Borr Drilling Limited (BORR) 6-KCurrent report (foreign)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

November 6, 2024

___________________________

Commission File Number: 001-39007

Borr Drilling Limited

SIGNATURES

This document and any other written or oral statements made by us in connection with this document 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.

You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “estimate,” “intend,” “plan,” “believe,” “likely to” “should,” “continue” or other similar expressions. These forward-looking statements include statements about plans, objectives, goals, strategies, future events or performance, outlook, prospects and trends, market outlook, contract backlog, expected contracting and operation of our jack-up rigs, drilling contracts, options, expected trends in dayrates, market conditions, statements about dividends and share buybacks, statements with respect to newbuilds, including expected delivery dates, activity levels in the jack-up rig and oil industry, expected demand for and utilization of rigs, expected Adjusted EBITDA and other non-historical statements.

These forward-looking statements are not statements of historical facts and are based upon current estimates, expectations, beliefs and various assumptions, many of which are based, in turn, upon further assumptions. These statements involve significant known and unknown 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, financial results, position 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, risks relating to industry conditions and tendering activity, risks relating to customer demand and contracting activity and the risk of suspension and or termination of operations, the risk of delays in payments to our joint ventures 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 or through issuance of additional debt or equity or sale of assets, risks relating to our debt agreements, including our super senior revolving credit facility and other debt instruments, including our senior secured bonds due in 2028 and 2030, our convertible notes due in 2028, including risks relating to our ability to comply with covenants under our super senior revolving credit facility and other debt instruments and obtain any necessary waivers and the risk of cross defaults, risks relating to our ability to meet repayment obligations under senior secured notes due in 2028 and 2030, our convertible bonds and our other obligations as they fall due, including amortization payments, excess cash repayment offers and payments due at maturity, risks relating to future financings including the risk that future financings may not be completed when required and future equity and convertible debt financings will dilute shareholders and the risk that the foregoing would result in insufficient liquidity to continue our operations, risks relating to contracting our newly acquired rigs, 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 military actions including in Ukraine and the Middle East and their impact on our business and industry, and other risks described in Part. I of "Item 3.D. Risk Factors" of our most recent Annual Report on Form 20-F and other filings with the Commission.

The foregoing factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement included in this report should not be construed as exhaustive. Any forward-looking statements that we make in this report speak only as of the date of such statements and we caution readers of this report not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no (and expressly disclaim any) 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.

Exhibit 99.1

Management Discussion and Analysis of Financial Condition and Results of Operation

The following is a discussion of our financial condition and results of operations for the nine months ended September 30, 2024 and 2023. Unless the context indicates otherwise, the "Company," "we," "us," "our," and words of similar nature, all refer to Borr Drilling Limited and its consolidated subsidiaries. Unless otherwise indicated, all references to "USD" and "$" in this report are to U.S. dollars. You should read the following discussion and analysis together with the financial statements and related notes included elsewhere in this report. For additional information, including definitions of certain terms used herein, please see Item 5 of our annual report on Form 20-F for the year ended December 31, 2023, which was filed with the Commission on March 27, 2024.

Overview

Recent Developments

In October 2024, at a Special General Meeting of the Company, a resolution was passed to approve the delisting of the Company's common shares from the Oslo Stock Exchange ("OSE"), and to authorize the Board of Directors to take the necessary steps to implement the delisting, including filing an application with the OSE. The Company filed the delisting application with the OSE on October 2, 2024 which was approved by the OSE on November 1, 2024. The last day of trading for the Company on the OSE will be December 30, 2024.

In November 2023, the Company entered into a $180 million Super Senior Revolving Credit Facility, comprised of a $150 million Revolving Credit Facility and a $30.0 million Guarantee Facility. In August 2024, the Company increased the $30.0 million Guarantee Facility to $45.0 million, bringing the total Super Senior Revolving Credit Facility to $195.0 million.

In May 2024, the Company granted the Chief Executive Officer ("CEO") 750,000 restricted share units ("RSUs") and 250,000 performance share units ("PSUs"). 500,000 RSUs vest on December 31, 2025 and 250,000 RSUs and 250,000 PSUs vest on December 31, 2026. The awards are conditional upon the CEO remaining an executive of the Company at the date of vesting with the PSUs being subject to an additional performance criteria linked to the Company's total shareholder return performance in comparison to a certain set of industry peers.

