Borr Drilling Limited - Contracting Update
- Securing new contract commitments for three premium jack-up rigs showcases Borr Drilling's ability to drive revenue growth.
- The total of 820 days and $158.6 million in contract revenue, inclusive of mobilization and demobilization compensation, indicates a substantial financial impact.
- Securing multiple contracts in the North Sea and Southeast Asia diversifies Borr Drilling's geographical footprint and revenue streams.
- The firm and binding Letter of Award for a future campaign highlights the company's strong market position and growth potential.
- The anticipated commencement of contracts in various regions throughout 2024 and 2025 demonstrates a robust project pipeline for Borr Drilling.
- None.
The announcement of new contract commitments for Borr Drilling Limited's premium jack-up rigs represents a positive development for the company's operational backlog and future revenue streams. The addition of 820 days worth of contracts at a value of $158.6 million is a substantial increase in workload and financial security. This is particularly noteworthy in the context of the energy sector, where contract longevity and stability are key indicators of a company's performance and future prospects.
Investors may view these new contracts as a sign of trust in Borr Drilling's operational capabilities, potentially leading to a more favorable perception of the company's stock. Furthermore, the diversification of contracts across different geographical regions, such as the North Sea and Southeast Asia, helps mitigate regional market risks. The undisclosed customer's firm and binding Letter of Award for a campaign of 480 days also adds an element of anticipation and potential growth to the company's portfolio.
From a financial perspective, the disclosure of $158.6 million in contract revenue is a significant figure that will likely impact Borr Drilling's financial health positively. The inclusion of mobilization and demobilization compensation indicates that the company is effectively managing its operational costs associated with the transitioning of rigs to new locations. This strategic management can lead to improved margins and profitability.
Analysts typically extrapolate such contract values to forecast earnings and assess the company's valuation. Given that the contracts commence at different times throughout 2024 and into 2025, this staged inflow of revenue can provide a more stable financial outlook for the company, smoothing out potential volatility in earnings. It's also essential to consider the day rate implied by these contracts, which can serve as a benchmark for the industry and reflect the current demand for drilling services.
The energy market is influenced by a variety of factors, including oil prices, geopolitical stability and supply-demand dynamics. Borr Drilling's announcement of new contracts is a reflection of current market conditions and the demand for drilling services. The fact that these contracts are for premium jack-up rigs suggests that there is a specific demand for high-specification rigs capable of operating in challenging environments.
It is also indicative of the company's competitive positioning within the market. By securing contracts in both the North Sea and Southeast Asia, Borr Drilling is demonstrating its operational reach and versatility. This could attract attention from investors who are looking for companies with a diversified portfolio and the ability to capitalize on opportunities in different markets. Additionally, the timeline for these contracts suggests a steady workload well into the future, which is a positive sign for the company's sustained growth.
In the North Sea, multiple contracts have been secured totaling 250 days of backlog that commenced in March 2024.
In Southeast Asia, the Company has secured a one well commitment, with an anticipated duration of 90 days, that will commence in May 2024.
Finally, an undisclosed customer has issued a firm and binding Letter of Award for a campaign expected to commence between Q4 2024 and Q1 2025, with an estimated duration of 480 days.
9 April 2024
Forward looking statements
This press release includes forward looking statements, which do not reflect historical facts and may be identified by words such as "will", "expect" , "estimate" and similar expressions and include statements relating to contract awards, letter of awards, contract duration and value and expected start and end dates, and other non-historical statements. Such forward looking statements are subject to risks, uncertainties, contingencies and other factors could cause actual events to differ materially from the expectations expressed or implied by the forward-looking statements included herein, including risks related to contracting, including our ability to convert LOAs into contracts, the final terms and start dates of such contracts, actual performance under drilling contracts, the risk that backlog may not be realized, and other risks and uncertainties described in the section entitled "Risk Factors" in our most recent annual report on Form 20-F and other filings with the Securities and Exchange Commission. Such risks, uncertainties, contingencies and other factors could cause actual events to differ materially from the expectations expressed or implied by the forward -looking statements included herein. These forward-looking statements are made only as of the date of this release. We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.
Contact:
Questions should be directed to: Magnus Vaaler, CFO, +44 1224 289208
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SOURCE Borr Drilling Limited
