suppliers
Our material supply needs include labor agencies, insurance brokers, maintenance providers, shipyard access and drilling
equipment. Our senior management team has extensive experience in the oil and gas industry in general, and in the offshore
drilling industry in particular, and has built an extensive industry network. We believe that our relationships with our key
suppliers and service providers is critical as it allows us to benefit from economies of scale in the procurement of goods and
services and sub-contracting work.
Competition
The shallow-water offshore contract drilling industry is highly competitive. We compete on a worldwide basis and competition
varies by region at any particular time. Our competition ranges from large international companies offering a wide range of
drilling and other oilfield services to smaller, locally owned companies. Some of our competitors’ fleets comprise a combination
of offshore, onshore, shallow, midwater and deepwater rigs. We seek to differentiate our company from most of our competitors,
which have mixed fleets, by exclusively focusing on shallow-water drilling which we believe allows us to optimize our size and
scale and achieve operational efficiency.
Drilling contracts are traditionally awarded on a competitive basis, whether through tender or private negotiations. We believe
that the principal competitive factors in the markets we serve are pricing, technical capability of service and equipment, condition
and age of equipment, rig availability, rig location, safety record, crew quality, operating integrity, reputation, industry standing
and customer relations. We have made significant equity investments in our jack-up rigs and have built a fleet consisting of
premium jack-up rigs with proven design and quality equipment, acquired at what we believe are attractive prices. We believe that
our fleet of high-quality jack-up rigs allows us to competitively bid on industry tenders on the basis of the modern technical
capability, condition and age of our jack-up rigs. In addition, we believe our focus on QHSE performance will complement our
modern fleet, further allowing us to competitively bid for drilling contracts.
Seasonality
In general, seasonal factors do not have a significant direct effect on our business. However, we have operations in certain parts of
the world where weather conditions during parts of the year could adversely impact the operational utilization of the rigs and our
ability to relocate rigs between drilling locations, and as such, limit contract opportunities in the short term. Such adverse weather
could occur during, among other times, the winter season in the North Sea, hurricane season in the Mexican Gulf and the
monsoon season in South East Asia.
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Risk of Loss and Insurance
Our operations are subject to hazards inherent in the drilling of oil and gas wells, including blowouts, punch through, loss of
control of the well, abnormal drilling conditions, mechanical or technological failures, seabed cratering, fires and pollution, which
could cause personal injury, suspend drilling operations, or seriously damage or destroy the equipment involved. Offshore drilling
contractors such as us are also subject to hazards particular to marine operations, including capsizing, grounding, collision and
loss or damage from severe weather. Litigation arising from such an event may result in us being named a defendant in lawsuits
asserting large claims.
As is customary in the drilling industry, we attempt to mitigate our exposure to some of these risks through indemnification
arrangements and insurance policies. We carry insurance coverage for our operations in line with industry practice and our
insurance policies provide insurance cover for physical damage to the rigs, loss of income for certain rigs and third-party liability,
including:
Physical Damage Insurance: Hull and Machinery Insurance
We purchase hull and machinery insurance for our entire fleet and all of our fleet equipment to cover the risk of physical damage
to a rig. The level of coverage for each rig reflects its agreed value when the insurance is placed. We effectively self-insure part of
the risk as any claim we make under our insurance will be subject to a deductible. The deductible for each rig reflects the market
value of the rig and is currently a weighted average maximum of approximately $1.0 million per claim.
War Risk Insurance
We maintain war risk insurance for our rigs up to a maximum amount of $200 million per rig depending on the value of the
protection and indemnity and hull and machinery insurance policies for each rig and subject to certain coverage limits, deductibles
and exclusions. The terms of our war risk policies include a provision whereby underwriters can, upon service of seven days’
prior written notice to the insured, cancel the policies in the event that the insured has or may have breached sanctions. Further,
the policies will automatically terminate after the outbreak of war, or war-like conditions, between two or more of China, the
United States, the United Kingdom, Russia and France.
Loss of Hire Insurance
We maintain loss of hire insurance for certain of our jack-up rigs to cover loss of revenue in the event of extensive downtime
caused by physical damage covered by our hull and machinery insurance policies. Provided such downtime continues for more
than 45 days, the policies will cover an agreed daily rate of hire for such downtime up to a maximum of 180 days, not to exceed
100% of the daily loss of hire for such period. The decision to obtain loss of hire insurance is taken where required by the terms of
our finance agreements in respect thereof and otherwise on a case-by-case basis whenever a rig is contracted for drilling
operations. The amount covered under a loss of hire policy will depend on, among other things, the duration of the contract, the
contract rates and other terms of the relevant drilling contract.
Protection and Indemnity Insurance
We purchase protection and indemnity insurance and excess umbrella liability insurance. Our protection and indemnity insurance
covers third-party liabilities arising from the operation of our rigs, including personal injury or death (for crew and other third-
parties), collisions, damage to fixed and floating objects and statutory liability for oil spills and the release of other forms of
pollution, such as bunkers, and wreck removal. The protection and indemnity insurance policies, together with our excess
umbrella policy, cover claims up to the maximum of the agreed total claim amount, but not exceeding the maximum of $510
million (for our operational rigs) or $210 million (for our stacked rigs), as applicable, depending on contractual obligations and
area of operation. The excess umbrella insurance policy referred to above covers an additional $100 million to $200 million per
event, in addition to our protection and indemnity insurance policies, as part of our overall combined maximum insurance
coverage. If the aggregate value of a claim against one of our rig-owning subsidiaries under a protection and indemnity insurance
policy exceeds the maximum of $210 million or $310 million (for our rigs in Mexico), the excess umbrella insurance policy will
cover an additional agreed amount. We are self-insured for costs in excess of the overall combined maximum limit of coverage, or
$210 million for stacked rigs and the agreed aggregate limit between $310 million and $510 million for an operational rig, as
agreed. If the aggregate value of a claim against one of our subsidiaries under a protection and indemnity insurance policy
exceeds $210 million or $310 million, the excess umbrella policy will for rigs that are not laid-up cover an additional sum
between $100 million and $200 million as agreed for each rig, but maximum $510 million combined, meaning that we are self-
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insured for costs in excess of the total combined limit, as agreed. We retain the risk for the deductible of up to $25,000 per claim
relating to protection and indemnity insurance or up to $250,000 for claims made in the United States.
We also maintain insurance policies and excess insurance policies against general liability and public liability for onshore
statutory and contractual risks, mainly related to employment, tenant, warehouses and other on-shore activities. The insured value
under each individual policy is between $1 million and $5 million and is complemented by the excess umbrella policy which
provides for an additional aggregate excess limit of $50 million per annum.
Management's determination of the appropriate level of insurance coverage is made on an individual asset basis taking into
account several factors, including the age, market value, cash flow value and replacement value of our jack-up rigs, their location
and operational status.
LEGAL PROCEEDINGS
We are from time to time involved in civil litigation, and we anticipate that we will be involved in such litigation matters from
time to time in the future. The operating hazards inherent in our business expose us to a wide range of legal claims including
claims arising from personal injury; environmental issues; claims from and against contractual counterparties such as customers,
suppliers, partners and agents; intellectual property litigation; tax or securities claims and maritime claims, including the possible
arrest of our jack-up rigs. Risks associated with litigation include the risk of having to make a payment to satisfy a judgment
against us, legal and other costs associated with asserting our claims or defending lawsuits, and the diversion of management’s
attention to these matters. Even if successful, we may not be able to recover all of our costs.
REGULATION
We are registered under the laws of Bermuda and our principal executive offices are located in Bermuda. The management
headquarters of Borr Drilling Management UK are located in the United Kingdom, while we have business operations in four
regions; Europe, Asia, Africa and Americas as well as in various countries where our rigs are operating or stacked. As a result of
this organizational structure and the scope of our operations, we are subject to a variety of laws in different countries, including
those related to the environment, health and safety, personal privacy and data protection, content restrictions, telecommunications,
intellectual property, advertising and marketing, labor, foreign exchange, competition and taxation. These laws and regulations
are constantly evolving and may be interpreted, implemented or amended in a manner that could harm our business. It also is
likely that if our business grows and evolves and our rigs and services are used more globally, we will become subject to laws and
regulations in additional jurisdictions. This section sets forth the summary of material laws and regulations relevant to our
business operations.
Environmental and Other Regulations in the Offshore Drilling Industry
Our operations are subject to numerous QHSE laws and regulations in the form of international treaties and maritime regimes,
flag state requirements, national environmental laws and regulations which may include laws or regulations pertaining to climate
change, carbon emissions or energy use, navigation and operating permits requirements, local content requirements, and other
national, state and local laws and regulations in force in the jurisdictions in which our jack-up rigs operate or are registered, which
can significantly affect the ownership and operation of our jack-up rigs. See the section entitled “Item 3.D. Risk Factors — Risk
Factors Related to Applicable Laws and Regulations — We are subject to complex environmental laws and regulations that can
adversely affect us.”
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Class and Flag State Requirements
Each of our rigs is subject to regulatory requirements of its flag state. Flag state requirements reflect international maritime
requirements and are in some cases further interpolated by the flag state itself. These include engineering, safety and other
requirements related to offshore industries generally. In addition, in order to be permitted to operate, each of our jack-up rigs must
be certified by a classification society as being “in-class,” which provides evidence that the jack-up rig was built, and is
maintained, in accordance with the rules of the relevant classification society and complies with applicable rules and regulations
of the flag state as well as the international conventions to which that country is a party. Maintenance of class certification has a
significant cost and although dry docking is not necessary for the five year special periodic survey, underwater inspections are
required every thirty months. This is required to verify the integrity of our jack-up rigs and maintain compliance with class
requirements. Moreover, we could be required to take a jack-up rig out of service for repairs or modifications. Our jack-up rigs
are certified as being “in-class” by ABS and we comply with the mandatory requirements of the national authorities in the
countries in which our jack-up rigs operate. In addition, classification societies are authorized to issue statutory certificates on the
basis of delegated authority from the flag states for some of the internationally required certifications, such as the Code for the
Construction and Equipment of Mobile Offshore Drilling Units certificate.
International Maritime Regimes
Applicable international maritime regime requirements include, but are not limited to, the International Convention for the
Prevention of Pollution from Ships ("MARPOL"), the International Convention on Civil Liability for Oil Pollution Damage of
1969, the International Convention on Civil Liability for Bunker Oil Pollution Damage of 2001 (ratified in 2008), the
International Convention for the Safety of Life at Sea of 1974 as amended, the Code for the Construction and Equipment of
Mobile Offshore Drilling Units, 2009 and the International Convention for the Control and Management of Ships’ Ballast Water
and Sediments, effective as of 2017 (the “BWM Convention”). These conventions have been widely adopted by United Nation
member countries, and in some jurisdictions in which we operate, these regulations have been expanded upon. These various
conventions regulate air emissions and other discharges to the environment from our jack-up rigs worldwide, and we may incur
costs to comply with these regimes and continue to comply with these regimes as they may be amended in the future. In addition,
these conventions impose liability for certain discharges, including strict liability in some cases.
Annex VI to MARPOL sets limits on sulfur dioxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate
emissions of ozone depleting substances. Annex VI applies to all ships and, among other things, imposes a global cap on the
sulfur content of fuel oil and allows for specialized areas to be established internationally with even more stringent controls on
sulfur emissions. For vessels 400 gross tons and greater, platforms and drilling rigs, Annex VI imposes various survey and
certification requirements. Moreover, Annex VI regulations impose progressively stricter limitations on sulfur emissions from
ships. Since January 1, 2015, these limitations have required that fuels of vessels in covered ECAs, including the Baltic Sea,
North Sea, North America and United States Caribbean Sea ECAs, contain no more than 0.1% sulfur. For non-ECA-areas, a
global cap on sulfur content of no more than 0.5% entered into force on January 1, 2020. Annex VI also established new tiers of
stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation. All of our rigs are in
compliance with these requirements.
The BWM Convention required for a phased introduction of mandatory ballast water exchange requirements (beginning in 2009),
to be replaced in time with a requirement for mandatory ballast water treatment. The BWM Convention entered into force on
September 8, 2017. Under its requirements, for jack-up rigs with a ballast water capacity of more than 5,000 cubic meters that
were constructed in 2011 or before, only ballast water treatment will be accepted by the BWM Convention. All of our jack-up rigs
considered in operational status are in full compliance with the staged implementation of the BWM Convention by IMO
guidelines.
Environmental Laws and Regulations
We are subject to laws which govern discharge of materials into the environment or otherwise relate to environmental protection,
including complying with regulations on the transit and safe recycling of hazardous materials which are relevant when we retire
rigs from the international fleet. In certain circumstances, these laws may impose strict liability, rendering us liable for
environmental and natural resource damages without regard to negligence or fault on our part. Implementation of new
environmental laws or regulations that may apply to jack-up rigs may subject us to increased costs or limit the operational
capabilities of our rigs and could materially and adversely affect our operations and financial condition. Applicable environmental
laws and regulations for our current operations include the Basel Convention, the Hong Kong International Convention for the
Safe and Environmentally Sound Recycling of Ships, 2009 (when it enters into force) as well as European Union regulations,
including the E.U. Directive 2013/30 on the Safety of Offshore Oil and Gas Operations, Regulation (EC) No 1013/2006 on
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Shipments of Waste and Regulation (E.U.) No 1257/2013 on Ship Recycling. Were we to operate in other regions, such as the US
or Brazil, additional environmental laws and regulations would apply to our operations.
Safety Requirements
Our operations are subject to special safety regulations relating to drilling and to the oil and gas industry in many of the countries
where we operate. Other countries are also undertaking a review of their safety regulations related to our industry. These safety
regulations may impact our operations and financial results by adding to the costs of exploring for, developing and producing oil
and gas in offshore settings. The rule contains a number of other requirements, including third-party verification and
certifications, real-time monitoring of deepwater and certain other activities, and sets criteria for safe drilling margins. If material
spill events were to occur in the future, certain countries could elect to again issue directives to temporarily cease drilling
activities and, in any event, may from time-to-time issue additional safety and environmental laws and regulations regarding
offshore oil and gas exploration and development. The E.U. has also undertaken a significant revision of its safety requirements
for offshore oil and gas activity through the issuance of the E.U. Directive 2013/30 on the Safety of Offshore Oil and Gas
Operations.
Navigation and Operating Permit Requirements
Numerous governmental agencies issue regulations to implement and enforce the laws of the applicable jurisdiction, which often
involve lengthy permitting procedures, impose difficult and costly compliance measures, particularly in ecologically sensitive
areas, and subject operators to substantial administrative, civil and criminal penalties or may result in injunctive relief for failure
to comply. Some of these laws contain criminal sanctions in addition to civil penalties.
Local Content Requirements
Governments in some countries have become increasingly active in local content requirements on the ownership of drilling
companies, local content requirements for equipment utilized in operations within the country and other aspects of the oil and gas
industries in their countries. These regulations include requirements for participation of local investors in our local operating
subsidiaries, including in Mexico. Some foreign governments favor or effectively require (i) the awarding of drilling contracts to
local contractors or to drilling rigs owned by their own citizens, (ii) the use of a local agent or (iii) foreign contractors to employ
citizens of, or purchase supplies from, a particular jurisdiction. In addition, national oil companies may impose restrictions on the
submission of tenders, including eligibility criteria, which effectively require the use of domestically supplied goods and services
or a local partner.
Data Protection Laws and Regulations
We are subject to rules and regulations governing protection of personal data including the GDPR, repealing the 1995 European
Data Protection Directive (Directive 95/46/EC) and any national laws within the European Economic Area (“EEA”)
supplementing the GDPR. Data protection legislation, including the GDPR, regulates the manner in which we may hold, use and
communicate personal data of our employees, customers, vendors and other third parties. Data protection is a sector of significant
regulatory focus with scrutiny of cybersecurity practices and the collection, storage, use and sharing of personal data increasing
around the world. As a consequence, there is uncertainty associated with the legal and regulatory environment relating to privacy,
e-privacy and data protection laws, which continue to develop in ways we cannot predict. Changes in applicable data protection
and cybersecurity legislation could materially and adversely affect our business.
The companies within our Group which are employers are “data controllers” for the purposes of the GDPR, meaning that, among
other obligations, they are required to ensure that personal data collected for instance from our employees is safely stored, that its
accuracy is maintained (meaning that inaccurate data is corrected) and that personal data is only stored for as long as necessary
further to the purpose for which it was collected. With respect to transfers of our employees’ personal data that is subject to the
GDPR, whether externally to third parties or internally within our Group, the GDPR requires that we establish safeguards to
ensure that personal data is safely transferred and that the rights of the data subject are respected and upheld.
The companies within our Group which communicate with vendors and other third parties, in connection with contracts or
otherwise, may be “data controllers” or “data processors” for the purposes of the GDPR and are required to handle any personal
data received from vendors and other third parties in accordance with the provisions of the GDPR.
The GDPR applies primarily to our companies established in the EEA but may also apply to other companies in the Group to the
extent that their business involves personal data of persons located within the EEA. Noncompliance with the GDPR can lead to
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the imposition of government enforcement actions and prosecutions, private litigation (including class actions) and administrative
fines, currently up to the greater of €20 million and 4% of our global turnover in the financial year preceding the imposition of the
fine, as well as an obligation to compensate the relevant individual(s) for financial or non-financial damages claimed under
Article 82 of the GDPR. Any such compromise could also result in damage to our reputation and a loss of confidence in our
security and privacy or data protection measures. A breach of the GDPR (or other applicable data protection legislation) could
have a material adverse effect on our business, financial condition and results of operations.
Other Laws and Regulations
In addition to the requirements described above, our international operations in the offshore drilling segment are subject to various
other international conventions and laws and regulations in countries in which we operate, including laws and regulations relating
to the importation of, and operation of, jack-up rigs and equipment, cabotage rules, currency conversions and repatriation, oil and
gas exploration and development, taxation of offshore earnings, taxation of the earnings of expatriate personnel, the use of local
employees and suppliers by foreign contractors, duties on the importation and exportation of our rigs and other equipment, local
community development and social corporate responsibility requirements. There is no assurance that compliance with current
laws and regulations or amended or newly adopted laws and regulations can be maintained in the future or that future
expenditures required to comply with all such laws and regulations in the future will not be material.
INDUSTRY OVERVIEW
We operate in the global offshore contract drilling industry, which is a part of the international oil industry, and within the global
offshore contract drilling industry we predominately operate jack-up rigs in shallow-water. The activity and pricing within the
global offshore contract drilling industry is driven by a multitude of demand and supply factors, including expectations regarding
oil and gas prices, anticipated oil and gas production levels, worldwide demand for oil and gas, the availability of quality
reservoirs, exploration success, availability of qualified drilling rigs and operating personnel, relative production costs, the
availability of or lead time required for drilling and production equipment, the stage of reservoir development and political and
regulatory environments.
One fundamental demand driver is the level of investment by E&P Companies and their associated capital expenditures.
Historically, the level of upstream capital expenditures has primarily been driven by future expectations regarding the price of oil
and natural gas.
Overview of the Global Offshore Contract Drilling Market
The offshore contract drilling industry provides drilling, workover and well construction services to E&P Companies through the
use of Mobile Offshore Drilling Units ("MODUs"). Historically, the offshore drilling industry has been highly cyclical. Offshore
spending by E&P Companies has fluctuated substantially on an annual basis depending on a variety of factors. See “Item 3.D.
Risk Factors—Risk Factors Related to Our Industry.”
The profitability of the offshore contract drilling industry is largely determined by the balance between supply and demand for
MODUs. Offshore drilling contractors can mobilize MODUs from one region of the world to another, or reactivate stacked rigs in
order to meet demand in various markets.
Offshore drilling contractors typically operate their MODUs under contracts received either by submitting proposals in
competition with other contractors or following direct negotiations. The rate of compensation specified in each contract depends
on, among other factors, the number of available rigs capable of performing the work, the nature of the operations to be
performed, the duration of work, the amount and type of equipment and services provided, the geographic areas involved and
other variables. Generally, contracts for drilling services specify a daily rate of compensation and can vary significantly in
duration, from weeks to several years. Competitive factors include, among others: price, rig availability, rig operating features,
workforce experience, operating efficiency, condition of equipment, safety record, contractor experience in a specific area,
reputation and customer relationships.
Periods of high demand are typically followed by a shortage of rigs and consequently higher dayrates which, in turn, makes it
advantageous for industry participants to place orders for new rigs. After difficult market conditions in 2020 and 2021, we have
seen market recovery in 2022 and 2023 with all the Company's jack-up rigs excluding newbuildings being operational at
December 31, 2023, with rig global fleet utilization exceeding pre-COVID-19 levels, reaching levels in the market last seen in
2014.
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The Jack-Up Rig Segment
Jack-up rigs can, in principle, be used to drill (i) exploration wells, i.e. explore for new sources of oil and gas or (ii) new
production wells in an area where oil and gas is already produced; the latter activity is referred to as development drilling and
constitutes the vast majority of current demand. Shallow-water oil and gas production is generally a low-cost production, in terms
of cost per barrel of oil. As a result, and due to the shorter period from investment decision to cash flow, E&P Companies have an
incentive to invest in shallow-water developments over other offshore production categories.
The jack-up drilling market is characterized by a highly competitive and fragmented supplier landscape, with market participants
ranging from large international companies to small, locally owned companies and rigs owned by NOCs (the latter are referred to
as owner-operated rigs). The operations of the largest players are generally dispersed around the globe due to the high mobility of
most MODUs. Although the cost of moving MODUs from one region to another and/or the availability of rig-moving vessels may
cause a short-term imbalance between supply and demand in one region, significant variations between regions do not exist in the
long-term due to MODU mobility.
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There are several sub-segments within the jack-up drilling segment based on different attributes of the rigs, typically water depth
capability, age, hook load capacity, cantilever reach and environmental conditions a rig can operate in. The sub-segment
classification varies across market participants, third parties (researchers, consultants etc.), classification societies and others. In
this annual report, we have used the following classification of the jack-up sub-segments, which are as follows:
• “modern” or “premium” – rigs delivered in 2000 or later; and
• “standard” – rigs delivered prior to 2000.
In recent years, the jack-up drilling market has experienced a shift in demand towards modern jack-up rigs. In line with this trend,
several drilling contractors are renewing their fleets through both newbuildings and rig acquisitions.
C. ORGANIZATIONAL STRUCTURE
A full list of our significant management, operating and rig-owning subsidiaries is shown in Exhibit 8.1 to this annual report and
the following diagram depicts our simplified organizational and ownership structure. Our significant subsidiaries depicted below
are 100% owned by Borr Drilling Limited either directly or indirectly, unless specifically noted otherwise.
Our subsidiary Borr Mexico Ventures Limited holds a 51% interest in two Mexican entities Perfomex and Perfomex II, and a
subsidiary of our local operating partner in Mexico holds the remaining 49% interest.
D. PROPERTY, PLANT AND EQUIPMENT
We do not own any material interest in real estate. Our principal executive office is located in Bermuda, while our operational
headquarters are located in London. Our principal lease is the rental of approximately 16,206 sq ft of office space in Aberdeen,
UK under a ten year lease which began in 2019. In addition we rent office space in Oslo, Stavanger, Singapore, Kuala Lumpur,
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Kuala Belait, Doha, Bangkok, London, Dubai, Al-Khobar, Pointe Noire and Port Gentil, however we do not consider these as
material leases. In addition to office space, we also rent storage and yard facilities to support our operations in the countries we
operate in.
We own a modern fleet of premium jack-up rigs. See “Item 4.B. Business Overview - Our Business - Our Fleet” for a summary of
our consolidated fleet of jack-up rigs as well as jack-up rigs under construction as of March 22, 2024.
A number of our rig-owning subsidiaries' shares and assets are pledged to secure loan facilities.  See "Item 5.B. Liquidity and
Capital Resources - Our Existing Indebtedness" for more information.
We are subject to several international, national, and local environmental laws, regulations, treaties and conventions which may
affect the utilization of our rigs. In addition, other environmental issues may influence the Company's use of property, plant and
equipment. See "Item 3.D. Risk Factors - Risk Factors Related to Applicable Laws and Regulations" and "Item 4.B. Business
Overview - Regulation" above.
ITEM 4A.  UNRESOLVED STAFF COMMENTS
None.
ITEM 5.  OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our
Audited Consolidated Financial Statements included herein and the related notes thereto included elsewhere in this annual
report. The discussion and analysis below contain certain forward-looking statements about our business and operations that are
subject to the risks, uncertainties and other factors described in the section entitled “Item 3.D. Risk Factors,” and elsewhere in
this annual report. These risks, uncertainties and other factors could cause our actual results to differ materially from those
expressed in, or implied by, the forward-looking statements. See the section entitled “Special Note Regarding Forward-Looking
Statements.”
Overview of Financial Information Presented
We are an offshore shallow-water drilling contractor providing worldwide offshore drilling services to the oil and gas industry.
Our primary business is the ownership, contracting and operation of jack-up rigs for operations in shallow-water areas (i.e., in
water depths up to approximately 400 feet), including the provision of related equipment and work crews to conduct oil and gas
drilling and workover operations for exploration and production customers.
We are a preferred operator to our customers of jack-up rigs within the jack-up drilling market. The shallow-water market is our
operational focus as it has a shorter lifecycle between exploration and first oil and lower capital expenditure than other forms of
drilling performed by mobile offshore drilling units, such as drillships. We contract our jack-up rigs and associated offshore
crews, primarily on a dayrate basis, to drill wells for our customers, including integrated oil companies, state-owned national oil
companies and independent oil and gas companies. A dayrate drilling contract generally extends over a period of time covering
either the drilling of a single well or group of wells or covering a stated term. Our Total Contract Backlog (excluding backlog
from joint venture operations which earns related party revenue) was $1,206.5 million as of December 31, 2023 and
$929.8 million as of December 31, 2022. We currently operate in significant oil-producing geographies throughout the world,
including the North Sea, Mexico, West Africa, Middle East and South East Asia. We operate our business with a competitive cost
base, driven by a strong and experienced organizational culture and a carefully managed capital structure.
From our initial acquisition of rigs in early 2017, we have become one of the world’s largest international offshore jack-up
drilling contractors by number of jack-up rigs, with an average fleet age among the lowest in the industry. The summary in “Item
4.B. Business Overview” illustrates the development in our fleet since our inception.
How We Evaluate Our Business
During the years ended December 31, 2023 and 2022, we had one operating segment consisting of operations performed under
our dayrate model (which includes rig charters and ancillary services), however, prior to 2022, we had an additional operating
segment consisting of operations performed under the IWS model. IWS operations were performed by our joint venture entities
Opex and Akal. On August 4, 2021, the Company executed a Stock Purchase Agreement for the sale of the Company's 49%
57
interest in each of Opex and Akal (see Note 7 - Equity Method Investments of our Audited Consolidated Financial Statements
included herein), representing the Company's disposal of the IWS operating segment.
We evaluate our business based on a number of operational and financial measures that we believe are useful in assessing our
historical and expected future performance throughout the commodity-price cycles that have characterized the offshore drilling
industry since our inception. These operational and financial measures include the following:
Operational Measures
Total Contract Backlog
Our Total Contract Backlog includes only firm commitments for contract drilling services represented by definitive agreements.
Total Contract Backlog (in $ millions) is calculated as the maximum contract drilling dayrate revenue that can be earned from a
drilling contract based on the contracted operating dayrate. Total Contract Backlog excludes revenue resulting from mobilization
and demobilization fees, contract preparation, capital or upgrade reimbursement, recharges, bonuses and other revenue sources
and is not adjusted for planned out-of-service periods during the contract period. Total Contract Backlog excludes backlog from
joint venture operations which earn related party revenue.
Total Contract Backlog (in contracted rig years) is calculated as our total number of contracted rig years based on firm
commitments, which illustrates the time it would take one jack-up rig to perform the obligations under all agreements for all rigs
consecutively.
The contract period excludes additional periods that may result from the future exercise of extension options under our contracts,
and such extension periods are included only when such options are exercised. The contract operating dayrate may temporarily
change due to, among other factors, mobilization, weather or repairs.
Our Total Contract Backlog (excluding backlog from joint venture operations which earn related party revenue), expressed in
U.S. dollars and in number of years, as of December 31, 2023, 2022 and 2021, were as follows:
As of December 31,
2023
2022
2021
Total Contract Backlog (in $ millions)(1)
$1,206.5
$929.8
$324.8
Total Contract Backlog (in contracted rig years)(1)
25
24
12
(1) The table assumes no exercise of extension options or renegotiations under our current contracts.
Technical Utilization
Technical Utilization is the efficiency with which we perform well operations without stoppage due to mechanical, procedural or
other operational events that result in down, or zero, revenue time. Technical Utilization is calculated as the technical utilization
of each rig in operation for the period, divided by the number of rigs in operation for the period, with the technical utilization for
each rig calculated as the total number of hours during which such rig generated dayrate revenue, divided by the maximum
number of hours during which such rig could have generated dayrate revenue, expressed as a percentage measured for the period.
Technical Utilization is calculated only with respect to rigs in operation for the relevant period and is not calculated on a fleet-
wide basis. Technical Utilization is a measure of efficiency of rigs in operation and is not a measurement of utilization of our fleet
overall.
Economic Utilization
Economic Utilization is the dayrate revenue efficiency of our operational rigs and reflects the proportion of the potential full
contractual dayrate that each operating jack-up rig actually earns each day. Economic Utilization is affected by reduced rates for
standby time, repair time or other planned out-of-service periods. Economic Utilization is calculated as the economic utilization of
each rig in operation for the period, divided by the number of rigs in operation for the period, with the economic utilization of
each rig calculated as the total revenue, excluding bonuses, as a proportion of the full operating dayrate multiplied by the number
of days on contract in the period. Economic Utilization is calculated only with respect to rigs in operation for the relevant period
and is not calculated on a fleet-wide basis. Economic Utilization is a measure of efficiency of rigs in operation and is not a
measurement of utilization of our fleet overall.
58
Rig Utilization
Rig Utilization is calculated as the weighted average number of operating rigs divided by the weighted average number of rigs
owned for each period.
Total Recordable-Incident Frequency (TRIF)
TRIF is a measure of the rate of recordable workplace injuries. TRIF, as defined by the International Association of Drilling
Contractors, is derived by multiplying the number of recordable injuries during the twelve-month period prior to the specified date
by 1,000,000 and dividing this value by the total hours worked in that period. An incident is considered “recordable” if it results
in medical treatment over certain defined thresholds (such as receipt of prescription medication, stitches to close a wound,
inability to carry out normal work activity, or time spent away from work).
Weighted Average Number of Operating Rigs
Weighted Average Number of Operating Rigs describes the number of jack-up rigs operating, which may be compared to our
total available jack-up fleet. We define operating rigs as all of our jack-up rigs that are currently operating on firm commitments
for contract drilling services, represented by definitive agreements. This excludes our jack-up rigs which are stacked, undergoing
reactivation programs and newbuild rigs under construction. The Weighted Average Number of Operating Rigs is the aggregate
number of revenue days during the period from contract drilling services, divided by the number of days in the applicable period.
Our Technical Utilization and Economic Utilization (both excluding joint venture operations), Rig Utilization, TRIF and
Weighted Average Number of Operating Rigs for the years ended December 31, 2023, 2022 and 2021 were as follows:
 
