Borr Drilling, an offshore drilling contractor, is working to safe a liquidity runway till 2022 even in an unlikely low state of affairs with none additional contracts.
In an replace on Wednesday, Borr Drilling stated that, on account of the weakened market, it had actively entered into discussions with the shipyards and collectors to create a liquidity runway till 2022.
According to the drilling contractor, the lenders and shipyards recognise the present difficult surroundings and vital progress has been made primarily based on a proposed association with lenders together with shipyards which incorporates the postponement of sure yard commitments, an adjustment in covenants and lowered amortisation in addition to deferring money curiosity funds.
These discussions are displaying materials progress, and the board expects the method to be finalized within the near-term, the corporate added.
Borr’s administration believes that such an answer, if concluded, will give the corporate a runway for the subsequent two years even within the unlikely state of affairs the place no new contracts are obtained or renewed.
At the tip of the primary quarter of 2020 and into the second quarter 2020, the corporate additionally obtained sure waivers from its lenders, together with a waiver of its minimal free liquidity threshold in addition to curiosity fee deferrals.
Further lower in variety of contracted rigs
In April, the corporate bought the B152 and Dhabi II rigs for whole proceeds of $15.eight million.
On 19 May 2020, Borr signed an settlement to promote the MSS1 semi-submersible rig for recycling for proceeds of $2.2 million.
The ebook worth of the rig was impaired all the way down to its sale worth on the finish of the primary quarter of 2020, and the rig was categorised as held on the market. The sale is anticipated to shut within the second quarter of 2020.
Borr famous it continues to be concerned in different tender processes which could result in the sale of some trendy property.
Looking on the whole jack-up market, the variety of contracted items have decreased from 387 to 371 items within the final 2 months, on account of the COVID-19 pandemic, and Borr expects this quantity to cut back additional.
“However, as international oil demand is anticipated to rebound within the coming yr, we anticipate that among the provide reductions and shut-ins shall be slower to get better”, The Chairman of Borr’s board, Paal Kibsgaard, commented.
He added: “This might result in the event of a extra constructive oil market over the course of 2021 and a subsequent enchancment in offshore drilling”.
It is value noting that, throughout the first quarter of 2020, Borr’s working revenues elevated by 12 per cent quarter on quarter to $104.1 million from $92.9 million in 4Q 2019.
The firm’s internet loss elevated to $87 million in 1Q 2020 from $60.three million in 4Q 2019.
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