In September 2024, the Board of Directors resolved to grant 2,990,000 share options under the Company's approved share options scheme to certain of employees. Each share option gives the awardee the right to subscribe to one share in the Company. The options have a strike price of $6.68 and vest over a three-year period commencing on August 15, 2025 and expire after five years.

In April 2024, we received a notice of temporary suspension of operations for the rig “Arabia I”, operating in Saudi Arabia. In June 2024, we terminated the contract for the rig, allowing us to secure a new contract for the rig in Brazil, which is expected to commence in 2025.

In August 2024, the Company accepted delivery of newbuild rig "Vali".

Operating and Financial Review

Set forth below is selected financial information for the nine months ended September 30, 2024 and 2023.

Historically, we have met our liquidity needs principally from cash generated from operations, offerings of equity, convertible bonds, secured bonds, secured loan facilities, including shipyard delivery financing arrangements, revolving credit facilities and sale of non-core assets.

As of September 30, 2024, we had $185.7 million in cash and cash equivalents and $0.9 million in restricted cash.

Cash Distributions

In May 2024, our Board of Directors approved a cash distribution of $0.10 per share for the first quarter of 2024, which was paid on June 17, 2024.

In August 2024, our Board of Directors approved a cash distribution of $0.10 per share for the second quarter of 2024, which was paid on September 6, 2024.

Borrowing Activities

As of September 30, 2024, we had total principal amount of debt outstanding of $2,072.1 million, of which $126.0 million matures within the next twelve months.

In February 2023 we issued $250.0 million unsecured convertible bonds due in February 2028. The Convertible Bonds have a coupon of 5.0% per annum payable semi-annually in arrears in equal installments. In March 2024, we repurchased $10.6 million principal amount of Convertible Bonds.

Following the payment of a $0.05 per share cash distribution in each of January and March 2024, as well as the payment of a $0.10 per share cash distribution in each of June and August 2024, the adjusted conversion price for the convertible bonds is $7.0249 per share, with the current outstanding principal amount of the Convertible Bonds convertible into 34,078,777 shares.

The Company and its subsidiaries may from time to time further repurchase or otherwise trade in its own debt in open market or privately negotiated transactions or otherwise.

Cash Flows

Net cash used in investing activities of $219.5 million for the nine months ended September 30, 2024 is comprised of $36.1 million in additions to jack-up rigs, primarily as a result of special periodic survey and long term maintenance costs and $183.0 million in additions to newbuildings, primarily as a result the $159.9 million final installment payment for the "Vali" as well as $23.1 million in activation costs relating to the "Vali" and the "Var" and $0.4 million in purchases of property, plant and equipment.

Net cash used in investing activities of $68.7 million for the nine months ended September 30, 2023 is comprised of $77.2 million in additions to jack-up rigs, primarily as a result of activation and reactivation costs and $1.3 million in purchases of property, plant and equipment. These were offset by $9.8 million of distributions from equity method investments as a result of the return of previous shareholder funding.

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.

During the nine months ended September 30, 2024, the Company changed its definition of Adjusted EBITDA to exclude the adjustment for amortization of deferred mobilization and contract preparations costs as well as the adjustment for amortization of deferred mobilization, demobilization and other revenue. We believe that this change enables us to be more closely aligned with the calculation methodology used by many of our industry peers. Adjusted EBITDA for all periods presented has been updated as per the definition below.

We believe that Adjusted EBITDA improves the comparability of period-to-period 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.

Index to the Unaudited Condensed Consolidated Financial Statements

Borr Drilling Limited

Notes to the Unaudited Condensed Consolidated Financial Statements

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.

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.

The Company recognizes revenues earned under drilling contracts based on variable dayrates, which range from full operating dayrates 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 revenues earned in relation to contract management agreements where we provide rig operational and maintenance support services to third parties based either on a cost-plus or dayrate basis. Such 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 revenues earned in relation to certain bareboat charter agreements where we lease our owned rigs to third parties based on fixed daily rates, which range from operating rates to stand-by 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 fixed daily rates that change over the firm term of the contract. Such fixed daily rate 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. Reimbursable revenues are recognized in 'Dayrate revenue' in the Unaudited Condensed Consolidated Statements of 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.