Year Ended December 31,
 
2023
2022
2021
Technical Utilization (in %)
98.3
98.9
98.4
Economic Utilization (in %)
97.9
98.1
94.8
Rig Utilization (in %)
92.4
72.3
53.3
TRIF (number of incidents)
0.65
1.68
1.00
Weighted Average Number of Operating Rigs
20.1
15.9
11.9
Non-GAAP Financial Measures
Adjusted EBITDA
In addition to disclosing financial results in accordance with U.S. GAAP, this report includes the non-GAAP financial measure,
Adjusted EBITDA. We believe that this non-GAAP financial measure provides useful supplemental information about the
financial performance of our business, enables comparison of financial results between periods where certain items may vary
independent of business performance, and allows for greater transparency with respect to key metrics used by management in
operating our business and measuring our performance.
The non-GAAP financial measure should not be considered a substitute for, or superior to, financial measures calculated in
accordance with GAAP, and the financial results calculated in accordance with GAAP. Non-GAAP measures are not uniformly
defined by all companies and may not be comparable with similarly titled measures and disclosures used by other companies.
59
Non-GAAP
Measure
Closest Equivalent
to GAAP Measure
Definition
Rationale for Presentation of this
non-GAAP Measure
Adjusted
EBITDA
Net income / (loss)
attributable to
shareholders of Borr
Drilling Limited
Net income / (loss) adjusted for: gain on disposal of
jack-up rigs; depreciation of non-current assets;
impairment of non-current assets; other non-
operating income; income from equity method
investments; total financial expenses, net;
amortization of deferred mobilization and contract
preparation costs; amortization of deferred
mobilization and demobilization and other revenue;
and income tax.
Increases the comparability of total
business performance from period to
period and against the performance of
other companies by excluding the
results of our equity investments and
removing the impact of depreciation,
financing and tax items.
We believe that Adjusted EBITDA improves the comparability of year-to-year results and is representative of our underlying
performance, although Adjusted EBITDA has significant limitations, including not reflecting our cash requirements for capital or
deferred costs, rig reactivation costs, newbuild rig activation costs, contractual commitments, taxes, working capital or debt
service. Non-GAAP financial measures may not be comparable to similarly titled measures of other companies and have
limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as
reported under U.S. GAAP.
Significant Events in 2023
Issuance of Unsecured Convertible Bonds due 2028
In February 2023, we raised gross proceeds of $250.0 million through the issuance of new unsecured convertible bonds, which
mature in February 2028, the proceeds of which were used to repay our Convertible Bonds due in May 2023. The initial
conversion price was $7.3471 per share, with the full amount of the Convertible Bonds convertible into 34,027,031 shares.
Following the declaration and payment of a $0.05 per share cash distribution in January 2024 and a further $0.05 per share cash
distribution paid in March 2024, the adjusted conversion price is $7.2384 per share, with the full amount of the convertible bonds
convertible into 34,538,019 shares. The Convertible Bonds have a coupon of 5.0% per annum payable semi-annually in arrears in
equal installments.
Issuance of Senior Secured Bonds due in 2026
In February 2023, we raised gross proceeds of $150.0 million through the issuance of senior secured bonds, due in 2026, the
proceeds of which were used to repay the remaining parts of our Convertible Bonds due in May 2023 that were not repaid by the
proceeds of the Convertible Bonds due 2028, and for general corporate purposes. The senior secured bonds had a coupon of
9.50% per annum payable semi-annually in arrears, and were secured by, among other assets, first priority mortgages over the
jack-up rigs “Frigg”, “Odin” and “Ran”. The senior secured bonds were fully repaid in November 2023 (see below).
Amendment to the Secured Facility with DNB Bank ASA (DNB Facility)
In April 2023, we amended our $150.0 million bilateral facility provided by DNB Bank ASA increasing the facility to $175.0
million. In addition, we entered into a facility with DNB Bank ASA to provide guarantees and letters of credit of up to $25.0
million, enabling the Company to make freely available the $10.5 million restricted cash related to guarantees and letters of credit
in the Consolidated Balance Sheets as at March 31, 2023. In August 2023, we amended our $25.0 million guarantee facility
provided by DNB Bank ASA temporarily increasing the facility to $40.0 million until December 31, 2023. The DNB facility was
fully repaid in November 2023 (see below).
Issuance of Senior Secured Notes
In November 2023, the Company's wholly-owned subsidiary Borr IHC Limited, and certain other subsidiaries, issued $1,540.0
million in aggregate principal amount of senior secured notes, consisting of $1,025.0 million principal amount of senior secured
notes due 2028, issued at a price of 97.750% of par, raising proceeds of $1,001,937,500 and bearing a coupon of 10% per annum
and $515.0 million principal amount of senior secured notes due 2030, issued at a price of 97.000% of par, raising proceeds of
$499,550,000 and bearing a coupon of 10.375% per annum.
60
The net proceeds from the issuance of the Notes, together with the proceeds of the private placement of shares in Norway
(discussed below), were used to repay all of the Company’s outstanding secured borrowings, being the Company’s $175.0 million
facility with DNB Bank ASA, $195.0 million facility with Hayfin Services LLP, the shipyard delivery financing arrangements
with PPL and Seatrium, the Company’s $150 million principal amount of Norwegian law senior secured bonds, and to pay related
premiums, fees, accrued interest and expenses, in connection with the foregoing.
Entry into Super Senior Credit Facility
In addition, in November 2023, the Company entered into a $180 million Super Senior Credit Facility, comprised of a $150
million RCF and a $30.0 million Guarantee Facility.
See Note 21 - Debt of our audited Consolidated Financial Statements included herein, for further information on the financing
facilities described above.
Increases in Share Capital
In connection with the issuance of our $250.0 million Convertible Bonds discussed above, the Company entered into a Share
Lending Framework Agreement with DNB Markets ("SLA") with the intention to make up to 25,000,000 loan shares available to
DNB for the purposes of facilitating investors’ hedging activities on the Oslo Stock Exchange.
In February 2023, to issue the 25,000,000 loan shares to be made available for borrowing to DNB by the Company under the
SLA, the Company's issued share capital was increased by $2,500,000 to $25,426,359.80 divided into 254,263,598 shares, each
with a nominal value of $0.10 per share.
During July 2023, we sold 1,293,955 shares of par value $0.10 each under our ATM program, raising gross proceeds of $9.7
million and on August 16, 2023, the Company issued 1,000,000 of shares, of par value $0.10 each, which were subsequently
repurchased to be held in treasury for purposes of equity compensation awards.
Further, on October 2023, the Company conducted a private placement of new shares in Norway of NOK equivalent to gross
proceeds of $50.0 million, by issuing 7,522,838 shares of par value $0.10 each. On October 27, 2023, the equity offering was
settled and the Company's issued number of shares increased to 264,080,391 common shares with a par value of $0.10 per share.
See Note 28 - Stockholders' Equity of our audited Consolidated Financial Statements included herein, for further information.
Share Repurchase Program
In December 2023, the Company announced that its Board of Directors approved a share repurchase program for the Company's
shares, to be purchased in the open market and limited to a total amount of $100.0 million. The approval does not have a fixed
expiration and the repurchase program may be suspended or discontinued at any time. During December 2023, we repurchased
into treasury 125,000 of our shares for a total of $0.8 million.
See Note 28 - Stockholders' Equity of our audited Consolidated Financial Statements included herein, for further information.
Contributed Surplus
On December 22, 2023, at a Special General Meeting, pursuant to the Bermuda Companies Act, the Company's shareholders
approved a reduction of the Share Premium (Additional Paid in Capital "APIC") account of the Company from $2,290,578,712 to
$290,578,712 by the transfer of $2,000,000,000 of the Share Premium (APIC) to the Company’s Contributed Surplus account,
with effect from December 22, 2023. The Contributed Surplus account, as defined by Bermuda law, consists of amounts
previously recorded as Share Premium (APIC).
Dividend Declaration
In December 2023, the Company announced that its Board of Directors approved a cash distribution of $0.05 per share for the
third quarter of 2023. This cash distribution was paid in January 2024, to shareholders of record at close of business on December
29, 2023.
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In February 2024, the Company announced that its Board of Directors approved a cash distribution of $0.05 per share for the
fourth quarter of 2023. This cash distribution was paid on March 18, 2024 to shareholders of record at close of business on March
4, 2024.
See Note 28 - Stockholders' Equity of our audited Consolidated Financial Statements included herein, for further information.
Recent Developments
In March 2024, we completed the issuance of $200 million principal amount of additional 10% senior secured notes due in 2028,
raising gross proceeds of $211.9 million.
Key Components of Our Results of Operations
See Note 2 - Basis of Preparation and Accounting Policies of our audited Consolidated Financial Statements included herein, for
further information on our accounting policies.
Operating revenues
We earn revenues primarily by performing the following activities: (i) providing our jack-up rigs, work crews, related equipment
and services necessary to operate our jack-up rigs; (ii) providing our jack-up rigs to our Mexican equity method investments
(Perfomex and Perfomex II) under bareboat lease contracts, and providing management and services under management
agreements to Perfomex and Perfomex II; (iii) delivering our jack-up rigs by mobilizing to and demobilizing from the drill
location; and (iv) performing certain pre-operating activities, including rig preparation activities or equipment modifications
required for our contracts.
We recognize revenues earned under our drilling contracts based on variable dayrates, which range from a full operating dayrate
to lower rates or zero rates for periods when drilling operations are interrupted or restricted, based on the specific activities we
perform during the contract. The total transaction price is determined for each individual contract by estimating both fixed and
variable consideration expected to be earned over the firm term of the contract and probable liquidated damages. Revenues are
recorded based on these blended rates, applied to the actual Economic Utilization of each period. Such dayrate consideration is
attributed to the distinct time period to which it relates within the contract term, and therefore, is recognized as we perform the
services. We recognize reimbursement revenues and the corresponding costs as we provide the customer-requested goods and
services, when such reimbursable costs are incurred while performing drilling operations. Prior to performing drilling operations,
we may receive pre-operating revenues, on either a fixed lump sum or variable dayrate basis, for mobilization, contract
preparation, customer-requested goods and services or capital upgrades, which we recognize on a straight-line basis over the
estimated firm contract period. We recognize losses related to contracts as such losses are incurred.
We may receive fees (on either a fixed lump-sum or variable dayrate basis) for the demobilization of our rigs. Demobilization
revenue expected to be received upon contract completion is estimated as part of the overall transaction price at contract inception
and recognized over the term of the contract. In most of our contracts, there is uncertainty as to the likelihood and amount of
expected demobilization revenue to be received as the amount may vary dependent upon whether or not the rig has additional
contracted work following the contract. Therefore, the estimate for such revenue may be constrained, depending on the facts and
circumstances pertaining to the specific contract. We assess the likelihood of receiving such revenue based on past experience and
knowledge of the market conditions.
We provide corporate support services, secondment of personnel and management services to our equity method investments
under management and service agreements. The services are based on costs incurred in the period with appropriate margins and
have been recognized under Related party revenue with associated costs included within Rig operating and maintenance expenses
in our Consolidated Statements of Operations.
We lease rigs on bareboat charters to our equity method investments, Perfomex and Perfomex II. We expect lease revenue earned
under the bareboat charters to be variable over the lease term, as a result of the contractual arrangement which assigns the
bareboat a value over the lease term equivalent to residual cash after payments of operating expenses and other fees. We, as a
lessor, do not recognize a lease asset or liability on our balance sheets at the time of the formation of the entities nor as a result of
the lease. Revenue is recognized when management are able to reasonably predict the expected underlying bareboat rate over the
contract term.
Gains or losses on disposals
62
From time to time we may sell, or otherwise dispose of, our jack-up rigs and/or other fixed assets to external parties. In addition,
assets, including certain jack-up rigs, may be classified as “held for sale” on our balance sheets when, among other things, we are
committed to a plan to sell such assets and consider a sale probable within twelve months. We may recognize a gain or loss on
any such disposal depending on whether the fair value of the consideration received is higher or lower than the carrying value of
the asset.
Operating expenses
Our operating expenses primarily include jack-up rig operating and maintenance expenses, depreciation and impairment, general
and administrative expenses.
Rig operating and maintenance expenses are the costs associated with owning a jack-up rig that may from time to time be either in
operation or stacked, including:
• Rig personnel expenses: compensation, transportation, training, as well as catering costs while the crew are on the jack-up
rig. Such expenses vary from country to country and reflect the combination of expatriate and national, local market rates,
unionized trade arrangements, local law requirements regarding social security, payroll charges and end of service benefit
payments.
• Rig maintenance expenses: expenses related to maintaining our jack-up rigs in operation, including the associated freight
and customs duties, which are not capitalized or deferred. Such expenses do not directly extend the rig life or increase the
functionality of the rig.
• Other rig-related expenses: all remaining operating expenses such as supplies, insurance costs, professional services,
equipment rental, other miscellaneous costs and new provisions and recoveries of previous provisions for expected credit
losses.
Depreciation costs are based on the historical cost of our jack-up rigs, less impairment charges. Rigs are recorded at historical cost
less accumulated depreciation and impairment. Jack-up rigs and related equipment acquired as part of asset acquisitions are stated
at fair market value as of the date of the acquisition. The cost of these assets, less estimated salvage values, are depreciated on a
straight-line basis over their estimated remaining economic useful lives. The estimated economic useful life of our jack-up rigs,
when new, is 30 years and jack up rig equipment and machinery three to 20 years. We evaluate the carrying value of our jack-up
rigs on a quarterly basis to identify events or changes in circumstances that indicate that the carrying value of such jack-up rigs
may not be recoverable. If the carrying value of the asset is not recoverable, an impairment loss is recognized as the difference
between the carrying value of the asset and its fair value. Costs related to periodic surveys are capitalized as part of drilling units
and amortized over the anticipated period covered by the survey which is up to five years. These costs are primarily shipyard
costs and the costs related to employees directly involved in the work. Amortization costs for periodic surveys are included in
depreciation expense.
Our general and administrative expenses primarily include all office personnel costs and other miscellaneous expenses incurred
by the operational headquarters as well as share-based compensation expenses, fees payable to certain Related Parties under a
management agreement for providing business, organizational, strategic, financial and other advisory services.
Material Factors Affecting Results of Operations and Future Results
Our results of operations have a number of key components and are primarily affected by the number of jack-up rigs under
contract, the contractual dayrates we earn and the associated operating and maintenance expenses. Our future results may not be
comparable to our historical results of operations for the periods presented. In addition, when evaluating our historical results of
operations and assessing our prospects in the periods under review, you should consider the following factors:
Acquisitions and Disposals
Since our inception in 2016, we have acquired more than 50 jack-up rigs through both the purchase of existing jack-up rigs,
companies owning jack-up rigs and contracts for newbuild jack-up rigs, of which we have sold 30 and one semi-submersible. This
increase in jack-up rigs and related expansion of operations resulting from an increased number of jack-up rigs under contract has
had a significant impact on our results of operations and our balance sheets during the periods presented in our Audited
Consolidated Financial Statements included herein. The key characteristics of our rigs owned but not under contract which may
yield differences in their marketability or readiness for use, include the age of the rig, the geographic location, the technical
specifications and whether such rigs are warm stacked or cold stacked; please see our fleet status report in “Item 4.B. Business
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Overview—Our Business—Our Fleet” for further information regarding these features by rig. For more information on our
acquisitions and disposals, please see the section entitled “Item 4.B. Business Overview—Our History”.
The table below sets forth information relating to our acquisitions and disposals since our formation:
Transaction
(Closing Date)
Transaction
Value (1)
(In $ millions)
Rigs Purchased (2)
Rig Status at
Acquisition
Rig Status as of
December 31, 2023(3)
Hercules Acquisition
(January 23, 2017)
$130.0
Premium jack-up rigs: 2
Warm stacked: 2
Under contract: 2
Transocean Transaction
(May 31, 2017)
$1,240.5
Premium jack-up rigs: 6
Standard jack-up rigs: 4
Contracts for NB jack-up rigs: 5
Warm stacked: 7
Under legacy contract: 3
Under construction: 5
Under contract: 6
Disposed: 7
Under construction: 2
PPL Acquisition
(October 6, 2017)
$1,300
Contracts for NB jack-up rigs: 9
Under construction: 9
Under contract: 8
Disposed: 1
Paragon Transaction
(March 29, 2018)
$241.3
Premium jack-up rigs: 2
Standard jack-up rigs: 20
Semi-submersible: 1
Warm stacked:16
Under legacy contract: 7
Under contract: 2
Disposed: 21
Seatrium Acquisition
(May 16, 2018)
$742.5
Contracts for NB jack-up rigs: 5
Under construction: 5
Under contract: 3
Disposed: 2
Seatrium Hull B378
Acquisition
(March 29, 2019)
$122.1
Contract for a NB jack-up rig: 1
Under construction: 1
Under contract: 1
(1) This is the amount reflected in the balance sheets as a result of purchase accounting.
(2) NB denotes Newbuilding
(3) Jack-up rigs “Under Contract” include those rigs which are operating or being prepared or mobilized, or are otherwise awaiting
the commencement of drilling operations under the relevant contract.
Acquisitions and Disposals
We have agreements to purchase two undelivered rigs from Seatrium, “Vale” and “Var”. In September 2023, we entered into an
agreement with Seatrium, to amend the Construction Contracts for the rigs “Vale” and “Var” and give notice to expedite their
delivery dates, on a best efforts basis, to August 15, 2024 and November 15, 2024, respectively, in consideration for an additional
payment of $12.5 million (“acceleration costs”) per rig on each respective delivery date. The terms of these future and contingent
obligations include: (i) the payment of the final installments on each rig, of $147,406,000 per rig, payable on delivery; (ii)
“holding costs” and “cost cover”, accruing until delivery of the rigs, which are payable quarterly in arrears; (iii) acceleration costs,
payable on delivery; and (iv) the ability to draw on committed delivery financing of $130.0 million for each rig, with a four-year
maturity, subject to a right for the lender to call the loan after three years, with repayments of principal at the rate of $15.0 million
per year per rig in years 1 and 2 with the balance of the principal amortizing in years 3 and 4. We have made and may consider in
the future acquisitions and disposals of jack-up rigs. Acquisitions or disposals of our jack-up rigs are likely to impact our revenue
as well as our operating and maintenance expenses. For details of acquisitions or disposals see “Item 4.B. Business Overview—
Our History—Divestments”.
Other Factors Affecting Results of Operations
In addition to the factors identified above, you should consider the following facts when evaluating our results of operations for
the periods presented:
• Revenues: Our revenues are primarily affected by the number of jack-up rigs under contract from time to time and the
dayrates we are able to charge our customers, which vary from time to time. To a significant extent, the dayrates we
charge our customers depend on the market cycle of the jack-up drilling market at a given point in time. Historically,
when oil prices decrease, capital spending and drilling activity decline, which leads to an oversupply of drilling rigs and
reduced dayrates. Conversely, higher oil prices, increased capital spending and drilling activity and limited supply of
drilling rigs have historically led to higher dayrates. In addition, the number of jack-up rigs under contract from time to
64
time is affected by, among other factors, our relationships with new and existing customers and suppliers, which have
grown substantially since our inception in 2016. Our revenues may also be affected by other situations, including when
our jack-up rigs cease operations due to technical failures and other situations where we do not collect revenue from our
customers. Our ability to keep our jack-up rigs operational when under contract is monitored by our Board and
management as Technical Utilization statistics.
• Nature of Our Operating and General and Administrative Expenses: Our operating expenses in 2023 and 2022 reflect
expenses relating to operating and non-operating rigs (e.g. costs relating to warm stacking of rigs). We expect the nature
of our operating expenses will shift to include primarily expenses related to the ongoing operation of our jack-up rigs. In
such case, our operating expenses will depend on various factors, including expenses related to operating our jack-up
rigs, maintenance projects, downtime, weather and other operating factors. In addition, we have incurred and expect to
incur direct, incremental general and administrative expenses as a result of our being a publicly traded company in the
United States and Norway, including costs associated with hiring personnel for positions created as a result of our U.S.
and Norway public company status, publishing annual and interim reports to shareholders consistent with SEC, NYSE
and Oslo Børs requirements, expenses relating to compliance with the rules and regulations of the SEC, listing standards
of the NYSE and the costs of independent director compensation as well as professional and legal fees incurred in the
ordinary course of business.
• Financing Arrangements and Investments in Securities: The financial income and expenses reflected in our Audited
Consolidated Financial Statements included herein may not be indicative of our future financial income and expenses
and may, along with other line items related to our financing arrangements and historical financing arrangements detailed
in the section entitled “Item 5.B. Liquidity and Capital Resources—Our Existing Indebtedness,” change as the number of
our jack-up rigs under contract increases. As we take delivery of the newbuild rigs we have agreed to purchase, we
expect to finance a portion of the purchase price and thus our debt levels and finance expense will increase. The
financing arrangements we have had in place historically may not be representative of the agreements that will be in
place in the future or that we had in place during our first years of operations. For example, we have amended our
financing arrangements in the past, including in 2019, 2020, 2021, 2022 and 2023, and we may amend our existing
financing arrangements or enter into new financing arrangements and such new agreements may not be on the same
terms as our current financing arrangements. In addition, from time to time, we may make and hold investments in other
companies in our industry that own/operate offshore drilling rigs with similar characteristics to our fleet of jack-up rigs,
subject to compliance with the covenants contained in certain of our financing arrangements which restrict such
investments. We also may purchase and hold debt or other securities issued by other companies in the offshore drilling
industry from time to time. These financial investments will impact our results of operations.
• Interest Rates and Derivative Values: Following the issuance of the Notes, all of our debt as of December 31, 2023 is on
fixed interest rates. However, under the RCF we entered to in November 2023, undrawn as of December 31, 2023, the
interest rate is determined with reference to SOFR plus a specified margin.
• Income Taxes: Income tax expense reflects current tax and deferred taxes related to the operation of our jack-up rigs and
may vary significantly depending on the jurisdiction(s) of operation of our subsidiaries, the underlying contractual
arrangements and ownership structure and other factors. In most cases, the calculation of tax is based on net income or
deemed income in the jurisdiction(s) where our subsidiaries operate. Our income tax expense will be primarily affected
by the number of jack-up rigs under contract from time to time and the dayrates we are able to charge our customers as
well as the expenses we incur which can vary from time to time. Because taxes are impacted by taxable income of our
subsidiaries, our tax expense may not be correlated with our income on a consolidated basis.
65
A. OPERATING RESULTS
Year ended December 31, 2023 compared to the year ended December 31, 2022
The following table summarizes our results of operations for the years ended December 31, 2023 and 2022:
For the Year Ended December 31,
(in $ millions)
2023
2022
Dayrate revenue
642.0
358.7
Related party revenue
129.6
85.1
Operating revenues
771.6
443.8
Gain on disposals
0.6
4.2
Total operating expenses
(521.8)
(549.9)
Operating income / (loss)
250.4
(101.9)
Other non-operating income
—
2.0
Income from equity method investments
4.9
1.2
Total financial expenses, net
(199.2)
(175.7)
Income tax expense
(34.0)
(18.4)
Net income / (loss) and total comprehensive income / (loss)
22.1
(292.8)
The following table sets forth a reconciliation of net income / (loss) to Adjusted EBITDA for the years ended December 31, 2023
and 2022:
 
