Why Borr Drilling Stock Was Slumping This Week
Key Points
Although revenue grew year over year, the company's net loss deepened.
It suffered from delays in the operational start of one of its rigs.
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Investors hoping that Borr Drilling (NYSE: BORR) stock would dig up significant gains were disappointed over the past few days. On Thursday, the offshore drilling specialist reported a first quarter that investors clearly found underwhelming, and many sold their shares.
According to data compiled by S&P Global Market Intelligence, Borr's price was down by almost 10% week to date as of early afternoon Friday.
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Twin first-quarter misses
For the quarter, Borr's revenue came in at $247 million, which was 14% higher year over year. However, the company's net loss under generally accepted accounting principles (GAAP) deepened considerably to $29 million ($0.09 per share) from the year-ago frame's $16.9 million deficit.
Image source: Getty Images.
With those figures, Borr whiffed on both the top and bottom lines. On average, analysts tracking the company were expecting it to post more than $257 million in revenue and break even on the bottom line.
Borr's year-over-year revenue growth was driven in no small measure by a higher rig count. In a related development, the net loss deepened largely due to expenses related to its purchase of five rigs, as well as a noncash credit loss provision totaling $8.4 million.
A still drill
Another factor putting the squeeze on Borr is a delay in the next phase of operations with one of the company's rigs, the Odin.
This was to have begun drilling for its client, privately held energy company Cantium, in February, but hiccups in contract preparation and regulatory approvals have occurred, according to Borr. Odin is now expected to start drilling in late June; at the moment, it's not producing revenue and requires roughly $10 million in additional preparatory expenses.
If I were an investor, I'd be more encouraged by the company's 99.4% technical utilization rate -- a crucial operational metric that measures the number of hours a rig is engaged in drilling activity relative to the contracted hours. This indicates that demand remains high, a trend that should be maintained in our current era of high oil prices.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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