Investment in marketable equity securities

Investment in marketable equity securities with readily determinable fair values are measured at fair value each reporting period with the related gains and losses, including unrealized, recognized in “Other financial expenses, net” in the Unaudited Condensed Consolidated Statements of Operations.

We classify our investment in marketable equity securities as current assets because the securities are available to be sold to meet liquidity needs if necessary, even if it is not the intention to dispose of the securities in the next twelve months.

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 June 2022, the Financial Accounting Standards Board ("FASB") issued 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) and 3) The circumstances that could cause a lapse in the restriction(s). These amendments are effective for the Company from January 1, 2024. There was no impact resulting from these amendments on our unaudited consolidated financial statements or related disclosures as presented in this interim set of accounts for the nine months ended September 30, 2024.

In March 2023, the FASB issued 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. These amendments are effective for the Company from January 1, 2024. There was no impact resulting from these amendments on our unaudited consolidated financial statements or related disclosures as presented in this interim set of accounts for the nine months ended September 30, 2024.

In March 2023, the FASB issued 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). These amendments are effective for the Company from January 1, 2024. There was no impact resulting from these amendments on our unaudited consolidated financial statements or related disclosures as presented in this interim set of accounts for the nine months ended September 30, 2024.

In November 2023, the FASB issued 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. These amendments are effective for the Company for annual periods beginning from January 1, 2024 and interim periods beginning January 1, 2025. There was no impact resulting from these amendments on our unaudited consolidated financial statements and no material impact on our related disclosures as presented in this interim set of accounts for the nine months ended September 30, 2024.

Note 4 - Segment Information

During the three months ended September 30, 2024 and September 30, 2023, we had a single reportable segment: our operations performed under our dayrate model (which includes rig charters and ancillary services). Our CODM, 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 single operating segment. Given that we only have a single reportable segment, allocation of resources by our CODM is not determined by segment profit or loss.

The following presents financial information by segment for the three months ended September 30, 2024:

The following presents our revenues by geographic area:

The following customers accounted for more than 10% of our dayrate and related party revenues:

The following presents the net book value of our jack-up rigs by geographic area:

Note 6 - Equity Method Investments

We own a 51% interest in two Mexico-based joint ventures, Perfomex and Perfomex II. We previously provided five jack-up rigs on bareboat charters to these joint ventures. These joint ventures previously provided dayrate drilling services to Opex Perforadora S.A. de C.V. (“Opex”) and Perforadora Profesional AKAL I, SA de CV (“Akal”), which both provide integrated well services to Petróleos Mexicanos (“Pemex”). Opex and Akal are wholly owned by Operadora Productora y Exploradora Mexicana, S.A. de C.V. (“Operadora”), a fully owned subsidiary of Proyectos Globales de Energia y Servicos CME, S.A. DE C.V. (“CME”). CME owns the remaining 49% interest in our joint ventures Perfomex and Perfomex II.

Effective January 1, 2024, Perfomex and Opex agreed to terminate the Drilling and Technical Services Agreements ("DTSAs") for the jack-up rigs "Grid" and "Gersemi" which triggered a termination fee payable by Opex to Perfomex of $14 million, or $7 million per Borr jack-up rig operated by Perfomex. Effective April 1, 2024, Perfomex and Opex agreed to terminate the DTSAs for the jack-up rigs "Galar", "Odin" and "Njord" which triggered a further termination fee payable by Opex to Perfomex of $21 million, or $7 million per Borr jack-up rig. The associated bareboat charter agreements between Perfomex and the Company were also terminated. Effective the same dates as the termination dates referenced above, the Company entered into new fixed rate bareboat charter agreements for the jack-up rigs "Grid", "Gersemi", "Galar", "Odin" and "Njord" with Irish Energy Drilling Assets, DAC ("Irco"). The new bareboat charter agreements remain in effect until December 31, 2025.

In addition, effective January 1, 2024, Perfomex entered into new Drilling, Operation and Management Agreements ("DO&M Agreements") with Perforadora Ircomex, S.A. DE C.V. ("Ircomex") to provide drilling, operations and management services for the Borr jack-up rigs "Grid" and "Gersemi", plus third-party owned jack-up rigs "CME I" and "CME II". Effective April 1, 2024, DO&M Agreements were also entered into by Borr Drilling Contracting S. de R.L. de C.V., a wholly owned subsidiary of the Company, with Ircomex, to provide drilling, operations and management services for the Borr jack-up rigs "Galar", "Odin" and "Njord". These DO&M Agreements are based on a cost-plus pricing model and remain in effect until December 31, 2025.