For the Year Ended December 31,
(in $ millions)
2023
2022
Net income / (loss)
22.1
(292.8)
Depreciation of non-current assets
117.4
116.5
Impairment of non-current assets
—
131.7
Interest income
(4.9)
(5.4)
Interest expense
177.2
139.2
Foreign exchange loss, net
2.8
0.9
Other financial expenses
24.1
41.0
Income from equity method investments
(4.9)
(1.2)
Gain on disposals (1)
—
(3.5)
Other non-operating income
—
(2.0)
Amortization of deferred mobilization and contract preparation costs
44.6
36.7
Amortization of deferred mobilization, demobilization revenue and other revenue
(61.9)
(22.2)
Income tax expense
34.0
18.4
Adjusted EBITDA
350.5
157.3
(1) Gain on disposals includes $3.5 million associated with the net gain on disposal of jack-up rigs, which is excluded from our
Adjusted EBITDA calculation. See Note 6 - Gain on Disposals of our Audited Consolidated Financial Statements included herein.
Operating Revenues
Total operating revenues increased by $327.8 million to $771.6 million for the year ended December 31, 2023 compared to
$443.8 million in 2022. This was principally due to the following increases:
• $114.3 million increase due to an increase in the number of rigs in operation;
• $63.6 million increase due to an increase in number of operating days for rigs which were in operation in the current and
comparative period;
• $58.7 million increase due to an increase in average dayrates;
66
• $46.7 million increase due to an increase in other revenue, which is primarily comprised of $31.5 million of amortization
of deferred mobilization and demobilization revenue;
• $36.3 million increase in related party revenues primarily as a result of improved profitability of jack-up rigs "Galar",
"Grid", "Njord", "Gersemi" and "Odin", that we lease to our joint ventures, Perfomex and Perfomex II, on a bareboat
charter basis; and
• $8.2 million increase in related party revenues primarily as a result of amortization of other deferred revenue.
Gain on Disposals
Gain on disposals was $0.6 million for the year ended December 31, 2023 compared to $4.2 million in 2022. In 2023 the gain on
disposals related to the sale of scrap assets. In 2022 we recognized a gain on disposal of $3.7 million in relation to the agreement
to sell the three newbuildings "Tivar", "Huldra" and "Heidrun" and a gain on disposal of $0.7 million in relation to the sale of rig
related equipment, offset by a $0.2 million loss on the sale of jack-up rig "Gyme".
Total Operating Expenses
Operating expenses include the following items:
For the Year Ended December 31,
(in $ millions)
2023
2022
Rig operating and maintenance expenses
359.3
264.9
Depreciation of non-current assets
117.4
116.5
Impairment of non-current assets
—
131.7
General and administrative expenses
45.1
36.8
Total operating expenses
521.8
549.9
Total operating expenses decreased by $28.1 million to $521.8 million for the year ended December 31, 2023 compared to
$549.9 million in 2022.
Rig operating and maintenance expenses increased by $94.4 million to $359.3 million for the year ended December 31, 2023
compared to $264.9 million for 2022. This was principally due to an increase of $91.2 million as a result of an increase in
operating days primarily in relation to jack-up rigs "Arabia I", "Arabia II", Arabia III", "Thor", "Hild", "Groa", "Prospector 5" and
"Ran" during 2023 compared to 2022. This increase was offset by a decrease of $6.4 million related to jack-up rigs "Tivar",
"Huldra", "Heidrun" and "Gyme" which were sold during 2022, resulting in no expenses in 2023 for these rigs.
Depreciation of non-current assets increased by $0.9 million to $117.4 million for the year ended December 31, 2023 compared to
$116.5 million for 2022. This was principally due to an increase in depreciation of $6.2 million primarily as a result of an increase
in depreciable additions of jack-up rigs for the year ended December 31, 2023. This increase was offset by a decrease by $3.0
million in relation to the jack-up rig "Gyme" which was classified as held for sale during the quarter ended September 30, 2022
and subsequently sold, thereby ceasing depreciation, and a decrease by $2.3 million in relation to certain long-term maintenance 
projects being fully amortized during 2023.
Impairment of non-current assets was nil for the year ended December 31, 2023 compared to $131.7 million in 2022. In 2022, we
recognized an impairment loss of $124.4 million representing the impairment of advance payments and capitalized interest on the
newbuilding jack-up rigs "Tivar", "Huldra", and "Heidrun" as well as a $7.3 million impairment loss on the jack-up rig "Gyme",
both following an impairment review as a result of the Company entering into agreements to the sell the newbuildings and jack-up
rig. The three newbuildings and the jack-up rig were subsequently sold.
General and administrative expenses increased by $8.3 million to $45.1 million for the year ended December 31, 2023 compared
to $36.8 million in 2022. This was principally due to an increase by $3.0 million in relation to costs associated with the issuance
of share options and performance stock units to certain employees as well as various insignificant movements associated with
general corporate activities.
Other non-operating income
Other non-operating income was nil for the year ended December 31, 2023 compared to $2.0 million in 2022. In 2022, we
recognized $2.0 million in relation to an amendment to a historical agreement to recycle one of our jack-up rigs.
67
Income from Equity Method Investments
Income from equity method investments increased by $3.7 million to $4.9 million for the year ended December 31, 2023
compared to $1.2 million for 2022. This was principally as a result of an increase in net foreign exchange gains.
Total Financial Expenses, net
Total financial expenses, net, include the following items:
For the Year Ended December 31,
(in $ millions)
2023
2022
Interest income
(4.9)
(5.4)
Interest expenses
177.2
139.2
Other financial expenses, net
26.9
41.9
Total financial expenses, net
199.2
175.7
Total financial expenses, net increased by $23.5 million to $199.2 million for the year ended December 31, 2023 compared to
$175.7 million for 2022.
Interest income decreased by $0.5 million to $4.9 million for the year ended December 31, 2023 compared to $5.4 million in
2022. This was principally due to a decrease of $4.0 million from interest income from our joint ventures offset by an increase of
$3.5 million from interest income on term deposits.
Interest expenses increased by $38.0 million to $177.2 million for the year ended December 31, 2023 compared to $139.2 million
for 2022. This was principally due to the following increases:
• $32.0 million increase in interest expense associated with amendments made to our various financing facilities and the
issuance of our Notes due in 2028 and 2030 and repayment of existing secured debt during 2023;
• $11.6 million increase in loss on debt extinguishment associated with the repayment of the $150 million senior secured
bonds and facility with Hayfin Services LLP; and
• $3.4 million increase in amortization of deferred finance charges and debt discounts.
These increases were offset by a $9.0 million increase in gain on debt extinguishment associated with the repayment of the
shipyard delivery financing arrangements with PPL and Seatrium and the DNB Facility.
Other financial expenses, net, decreased by $15.0 million to $26.9 million for the year ended December 31, 2023 compared to
$41.9 million in 2022. This was principally due to the following decreases:
• $10.4 million decrease in bank commitment, guarantee and other fees primarily due to fees in relation to the refinancing
of debt incurred in 2022 with no corresponding fees in 2023; and
• $6.1 million decrease in yard cost cover expenses as a result of the disposal of jack-up rig "Tivar" during the quarter
ended December 31, 2022.
These decreases were offset by a $1.9 million increase in foreign exchange losses.
Income Tax Expense
Income tax expense increased by $15.6 million to $34.0 million for the year ended December 31, 2023 compared to $18.4 million
for 2022. This is principally due to the following:
• $17.7 million increase due to increased profitability in Africa;
• $7.8 million increase due to increased operations and profitability in Asia;
• $5.2 million increase due to increased bareboat revenues in Mexico;
• $4.4 million increase due to increased operations in the Middle East; and
• $4.4 million increase due to increased operations in Mexico.
68
These increases were offset by a $16.5 million release of valuation allowance on deferred tax assets and a $9.3 million release of
uncertain tax position in 2023.
Year ended December 31, 2022 compared to the year ended December 31, 2021
For a discussion of our results for the year ended December 31, 2022 compared to the year ended December 31, 2021, please see
“Item 5. Operating and Financial Review and Prospects A. Operating Results – Year ended December 31, 2022, compared to the
year ended December 31, 2021” contained in our annual report on Form 20-F for the year ended December 31, 2022 filed with the
SEC on March 30, 2023.
B. LIQUIDITY AND CAPITAL RESOURCES
Short-Term Liquidity and Cash Requirements
Historically, we have met our liquidity needs principally from offerings of equity, convertible bonds and secured bonds, available
funds under our financing arrangements and secured loan facilities, including shipyard delivery financing arrangements related to
our newbuild rigs and revolving credit facilities, cash generated from operations, and sale of non-core assets.
Our primary uses of cash during the year ended December 31, 2023 were operating expenses, investing activities including capital
expenditures mainly related to activations and re-activations of jack-up rigs, and interest payments. Capital expenditures related to
contract preparation, purchase and refurbishment of rig equipment, and other investments are highly dependent on how many
jack-up rigs we activate or re-activate, which is in turn dependent on the number of contracts we are able to secure. We funded
our 2023 capital expenditures and deferred costs using available cash and cash flows from operations, proceeds from our various
share issuances (discussed below) and proceeds from debt financings. We expect our funding sources to be similar in 2024,
primarily using available cash and cash flows from operations, as well as potential debt and equity financings, although there is no
assurance that future equity raises or debt financings will be available.
As of December 31, 2023 we had $102.5 million in cash and cash equivalents and $0.1 million in restricted cash.
Our funding and treasury activities are conducted within our established corporate policies and are intended to maximize
investment returns in light of our liquidity requirements. Cash and cash equivalents are held primarily in U.S. dollars with some
balances held in various currencies such as Malaysian Ringgit, Central African CFA Francs, Mexican Pesos, Thai Baht, Nigerian
Naira, British Pounds, Saudi-Arabian Riyal, Norwegian Kroner and Euros. We have not made use of derivative instruments.
We are dependent on cash generated by our subsidiaries which are subject to legal and contractual restrictions. See the section
entitled "Item 3.D. Risk Factors—Risk Factors related to our business". We are a holding company and are dependent upon cash
flows from subsidiaries and equity method investments to meet our obligations. If our operating subsidiaries or equity method
investments experience sufficiently adverse changes in their financial condition or results of operations, or we otherwise become
unable to arrange further financing to meet our liquidity requirements to satisfy our debt or other obligations as they become due,
we may become subject to insolvency proceedings.
As of the date of this report, we believe that our cash flow from operations, together with our cash and cash equivalents, will meet
our anticipated capital expenditure commitments, working capital requirements, our debt obligations and our debt covenants, for
the next 12 months. Please refer to Note 1 - General of our Audited Consolidated Financial Statements included herein.
Equity Offerings
During the year ended December 31, 2023, in connection with the $250.0 million Convertible Bonds (see "Our Existing
Indebtedness"), we entered into a share lending agreement with the intention of making up to 25,000,000 common shares
available to lend to DNB for the purposes of allowing the holders of the $250.0 million Convertible Bonds to perform hedging
activities on the Oslo Stock Exchange (see Note 28 - Stockholders' Equity). In connection with this arrangement, during the year
ended December 31, 2023, we issued 25,000,000 shares at par value, which were repurchased into treasury.
As of December 31, 2023, 14,443,270 shares have been issued to DNB Markets by the Company under the share lending
agreement for the purpose of allowing the Convertible Bond holders to perform hedging activities on the Oslo Stock Exchange.
For more information see Note 28 - Stockholders' Equity.
69
In October, 2023, the Company conducted a private placement of new shares of NOK equivalent to $50 million by issuing
7,522,838 new common shares of par value $0.10 each at a subscription price of NOK equivalent to $6.6464 per share and, as a
result, the Company's issued number of shares increased to 264,080,391 common shares of par value $0.10 each.
In addition, during the year ended December 31, 2023, we sold and issued 1,293,955 shares of par value $0.10 each under our
ATM program, raising gross proceeds of $9.7 million and net proceeds of $9.6 million, with compensation paid by the Company
to Clarksons Securities of $0.1 million.
Following the October 2023 private placement and issuance of shares under our share lending agreement and ATM program, the
Company's issued number of shares increased to 264,080,391, as of December 31, 2023.
For details of the Company's equity offerings for the years ended December 31, 2023 and 2022, see Note 28 - Stockholders'
Equity of our Audited Consolidated Financial Statements included herein.
Long-Term Liquidity and Cash Requirements
Our long-term liquidity and cash requirements are primarily for funding our activation projects, repaying our debt and interest
obligations as well as cash requirements in relation to taking delivery of rigs under construction. Sources of funding for our long-
term requirements include cash from operations, refinancing of our existing financing arrangements, delivery financing from
shipyards and equity offerings. See Note 1 - General of our Audited Consolidated Financial Statements included herein for our
going concern assessment.
Capital Expenditures Commitments
Our primary commitments for capital expenditures relate to our newbuild jack-up drilling rigs from Seatrium.
We acquired five newbuildings in connection with the Transocean Transaction. As of December 31, 2023 two rigs have been
delivered ("Saga", "Skald") in 2018, one was sold ("Tivar") in 2022 and two remain under construction ("Vale" and "Var"). We
may exercise an option to take delivery financing from Seatrium. with respect to “Vale” and “Var” of $130 million for each rig,
subject to certain conditions. In September 2023, we amended the construction contract with Seatrium for the Vale and the Var
and gave notice to expedite their delivery dates which were the third quarter of 2025, on a best efforts basis only, to August 2024
and November 2024, respectively, in consideration for an additional payment of $12.5 million acceleration cost per rig payable on
each respective delivery date. The remaining contracted installments, including the acceleration costs, for these two rigs under
construction, payable on delivery, are approximately $319.8 million as of December 31, 2023 ($294.8 million as of December 31,
2022), of which Seatrium has committed to finance $130 million for each rig, with a four-year maturity, subject to a right for the
lender to call the loan after three years, with repayments beginning on the first anniversary of the loan until maturity.
As of December 31, 2023, we estimate our capital expenditures in the next twelve months relating to upcoming contracts and rig
activations is approximately $91.6 million. This is based on known contracts as at December 31, 2023, in addition to potential rig
activations for which management believes favorable contracting opportunities exist.
We had no off-balance sheet arrangements as of December 31, 2023, other than commitments in the ordinary course of business
that we are contractually obligated to fulfill with cash under certain circumstances. These commitments include guarantees
towards third parties such as performance guarantees to customers as they relate to our drilling contracts. Obligations under these
guarantees are not normally called, as we typically comply with the underlying performance requirement. During the year ended
December 31, 2023, we entered into a new facility with DNB Bank ASA to provide guarantees and letters of credit of up to
$30.0 million collateralized by the same security that secures the Notes. As a result, no restricted cash is supporting bank
guarantees as at December 31, 2023 ($10.1 million as restricted cash as at December 31, 2022).
70
Cash Flows
Our cash flows for the years ended December 31, 2023 and 2022 are presented below:
For the Year Ended December 31,
(In $ millions)
2023
2022
Net cash (used in) / provided by operating activities
(50.7)
62.5
Net cash used in investing activities
(104.2)
(82.6)
Net cash provided by financing activities
139.0
92.6
Net change in cash and cash equivalents and restricted cash
(15.9)
72.5
Net cash (used in) / provided by operating activities
Net cash used in operating activities was $50.7 million during the year ended December 31, 2023, compared to $62.5 million
provided by operations during the year ended December 31, 2022. The decrease of $113.4 million was primarily due to cash
expenditures for contract drilling services and the timing of working capital movements offset in part by the increase in number of
operating rigs and associated cash receipts from contract drilling services. Included within net cash used in operating activities
during the year ended December 31, 2023, are interest payments of $217.4 million and income tax payments of $38.2 million
compared with interest payments of $83.9 million and income tax payments of $16.2 million during the year ended December 31,
2022.
Net cash used in investing activities
Net cash used in investing activities of $104.2 million for the year ended December 31, 2023 is comprised of:
• $111.2 million in additions to jack-up rigs primarily as a result of activation and reactivation, primarily for the jack-up
rigs "Arabia III", "Hild", "Arabia I" and "Arabia II";
• $1.5 million in purchases of property, plant and equipment; and
• $1.3 million in additions to newbuildings pertaining to "Vale" and "Var".
This was partially offset by $9.8 million in net distributions from our equity method investments as a result of the return of
previous shareholder funding.
Net cash used in investing activities of $82.6 million for the year ended December 31, 2022 is comprised of:
• $81.5 million in additions to jack-up rigs primarily as a result of activation and reactivation, of which $25.0 million
pertains to the jack-up rig "Arabia I", $24.8 million pertains to "Arabia II" and $15.5 million pertains to "Thor"; and
• $1.8 million in purchases of property, plant and equipment.
This was partially offset by $0.7 million proceeds from the sale of rig related equipment.
Net cash provided by financing activities
Net cash provided by financing activities of $139.0 million for the year ended December 31, 2023 is comprised of:
• $1,465.2 million proceeds, net of transaction costs from our Notes issued in November 2023;
• $391.3 million proceeds, net of transaction costs from our Convertible Bonds and the $150 million principal amount of
Norwegian law senior secured bonds issued in February 2023;
• $48.6 million proceeds, net of transaction costs from our October 2023 $50.0 million equity offering;
• $25.0 million proceeds from the drawdown in April 2023 on our upsized facility with DNB Bank ASA;
• $9.6 million proceeds, net of transaction costs from the sale of shares under our ATM program; and
• $0.8 million proceeds from the exercise of share options.
This was partially offset by the repayment of debt of $1,800.6 million and the purchase of treasury shares of $0.7 million. The
repayment of debt of $1,800.6 million in comprised of the following:
71
• $695.6 million used to repay the PPL shipyard delivery financing arrangement;
• $350.0 million used to repay the convertible bonds which were due in May 2023;
• $272.7 million used to repay the shipyard delivery financing arrangement with Offshore Partners Pte. Ltd;
• $175.1 million used to repay the facility with DNB Bank ASA;
• $157.2 million used to repay the facility with Hayfin Services LLP, and
• $150.0 million used to repay the principal amount of Norwegian law senior secured bonds.
Net cash provided by financing activities of $92.6 million for the year ended December 31, 2022 is comprised of:
• $260.4 million proceeds, net of transactions costs from our August 2022 equity offering;
• $28.9 million proceeds, net of transaction costs from our equity offering which closed in January 2022;
• $8.8 million proceeds, net of transaction costs from the sale of shares under our ATM program; and
• $150.0 million proceeds from our DNB Facility.
This was partially offset by the repayment of debt of $355.5 million of which $280.0 million was used to repay in full the senior
secured credit facilities with DNB Bank ASA, $30.5 million was used to repay in full the senior secured revolving credit facility
with DNB Bank ASA and Danske Bank and $45.0 million was used to make a partial repayment on the facility with Hayfin
Services LLP.
Our Existing Indebtedness
As of December 31, 2023, we had total outstanding borrowings, gross of capitalized borrowing costs and debt discounts of
$1,790.0 million, most of which is secured by, among other things, all of our rigs.
Our indebtedness as of December 31, 2023 includes our:
• $1,025.0 million principal amount of Notes due in 2028;
• $515.0 million principal amount of Notes due in 2030; and
• $250.0 million principal amount of Convertible Bonds due in 2028
In March 2024, we issued $200.0 million principal amount of additional 10% senior secured notes due in 2028.
The Company also has a $180 million Super Senior Credit Facility, comprised of a $150 million RCF and a $30 million
Guarantee Facility, which is also secured by all of our rigs. As of December 31, 2023, $29.0 million were drawn under the
Guarantee Facility, and the $150 million under the RCF were undrawn.
In addition, we have agreed to purchase two newbuild rigs from Seatrium, with contractual delivery dates in 2025 and best efforts
expedited delivery dates in August and November 2024.  The purchase price is approximately $159.9 million per rig, including
the payment of $12.5 million in acceleration costs per rig to expedite delivery, and we have secured financing of $130.0 million
for each rig of up to 4 years from delivery, which may be reduced to three years at the lender's option.
Senior Secured Note due in 2028 and 2030
In November 2023, the Company's wholly owned subsidiary Borr IHC Limited, and certain other subsidiaries, issued of $1,025.0
million principal amount of senior secured notes due in 2028 at a price equal to 97.750%, bearing a coupon of 10 % per annum
(the "2028 Notes") and $515.0 million principal amount of senior secured notes due in 2030 at a price equal to 97.000%, bearing a
coupon of 10.375% per annum (the "2030 Notes" and, together with the 2028 Notes, the "Notes"). The 2028 Notes will mature on
November 15, 2028 and the 2030 Notes will mature on November 15, 2030, and interest on the Notes is payable on May 15 and
November 15 of each year, beginning on May 15, 2024.
The net proceeds from the issuance of the Notes were used to repay all of the Company’s outstanding secured borrowings, being
the Company’s facility with DNB Bank ASA, facility with Hayfin Services LLP, shipyard delivery financing arrangements with
PPL and Seatrium, the Company’s $150.0 million principal amount of Norwegian law senior secured bonds, and to pay related
premiums, fees, accrued interest and expenses.
In March 2024, we completed the issuance of $200.0 million principal amount of additional 10% senior secured notes due in
2028, raising gross proceeds of $211.9 million.
Super Senior Credit Facility
72
On November 7, 2023, the Company and Borr IHC Limited entered into the Super Senior Credit Facility Agreement in an
aggregate principal amount of $180 million, comprised of a $150 million RCF and a $30.0 million Guarantee Facility.
Unsecured Convertible Bonds Due in 2028
In February 2023, we raised $250.0 million gross proceeds through the issuance of Convertible Bonds due 2028. The Convertible
Bonds bear interest at 5.00% per annum payable semi-annually and had an initial conversion price of $ 7.3471 per share,
convertible into 34,027,031 common shares. Following the declaration and payments of a $0.05 per share cash distribution in
January 2024 and a further $0.05 per share cash distribution paid in March 2024, the adjusted conversion price is $7.2384 per
share, with the full amount of the convertible bonds convertible into 34,538,019 shares
Various agreements governing our debt restrict and, in some cases may actually prohibit, our ability to move cash within the
group.
Management believes that the Company’s liquidity position, cash flows from operations and availability under its Super Senior
Credit Facility will be adequate to meet the Company’s working capital requirements, financial commitments and debt
obligations, growth, operating and maintenance capital expenditures. Management continues to regularly monitor the Company’s
ability to finance the needs of its operating, financing and investing activities.
In March 2024, we repurchased $10.6 million of Convertible Bonds. The Company and its subsidiaries may from time to time
further repurchase or otherwise trade in its own debt in open market transactions, privately negotiated or otherwise.
As of December 31, 2023, we were in compliance with all our covenants under our various loan agreements.
See Note 21 - Debt of our Audited Consolidated Financial Statements included herein for additional information on our
borrowings as of December 31, 2023.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
Not applicable.
D. TREND INFORMATION
Offshore Drilling Market
Energy commodity prices have decreased since June 2022, when the price for Brent crude oil reached approximately $120 per
barrel, and has recently reached approximately $82 per barrel as of February 2024. However, these lower prices coupled with the
global turbulent macroeconomic environment have not affected global demand for offshore drilling services, including jack-up
rigs, which remains strong. 
As a result of increased capital spending by our clients, demand for contract drilling services has continued improving since 2021.
Consequently, the offshore drilling industry has seen contracting activity and dayrates increase in 2023 and continue to do so into
2024. Many new contracts have been for longer durations, as customers aim to lock up jack-up rigs for longer term projects. In
addition, demand for offshore drilling services appears to continue to be supported by geopolitical events, such as Russia’s
military actions across Ukraine and military action in Israel, the related economic sanctions imposed by various governments and
a renewed interest in energy security across Europe, the United States and other countries. Despite positive industry trends we
have recently experienced, we remain subject to risks relating to the volatility of our industry and the risk that demand and day
rates could decline, including as a result of inflation impacting many major economies and global economic uncertainty.
With a global competitive jack-up rig utilization of approximately 94% in February 2024 based on industry reports (such as S&P
Global), which represents an increase of approximately 10% from December 31, 2021, we remain optimistic that recent positive
trends will continue and that the offshore drilling market will continue to improve in the foreseeable future, predicated on
continued strength in the demand for hydrocarbons. As of February 2024, there are 308 modern jack-ups contracted, representing
an increase of approximately 71 units as compared to recent lows in late 2020 and during the same period, the number of standard
jack-ups contracted has shrunk by approximately seven units, confirming our view of a continued market bifurcation and
operators’ preference for modern rigs.
73
Although demand is expected to continue improving and consequently the number of contracted rigs to increase, growth in rig
supply is anticipated to be restrained. Currently, there are approximately 16 newbuild rigs under construction of which one is
already contracted, leaving a total of 15 available (including "Vale" and "Var" which we have agreed to acquire). We anticipate
that few of these rigs under construction will be able to enter the marketed fleet in the near future due to several being in early
stages of completion and due to increasing supply chain pressures which impact construction. The order book of new rigs as a
percentage of the current jack-up fleet has reached a 20-year record low and stands at approximately 4%. No new jack-up rigs
have been ordered in the last three years, and industry analysts estimate that the newbuild cost for a high specification jack-up rig
is currently around $260 million (Clarksons Research).
We also face risks and trends that could adversely affect our industry and business. Energy rebalancing trends have accelerated in
recent years as evidenced by promulgated or proposed government policies and commitments by many of our customers to further
invest in sustainable energy sources. Our industry could be further challenged as our customers rebalance their capital investments
to include alternative energy sources, as well as respond to the normal cycles that have historically existed in our industry. We
remain subject to risk of inflation as well as disruptions in supply chains and distribution channels. Nonetheless, the global energy
demand may increase over the coming decades, and in this case offshore oil and gas will continue to play an important and
sustainable role in meeting this demand for the foreseeable future.
E. CRITICAL ACCOUNTING ESTIMATES
We prepare our Audited Consolidated Financial Statements in accordance with generally accepted accounting principles in the
U.S., which require us to make significant judgements and estimates that are important to our financial position and results of
operations. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under
the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities.
Actual results may differ from these estimates.
We consider the following to be our critical accounting estimates. For a summary of our significant accounting policies, see Note
2 - Basis of Preparation and Accounting Policies of our Audited Consolidated Financial Statements included herein.
Impairment of jack-up rigs
We continually monitor events and changes in circumstances that could indicate carrying amounts of our jack-up rigs may not be
recoverable. At least annually, and additionally if such events or changes in circumstances are present, we assess the
recoverability of our jack-up rigs by determining whether the carrying amount of such assets will be recovered through
undiscounted cash flows.
In assessing the recoverability of our jack-up rigs' carrying amounts, we make assumptions regarding estimated cash flows. If the
total of the undiscounted cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on
the excess of the carrying amounts over their respective fair value. Two critical assumptions, utilization and dayrate revenues, are
key assumptions utilized in determining the estimated cash flows and are highly market dependent. Other assumptions include
estimates in respect of residual or scrap values, operating and maintenance expenses and capital expenditures.
The sensitivity analysis has been performed based on changes in utilization and dayrate revenue critical assumptions on the
consolidated jack-up rig and newbuild fleet:
• 5% decrease to both utilization and dayrate revenue critical assumptions would not result in impairment charges.
• 10% decrease to both utilization and dayrate revenue critical assumptions would not result in impairment charges.
(In $ millions)
Cash Flow Headroom
Impairment Charge
5% decrease to utilization and dayrate revenue
6,779.1
—
10% decrease to utilization and dayrate revenue
4,904.1
—
As of December 31, 2023 and 2022, the carrying amount of our jack-up rigs and newbuildings was $2,583.7 million and
$2,592.6 million, respectively. No impairment was recognized for the year ended December 31, 2023, while the Company
recognized an impairment charge of $131.7 million in the Consolidated Statements of Operations in the year ended December 31,
2022 related to our jack-up rig "Gyme" and three newbuildings disposed of during the year. No impairment related to
74
recoverability of our remaining jack-up rigs' carrying amounts was recognized during the years ended December 31, 2023 and
2022.
ITEM 6.  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND SENIOR MANAGEMENT
The following provides information about each of our directors and executive officers as of the date of this annual report.
Name
Age
Position
Tor Olav Trøim
61
Chairman of our Board of Directors and Director
Kate Blankenship
59
Director, Audit Committee Chairperson and Compensation Committee Chairperson
Jeffrey R. Currie
57
Director and Nominating and Governance Committee Member
Neil Glass
62
Director, Audit Committee Member and Chair of Nominating and Governance Committee
Dan Rabun
69
Director and Compensation Committee Member
Mi Hong Yoon
53
Director and Company Secretary
Patrick Schorn
55
Director and Chief Executive Officer, Borr Drilling Management UK
Magnus Vaaler
40
Chief Financial Officer, Borr Drilling Management AS
Biographies
Certain biographical information about each of our Directors and executive officers is set forth below:
Tor Olav Trøim has served as a Director on our Board since our incorporation and was our founder. He served as the Chairman
of the Board from August 2017 until September 2019 and was appointed Chairman of the Board again in February 2022. Mr.
Trøim is the founder and sole shareholder of Magni Partners and is the senior partner (and an employee) of Magni Partners’
subsidiary, Magni Partners Limited, in the UK. Mr. Trøim is a beneficiary of the Drew Trust, and the sole shareholder of Drew
Holdings Limited. Mr. Trøim has over 30 years of experience in energy related industries serving in various positions. Before
founding Magni Partners in 2014, Mr. Trøim was a director of Seatankers Management Co. Ltd., from 1995 until September 2014
and was the Chief Executive Officer of DNO AS from 1992 to 1995 and an Equity Portfolio Manager with Storebrand ASA from
1987 to 1990. Mr. Trøim graduated with an MSc degree in naval architecture from the University of Trondheim, Norway in 1985.
Other directorships and management positions include Magni Partners (Bermuda) Limited (Founding Partner) and Golar LNG
Limited (Chairman). During his employment period for Seatankers, Mr. Troim also held executive positions in affiliated
companies. This included being CEO for Seadrill Ltd., Frontline Ltd., Golar LNG., and Ship Finance Ltd.
Kate Blankenship has served as a Director on our Board and as Chair of our Audit Committee since February 26, 2019 and
serves as Chair of our Compensation Committee. Mrs. Blankenship is a member of the Institute of Chartered Accountants in
England and Wales and graduated from the University of Birmingham with a Bachelor of Commerce in 1986. Mrs. Blankenship
joined Frontline Ltd in 1994 and served as its Chief Accounting Officer and Company Secretary until October 2005. Among other
positions, she has served on the board of numerous companies, including as director and Audit Committee Chairperson of North
Atlantic Drilling Ltd. from 2011 to 2018, Archer Limited from 2007 to 2018, Golden Ocean Group Limited from 2004 to 2018,
Frontline Ltd. from August 2003 to 2018, Avance Gas Holding Limited from 2013 to 2018, Ship Finance International Limited
from October 2003 to 2018, Seadrill Limited from 2005 to 2018 and Seadrill Partners LLC from 2012 to 2018. Mrs. Blankenship
also serves as a director of 2020 Bulkers Ltd, Eagle Bulk Shipping Inc and International Seaways Inc. In addition, Mrs.
Blankenship served as a director of Diamond S Shipping Inc from March 2019 to 2021 when the company merged with
International Seaways Inc.
Jeffrey R. Currie has served as a Director on our Board since October 16, 2023. Mr. Currie is a Chief Strategy Officer of Energy
Pathways at The Carlyle Group since February 2024, after his retirement from Goldman Sachs after working there for 27 years.
During his last 15 years he was a Partner and the Global Head of Commodities Research where he was tasked with conducting
research on commodity market dynamics, investment strategies, and asset allocation. Mr. Currie is the Chairman of the Advisory
Board of The University of Chicago’s Energy Policy Institute and serves on the board of Abaxx Technologies since October 2,
2023. He also held roles as the European Co-Head of Economics, Commodities and Strategy Research between 2010 and 2012.
Prior to joining Goldman Sachs, Mr. Currie taught undergraduate and graduate level courses in microeconomics and econometrics
at The University of Chicago and served as the associate editor of Resource and Energy Economics. Mr. Currie also worked as a
consulting economist, specializing in energy and other microeconomic issues, and has advised many government agencies. Mr.
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Currie is a graduate of Pepperdine University, holds a Master of Arts (Economics) and earned a PhD in Economics from The
University of Chicago in 1996.
Neil Glass has served as a Director on our Board since December 2019 and also serves as an Audit Committee Member and
chairs our Nominating and Governance Committee. Mr. Glass worked for Ernst & Young for 11 years: seven years with the
Edmonton, Canada office and four years with the Bermuda office. In 1994, he became General Manager and in 1997 the sole
owner of WW Management Limited, tasked with overseeing the day-to-day operations of several international companies. Mr.
Glass has over 20 years’ experience as both an executive director and as an independent non-executive director of international
companies. Mr. Glass is a member of both the Chartered Professional Accountants of Bermuda and of Alberta, Canada, and is a
Chartered Director and Fellow of the Institute of Directors. Mr. Glass graduated from the University of Alberta in 1983 with a
degree in Business. Mr. Glass also serves as a director and Audit Committee Chair of Cool Company Ltd., and served as a
director and Audit Committee Member of 2020 Bulkers Ltd (until August 10, 2022) and Golar LNG Partners LP (until April 15,
2021).
Daniel Rabun has served as a Director on our Board since April 2023. Mr. Rabun joined Ensco plc in March 2006 as President
and as a member of the board of directors. Mr. Rabun was appointed to serve as Ensco plc’s Chief Executive Officer from
January 1, 2007 and was elected Chairman of the board of directors in May 2007. Mr. Rabun retired from Ensco plc as President
and Chief Executive Officer in May 2014 and as Chairman in May 2015. Mr. Rabun serves as a director of Golar LNG Ltd since
February 2015 and was appointed Chairman in September 2015. Prior to joining Ensco plc, Mr. Rabun was a partner at the
international law firm of Baker & McKenzie LLP where he had practiced law since 1986. In May 2015, Mr. Rabun became a non-
executive director and currently serves a member of the Audit Committee and the Corporate Responsibility, Governance and
Nominations Committee of APA Corporation (formerly Apache Corp.). In May 2018, Mr. Rabun became Chairman of the Board
and a member of the Compensation Committee and is Chairman of the Governance and Nominations Committee of ChampionX
Corporation. He has been a US Certified Public Accountant since 1976 and a member of the Texas Bar since 1983. Mr. Rabun
holds a Bachelor of Business Administration Degree in Accounting from the University of Houston and a Juris Doctorate Degree
from Southern Methodist University.
Mi Hong Yoon joined the Company as a Director on our Board and as our Company Secretary on March 1, 2022. Ms. Yoon is a
Managing Director of Golar Management (Bermuda) Limited since February 2022. Prior to this role, she was employed by
Digicel Bermuda as Chief Legal, Regulatory and Compliance Officer from March 2019 until February 2022 and also served as
Senior Legal Counsel of Telstra Corporation Limited’s global operations in Hong Kong and London from 2009 to 2019. She has
extensive international legal and regulatory experience and is responsible for the corporate governance and compliance of the
Company. Ms. Yoon graduated from the University of New South Wales with a Bachelor of Law degree (LLB) and earned a
Master’s degree (LLM) in international economic law from the Chinese University of Hong Kong. She is a member of the
Institute of Directors and has held several director positions over the years. Current directorships and management positions
include Golar LNG Ltd. (company secretary), 2020 Bulkers Ltd. (company secretary) and Himalaya Shipping Ltd. (director and
company secretary).
Patrick Schorn has served as Director since October 2023 and has been serving as the Chief Executive Officer of Borr Drilling
since September 2020, after serving as a Director since January 2018. Mr. Schorn was previously the Executive Vice President of
Wells for Schlumberger Limited. Prior to this role, he held various global management positions including President of
Operations for Schlumberger Limited; President Production Group; President of Well Services; President of Completions; and
GeoMarket Manager Russia. He began his career with Schlumberger Limited in 1991 as a Stimulation Engineer in Europe and
has held various management and engineering positions in France, United States, Russia, US Gulf of Mexico and Latin America.
Mr. Schorn holds a Bachelor of Science degree in Oil and Gas Technology from the University “Noorder Haaks” in Den Helder,
the Netherlands.
Magnus Vaaler became the Chief Financial Officer of the Company in December 2020, previously serving as the VP Investor
Relations and Treasury. Mr. Vaaler has been working in the Company’s Finance department since January 2018 with Treasury,
Finance and Investor relations. Mr. Vaaler brings many years of finance, oil and offshore industry experience from three years as
VP Finance at Offshore Merchant Partners, a portfolio company of Hitecvision, and seven years as Treasurer and VP Finance at
Frontline Ltd., listed on NYSE and OSE. Mr. Vaaler holds a Bachelor of Commerce degree from University College Dublin.
Management of the Company
Our Board is responsible for determining the strategic vision and ultimate direction of our business, determining the principles of
our business strategy and policies and promoting our current, short-term and long-term interests in a sustainable manner, taking
into account economic, social and environmental conditions. Our Board is responsible for overseeing our business and, subject to
our governing documents and applicable law, generally delegates day-to-day management of the Company to our senior
76
management team. Our Board generally oversees risk management and our senior management team generally manage the
material risks that we face. The Board must, however, be consulted on all matters of material importance and, or, of an unusual
nature and, for such matters, will provide specific authorization to personnel in our senior management to act on its behalf.
The senior management team responsible for our day-to-day management has extensive experience in the oil and gas industry in
general and in the offshore drilling area in particular. The Board has defined the scope and terms of the services to be provided by
our senior management. Management services are provided to the Group by Borr Drilling Management UK, Borr Drilling
Management DMCC and Borr Drilling Management AS, all being subsidiaries of the Company and incorporated in England and
Wales, the United Arab Emirates and Norway respectively.
B. COMPENSATION
During the year ended December 31, 2023, we paid our Directors and executive officers aggregate compensation (including
bonuses) of $5.7 million. In addition for 2023 we recognized an expense of $2.4 million relating to stock options, restricted stock
units (RSUs) and performance stock units granted to certain of our Directors and executive officers and immaterial costs related to
the provision of pension, retirement or similar benefits to one executive officer, as our remaining executive officers have chosen
to opt out of the Company pension scheme.
Some of the Directors elected to receive part of their compensation in the form of shares. The following table sets forth the shares
issued to our Directors in lieu of compensation during the financial years ended December 31, 2022 and December 31, 2021:
March 18, 2021
July 14. 2021
October 14. 2022
Name of Director
Number Shares
Granted
Transfer Value
($)
Number Shares
Granted
Transfer Value
($)
Number Shares
Granted
Transfer Value
($)
Tor Olav Trøim
75,041
180,097
12,967
21,370
12,367
44,521
Pål Kibsgaard (1)
31,250
75,000
6,250
10,300
56,051
201,784
Kate Blankenship
93,800
225,121
16,209
26,712
15,460
55,656
Neil Glass
75,041
180,097
12,967
21,370
6,944
24,998
Mi Hong Yoon
—
—
—
—
—
—
Georgina Sousa (2)
—
—
—
—
—
—
Total Directors
275,132
660,316
48,393
79,752
90,822
326,959
(1) Effective September 30, 2022 Mr. Kibsgaard resigned as Director.
(2) Effective March 1, 2022, Ms. Sousa retired as Director and Company Secretary.
Shares granted on March 18, 2021 were in respect of director compensation for the three months ended December 31, 2019 as
well as the year ended December 31, 2020. Shares granted on July 14, 2021 were in respect of director compensation for the three
months ended March 31, 2021. Shares granted on October 14, 2022 were in respect of directors compensation for the nine months
ended December 31, 2021 and nine months ended September 30, 2022. The transfer value of the shares is determined based on
the closing price of the Company's share on the Oslo Stock Exchange on the respective dates of issuances. All shares issued were
from Treasury shares, for further details refer to Note 28 - Stockholders' Equity of our Audited Consolidated Financial Statements
included therein.
Certain of our Directors receive part of their aggregate director compensation as RSUs. On November 17, 2023 the Company
granted 22,556 (112,780 in total) RSUs to five of our Directors, subject to the participants continuing to serve as Director from
the grant date to the vesting date. On October 8, 2023 the Company issued 29,528 (88,584 in total) shares to three of our Directors
in relation to RSUs granted on November 18, 2022. For further details on the RSUs issued in 2023 please refer to Note 24 - Share
Based Compensation and for details of the treasury shares issued to settle the RSUs granted in November 2022, please refer to
Note 28 - Stockholders' Equity of our Audited Consolidated Financial Statements included therein.
See "Item 6.E. Share Ownership" for share compensation paid to executive officers during the year ended December 31, 2023.
77
C. BOARD PRACTICES
The Company is subject to Bermudian law regarding corporate governance. Our Board currently consists of seven Directors. A
Director is not required to hold any shares in our Company by way of qualification. A Director who is in any way, whether
directly or indirectly, interested in a contract or proposed contract with our Company is required to declare the nature of the
interest at a meeting of our Directors. Subject to declaring the interest and any further disclosure required by the Companies Acts,
a Director may vote in respect of any contract, proposed contract, or arrangement notwithstanding that he or she may be interested
therein, and if he or she does so, their vote shall be counted and may be counted in the quorum at any meeting of our Directors at
which any such contract or proposed contract or arrangement is considered. The Directors may exercise all of our powers to
borrow money, mortgage our undertaking, property and uncalled capital, and issue debentures or other securities whenever money
is borrowed or as security for any of our obligations or of any third party.
Our Board is elected annually by a vote of a majority of the common shares represented at the meeting at which at least two
shareholders, present in person or by proxy, and entitled to vote (whatever the number of shares held by them) constitutes a
quorum. In addition, the maximum and minimum number of Directors are determined by a resolution of our shareholders, but no
less than two Directors shall serve at any given time. Each Director shall hold office until the next annual general meeting
following his or her election or until his or her successor is elected.
The Directors may be re-elected. Directors stand for re-election at each annual general meeting but there is no limit on the term of
office.
There are no service contracts between the Company and any member of our Board providing for the accrual of benefits,
compensation or otherwise, upon termination of their employment or service.
Independence of directors
The NYSE requires that a U.S. listed company maintain a majority of independent directors. As a foreign private issuer, we are
exempt from certain rules of the NYSE and are permitted to follow home country practice in lieu of the relevant provisions of the
NYSE Listed Company Manual, including this NYSE requirement. As permitted under Bermuda law and our bye-laws, four
members of our Board, Mrs. Kate Blankenship, Mr. Neil Glass, Mr. Jeffrey Currie, and Mr. Dan Rabun are independent
according to the NYSE’s standards for independence.
Board Committees
We have three board committees, being an audit committee, a nominating and governance committee and a compensation
committee.
Audit committee
The NYSE requires, among other things, that a listed U.S. company have an audit committee with a minimum of three members,
all of whom must be independent. Additionally, at least one member of the audit committee must have accounting or related
financial management expertise. As a foreign private issuer, we are exempt from certain rules of the NYSE and are permitted to
follow home country practice in lieu of the relevant provisions of the NYSE Listed Company Manual, including the requirement
to have three members on the audit committee. Consistent with our status as a foreign private issuer and the jurisdiction of our
incorporation, our audit committee currently consists of two members, Mrs. Kate Blankenship and Mr. Neil Glass, who are both
independent and who both qualify as an audit committee financial expert ("ACFE") under U.S. securities laws relating to audit
committees. Under our audit committee charter, the audit committee is responsible for overseeing the audits of the Company's
financial statements, overseeing the quality and integrity of our external financial reporting, appointment, compensation and
oversight of our external auditors, reviewing, evaluating and advising the Board concerning the adequacy of our accounting
systems, internal controls, compliance with legal and regulatory requirements and cybersecurity oversight.
Compensation committee
The NYSE requires, among other things, that a listed U.S. company have a compensation committee composed entirely of
independent directors and a committee charter specifying the purpose, duties and evaluation procedures of the committee.
Although as a foreign private issuer we are exempt from such rules and permitted to follow home country practice, we have
established a compensation committee currently consisting of Mrs. Kate Blankenship and Mr. Dan Rabun, who are independent
Directors according to NYSE's standards for independence. The compensation committee is responsible for establishing general
78
compensation guidelines and policies for executive employees. The compensation committee determines the compensation and
other terms of employment for executive employees (including salary, bonus, equity participation, benefits and severance terms)
and reviews, from time to time, our compensation strategy and compensation levels in order to ensure we are able to attract, retain
and motivate executives and other employees. The compensation committee is also responsible for approving any equity incentive
plans or arrangements and any guidelines or policies for the grant of equity incentives thereunder to our employees. It oversees
and periodically reviews all annual bonuses, long-term incentive plans, stock options, incentive-based compensation recoupment
policy, employee pension and welfare benefit plans and also reviews and makes recommendations to the Board regarding the
compensation of Directors for their services to the Board.
Nominating and governance committee
The NYSE requires, among other things, that a listed U.S. company have a nominating and corporate governance committee of
independent directors and a committee charter specifying the purpose, duties and evaluation procedures of the committee.
Although as a foreign private issuer we are exempt from such rules and permitted to follow home country practice, we have
established a nominating and corporate governance committee consisting of Mr. Neil Glass and Mr. Jeffrey Currie who are
independent Directors according to the NYSE’s standards for independence. The nominating and governance committee is
appointed by the Board to assist the Board in (i) identifying individuals qualified to become members of the Board, consistent
with criteria approved by the Board, (ii) recommending to the Board the Director nominees to stand for election at the next
general meeting of shareholders, (iii) developing and recommending to the Board a set of corporate governance principles
applicable to our Directors and employees, (iv) recommending committee structure, operations and reporting obligations to the
Board, (v) recommending committee assignments for directors to the Board and (vi) overseeing an annual review of Board
performance.
Executive sessions
The NYSE requires that non-management directors meet regularly in executive sessions without management. The NYSE also
requires that, if such executive sessions include any non-management Directors who are not independent, all independent
directors also meet in an executive session at least once a year. Our Directors regularly hold executive sessions without
management and our independent directors hold executive sessions when deemed appropriate.
D. EMPLOYEES
Employees
The table below presents our employees and contractors by function:
As at December 31,
2023
2022
2021
Rig Based
2,544
2,236
1,731
Shore Based
325
268
195
Total
2,869
2,504
1,926
Company Employees
1,884
1,504
517
Contractors
985
1,000
1,409
Total
2,869
2,504
1,926
These employees and contractors have extensive technical, operational and management experience in the jack-up segment of the
shallow-water offshore drilling industry. The increase in the number of employees and contractors in the year ended December
31, 2023 is primarily a result of increased operations in Mexico, Asia and the Middle East regions, which supported the re-
activations of warm stacked rigs and the activations of some of our newbuilds. The increase in the split between employees and
contractors is due to a shift in our employment strategy to increasingly directly hire employees.
Some of our employees and our contracted labor are represented by collective bargaining agreements. As part of the legal
obligations in some of these agreements, we are required to contribute certain amounts to retirement funds and pension plans and
have restricted ability to terminate employment. In addition, many of these represented individuals are working under agreements
79
that are subject to salary negotiations. These negotiations could result in higher personnel costs, other increased costs or increased
operating restrictions that could adversely affect our financial performance. We consider our relationships with the various unions
as stable, productive and professional.
The table below presents our employees and contractors by function as of December 31, 2023:
Company Employees
Contractors
Total
Rig-based
1,595
949
2,544
Shore-based
289
36
325
Total
1,884
985
2,869
We seek to employ national employees and contractors wherever possible in the markets in which our rigs operate. This enables
us to strengthen customer and governmental relationships, particularly with NOCs, and results in a more competitive cost base as
well as relatively lower employee turnover.
E. SHARE OWNERSHIP
The following table sets forth information as of March 22, 2024 with respect to the beneficial ownership of our common shares,
share options and restricted share units ("RSUs") by:
• each of our Directors and executive officers; and
• all of our Directors and executive officers as a group
The calculations in the table below are based on 252,996,439 common shares outstanding as of March 22, 2024. Beneficial
ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially
owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire
within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security. These
shares, however, are not included in the computation of the percentage ownership of any other person.
Name of Director
of Officer
Common
Shares
Owned
Ownership
(%)
Number
of Options
Exercise
Price ($)
(1)
Option Expiry Date
Number
of RSUs
RSU Vesting Date
Tor Olav Trøim (2)
16,222,385
6.4%
—
—
—
22,556
September 30, 2024
Kate Blankenship
224,997
*
—
—
—
22,556
September 30, 2024
Neil Glass
165,124
*
—
—
—
22,556
September 30, 2024
 Dan Rabun
—
*
—
—
—
22,556
September 30, 2024
Jeffrey Currie
—
*
—
—
—
22,556
September 30, 2024
Patrick Schorn
1,100,000
*
1,200,000
2.00
August 12, 2026
N/A
N/A
Patrick Schorn (3)
—
*
333,334
4.00
September 1, 2027
N/A
N/A
Patrick Schorn (3)
—
*
333,333
4.75
September 1, 2027
N/A
N/A
Patrick Schorn (3)
—
*
333,333
5.50
September 1, 2027
N/A
N/A
Magnus Vaaler
75,000
*
550,000
2.00
August 12, 2026
N/A
N/A
Magnus Vaaler
—
*
133,334
4.00
September 1, 2027
N/A
N/A
Magnus Vaaler
—
*
133,333
4.75
September 1, 2027
N/A
N/A
Magnus Vaaler
—
*
133,333
5.50
September 1, 2027
N/A
N/A
Magnus Vaaler (4)
—
*
300,000
6.65
November 17, 2028
N/A
N/A
Total Directors
and Officers
17,787,506
7.0%
3,450,000
112,780
(*) Represents ownership of less than 1% of our outstanding shares.
(1) Exercise prices are presented gross of dividends declared.
80
(2) Represents shares beneficially owned by Tor Olav Trøim, through his beneficial ownership of Drew.
(3) In addition to the shares owned and share options granted, Patrick Schorn was awarded 500,000 performance stock units. See
below for additional disclosures.
(4) The following options were granted during the year ended December 31, 2023.
Long-term Incentive Program
We have adopted a long-term incentive plan and have authorized the issuance of up to 12,997,000 options pursuant to awards
under our long-term incentive program, of which 1,227,000 options remain unallocated for further awards and recruitments. Any
person who is contracted to work at least 20 hours per week in our service, the members of our Board and any person who is a
member of the board of any of our subsidiaries are eligible to participate in our long-term incentive plan. The purpose of our long-
term incentive program is to align the long-term financial interests of our employees and Directors with those of our shareholders,
to attract and retain those individuals by providing compensation opportunities that are competitive with other companies, and to
provide incentives to those individuals who contribute significantly to our long-term performance and growth. To accomplish this,
our long-term incentive plan permits the issuance of our shares.
The long-term incentive plan is based on the granting of options to subscribe to new securities. Such options are typically granted
with a term of five years. The Board has the authority to set the subscription price, vesting periods and the terms of the options.
No consideration is paid by the recipients for the options. When an individual ceases to be eligible to retain options, for example
by leaving the group, unvested options lapse. Vested options must, under the same circumstances, be exercised within a certain
period after the termination date. For further details on share options please refer to Note 24 - Share Based Compensation of our
Audited Consolidated Financial Statements included herein.
Performance Stock Units
On August 11, 2022, Patrick Schorn, the Company's Chief Executive Officer was awarded 500,000 performance stock units that
will vest in full on September 1, 2025, subject to the Company’s share price reaching $10.00 per share on 75% of the days in the
third quarter of 2025, prior to September 1, 2025 and Patrick Schorn's continued service. The Company's share price on the grant
date was $3.96.
Restricted Share Units
On November 17, 2023 the Company issued 22,556 (112,780 in total) RSUs to five of our Directors, which will vest in full on
September 30, 2024, subject to the participants continuing to serve as Director from the grant date to the vesting date.
Treasury shares
During the year ended December 31, 2023 we issued 88,584 of our treasury shares to various of our Directors (and one former
Director) in settlement of RSUs granted in 2022, which vested in September 2023. See above and “Item 6.B. Compensation”.  Of
the total treasury shares held at December 31, 2023, we held 351,937 treasury shares which may be used for issuances under our
long-term incentive program and for other purposes including issuance of shares to Directors as part of their annual compensation.
F. DISCLOSURE OF A REGISTRANT'S ACTION TO RECOVER ERRONEOUSLY AWARDED
COMPENSATION
Not applicable. 
ITEM 7.  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. MAJOR SHAREHOLDERS 
Except as specifically noted, the following table sets forth information as of March 22, 2024 with respect to the beneficial
ownership of our common shares by each person known to us to own beneficially more than 5% of our total common shares.
81
Common Shares (1)
Owner
Number
Percentage
Granular Capital Ltd (2)
47,884,303
18.9%
Allan & Gill Gray Foundation (3)
23,342,709
9.2%
BlackRock, Inc. (4)
16,722,695
6.6%
Tor Olav Trøim (5)
16,222,385
6.4%
Capital International Investors (6)
15,596,621
6.2%
The Goldman Sachs Group, Inc. (7)
13,499,674
5.3%
JPMorgan Chase & Co (8)
13,281,209
5.2%
(1) The calculations in the table above are based on 252,996,439 common shares outstanding as of March 22, 2024.
(2) This information is based solely on the Oslo Stock Exchange mandatory notification of trades by Granular Capital Ltd on July
4, 2023.
(3) Based solely on information contained in a Schedule 13G filed on February 14, 2024 by Orbis Investment Management Limited
("OIML"). To the best of our knowledge, the Managers are ultimately controlled by the Allan & Gill Gray Foundation, through its
ownership or control, as applicable, of OIML.
(4) Based solely on the Oslo Stock Exchange mandatory notification of trades by BlackRock, Inc on February 5, 2024.
(5) Based solely on the Oslo Stock Exchange mandatory notification of PDMR transactions on March 12, 2024, by Drew. Mr. Tor
Olav Trøim is the beneficiary of Drew Trust that wholly owns Drew.
(6) Based solely on information contained in a Schedule 13G filed on February 7, 2024 by Capital International Investors.
(7) This information is based solely on the Oslo Stock Exchange mandatory notification of trades by The Goldman Sachs Group,
Inc on March 18, 2024.
(8) This information is based solely on the Oslo Stock Exchange mandatory notification of trades by JPMorgan Chase & Co on
January 15, 2024.
To our knowledge, as of March 22, 2024, a total of 252,996,439 shares are held by 2 record holders in the United States,
including Cede & Co., as nominee for the Depository Trust Company, which indirectly holds our shares on the NYSE and Oslo
Børs.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company. See the section
entitled “Item 10.B. Our Memorandum of Association and Bye-Laws” for historical changes in our shareholding structure.
B. RELATED PARTY TRANSACTIONS
Related party transactions that we were party to for the years ended December 31, 2023, 2022 and 2021 are described in Note 27 -
Related Party Transactions of our Audited Consolidated Financial Statements included herein.
Other Relationships
Director participation in equity offering
Some Directors and executive officers of the Company participated in the equity offering that closed on January 31, 2022, August
25, 2022 and October 24, 2023 on the same terms as other participants.
The following Directors have received shares as part of their compensation in 2023:
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Name of Director
October 8, 2023(1)
Tor Olav Trøim
29,528
Kate Blankenship
29,528
Neil Glass
29,528
Total
88,584
(1) Shares received as settlement of RSU's which formed part of compensation for the period November 18, 2022 to September 30,
2023.
For further details of our shares issued as compensation to Directors see Note 28 - Stockholders' Equity of our Audited
Consolidated Financial Statements included therein.
For more information on shareholdings held by all Directors and executive officers of the Company see the section entitled “Item
6.E. Share Ownership”
C. INTERESTS OF EXPERTS AND COUNSEL
Not applicable. 
ITEM 8.  FINANCIAL INFORMATION
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
See “Item 18. Financial Statements” for more information on the financial statements filed as a part of this annual report.
See “Item 4.B. Business Overview—Legal Proceedings” for a discussion of legal proceedings. We may, from to time, be involved
in legal proceedings and claims that arise in the ordinary course of business. A provision will be recognized in the financial
statements when we believe that a liability will be probable for which the amounts are reasonably estimable, based upon the facts
known prior to the issuance of the financial statements.
Dividend distribution policy
Our long-term objective is to pay a regular dividend in support of our main objective which is to provide significant returns to our
shareholders. The level of our dividends will be guided by current earnings, market prospects, capital expenditure requirements
and investment opportunities.
Any future dividends declared will be at the discretion of our Board of Directors and will depend upon our financial condition,
earnings and other factors, such as any restrictions in our financing arrangements. Our ability to declare dividends is also
regulated by Bermuda law, which prohibits us from paying dividends if, at the time of distribution, we will not be able to pay our
liabilities as they fall due or the value of our assets is less than the sum of our liabilities, issued share capital and share premium.
In addition, since we are a holding company with no material assets other than the shares of our subsidiaries and equity method
investments through which we conduct our operations, our ability to pay dividends will depend on our subsidiaries and equity
method investments distributing to us their earnings and cash flows. Some of our debt instruments, including restrictions in the
indenture governing the Notes, limit us from making certain distributions.
B. SIGNIFICANT CHANGES 
There have been no significant changes since the date of our Audited Consolidated Financial Statements included in this report,
other than as described in Note 29 - Subsequent Events of our Audited Consolidated Financial Statements included herein.
ITEM 9.  THE OFFER AND LISTING
A. OFFER AND LISTING DETAILS
Our common shares are listed on the Oslo Børs, our principal host market, and on the New York Stock Exchange under the
symbol “BORR.”
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Please see “Item 10.B. Memorandum and Articles of Association” for a description of the rights attaching to our common shares.
B. PLAN OF DISTRIBUTION 
Not applicable. 
C. MARKETS 
Our shares are listed on the Oslo Børs and New York Stock Exchange under the symbol “BORR”
D. SELLING SHAREHOLDERS
Not applicable.
E. DILUTION
Not applicable.
F. EXPENSES OF THE ISSUE 
Not applicable. 
ITEM 10.  ADDITIONAL INFORMATION
A. SHARE CAPITAL
Not applicable.
B. MEMORANDUM AND ARTICLES OF ASSOCIATION 
We are an exempted company limited by shares incorporated in Bermuda and our corporate affairs are governed by our
Memorandum and Bye-Laws, the Companies Act and the common law of Bermuda. 
Our Memorandum of Association and Bye-Laws
The Memorandum of the Company has previously been filed as Exhibit 3.1 to the Company’s Registration Statement on Form
F-1 filed with the Securities and Exchange Commission on July 10, 2019, and is hereby incorporated by reference into this
Annual Report.
The Bye-Laws of the Company, as amended, are incorporated by reference as Exhibit 1.2 to this annual report.
The following are summaries of material provisions of our Memorandum and Bye-Laws, insofar as they relate to the material
terms of our shares.
Objects of Our Company 
We were incorporated by registration under the Companies Act. Our business objects, as stated in section Six of our
Memorandum, are unrestricted and we have all the powers of a natural person. 
Common Shares Ownership 
Our Memorandum and Bye-Laws do not impose any limitations on the ownership rights of our shareholders. The Bermuda
Monetary Authority has given a general permission for us to issue shares to nonresidents of Bermuda and for the free
transferability of our shares among nonresidents of Bermuda, for so long as our shares are listed on an appointed stock exchange.
There are no limitations on the right of non-Bermudians or non-residents of Bermuda to hold or vote our common shares. 
Dividends
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As a Bermuda exempted company limited by shares, we are subject to Bermuda law relating to the payment of dividends. We
may not pay any dividends if, at the time the dividend is declared or at the time the dividend is paid, there are reasonable grounds
for believing that, after giving effect to that payment:
• we will not be able to pay our liabilities as they fall due; or
• the realizable value of our assets is less than our liabilities.
In addition, since we are a holding company with no material assets, and conduct our operations through subsidiaries, our ability
to pay any dividends to shareholders will depend on our subsidiaries’ distributing to us their earnings and cash flow. Some of our
loan agreements currently limit or prohibit our subsidiaries’ ability to make distributions to us and our ability to make
distributions to our shareholders. 
Voting Rights 
Holders of common shares are entitled to one vote per share on all matters submitted to a vote of holders of common shares.
Unless a different majority is required by law or by our Bye-Laws, resolutions to be approved by holders of common shares
require approval by a simple majority of votes cast at a meeting at which a quorum is present. 
Majority shareholders do not generally owe any duties to other shareholders to refrain from exercising all of the votes attached to
their shares. There are no deadlines in the Companies Act relating to the time when votes must be exercised. However, our Bye-
Laws provide that where a shareholder or a person representing a shareholder as a proxy wishes to attend and vote at a meeting of
our shareholders, such shareholder or person must give us not less than 48 hours’ notice in writing of their intention to attend and
vote.
The key powers of our shareholders include the power to alter the terms of our Memorandum and to approve and thereby make
effective any alterations to our Bye-Laws made by the directors. Dissenting shareholders holding 20% of our shares may apply to
the court to annul or vary an alteration to our Memorandum. A majority vote against an alteration to our Bye-Laws made by the
directors will prevent the alteration from becoming effective. Other key powers are to approve the alteration of our capital,
including a reduction in share capital, to approve the removal of a director, to resolve that we will be wound up or discontinued
from Bermuda to another jurisdiction or to enter into an amalgamation, merger or winding up. Under the Companies Act, all of
the foregoing corporate actions require approval by an ordinary resolution (a simple majority of votes cast), except in the case of
an amalgamation or merger transaction, which requires approval by 75% of the votes cast, unless our Bye-Laws provide
otherwise, which our Bye-Laws do. Our Bye-Laws provide that the Board may, with the sanction of a resolution passed by a
simple majority of votes cast at a general meeting with the necessary quorum for such meeting of two persons at least holding or
representing 33.33% of our issued shares (or the class of securities, where applicable), amalgamate or merge us with another
company. In addition, our Bye-Laws confer express power on the Board to reduce its issued share capital selectively with the
authority of an ordinary resolution of the shareholders.
The Companies Act provides that a company shall not be bound to take notice of any trust or other interest in its shares. There is a
presumption that all the rights attaching to shares are held by, and are exercisable by, the registered holder, by virtue of being
registered as a member of the company. Our relationship is with the registered holder of our shares. If the registered holder of the
shares holds the shares for someone else (the beneficial owner), then the beneficial owner is entitled to the shares and may give
instructions to the registered holder on how to vote the shares. The Companies Act provides that the registered holder may appoint
more than one proxy to attend a shareholder meeting, and consequently where rights to shares are held in a chain the registered
holder may appoint the beneficial owner as the registered holder’s proxy.
Meetings of Shareholders
The Companies Act provides that a company must have a general meeting of its shareholders in each calendar year unless that
requirement is waived by resolution of the shareholders. Under our Bye-Laws, annual shareholder meetings will be held in
accordance with the Companies Act at a time and place selected by the Board, provided that no such meetings can be held in
Norway or the United Kingdom. Special general meetings may be called at any time at the discretion of the Board, provided that
no such meetings can be held in Norway or the United Kingdom.
Annual shareholder meetings and special meetings must be called by not less than seven days’ prior written notice specifying the
place, day and time of the meeting. The Board may fix any date as the record date for determining those shareholders eligible to
receive notice of and to vote at the meeting.
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The quorum at any annual or general meeting is equal to at least two shareholders, present in person or by proxy, and entitled to
vote (whatever the number of shares held by them). The Companies Act specifically imposes special quorum requirements where
the shareholders are being asked to approve the modification of rights attaching to a particular class of shares (33.33%) or an
amalgamation or merger transaction (33.33%) unless in either case the bye-laws provide otherwise.
The Companies Act provides shareholders holding 10% of a Company’s voting shares the ability to request that the Board shall
convene a meeting of shareholders to consider any business which the shareholders wish to be discussed by the shareholders
including (as noted below) the removal of any director. However, the shareholders are not permitted to pass any resolutions
relating to the management of our business affairs unless there is a pre-existing provision in the company’s bye-laws which
confers such rights on the shareholders. Subject to compliance with the time limits prescribed by the Companies Act, shareholders
holding 5% of the voting shares (or alternatively, 100 shareholders) may also require the directors to circulate a written statement
not exceeding 1,000 words relating to any resolution or other matter proposed to be put before, or otherwise considered during,
the annual general meeting of the company.
Election, Removal and Remuneration of Directors 
The Companies Act provides that the directors shall be elected or appointed by the shareholders. A director may be elected by a
simple majority vote of shareholders. A person holding more than 50% of the voting shares of the company will be able to elect
all of the directors, and to prevent the election of any person whom such shareholder does not wish to be elected. There are no
provisions for cumulative voting in the Companies Act or the Bye-Laws. Further, our Bye-Laws do not contain any super-
majority voting requirements relating to the appointment or election of directors. The appointment and removal of directors is
covered by Bye-Laws 97, 98 and 99.
There are procedures for the removal of one or more of the directors by the shareholders before the expiration of his term of
office. Shareholders holding 10% or more of our voting shares may require the Board to convene a shareholder meeting to
consider a resolution for the removal of a director. At least 14 days’ written notice of a resolution to remove a director must be
given to the director affected, and that director must be permitted to speak at the shareholder meeting at which the resolution for
his removal is considered by the shareholders. Any vacancy created by such a removal may be filled at the meeting by the election
of another person by the shareholders or in the absence of such election, by the Board.
The Companies Act stipulates that an undischarged bankruptcy of a director (in any country) shall prohibit that director from
acting as a director, directly or indirectly, and taking part in or being concerned with the management of a company, except with
leave of the court. Bye-Law 100 is more restrictive in that it stipulates that the office of a Director shall be vacated upon the
happening of any of the following events:
• If he resigns his office by notice in writing delivered to the registered office or tendered at a meeting of the Board;
• If he becomes of unsound mind or a patient for any purpose of any statute or applicable law relating to mental health
and the Board resolves that his office is vacated;
• If he becomes bankrupt or compounds with his creditors;
• If he is prohibited by law from being a Director; or
• If he ceases to be a Director by virtue of the Companies Act or is removed from office pursuant to the company’s
bye-laws.
Under our Bye-Laws, the minimum number of directors comprising the Board at any time shall be two. The Board currently
consists of seven directors. The minimum and maximum number of directors comprising the Board from time to time shall be
determined by way of an ordinary resolution of our shareholders. The shareholders may, at the annual general meeting by
ordinary resolution, determine that one or more vacancies in the Board be deemed casual vacancies. The Board, so long as a
quorum remains in office, shall have the power to fill such casual vacancies. Our directors are not required to retire because of
their age, and the directors are not required to be holders of our shares. Directors serve for one year terms, and shall serve until re-
elected or until their successors are appointed at the next annual general meeting.
Director Transactions
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Our Bye-Laws do not prohibit a director from being a party to, or otherwise having an interest in, any transaction or arrangement
with our Company or in which our Company is otherwise interested. Our Bye-Laws provide that a director who has an interest in
any transaction or arrangement with us and who has complied with the provisions of the Companies Act and with our Bye-Laws
with regard to disclosure of such interest shall be taken into account in ascertaining whether a quorum is present, and will be
entitled to vote in respect of any transaction or arrangement in which he is so interested.
Bye-Law 111 provides our Board the authority to exercise all of our powers to borrow money and to mortgage or charge all or
any part of our property and assets as collateral security for any debt, liability or obligation. However, under the Companies Act,
companies may not lend money to a director or to a person connected to a director who is deemed by the Companies Act to be a
director (a “Connected Person”), or enter into any guarantee or provide any security in relation to any loan made to a director or a
Connected Person without the prior approval of the shareholders of the company holding in aggregate 90% of the total voting
rights in the company.
Our Bye-Laws provide that no director, alternate director, officer, person or member of a committee, if any, resident
representative, or his heirs, executors or administrators, which we refer to collectively as an indemnitee, is liable for the acts,
receipts, neglects or defaults of any other such person or any person involved in our formation, or for any loss or expense incurred
by us through the insufficiency or deficiency of title to any property acquired by us, or for the insufficiency or deficiency of any
security in or upon which any of our monies shall be invested, or for any loss or damage arising from the bankruptcy, insolvency
or tortious act of any person with whom any monies, securities or effects shall be deposited, or for any loss occasioned by any
error of judgment, omission, default or oversight on his part, or for any other loss, damage or other misfortune whatever which
shall happen in relation to the execution of his duties, or supposed duties, to us or otherwise in relation thereto. Each indemnitee
will be indemnified and held harmless out of our funds to the fullest extent permitted by Bermuda law against all liabilities, loss,
damage or expense (including but not limited to liabilities under contract, tort and statute or any applicable foreign law or
regulation and all reasonable legal and other costs and expenses properly payable) incurred or suffered by him as such director,
alternate director, officer, person or committee member or resident representative (or in his reasonable belief that he is acting as
any of the above). In addition, each indemnitee shall be indemnified against all liabilities incurred in defending any proceedings,
whether civil or criminal, in which judgment is given in such indemnitee’s favor, or in which he is acquitted. We are authorized to
purchase insurance to cover any liability it may incur under the indemnification provisions of our Bye-Laws. Each shareholder
has agreed in Bye-Law 166 to waive to the fullest extent permitted by Bermuda law any claim or right of action he might have
whether individually or derivatively in the name of the company against each indemnitee in respect of any action taken by such
indemnitee or the failure by such indemnitee to take any action in the performance of his duties to us.
Liquidation
In the event of our liquidation, dissolution or winding up, the holders of common shares are entitled to share in our assets, if any,
remaining after the payment of all of our debts and liabilities, subject to any liquidation preference on any outstanding preference
shares.
Redemption, Repurchase and Surrender of Shares
Subject to certain balance sheet restrictions, the Companies Act permits a company to purchase its own shares if it is able to do so
without becoming cash flow insolvent as a result. The restrictions are that the par value of the share must be charged against the
company’s issued share capital account or a company fund which is available for dividend or distribution or be paid for out of the
proceeds of a fresh issue of shares. Any premium paid on the repurchase of shares must be charged to the company’s current share
premium account or charged to a company fund which is available for dividend or distribution. The Companies Act does not
impose any requirement that the directors shall make a general offer to all shareholders to purchase their shares pro rata to their
respective shareholdings. Our Bye-Laws do not contain any specific rules regarding the procedures to be followed by us when
purchasing our shares, and consequently the primary source of our obligations to shareholders when we tender for our shares will
be the rules of the listing exchanges on which our shares are listed. Our power to purchase our shares is covered by Bye-Laws 7, 8
and 9.
Issuance of Additional Shares 
Bye-Law 3 confers on the directors the right to dispose of any number of unissued shares forming part of our authorized share
capital without any requirement for shareholder approval. 
The Companies Act and our Bye-Laws do not confer any pre-emptive, redemption, conversion or sinking fund rights attached to
our common shares. Bye-Law 14 specifically provides that the issuance of more shares ranking pari passu with the shares in issue
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shall not constitute a variation of class rights, unless the rights attached to shares in issue state that the issuance of further shares
shall constitute a variation of class rights. 
Inspection of Books and Records
The Companies Act provides that a shareholder is entitled to inspect the register of shareholders and the register of directors and
officers of the company. A shareholder is also entitled to inspect the minutes of the meetings of the shareholders of the company,
and the annual financial statements of the company. Our Bye-Laws do not provide shareholders with any additional rights to
information, and our Bye-Laws do not confer any general or specific rights on shareholders to inspect our books and records.
Implications of Being a Foreign Private Issuer 
We are considered a “foreign private issuer.” For more information, please see the section entitled "Item 10.H. Additional
Information-Documents on Display".
We may take advantage of these exemptions until the first day after we cease to qualify as a foreign private issuer. We would
cease to be a foreign private issuer if, on the last business day of our second fiscal quarter, more than 50.0% of our outstanding
voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of our executive
officers or directors are U.S. citizens or residents, (ii) more than 50.0% of our assets are located in the United States or (iii) our
business is administered principally in the United States. As a foreign private issuer, we have taken advantage of certain reduced
reporting and other requirements that apply to U.S. "domestic" companies with shares registered with the SEC. Accordingly, the
information contained herein may be different than the information you receive from other public companies in which you hold
equity securities. 
Certain Bermuda Company Considerations
Our corporate affairs are governed by our Memorandum and Bye-Laws as described above, the Companies Act and the common
law of Bermuda. You should be aware that the Companies Act differs in certain material respects from the laws generally
applicable to U.S. companies incorporated in the State of Delaware. Accordingly, you may have more difficulty protecting your
interests under Bermuda law in the face of actions by management, directors or controlling shareholders than would shareholders
of a corporation incorporated in a United States jurisdiction, such as the State of Delaware. Please see Exhibit 2.1 to this Annual
Report on Form 20-F.
C. MATERIAL CONTRACTS 
For more information concerning our material contracts, see “Item 4. Information on the Company,” “Item 5. Operating and
Financial Review and Prospects" and “Item 19. Exhibits" of this Annual Report.
D. EXCHANGE CONTROLS
Our common shares may be offered or sold in Bermuda only in compliance with the provisions of the Investment Business Act of
2003 and the Exchange Control Act 1972, and related regulations of Bermuda which regulate the sale of securities in Bermuda. In
addition, specific permission is required from the Bermuda Monetary Authority, or the BMA, pursuant to the provisions of the
Exchange Control Act 1972 and related regulations, for all issuances and transfers of securities of Bermuda companies, other than
in cases where the BMA has granted a general permission. The BMA in its policy dated June 1, 2005 provides that where any
equity securities of a Bermuda company, including our common shares, are listed on an appointed stock exchange, general
permission is given for the issue and subsequent transfer of any securities of a company from and/or to a nonresident, for as long
as any equities securities of such company remain so listed. The NYSE is deemed to be an appointed stock exchange under
Bermuda law.
Although we are incorporated in Bermuda, we are classified as a non-resident of Bermuda for exchange control purposes by the
BMA. Other than transferring Bermuda Dollars out of Bermuda, there are no restrictions on our ability to transfer funds into and
out of Bermuda or to pay dividends in currency other than Bermuda Dollars to U.S. residents (or other non-residents of Bermuda)
who are holders of our common shares.
In accordance with Bermuda law, share certificates may be issued only in the names of corporations, individuals or legal persons.
In the case of an applicant acting in a special capacity (for example, as an executor or trustee), certificates may, at the request of
the applicant, record the capacity in which the applicant is acting. Notwithstanding the recording of any such special capacity, we
88
are not bound to investigate or incur any responsibility in respect of the proper administration of any such estate or trust. We will
take no notice of any trust applicable to any of our shares or other securities whether or not we had notice of such trust.
E. TAXATION
The following discussion of the Bermuda and U.S. federal income tax consequences of an investment in our common shares is
based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to
change. This summary does not deal with all possible tax consequences relating to an investment in our common shares, such as
the tax consequences under U.S. state and local tax laws or under the tax laws of jurisdictions other than Bermuda and the United
States.
Bermuda Taxation
While we are incorporated in Bermuda, we are not currently subject to taxation under the laws of Bermuda, however, we note that
the Bermuda Corporate Income Tax Act 2023 ("Corporate Income Tax Act") was enacted on December 27, 2023 and will apply
from January 1, 2025). Distributions we receive from our subsidiaries are also not subject to any Bermuda tax. There is no
Bermuda income, corporation or profits tax, withholding tax, capital gains tax, capital transfer tax or estate duty or inheritance tax
payable by nonresidents of Bermuda in respect of capital gains realized on a disposition of our shares or in respect of distributions
they receive from us with respect to our shares. This discussion does not, however, apply to the taxation of persons ordinarily
resident in Bermuda. Bermuda shareholders should consult their own tax advisors regarding possible Bermuda taxes with respect
to dispositions of, and distributions on, our shares. We have received from the Minister of Finance under The Exempted
Undertaking Tax Protection Act 1966, as amended, an assurance that, in the event that Bermuda enacts legislation imposing tax
computed on profits, income, any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance, the
imposition of any such tax shall not be applicable to us or to any of our operations or shares, debentures or other obligations, until
March 31, 2035 (we note that this assurance is overridden by the Corporate Income Tax Act, with effect from January 1, 2025).
This assurance is subject to the proviso that it is not to be construed to prevent the application of any tax or duty to such persons
as are ordinarily resident in Bermuda or to prevent the application of any tax payable in accordance with the provisions of the
Land Tax Act 1967. The assurance does not exempt us from paying import duty on goods imported into Bermuda. In addition, all
entities employing individuals in Bermuda are required to pay a payroll tax and there are other sundry taxes payable, directly or
indirectly, to the Bermuda government. We and our subsidiaries incorporated in Bermuda pay annual government fees to the
Bermuda government. Bermuda currently has no tax treaties in place with other countries in relation to double-taxation or for the
withholding of tax for foreign tax authorities. 
The assurance granted by the Minister of Finance pursuant to the Tax Protection Act has been made subject to the application of
any taxes payable pursuant to the Corporate Income Tax Act. Amendments were made to the Tax Protection Act by the Corporate
Income Tax Act, with the consequence that liability for any taxes payable pursuant to the Corporate Income Tax Act will apply
notwithstanding any prior assurance given pursuant to the Tax Protection Act.
Following rounds of consultation with the public and industry stakeholders in August, October and November 2023, the
Corporate Income Tax Act was passed by the House of Assembly in Bermuda on December 15, 2023 and was also passed by the
Senate on December 18, 2023.  This legislation is set to become fully operative on January 1, 2025 when corporate income tax
will be imposed.
Subject to certain exceptions, Bermuda entities that are part of a multinational group will be in scope of the provisions of the
Corporate Income Tax Act if, with respect a fiscal year, such group has annual revenue of EUR 750 million (equivalent) or more
in the consolidated financial statements of the ultimate parent entity for at least two of the four fiscal years immediately prior to
such fiscal year (“Bermuda Constituent Entity Group”).
Where corporate income tax is chargeable to a Bermuda Constituent Entity Group, the amount of corporate income tax chargeable
to a  Bermuda Constituent Entity Group for a fiscal year shall be 15% of the net taxable income of the Bermuda Constituent
Entity Group, less tax credits applicable under the Corporate Income Tax Act (foreign tax credits) or as prescribed by regulation
by the Minister of Finance (qualified refundable tax credits). 
Qualified refundable tax credits, to be developed in 2024, will be incorporated into the new corporate income tax regime to
provide incentives for investment by international companies.  The Minister of Finance has stated that investments could be
encouraged in areas such as infrastructure, education, healthcare, innovation and housing.  As Bermuda continues to participate in
the global minimum tax initiative, it will closely track the manner in which this is implemented around the world.
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U.S. Federal Income Tax Considerations
The following discussion is a summary of the U.S. federal income tax considerations generally applicable to the ownership and
disposition of our common shares by U.S. Holders (as defined below) that hold our common shares as “capital assets” (generally,
property held for investment) for U.S. federal income tax purposes. This discussion is based on the U.S. Internal Revenue Code of
1986, as amended (the “Code”), U.S. Treasury regulations promulgated thereunder (“Regulations”), published positions of the
IRS, administrative pronouncements, court decisions and other applicable authorities, all as in effect as of the date hereof and all
of which are subject to change or differing interpretations (possibly with retroactive effect). No ruling has been sought from the
IRS with respect to any U.S. federal income tax consequences described below, and there can be no assurance that the IRS would
not take, or a court would not sustain a contrary position.
This discussion does not discuss all aspects of U.S. federal income taxation that may be relevant to investors in light of their
particular circumstances, or investors subject to special tax rules (including, for example, banks or other financial institutions,
insurance companies, regulated investment companies, real estate investment trusts, broker-dealers, dealers in securities or foreign
currency, traders in securities that elect mark-to-market treatment, tax-exempt organizations (including private foundations),
entities or arrangements that are treated as partnerships for U.S. federal income tax purposes (or partners therein), holders who are
not U.S. Holders, U.S. expatriates, holders who own (directly, indirectly or constructively) 10% or more of our stock (by vote or
value), holders who acquire their common shares pursuant to any employee share option or otherwise as compensation, investors
that will hold their common shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for
U.S. federal income tax purposes or investors who have a functional currency other than the U.S. dollar, all of whom may be
subject to tax rules that differ significantly from those discussed below). This discussion, moreover, does not address any U.S.
state or local or non-U.S. tax considerations or any U.S. federal estate, gift tax or alternative minimum tax considerations, or the
Medicare tax on net investment income.
U.S. Holders should consult their tax advisor regarding the U.S. federal, state, local and non-U.S. income and other tax
considerations of an investment in our common shares.
General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our common shares that is, for U.S. federal income tax
purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a
corporation for U.S. federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof
or the District of Columbia, (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes
regardless of its source or (iv) a trust (A) the administration of which is subject to the primary supervision of a U.S. court and
which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (B) that has validly
elected to be treated as a U.S. person under the Code for U.S. federal income tax purposes.
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) is a beneficial owner
of our common shares, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the
status of the partner and the activities of the partnership. Partnerships holding our common shares and their partners should
consult their tax advisors regarding an investment in our common shares.
Dividends
Subject to the discussion below under “Passive Foreign Investment Company Considerations,” the gross amount of any
distributions received by a U.S. Holder on our common shares will generally be subject to tax as dividends to the extent paid out
of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, and will generally be
includible in the gross income of such U.S. Holder on the day actually or constructively received. Distributions in excess of our
current or accumulated earnings and profits will generally be treated as a non-taxable return of capital to the extent of the U.S.
Holder's adjusted tax basis in our common shares and thereafter generally treated as capital gain. Because we do not intend to
determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay is generally
expected to be treated as a “dividend” for U.S. federal income tax purposes.
Individual and other non-corporate U.S. Holders may be subject to tax at the lower capital gains rate applicable to “qualified
dividend income,” provided that certain requirements are met, including that (i) we are eligible for the benefits of a
comprehensive income tax treaty with the United States which the Secretary of Treasury of the United States determines is
satisfactory for purposes of this provision and which includes an exchange of information program, or our common shares are
treated as readily tradable on an established securities market in the United States, (ii) we are neither a PFIC nor treated as such
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with respect to a U.S. Holder (as discussed below) for the taxable year in which the dividend is paid and the preceding taxable
year, and (iii) certain holding period requirements are met. Our common shares are listed on the New York Stock Exchange so our
common shares are expected to be readily tradable, although there can be no assurance in this regard.
For foreign tax credit purposes, dividends received on our common shares will generally be treated as income from sources
outside the United States and will generally constitute passive category income. The rules governing the U.S. foreign tax credit
are complex and their application depends in large part on the U.S. Holder’s individual facts and circumstances. Accordingly,
U.S. Holders should consult their tax advisors regarding the availability of the U.S. foreign tax credit under their particular
circumstances.
Sale or Other Disposition of our Shares
Subject to the discussion below under “Passive Foreign Investment Company Considerations,” a U.S. Holder will generally
recognize capital gain or loss upon the sale or other disposition of common shares in an amount equal to the difference between
the amount realized upon the disposition and the holder’s adjusted tax basis in such common shares. Any capital gain or loss will
be long-term if the U.S. Holder's holding period in respect of such common shares exceeds one year at the time of disposition and
will generally be U.S. source gain or loss for U.S. foreign tax credit purposes.
Long-term capital gains of individuals and certain non-corporate U.S. Holders are currently eligible for reduced rates of taxation.
The deductibility of capital losses may be subject to limitations. U.S. Holders should consult their tax advisors regarding the tax
consequences if a foreign tax is imposed on a disposition of our common shares, including the availability of the foreign tax credit
under their particular circumstances. 
Passive Foreign Investment Company Considerations
A non-U.S. corporation, such as the Company, will be classified as a passive foreign investment company, or PFIC, for U.S.
federal income tax purposes, if, in any taxable year, either (i) 75% or more of its gross income for such year consists of certain
types of “passive” income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during
such year is attributable to assets that produce or are held for the production of passive income. Passive income generally
includes, among other things, dividends, interest, rents, royalties and net gains from the disposition of assets that produce such
income. However, passive income does not generally include income derived from the performance of services. Passive assets are
those which give rise to passive income and include assets held for investment, as well as cash, assets readily convertible into
cash, and (subject to certain exceptions) working capital. Our goodwill and other unbooked intangibles are taken into account and
may be classified as active or passive depending on the income such assets generate or are held to generate. We will be treated as
owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we
own, directly or indirectly or constructively, at least 25% (by value) of its stock.
Based upon our income and assets, including goodwill and other unbooked intangibles, we believe we were not a PFIC for our
most recent taxable year ended December 31, 2023, and we do not expect to be a PFIC for the current taxable year or foreseeable
future taxable years. In making this determination, we believe that any income we receive from offshore drilling service contracts
should not be treated as passive income under the PFIC rules and that the assets we own and utilize to generate this income should
not be treated as passive assets. However, because these determinations are based on the nature of our income and assets from
time to time, as well as involving the application of complex tax rules, and because our view is not binding on the courts or the
IRS, no assurances can be provided that we will not be considered a PFIC for the current, or any past or future taxable years.
While we do not expect to be or become a PFIC in the current or future taxable years, the determination of whether we are or will
become a PFIC will depend on our income, assets and activities in each year. No assurance can be given that the composition of
our income or assets will not change in a manner that could make us a PFIC in the future. Under circumstances where we
determine not to deploy significant amounts of cash for capital expenditures and other general corporate purposes, our risk of
becoming classified as a PFIC may substantially increase.
Because the determination of PFIC status is a fact-intensive inquiry made on an annual basis and will depend upon the
composition of our assets and income, our goodwill and other unbooked intangibles, no assurance can be given that we are not or
will not become classified as a PFIC. If we are classified as a PFIC for any year during which a U.S. Holder holds our common
shares, we will generally continue to be treated as a PFIC with respect to such U.S. Holder for all succeeding years during which
such U.S. Holder holds our common shares, regardless of whether we continue to meet either of the PFIC tests described above.
If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our common shares, and unless the U.S.
Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules,
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regardless of whether we remain a PFIC, with respect to any (i) excess distribution that we make to the U.S. Holder (which
generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125% of the average annual
distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the common shares) and
(ii) gain realized on the sale or other disposition, including an indirect disposition such as a pledge, of common shares. Under the
PFIC rules:
• the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the common shares;
• amounts allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the
first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income;
• amounts allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest marginal
tax rate in effect for individuals or corporations, as appropriate, for that year; and
• the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior
taxable year, other than a pre-PFIC year.
If we are a PFIC for any taxable year during which a U.S. Holder holds our common shares and any of our non-U.S. subsidiaries
is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of each lower-tier
PFIC for purposes of the application of these rules. U.S. Holders should consult their tax advisors regarding the application of the
PFIC rules to any of our subsidiaries.
As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with
respect to such stock. If a U.S. Holder makes a valid mark-to-market election, the U.S. Holder will include in income each year an
amount equal to the excess, if any, of the fair market value of the common shares as of the close of such U.S. Holder’s taxable
year over such U.S. Holder’s adjusted basis in such shares. The U.S. Holder is allowed a deduction for the excess, if any, of such
U.S. Holder’s adjusted basis in the common shares over their fair market value as of the close of the taxable year. Deductions are
allowable, however, only to the extent of any net mark-to-market gains on the common shares included in the U.S. Holder’s
income for prior taxable years. Amounts included in the U.S. Holder’s income under a mark-to-market election, as well as gain on
the actual sale or other disposition of the common shares, will be treated as ordinary income. Ordinary loss treatment also applies
to the deductible portion of any mark-to-market loss on the common shares, as well as to any loss realized on the actual sale or
disposition of the common shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains
previously included in income with respect to such shares. The U.S. Holder’s basis in the common shares will be adjusted to
reflect any such income or loss amounts. If a U.S. Holder makes a mark-to-market election, then, in any taxable year for which we
are classified as a PFIC, tax rules that apply to distributions by corporations that are not PFICs would apply to distributions by us
(except that the lower applicable capital gains rate for qualified dividend income would not apply). If a U.S. Holder makes a valid
mark-to-market election and we subsequently cease to be classified as a PFIC, the U.S. Holder will not be required to take into
account the mark-to-market income or loss described above during any period that we are not classified as a PFIC.
The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis
quantities on at least 15 days during each calendar quarter ("regularly traded") on a qualified exchange or other market, as defined
in the applicable Regulations. For those purposes, our shares are treated as listed on a qualified exchange or other market since
their listing on the New York Stock Exchange. We anticipate that our shares should qualify as being regularly traded, but no
assurances may be given in this regard.
Because a mark-to-market election can be made only with respect to marketable stock, such election generally will not be
available for any lower-tier PFICs that we may own. Therefore, if we are treated as a PFIC, a U.S. Holder may continue to be
subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an
equity interest in a PFIC for U.S. federal income tax purposes.
We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available,
would result in tax treatment different from the general tax treatment for PFICs described above.
If a U.S. Holder owns our common shares during any taxable year that we are a PFIC, the holder must generally file an annual
IRS Form 8621 or such other form as is required by the U.S. Treasury Department. U.S. Holders should consult their tax advisors
regarding the potential tax consequences to such holder if we are or become a PFIC, including the possibility of making a mark-
to-market election.
92
Foreign Financial Asset Reporting
A U.S. Holder may be required to report information relating to an interest in our common shares, generally by filing IRS Form
8938 (Statement of Specified Foreign Financial Assets) with the U.S. Holder’s federal income tax return. A U.S. Holder may also
be subject to significant penalties if the U.S. Holder is required to report such information and fails to do so. U.S. Holders should
consult their tax advisors regarding information reporting obligations, if any, with respect to ownership and disposition of our
common shares.
F. DIVIDENDS AND PAYING AGENTS
Not applicable.
G. STATEMENT BY EXPERTS
Not applicable. 
H. DOCUMENTS ON DISPLAY
We will file reports and other information with the Commission. The Commission maintains a website (http://www.sec.gov) that
contains reports, proxy and information statements and other information regarding registrants that file electronically with it.
We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private
issuers. Accordingly, we are required to file annual reports on Form 20-F and furnish reports on Form 6-K with the SEC. All
information filed and furnished with the SEC can be obtained over the internet at the SEC’s website at www.sec.gov.
Our information filed with or furnished to the SEC is available free of charge through our website (www.borrdrilling.com). The
information contained on our website is not a part of this annual report.
As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing
and content of proxy statements. While we furnish proxy statements to shareholders in accordance with the applicable rules of any
stock exchange on which our common shares may be listed in the future, those proxy statements will not conform to
Schedule 14A of the proxy rules promulgated under the Exchange Act. Our executive officers, directors and principal
shareholders are also exempt from the reporting and short-swing profit recovery provisions contained in section 16 of the
Exchange Act. Although we are not required under the Exchange Act to file periodic reports and financial statements with the
SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act, we furnish holders
of our shares with annual reports containing audited financial statements and a report by our independent registered public
accounting firm and intend to make available quarterly reports containing selected unaudited financial data for the first three
quarters of each fiscal year. In addition, we are not required to comply with regulation FD, which restricts the selective disclosure
of material information. Our audited financial statements are prepared in accordance with U.S. GAAP and those reports will
include a “Operating and Financial Review and Prospects” section for the relevant periods.
I. SUBSIDIARY INFORMATION
Not applicable. 
J. ANNUAL REPORT TO SECURITY HOLDERS
Not applicable. 
ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risks, including interest rate and foreign currency exchange risks. The following section
provides qualitative and quantitative disclosures on the effect that these risks could have upon us. The below quantitative analysis
provides information regarding our exposure to foreign currency risk.
Interest Rate Risk
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As of December 31, 2023, all of our debt obligations are on fixed interest rates, therefore we are currently not exposed to the
impact of interest rate changes. Under our RCF, undrawn as of December 31, 2023, we are exposed to the impact of interest rate
changes as we are required to make interest payments based on SOFR plus associated margins. Significant increases in interest
rates could adversely affect our future results of operations and cash flows should we elect to drawdown on this facility.
We may utilize derivative instruments to manage interest rate risk in the future, but we are not engaged in derivative transactions
for speculative or trading purposes.
For disclosure of the fair value of our debt obligations outstanding as of December 31, 2023, refer to Note 26 – Financial
Instruments of our Audited Consolidated Financial Statements included herein.
Foreign Currency Risk
The majority of our transactions are denominated in U.S. dollars, our functional currency. Periodically, we may be exposed to
foreign currency exchange fluctuations as a result of expenses incurred associated with our international operations. This risk
primarily pertains to our rig operating and maintenance expenses and our general and administrative expenses, which includes
transactions denominated in primarily British Pounds, Central African CFA Francs, Saudi Riyal, Malaysian Ringgit, Thai Baht,
Mexican Pesos, United Arab Emirates Dirham, Euros, Norwegian Kroner and Singaporean Dollars. We do not have any non-U.S.
dollar debt and thus are not exposed to currency risk related to debt.
Our primary currency exchange rate risk management strategy involves structuring certain customer contracts to provide for
payment from the customer in a combination of both U.S. dollars and local currency. The payment portion denominated in local
currency is based on anticipated local currency requirements over the contract term. Due to various factors, including customer
acceptance, local banking laws, other statutory requirements, local currency convertibility and the impact of inflation on local
costs, actual local currency needs may vary from those anticipated in the customer contracts, resulting in partial exposure to
currency exchange rate risk. Further, we may utilize foreign currency forward exchange contracts to manage foreign exchange
risk. We are not engaged in derivative transactions for speculative or trading purposes.
The net foreign currency exchange impact resulting from our international operations has not historically had a material impact on
our operating results with a foreign exchange loss of $2.8 million for the year ended December 31, 2023 recognized within "Other
financial expenses, net" in our Consolidated Statements of Operations.
For the year ended December 31, 2023, a hypothetical ten percent adverse change in the exchange rates against the U.S. dollar
would result in an increase of $17.9 million in our rig operating and maintenance expenses and general and administrative
expenses, combined. The sensitivity analysis is based on an average ten percent increase in all foreign exchange currencies
applied against the foreign currency transactions for the period thereby assuming foreign exchange rates change in a parallel
manner, and assumes unchanged market conditions other than exchange rates, such as volatility and interest rates. For this reason,
it is purely indicative.
ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. DEBT SECURITIES
Not applicable.
B. WARRANTS AND RIGHTS
Not applicable.
C. OTHER SECURITIES
Not applicable.
D. AMERICAN DEPOSITORY SHARES
Not applicable.
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PART II
ITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS
None.
ITEM 15.CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as that term is defined in Rules 13(a)-15(i) and 15d-15(e) under the Exchange
Act) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such
information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosures. There are inherent limitations to the effectiveness
of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding
of controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance
of achieving their control objectives.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated the
effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2023. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
effective as of December 31, 2023.
Management’s Report on Internal Control over Financial Reporting
Our management, including the Chief Executive Officer and Chief Financial Officer, is responsible for establishing and
maintaining adequate internal control over financial reporting (as such term is defined by Rule 13a-15(f) and 15d-15(f) under the
Securities Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external purposes in
accordance with U.S. GAAP and includes those policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect our transactions and dispositions of assets; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our
receipts and expenditures are being made only in accordance with authorizations of our management and Directors; and (iii)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our
assets, that could have a material effect on the financial statements.
Our management has assessed the effectiveness of internal control over financial reporting as of December 31, 2023 based on the
criteria established in "Internal Control—Integrated Framework (2013)" issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on such assessment and criteria, our management has concluded that our internal control over
financial reporting was effective as of December 31, 2023.
The Company’s independent registered public accounting firm has issued an attestation report on management's assessment of the
effectiveness of the Company’s internal control over financial reporting.
Attestation Report of the Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by
PricewaterhouseCoopers LLP, a United Kingdom entity ("PwC UK"), an independent registered public accounting firm, as stated
in their report which appears on page F-2 of our consolidated financial statements included herein.
Changes in Internal Control over Financial Reporting
95
There were no changes in our internal control over financial reporting that occurred during the period covered by this annual
report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16.[RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Based on the qualifications and relevant experience described in "Item 6.A. Directors and Senior Management", our board of
Directors has determined that Kate Blankenship and Neil Glass each qualify as an audit committee financial expert as defined in
Item 16A. of Form 20-F under the Exchange Act and are independent in accordance with SEC rule 10A-3 pursuant to Section
10A of the Securities Exchange Act of 1934 and NYSE listed company independence requirements applicable to audit committee
members.
ITEM 16B. CODE OF ETHICS
Our Board has established a code of business conduct and ethics applicable to our employees, Directors and officers. Any waiver
of this code may be made only by our Board and will be promptly disclosed as required by applicable U.S. federal securities laws
and the corporate governance rules of the NYSE. Our code of business conduct and ethics is publicly available on our website at
www.borrdrilling.com and is reviewed on an annual basis. We will provide any persons, free of charge, a copy of our code of
ethics upon written request to our registered office.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees and services
Effective from their appointment at the Annual General on September 17, 2019, the Company's shareholders approved the
engagement of PwC UK, as the Company's independent registered public accounting firm.
Our audit committee charter requires that all audit and non-audit services provided by our independent registered public
accounting firm are pre-approved by our audit committee. In particular, pursuant to our audit committee charter, the chair of the
audit committee shall pre-approve all audit services to be provided to Borr Drilling, whether provided by our independent
registered public accounting firm or other firms. Any decision of the chair of the audit committee to pre-approve audit or non-
audit services shall be presented to the audit committee.
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services
rendered by PwC UK and other member firms within the PwC network for the years ended December 31, 2023 and 2022:
Year ended December 31,
(In millions of $)
2023
2022
Audit fees(1)
1.6
1.2
Audit-related fees(2)
0.7
0.5
Tax fees(3)
0.2
0.1
Total
2.5
1.8
(1) Includes fees billed or accrued for professional services rendered by the principal accountant, and member firms in their
respective network, for the audit of our annual financial statements, and those of our consolidated subsidiaries, as well as
additional services that are normally provided by the accountant in connection with statutory and regulatory filings or
engagements, except for those not required by statute or regulation.
(2) Audit-related fees in 2023 principally relate to our debt re-financing and ATM program whereas in 2022 these principally
related to our January 2022 and August 2022 equity offerings as well as our ATM program.
(3) Tax fees consist of fees for professional services rendered during the fiscal year by the principal accountant mainly for tax
compliance and assistance with tax audits and appeals.
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ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
On December 8, 2023 the Board approved a share repurchase program for the Company’s shares, to be purchased in the open
market which was limited to a total amount of $100.0 million.
The timing and amount of any shares repurchased will be determined by the Company based on its evaluation of market
conditions and other factors including available liquidity and limits under debt instruments and as permitted by securities laws and
other legal requirements. The authorization does not have a fixed expiration and the repurchase program may be suspended or
discontinued at any time.
Period
Total number
of shares
purchased
Average price
paid per share
Total number of shares
purchased as part of publicly
announced plans or
programs
Approximate value of
shares that may yet be
purchased under the
plans or programs
December 1 to December 31, 2023
125,000
$6.18
125,000
$99,227,731
Total
125,000
$6.18
125,000
$99,227,731
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable
ITEM 16G. CORPORATE GOVERNANCE
Pursuant to Section 303A.11 of the NYSE listing standards, applicable to foreign private issuers, we are permitted to follow our
home country practices in lieu of certain NYSE corporate governance requirements. Companies with securities listed at the OSE,
are subject to report on the Norwegian Code of Practice for Corporate Governance (the "Norwegian Code").
Other than the matters described below, there are no significant differences between our corporate governance practices and those
followed by U.S. domestic companies under NYSE rules. 
Audit Committee. NYSE listing standards require, among other things, that a listed U.S. company have an audit committee with a
minimum of three members, all of whom are independent. The Norwegian Code requires that most of the members are
independent, that the members of the audit committee shall be elected by and among the members of the board of directors, and
further that the board members who also are senior employees are not elected as members. Our audit committee consists of two
independent Directors, Kate Blankenship and Neil Glass, respectively, which differs from the NYSE listing standards which
require a minimum of three members. Our audit committee complies with Rule 10A-3 under the Securities Exchange Act of 1934,
and the Norwegian Code.
Shareholder Approval Requirements. NYSE listing standards require that a listed U.S. company obtain prior shareholder approval
for certain issuances of shares or the approval of, and material revisions to, equity compensation plans. As permitted under the
Norwegian Code, Bermuda law and our bye-laws, we do not seek such shareholder approval prior to issuances of authorized stock
exceeding 20% of the number of shares or voting power outstanding, issuances of shares to certain related parties or entities in
which a related party has an interest or approval for equity compensation plans and to material revisions thereof.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
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Not applicable.
ITEM 16K. CYBERSECURITY
Risk Management and Strategy
We have developed and implemented a cybersecurity risk management program designed to safeguard the confidentiality,
integrity, and availability of systems, data, and applications. Our cybersecurity risk management program includes processes and
controls designed to assess, identify, and manage cybersecurity risks, which is integrated in our overall enterprise risk
management system and processes.
We have developed our program in accordance with the standards outlined in the International Organization for Standardization
and the International Electrotechnical Commission (ISO/IEC) 27001. This does not imply that we meet any particular technical
standards, specifications, or requirements, only that we use the ISO/IEC standards as guide to help us identify, assess, and manage
cybersecurity risks relevant to our business.
Our cybersecurity risk management program includes:
a. Risk Assessment: Defined in the information security management system (ISMS), it is designed to help identify,
analyze, and prioritize material cybersecurity risks to our critical systems, information, and our broader enterprise IT
environment;
b. External Service Providers: we collaborate with third-party security specialists, where applicable, to enhance the
effectiveness of our cybersecurity processes and controls. We have processes to oversee and identify risks associated
with third-party service providers embedded as part of our risk management program and following up on due diligence
and contractual obligations;
c. Incident Response Plan: a defined plan that include processes and procedures for prevention, detection, mitigation and
remediation of our cybersecurity incidents; and
d. Security Awareness Campaigns: Campaigns via various channels (e.g. trainings, direct email, screen savers, etc.) to
educate personnel about cybersecurity risks and threat awareness.
Based on the information we have, we do not believe any risks from cybersecurity threats, including as a result of any previous
cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy,
results of operations or financial condition. However, the scope and impact of any future incident cannot be predicted. See “Item
3D – Risk Factors” for more information on cybersecurity risks.
Governance
Cybersecurity is an important part of our risk management processes and an area of focus for our Board and management. The
Board has delegated the oversight of cybersecurity risk management program to management through the ISMS Forum. ISMS
Forum conducts periodic reviews to assess the performance of our ISMS as part of the ISO/IEC 27001 standards and actively
participates in these reviews, where cybersecurity risks and metrics are evaluated amongst other strategic considerations. This
approach is intended to ensure that management is actively involved in all matters related to cyber security and is making risk-
based decisions.
ISMS Forum provides updates on a quarterly basis to the Board of Directors on key components of our program and our
cybersecurity risks and updates the Board, as necessary, regarding any material cybersecurity incidents.
Our IT organization, which is headed by our IT Director and a member of the ISMS Forum, is responsible for assessing and
managing material risks from cybersecurity threats. Our IT Director has over 20 years of IT operational, tactical and strategical
experience including IT infrastructure library and ISO 27001 with over 10 years' being in the offshore drilling industry. Our IT
organization cooperates with third-party cybersecurity partner who provides IT services and support. Our IT organization has
primary responsibility for our prevention, detection, mitigation, and remediation of our cybersecurity incidents and our overall
cybersecurity risk management program and is supported by a trusted cybersecurity partner. Our IT organization has members
with over 15 years of experience in the areas of information security, digital transformation, and enterprise risk management
across multiple industries.
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PART III
ITEM 17.FINANCIAL STATEMENTS 
Please see "Item 18. Financial Statements".
ITEM 18.FINANCIAL STATEMENTS
The following financial statements listed below and set forth on the F-pages filed as part of this Annual Report.
99
ITEM 19.EXHIBITS
Index to Exhibits
Exhibit Number
Description of Document
 
