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Borr optimism for the future after Q2 net loss

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Borr Drilling Limited, the Bermuda-based oilfield services company, has reported a net loss of $59.9 million for the second quarter of 2021.

The company said that was an increase of $5.5 million compared to the first quarter of the year, impacted by a $21.7 million decrease in income from equity method investments, mainly related to the integrated well services (IWS) JVs in Mexico.

Borr reported total operating revenues of $54.8 million, an increase of 13 per cent compared to the first quarter of 2021.

Adjusted EBITDA was $3.7 million, an increase of $14.4 million compared to the first quarter.

In June, the company said it entered into a memorandum of understanding to sell the company's ownership in the IWS JVs to streamline Mexico operations and improve liquidity. The transaction was completed this month and released $26.5 million net in cash.

Borr said it substantially improved cash collections from Pemex to its Mexico JVs.

Late this month, the company said it entered into two letters of award/letters of intent which have previously not been announced for two rigs in West Africa for a total duration of two years plus options.

In 2021 to date, the company said it has been awarded 28 new contracts, extensions, exercised options and LOA/LOIs, representing 6,398 days of potential backlog and $542 million in revenues, excluding unexercised optional periods.

Patrick Schorn, chief executive officer of Borr Drilling, said: "We have seen a steady improvement in operations during the second quarter of 2021 with 13 rigs working at quarter end.

“Following our significant contract wins year to date, we have added approximately $542 million in revenues to our backlog. In our fleet we have an additional ten delivered rigs that can be deployed in an improving market, and a further five rigs still to be delivered by the Keppel FELS shipyard.

"Based on ongoing negotiations expected to be concluded in the coming weeks, we anticipate having 17 rigs operating and generating revenue by year end. Against a backdrop of elevated oil prices, rig demand reverting to and outpacing pre-pandemic levels and rig supply naturally reducing, we are well positioned to benefit from the current environment, and on the way to having all of our 23 delivered rigs working by the end of 2022.

“The company should generate positive cash from operations after paying cash interest cost at the current level of 13 rigs operating at contracted rates for a full quarter. This provides us with a solid foundation going forward.

"Following improved collections in our Mexican joint ventures and the sale of our stake in the integrated well services joint ventures, we have received $42.4 million from our Mexico operations year to date. The transaction has allowed us to release working capital while simultaneously securing additional work for our five rigs in the country until the end of 2022.

“Due to a substantial improvement in collections from Pemex in Mexico during 2021, combined with the new arrangement whereby we participate only in joint ventures providing drilling services, we expect increased regularity of cash payments from our Mexico JVs.

“The resulting liquidity improvement from the release of cash in Mexico coupled with cash from operations and encouraging market signals means that both management and the board are focusing on further improving our capital structure post 2023. Specific initiatives have been taken with the target of securing a long-term capital structure solution.

“We expect these, in combination with additional rig activations and rigs in operation, to further strengthen our operating cash flows and financial position going forward."

Patrick Schorn, CEO of Borr Drilling (File photograph)
Borr Drilling: reports second quarter net loss of $59.9 million (File photograph)

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Published August 31, 2021 at 12:39 pm (Updated August 31, 2021 at 12:40 pm)

Borr optimism for the future after Q2 net loss

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