Borr Drilling has sold 14 old jack-up rigs en bloc to a non-drilling company. The rigs will be delivered to the new owner over the next 30 days. The disposal is expected to contribute up to USD16 million in profit to Borrs Q2-2018 results.
13 of the rigs will be demobilised as drilling rigs and will be targeted for MOPU orientated work. The remaining unit is allocated to development work for a specific life of field project. None of the rigs will re-enter the international jack-up drilling market post this transaction.
Borr Drilling has, since the conclusion of the Paragon transaction, actively tried to reduce the daily operating cost and capex linked to rigs which from a technical, economical or safety perspective are not feasible to return to revenue generating drilling activities. Since the beginning of the year Borr and Paragon have sold in total 26 rigs which will all leave the actively marketed jack-up fleet. The direct stacking cost for these 26 rigs was estimated to be around USD 35 million yearly which will be reduced to zero when the last rig is delivered within the next 30 days.
Out of the total delivered jack up fleet of 531 units, in total 244 units (46 %) were delivered prior to 1988. In total 104 of these older units have been stacked for more than 1 year. The cost and investments required to bring old, unemployed rigs back to the drilling market cannot be defended from a financial, operational or safety point of view. Borr Drilling has executed its divestment strategy and will, after the rationalization of the fleet and delivery of the remaining 9 newbuilds, have 24 high spec jack-ups, making it the largest premium jack-up operator in the world. In addition, Borr Drilling owns 5 older jack-ups and 1 older North Sea semi-submersible all performing contractual obligations, and 2 older jack-ups unemployed in the North Sea Market.
The Board is impressed with the speed the Borr organisation has been able to integrate Paragon, rationalize the fleet and reduce the general overhead and daily operating cost. At the same time the operation has remained strong, confirmed by an overall uptime of more than 98 % on the 8 units Borr has had in operation since the completion of the transaction.
CEO Svend Anton Maier says in a comment: We have, over the last 17 months, been able to build a unique fleet of 24 high specification assets acquired at attractive prices funded by a strong combination of equity and attractive seller financing. We see clear signs that the tender activity in the market is increasing, to a large extent, driven by NOCs and major oil companies. With the solid operational platform built both organically and through the Paragon acquisition, we are very well positioned for what we see as the start of the next upturn cycle in the jack-up market.