 
1.1*
1.2*
2.1*
4.1#*
4.2#*
4.3*
8.1**
12.1**
12.2**
13.1**
15.1**
97.1**
101.INS**
XBRL Instance Document.
101.SCH**
XBRL Taxonomy Extension Schema Document.
101.CAL**
XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**
XBRL Taxonomy Extension Definition Linkbase Document.
100
Exhibit Number
Description of Document
101.LAB**
XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**
XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*
Previously filed.
**
Filed herewith.
#
Portions of this exhibit have been omitted because such portions are both not material and the registrant customarily and
actually treats the redacted information as private and confidential. The omissions have been indicated by Asterisks
(“[***]”).
101
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and
authorized the undersigned to sign this annual report on its behalf.
Borr Drilling Limited
(Registrant)
By:
/s/ Magnus Vaaler
Name:
Magnus Vaaler
Date: March 27, 2024
Title:
Principal Financial Officer
102
BORR DRILLING LIMITED
INDEX TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Page
F-1
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Borr Drilling Limited
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Borr Drilling Limited and its subsidiaries (the “Company”) as
of December 31, 2023 and December 31, 2022, and the related consolidated statements of operations, comprehensive income/
(loss), changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023,
including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the
Company's internal control over financial reporting as of December 31, 2023 , based on criteria established in Internal Control -
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position
of the Company as of December 31, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2023 in conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control
over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in
Management’s Report on Internal Control over Financial Reporting appearing under Item 15. Our responsibility is to express
opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material
respects. 
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of
the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our
audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
F-2
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Jack-up drilling rigs impairment assessment
As described in Notes 2 and 16 to the consolidated financial statements, the carrying amount of the Company’s jack-up drilling
rigs as of December 31, 2023, was $2,578.3 million. Management uses judgment in considering if events or changes in
circumstances indicate the carrying amount of jack-up drilling rigs may not be recoverable. Management determines
recoverability by comparing the carrying amount of an asset to the estimated undiscounted cash flows of the asset. If the total of
the undiscounted cash flows is less than the carrying amount, an impairment loss is recognized as the difference between the
carrying amount of the asset and its fair value.  In determining estimated cash flows, utilization and dayrate revenues are key
assumptions.  Management concluded that indicators of impairment existed for seven jack-up rigs and performed a recoverability
assessment, however no impairment loss was recognized during the year ended December 31, 2023, as the estimated
undiscounted cash flows were higher than the carrying amounts of the associated jack-up rigs. 
The principal considerations for our determination that performing procedures relating to the jack-up drilling rigs impairment
assessment is a critical audit matter are (i) the significant judgment by management in determining whether any events or
circumstances existed which would indicate that the carrying value of the jack-up drilling rigs might not be recoverable and
developing the estimated undiscounted cash flows; and (ii) the high degree of auditor judgment, subjectivity and effort in
performing audit procedures to evaluate management’s assumptions related to utilization and dayrate revenues. 
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall
opinion on the consolidated financial statements. These procedures included testing the effectiveness of the controls relating to
management’s assessment of indicators of impairment and development of recoverability estimates. These procedures also
included, among others, (i) evaluating the appropriateness of management’s judgments for determining whether indicators of
impairment existed; (ii) testing management’s process for developing the jack-up rigs recoverability assessment; (iii) evaluating
the appropriateness of the model used by management; (iv) testing the completeness and accuracy of underlying data; and (v)
evaluating the reasonableness of significant assumptions related to expected future utilization and dayrate revenues used in the
estimated undiscounted cash flows. Evaluating management’s assumptions related to future utilization and dayrate revenues
involved evaluating whether the assumptions used by management were reasonable considering past performance of the jack-up
drilling rigs, contracted future revenues, macroeconomic conditions, industry forecasts, and management’s historical forecasting
accuracy.
/s/ PricewaterhouseCoopers LLP
Watford, United Kingdom
March 27, 2024
We have served as the Company’s auditor since 2019.
F-3
BORR DRILLING LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021
(In $ millions, except per share data)
Notes
2023
2022
2021
Operating revenues
Dayrate revenue
4
642.0
358.7
205.8
Related party revenue
4,27
129.6
85.1
39.5
Total operating revenues
771.6
443.8
245.3
Gain on disposals
6
0.6
4.2
1.2
Operating expenses
 
