Keppel and Borr Drilling change up delivery terms for five jack-up rigs

Singapore’s Keppel shipyard has entered into an amended and restated framework deed with drilling contractor Borr Drilling to accelerate deliveries of three rigs and defer two others.

As a reminder, Keppel and Borr had already previously delayed deliveries of these rigs being built by Keppel’s subsidiaries, first in June 2020 and then in January 2021. This resulted in the deferral of the scheduled delivery of five jack-up rigs to 2023. The rigs were supposed to be delivered progressively with the first delivery in May 2023 and the final delivery in December 2023.

Keppel O&M has now entered into the amended and restated framework deed with Borr Drilling and certain of its subsidiaries to, amongst other things, accelerate the delivery of three of the five undelivered jack-up rigs to Borr Drilling (or a third party whom Borr Drilling intends to sell the rigs to) between October 2022 and July 2023.

The seller’s credit arrangements for two of these three jack-ups will be cancelled, and accordingly, all three rigs will be delivered without any seller’s credit arrangement. The overall aggregate of the various seller’s credit arrangements being made available by Keppel O&M will be significantly reduced by over 35 per cent.

All three jack-up rigs will be delivered with full payments (including holding costs and cost cover) on delivery, amounting to at least $352 million in aggregate, out of which at least $158 million will be payable in 2022. These new arrangements will become effective immediately.

The remaining two of the five undelivered jack-up rigs will have their scheduled deliveries to Borr Drilling deferred to 2025. Borr Drilling will pay holding costs and cost cover in respect of the deferred deliveries.

The transactions contemplated in the amended and restated framework deed (other than those previously described) will become effective upon the satisfaction of certain conditions, including Borr Drilling obtaining consents of its other key creditors for, amongst others, the deferral of principal and interest payments in respect of certain debts owing to those creditors to 2025.

According to Borr’s fleet status report, these five rigs are named Tivar, Vale, Var, Huldra, and Heidrun.