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Borr Drilling Limited has secured new contract commitments in the North Sea and in Southeast Asia for three of its jack-up gigs.
The contract commitments add up to 820 days in total and $156.8 million in revenue inclusive of mobilization and demobilization compensation, Borr said in a news release Tuesday. The contracts are for Borr’s Prospector 1 and Gunnlod jack-up rigs, plus a rig still to be determined.
In the North Sea, the company secured multiple contracts totaling 250 days of backlog that started in March. In Southeast Asia, Borr secured a one-well commitment, with an anticipated duration of 90 days, that will begin in May, according to the release.
Further, an undisclosed customer issued a firm and binding letter of award for a campaign expected to start between the fourth quarter of 2024 and the first quarter of 2025, with an estimated duration of 480 days, Borr stated.
Meanwhile, Borr received a notice of temporary suspension of operations for its rig Arabia I, operating in Saudi Arabia. The temporary suspension will be for a period of up to 12 months, and is expected to start in the second quarter.
The company said it intends to seek alternative engagement for the rig while it is on suspension, according to a separate statement.
Fourth Quarter Results
In its most recent earnings release, Borr reported fourth-quarter net income of $28.4 million, an increase of $28.1 million quarter over quarter. It posted total operating revenues of $220.6 million, an increase of $29.1 million, or 15 percent, compared to the third quarter of 2023.
The company’s adjusted EBITDA for the fourth quarter of 2023 was $105.9 million, an increase of $17.7 million, or 20 percent, sequentially.
Borr reported a total contract revenue backlog of $1.75 billion as of December 31, 2023, including its Mexico rigs.
“Our fourth quarter performance has been strong, enabling us to close the year having achieved several major milestones,” Borr CEO Patrick Schorn said.
“On the contracting front, we closed the year with all of our 22 delivered rigs contracted,” Schorn continued. “Over the course of 2023, we also secured several new contracts adding $728 million, at an implied rate of approximately $161,000 per day, to our revenue backlog, which stood at $1.75 billion at year end”.
“Following the award of three additional contracts in 2024, we have 87 percent of our available capacity in 2024 already covered by firm contracts and priced options, and we expect this to further increase in the coming months as we progress current negotiations. This strong contract coverage provides both solid near-term revenue and earnings visibility as well as the ability to balance contracts to optimize our market position and earnings,” he outlined.
“Our Adjusted EBITDA increased by 20 percent from the third quarter to $105.9 million, reflecting a close to fully operational fleet. We expect Adjusted EBITDA to continue to increase throughout 2024 as more rigs end their current contracts and commence new ones at higher day rates and improved contract terms. Based on our positive business outlook and strong fleet coverage, we maintain our estimate of Adjusted EBITDA for the full year 2024 to be between $500 to $550 million,” Schorn added.
To contact the author, email rocky.teodoro@rigzone.com
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