Want In on Energy for Under $5? This Could Be the Cheapest Offshore Play Around
Here's a low-cost way to gain exposure to offshore rig demand.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
Need some exposure to the energy space? Yeah, me too, but I don't want to lay out a ton of dough. The S&P Energy Sector SPDR ETF (XLE) is up 6.7% year to date with a couple of days to go in the year, placing the group in ninth place among the 11 sector SPDRs. (All 11 are in the green, BTW).
I recently invested in a new "Stocks Under $10" type name that might fit the bill for my own account. No, it's not paying off just yet. This is not at this time a tale of victory.
Had I invested at the May 2025 lows, I would have been up 156% as of Friday night's close. That said, Friday night's close was down 11.4% from the stock's early December high and down 1.5% year to date. Since 2019, these shares have traded for as little as $0.49 and for as much as $9.01.
I am speaking of Borr Drilling (BORR) .
Who Are These Guys?
Borr Drilling is a Hamilton, Bermuda-based offshore, shallow-water drilling contractor servicing the energy complex. The company's core business is the ownership and operation of jack-up rigs operating in water depths of approximately 400 feet.
Borr owns or owned 24 rigs and operates facilities in the North Sea, Gulf of America/Mexico, off of West Africa, off of Southeast Asia and in the Middle East.
Fundamentals
Borr last reported earnings on November 5 with its third-quarter financial results. The company posted GAAP EPS of $0.10, beating Wall Street expectations by two cents per share, while generating revenue of $277.1 million. That sales print also beat the Street and was good enough for year-over-year growth of 14.7%.
That's sort of where the fun stops. At the completion of that September (3rd) quarter, Borr had generated operating cash flow of $206.1 million over the trailing 12-month period, while capex spending ran at $262.3 million. That's "free" cash flow of -$56.2 million.
Turning to the balance sheet, current assets ran at $665.4 million including a cash position of $227.8 million. Current liabilities ended the period at $409.2 million, including $118.1 million in shorter-term debt, but also unearned revenue of $52.9 million. That put Borr's current ratio at 1.63 (not bad) or once adjusted for those deferred revenues, an even better 1.87.
Total assets amounted to $3.522 billion, while total liabilities less equity came to $2.382 billion, including another $1.938 billion in long-term debt. Yes, the long-term debt is an issue, but the company has its current situation under control. That's something of a plus for smaller firms operating in energy exploration.
News
In early December, the stock sold off in response to Borr's pricing of 21 million new shares at $4.00 in a secondary offering in order to raise about $84 million. The company also priced $165 million in 10.375% senior secured notes due in the year 2030.
Do I love the idea of going deeper into debt and diluting the equity like that? Of course not.
However, Borr took those steps in order to acquire five jack-up rigs from Noble Corp. (NE) . This would expand the Borr Drilling fleet to 29 rigs. The deal is expected to close in early 2026 and two of these rigs will be chartered back to Noble for a year. That charter is expected to produce roughly $29 million worth of earnings less debt service.
In other news, Borr is dually listed at the New York Stock Exchange and at Euronext Growth Oslo. The listing at the Oslo growth exchange literally just occurred on December 19 and is seen by the company as a first step towards listing at the main Oslo Stock Exchange where its investor base, at least in theory, would broaden.
Then Came Marcelo Lopez
I like James Grant of Grant's Interest Rate Observer. I always have. We shared something of a friendship when I worked on the trading floor of the NYSE, and he was a frequent visitor. Sometimes I would just see him out on the street. I always thought him one of the smartest thinkers on Wall Street.
Grant called out Borr this past summer when the shares were trading near their lows for the year. Grant credited Marcelo Lopez of L2 Capital Partners for putting the idea in his head at the time. On the acquisition of five new rigs expanding the company's fleet, Lopez recently wrote, “The utilization rate (for these rigs) is already above 90%, with no new jack-up rigs currently under construction—while there have been some orders, no steel has been cut as of yet.”
Lopez added that nine jack-ups are expected to be retired from the overall market this year, with even more retirements anticipated for calendar year 2026. He wrote, “If 20 jack-ups are retired over the 2025–26 period, this will reduce the overall fleet by about 5%.”
Lopez adds that “Borr may still be trading at less than 1x Ebitda” — a valuation that would suggest significant upside remains should day rates run from the current level of $145,000 to something close to $200,000 given the expected reduction in supply.
The Chart
Long-time readers know I get excited when I get to pull the old Andrews' Pitchfork model out of my bag of tricks. We can see here that the stock has tried to break out beyond the upper trendline of the model and to crash through the lower trendline as well without success in cracking either line.
Currently the stock is testing both the central trendline and its own 21-day exponential moving average (EMA) from above. Should that support area fail, the 50-day simple moving average (SMA) is now running concurrently with the lower trendline, thus strengthening that rising level of technical support.
Relative strength is flatlining at better-than-neutral levels, while the daily moving average convergence divergence (MACD) has run into trouble. Currently, the histogram of the 9-day EMA has crossed into negative territory as the 12-day EMA has crossed below the 26-day EMA. Having missed most of the late 2025 elevator ride, this puts me in accumulation mode down to that 50-day line.
Price Target: $5.00 (for now)
Pivot: Central trendline (currently $3.90)
Add: Down to 50-day SMA (currently $3.40)
Panic: Loss of lower trendline
At the time of publication, Guilfoyle was long BORR equity.