Irco and Ircomex will continue to provide the jack-up rigs "Grid","Gersemi","Galar", "Odin" and "Njord" and accompanying operational services to Opex, to service its integrated well services contract with Pemex.

The below tables set forth the results from these entities, on a 100% basis, for the three months ended September 30, 2024 and 2023:

As of September 30, 2024, Perfomex and Perfomex II had $67.0 million of receivables from Opex and Akal, of which $61.4 million was outstanding and $5.6 million was unbilled. 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.

The following presents our investments in equity method investments as at September 30, 2024:

Note 7 - Interest Expense

Interest expense is comprised of the following:

Note 8 - Other Financial Expenses, net

Other financial expenses, net is comprised of the following:

Note 9 - Taxation

Total pre-tax (loss) / income is comprised of the following by jurisdiction:

The change in the effective tax rate from period to period is 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 little direct correlation between the income tax provision or benefit and income or loss before taxes. We used a discrete effective tax rate method to calculate income taxes.

The deferred tax assets related to our net operating losses were primarily generated in the United Kingdom 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 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 remain 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 10 - Income/(loss) Per Share

The weighted average number of shares outstanding includes 12,331,900 and 14,443,270 shares as of September 30, 2024 and December 31, 2023 shares, respectively, which have been issued as part of a share lending arrangement relating to the Company's issuance of $250.0 million Convertible Bonds in 2023 (see Note 23 - Common Shares).

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 periods presented because the effects were anti-dilutive.

For the three months ended September 30, 2023, the impact of 60,000 share options, 500,000 performance share units and for the nine months ended September 30, 2023, the impact of 8,619,698 share options, 500,000 performance share units and 88,584 restricted stock 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. In addition, for the three months ended September 30, 2023, 34,027,031 shares issuable upon exercise of our convertible bonds due in May 2028 with a conversion price of $7.3471 per share, have been excluded as they are anti-dilutive.

Note 11 - Other Current Assets

The table below sets forth the carrying value of our newbuildings:

During the nine months ended September 30, 2024, we considered whether indicators existed that the carrying amounts of our newbuildings may not be recoverable as of September 30, 2024, and concluded that no indicators, events, or changes in circumstances, have occurred to warrant a change in the assumptions utilized in the December 31, 2023 impairment tests of our newbuilding jack-up rig fleet. We will continue to monitor developments in the markets in which we operate for indications that the carrying values of our long-lived assets are not recoverable.

The remaining contracted installments as of September 30, 2024 payable on delivery, for one Seatrium newbuild ordered in 2017 is $159.9 million. The remaining contracted installments as of December 31, 2023 related to two Seatrium newbuilds ordered in 2017, of which one has been delivered in the nine months ended September 30, 2024 are in total $319.8 million (see Note 20 - Commitments and Contingencies).

Set forth below is the carrying value of our jack-up rigs:

Accumulated depreciation related to jack-up rigs as at September 30, 2024 is $692.8 million (as at December 31, 2023 was $598.1 million).

In addition to the depreciation in the above table, the Company recognized depreciation of $0.2 million and $0.8 million for the three and nine months ended September 30, 2024 related to property, plant and equipment ($0.8 million and $1.6 million for the three and nine months ended September 30, 2023).

During the nine months ended September 30, 2024, we considered whether indicators of impairment existed that could indicate that the carrying amounts of our jack-up rigs may not be recoverable as of September 30, 2024, and concluded that no such events or changes in circumstances have occurred to warrant a change in the assumptions utilized in the December 31, 2023 impairment tests of our jack-up rig fleet. We will continue to monitor developments in the markets in which we operate for indications that the carrying values of our long-lived assets are not recoverable.

We have various operating leases, principally for office space, storage facilities and operating equipment, which expire at various dates.

