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In a stark reflection of the tumultuous market conditions, Borr Drilling Ltd’s stock has tumbled to a 52-week low, touching down at $1.62. The offshore drilling contractor, which specializes in providing drilling services to the oil and gas industry, has seen its shares battered by a confluence of sector-specific headwinds and broader market volatility. According to InvestingPro data, the company trades at a modest P/E ratio of 4.95 and Price/Book multiple of 0.4, suggesting potential undervaluation despite its significant debt burden of $2.1 billion. This latest price level underscores a precipitous decline over the past year, with the stock experiencing a staggering 71.96% drop from its value 12 months prior. Investors and analysts are closely monitoring the company’s performance, as it navigates through the challenges of fluctuating energy prices, operational costs, and a competitive landscape that continues to exert pressure on the bottom line. Despite these challenges, the company maintains profitability with a gross margin of 56% and revenue of $1 billion in the last twelve months. For deeper insights into Borr Drilling’s financial health and 16 additional key ProTips, visit InvestingPro.
In other recent news, Borr Drilling Limited has been in the spotlight with several developments affecting its financial outlook. The company recorded a 31% revenue growth in 2024, although its gross leverage decreased to 4.2x from 4.7x in 2023. However, Borr’s free cash flow was highly negative at $408 million, primarily due to issues with receivables from Petroleos Mexicanos (PeMex) and expenditures on new rigs. Moody’s Ratings has affirmed Borr’s B3 ratings and revised its outlook to stable, citing concerns over lower contractual coverage and significant additional debt for new rigs. The firm also highlighted the impact of contract suspensions by Saudi Arabian Oil Company and PeMex on Borr’s utilization levels.
Moody’s projects EBITDA to remain flat at around $500 million in 2025 and 2026, assuming the company achieves 75%-80% contracted coverage. The agency expects free cash flow to improve to $260 million in 2025, aided by the recovery of delayed PeMex payments. Borr’s liquidity is deemed adequate, with access to a $150 million revolving credit facility and expected positive free cash flow generation from 2025 onwards. Environmental, social, and governance considerations have negatively impacted Borr’s rating, reflecting higher risks than typical issuers. The stable outlook from Moody’s anticipates that Borr will manage its balance sheet conservatively and prioritize debt reduction over shareholder returns.
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