Jack-up drilling rig contractor Borr Drilling on Friday reported a $109,6 million net loss for the second quarter of 2020, on revenues of $84 million.
For comparison, Borr provided the 1Q 2020 figures, in which it posted a loss of $87 million, on revenues of $104,1 million.
The Oslo-listed drilling contractor, which recently appointed new CEO, said the revenues fell sequentially due to the coronavirus impact on activity, and its six jack-up rigs ending their contracts during the quarter, representing a reduction of $30.1 million.
This was somewhat offset by the company’s sale of the "Paragon B152" and "Dhabi II" rigs to an unnamed buyer. Borr continues to operate the rigs for the buyer.
Borr Drilling currently has eight rigs in operation: two in West Africa, one in South East Asia, and five in Mexico.
During the quarter, Borr Drilling completed the financial restructuring, with lenders agreeing on deferrals of certain interest payments, and Keppel agreeing on delivery delays for five newbuild jack-up rigs.
Borr said this would provide total liquidity improvement of more than $315 million in the perod from announcement to the first quarter of 2022.
The company is also looking to potentially sell some of its rigs.
"Borr Drilling will actively participate in processes which can lead to divestments of modern assets. However such transactions will only be pursued if it is accretive to the Company in terms of value and liquidity,“ the company said.
It has also put two rigs, deemed non-core assets, Atla and Balder up for sale.
"The company is open to divesting these assets. None of the assets are currently leveraged, and any sales proceeds will improve the liquidity position of the company and create liquidity to accelerate activation of remaining rigs,“ the company said.
Signs of recovery?
Based on the expected reduced oil supply from US shale and a recovery in global oil demand, Borr Drilling said, the company is of the opinion that the international oil and gas activity will increase in the next years, driven by low cost onshore and shallow water developments.
The company said that its "leading fleet of modern jack-ups" positions its well to benefit from the expected improvement.
The Chairman of the Board, Paal Kibsgaard, said the improvement in oil prices has triggered the demand for putting three of the company's warm stacked units back to work.
"This shows the resilience of the shallow water offshore drilling market and, as oil prices continue to improve, we expect to put further units back to work in the future. The distress in the offshore drilling industry is likely to force both needed consolidation and fleet rationalisation going forward. Borr Drilling has a brand -new jack-up drilling rig fleet and is well positioned to participate in such consolidation if it benefits our shareholders," he said.
Borr Drilling currently owns 25 rigs delivered in or after 2001 - which it describes as "modern" - jack-up rigs, and one standard jack-up rig, built before 2001. The company has contracts for delivery of five newbuilds by the third quarter of 2022.
"When all newbuild rigs have been delivered, and after the expected sale of the standard jack-up rig "Eir" is completed, the fleet will consist of 30 modern rigs (28 built after 2010)," Borr Drilling said.