OSLO, Norway, May 20, 2020 /PRNewswire/ -- Hamilton, Bermuda, May
20, 2020: Borr Drilling Limited ("Borr", "Borr Drilling",
"we" or the "Company") (NYSE: BORR, OSE: BDRILL) announces a
trading update, including a limited financial analysis of the three
months ended March 31, 2020.
This trading update given today is in lieu of the Company's
usual quarterly report and includes the Company's Statement of
Operations and a Balance Sheet for the first quarter 2020 as an
appendix prepared in accordance with US GAAP.
The Chairman of the Board, Paal
Kibsgaard, commented:
"I am pleased with the first quarter financial results, where
we in spite of operational challenges linked to COVID-19, saw a
sequential increase in operating revenues of 12% to $104.1 million, and Adjusted EBITDA reaching
$25.4 million, an increase of
$23.6 million compared to the fourth
quarter 2019.
The first quarter financial performance was driven by "Saga",
"Idun" and "Prospector 1", all generating revenue for a full three
months, and by lower operating expenses, as our rig activation
program continued to wind down, as well as lower G&A costs
compared to the fourth quarter 2019.
In response to the COVID-19 pandemic, the Company has taken a
range of operational and business continuity measures to protect
the health and safety of our people, both onshore and offshore, and
also to ensure that we can continue to serve our customers. With
the weaker short-term outlook for oil prices and offshore activity,
we have also implemented a company-wide cost reduction plan, to
reduce annual operating and G&A expenses by a further
$35 million.
The Company continues to work on improving cashflow and
strengthening the balance sheet through tight control of both
operating expenses and working capital. With 6 newly activated rigs
unemployed due to reduced offshore activity, the liquidity required
for rig classification and mobilization to secure new contracts is
expected to be minimal.
The Company has, as a result of the weakened market, actively
entered into discussions with the shipyards and creditors to create
a liquidity runway until 2022 even in an unlikely low scenario
without any further contracts. These discussions are showing
material progress, and the board expects the process to be
finalized in the near-term.
In April, the Company sold the "B152" and "Dhabi II" rigs for
total proceeds of $15.8 million, and
Borr continues to be involved in other tender processes which might
lead to sale of some modern assets.
Looking at the total jack-up market, the number of contracted
units have decreased from 387 to 371 units in the last 2 months, as
a result of the COVID-19 pandemic, and we expect this number to
reduce further. However, as global oil demand is anticipated to
rebound in the coming year, we expect that some of the supply
reductions and shut-ins will be slower to recover. This could lead
to the development of a more constructive oil market over the
course of 2021, and a subsequent improvement in offshore
drilling."
Highlights in the first quarter 2020
In $
million
|
|
Q1 -
2020
|
Q4 -
2019
|
FY
2019
|
Total operating
revenues
|
|
104.1
|
92.9
|
334.1
|
Adjusted
EBITDA
|
|
25.4
|
1.8
|
(2.6)
|
Operating
loss
|
|
(26.8)
|
(30.2)
|
(150.7)
|
Net
income/(loss)
|
|
(87.0)
|
(60.3)
|
(299.1)
|
Operating revenues increased by 12% quarter on quarter to
$104.1 million
- Adjusted EBITDA in the first quarter 2020 of $25.4 million, an increase of $23.6 million over Q4 2019
- The results from the Company's integrated service operation in
Mexico has improved significantly
through increased efficiency. The operation is showing strong
results adjusted for the start-up costs and is confirming Borr's
capabilities.
- The improvement in Mexican operations includes a reversal of
$18.3 million from the geological
event in fourth quarter 2019 which has now been booked as revenue
and collected from Pemex. This has led to a positive adjustment of
the Q4 numbers.
- As a function of the weaker market, the Company has thoroughly
reviewed its cost structure. Actions have already been implemented
to reduce the annual run-rate of overall operational cost and
G&A with $35 million compared to
the Company's original budget.
Subsequent events
- Borr continue to be involved in tender processes which might
lead to sale of certain modern assets, with the target to further
strengthen the liquidity position.
- The Company has sold "B152" and "Dhabi II" with associated
backlog for total proceeds of $15.8
million in April, resulting in an estimated accounting gain
of $11.8 million, which will be
recorded in the second quarter 2020.
- In May, the Company took delivery of 4.26 million Valaris
shares under its forward contracts and subsequently sold 1.7
million of the shares in line with its previously communicated
strategy.
- On May 19, 2020, we signed an
agreement to sell the "MSS1" for recycling for proceeds of
$2.2 million. The book value of the
rig was impaired down to its sale value at the end of the first
quarter 2020, and the rig was classified as held for sale. The sale
is expected to close in the second quarter 2020.
- Borr has, in response to the weakening market, taken an active
approach to enter into discussions with its lenders and shipyards
with the target to lower the Company's cash break even rates for
the next two years and thereby significantly strengthen the
Company's liquidity situation. The lenders and shipyards recognise
the current challenging environment. Significant progress has been
made based on a proposed arrangement with lenders including
shipyards which includes postponement of certain yard commitments,
adjustment in covenants and reduced amortisation as well as
deferring cash interest payments. Management believes that such a
solution, if concluded, will give the Company a runway for the next
two years even in the unlikely scenario where no new contracts are
obtained or renewed. At the end of the first quarter of 2020 and
into the second quarter 2020, the Company also received certain
waivers from its lenders, including a waiver of its minimum free
liquidity threshold as well as interest payment
deferrals.
The full Trading Update and the Fleet Status Report is available
in the enclosed files
May 20, 2020
The Board of Directors
Borr Drilling Limited
Hamilton, Bermuda
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The following files are available for download:
https://mb.cision.com/Public/16983/3117137/9d7e1c3106cdfa28.pdf
|
Borr Q1 2020 Trading
Update
|
https://mb.cision.com/Public/16983/3117137/9c5585b240026b3c.pdf
|
Borr Drilling - Fleet
Status Report May 2020
|
Please add the contact details below:
Magnus Vaaler:
VP Investor Relations and Treasury
+47-22-48-30-00
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SOURCE Borr Drilling Limited