 
Rig operating and maintenance expenses
(359.3)
(264.9)
(180.5)
Depreciation of non-current assets
16
(117.4)
(116.5)
(119.6)
Impairment of non-current assets
15,16
—
(131.7)
—
General and administrative expenses
(45.1)
(36.8)
(34.7)
Total operating expenses
(521.8)
(549.9)
(334.8)
Operating income / (loss)
250.4
(101.9)
(88.3)
Other non-operating income
7
—
2.0
3.6
Income from equity method investments
7
4.9
1.2
16.1
Financial income (expenses), net
Interest income
4.9
5.4
—
Interest expense
8
(177.2)
(139.2)
(99.4)
Other financial expenses, net
9
(26.9)
(41.9)
(15.3)
Total financial expenses, net
(199.2)
(175.7)
(114.7)
Income / (loss) before income taxes
56.1
(274.4)
(183.3)
Income tax expense
10
(34.0)
(18.4)
(9.7)
Net income / (loss) attributable to stockholders of Borr Drilling
Limited
22.1
(292.8)
(193.0)
Income / (loss) per share
Basic and diluted income / (loss) per share
11
0.09
(1.64)
(1.43)
Weighted-average shares outstanding, basic
11
244,270,405
178,404,637
134,726,336
Weighted-average shares outstanding, diluted
11
248,150,614
178,404,637
134,726,336
The accompanying notes are an integral part of these Audited Consolidated Financial Statements.
F-4
BORR DRILLING LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS) FOR THE YEARS ENDED
DECEMBER 31, 2023, 2022 AND 2021
(In $ millions)
Notes
2023
2022
2021
Net income / (loss)
22.1
(292.8)
(193.0)
Other comprehensive income
—
—
—
Total comprehensive income / (loss)
22.1
(292.8)
(193.0)
Comprehensive income / (loss) attributable to:
Stockholders of Borr Drilling Limited
22.1
(292.8)
(193.0)
Total comprehensive income / (loss)
22.1
(292.8)
(193.0)
The accompanying notes are an integral part of these Audited Consolidated Financial Statements.
F-5
BORR DRILLING LIMITED
CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2023 AND 2022
(In $ millions, except per share data)
Notes
2023
2022
Assets
Current assets
Cash and cash equivalents
 
102.5
108.0
Restricted cash
12
0.1
2.5
Trade receivables, net
13
56.2
43.0
Prepaid expenses
 
11.0
9.6
Deferred mobilization and contract preparation cost
5
39.4
38.4
Accrued revenue
5
73.7
57.4
Due from related parties
27
95.0
65.6
Other current assets
14
32.0
25.4
Total current assets
 
409.9
349.9
Non-current assets
 
 
Non-current restricted cash
12
—
8.0
Property, plant and equipment
 
3.5
3.9
Newbuildings
15
5.4
3.5
Jack-up drilling rigs, net
16
2,578.3
2,589.1
Equity method investments
7
15.7
20.6
Other non-current assets
18
67.3
26.7
Total non-current assets
 
2,670.2
2,651.8
Total assets
 
3,080.1
3,001.7
Liabilities and equity
 
 
Current liabilities
 
 
Trade payables
 
35.5
47.7
Accrued expenses
19
77.0
80.8
Short-term accrued interest and other items
42.3
77.7
Short-term debt
21
82.9
445.9
Short-term deferred mobilization, demobilization and other revenue
5
59.5
57.3
Other current liabilities
20
63.2
36.2
Total current liabilities
 
360.4
745.6
Non-current liabilities
 
 
Long-term accrued interest and other items
—
29.7
Long-term debt
21
1,618.8
1,191.1
Long-term deferred mobilization, demobilization and other revenue
5
56.6
68.7
Other non-current liabilities
5.8
14.3
Onerous contracts
22
54.5
54.5
Total non-current liabilities
 
1,735.7
1,358.3
Total liabilities
 
2,096.1
2,103.9
Commitments and contingencies
23
Stockholders’ equity
Share Capital - Common shares of par value $0.10 per share: authorized 315,000,000
(2022: 255,000,000), issued 264,080,391 (2022: 229,263,598) and outstanding
252,582,036 (2022: 228,948,087) shares
28
26.5
23.0
Treasury shares
 
(8.9)
(9.8)
Additional paid in capital
 
337.2
2,265.6
Contributed surplus
1,988.1
—
Accumulated deficit
 
(1,358.9)
(1,381.0)
Total equity
 
984.0
897.8
Total liabilities and equity
 
3,080.1
3,001.7
The accompanying notes are an integral part of these Audited Consolidated Financial Statements.
F-6
BORR DRILLING LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND
2021
(In $ millions)
Notes
2023
2022
2021
Cash flows from operating activities
Net income / (loss)
22.1
(292.8)
(193.0)
Adjustments to reconcile net income / (loss) to net cash provided by/(used
in) operating activities:
Non-cash compensation expense related to stock based and directors'
compensation
5.6
2.6
0.9
Depreciation of non-current assets
16
117.4
116.5
119.6
Impairment of non-current assets
16
—
131.7
—
Amortization of deferred mobilization and contract preparation costs
44.6
36.7
12.6
Amortization of deferred mobilization, demobilization and other revenue
(61.9)
(22.1)
(5.9)
Gain on disposal of assets and other non-operating income
6,7
(0.6)
(4.2)
(4.8)
Amortization of debt discount
1.0
—
—
Amortization of deferred finance charges
21.3
7.9
6.5
Bank commitment, guarantee and other fees
(2.9)
15.7
—
Effective interest rate adjustments
(19.7)
2.8
3.7
Income from equity method investments
7
(4.9)
(1.2)
(16.1)
Deferred income tax
10
(16.5)
(2.1)
(0.5)
Change in assets and liabilities
    Amounts due to/from related parties
(29.4)
(17.0)
(13.7)
    Accrued expenses
2.1
89.8
10.3
    Accrued interest
(66.1)
(35.8)
29.0
    Other current and non-current assets
(107.7)
(139.2)
(24.1)
    Other current and non-current liabilities
44.9
173.2
16.6
Net cash (used in) / provided by operating activities
(50.7)
62.5
(58.9)
Cash flows from investing activities
Purchase of property, plant and equipment
(1.5)
(1.8)
(0.1)
Proceeds from sale of fixed assets
6
—
0.7
2.7
Repayment from / (funding provided to) equity method investments
7
9.8
—
46.5
Proceeds from disposal of equity method investments
7
—
—
10.6
Additions to newbuildings
15
(1.3)
—
—
Additions to jack-up drilling rigs
16
(111.2)
(81.5)
(18.8)
Net cash (used in) / provided by investing activities
(104.2)
(82.6)
40.9
Cash flows from financing activities
Proceeds from share issuance, net of issuance costs
28
58.1
298.1
44.8
Repayment of debt
21
(1,800.6)
(355.5)
—
Proceeds from debt, net of discount and issuance costs
21
1,881.5
150.0
—
Purchase of treasury shares
(0.8)
—
—
Proceeds from exercise of share options
28
0.8
—
—
Net cash provided by financing activities
139.0
92.6
44.8
Net (decrease) / increase in cash, cash equivalents and restricted cash
(15.9)
72.5
26.8
Cash, cash equivalents and restricted cash at beginning of the year
118.5
46.0
19.2
Cash, cash equivalents and restricted cash at end of the year
102.6
118.5
46.0
F-7
Supplementary disclosure of cash flow information
(In $ millions)
2023
2022
2021
Interest paid
(217.4)
(83.9)
(57.2)
Income taxes (paid) refunded, net
(38.2)
(16.2)
0.8
Non-cash offset of debt and jack-up rigs
—
(87.0)
—
Non-cash offset of accrued interest and jack-up rigs
—
(33.0)
—
Issuance of debt as non-cash settlement of financing fee
—
8.2
5.0
Supplemental note to the consolidated statements of cash flows
The following table identifies the balance sheet line-items included in cash, cash equivalents and restricted cash presented in the
consolidated statements of cash flows:
(In $ millions)
2023
2022
2021
2020
Cash and cash equivalents
102.5
108.0
34.9
19.2
Restricted cash
0.1
2.5
3.3
—
Non-current restricted cash
—
8.0
7.8
—
Total cash and cash equivalents and restricted cash
102.6
118.5
46.0
19.2
The accompanying notes are an integral part of these Audited Consolidated Financial Statements.
F-8
BORR DRILLING LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED
DECEMBER 31, 2023, 2022 AND 2021
(In $ millions, except share numbers)
Number of
outstanding
shares
Share
Capital
Treasury
shares
Additional paid
in capital
Contributed
Surplus
Accumulated
Deficit
Total
equity
Consolidated balance at January 1, 2021
109,429,494
11.0
(26.2)
1,947.2
—
(895.2)
1,036.8
Issue of common shares
27,058,823
2.8
—
43.2
—
—
46.0
Equity issuance costs
—
—
—
(1.2)
—
—
(1.2)
Stock based compensation
323,525
—
12.5
(11.6)
—
—
0.9
Total comprehensive income/(loss)
—
—
—
—
—
(193.0)
(193.0)
Other, net
—
—
—
0.4
—
—
0.4
Consolidated balance at December 31, 2022
136,811,842
13.8
(13.7)
1,978.0
—
(1,088.2)
889.9
Issue of common shares
92,046,404
9.2
—
304.6
—
—
313.8
Equity issuance costs
—
—
—
(15.7)
—
—
(15.7)
Stock based compensation
90,822
—
3.9
(1.3)
—
—
2.6
Shares cancelled
(981.0)
—
—
—
—
—
—
Total comprehensive loss
—
—
—
—
—
(292.8)
(292.8)
Consolidated balance at December 31, 2022
228,948,087
23.0
(9.8)
2,265.6
—
(1,381.0)
897.8
Issue of common shares
23,260,063
3.5
(1.2)
59.0
—
—
61.3
Equity issuance costs
—
—
—
(1.7)
—
—
(1.7)
Repurchase of treasury shares
(125,000)
—
(0.8)
—
—
—
(0.8)
Convertible debt issuance cost
—
—
—
10.9
—
—
10.9
Reduction in share premium / APIC
—
—
—
(2,000.0)
2,000.0
—
—
Stock based compensation
498,886
—
2.9
3.4
—
—
6.3
Distributions to shareholders
—
—
—
—
(11.9)
—
(11.9)
Total comprehensive income
—
—
—
—
22.1
22.1
Consolidated balance at December 31, 2023
252,582,036
26.5
(8.9)
337.2
1,988.1
(1,358.9)
984.0
The accompanying notes are an integral part of these Audited Consolidated Financial Statements.
F-9
BORR DRILLING LIMITED
NOTES TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - General
Borr Drilling Limited was incorporated in Bermuda on August 8, 2016. We are listed on the Oslo Stock Exchange and on the
New York Stock Exchange under the ticker “BORR”. Borr Drilling Limited is an international offshore drilling contractor
providing services to the oil and gas industry. Our primary business is the ownership, contracting and operation of modern jack-
up drilling rigs for operations in shallow-water areas (i.e., in water depths of approximately 400 feet), including the provision of
related equipment and work crews to conduct drilling of oil and gas wells and workover operations for exploration and production
customers. As of December 31, 2023, we had 22 premium jack-up rigs and had agreed to purchase two additional premium jack-
up rigs under construction, which are scheduled for delivery in 2024.
As used herein, and unless otherwise required by the context, the terms “Company”, “Borr”, “we,” “Group”, “our” and words of
similar nature refer to Borr Drilling Limited and its consolidated companies. The use herein of such terms as “group”,
“organization”, “we”, “us”, “our” and “its”, or references to specific entities, is not intended to be a precise description of
corporate relationships.
Going concern
The consolidated financial statements have been prepared on a going concern basis.
In our previous reports, except for the period ending September 30, 2023, we had disclosed a substantial doubt over our ability to
continue as a going concern due to us incurring significant losses since inception and our potential dependence on additional
financing in order to meet our existing capital expenditure commitments, working capital requirements and our debt obligations
expected in the next 12 months.
With the execution of our comprehensive refinancing in October and November 2023, which included the issuance of our
$1.54 billion Notes, new $180.0 million Super Senior Credit Facility (comprised of a $150 million Revolving Credit Facility
("RCF") and a $30.0 million Guarantee Facility), $50.0 million equity raise, and issuance of additional $200.0 million under the
same terms and conditions as the $1.025 billion 2028 Notes in March 2024, we believe that our cash flow from operations,
together with the $150 million undrawn under our RCF and our cash and cash equivalents, will meet our anticipated capital
expenditure commitments, working capital requirements, our debt obligations and allow us to meet our debt covenants, for the
next 12 months following the date of issue of the financial statements.
The financial statements included in this report have been prepared on a going concern basis of accounting, which presumes that
we will be able to realize our assets and discharge our liabilities in the normal course of business as they come due. Financial
information in this report does not include any adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that would be necessary if we were unable to realize our assets and settle
our liabilities as a going concern in the normal course of operations. Such adjustments could be material.
Note 2 - Basis of Preparation and Accounting Policies
Basis of preparation
The audited consolidated financial statements are presented in accordance with accounting principles generally accepted in the
United States ("U.S. GAAP"). Amounts are presented in United States Dollars (“U.S. dollar or $”) rounded to the nearest million,
unless otherwise stated.
On December 14, 2021 the Board of Directors approved a 2-to-1 reverse share split of the Company’s shares. Upon effectiveness
of the Reverse Split, every two shares of the Company’s issued and outstanding common shares, par value $0.05 per share was
combined into one issued and outstanding common share, par value $0.10 per share. Unless otherwise indicated, all share and per
share data in these Consolidated Audited Financial Statements have been adjusted as necessary to give effect of our Reverse Share
Split and is approximate due to rounding.
Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform
to the current period's presentation.
F-10
Principles of consolidation
A variable interest entity (“VIE”) is defined by the accounting standard as a legal entity where either (a) equity interest holders, as
a group, lack the characteristics of a controlling financial interest, including decision making ability and an interest in the entity’s
residual risks and rewards, or (b) the equity holders have not provided sufficient equity investment to permit the entity to finance
its activities without additional subordinated financial support, or (c) the voting rights of some investors are not proportional to
their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or
both and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has
disproportionately few voting rights. A party that is a variable interest holder is required to consolidate a VIE if the holder has
both (a) the power to direct the activities that most significantly impact the entity’s economic performance, and (b) the obligation
to absorb losses that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially
be significant to the VIE.
Investments in entities in which we directly or indirectly hold more than 50% of the voting control and meeting criteria (a) and (b)
above in regards to requirements to consolidate a VIE are consolidated in the financial statements. All intercompany balances and
transactions are eliminated. The non-controlling interests of subsidiaries are included in the consolidated balance sheets and
consolidated statements of operations as “Non-controlling interests".
Foreign currencies
The Company and the majority of its subsidiaries use the U.S. dollar as their functional currency as the majority of their revenues
and expenses are denominated in U.S. dollars. Accordingly, the Company’s reporting currency is also U.S. dollars. For
subsidiaries that maintain their accounts in currencies other than U.S. dollars, the Company uses the current method of translation
whereby the statement of operations is translated using the average exchange rate for the period and the assets and liabilities are
translated using the period end exchange rate.
Transactions in foreign currencies are translated into U.S. dollars at the rates of exchange in effect at the date of the transaction.
Gains and losses on foreign currency transactions are included in "Other financial (expenses) income, net" in the Consolidated
Statements of Operations.
Use of estimates
The preparation of financial statements in accordance with U.S. GAAP requires that management make estimates and
assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
In assessing the recoverability of our jack-up rigs' carrying amounts, we make assumptions regarding estimated future cash flows,
estimates in respect of residual or scrap values, utilization, dayrates, operating and maintenance expenses and capital
expenditures.
Fair value measurements
We account for fair value measurement in accordance with the accounting standards guidance using fair value to measure assets
and liabilities. The guidance provides a single definition for fair value, together with a framework for measuring it, and requires
additional disclosure about the use of fair value to measure assets and liabilities.
Revenue
The Company performs services that represent a single performance obligation under its drilling contracts. This performance
obligation is satisfied over time. The Company earns revenues primarily by performing the following activities: (i) providing the
drilling rig, work crews, related equipment and services necessary to operate the rig (ii) delivering the drilling rig by mobilizing to
and demobilizing from the drilling location, and (iii) performing certain pre-operating activities, including rig preparation
activities or equipment modifications required for the contract.
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The Company recognizes revenues earned under drilling contracts based on variable dayrates, which range from a full operating
dayrate to lower rates or zero rates for periods when drilling operations are interrupted or restricted, based on the specific
activities performed during the contract. The total transaction price is determined for each individual contract by estimating both
fixed and variable consideration expected to be earned over the firm term of the contract and may include the blending of rates
when a contract has operating dayrates that change over the firm term of the contract. Such dayrate consideration is attributed to
the distinct time period to which it relates within the contract term, and therefore is recognized as the Company performs the
services. The Company recognizes reimbursement revenues and the corresponding costs, gross, at a point in time, as the Company
provides the customer-requested goods and services, when such reimbursable costs are incurred while performing drilling
operations.
Prior to performing drilling operations, the Company may receive pre-operating revenues, on either a fixed lump-sum or variable
dayrate basis, for mobilization, contract preparation, customer-requested goods and services or capital upgrades or other upfront
payments, which the Company recognizes over time in line with the satisfaction of the performance obligation. These activities
are not considered to be distinct within the context of the contract and therefore, the associated revenue is allocated to the overall
performance obligation and recognized ratably over the expected term of the related drilling contract. We record a contract
liability for mobilization fees received, which is amortized ratably to dayrate revenue as services are rendered over the initial term
of the related drilling contract.
We may receive fees (on either a fixed lump-sum or variable dayrate basis) for the demobilization of our rigs. Demobilization
revenue expected to be received upon contract completion is estimated as part of the overall transaction price at contract inception
and recognized over the term of the contract. In most of our contracts, there is uncertainty as to the likelihood and amount of
expected demobilization revenue to be received as the amount may vary dependent upon whether or not the rig has additional
contracted work following the contract. Therefore, the estimate for such revenue may be constrained, depending on the facts and
circumstances pertaining to the specific contract. We assess the likelihood of receiving such revenue based on past experience and
knowledge of the market conditions.
Contract costs
The Company incurs costs to prepare rigs for contract and deliver or mobilize rigs to drilling locations. The Company defers pre-
operating contract preparation and mobilization costs, and recognizes such costs on a straight-line basis, in "Rig operating and
maintenance expenses" in the Consolidated Statements of Operations, over the estimated firm period of the drilling contract.
Contract preparation and mobilization costs can include costs relating to equipment, labor and rig transportation costs (tugs, heavy
lift vessel costs), that are directly attributable to our future performance obligation under each respective drilling contract. Costs
incurred for the demobilization of rigs at contract completion are recognized as incurred during the demobilization process.
Related parties
Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over
the other party in making financial and operating decisions. Parties are also related if they are subject to common control or
common significant influence.
Related party revenue
a. Management and services revenue: We provide corporate support services, secondment of personnel and management
services to our equity method investments under management and service agreements. The revenue for these services is
based on costs incurred in the period, inclusive of an appropriate margin and has been recognized under related party
revenue in our Consolidated Statement of Operations. The associated costs are included within total operating expenses
in our Consolidated Statements of Operations.
b. Bareboat revenue: We lease rigs on bareboat charters to our Equity Method Investments, Perforaciones Estratégicas e
Integrales Mexicana, S.A. de C.V. (“Perfomex”) and Perforaciones Estrategicas e Integrales Mexicana II, SA de CV
(“Perfomex II”). We expect lease revenue earned under the bareboat charters to be variable over the lease term, as a
result of the contractual arrangement which assigns the bareboat a value over the lease term equivalent to residual
earnings after operating expenses and other fees. We, as a lessor, do not recognize a lease asset or liability on our balance
sheet at the time of the formation of the entities nor as a result of the lease. Revenue is recognized under "Related party
revenue" in our Consolidated Statements of Operations.
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Rig operating and maintenance expenses
Rig operating and maintenance expenses are costs associated with operating rigs that are either in operation or stacked, and
include the remuneration of offshore crews and related costs, rig supplies, inventory, insurance costs, expenses for repairs and
maintenance as well as costs related to onshore personnel in various locations where we operate and are expensed as incurred.
Stacking costs for rigs are expensed as incurred.
Impairment of long-lived assets
We continually monitor events and changes in circumstances that could indicate carrying amounts of our long-lived assets may
not be recoverable. At least annually, and if such events or changes in circumstances are present, we assess the recoverability of
long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected
future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, we recognize an impairment
loss based on the excess of the carrying amounts over the respective fair values, based on the undiscounted cash flows. In this
assessment of recoverability, we apply a variety of valuation methods, incorporating income, market and cost approaches. We
may weight the approaches under certain circumstances. Our estimate of fair value generally requires us to use significant
unobservable inputs, representative of Level 3 fair value measurements, including assumptions regarding long-term future
performance of our asset groups, such as projected revenues and costs, dayrates, utilization and residual values. These projections
involve uncertainties that rely on assumptions about demand for our services and future market conditions.
Equity method investments
We account for our ownership interest in certain of our investments as equity method investments. The equity method of
accounting is applied when we generally have between 20% and 50% of the voting rights, or over which we have significant
influence, but over which we do not exercise control or have the power to control the financial and operational policies. This also
extends to entities in which we hold a majority interest, but we do not have control. Under this method, we record our investment
at cost and adjust the carrying amount for our share of earnings or losses of the equity method investment in "Income/(loss) from
equity method investments" in the Consolidated Statements of Operations. When our share of losses equals or exceeds our
interest, we do not recognize further losses, unless we have incurred obligations or made payments on behalf of the equity method
investment. Guarantees issued to the equity method investments and in-substance capital contributions and capital contributions
are added to the carrying value of the equity method investment in the Consolidated Balance Sheets. Our share of earnings or
losses are reflected as a non-cash activity in operating activities in the Consolidated Statements of Cash Flows.
Investments in equity method investments are assessed for other-than-temporary impairment whenever changes in the facts and
circumstances indicate that the fair value may be below the carrying value of our investment. Where determined to be other-than-
temporary impairment, we will recognize an impairment loss in the period in "Income from equity method investments" in the
Consolidated Statements of Operations.
Income taxes 
Borr Drilling Limited is a Bermuda company that has a number of subsidiaries, affiliates and branches in various jurisdictions, a
number of which have evolving tax laws. On December 27, 2023, Bermuda enacted the Corporate Income Tax Act 2023
("Corporate Income Tax Act") which introduces a 15% income tax from January 1, 2025. This is consistent with the Global Anti-
Base Erosion Model Rules (Pillar 2) published by the Organization for Economic Co-operation and Development (“OECD”) and
it overrides previous assurances of tax exemption in Bermuda until 2035. The Company and its Bermuda subsidiaries will not be
subject to Bermuda income tax until such time as Borr achieves consolidated global revenues of USD equivalent of EUR
750 million or more in two of the preceding four fiscal years. This means Bermuda income tax will be applicable to the Company
at the same time Pillar 2 becomes applicable to Borr globally. This is expected to be from January 1, 2026. Certain subsidiaries,
affiliates and branches operate in other jurisdictions where withholding taxes are imposed. Consequently, income taxes have been
recorded in these jurisdictions when appropriate. Our income tax expense is based on our income and statutory tax rates in the
various jurisdictions in which we operate. We provide for income taxes based on the tax laws and rates in effect in the countries in
which operations are conducted and income is earned.
The determination and evaluation of our annual group income tax provision involves interpretation of tax laws in various
jurisdictions in which we operate and requires significant judgment and use of estimates and assumptions regarding significant
future events, such as amounts, timing and character of income, deductions and tax credits. There are certain transactions for
which the ultimate tax determination is unclear due to uncertainty in the ordinary course of business. We recognize tax liabilities
on uncertain tax positions as per US GAAP, including penalties and interest, if applicable, based on our assessment of whether
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our tax positions are more likely than not sustainable, based solely on the technical merits and considerations of the relevant
taxing authority’s widely understood administrative practices and precedence. Changes in tax laws, regulations, agreements,
treaties, foreign currency exchange restrictions or our levels of operations or profitability in each jurisdiction may impact our tax
liability in any given year. While our annual tax provision is based on the information available to us at the time, a number of
years may elapse before the ultimate tax liabilities in certain tax jurisdictions are determined. Current income tax expense reflects
an estimate of our income tax liability for the current period, withholding taxes, changes in prior year tax estimates as tax returns
are filed, or from tax audit adjustments.
Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities calculated according to
local tax rules.
Deferred tax assets and liabilities are based on temporary differences that arise between carrying values used for financial
reporting purposes and amounts used for taxation purposes of assets and liabilities and the future tax benefits of tax loss carry
forwards.
Our deferred tax expense or benefit represents the change in the balance of deferred tax assets or liabilities as reflected in the
Consolidated Balance Sheets. Valuation allowances are determined to reduce deferred tax assets when it is more likely than not
that some portion or all of the deferred tax assets will not be realized. To determine the amount of deferred tax assets and
liabilities, as well as of the valuation allowances, we must make estimates and certain assumptions regarding future taxable
income, including assumptions regarding where our jack-up rigs are expected to be deployed, as well as other assumptions related
to our future tax position. A change in such estimates and assumptions, along with any changes in tax laws, could require us to
adjust the deferred tax assets, liabilities, or valuation allowances. The amount of deferred tax provided is based upon the expected
manner of settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet date. The impact
of tax law changes is recognized in periods when the change is enacted.
Earnings per share
Basic earnings/(loss) per share (“EPS”) is calculated based on the income/(loss) for the period available to common shareholders
divided by the weighted average number of shares outstanding. Diluted EPS includes the effect of the assumed conversion of
potentially dilutive instruments which for the Company includes share options, performance stock units, restricted stock units and
convertible bonds. The determination of dilutive EPS may require us to make adjustments to net income/(loss) and the weighted
average shares outstanding used to compute basic EPS unless anti-dilutive.
Onerous contracts
When we acquire newbuild jack-up drilling rigs there may exist instances whereby the fair value of the rig being constructed is
less than the present value of the remaining contractual commitments for the rig. Such contracts are recorded as a liability when
the difference is identified.
Cash and cash equivalents
Cash and cash equivalents consist of cash, bank deposits and highly liquid financial instruments with original maturities of three
months or less.
Restricted cash
Restricted cash consists of bank deposits which have been pledged as collateral for guarantees issued by banks in relation to rig
operating contracts or minimum deposits which must be maintained in accordance with credit agreements. Restricted cash
amounts with maturities longer than one year are classified as non-current assets.
Allowance for credit losses
Financial assets recorded at amortized cost reflect an allowance for current expected credit losses ("credit losses") over the
lifetime of the instrument. The allowance for credit losses reflects a deduction to the net amount expected to be collected on the
financial asset. Amounts are written off against the allowance when management believes the balance is uncollectible. Expected
recoveries will not exceed amounts previously written-off or current credit loss allowances by financial asset category. We
estimate expected credit losses based on relevant information about past events, including historical experience, current
conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Specific calculation of
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our credit allowances is included in the respective accounting policies included herein; all other financial assets are assessed on an
individual basis calculated using the method we consider most appropriate for each asset.
Trade receivables
Trade receivables are recognized when the right to consideration becomes unconditional based upon contractual billing schedules.
Trade receivables are presented net of allowances for expected credit losses. The allowances for expected credit losses are
calculated using a loss rate applied against an aging matrix and is recorded in "Rig operating and maintenance expenses" in the
Consolidated Statements of Operations, as and when they occur.
Contract assets and contract liabilities
Contract asset balances consist primarily of accrued revenue relating to work performed in the period, however which is yet to be
invoiced. When the right to consideration becomes unconditional based on the contractual billing schedule, accrued revenue is
recognized. At the point that accrued revenue is billed, trade accounts receivables are recognized. Contract asset balances also
include amounts recognized in advance of amounts invoiced due to the blending of rates when a contract has operating dayrates
that increase over the firm term of the contract.
Contract liabilities include payments received for mobilization as well as rig preparation and upgrade activities which are
allocated to the overall performance obligation and recognized ratably over the initial term of the contract in "Total operating
revenues" in the Consolidated Statements of Operations.
Jack-up drilling rigs
Jack-up rigs and related equipment are recorded at historical cost less accumulated depreciation and impairment. Jack-up rigs and
related equipment acquired as part of asset acquisitions are stated at fair market value as of the date of acquisition. The cost of our
jack-up rigs and related equipment are depreciated on a straight-line basis, after deducting salvage values, over their estimated
remaining economic useful lives. Depreciation commences when an asset is placed into service, and available for its intended use.
Useful lives applied in depreciation are as follows:
Jack-up rigs30 years
Jack-up rig equipment and machinery3 to 20 years
All costs incurred in connection with the acquisition, construction, major enhancement and improvement of assets are capitalized,
including allocations of interest incurred during periods that our jack-up rigs are under construction or undergoing major
enhancements or improvements. Costs incurred to place an asset into service are capitalized, including costs related to the initial
mobilization of a newbuild jack-up rig. Expenditures that do not improve the operating efficiency or extend the useful lives of
jack-up rigs or related equipment are expensed as incurred.
We use judgement in considering if events or changes in circumstances indicate that the carrying amount of such jack-up rigs may
not be recoverable. This assessment is done on a quarterly basis. When indicators are present, recoverability is determined by
comparing the carrying amount of an asset to the estimated undiscounted cash flows of the asset. If the total of the undiscounted
cash flows is less than the carrying amount, an impairment loss is recognized as the difference between the carrying amount of the
asset and its fair value. Jack-up rigs and related equipment held-for-sale are recorded at the lower of net book value or fair value.
Interest cost capitalized
Interest costs are capitalized on all qualifying assets that require a period of time to get them ready for their intended use.
Qualifying assets consist of newbuilding rigs under construction. The interest costs capitalized are calculated using the weighted
average cost of borrowings, from commencement of the asset development until substantially all the activities necessary to
prepare the asset for its intended use are complete. We do not capitalize amounts beyond the actual interest expense incurred in
the period.
Newbuildings
Jack-up rigs under construction are capitalized, classified as newbuildings and presented as non-current assets. All costs directly
incurred in connection with the construction of newbuildings are capitalized, including allocations of interest incurred during
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periods that our newbuildings are under construction. Costs incurred to place an asset into service are capitalized, including costs
related to the initial mobilization of a newbuild jack-up rig.
Capitalized costs are reclassified from newbuildings to jack-up rigs when the assets are available for their intended use.
Leases
The following sets out the lease accounting policy for all leases with the exception of short-term leases (less than 12 months) for
which we have elected to recognize the lease payments in our Consolidated Statements of Operations on a straight-line basis over
the lease term and variable lease payments in the period in which the obligation for those payments is incurred.
Lessee: When we enter into a new contract, or modify an existing contract, we evaluate whether that contract has a finance or
operating lease component. We do not have, nor expect to have any leases classified as finance leases. We determine the lease
commencement date by reference to the date the leased asset is available for use and transfer of control has occurred from the
lessor. At the lease commencement date, we measure and recognize a lease liability and a right of use ("ROU") asset in the
Consolidated Balance Sheets. The lease liability is measured at the present value of the lease payments not yet paid, discounted
using the estimated incremental borrowing rate ("IBR") at lease commencement. The ROU asset is measured at the initial
measurement of the lease liability, plus any lease payments made to the lessor at or before the commencement date, minus any
lease incentives received, plus any initial direct costs incurred by us.
After the commencement date, we adjust the carrying amount of the lease liability by the amount of payments made in the period
as well as the unwinding of the discount over the lease term using the straight-line interest method. After commencement date, we
amortize the ROU asset by the amount required to keep total lease expense including interest constant (straight-line over the lease
term).
Absent an impairment of the ROU asset, the single lease cost is calculated so that the remaining cost of the lease is allocated over
the remaining lease term on a straight-line basis. The Company assesses a ROU asset for impairment and recognizes any
impairment loss in accordance with the accounting policy on impairment of long-lived assets.
We applied the following significant assumptions and judgments in accounting for our leases.
• We apply judgment in determining whether a contract contains a lease or a lease component as defined by Topic 842.
• We have elected to combine leases and non-lease components. As a result, we do not allocate our consideration between
leases and non-lease components.
• The discount rate applied to our operating leases is our incremental borrowing rate based on the information available at
commencement date in determining the present value of lease payments.
• Within the terms and conditions of some of our operating leases we have options to extend or terminate the lease. In
instances where we are reasonably certain to exercise available options to extend or terminate, then the option is included
in determining the appropriate lease term to apply. Options to renew our lease terms are included in determining the
ROU asset and lease liability when it is reasonably certain that we will exercise that option.
Lessor: When we enter into a new contract, or modify an existing contract, we identify whether that contract has a sales-type,
direct financing or operating lease. We do not have, nor expect to have any leases classified as sales-type or direct financing. For
our operating lease, the underlying asset remains on our Consolidated Balance Sheets and we record periodic depreciation
expense and lease revenue.
Interest-bearing debt
Interest-bearing debt is recognized initially at fair value less directly attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings related to delivery financing are stated at amortized cost.
Premiums and discounts related to the issuance of term debt are deferred and amortized over the term of the relevant debt using
the straight-line method as this approximates the effective interest method. Amortization of premiums and discounts is included in
"Interest expense" in the Consolidated Statements of Operations. Premiums and discounts are presented as an adjustment to the
corresponding liability in the Consolidated Balance Sheets.
F-16
Deferred charges
Costs associated with long-term financing, including debt arrangement fees, are deferred and amortized over the term of the
relevant loan using the straight-line method as this approximates the effective interest method. Amortization of loan costs is
included in "Interest expense" in the Consolidated Statements of Operations. If a loan is repaid early, any unamortized portion of
the related deferred charge is charged against income in the period in which the loan is repaid. Deferred charges are presented as
either a gross asset or as a deduction from the corresponding liability in the Consolidated Balance Sheets.
Debt extinguishments and modifications
Costs associated with debt extinguishments are included in determining the debt extinguishment gain or loss which is included in
"Interest expense" in the Consolidated Statements of Operations. Costs associated with debt modifications are accounted for as
deferred charges. See Deferred charges accounting policy.
Convertible bonds
We account for debt instruments with convertible features in accordance with the details and substance of the instruments at the
time of their issuance. For convertible debt instruments issued at a substantial premium to equivalent instruments without
conversion features, or those that may be settled in cash upon conversion, it is presumed that the premium or cash conversion
option represents an equity component.
Accordingly, we determine the carrying amounts of the liability and equity components of such convertible debt instruments by
first determining the carrying amount of the liability component by measuring the fair value of a similar liability that does not
have an equity component. The carrying amount of the equity component representing the embedded conversion option is then
determined by deducting the fair value of the liability component from the total proceeds from the issue. The resulting equity
component is recorded, with a corresponding offset to debt discount which is subsequently amortized to interest cost using the
effective interest method over the period the debt is expected to be outstanding as an additional non-cash interest expense.
Transaction costs associated with the instrument are allocated pro-rata between the debt and equity components.
For conventional convertible bonds which do not have a cash conversion option or where no substantial premium is received on
issuance, it may not be appropriate to separate the bond into the liability and equity components.
Derivatives
We use derivatives to reduce market risks. All derivative financial instruments are initially recorded at fair value as either assets
or liabilities in the accompanying Consolidated Balance Sheets and subsequently remeasured to fair value. The changes in fair
value of derivative financial instruments are recognized each period in "Other financial (expenses) income, net" in the
Consolidated Statements of Operations. Cash outflows and inflows resulting from economic derivative contracts are presented as
cash flows from operations in the Consolidated Statements of Cash Flows. We do not apply hedge accounting.
Equity issuance costs
Equity issuance costs are recorded as a reduction of additional paid-in-capital and charged to shareholders' equity.
Pensions
Defined benefit pension costs, assets and liabilities requires significant actuarial assumptions to be adjusted annually to reflect
current market and economic conditions. Full recognition of the funded status of defined benefit pension plans are included within
our Consolidated Balance Sheets. We fair value, using level 3 inputs, our plan assets and projected benefit obligation.
Defined contribution pension costs represent the contributions payable to the scheme in respect of the accounting period and are
recorded in the Consolidated Statements of Operations.
Treasury shares
Treasury shares are recognized at cost as a component of shareholders’ equity. When we re-issue treasury stock at an amount
greater/ (less) than the current price of the share (based on a first in first out policy), we realize a gain/ (loss) on the re-issuance of
the shares. A gain on re-issuance of treasury shares is credited to additional paid-in-capital whereas a loss on re-issuance of
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treasury shares may be debited to additional paid-in-capital to the extent that previous net gains from sales or retirements of the
same class of stock are included in additional paid-in-capital. Any losses in excess of that amount are charged to retained
earnings.
Share-based compensation 
Our stock-based compensation includes stock options, performance stock units ("PSUs") and restricted stock-units ("RSUs").
The fair value of stock options is estimated using the Black-Scholes Option pricing method, the fair value of the PSUs is
estimated using the Monte Carlo option pricing model and the fair value of RSUs is estimated using the fair value of the
Company's common stock at grant date.
We expense the fair value of stock-based compensation over the period the stock options, PSUs or RSUs vest. We amortize stock-
based compensation awards on a straight-line basis over the period during which the individuals are required to provide service in
exchange for the reward - the requisite service (vesting) period. No compensation cost is recognized for stock-based
compensation for which the individuals do not render the requisite service. We account for forfeitures as they occur.
Contingencies
We assess our contingencies on an ongoing basis to evaluate the appropriateness of our liabilities and disclosures for such
contingencies. We recognize a liability when we believe that a loss is probable and the amount of loss can be reasonably
estimated, based upon the information available before the issuance of the financial statements.
Segment reporting
A segment is a distinguishable component of the business that is engaged in business activities from which we earn revenues and
incur expenses whose operating results are regularly reviewed by the chief operating decision maker ("CODM") (our Board of
Directors), and which are subject to risks and rewards that are different from those of other segments. We have identified two
reportable segments: Dayrate and Integrated Well Services ("IWS"). Effective August 4, 2021, we have one reportable segment,
Dayrate, following the sale of the Company's 49% interest in each Opex and Akal, representing the Company's disposal of the
IWS operating segment (see Note 7 - Equity Method Investments).
Note 3 - Recently Issued Accounting Standards
Adoption of new accounting standards
In October 2021, the Financial Accounting Standards Board ("FASB") issued ASU 2021-08 Business Combinations (Topic 805):
Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments require acquiring
entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The
amendments in this Update improve comparability for both the recognition and measurement of acquired revenue contracts with
customers at the date of, and after, a business combination. The amendments improve comparability after the business
combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a
business combination and revenue contracts with customers not acquired in a business combination. These amendments are
effective for the Company from January 1, 2023. There was no impact resulting from these amendments on our Audited
Consolidated Financial Statements or related disclosures.
In March 2022, the FASB issued ASU 2022-01 Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer
Method. The amendments clarify the accounting for, and promote consistency in, the reporting of hedge basis adjustments
applicable to both a single hedged layer and multiple hedged layers as follows: 1) An entity is required to maintain basis
adjustments in an existing hedge on a closed portfolio basis (that is, not allocated to individual assets). 2) An entity is required to
immediately recognize and present the basis adjustment associated with the amount of the de-designated layer that was breached
in interest income. In addition, an entity is required to disclose that amount and the circumstances that led to the breach. 3) An
entity is required to disclose the total amount of the basis adjustments in existing hedges as a reconciling amount if other areas of
GAAP require the disaggregated disclosure of the amortized cost basis of assets included in the closed portfolio. 4) An entity is
prohibited from considering basis adjustments in an existing hedge when determining credit losses. These amendments are
effective for the Company from January 1, 2023. There was no impact resulting from these amendments on our Audited
Consolidated Financial Statements or related disclosures.
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In March 2022, the FASB issued ASU 2022-02 Financial Instruments—Credit Losses (Topic 326). The amendments eliminate the
accounting guidance for troubled debt restructurings by creditors that have adopted the Current Expected Credit Losses (CECL)
model and enhance the disclosure requirements for loan refinancing and restructurings made with borrowers experiencing
financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross write offs for
financing receivables and net investment in leases by year of origination in the vintage disclosures. These amendments are
effective for the Company from January 1, 2023. There was no impact resulting from these amendments on our Audited
Consolidated Financial Statements or related disclosures.
In September 2022, the FASB issued ASU 2022-04 Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of
Supplier Finance Program Obligations. The amendments require that a buyer in a supplier finance program disclose sufficient
information about the program to allow a user of financial statements to understand the program’s nature, activity during the
period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative
and quantitative information about its supplier finance programs. These amendments are effective for the Company from January
1, 2023. There was no impact resulting from these amendments on our Audited Consolidated Financial Statements or related
disclosures.
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Accounting pronouncements that have been issued but not yet adopted
Standard
Description
Date of
Adoption
Effect on our
Consolidated Financial
Statements or Other
Significant Matters
ASU 2022-03 Fair Value
Measurement (Topic 820): Fair
Value Measurement of Equity
Securities Subject to Contractual
Sale Restrictions
The amendments clarify that a contractual restriction on the
sale of an equity security is not considered part of the unit of
account of the equity security and, therefore, is not considered
in measuring fair value. The amendments also clarify that an
entity cannot, as a separate unit of account, recognize and
measure a contractual sale restriction and require the following
disclosures for equity securities subject to contractual sale
restrictions:
1. The fair value of equity securities subject to contractual sale
restrictions reflected in the balance sheet
2. The nature and remaining duration of the restriction(s)
3. The circumstances that could cause a lapse in the
restriction(s).
January 1,
2024
No material impact
expected
ASU 2023-01 Leases (Topic 842):
Common Control Arrangements
The amendments provide a practical expedient for private
companies and not-for-profit entities that are not conduit bond
obligors to use the written terms and conditions of a common
control arrangement to determine whether a lease exists and, if
so, the classification of and accounting for that lease. If no
written terms and conditions exist (including in situations in
which an entity does not document existing unwritten terms
and conditions in writing upon transition to the practical
expedient), an entity is prohibited from applying the practical
expedient and must evaluate the enforceable terms and
conditions to apply Topic 842.
Also, the amendments require that leasehold improvements
associated with common control leases be:
1. Amortized by the lessee over the useful life of the leasehold
improvements to the common control group (regardless of the
lease term) as long as the lessee controls the use of the
underlying asset (the leased asset) through a lease. However, if
the lessor obtained the right to control the use of the
underlying asset through a lease with another entity not within
the same common control group, the amortization period may
not exceed the amortization period of the common control
group.
2. Accounted for as a transfer between entities under common
control through an adjustment to equity (or net assets for not-
for-profit entities) if, and when, the lessee no longer controls
the use of the underlying asset.
Additionally, those leasehold improvements are subject to the
impairment guidance in Topic 360, Property, Plant, and
Equipment.
January 1,
2024
No material impact
expected
ASU 2023-02 Investments—Equity
Method and Joint Ventures (Topic
323): Accounting for Investments in
Tax Credit Structures Using the
Proportional Amortization Method
(a consensus of the Emerging
Issues Task Force)
The amendments permit reporting entities to elect to account
for their tax equity investments, regardless of the tax credit
program from which the income tax credits are received, using
the proportional amortization method if certain conditions are
met. Under the proportional amortization method, an entity
amortizes the initial cost of the investment in proportion to the
income tax credits and other income tax benefits received and
recognizes the net amortization and income tax credits and
other income tax benefits in the income statement as a
component of income tax expense (benefit).
January 1,
2024
No material impact
expected
F-20
ASU 2023-05 Business
Combinations—Joint Venture
Formations (Subtopic 805-60):
Recognition and Initial
Measurement
The amendments in this Update address the accounting for
contributions made to a joint venture, upon formation, in a
joint venture’s separate financial statements. The objectives of
the amendments are to:
(1) provide decision-useful information to investors and other
allocators of capital (collectively, investors) in a joint
venture’s financial statements; and
(2) reduce diversity in practice.
To reduce diversity in practice and provide decision-useful
information to a joint venture’s investors, the Board decided to
require that a joint venture apply a new basis of accounting
upon formation, resulting in a joint venture, upon formation,
being required to recognize and initially measure its assets and
liabilities at fair value (with exceptions to fair value
measurement that are consistent with the business
combinations guidance).
January 1,
2025
Under evaluation
ASU 2023-07 Segment Reporting
(Topic 280): Improvements to
Reportable Segment Disclosures
The amendments in this Update improve reportable segment
disclosure requirements, primarily through enhanced
disclosures about significant segment expenses. The
amendments in this Update:
1. Require that a public entity disclose, on an annual and
interim basis, significant segment expenses that are regularly
provided to the chief operating decision maker (CODM) and
included within each reported measure of segment profit or
loss.
2. Require that a public entity disclose, on an annual and
interim basis, an amount for other segment items by reportable
segment and a description of its composition.
3. Require that a public entity provide all annual disclosures
about a reportable segment’s profit or loss and assets currently
required by Topic 280 in interim periods.
4. Clarify that if the CODM uses more than one measure of a
segment’s profit or loss in assessing segment performance and
deciding how to allocate resources, a public entity may report
one or more of those additional measures of segment profit.
However, at least one of the reported segment profit or loss
measures (or the single reported measure, if only one is
disclosed) should be the measure that is most consistent with
the measurement principles used in measuring the
corresponding amounts in the public entity’s consolidated
financial statements.
5. Require that a public entity disclose the title and position of
the CODM and an explanation of how the CODM uses the
reported measure(s) of segment profit or loss in assessing
segment performance and deciding how to allocate resources.
6. Require that a public entity that has a single reportable
segment provide all the disclosures required by the
amendments in this Update and all existing segment
disclosures in Topic 280.
January 1,
2024
No material impact
expected
ASU 2023-09 Income Taxes (Topic
740): Improvements to Income Tax
Disclosures
The amendments in this Update require that public business
entities on an annual basis (1) disclose specific categories in
the rate reconciliation and (2) provide additional information
for reconciling items that meet a quantitative threshold (if the
effect of those reconciling items is equal to or greater than 5
percent of the amount computed by multiplying pretax income
[or loss] by the applicable statutory income tax rate). A public
business entity is required to provide an explanation, if not
otherwise evident, of the individual reconciling items
disclosed, such as the nature, effect, and underlying causes of
the reconciling items and the judgment used in categorizing
the reconciling items.
The other amendments in this Update improve the
effectiveness and comparability of disclosures by (1) adding
disclosures of pretax income (or loss) and income tax expense
(or benefit) to be consistent with U.S. Securities and Exchange
Commission (SEC) Regulation S-X 210.4-08(h), Rules of
General Application—General Notes to Financial Statements:
Income Tax Expense, and (2) removing disclosures that no
longer are considered cost beneficial or relevant.
January 1,
2025
Under evaluation
The FASB have issued further updates not included above. We do not currently expect any of these updates to have a material
impact on our Audited Consolidated Financial Statements and related disclosures either on transition or in future periods.
F-21
Note 4 - Segments
During the years ended December 31, 2023 and December 31, 2022, we had a single reportable segment: our operations
performed under our dayrate model (which includes rig charters and ancillary services). During the year ended December 31,
2021, we had two operating segments: operations performed under our dayrate model (which includes rig charters and ancillary
services) and operations performed under the Integrated Well Services ("IWS") model. IWS operations were performed by our
joint venture entities Opex and Akal.
On August 4, 2021, the Company executed a Stock Purchase Agreement for the sale of the Company's 49% interest in each of
Opex and Akal, representing the Company's disposal of the IWS operating segment (see Note 7 - Equity Method Investments).
Our Chief Operating Decision Maker (our Board of Directors) reviews financial information provided as an aggregate sum of
assets, liabilities and activities that exist to generate cash flows, by our operating segments.
The following presents information by segment for the year ended December 31, 2023:
(In $ millions)
Dayrate
Reconciling items(2)
Consolidated total
Dayrate revenue
954.2
(312.2)
642.0
Related party revenue
—
129.6
129.6
Gain on disposals
—
0.6
0.6
Rig operating and maintenance expenses
(665.2)
305.9
(359.3)
Depreciation of non-current assets
(115.5)
(1.9)
(117.4)
General and administrative expenses
—
(45.1)
(45.1)
Income from equity method investments
—
4.9
4.9
Operating income including equity method
investment
173.5
81.8
255.3
Total assets
3,401.0
(320.9)
3,080.1
The following presents information by segment for the year ended December 31, 2022:
(In $ millions)
Dayrate
Reconciling items(2)
Consolidated total
Dayrate revenue
600.0
(241.3)
358.7
Related party revenue
—
85.1
85.1
Gain on disposals
—
4.2
4.2
Rig operating and maintenance expenses
(501.2)
236.3
(264.9)
Depreciation of non-current assets
(114.9)
(1.6)
(116.5)
Impairment of non-current assets
(131.7)
—
(131.7)
General and administrative expenses
—
(36.8)
(36.8)
Income from equity method investments
—
1.2
1.2
Operating (loss)/income including equity
method investment
(147.8)
47.1
(100.7)
Total assets
3,287.9
(286.2)
3,001.7
The following presents information by segment for the year ended December 31, 2021:
F-22
(In $ millions)
Dayrate
IWS (1)
Reconciling items(2)
Consolidated total
Dayrate revenue
205.8
301.6
(301.6)
205.8
Related party revenue
39.5
—
—
39.5
Intersegment revenue
88.5
—
(88.5)
—
Gain on disposals
—
—
1.2
1.2
Rig operating and maintenance expenses
(339.7)
(186.3)
345.5
(180.5)
Intersegment expenses
—
(88.5)
88.5
—
Depreciation of non-current assets
(117.6)
—
(2.0)
(119.6)
General and administrative expenses
—
—
(34.7)
(34.7)
Income from equity method investments
—
—
16.1
16.1
Operating (loss)/income including equity
method investment
(123.5)
26.8
24.5
(72.2)
Total assets
3,277.6
—
(197.3)
3,080.3
(1) Financial information presented for the IWS operating segment covers the period up to disposal, on August 4, 2021.
(2) General and administrative expenses and depreciation expense incurred by our corporate office are not allocated to our
operating segments for purposes of measuring segment operating income/(loss) and are included in "Reconciling items". The full
operating results included above for our equity method investments are not included within our consolidated results and thus are
deducted under "Reconciling items" and replaced with our Income/(loss) from equity method investments (see Note 7 - Equity
Method Investments).
Geographic data
Revenues are attributed to geographical location based on the country of operations for drilling activities, and thus the country
where the revenues are generated.
The following presents our revenues by geographic area:
 
