Borr Drilling: Demand for jack-up rigs growing

The market for modern jack-up rigs has reached 90 percent utilization – for the first time in the cycle – and the demand for jack-up rigs is growing, offshore drilling company Borr Drilling has said.

The market for modern jack-up rigs has reached 90 percent utilization – for the first time in the cycle – and the demand for jack-up rigs is growing, offshore drilling company Borr Drilling has said.

Borr said there is visible demand for more than 50 jack-ups in the next 12 months, most of which is coming from the Middle East (19) rigs, Mexico (12), South-east Asia (9), West Africa (8), India (3), with the remaining coming from the rest of the world.

According to Borr, there are now only 14 warm stacked units left in the market – the rigs that can go on a contract relatively quickly – five of which are owned by Borr.

Borr currently has 19 contracted rigs – with another 12 to find contracts for. Of the dozen, five are available, while seven have yet to be delivered.

Borr Drilling Chairman of the Board Paal Kibsgaard, said: “The jack-up market tightened further in the third quarter, with strong tendering activity, improving dayrates and a strengthening market outlook for 2020. We continued to execute well throughout our rig operations, as well as on our rig activation program. Over the past two years, we have brought 16 rigs into operation, with an additional three rigs presently committed to commence work.

“With a further 12 modern rigs left to be contracted, of which 7 are still to be delivered, we are in a strong market position, both in terms of capacity and the age profile of our fleet.”

Since the previous quarterly results released in August 2019, Borr has been awarded contracts, LOAs, and extensions for 6 rigs with a combined revenue backlog of approximately $169 million. Total additional backlog added year to date of approximately $465 million.

For the third quarter of 2019, Borr reported operating revenues of $102.7 million, net loss of $79.2 million and Adjusted EBITDA of $13.8 million for the third quarter of 2019. Technical utilization for the operating rigs was 99.1% in the third quarter and 99.0% for the first nine months of 2019. Looking ahead, Borr said it expected a strong increase in EBITDA  in 2020.

“Based on the current dayrates of around $100k/day, and operating expenses of around $50k/day, we aim to generate around $500 million per year in gross cashflow before interest when all of our rigs are employed. This clearly shows the cashflow potential for Borr in the coming years, which the Company is fully focused on realizing,” Kibsgaard said.

Offshore Energy Today Staff

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