Mist jack-up rig - Borr Drilling

Borr Drilling believes rig day rates will increase

Offshore drilling contractor Borr Drilling has converted previous letters of awards into contracts, secured a couple of new deals, and postponed delivery dates for five newbuilds by two years. Based on the current tendering activity, the rig owner believes that day rates will increase.

Borr's Mist jack-up rig; Source: Borr Drilling

Borr Drilling now has 18 units contracted and committed for future contracts. As reported last November, the company expected to fully contract its fleet of 23 delivered rigs by 2022 due to strong demand. While it still has not happened, the expectations for this year have not changed.

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Borr on Wednesday released its latest fleet status report, revealing new contracts for its fleet of jack-up rigs. According to the report, Borr signed a new contract with Wintershall Dea for operations in Mexico. Under this contract, the Ran jack-up will work for the German oil company from August 2022 to January 2023.

Furthermore, the Prospector 5 rig has secured a contract with Dana Petroleum in the Netherlands from April 2022 to May 2022. The rig completed its previous contract with CNOOC in the UK in December 2021. With this latest contract, Borr has now increased the contracted and committed fleet to 18 rigs.

Following previously revealed letters of award, Borr has now signed contracts for the Idun, Groa, and Natt rigs.

Idun will be working for Petronas Carigali in Malaysia from March 2022 until May 2023. Groa will start its contract with QatarEnergy in Qatar in March 2022 and the contract will run until March 2024. The third one, Natt, has already started its contract with Eni in Congo in January 2022 and will be there until January 2023.

Borr has also confirmed that, following an announcement from December 2021, the Norve jack-up will be working for BW Energy in Gabon from September 2022 until April 2023. The rig is currently working for Vaalco in Gabon, set to end in April 2022, after which it is scheduled for a periodic survey.

Several other rigs have started their previously announced contracts, including Mist, which is working for PTTEP in Thailand, and Gerd, which started its contract with Addax in Cameroon this month.

The rig owner also disclosed that delivery dates for its five newbuild rigs at Keppel FELS have been postponed from 2023 to 2025, subject to completion of yard and refinancing agreements. The five new rigs are named Tivar, Vale, Var, Huldra, and Heidrun.

Revenues down over start-up delays

When it comes to its financial performance in the last quarter of 2021, Borr’s total operating revenues were $69.1 million, a decrease of $3.9 million or 5 per cent compared to the third quarter of 2021. The rig owner booked a net loss of $46.1 million for the last quarter, an increase of $13.5 million compared to the $32.6 million loss in the third quarter of 2021.

Borr Drilling CEO, Patrick Schorn, explained that the decrease in revenues was due to a slight delay in the start-up of new contracts from what was previously anticipated. He added that the company remains on track to have all its available 23 rigs committed and under contract by the end of 2022.

Schorn said: “The current oil price in combination with a tighter oil supply/demand balance is further improving the market for shallow-water offshore drilling. It is also becoming increasingly evident that the supply of rigs ready to go to work within six months is far less than the market previously anticipated. Therefore, we maintain the view that day rates will increase based on the current tender activity and available jack-up rig supply.”