Supplemental balance sheet information related to leases is as follows:

The current portion of the right-of-use assets of $0.5 million is recognized within "Other current assets" (see Note 11 - Other Current Assets) and the non-current portion of the right-of-use assets of $0.9 million is recognized within "Other non-current assets" (see Note 15 - Other Non-Current Assets) in the Unaudited Condensed Consolidated Balance Sheets. The current operating lease liabilities are recognized within "Other current liabilities" (see Note 17 - Other Current Liabilities) and the non-current operating lease liabilities are recognized within "Other non-current liabilities" in the Unaudited Condensed Consolidated Balance Sheets.

Components of lease expenses are comprised of the following:

Effective January 1, 2024, as part of a restructuring of our operations under our joint venture in Mexico, the Company entered into new fixed external bareboat charter agreements for two jack-up rigs and effective April 1, 2024 we entered into further fixed external bareboat charter agreements for three jack-up rigs, which continue to service Opex's contract with Pemex (see Note 6 - Equity Method Investments). Future revenues are based on a blended rate, in line with our revenue recognition policy, as the contract includes daily rates that change over the firm term of the contract.

Revenues from operating leases for the three and nine months ended September 30, 2024 of $27.4 million and $65.3 million have been recognized on a straight-line basis as “Bareboat charter revenue” in the Unaudited Condensed Consolidated Statements of Operations. There were nil revenues from operating leases for the three and nine months ended September 30, 2023.

The minimum future revenues to be received under the Company's operating leases on its jack-up rigs as of September 30, 2024, are as follows:

The cost and accumulated depreciation of jack-up rigs leased to third parties as of September 30, 2024 were $749.6 million and $583.1 million, respectively. There were no jack-up rigs leased to third parties as of December 31, 2023.

Note 17 - Other Current Liabilities

Note 18 - Debt

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 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 2030 at a price equal to 97.000%, bearing a coupon of 10.375% per annum (the "2030 Notes"). The 2028 Notes mature on November 15, 2028 and the 2030 Notes mature on November 15, 2030, and interest on the 2028 Notes and 2030 Notes is payable on May 15 and November 15 of each year, beginning on May 15, 2024.

In March 2024 and August 2024 the Company issued $200.0 million and $150.0 million principal amount of additional senior secured notes due in 2028, respectively (the "Additional 2028 Notes" and the "Further Additional 2028 Notes", and together with the 2028 Notes and the 2030

Notes, the "Notes"), under the same terms and conditions as the $1,025.0 million notes issued in November 2023. The Additional 2028 notes were issued at a price equal to 102.5% plus accrued interest, raising gross proceeds of $211.9 million. The Further Additional 2028 notes were issued at a price equal to 102.5% plus accrued interest, raising gross proceeds of $157.5 million.

In November 2023, the Company entered into a $180.0 million Super Senior Revolving Credit Facility, comprised of a $150.0 million Revolving Credit Facility and a $30.0 million Guarantee Facility. In August 2024, the Company increased the $30.0 million Guarantee Facility to $45.0 million, bringing the total Super Senior Revolving Credit Facility to $195.0 million.

During the three months ended September 30, 2024, the Company drew down and subsequently repaid $85.0 million of the RCF to facilitate the delivery of the jack-up rig '"Vali" due to the timing between the delivery of the rig and the proceeds received from the Further Additional 2028 notes issued in August 2024.

Note 19 - Onerous Contracts

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 "Vali" and "Var" in 2017.

Note 20 - Commitments and Contingencies

The Company has the following delivery installment commitments:

In September 2023, we entered into an agreement with Seatrium New Energy Limited to amend the Construction Contract for the "Vali" and the "Var" 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. In August 2024, we accepted delivery of the "Vali".

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 at September 30, 2024, the expected expiration dates of these obligations are as follows:

Note 21 - Related Party Transactions

Effective January 1, 2024, Perfomex and Opex agreed to terminate the DTSAs for the jack-up rigs "Grid" and "Gersemi" and effective April 1, 2024, Perfomex and Opex agreed to terminate the DTSAs for the jack-up rigs "Galar", "Odin" and "Njord". The associated bareboat charter agreements between Perfomex and the Company were also terminated. Effective the same dates as the termination dates referenced above, the Company entered into new fixed rate bareboat charter agreements for the jack-up rigs with an unrelated party, which has agreed to provide the five rigs to service Opex's contract with Pemex. As such, effective April 1, 2024, we do not provide rigs on a bareboat basis to Perfomex (see Note 6 - Equity Method Investments and Note 14 - Leases).