Offshore driller Borr Drilling has signed a master agreement with Singapore’s Keppel to acquire five jack-up rigs for a total value of approximately $745 million. This is $149 million per rig.
These are existing jack-up rigs which are currently being built by Keppel FELS to the KFELS B class designs. The total price of the five rigs excludes any down payments made by the respective original owners. To remind, back in the heyday before the oil prices collapsed in 2014, a KFELS B rig price was around $206 million.
According to Keppel, the master agreement with Borr Drilling will become effective upon the satisfaction of certain conditions, including Borr Drilling raising sufficient funds, and the relevant sales and purchase agreements for the individual rigs having been entered into.
Borr Drilling will pay the first installment of $288 million within 20 business days of the effective date of the Master Agreement and the remaining amounts are payable within five years from the respective delivery dates of each individual rig, on a seller’s credit with interest at market rates, Keppel said.
Deliveries from late 2019
The rigs are scheduled to be delivered progressively from 4Q 2019 to 4Q 2020, with one rig to be delivered in 2019 and four rigs in 2020.
Chris Ong, CEO of Keppel O&M said, “The agreement with Borr Drilling demonstrates that rig owners continue to look for reliable, high quality rigs, such as the KFELS B Class, to maximize efficiency and productivity. This is a win-win agreement for all parties and enables Keppel O&M to further improve our cashflow, minimize the holding risks of the projects, and clear several of the deferred orders. We look forward to providing Borr Drilling with another five premium, safe and cost-efficient rigs and continuing our strong partnership.”
CEO of Borr Drilling, Svend Anton Maier, added, “We are pleased to be getting another five high quality jack-up rigs from Keppel FELS on top of the five we acquired earlier. Our partnership with Keppel is crucial as it enables us to provide the market with the latest in jack-up rig technology, safety, and operability. This is an opportune time for us to grow our fleet of highly capable jack-up rigs as the market is showing signs of recovery from the bottom of the business cycle.”
News of the deal comes four months after Singapore media had reported on the potential similar agreement between the two companies.
According to a Business Times article entitled “Keppel O&M seeks to offload six jack-ups for up to US$960m” Keppel and Borr Drilling were believed “to have been in talks for the sale and resale of six jack-ups, including one that the yard group has been building without any contract in hand.”
The article at the time said that the five jack-ups that were under consideration were originally constructed for Grupo R, Clearwater Capital, Falcon Energy Group’s (FEG) unit, FTS Derricks and Fecon.
Norwegian offshore drilling contractor Borr Drilling, formerly known as Magni Drilling, was formed in 2016, with the ambition of acquiring and operating drilling assets in order to take advantage of opportunities in a rapidly changing oil and gas industry.
Schlumberger, the world’s largest oilfield services provider, acquired stake in the company “to demonstrate our openness to new types of business relationships.”
However, this was just a warm-up as the newcomer to the offshore drilling space then bought the entire jack-up fleet from Transocean for $1.35 billion in 2017, and then, earlier this year, the company acquired offshore driller Paragon Offshore.