For the Years Ended December 31,
(In $ millions)
2023
2022
2021
South East Asia
233.0
154.5
99.5
Mexico
191.2
95.9
39.5
West Africa
168.6
106.9
30.7
Middle East
147.8
37.7
—
Europe
31.0
48.8
75.6
Total
771.6
443.8
245.3
The following presents the net book value of our jack-up rigs by geographic area(1):
F-23
 
As of December 31,
(In $ millions)
2023
2022
Mexico
815.4
675.5
South East Asia
673.4
832.5
Middle East
553.0
481.2
West Africa
444.8
507.0
Europe
91.7
92.9
Total
2,578.3
2,589.1
(1) The fixed assets referred to in the table above exclude assets under construction. Asset locations at the end of a period are not
necessarily indicative of the geographical distribution of the revenue or operating profits generated by such assets during the
associated periods.
Major customers
The following customers accounted for more than 10% of our dayrate revenues:
 
For the Years Ended December 31,
(In % of operating revenues)
2023
2022
2021
Perfomex
17%
14%
11%
Saudi Arabian Oil Company
14%
4%
—%
Eni Congo S.A.
14%
10%
—%
PTT Exploration and Production Public Company Limited
5%
11%
24%
CNOOC Petroleum Europe Limited
—%
—%
16%
Total
50%
39%
51%
Note 5 - Contracts with Customers
Contract Assets and Liabilities
When the right to consideration becomes unconditional based on the contractual billing schedule, accrued revenue is recognized.
At the point that accrued revenue is billed, trade accounts receivable are recognized. Payment terms on invoice amounts are
typically 30 days.
Deferred mobilization, demobilization and contract preparation revenue includes revenues received for rig mobilization as well as
preparation and upgrade activities, in addition to demobilization revenues expected to be received upon contract commencement
and other lump-sum revenues relating to the firm periods of our contracts. These revenues are allocated to the overall performance
obligation and recognized on a straight-line basis over the initial term of the contracts.
F-24
The following presents our contract assets and liabilities from our contracts with customers:
As of December 31,
(In $ millions)
2023
2022
Accrued revenue (1)
73.7
57.4
Current contract assets
73.7
57.4
Non-current accrued revenue (2)
2.3
3.8
Non-current contract assets
2.3
3.8
Total contract assets
76.0
61.2
Current deferred mobilization, demobilization and contract preparation revenue
(59.5)
(57.3)
Current contract liability
(59.5)
(57.3)
Non-current deferred mobilization, demobilization and contract preparation revenue
(56.6)
(68.7)
Non-current contract liability
(56.6)
(68.7)
Total contract liability
(116.1)
(126.0)
(1) Accrued revenue includes $7.3 million ($0.5 million as of December 31, 2022) related to the current portion of deferred
variable rate revenue, $1.2 million ($0.9 million as of December 31, 2022) related to the current portion of liquidated damages
associated with a known delay in the operational start date of two of our contracts and $1.1 million ($0.7 million as of December
31, 2022) pertaining to the current portion of deferred demobilization revenue.
(2) Non-current accrued revenue includes $1.5 million ($1.5 million as of December 31, 2022) pertaining to the non-current
portion of deferred demobilization revenue and $0.8 million ($2.3 million as of December 31, 2022) related to non-current portion
of liquidated damages associated with a known delay in the operational start date of two of our contracts. Non-current accrued
revenue is included in "Other non-current assets" in our Consolidated Balance Sheets (see Note 18 - Other Non-Current Assets).
Total movement in our contract assets and contract liabilities balances during the years ended December 31, 2023 and 2022 are as
follows:
F-25
(In $ millions)
Contract assets
Contract liabilities
Balance as of December 31, 2021
20.2
6.4
Performance obligations satisfied during the reporting period
55.1
—
Amortization of revenue
—
(22.1)
Unbilled demobilization revenue
2.2
—
Unbilled variable rate revenue
3.9
—
Performance obligations to be satisfied over time
—
2.2
Cash received, excluding amounts recognized as revenue
—
139.5
Cash received against the contract asset balance
(20.2)
—
Balance as of December 31, 2022
61.2
126.0
Performance obligations satisfied during the reporting period
62.6
—
Amortization of revenue
—
(61.9)
Unbilled demobilization revenue
0.4
—
Unbilled variable rate revenue
11.9
—
Performance obligations to be satisfied over time
—
0.4
Cash received, excluding amounts recognized as revenue
—
51.6
Cash received against the contract asset balance
(60.1)
—
Balance as of December 31, 2023
76.0
116.1
Timing of revenue
The Company derives its revenue from contracts with customers for the transfer of goods and services, from various activities
performed both at a point in time and over time, under the output method.
For the years ended December 31,
(In $ millions)
2023
2022
2021
Over time
743.0
418.6
234.7
Point in time
28.6
25.2
10.6
Total
771.6
443.8
245.3
Revenue on existing contracts, where performance obligations are unsatisfied or partially unsatisfied at the balance sheet date, is
expected to be recognized as follows as at December 31, 2023:
For the years ending December 31,
(In $ millions)
2024
2025
2026
2027 onwards
Dayrate revenue
596.6
412.2
110.3
83.5
Other revenue (1)
55.7
32.9
7.7
9.9
Total
652.3
445.1
118.0
93.4
(1) Other revenue represents lump sum revenue associated with contract preparation and mobilization and is recognized ratably
over the firm term of the associated contract in "Dayrate revenue" in the Consolidated Statements of Operations.
Contract Costs
Deferred mobilization and contract preparation costs relate to costs incurred to prepare a rig for contract and delivery or to
mobilize a rig to the drilling location. We defer pre‑operating costs, such as contract preparation and mobilization costs, and
recognize such costs on a straight‑line basis, over the estimated firm period of the drilling contract. Costs incurred for the
demobilization of rigs at contract completion are recognized as incurred during the demobilization period.
F-26
As of December 31,
(In $ millions)
2023
2022
Current deferred mobilization and contract preparation costs
39.4
38.4
Non-current deferred mobilization and contract preparation costs (1)
42.6
17.1
Total deferred mobilization and contract preparation asset
82.0
55.5
(1) Non-current deferred mobilization and contract preparation costs are included in "Other non-current assets" in our Consolidated
Balance Sheets (see Note 18 - Other Non-Current Assets).
For the year ended December 31, 2023, total deferred mobilization and contract preparation costs increased by $26.5 million, as a
result of additional deferred costs of $71.1 million primarily relating to the contract preparation and mobilization costs of the rigs
"Arabia III", "Hild", "Gerd", "Ran", "Arabia I", "Arabia II" and "Saga", offset by amortization of $44.6 million.
For the year ended December 31, 2022, total deferred mobilization and contract preparation costs increased by $33.9 million, as a
result of additional deferred costs of $70.6 million primarily relating to the contract preparation and mobilization costs of the rigs
"Arabia I", "Arabia II", "Prospector 5", "Ran", "Saga", "Idun", "Mist, "Natt", "Gerd" and "Groa", offset by amortization of
$36.7 million.
F-27
Note 6 - Gain on Disposals
We recognized the following gain on disposal for the year ended December 31, 2023:
Year Ended December 31, 2023
(in $ millions)
Net proceeds
Book value on disposal
Gain on disposal
Rig Related Equipment
0.6
—
0.6
Total
0.6
0.0
0.6
We recognized the following loss and gain on disposals for the year ended December 31, 2022:
Year Ended December 31, 2022
(in $ millions)
Net proceeds
Book value on disposal
(Loss)/gain on disposal
Gyme (1)
119.5
119.7
(0.2)
Newbuildings (2)
11.3
7.6
3.7
Rig Related Equipment
0.7
—
0.7
Total
131.5
127.3
4.2
(1) Of the proceeds from the sale of the "Gyme", $87.0 million was used to directly repay the outstanding debt and back-end fee
with PPL pertaining to the Gyme, and $33.0 million was used to directly repay accrued interest associated with the "Gyme" and
the eight other rigs financed by PPL.
(2) Net proceeds from the sale were used to directly settle certain liabilities and future commitments with Seatrium New Energy
Limited (formerly known as  Keppel FELS Limited), pertaining to the rig "Tivar" and will be used to settle future commitments
with Seatrium for the rigs "Huldra" and "Heidrun".
We recognized the following loss and gain on disposals for the year ended December 31, 2021:
Year Ended December 31, 2021
(in $ millions)
Net proceeds
Book value on disposal
(Loss)/gain on disposal
Balder (3)
4.4
4.5
(0.1)
Rig Related Equipment
1.3
—
1.3
Total
5.7
4.5
1.2
(3) Of the net proceeds received from the sale of the "Balder", $3.0 million was received during the year ended December 31,
2020.
F-28
Note 7 - Equity Method Investments
During 2019 we entered into a joint venture with Proyectos Globales de Energia y Servicos CME, S.A. DE C.V. (“CME”) to
provide integrated well services to Petróleos Mexicanos (“Pemex”). This involved Borr Mexico Ventures Limited (“BMV”)
subscribing to 49% of the equity of Opex Perforadora S.A. de C.V. (“Opex”) and Perforadora Profesional AKAL I, SA de CV
(“Akal”). CME’s wholly owned subsidiary, Operadora Productora y Exploradora Mexicana, S.A. de C.V. (“Operadora”) owned
51% of each of Opex and Akal. In addition, we provided five jack-up rigs on bareboat charters to two other joint venture
companies, Perfomex and Perfomex II, in which we previously held a 49% interest. Perfomex and Perfomex II provide the jack-
up rigs under traditional dayrate drilling and technical services agreements to Opex and Akal.
On August 4, 2021, the Company executed a Stock Purchase Agreement with BMV and Operadora for the sale of the Company's
49% interest in each of Opex and Akal joint ventures, as well as the acquisition of a 2% incremental interest in each of Perfomex
and Perfomex II joint ventures. The acquisition was completed on the same date. The Company recognized a $3.6 million gain on
disposal of Opex and Akal in "Other non-operating income" in the Consolidated Statements of Operations in the year ended
December 31, 2021, as the difference between the cash consideration received of $10.6 million and the carrying value of the
equity method investments on the date of disposal of $7.0 million.
Prior to August 4, 2021, Opex and Akal contracted technical support services from BMV, management services from Operadora
and well services from specialist well service contractors and logistics and administration services from Logística y Operaciones
OTM, S.A. de C.V, an affiliate of CME. This structure enabled Opex and Akal to provide bundled integrated well services to
Pemex. The revenue earned was fixed under each of the Pemex contracts, while Opex and Akal managed the drilling services and
related costs on a per well basis. Prior to the sale, we were obligated, as a 49% shareholder, to fund any capital shortfall in Opex
or Akal should the Board of Opex or Akal make cash calls to the shareholders under the provisions of the Shareholder
Agreements.
Effective August 4, 2021, as we hold a 51% equity ownership in Perfomex and Perfomex II, we have assessed whether the
increased investments in Perfomex and Perfomex II joint ventures results in the need to consolidate these entities under US
GAAP. The significant judgements are whether the joint ventures are variable interest entities (VIEs) and, if so, whether Borr is
the primary beneficiary. We concluded that the joint ventures are VIEs; however, we do not have the power to direct the decisions
which most significantly impact the economic performance of the joint ventures. As such, we are not considered to be the primary
beneficiary of the variable interest entities and we continue to account for our interests in Perfomex and Perfomex II as equity
method investments in accordance with ASC 323, Investment - Equity Method and Joint Ventures and record the investments in
"Equity method investments" in the Consolidated Balance Sheets.
Effective October 20, 2022, all five jack-up rigs were provided to Perfomex on bareboat charters, thereby consolidating activities
into Perfomex, for Perfomex's provision of traditional dayrate drilling and technical services to Opex. Effective from this date,
Perfomex II continued to provide technical services to Opex, in addition to rig management services to external parties.
The below tables set forth the summarized results from these entities on a 100% basis for the years ended December 31, 2023,
2022 and 2021:
Year ended December 31, 2023
In $ millions
Perfomex
Perfomex II
Revenue
290.9
21.3
Operating expenses
(284.9)
(21.0)
Net income
3.8
5.7
Year ended December 31, 2022
In $ millions
Perfomex
Perfomex II
Revenue
157.9
83.4
Operating expenses
(154.6)
(81.7)
Net income
—
2.4
F-29
Year ended December 31,
2021
Period from January 1,
2021 to August 4, 2021
In $ millions
Perfomex
Perfomex II
Opex
Akal
Revenue
110.1
61.9
199.4
102.2
Operating expenses
(105.0)
(54.2)
(167.7)
(107.1)
Net income (loss)
1.0
5.1
30.9
(1.7)
Revenue in Opex and Akal is recognized on a percentage of completion basis under the cost input method. The services Opex and
Akal deliver to a single customer, Pemex, involve delivering integrated well services with payment upon the completion of each
well in the contract. Revenue in Perfomex and Perfomex II is recognized on a day rate basis on contracts with Opex, Akal and
Pemex, consistent with our historical revenue recognition policies, with day rate accruing each day as the service is performed.
We provided rigs and services to Perfomex and Perfomex II for use in their contracts with Opex and Akal, respectively. Effective
October 20, 2022, all five of our rigs are provided to Perfomex for use in its contracts with Opex.
As of December 31, 2023, Perfomex and Perfomex II had $164.9 million of receivables from Opex and Akal, of which
$131.7 million was outstanding and $33.2 million was unbilled. As of December 31, 2022, Perfomex and Perfomex II had
$113.9 million of receivables from Opex and Akal, of which $105.1 million was outstanding and $8.8 million was unbilled.
As of August 4, 2021, Opex and Akal had $237.1 million in receivables from Pemex, of which $113.7 million were outstanding
and $123.4 million were unbilled.
Summarized balance sheets, on a 100% basis of the Company's equity method investees are as follows:
As at December 31, 2023
In $ millions
Perfomex
Perfomex II
Cash
11.4
0.5
Total current assets
271.4
35.1
Total non-current assets
12.3
2.1
Total assets
283.7
37.2
Total current liabilities
257.2
23.8
Total non-current liabilities
8.3
0.2
Equity
18.2
13.2
Total liabilities and equity
283.7
37.2
As at December 31, 2022
In $ millions
Perfomex
Perfomex II
Cash
13.2
6.6
Total current assets
198.0
54.8
Total non-current assets
28.6
4.8
Total assets
226.6
59.6
Total current liabilities
191.6
51.6
Total non-current liabilities
20.6
0.5
Equity
14.4
7.5
Total liabilities and equity
226.6
59.6
The following presents our investments in equity method investments as at December 31, 2023 and December 31, 2022:
F-30
In $ millions
Perfomex
Perfomex II
Total
Balance as of January 1, 2022
16.9
2.5
19.4
Income / (loss) on a percentage basis
—
1.2
1.2
Balance as of December 31, 2022
16.9
3.7
20.6
Funding received from shareholder loan (1)
(9.8)
—
(9.8)
Income on a percentage basis
2.0
2.9
4.9
Balance as of December 31, 2023
9.1
6.6
15.7
(1) During the year ended December 31, 2023, $9.8 million funding provided by shareholders loans was repaid by Perfomex,
settling the outstanding balance.
Note 8 - Interest expense
Interest expense is comprised of the following:
 
