Borr Drilling to splash out $1.3 billion on nine jack-up rigs

Offshore driller Borr Drilling Limited has signed a master agreement for the acquisition of nine premium jack-up rigs from Sembcorp Marine’s PPL Shipyard.

Borr Drilling said last Friday that the acquisition would increase the company’s fleet to a total of 26 jack-up rigs once all rigs under construction at the shipyard have been delivered.

The company added that the acquired rigs, either built or under construction at PPL’s yard, were all PPL Pacific Class 400 premium jack-ups and are consistent with Borr Drilling’s existing fleet.

Seven out of the nine rigs have drilling packages from Cameron (a Schlumberger company) while all nine have Cameron BOPs. To put in perspective, the company announced a partnership with Schlumberger on the same day with the aim to offer integrated, performance-based drilling contracts in the offshore jack-up market.

Nine rigs for $1.3 billion

According to Borr’s statement, the total consideration for the transaction is expected to be around $1.3 billion.

Upon closing of the transaction, the company has agreed to make an up-front payment of $502 million to PPL. The remaining amount will be paid upon delivery of each rig. Borr has also secured financing from lenders for all remaining payments to the yard in the amount of $753 million.

In a separate statement, the offshore driller said that the company was contemplating offering up to 162,500,000 new shares, representing 51.5 percent of the outstanding shares of the company. The subscription price of $4.00 per share should raise gross proceeds of up to $650 million which will partly secure the financing for the acquisition of the jack-up rigs from PPL and general corporate purposes.

Borr added that the completion of the transaction with PPL is subject to equity financing being secured by the company.

Rig delivery and fleet

Borr Drilling will take delivery of the first rig in the fourth quarter of 2017 with the remaining rigs being delivered quarterly until the last rig is delivered in the first quarter of 2019.

The company’s current fleet consists of 17 jack-up rigs, two of which were bought from Hercules in late January and fifteen from Transocean in late May.