A Norwegian newcomer with ties to Seadrill, Borr Drilling, is set to acquire Transocean’s entire jackup fleet, including newbuilds, in a US$1.35 billion deal.
The Constellation II jackup. Image from Transocean.
Borr Drilling signed a letter of intent with Transocean to buy 15 high-specification jackup rigs, consisting of 10 rigs in Transocean’s fleet and five newbuilds under construction at Keppel FELS.
The total agreement is expected to be $1.35 billion, and includes remaining contract backlog and remaining yard installments to Keppel Fels for the five newbuilds. The deal is expected to close by May 2017.
According to Keppel, in 2013, Transocean ordered five KFELS Super B Class jackup rigs from Keppel FELS for $1.1 billion and made a 20% down payment. Under the new agreement, Borr Drilling will take over the contracts and undertake the remaining payment installments to Keppel FELS. The price for each rig is $216 million, compared to the original price of $219 million. Borr Drilling will also make a down payment of $275 million, Keppel said.
“A deposit has in line with what has been agreed between the parties been paid from Borr to Transocean,” Borr said today. “Borr has secured financing for the transaction through a private placement of equity securities.”
The delivery dates of the five rigs were originally between 2016 and 2017, according to Keppel. However, the dates were deferred by Transocean out to 2020. The first three rigs will now be delivered between 2017 and 2018, while the remaining two rigs will be delivered in 2020, Keppel said of the new deal with Borr Drilling. The KFELS Super B Class rigs are designed to operate in 400ft water depth and drill to 35,000ft.
Borr Drilling is a newcomer to the industry but has significant ties to top management at London-headquartered Seadrill. Borr's CEO Rune Magnus Lundetrae previously served as Seadrill's CFO from 2012-2015. Borr's COO Svend Anton Maier worked at Seadrill from 2007-2016, before that he was at Transocean and Ross Offshore. Seadrill's former president and CEO Fredrik Halvorsen sits on Borr Drilling's Board of Directors, as well as Tor Olav Trøim, Seadrill's former vice president and board member from 2004-2014.
Borr Drilling, which was set up with the “ambition of acquiring and operating modern drilling assets,” took a delivery of two Hercules Offshore jackups in January, in a $130 million transaction.
Last month, Transocean scrapped two idle rigs, the M.G. Hulme, Jr. and GSF Rig 140, classifying them as for sale. Transocean also announced it had idled three other rigs due to terminated contracts.