Borr Drilling Ltd. is building up its fleet, having reached a deal to buy nine jackup drilling rigs from Sembcorp Marine subsidiary PPL Shipyard (PPLS) in a $1.3 billion deal.
Sembcorp Marine said Oct. 6 that its subsidiary had signed agreements for the Pacific Class 400 rigs. Under the terms of the agreements, which are subject to certain conditions being met by both parties, Borr Drilling will take delivery of the rigs over a 14-month period starting in fourth-quarter 2017, according to a news release.
The deal comes about four months after Borr completed its purchase of 10 high-specification shallow-water jackups from Transocean in a $1.35 billion deal as the company works to grow its fleet. Borr was founded in 2016 by former executives of Seadrill. Schlumberger Oilfield Holdings Ltd. has a 20% ownership in Borr Drilling.
“Since purchasing two modern jackups in December 2016, Borr Drilling has acquired 15 additional rigs,” Borr said on its website. “The company is presently the operator of a fleet of 12 jackup drilling rigs. Further, we have five high specification units on order from Keppel FELS with delivery dates ranging from Q1 2018 to Q4 2020.”
As part of the latest deal, Borr will pay $500 million upfront with balance of about $800 million to be paid at any time within five years from the respective delivery dates of the rigs, Sembcorp said in the release. The drilling company is expected to pay interest at market rates from the delivery dates of the rigs to full payment of the balance amount.
Three of the rigs included in the sale are under construction, and PPLS terminated original contracts for customers for the remaining six rigs.
Sembcorp said the sale will result in a loss of about US$11 million (S$15 million); however, it is expected to “significantly improve the liquidity position of the company and help strengthen its ability to offer quality solutions to customers, ride through the current cycle trough and be well-positioned for the industry’s recovery.”