For the Years Ended December 31,
(In $ millions)
2023
2022
2021
Debt interest expense
(157.4)
(125.4)
(92.9)
Loss on debt extinguishment (1)
(19.4)
(7.8)
—
Amortization of deferred finance charges
(10.3)
(7.9)
(6.5)
Amortization of debt discount
(1.0)
—
—
Gain on debt extinguishment (2)
10.9
1.9
—
Total
(177.2)
(139.2)
(99.4)
(1) Loss on debt extinguishment for the year ended December 31, 2023 relates to the $15.5 million loss associated with the
repayment of the $150m Secured Bonds and the $3.9 million loss associated with the repayment of the Hayfin Debt Facility. Loss
on debt extinguishment for the year ended December 31, 2022 relates to the $2.9 million loss associated with the refinancing of
the Hayfin Debt Facility and the $4.9 million loss on the repayment of the Syndicated Senior Secured Credit Facilities and New
Bridge Facility, of which DNB Bank was one of the lenders of the syndicate.
(2) Gain on debt extinguishment for the year ended December 31, 2023 relates to the $7.2 million gain associated with the
repayment of the Seatrium Delivery Financing Facility, the $2.8 million gain associated with the repayment of the New DNB
Facility and the $0.9 million gain associated with the repayment of the PPL Delivery Financing Facility. Gain on debt
extinguishment for the year ended December 31, 2022 relates to the gain on extinguishment of the debt associated with the jack-
up rig "Gyme". Upon sale of the rig, part of the proceeds were used to repay the outstanding amount under its facility, which was
financed by PPL.
F-31
Note 9 - Other Financial Expenses, net
Other financial expenses, net is comprised of the following:
 
For the Years Ended December 31,
(In $ millions)
2023
2022
2021
Yard cost cover expense
(22.1)
(28.2)
(12.8)
Foreign exchange loss
(2.8)
(0.9)
(2.8)
Bank commitment, guarantee and other fees (1)
(2.3)
(12.7)
(4.2)
Other financial income / (expenses)
0.3
(0.1)
4.5
Total
(26.9)
(41.9)
(15.3)
(1) Bank commitment, guarantee and other fees include $10.7 million in financing fees for the year ended December 31, 2022 (nil
for the years ended December 31, 2023 and December 31, 2021).
Amortization of deferred finance charges for the years ended December 31, 2022 and December 31, 2021, of $7.9 million and
$6.5 million, respectively, have been presented in Interest expense in the Consolidated Statements of Operations, to conform to
the current period's presentation. See Note 8 - Interest expense.
Note 10 - Taxation
Borr Drilling Limited is a Bermuda company not currently required to pay taxes in Bermuda on ordinary income or capital gains
under a tax exemption granted by the Minister of Finance in Bermuda until March 31, 2035. However, the Bermuda Corporate
Income Tax Act was enacted on December 27, 2023 and will apply from January 1, 2025, as discussed below. We operate
through various subsidiaries, affiliates and branches in numerous countries throughout the world and are subject to tax laws,
policies, treaties and regulations, as well as the interpretation or enforcement thereof, in jurisdictions in which we or any of our
subsidiaries, affiliates and branches operate, were incorporated, or otherwise considered to have a tax presence. Our income tax
expense is based upon our interpretation of the tax laws in effect in various countries at the time that the expense was incurred.
Total pre-tax income / (loss) is comprised of the following by jurisdiction:
 
For the Years Ended December 31,
(In $ millions)
2023
2022
2021
Bermuda
(92.2)
(44.1)
(68.1)
Foreign
148.3
(230.3)
(115.2)
Total 
56.1
(274.4)
(183.3)
All income tax expense is attributable to foreign jurisdictions and is comprised of the following:
 
For the Years Ended December 31,
(In $ millions)
2023
2022
2021
Current tax expense
50.5
20.5
10.2
Change in deferred tax
(16.5)
(2.1)
(0.5)
Total 
34.0
18.4
9.7
Our annual effective tax rate for the year ended December 31, 2023 was approximately 60.61%, on a pre-tax income of
$56.1 million. Changes in our effective tax rate from period to period are primarily attributable to changes in the profitability or
loss mix of our operations in various jurisdictions. As our operations continually change among numerous jurisdictions, and
methods of taxation in these jurisdictions vary greatly, there is minimal direct correlation between the income tax provision /
benefit and income / (loss) before taxes. The year ended December 31, 2023 was also impacted by the release of a valuation
allowance against certain deferred tax assets in the U.K., and a decrease in the liability for unrecognized tax positions for the
expiration of a statute of limitations.
A reconciliation of the Bermuda statutory tax rate to our effective rate is shown below:
F-32
 
For the Years Ended December 31,
 
2023
2022
2021
Bermuda statutory income tax rate
—%
—%
—%
Tax rates which are different from the statutory rate
101.25%
(7.20)%
(6.64)%
Adjustment attributable to prior years
3.39%
0.67%
1.60%
Change in valuation allowance
(29.41)%
—%
—%
Adjustments to uncertain tax positions
(14.62)%
(0.18)%
(0.26)%
Total
60.61%
(6.71)%
(5.30)%
The components of the net deferred taxes are as follows:
 
As of December 31,
(In $ millions)
2023
2022
Deferred tax assets
 
 
Net operating losses
17.6
17.7
Excess of tax basis over book basis of property, plant and equipment
14.7
45.0
Other
20.6
17.9
Deferred tax asset
52.9
80.6
Less: valuation allowance
(33.6)
(77.1)
Net deferred tax assets (1)
19.3
3.5
Deferred tax liabilities
Deferred tax liabilities
—
(0.7)
Net deferred tax asset
19.3
2.8
(1) Net deferred tax assets are recognized in "Other non-current assets" in the Consolidated Balance Sheets (see Note 18 - Other
Non-Current Assets).
The deferred tax assets related to our net operating losses were primarily generated in the United Kingdom ($64.0 million net
operating losses at December 31, 2023) and will not expire. We recognize a valuation allowance for deferred tax assets when it is
more-likely-than-not that the benefit from the deferred tax asset will not be realized. The amount of deferred tax assets considered
realizable could increase or decrease in the near-term if estimates of future taxable income change. In 2023, we reduced our
valuation allowance previously recorded against the gross deferred tax assets primarily attributable to the net operating losses in
the United Kingdom. Due to existing contracts as of December 31, 2023, we determined that these net operating losses would
likely be utilized. The release of this valuation allowance reduced our income tax provision by $16.5 million.
We conduct business globally and, as a result, we file income tax returns, or are subject to withholding taxes, in various
jurisdictions. In the normal course of business we are generally subject to examination by taxation authorities throughout the
world, including major jurisdictions in which we operate or used to operate.
The following is a reconciliation of the liabilities related to our uncertain tax positions:
(In $ millions)
2023
2022
Unrecognized tax benefits, including interest and penalties, at January 1,
11.3
6.2
Additions for tax positions of prior year
0.3
—
Reduction in tax positions of prior years
(9.5)
—
Unrecognized tax benefits, excluding interest and penalties, at December 31,
2.1
6.2
Interest and penalties
1.1
5.1
Unrecognized tax benefits, including interest and penalties, at December 31,
3.2
11.3
The liabilities summarized in the table above are presented within "Other non-current liabilities" in the Consolidated Balance
Sheets.
F-33
We include, as a component of our income tax provision, potential interest and penalties related to liabilities for our unrecognized
tax benefits within our global operations. Interest and penalties resulted in an income tax expense of $1.1 million, $0.5 million
and $0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.
For the year ended December 31, 2023, we reduced our liability for uncertain tax positions, and our income tax provision, by $9.5
million to reflect the expiration of a statute of limitations.
As of December 31, 2023, the liabilities related to our unrecognized tax benefits, including estimated accrued interest and
penalties, totaled $3.2 million, and if recognized, would reduce our income tax provision by $3.2 million. As of December 31,
2022, the liabilities related to our unrecognized tax benefits, including estimated accrued interest and penalties, totaled $11.3
million, and if recognized, would reduce our income tax provision by $11.3 million. It is reasonably possible that our existing
liabilities related to our unrecognized tax benefits may increase or decrease in the next twelve months primarily due to the
progression of open audits or the expiration of statutes of limitation. While the amounts provided are an estimate and subject to
revision, we are not aware of any circumstances currently that would result in a material increase to the amounts provided for the
risks identified at this time.
In response to the Organization for Economic Co-Operation and Development (OECD) Base Erosion and Profit Shifting
initiative, a 15% worldwide minimum tax implemented on a country-by-country basis has been introduced with many
jurisdictions committed to a January 1, 2024, effective date.  There remains a number of uncertainties around the final Pillar 2
model rules, and we are closely monitoring developments on this initiative.
Additionally, on December 27, 2023, Bermuda enacted the Corporate Income Tax Act which imposes a 15% tax on Bermuda
businesses that are part of multinational enterprise (MNE) groups. The effective date of the income tax is for tax years beginning
on or after January 1, 2025.  We are actively monitoring the evolving developments of these regulations and evaluating their
potential impact on future periods.  At present, we expect that they will not have a substantial impact on our financial results in
the short term.
Note 11 - Earnings per Share
The computation of basic income/(loss) per share ("EPS") is based on the weighted average number of shares outstanding during
the period.
For the Years Ended December 31,
2023
2022
2021
Basic income/ (loss) per share
0.09
(1.64)
(1.43)
Diluted income/ (loss) per share
0.09
(1.64)
(1.43)
Issued ordinary shares at the end of the year
264,080,391
229,263,598
137,218,175
Weighted average number of shares outstanding during the year, basic
244,270,405
178,404,637
134,726,336
Dilutive effect of share options and RSU (1)
3,880,209
—
—
Weighted average number of shares outstanding during the year, diluted
248,150,614
178,404,637
134,726,336
(1) Includes the impact of 8,559,698 share options and 112,780 restricted stock units using the treasury stock method.
The following potential share issuances effects of convertible bonds, share options, RSUs and performance units have been
excluded from the calculation of diluted EPS for each of the years ended December 31, 2023, 2022 and 2021 because the effects
were anti-dilutive.
2023
2022
2021
Convertible bonds
34,260,413
5,540,079
5,540,079
Share options
2,160,000
9,445,006
5,670,000
Performance stock units
500,000
500,000
—
Restricted share units
—
88,584
—
F-34
For the year ended December 31, 2023, 34,260,413 shares issuable upon exercise of our convertible bonds due in May 2028 with
a conversion price of $7.2971 per share, have been excluded as they are anti-dilutive. In addition, the impact of 2,160,000 stock
options and 500,000 performance share units using the treasury stock method were anti-dilutive, as the exercise price was higher
than the average share price, and therefore have been excluded from the calculation.
Diluted EPS for the years ended December 31, 2022 and 2021 do not include the effect of the assumed conversion of potentially
dilutive instruments listed above, due to losses sustained in these years as this is deemed to have an anti-dilutive effect on our
EPS.
Note 12 - Restricted Cash
Restricted cash is comprised of the following:
 
As of December 31,
(In $ millions)
2023
2022
Restricted cash relating to the issuance of guarantees
—
10.1
Restricted cash relating to others
0.1
0.4
Total restricted cash
0.1
10.5
Less: amounts included in current restricted cash
(0.1)
(2.5)
Non-current restricted cash
—
8.0
In April 2023, the Company entered into a facility with DNB Bank ASA to provide guarantees and letters of credit of up to
$25.0 million collateralized by the rigs that secure the $175.0 million facility, thereby releasing previously restricted cash. In
August 2023, we amended our $25.0 million guarantee facility provided by DNB Bank ASA temporarily increasing the facility to
$40.0 million until December 31, 2023. In November 2023, the Company entered into a new facility with DNB Bank ASA to
provide guarantees and letters of credit of up to $30.0 million collateralized by the same security that secures the Notes.
F-35
Note 13 - Expected Credit Losses
The table below sets forth the allowance for expected credit losses:
(In $ millions)
Trade Receivables
Balance as at December 31, 2021
0.8
Provision for expected credit losses
0.2
Write-off charged against allowance
(0.7)
Balance as at December 31, 2022
0.3
Provision for expected credit losses
0.6
Write-off charged against allowance
(0.9)
Balance as at December 31, 2023
—
New provisions and recoveries of previous provisions are recorded in "Rig operating and maintenance expenses" in the
Consolidated Statements of Operations, as and when they occur.
Note 14 - Other Current Assets
Other current assets are comprised of the following:
As of December 31,
(In $ millions)
2023
2022
VAT receivable
16.5
9.4
Client rechargeables
5.3
4.6
Other tax receivables
4.7
5.2
Deferred financing fee
0.5
—
Right-of-use lease asset (1)
0.5
0.5
Corporate income taxes receivables
—
1.1
Other receivables
4.5
4.6
Total
32.0
25.4
(1) The right-of-use lease asset pertains to our office and yard leases (see Note 17 - Leases).
Note 15 - Newbuildings
The table below sets forth the carrying value of our newbuildings:
 
For the Years Ended December 31,
(In $ millions)
2023
2022
Balance as of January 1,
3.5
135.5
Additions
1.9
—
Disposals
—
(7.6)
Impairment
—
(124.4)
Total newbuildings
5.4
3.5
In September 2023, we entered into an agreement with Seatrium to amend the Construction Contracts for the rigs "Vale" and
"Var" and to expedite their delivery dates, on a best efforts basis, to August 15, 2024 and November 15, 2024, respectively, in
consideration for an additional payment of $12.5 million (acceleration costs) per rig on each respective delivery date. The
remaining contracted installments as of December 31, 2023, payable on delivery, for the Seatrium newbuilds acquired in 2017 are
approximately $319.8 million in the aggregate (approximately $294.8 million as of December 31, 2022). See Note 23 -
Commitments and Contingencies.
No rigs were delivered to the Company in either of the years ended December 31, 2023 or 2022.
F-36
Impairment
During the year ended December 31, 2023, we considered whether indicators of impairment existed that could suggest that the
carrying amounts of our newbuildings may not be recoverable as of December 31, 2023. We concluded that impairment indicators
existed for two newbuildings and performed a recoverability assessment. As the estimated undiscounted net cash flows were
higher than the carrying amounts of our newbuildings, no impairment was recognized.
Disposals
During the year ended December 31, 2022 the Company entered into a letter of intent ("LOI") for the sale of three newbuilding
jack-up rigs for $320.0 million, subject to various conditions, including entering into an agreement to give effect to the LOI. As a
result of the potential sale of the three newbuilding rigs, we performed an impairment assessment in June 2022 and concluded
that, based on management's best estimate of the most likely outcome, an impairment charge of $124.4 million was required to
reflect the difference between the best estimate of the sales amount less costs to sell and the sum of the current capitalized cost
and the expected cost to complete (level 3 fair value). In the quarter ended September 30, 2022, we entered into a sales agreement,
giving effect to the previously executed LOI. The sales agreement was conditional upon various closing conditions, and upon
closing, the final proceeds from the sale would be used to pay the delivery installments of the three newbuilding jack-up rigs.
During the quarter ended December 31, 2022, the sale of the three rigs was agreed and the Company recognized a gain on sale of
$3.7 million (see Note 6 - Gain on Disposals).
The calculation of the impairment charge recognized during the year ended December 31, 2022 is as follows:
(In $ millions)
Three newbuildings considered in the LOI carrying value
132.0
Estimated cost to complete and respective onerous provision, net
312.4
Total
444.4
Potential sale price
320.0
Impairment charge
(124.4)
Carrying Value
7.6
Note 16 - Jack-Up Drilling Rigs, net
Set forth below is the carrying value of our jack-up rigs:
 
As of December 31,
(In $ millions)
2023
2022
Opening balance as of January 1,
2,589.1
2,730.8
Additions
104.7
100.2
Depreciation
(115.5)
(114.9)
Disposals
—
(119.7)
Impairment
—
(7.3)
Ending balance as of December 31,
2,578.3
2,589.1
Accumulated depreciation related to jack-up rigs as at December 31, 2023 is $598.1 million (as at December 31, 2022 is $482.6
million).
Depreciation of property, plant and equipment
In addition to the depreciation in the above table, the Company recognized depreciation of $1.9 million for the year ended
December 31, 2023 related to property, plant and equipment ($1.6 million in 2022 and $2.0 million in 2021). Accumulated
depreciation related to property, plant and equipment as at December 31, 2023 is $7.1 million (as at December 31, 2022 is $5.2
million).
F-37
Disposals
During the year ended 2022, the Company concluded that the jack-up rig "Gyme" met the criteria for assets held for sale as at
September 30, 2022. During October 2022, the Company entered into an agreement to sell the "Gyme" for $120.0 million,
pursuant to an undertaking by the Company under its most recent refinancing with PPL Shipyard which was completed in October
2022. The sale of the "Gyme" was completed during the quarter ended December 31, 2022 and the Company recognized a loss on
sale of $0.2 million (see Note 6 - Gain on Disposals). The proceeds from the sale were applied to all outstanding amounts owed
on the rig, and excess amounts were applied to accrued interest for the eight other rigs financed by PPL. This disposal was within
our dayrate segment.
Impairment
During the years ended December 31, 2023 and December 31, 2021 no impairment was recognized. During the year ended
December 31, 2022, we recognized an impairment loss of $7.3 million for the jack-up rig "Gyme" as the rig was written down to
its expected sales value.
During the year ended December 31, 2023, we considered whether indicators of impairment existed that could suggest that the
carrying amounts of our jack-up rigs may not be recoverable as of December 31, 2023. We concluded that impairment indicators
existed for seven rigs and performed a recoverability assessment, however no impairment loss was recognized during the year
ended December 31, 2023 as the estimated undiscounted net cash flows were higher than the carrying amounts of our jack-up
rigs. In making this determination, day rate revenues and utilization were key assumptions in determining the estimated future
cash flows. We concluded that a severe, yet plausible scenario, with a 10% decrease in day rates and utilization used when
estimating undiscounted cash flows would not result in a shortfall between the undiscounted cash flow and carrying amount for
our jack-up drilling rigs.
We will continue to monitor developments in the markets in which we operate for indications that the carrying amounts of our
long-lived assets may not be recoverable.
Note 17 - Leases
We have various operating leases, principally for office space, storage facilities and operating equipment, which expire at various
dates. In 2018, we deemed two of our leases as onerous leases as a result of change in our operating strategy, one of which
expired during the year ended December 31, 2021 (our Beverwijk office lease) and one of which expired on March 1, 2022 (our
Houston office lease). Upon adoption of the leasing standard, for these operating leases, we offset the right-of-use asset of the
lease by the existing carrying amount of the onerous lease liability previously recorded on the date of adoption.
Supplemental balance sheet information related to leases is as follows:
 
As of December 31,
(In $ millions)
2023
2022
Operating leases right-of-use assets
1.6
2.2
Current operating lease liabilities
0.5
0.5
Non-current operating lease liabilities
1.1
1.7
The current portion of the right-of-use assets of $0.5 million are recognized within "Other current assets" (see Note 14 - Other
Current Assets) and the non-current portion of the right-of-use assets of $1.1 million are recognized within "Other non-current
assets" (see Note 18 - Other Non-Current Assets) in the Consolidated Balance Sheets. The current operating lease liabilities are
recognized within "Other current liabilities" (see Note 20 - Other Current Liabilities) and the non-current operating lease
liabilities are recognized within "Other liabilities" in the Consolidated Balance Sheets. Our weighted average remaining lease
term for our operating leases is 4.2 years. Our weighted-average discount rate applied for the majority of our operating leases is
6.6%.
F-38
Components of lease expenses are comprised of the following:
For the Years Ended December 31,
(In $ millions)
2023
2022
Operating lease expense
12.5
7.9
Short-term operating lease expense
—
—
Total operating lease expense
12.5
7.9
Sublease income
—
0.3
Our sublease income relates to our Houston Office lease which ended on March 1, 2022. Of the sublease income recognized
during the year ended December 31, 2022, $0.1 million was recognized as the amortization against our onerous lease liability and
$0.2 million derived from subcontracting our Houston office space is recognized in "General and administrative expenses" in our
Consolidated Statements of Operations. For the years ended December 31, 2023 and 2022, of the total operating lease expense,
$10.7 million and $6.2 million is recognized as "Rig operating and maintenance expenses", respectively and $1.8 million and
$1.7 million is recognized as "General and administrative expenses" in the Consolidated Statements of Operations, respectively.
The future minimum leases payments under the Company's non-cancellable operating leases as at December 31, 2023 are as
follows:
(In $ millions)
2024
0.6
2025
0.6
2026
0.3
2027
0.3
2028
0.3
Thereafter
—
Total Minimum Lease Payments
2.1
Less: Imputed interest
(0.5)
Present value of operating liabilities
1.6
F-39
Note 18 - Other Non-Current Assets
Other non-current assets are comprised of the following:
As of December 31,
(In $ millions)
2023
2022
Deferred mobilization and contract preparation costs (1)
42.6
17.1
Deferred tax asset
19.3
3.5
Deferred financing fee
1.7
—
Deferred demobilization revenue (2)
1.5
1.5
Right-of-use lease asset, non-current (3)
1.1
1.7
Liquidated damages (4)
0.8
2.3
Prepayments
0.3
0.2
VAT receivable
—
0.4
Total
67.3
26.7
(1) Non-current deferred mobilization and contract preparation costs relates to the non-current portion of contract mobilization and
preparation costs for the jack-up rigs "Idun", "Saga", "Hild", "Arabia I", "Arabia II" and "Arabia III", which entered into long-
term contracts during the year (see Note 5 - Contracts with Customers).
(2) Non-current deferred demobilization revenue relates to demobilization revenue for two of our jack-up rigs, which will be billed
upon contract completion.
(3) The right-of-use lease asset pertains to our office leases (see Note 17 - Leases).
(4) Relates to the non-current portion of liquidated damages associated with a known delay in the operational start date of two of
our contracts, which is amortized over the firm contract terms and recognized as reduction of "Dayrate revenue" in the
Consolidated Statements of Operations.
Note 19 - Accrued Expenses
As of December 31,
(In $ millions)
2023
2022
Accrued goods and services received, not invoiced
19.7
22.2
Accrued payroll and bonus
12.3
8.6
Other accrued expenses (1)
45.0
50.0
Total
77.0
80.8
(1) Other accrued expenses includes holding costs, professional fees, management fees and other accrued expenses related to rig
operations.
Note 20 - Other Current Liabilities
As of December 31,
(In $ millions)
2023
2022
Other current taxes payable (1)
19.7
11.4
VAT payable
17.5
22.7
Dividends payable (2)
11.9
—
Corporate income taxes payable
6.7
—
Accrued payroll and severance
0.8
0.2
Operating lease liability, current
0.5
0.5
Other current liabilities
6.1
1.4
Total other current liabilities
63.2
36.2
F-40
(1) Other current taxes payable includes withholding tax, payroll tax and other indirect tax related liabilities.
(2) On December 22, 2023, the Company declared a cash distribution of $0.05 per share, corresponding to a total of $11.9 million,
which was paid to our shareholders on January 22, 2024.
F-41
Note 21 - Debt
Short-term debt is comprised of the following:
As of December 31,
(In $ millions)
2023
2022
2028 Notes
75.0
—
2030 Notes
25.0
—
$350m Convertible bonds
—
350.0
PPL Delivery Financing
—
60.0
Hayfin Facility
—
20.0
New DNB Facility
—
20.0
Principal Outstanding
100.0
450.0
Deferred finance charges (1)
(10.3)
(4.9)
Debt discount
(6.8)
—
Hayfin Facility Back-End Fee
—
0.4
New DNB Facility Back-End Fee
—
0.4
Carrying Value Short-Term Debt (2)
82.9
445.9
Long-term debt is comprised of the following:
As of December 31,
(In $ millions)
2023
2022
2028 Notes
950.0
—
2030 Notes
490.0
—
$250m Convertible Bonds
250.0
—
PPL Delivery Financing
—
609.6
Seatrium Delivery Financing
—
259.2
Hayfin Facility
—
134.0
New DNB Facility
—
130.0
Principal Outstanding
1,690.0
1,132.8
Deferred finance charges(1)
(40.5)
(6.4)
Debt discount
(30.7)
—
PPL Delivery Financing Back-End Fee
—
26.0
Seatrium Delivery Financing Back-End Fee
—
13.5
Hayfin Facility Back-End Fee
—
2.8
New DNB Facility Back-End Fee
—
2.6
Effective Interest Rate adjustments on PPL and Seatrium Delivery Financing
Facilities
—
19.8
Carrying Value Long-Term Debt (2)
1,618.8
1,191.1
(1) As at December 31, 2023, deferred finance charges include the unamortized legal and bank fees associated with the 2028 Notes,
2030 Notes, $250 million Convertible Bonds, undrawn $150 million RCF as well as the unamortized debt issuance cost associated
with the fair value of the Share Lending Agreement (see Note 28 - Stockholders' Equity). As at December 31, 2022, deferred
finance charges included the unamortized legal and bank fees associated with the New DNB Facility, amended Hayfin Term Loan
F-42
Facility, $350 million Convertible Bond and the unamortized extension fee associated with the amended PPL Delivery Financing
Facility.
(2) Carrying amounts in the table above include, where applicable, deferred financing fees, debt discounts and certain interest
adjustments to allow for variations in interest payments to be straight lined.
The scheduled maturities as of December 31, 2023 of our principal debt are as follows:
(In $ millions)
December 31, 2023
2024
100.0
2025
100.0
2026
100.0
2027
100.0
Thereafter
1,390.0
Total
1,790.0
Our Long Term Debt
We have relied on long term secured loans and bonds and unsecured convertible notes to finance our business, including our
shipyard financing facilities with Seatrium and PPL, our secured loan with Hayfin, our Syndicated facility and our New Bridge
Facility and our Convertible bonds due 2023.
In the second half of 2022, we refinanced our senior secured credit facilities, maturing in 2023 to 2025. Following the successful
equity raise of $274.9 million of gross proceeds in August 2022 and the signing and full drawdown of our $150.0 million New
DNB Facility, we repaid in full the Syndicated Facility and the New Bridge Facility. Concurrently, we extended our shipyard
delivery financing arrangement with PPL and our Hayfin Facility to mature in 2025; deferred the delivery dates for our remaining
two newbuild jack-up rigs to 2025 and agreed to sell to a third party three newbuild jack-up rigs which the Company had
previously agreed to purchase from Seatrium.
In February 2023, we issued $250.0 million principal amount of Convertible Bonds due in February 2028 and $150.0 million
principal amount of Senior Secured Bonds due in February 2026, the proceeds of which were used to repay our $350 million of
Convertible bonds due in May 2023.
In November 2023, we issued $1.54 billion of senior secured notes due in 2028 and 2030 and used the proceeds, together with the
proceeds of a $50 million equity raise, to repay all of our then outstanding secured debt, consisting of the amounts outstanding
under our (i) Hayfin Facility, (ii) Seatrium Facility, (iii) PPL Facility (iv) Syndicated Facility with DNB and (v) Senior Secured
Notes due 2026.
As a result, as of December 31, 2023, our indebtedness consists of our $1.54 billion principal amount of senior secured notes due
2028 and 2030, which are secured by all of our currently owned rigs and our $250 million of unsecured Convertible Bonds due
2028. We also have a $180 million Super Senior Credit Facility, comprised of a $150 million RCF and a $30 million Guarantee
Facility, which is also secured by all of the rigs we currently own. As of December 31, 2023, $29 million were drawn under the
Guarantee Facility, and the $150 million under the RCF were undrawn (See Note 23 - Commitments and Contingencies).
Set forth below is a description of our outstanding bonds and our existing credit facility.
Senior Secured Notes
On November 7, 2023, the Company's wholly owned subsidiary Borr IHC Limited, and certain other subsidiaries, issued
$1,540.0 million in aggregate principal amount of senior secured notes, consisting of $1,025.0 million principal amount of senior
secured notes due 2028 issued at a price of 97.750%, raising proceeds of $1,001.9 million, bearing a coupon of 10% per annum
(the "2028 Notes") and $515.0 million principal amount of senior secured notes due 2030 issued at a price of 97.000%, raising
proceeds of $499.5 million, bearing a coupon of 10.375% per annum (the "2030 Notes" and, together with the 2028 Notes, the
"Notes"). The 2028 Notes mature on November 15, 2028 and the 2030 Notes mature on November 15, 2030, and interest on the
Notes is payable on May 15 and November 15 of each year, beginning on May 15, 2024.
The net proceeds from the issuance of the Notes, together with the proceeds of a $50 million private placement of the Company’s
shares in Norway, were used to repay all of the Company’s outstanding secured borrowings, being the Company’s DNB Facility,
F-43
Hayfin Facility, the  PPL Delivery Financing and the Seatrium Delivery Financing, the Company’s existing $150.0 million
principal amount of Senior Secured Bonds, and to pay related premiums, fees, accrued interest and expenses, in connection with
the foregoing.
The Notes were issued pursuant to an Indenture, dated November 7, 2023 (the "Indenture"), among Borr IHC Limited, the
Company and certain subsidiaries of the Company named therein, and the trustee and security agent thereunder.
The Notes are guaranteed by the Company and by certain of our subsidiaries (the "Subsidiary Guarantors") and secured by
substantially all of the assets of the Company and Subsidiary Guarantors, including our 22 delivered jack-up rigs. The Super
Senior Credit Facility (see below) is secured on a super senior basis by the same collateral that secures the Notes.
The Indenture for the Notes requires amortization payments of $100 million per year at a price of 105% of principal amount, plus
accrued interest. The Indenture also contains a cash sweep provision, applicable after the publication of the Company’s annual
report, starting with the 2024 annual report to be published in 2025, requiring a mandatory offer to purchase the Notes with
Excess Cash Flow (as defined in the Indenture) at 105% of principal amount plus accrued interest, of: (a) if the Consolidated
Total Leverage Ratio (as defined in the Indenture) exceeds 3.0 to 1.0, a principal amount of Notes equal to 75% of the Excess
Cash Flow for such fiscal year, (b) if the Consolidated Total Leverage Ratio exceeds 2.0 to 1.0 but is less than 3.0 to 1.0, a
principal amount of Notes equal to 50% of the Excess Cash Flow for such fiscal year and (c) if the Consolidated Total Leverage
Ratio exceeds 1.5 to 1.0 but is less than 2.0 to 1.0, a principal amount of Notes equal to 25% of the Excess Cash Flow for such
fiscal year.
Optional Redemption
2028 Notes
Except as for the amortization described above, the 2028 Notes are not redeemable prior to November 15, 2025, except by paying
a make-whole premium. From November 15, 2025, the Issuers may redeem all or a portion of the 2028 Notes at the redemption
prices set forth below, plus accrued and unpaid interest, if any, to, but excluding, the redemption date:
12-month period commencing on November 15, 2025
Price (% of principal amount)
2025
105.000%
2026
102.500%
2027 and thereafter
100.000%
Prior to November 15, 2025, the Issuers may redeem up to 40% of the original aggregate principal amount of the 2028 Notes
issued under the Indenture (including any additional 2028 Notes) up to an amount equal to the net cash proceeds of one or more
equity offerings, at a redemption price equal to 110.000% of the principal amount thereof, plus accrued and unpaid interest
thereon, provided, that immediately after giving effect to any such redemption, at least 60% of the original aggregate principal
amount of 2028 Notes (including any additional 2028 Notes) remains outstanding. In addition, at any time prior to November 15,
2025, the Issuers may redeem up to 10% of the original aggregate principal amount of the 2028 Notes issued under the Indenture
(including any additional 2028 Notes) during any twelve-month period at a redemption price equal to 103.000% of the aggregate
principal amount thereof, plus accrued and unpaid interest.
2030 Notes
Except as for the amortization described above, the 2030 Notes are not redeemable prior to November 15, 2026, except by paying
a make-whole premium. From November 15, 2026, the Issuers may redeem all or a portion of the 2030 Notes at the redemption
prices set forth below, plus accrued and unpaid interest:
12-month period commencing on November 15, 2026
Price (% of principal amount)
2026
105.188%
2027
102.594%
2028 and thereafter
100.000%
F-44
Prior to November 15, 2026, the Issuers may redeem up to 40% of the original aggregate principal amount of the 2030 Notes
issued under the Indenture (including any additional 2030 Notes) up to an amount equal to the net cash proceeds of one or more
equity offerings, at a redemption price equal to 110.375% of the principal amount thereof, plus accrued and unpaid interest
thereon, provided, that immediately after giving effect to any such redemption, at least 60% of the original aggregate principal
amount of 2030 Notes (including any additional 2030 Notes) remains outstanding. In addition, at any time prior to November 15,
2026, the Issuers may redeem up to 10% of the original aggregate principal amount of the 2030 Notes issued under the Indenture
(including any additional 2030 Notes) during any twelve-month period at a redemption price equal to 103.000% of the aggregate
principal amount thereof, plus accrued and unpaid interest.
The Indenture contains covenants that, among other things, restrict the ability of the Company and its “restricted
subsidiaries” (currently consisting of all of the Company’s subsidiaries other than the entities which are party to the contracts to
acquire Vale and Var (and the owner of such entity and our Mexican JVs)) to: (i) incur additional debt and issue certain preferred
stock; (ii) incur or create liens securing debt; (iii) pay or make certain dividends, distributions, investments and other restricted
payments; (iv) sell or otherwise dispose of certain assets; (v) engage in certain transactions with affiliates; and (vi) merge,
consolidate, amalgamate or sell, transfer, lease or otherwise dispose of all or substantially all of the Company’s assets. These
covenants are subject to important exceptions and qualifications. In addition, many of these covenants will be suspended with
respect to the Notes during any time that the Notes have investment grade ratings from at least two rating agencies and no default
with respect to the Notes has occurred and is continuing.
Upon the occurrence of certain Change of Control Triggering Event (as defined in the Indenture), the Issuers must offer to
purchase all of the Notes then outstanding at a price equal to 101% of the principal amount thereof, together with accrued and
unpaid interest, if any, to the date of the purchase.
The foregoing description of the Indenture is qualified in its entirety by reference to the full text of the Indenture, a copy of which
is filed as Exhibit 4.13 to the Q3 2023 Form 6-K and is incorporated herein by reference.
Super Senior Credit Facility
On November 7, 2023, the Company and Borr IHC Limited (as borrowers and guarantors) entered into the Super Senior Credit
Facility Agreement with DNB Bank ASA and Citibank N.A., Jersey Branch (as original lenders), DNB Bank ASA (as facility
agent) (the “RCF Facility Agent”) and Wilmington Trust (London) Limited (as security agent). This facility is comprised of a
$150 million RCF and a $30 million Guarantee Facility.
Borrowings will be available to be used for general corporate and/or working capital purposes, provided that any amounts
borrowed may not be used to fund any dividend or other distribution. 
The Super Senior Credit Facility is secured on a super-senior basis by the same security that secures the Notes.
The interest rate on loans under the RCF is the applicable margin plus Term SOFR, subject to a zero floor. The initial margin is
3.25% per annum. Subject to certain conditions, the margin will be adjusted in accordance with a margin ratchet.
The Super Senior Credit Facility Agreement contains certain incurrence covenants which are substantially the same as those that
are contained in the Indenture for the Notes, customary affirmative and negative covenants, as well as financial covenants which
require the Company to comply subject (where applicable) to the satisfaction of certain conditions, with a maximum consolidated
net leverage ratio, a minimum liquidity ratio, a minimum equity ratio, a minimum collateral ratio (based on the market value of
certain of our Rigs) and a minimum interest cover ratio on particular test dates and during particular periods. The agreement
contains customary cure rights for certain of the financial covenants.
A commitment fee is payable on the aggregate undrawn and uncancelled amount of the RCF from November 7, 2023 until the last
day of the availability period for the facility at the rate of 40% of the then applicable margin.
The termination date for the Super Senior Credit Facility will be the earlier of the date falling (i) 54 months after the Closing Date
(as defined in the Super Senior Credit Facility Agreement); and (ii) six months prior to the final maturity of the Notes.
The foregoing description of the Super Senior Credit Facility is qualified in its entirety by reference to the full text of the Super
Senior Credit Facility Agreement, a copy of which is filed as Exhibit 4.14 to the Q3 2023 Form 6-K and is incorporated herein by
reference.
F-45
Undelivered Seatrium Newbuild Financing
We have agreements to purchase two undelivered rigs from Seatrium, “Vale” and “Var”. These rigs are presently under
construction by Seatrium and the best efforts expedited delivery date for "Vale" is scheduled for August 2024, and best efforts
expedited delivery date for "Var" is scheduled for November 2024.
In October 2023, we reached an agreement in principle with Seatrium to amend and restate the terms of these future and
contingent obligations which include: (i) the payment of the final installments on each rig, of $147,406,000 per rig, payable on
delivery; (ii) “holding costs” and “cost cover”, accruing until delivery of the rigs, which are payable quarterly in arrears; (iii)
acceleration costs of $12.5 million per rig, payable on delivery; and (iv) the ability to draw on committed delivery financing from
OPPL, of $130.0 million for each rig, with a four-year maturity, subject to a right for the lender to call the loan after three years,
with repayments of principal at the rate of $15.0 million per year per rig in years 1 and 2 with the balance of the principal
amortizing in years 3 and 4.
As part of the agreement with Seatrium, the Company will grant a limited guarantee to Seatrium in respect of construction and
related costs related to "Vale" and "Var" (less the amount of the committed financing) up to delivery. If the committed financing
facilities are drawn, then the lender, OPPL, will not have recourse to the Company and will not have a guarantee from the
Company in respect of the financing but the facilities will be secured by a separate security package, consisting of: (i) rig
mortgages over "Vale" and "Var", (ii) pledges over receivables in respect of the rigs from each the owners of "Vale" and "Var"
and (on a limited recourse basis) any intra-group charterers, (iii) pledge over insurances, (iv) share pledges over the share capital
of the owners of "Vale" and "Var" (v) a fixed charge over a blocked debt reserve bank account, (vi) a floating charge over the
earnings account of each owner of "Vale" and "Var" and (vii) an intercompany debt subordination deed. 
Unsecured Convertible Bonds due 2028
In February 2023, we raised $250.0 million through the issuance of new unsecured convertible bonds, which mature in February
2028, the proceeds of which were used to refinance our Convertible Bonds due in May 2023. The initial conversion price was $
7.3471 per share, convertible into 34,027,031 common shares. Following the declaration and payment of a $0.05 per share cash
distribution in January 2024 and a further $0.05 per share cash distribution paid in March 2024, the adjusted conversion price is
$7.2384 per share, with the full amount of the convertible bonds convertible into 34,538,019 shares. The convertible bonds have a
coupon of 5% per annum payable semi-annually in arrears in equal installments. The terms and conditions governing our
convertible bonds contain customary events of default, including failure to pay any amount due on the bonds when due, and
certain restrictions, including, among others, restrictions on disposal of assets and our ability to carry out any merger or corporate
reorganization, subject to exceptions.
For a description of our outstanding debt facilities as at December 31, 2022, see Note 21 - Debt, in our annual report on Form 20-
F for the year ended December 31, 2022 filed with the SEC on March 30, 2023.
Interest
The weighted average interest rate for our interest-bearing debt (excluding our convertible bonds) was 10.62% for the year ended
December 31, 2023 (2022: 7.32%).
Note 22 - Onerous Contracts
Onerous contracts are comprised of the following:
As of December 31,
(In $ millions)
2023
2022
Onerous rig contract "Vale"
26.9
26.9
Onerous rig contract "Var"
27.6
27.6
Total
54.5
54.5
Onerous contracts relate to the estimated excess of remaining shipyard installments to be made to Seatrium over the fair value
estimate at the time of acquisition of the newbuild contracts for the jack-up drilling rigs "Vale" and "Var" in 2017.
F-46
During the quarter ended December 31, 2022, the Company entered into a sales agreement relating to three newbuild jack-up rigs,
of which one was the jack-up rig "Tivar". Upon sale of the "Tivar" in the fourth quarter of 2022, the corresponding onerous
liability was de-recognized.
Note 23 - Commitments and Contingencies
Transocean Transaction
On March 15, 2017, the Company entered into an agreement and a signed letter of intent to acquire fifteen high specification jack-
up drilling rigs from Transocean Inc ("Transocean"). The transaction consisted of Transocean's entire jack-up fleet, comprising
eight rig owning companies in Transocean's fleet and five newbuildings under construction at Seatrium, Singapore.
Of the five newbuildings acquired in connection with the Transocean Transaction, as of December 31, 2023 two rigs were
delivered ("Saga", "Skald") in 2018, one was sold ("Tivar") in 2022 and two remain under construction ("Vale" and "Var"). We
have an option to accept delivery financing from Seatrium with respect to “Vale” and “Var”. In June 2020, we agreed to defer the
delivery of these two rigs to the third quarter of 2022, in January 2021, we agreed to defer delivery dates to the third quarter of
2023 and in October 2022, we agreed to further defer delivery dates to the second and third quarter of 2025. In September 2023,
we entered into an executed agreement with Seatrium to amend the Construction Contract for the two rigs and give notice to
expedite their delivery dates, on a best efforts basis only, to August  2024 and November 2024, respectively, in consideration for
an additional payment of $12.5 million (acceleration costs) per rig on each respective delivery date. The remaining contracted
installments for these two rigs under construction, payable on delivery are approximately $319.8 million as of December 31, 2023
($294.8 million as of December 31, 2022).
Acquisition of Seatrium Rigs
In May 2018, the Company signed a master agreement to acquire five premium newbuild jack-up drilling rigs from Seatrium. In
October 2019, January 2020 and April 2020 we took delivery of the new jack-up rigs “Hermod”, "Heimdal" and "Hild",
respectively. In 2022 the delivery dates of the two remaining rigs were amended to 2023 and subsequently, the rigs "Huldra" and
"Heidrun" were sold. The remaining contracted installments for these two rigs under construction, payable on delivery are nil as
of December 31, 2023 and 2022.
The Company has the following delivery installment commitments:
As of December 31,
(In $ millions)
2023
2022
Delivery installments for jack-up drilling rigs
319.8
294.8
Total
319.8
294.8
The following table sets forth when our delivery installment commitments fall due as of December 31, 2023:
(In $ millions)
Less than 1 year
1-3 years
Total
Delivery installments for jack-up rigs
319.8
—
319.8
Other commercial commitments
We have other commercial commitments which contractually obligate us to settle with cash under certain circumstances. Bank
and parent company guarantees entered into between certain customers and governmental bodies guarantee our performance
regarding certain drilling contracts, customs import duties and other obligations in various jurisdictions.
The Company has the following guarantee commitments:
As of December 31,
(In $ millions)
2023
2022
Bank guarantees and performance bonds(1)
29.0
9.7
Total
29.0
9.7
F-47
(1) In April 2023, the Company entered into a facility with DNB Bank ASA to provide guarantees and letters of credit of up to
$25.0 million collateralized by the rigs that secure the $175.0 million facility, enabling the Company to free up the restricted cash
that used to be collateralized for guarantees and recognized in the Consolidated Balance Sheets as restricted cash. In August 2023,
we amended our $25.0 million guarantee facility provided by DNB Bank ASA temporarily increasing the facility to $40.0 million
until December 31, 2023. In November 2023, the Company entered into a new facility with DNB Bank ASA to provide
guarantees and letters of credit of up to $30.0 million collateralized by the same security that secures the Notes. As a result, no
restricted cash is supporting bank guarantees as at December 31, 2023 ($10.1 million at December 31, 2022). See Note 12 -
Restricted Cash.
As of December 31, 2023, the expected expiration dates of these obligations are as follows:
(In $ millions)
Less than 1 year
1-3 years
Thereafter
Total
Bank guarantees and performance bonds
12.1
11.3
5.6
29.0
Assets pledged as collateral
As of December 31,
(In $ millions)
2023
2022
Book value of jack-up rigs pledged as collateral for debt facilities
2,578.3
2,396.2
Note 24 - Share Based Compensation
Share Options
We have adopted a long-term Share Option Scheme ("Borr Scheme"). The Borr Scheme permits the board of directors, at its
discretion, to grant options to acquire shares in the Company, to employees and directors of the Company or its subsidiaries.
Options granted under the Borr Scheme will vest at a date determined by the board at the date of the grant. The options granted
under the plan to date have five-year terms and have various vesting profiles, which range over one year to four year periods. The
total number of shares authorized by the Board to be issued under the Borr Scheme is 12,997,000.
Share-based payment charges for the years ended December 31, 2023, 2022 and 2021 were as follows:
For the Years Ended December 31,
(In $ millions)
2023
2022
2021
Share-based payment charge
4.6
2.1
0.1
Details regarding share option issuances for the year ended December 31, 2023, 2022 and 2021 are as follows:
Grant Date
Number of
Share
Options
Issued
Exercise
Price
Share Price
Grant Date
November 2023
2,100,000
6.65
6.19
September 2022
1,333,334
4.00
3.96
September 2022
1,333,333
4.75
3.96
September 2022
1,333,333
5.50
3.96
August 2021
5,150,000
2.00
1.40
The fair values of the options issued in 2023, 2022 and 2021 were calculated at $5.5 million, $8.0 million and $2.6 million
respectively, and are recognized as "General and administrative expenses" or "Rig operating and maintenance expenses" over the
vesting period, based on the employee's profit center, in the Consolidated Statements of Operations.
The table below sets forth the number of share options and weighted average fair value price for the years ended December 31,
2023, 2022 and 2021:
F-48
2023
2022
2021
Number
Weighted
Avg. Fair
Value Price
(in $)
Number
Weighted
Avg. Fair
Value Price
(in $)
Number
Weighted
Avg. Fair
Value Price
(in $)
Outstanding at January 1
9,445,006
1.19
5,670,000
0.64
885,000
1.91
Granted during the year
2,100,000
2.63
4,000,000
2.00
5,150,000
0.51
Exercised during the year
(410,302)
0.47
—
—
—
—
Forfeited during the year
(217,506)
0.88
(11,250)
2.68
(105,500)
1.24
Expired during the year
(227,500)
2.29
(213,744)
1.78
(259,500)
3.19
Outstanding at December 31
10,689,698
1.48
9,445,006
1.19
5,670,000
0.64
The fair value of equity settled options are measured at grant date using the Black Scholes option pricing model using the
following inputs:
2023
2022
2021
Expected future volatility
59%
76%
57%
Expected dividend rate
—%
—%
—%
Risk-free rate
4.3% to 4.8%
3.4% to 3.5%
0.5% to 0.8%
Expected life after vesting
3.3 years
3.5 years
2 years
The volatility was derived by using an average of the (i) historic volatility of the Company’s shares since listing on the Oslo Stock
Exchange, (ii) peer group volatility and (iii) Oslo Energy sector index volatility.
The table below sets forth the number of share options granted and weighted average exercise price during the years ended
December 31, 2023, 2022 and 2021:
2023
2022
2021
Number
Weighted
Avg.
Exercise
Price (in $)
Number
Weighted
Avg.
Exercise
Price (in $)
Number
Weighted
Avg.
Exercise
Price (in $)
Outstanding at January 1
9,445,006
4.48
5,670,000
5.66
885,000
41.86
Granted during the year
2,100,000
6.65
4,000,000
4.75
5,150,000
2.00
Exercised during the year
(410,302)
2.00
—
—
—
—
Forfeited during the year
(217,506)
3.77
(11,250)
48.70
(105,500)
46.42
Expired during the year
(227,500)
46.92
(213,744)
38.47
(259,500)
40.64
Outstanding at December 31
10,689,698
4.11
9,445,006
4.48
5,670,000
5.66
Exercisable at December 31
1,313,036
3.51
271,250
45.00
411,244
41.75
The aggregate intrinsic value for the outstanding share options as of December 31, 2023 and 2022 is $36.3 million and
$16.9 million, respectively. The aggregate intrinsic value for the exercisable share options as of December 31, 2023 and 2022 is
$6.7 million and nil, respectively. The total intrinsic value for the share options exercised during the year ended December 31,
2023 was $2.2 million. No share options were exercised during the year ended December 31, 2022
Weighted average remaining life for the vested options as at December 31, 2023, 2022 and 2021 were 2.54 years, 0.71 years and
1.19 years respectively.
Performance Stock Units
Pursuant to the Long Term Incentive Plan ("LTIP"), we granted 500,000 Performance Stock Units ("PSUs") to our Chief
Executive Officer during the year ended December 31, 2022. The PSUs will vest in full on September 1, 2025 depending on
certain performance criteria linked to the closing share price. Pay out of the award is subject to reaching $10.00 per share on 75%
of the days in the third quarter of 2025, prior to September 1, 2025.
F-49
PSUs expense for the year ended December 31, 2023 and 2022 was $0.3 million and $0.1 million, respectively.
The table below sets forth the number of PSUs and weighted average fair value price for the year ended December 31, 2022:
Number
Weighted
Avg. Fair
Value Price
(in $)
Non-vested at January 1, 2022
—
—
Granted during the year
500,000
2.02
Forfeited during the year
—
—
Expired during the year
—
—
Non-vested at December 31, 2022
500,000
2.02
No PSUs were granted during the years ended December 31, 2023 and 2021.
The fair value of the PSUs issued in 2022 was calculated at $1.0 million and is recognized in "General and administrative
expenses" in the Consolidated Statements of Operations over the vesting period.
The fair value of PSUs is measured at grant date using the Monte Carlo simulation model using the following inputs:
2022
Expected future volatility
81%
Share price at valuation date
$3.96
Expected dividend rate
—%
Risk-free rate
3.54%
The volatility was derived by using an average of the (i) historic volatility of the Company’s shares since listing on the New York
Stock Exchange, (ii) peer group volatility and (iii) Oslo Energy sector index volatility.
Restricted Stock Units
We granted 112,780 Restricted Stock Units ("RSUs") to our directors during the year ended December 31, 2023. The RSUs will
vest in full on September 30, 2024 and are conditional on recipients continuing to serve as a director at the date of vesting.  We
granted 88,584 RSUs to our directors during the year ended December 31, 2022. These RSUs vested in full on September 30,
2023.
RSUs expense for the years ended December 31, 2023 and 2022 was $0.5 million and $0.1 million, respectively.
The table below sets forth the number of RSUs and weighted average fair value price for the years ended December 31, 2023 and
2022:
2023
2022
Number
Weighted
Avg. Fair
Value Price
(in $)
Number
Weighted
Avg. Fair
Value Price
(in $)
Non-vested at January 1
88,584
5.08
—
—
Granted during the year
112,780
6.19
88,584
5.08
Vested during the year
(88,584)
5.08
—
—
Forfeited during the year
—
—
—
—
Expired during the year
—
—
—
—
Non-vested at December 31
112,780
6.19
88,584
5.08
F-50
The aggregate intrinsic value for the non-vested RSUs as of December 31, 2023 and 2022 is $0.8 million and $0.4 million,
respectively. The total intrinsic value for the RSUs vested during the year ended December 31, 2023 was $0.6 million.
No RSUs were granted during the year ended December 31, 2021.
The fair value of the RSUs issued in 2023 and 2022 is calculated at $0.7 million and $0.5 million and is recognized in "General
and administrative expenses" in the Consolidated Statements of Operations over the vesting period.
The fair value of the RSUs is estimated using the closing market price of our stock at grant date.
Note 25 - Pensions
Defined Benefit Plans
As part of the Paragon acquisition, on March 29, 2018, the Company acquired two defined benefit pension plans.
As of December 31, 2023, the Company sponsored two non-U.S. noncontributory defined benefit pension plans, the Paragon
Offshore Enterprise Ltd and the Paragon Offshore Nederland B.V. pension plans, which cover certain Europe-based salaried
employees. As of January 1, 2017, all active employees under the defined benefit pension plans were transferred to a defined
contribution pension plan related to their future service. The accrued benefits under the defined benefit plans were frozen and all
employees became deferred members.
As of December 31, 2023, assets of the Paragon Offshore Enterprise Ltd and Paragon Offshore Nederland B.V. pension plans
were invested in instruments that are similar in form to a guaranteed insurance contract. The plan assets are based on surrender
values, and represent the present value of the insured benefits. Surrender values are calculated based on the Dutch Central Bank
interest curve. This yield curve is based on inter-bank swap rates. There are no observable market values for the assets (Level 3);
however, the amounts listed as plan assets were materially similar to the anticipated benefit obligations under the plans.
As of December 31, 2023, our pension obligations represented an aggregate liability of $114.3 million and an aggregate asset of
$114.3 million, representing the fully funded status of the plans. In the year ended December 31, 2023, aggregate periodic benefit
costs showed an interest cost of $2.7 million and an expected return on plan assets of $2.7 million. Our defined benefit pension
plans are recorded at fair value.
A reconciliation of the changes in projected benefit obligations (“PBO”) for our pension plans are as follows:
As of December 31,
(In $ millions)
2023
2022
Benefit obligation at beginning of period
106.9
172.9
Interest cost
2.7
0.7
Actuarial loss / (gain)
2.6
(54.3)
Benefits paid
(2.1)
(1.8)
Foreign exchange rate changes
4.2
(10.6)
Benefit obligation at end of period
114.3
106.9
F-51
A reconciliation of the changes in fair value of plan assets is as follows:
As of December 31,
(In $ millions)
2023
2022
Fair value of plan assets at beginning of period
106.9
172.9
Actual return on plan assets
5.3
(53.6)
Benefits paid
(2.1)
(1.8)
Foreign exchange rate changes
4.2
(10.6)
Fair value of plan assets at end of period
114.3
106.9
Both plans were fully funded as of December 31, 2023 and December 31, 2022 and as such, no amounts are recognized in our
Consolidated Statements of Operations as of December 31, 2023 and December 31, 2022.
Benefit cost includes the following components:
 
