APRIL 30, 2018 — Tor Olav Troim’s Borr Drilling Limited has sold 14 older jack-up rigs en bloc to a non-drilling company. The rigs were acquired as part of Borr Drilling’s acquisition of Houston-headquartered Paragon Offshore and will be delivered to the new owner over the next 30 days. The disposal is expected to contribute up to $16 million in profit to Borr’s Q2-2018 results.
Borr says that 13 of the rigs will be demobilized as drilling rigs and will be targeted for mobile offshore production unit work. The remaining unit is allocated to development work for a specific life of field project. None of the rigs will re-enter the international jack-up drilling market after transaction.
Borr Drilling says that since the conclusion of the Paragon deal it has actively tried to reduce the daily operating cost and capex linked to rigs that, from a technical, economical or safety perspective, it is not feasible to return to revenue generating drilling activities. Since the beginning of the year Borr and Paragon have sold in total 26 rigs that will all leave the actively marketed jack-up fleet. The direct stacking cost for these 26 rigs was estimated to be around $35 million yearly which will be reduced to zero when the last rig is delivered within the next 30 days.
Borr says that cost and investments required to bring old, unemployed rigs back to the drilling market cannot be defended from a financial, operational or safety point of view. Borr says it has executed its divestment strategy and will, after the rationalization of the fleet and delivery from the shipbuilder of remaining 9 newbuilds, have 24 high spec jack-ups, making it the largest premium jack-up operator in the world. In addition, Borr Drilling owns five older jack-ups and oneolder North Sea semi-submersible all performing contractual obligations, and two older jack-ups unemployed in the North Sea Market.
CEO Svend Anton Maier says: “We have, over the last 17 months, been able to build a unique fleet of 24 high specification assets acquired at attractive prices funded by a strong combination of equity and attractive seller financing. We see clear signs that the tender activity in the market is increasing, to a large extent, driven by NOCs and major oil companies. With the solid operational platform built both organically and through the Paragon acquisition, we are very well positioned for what we see as the start of the next upturn cycle in the jack-up market.”