Photo: Norve, one of 23 rigs in Borr's fleet (for illustration purposes); Source: Borr Drilling

Borr Drilling laying the groundwork to divest three rigs for $320 million

Offshore drilling contractor Borr Drilling has entered into a deal with an undisclosed buyer for the sale of three jack-up rigs, which are currently under construction with Keppel FELS, a wholly-owned subsidiary of Keppel Offshore & Marine.

Borr Drilling revealed on Monday that it has signed a binding letter of intent with an undisclosed third party for the sale of three high-specification units under construction with the Keppel FELS shipyard. The rigs being sold are Tivar, Huldra and Heidrun. These three rigs are among the five newbuild rigs for which delivery dates were postponed from 2023 to 2025 back in February 2022.

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In regards to the sale of these three rigs, the offshore drilling contractor advised that it is subject to customary closing conditions and procedures and is expected to conclude within 30 days. Since these rigs are expected to be employed by the prospective owner in a captive market, the sale represents limited competition to Borr Drilling’s fleet.

Furthermore, the rig owner informed that the total consideration for this transaction is $320 million, which will be used to “pay the delivery instalments of the three rigs and eliminates the associated activation costs that would have been applied in the future.”

According to Borr Drilling, this sale forms an “integral part” of the refinancing and optimisation of its capital structure, which the company is working to complete as it significantly reduces its capital commitments. The firm further pointed out that it continues to actively engage with its creditors to complete its refinancing and expects to update the market further on the progress in the
coming days.

Upon the completion of the sale, the offshore drilling contractor’s fleet will be composed of 23 delivered rigs – of which 20 are currently contracted – and two rigs under construction with Keppel FELS.

“We confirm our ambition of having all 23 delivered rigs contracted by the end of 2022, benefiting from the fast-improving jack-up market,” concluded Borr Drilling in its statement.

When it comes to the firm’s latest contracts, it is worth noting that the rig owner secured a deal in May 2022 for a jack-up drilling rig from an unnamed operator in Southeast Asia.