For the Years Ended December 31,
(In $ millions)
2023
2022
Interest cost
2.7
0.7
Expected return on plan assets
(2.7)
(0.7)
Net benefit cost
—
—
No benefit cost was recognized in our Consolidated Statement of Operations during 2023 and 2022.
Defined Benefit Plans – Key Assumptions
The key assumptions for the plans are summarized below:
As of December 31,
Weighted Average Assumptions Used to Determine Benefit Obligations
2023
2022
Discount rate
2.33% to 2.47%
2.54% to 2.93%
For the Years Ended December 31,
Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost
2023
2022
Discount rate
2.54% to 2.93%
2.54% to 2.93%
Expected long-term return on plan assets
2.54% to 2.93%
2.54% to 2.93%
The discount rates used to calculate the net present value of future benefit obligations are determined by using a yield curve of
high-quality bond portfolios with an average maturity approximating that of the liabilities.
The assets are based on the surrender value of vested benefits within the Nationale Nederlanden contract. This value is based on
the projected future cash flows discounted with a (contractually specified) interest rate term structure (spot rates by term). The
single interest equivalent of this interest rate term structure has been set as the expected return on plan assets.
Defined Benefit Plans – Cash Flows
No contributions were made to the plans in 2023 or 2022. The Company does not expect to make contributions to the plan in the
next year.
The following table summarizes the benefit payments at December 31, 2023 estimated to be paid within the next ten years by the
issuer of the guaranteed insurance contract:
Payments by Period
Total
2024
2025
2026
2027
2028
Five Years Thereafter
Estimated benefit payments
36.5
2.5
2.8
3.0
3.3
3.5
21.4
F-52
Defined Contribution Plans
The Company operates a number of defined contribution plans, allowing employees to make tax-deferred contributions to the
plans. Under these plans the Company matches contributions up to certain defined percentages, depending on the plan. Matching
contributions totaled $2.2 million, $2.4 million and $1.3 million for the years ended December 31, 2023, 2022 and 2021
respectively.
Note 26 - Financial Instruments
Concentration of credit risk
There is a concentration of credit risk with respect to cash and cash equivalents and restricted cash to the extent that substantially
all of the amounts are carried with DNB Bank ASA, Saudi Awwal Bank and Citibank, however we believe this risk is remote, as
they are established and reputable establishments with no prior history of default.
Interest rate risk
As of December 31, 2023, all of our debt obligations are on fixed interest rates, therefore we are currently not exposed to the
impact of interest rate changes. Under our RCF, undrawn as of  December 31, 2023, we are exposed to the impact of interest rate
changes as we are required to make interest payments based on SOFR plus associated margins. Significant increases in interest
rates could adversely affect our future results of operations and cash flows should we elect to drawdown on this facility.  The
Company is exposed to changes in long-term market interest rates if and when maturing debt is refinanced with new debt.
In certain situations, the Company may enter into financial instruments to reduce the risk associated with fluctuations in interest
rates. The Company is not engaged in derivative transactions for speculative or trading purposes and has not entered into
derivative agreements to mitigate the risk of these fluctuations.
Foreign exchange risk management
The majority of the Company's gross earnings are receivable in U.S dollars. The majority of our transactions, assets and liabilities
are denominated in U.S. dollars, our functional currency, however, we incur certain expenditures in other currencies. There is a
risk that currency fluctuations, primarily relative to the U.S. dollar will have a negative effect on the value of our cash flows. The
Company has not entered into derivative agreements to mitigate the risk of these fluctuations.
Supplier risk
A supplier risk exists in relation to our rigs undergoing construction with Seatrium, however, we believe this risk is remote as
Seatrium are global leaders in the rig and shipbuilding sectors. Failure to complete the construction of any newbuilding on time
may result in the delay, renegotiation or cancellation of employment contracts secured for the newbuildings. Further, significant
delays in the delivery of the newbuildings could have a negative impact on the Company’s reputation and customer relationships.
The Company could also be exposed to contractual penalties for failure to commence operations in a timely manner which could
adversely affect the Company’s business, financial condition and results of operations.
Fair values of financial instruments
F-53
The carrying value and estimated fair value of the Company’s cash and financial instruments were as follows:
As of December 31, 2023
As of December 31, 2022
(In $ millions)
Hierarchy
Fair Value
Carrying Value
Fair Value
Carrying Value
Assets
Cash and cash equivalents(1)
1
102.5
102.5
108.0
108.0
Restricted cash(1)
1
0.1
0.1
2.5
2.5
Trade receivables(1)
1
56.2
56.2
43.0
43.0
Other current assets (excluding deferred costs)(1)
1
31.5
31.5
25.4
25.4
Due from related parties(1)
1
95.0
95.0
65.6
65.6
Non-current restricted cash(1)
1
—
—
8.0
8.0
Liabilities
Trade payables(1)
1
35.5
35.5
47.7
47.7
Accrued expenses(1)
1
77.0
77.0
80.8
80.8
Short-term accrued interest and other items (1)
1
42.3
42.3
77.7
77.7
Other current liabilities(1)
1
63.2
63.2
36.2
36.2
Short-term debt (2)
1
—
—
100.8
100.8
Short-term debt (2) (3)
2
104.4
100.0
330.8
350.0
Long-term debt (2)
1
—
—
1,177.7
1,177.7
Long-term debt (2) (4)
2
1,818.0
1,690.0
—
—
(1) The carrying values approximate the fair values due to their near term expected receipt of cash.
(2) Short term and long term debt excludes debt discounts, deferred finance charges and effective interest rate adjustments.
(3) As at December 31, 2023, this relates to our 10% Notes due in 2028 and 10.375% Notes due in 2030 and as at December 31,
2022, this relates to our 3.875% Convertible Bond due in 2023. These are fair valued using observable market-based inputs.
(4) As at December 31, 2023 this relates to our 10% Notes due in 2028 and 10.375% Notes due in 2030 and our $250 million
Convertible Bond due in 2028 and as at December 31, 2022, this relates to our 3.875% Convertible Bond due in 2023. These
are fair valued using observable market-based inputs.
Share Lending Agreement
In addition, during the year ended December 31, 2023, the Company recognized a deferred finance charge in the amount of
$12.4 million in relation to our Share Lending Framework Agreement ("SLFA"), which was fair valued using observable market-
based inputs and is amortized over the term of the $250.0 million Convertible Bonds. During the year ended December 31, 2023
$2.3 million was amortized and recognized in "Interest Expense" in the Consolidated Statements of Operations. As at December
31, 2023, the current element of the unamortized deferred finance charge of $2.5 million and the non-current element of the
unamortized deferred finance charge of $7.6 million are presented as a reduction to short-term and long-term debt, respectively, in
the Consolidated Balance Sheets (see Note 21 - Common Shares).
Note 27 - Related Party Transactions
a) Transactions with entities over which we have significant influence
We provided three rigs on a bareboat basis to Perfomex to service its contract with Opex and two rigs on a bareboat basis to
Perfomex II to service its contract with Akal. Perfomex and Perfomex II provided the jack-up rigs under traditional dayrate and
technical service agreements to Opex and Akal, respectively. This structure enabled Opex and Akal to provide bundled integrated
well services to Pemex. Effective October 20, 2022, we provide all five rigs on a bareboat basis to Perfomex, to service its
contracts with Opex. The bareboat revenue from these contracts is recognized as "Related party revenue" in the Consolidated
Statements of Operations.
F-54
The potential revenue earned by Opex and Akal was fixed under each of the Pemex contracts, while Opex and Akal managed the
drilling services and related costs on a per well basis. The revenue from these contracts was also recognized as "Related party
revenue" in the Consolidated Statements of Operations.
On August 4, 2021, the Company executed a Stock Purchase Agreement between BMV and Operadora for the sale of the
Company's 49% interest in each of the Opex and Akal joint ventures, as well as the acquisition of a 2% incremental interest in
each of Perfomex and Perfomex II joint ventures. The sale was completed on the same date and on this date Opex and Akal
ceased to be our related parties. Until their sale, as a 49% shareholder we were required to fund any capital shortfall in Opex or
Akal should the Board of Opex or Akal make cash calls to the shareholders under the provisions of the Shareholders Agreement
(see Note 7 - Equity Method Investments).
Bareboat revenues and management services revenue from our related parties for the years ended December 31, 2023, 2022 and
2021 consisted of the following:
For the Years Ended December 31,
(In $ millions)
2023
2022
2021
Bareboat Revenue - Perfomex
129.6
60.2
22.2
Bareboat Revenue - Perfomex II
—
24.9
9.3
Management Services Revenue - Perfomex
—
—
5.0
Management Services Revenue - Perfomex II
—
—
3.0
Total
129.6
85.1
39.5
Repayment of loans from our equity method investments for the years ended December 31, 2023, 2022 and 2021 consisted of the
following (1):
As of December 31,
(In $ millions)
2023
2022
2021
Perfomex
(9.8)
—
(31.6)
Perfomex II
—
—
(9.5)
Opex
—
—
(3.7)
Akal
—
—
(1.7)
Total
(9.8)
—
(46.5)
(1) Repayment of loans from our equity method investments is included in "Equity method investments" in the Consolidated
Balance Sheets (see Note 7 - Equity Method Investments).
Receivables: The balances with the joint ventures as of December 31, 2023 and 2022 consisted of the following:
As of December 31,
(In $ millions)
2023
2022
Perfomex
92.4
62.9
Perfomex II
2.6
2.7
Total
95.0
65.6
b) Transactions with Other Related Parties
Additional paid in capital: The transactions with other related parties for years ended December 31, 2023, 2022 and 2021
consisted of the following:
F-55
For the Years Ended December 31,
(In $ millions)
2023
2022
2021
Magni Partners Limited (1)
0.6
1.6
—
Total
0.6
1.6
—
(1) The above relates to fees directly attributable to the Company's Equity Offerings in October 2023 and August 2022 and have
been recognized in "Additional paid in capital" in our Consolidated Balance Sheets.
Expenses: The transactions with other related parties for the years ended December 31, 2023, 2022 and 2021 consisted of the
following:
For the Years Ended December 31,
(In $ millions)
2023
2022
2021
Front End Limited Company (1)
2.7
—
—
Drew Holdings Limited (2)
1.0
—
—
Magni Partners Limited (3)
0.6
0.5
0.9
Total
4.3
0.5
0.9
(1) Front End Limited Company ("Front End") owns 3% of Borr Arabia Well Drilling LLC, an entity that is consolidated by Borr
Drilling Limited and incorporated in the Kingdom of Saudi Arabia (the "KSA"). Front End is a party to a Management Agreement
with Borr Arabia Well Drilling LLC to provide management services in the KSA, for which it receives a management fee.
(2) Mr. Tor Olav Trøim, the Chairman of our Board, is the sole owner of Drew Holdings Limited ("Drew"). In January 2023 Drew
entered into a SLFA with the Company and DNB Markets for the purposes of facilitating investors’ hedging activities in
connection with the $250.0 million Senior Unsecured Convertible bonds due in 2028. In order to make the Company's shares
available for lending, and only until a certain number of new shares were issued by the Company in connection with such lending
arrangement, Drew made up to 15 million shares available to DNB Markets under the SLFA to facilitate such lending to the
convertible bond investors requiring such hedging activities. Under the terms of the SLFA, the Company incurred fees payable to
Drew for the shares available for lending. As at December 31, 2023, Drew is no longer a party to the SLA (see Note 28 -
Stockholders' Equity).
(3) Magni Partners Limited ("Magni") is a party to a Corporate Services Agreement with the Company, pursuant to which it
provides strategic advice and assists in sourcing investment opportunities, financing and other such services as the Company
wishes to engage, at the Company's option. There is both a fixed and variable element of the agreement, with the fixed cost
element representing Magni's fixed costs and any variable element being at the Company's discretion. Mr. Tor Olav Trøim, the
Chairman of our Board, is the sole owner of Magni. Effective January 1, 2024, the fixed element of the agreement is terminated,
while the remaining terms of the agreement continue to remain in force.
In January 2023, the Company recognized $1.3 million payable to Magni under a Call-off Contract to cover direct costs related to
assistance in relation to the Unsecured Convertible Bonds and Secured Bonds completed in February 2023 and in November
2023, the Company recognized $1.0 million payable to Magni under a Call-off Contract to cover direct costs related to assistance
in relation to 2028 and 2030 Notes completed in November 2023. As these costs are directly attributable to the issuance of these
bonds, these amounts were recognized as deferred finance charges, presented as a reduction to the carrying value of the associated
facilities and are amortized over the term of the facilities as "Interest Expense" in the Consolidated Statements of Operations.
F-56
Note 28 - Stockholders' Equity
Authorized share capital
(number of shares of $0.10 each)
2023
2022
Authorized shares: Balance at the start of the year
255,000,000
180,000,000
Increases:
August 16, 2022
—
40,000,000
August 25, 2022
—
35,000,000
February 23,2023
60,000,000
—
Authorized shares: Balance at the end of the year
315,000,000
255,000,000
Issued Share Capital
(number of shares of $0.10 each)
2023
2022
Issued : Balance at the start of the year
229,263,598
137,218,175
Shares issued (1)
8,816,793
92,046,404
Share issued and subsequently repurchased (2)
26,000,000
—
Shares cancelled(3)
—
(981)
Issued shares: Balance at the end of the year(3)
264,080,391
229,263,598
Outstanding Share Capital
(number of shares of $0.10 each)
2023
2022
Issued shares
264,080,391
229,263,598
Treasury shares
11,498,355
315,511
Outstanding shares
252,582,036
228,948,087
(1) Details of shares issued for the years ended December 31, 2023 and December 31, 2022 are as follows:
Date of Issue
Type of Listing
Exchange
Shares Issued
Price per Share
($)
Gross Proceeds
($ millions)
October 24, 2023
Private placement
Oslo
7,522,838
6.65
50.1
Various (ATM Sales) (5)
US public offering
NYSE
1,293,955
7.53
9.7
8,816,793
59.8
Date of Issue
Type of Listing
Exchange
Shares Issued
Price per Share
($)
Gross Proceeds
($ millions)
January 31, 2022
Private placement
Oslo
13,333,333
2.25
30.0
August 17, 2022
US public offering
NYSE
41,666,667
3.60
150.0
August 26, 2022
US public offering
NYSE
34,696,404
3.60
124.9
Various (ATM Sales) (5)
US public offering
NYSE
2,350,000
3.78
8.9
92,046,404
313.8
(2) During the year ended December 31, 2023, the Company issued 15.0 million shares, 10.0 million shares and 1.0 million of
shares, of par value $0.10 each on January 31, 2023, February 24, 2023 and August 16, 2023 respectively, which were
subsequently repurchased into treasury.
(3) Effective August 26, 2022 the company recorded the cancellation of 981 shares which related to fractional shares.
(4) As of December 31, 2023, our shares were listed on the Oslo Stock Exchange and the New York Stock Exchange.
F-57
(5) In July 2021, the Company entered into an Equity Distribution Agreement with Clarksons for the offer and sale of up to
$40.0 million of common shares of the Company through an ATM program. During the year ended December 31, 2023, the
Company issued 1,293,955 shares raising gross proceeds of $9.7 million and net proceeds of $9.6 million, with compensation
paid by the Company to Clarksons of $0.1 million.  During the year ended December 31, 2022, the Company issued 2,350,000
shares raising gross proceeds of $8.9 million and net proceeds of $8.8 million, with compensation paid by the Company to
Clarksons of $0.1 million.
Treasury Shares
(number of shares of $0.10 each)
2023
2022
Treasury shares : Balance at the start of the year
315,511
406,333
Share issued and subsequently repurchased
26,000,000
—
Shares bought back (1)
125,000
—
Shares lent under the Share Lending Agreement (2)
(14,443,270)
—
Shares issued on exercise of share options(3)
(410,302)
—
Shares issued as compensation (4)
(88,584)
(90,822)
Treasury shares : Balance at the end of the year
11,498,355
315,511
(1) On December 8, 2023 the board approved a share repurchase program for the Company’s shares, to be purchased in the open
market and limited to a total amount of $100 million. In December 2023, we acquired an aggregate of 125,000 shares on the
NYSE at an aggregate purchase price of $0.8 million. The Company did not acquire any of its own shares in 2022.
(2) As of December 31, 2023, the Company had loaned 14,443,270 shares to DNB for the purposes of allowing the holders of the
New Convertible Bonds to perform hedging activities on the OSE (see "Share Lending Agreement").
(3) The Company issued 1.0 million shares of par value $0.10 each on August 16, 2023, which were subsequently repurchased into
treasury to be used solely for issuance in connection with the exercise of share options vesting under the Company’s existing
share option program. The Company has issued  410,302 of these treasury shares in connection with our Borr Scheme (see Note
24 - Share Based Compensation) following the exercise of 410,302 share options.
(4) During the years ended December 31, 2023 and December 31, 2022, the Company issued 88,584 and 90,822 common shares in
relation to Director compensation. The value on the date of issuance of $0.45 million and $0.3 million, respectively, has been
recognized in "General and Administrative expenses" in the Consolidated Statements of Operations (see Note 24 - Share Based
Compensation as it relates to the 2023 issuance of common shares in settlement of RSUs). The book value of the treasury shares
issued was $2.8 million and $3.9 million respectively, as these shares had been bought back in 2018. The loss on issuance of the
treasury shares of $2.4 million and $3.6 million, respectively, has been recognized as a reduction in "Additional Paid in Capital"
in the Consolidated Balance Sheets as at December 31, 2023 and December 31, 2022.
Share Lending Agreement
In connection with the $250.0 million Convertible Bonds (see Note 21 - Debt), the Company entered into a SLFA with DNB
Markets ("DNB") and Drew Holdings Limited ("Drew") with the intention of making up to 25.0 million common shares ("Issuer
Lending Shares") available to lend to DNB for the purposes of allowing the holders of the New Convertible Bonds to perform
hedging activities on the OSE. The SLFA contains a provision that the Issuer Lending Shares be available only for trading on the
OSE. At the date of the execution of the SLFA, the Company did not have a sufficient number of common shares available for
trading on the OSE and therefore began the process of issuing new shares and making them available for trading on the OSE by
way of a listing prospectus (the “Prospectus Event”).
The Company and Drew, a shareholder of the Company, separately entered into a Share Loan Agreement (“SLA”) in which Drew
would make up to 15.0 million of its shares available to DNB (“Drew Shares”) until the Prospectus Event. During this period, the
Company would lend to Drew 15.0 million of its shares that were not yet available for trading on the OSE. The Prospectus Event
occurred on April 19, 2023, at which time Drew returned such shares back to Borr. In addition, DNB borrowed an equivalent
amount of Drew Shares from Borr to redeliver these shares back to Drew (the “Settlement”). Upon the Settlement, Drew ceased to
be a party to the SLA.
F-58
The "Loan Period" of the SLFA is defined as the earlier of (a) the date the SLFA is terminated (b) any date the convertible bonds
are either redeemed or converted into the Company’s shares in full and (c) the maturity date of the convertible bond in 2028. At
the expiration of the Loan Period, DNB must return all of the Issuer Lending Shares back to Borr. During the Loan Period, if an
investor returns any lending share to DNB, DNB shall return such lending shares back to the Company immediately. The
Company receives no proceeds from lending out the Issuer Lending Shares to DNB. DNB must charge each investor a lending fee
of a maximum of 0.5% per annum in which for the first six months from the date of the SLFA, the Company agrees to
Compensate DNB so that the lending fee DNB receives in total will be 1.0% per annum. There is no compensation that the
Company pays DNB for returning the Issuer Lending Shares to the Company. There is no unilateral mechanism given to either
party in choosing to settle in cash except for a very limited scenario involving default. DNB is not required to provide collateral
for borrowing the shares. There are no dividends paid to DNB as a result of lending out the Issuer Lending Shares.
At issuance, the share lending agreement was accounted for under ASC 470-20 as a "Deferred Finance Charge" of the
$250.0 million Convertible Bonds, with an offset to "Additional Paid in Capital" in the Consolidated Balance Sheets. The share
lending agreement was measured at a fair value in accordance with ASC 820 at inception and the Company recognized
$12.4 million accordingly.
Under the terms of the SLA, the Company incurs fees payable to Drew which are calculated based on the market-based value of
the borrowed shares by DNB from Drew at the interest rate of the New Convertible Bonds. During the year ended December 31,
2023 fees of $1.0 million were incurred (see Note 27 - Related Party Transactions).
Further, as part of the SLA, the Company also guaranteed to reimburse Drew in the event DNB does not return the Drew Shares at
a price equal to the higher of the Company’s share price and NOK56.36. As DNB returned in full the shares borrowed from Drew
on April 19, 2023, the Company was not required to fulfil the guarantee. The fair value of the guarantee was concluded to be
immaterial as at March 31, 2023.
As of March 31, 2023, 14,232,778 shares had been drawn by DNB from Drew which were repaid upon Settlement on April 19,
2023, by DNB drawing this same number of shares from the Company. As of December 31, 2023, the Company had loaned
14,443,270 shares to DNB for the purposes of allowing the holders of the New Convertible Bonds to perform hedging activities
on the OSE.
As of December 31, 2023, the unamortized amount of the issuance costs associated with the SLFA was $10.1 million.
Contributed Surplus
On December 22, 2023, at a Special General Meeting, pursuant to the Bermuda Companies Act, the Company's shareholders
approved a reduction of the Share Premium (Additional Paid in Capital "APIC") account of the Company from $2,290,578,712 to
$290,578,712 by the transfer of $2,000,000,000 of the Share Premium (APIC) to the Company’s Contributed Surplus account,
with effect from December 22, 2023. The Contributed Surplus account, as defined by Bermuda law, consists of amounts
previously recorded as Share Premium (APIC).
Dividends
On December 22, 2023, the Company declared a cash distribution of $0.05 per share, corresponding to a total of $11.9 million,
which was paid to our shareholders on January 22, 2024.
Note 29 - Subsequent Events
On December 22, 2023, the Company declared a cash distribution of $0.05 per share, corresponding to a total of $11.9 million,
which was paid to our shareholders on January 22, 2024.
In January 2024 and March 2024, the Company has issued 108,000 and 303,336 treasury shares, respectively, in connection with
the Borr Scheme (see Note 24 - Share Based Compensation) following the exercise of 108,000 and 303,336 share options,
respectively.
In February 2024, the Company announced that its Board of Directors approved a cash distribution of $0.05 per share for the
fourth quarter of 2023 which was paid on March 18, 2024 to shareholders of record at close of business on March 4, 2024.
F-59
In March 2024, Borr IHC Limited and certain other subsidiaries issued an additional $200 million in aggregate principal amount
of 10% senior secured note due 2028 ("the Additional Notes") at a price of 102.5% of par, raising gross proceeds of
$211.9 million. The Additional Notes have the same terms and conditions as the $1,025,000,000 principal amount notes issued in
November 2023 and will mature on November 15, 2028 (see Note 21 - Debt). The net proceeds from the issuance are intended to
be used for general corporate purposes, which may include capital expenditures, activation costs, optimization of shipyard
newbuild financing and select asset additions or funding of working capital.
In March 2024, the Company repurchased $10.6 million of our $250.0 million unsecured convertible bonds due 2028. The
remaining principal outstanding is $239.4 million.
F-60