Jack-up drilling contractor Borr Drilling's Chairman has said that 2019 was a record year when it comes to jack-up rig contract years awarded and that demand is high for modern jack-ups.
In a statement Friday, the Chairman of the Board, Paal Kibsgaard – ex-Schlumberger CEO -said the trend of increasing utilization and higher jack-up day rates seen in the first nine months of 2019, continued into the fourth quarter.
He said: “In 2019, 420 rig years [were ] contracted in the jack-up market, beating the 2013 peak of 410 rig years. In spite of the volatility seen in the global oil and equity markets so far this year, the growth in shallow-water drilling is set to continue in 2020.“
"This is driven by customers who have attractive shallow water acreage and are managing their resource base with a long-term view.#
Based on ongoing tendering activity and customer interactions, Borr, which owns 24 modern jack-up units – built after 2001 - expects there will be a requirement for more than 40 additional jack-ups to address the planned activity.
"This will likely consume most of the available modern jack-up capacity, setting the stage for further increases in utilization and day rates as the year progresses,” Kibsgaard said.
The Company currently has 16 rigs in operation: four in the North Sea, two in the Middle East, five in West Africa, three in South East Asia and two in Mexico.
Jack-up count to surpass 400
According to Borr, there are a total of 381 contracted jack-up rigs, up from 365 rigs per September 30, 2019. For modern rigs, contracted rig count stands at 263 representing an increase of approximately 86 rigs or 50% since 2014.
"There are currently only 34 uncontracted modern jack-ups. The Company estimates that only 14 modern units are warm stacked and are being actively marketed by international operators. Borr Drilling owns six of these units,” Borr said.
Borr Drilling said: “…We currently see a demand for more than 40 modern jack-up rigs in various tenders across the world. This includes 19 incremental rigs going into the Middle East, with UAE being a big driver with one NOC requiring up to 16 incremental modern rigs within first half of 2021. Mexico is also expected to require another ten rigs on top of what has already been contracted, and we expect SouthEast Asia, driven by Thailand, Malaysia, and Vietnam to require seven incremental rigs.
“Additionally there is incremental demand in West-Africa, India, China, and other jurisdictions. As a result of this and with a total of 381 rigs currently contracted, we expect the global jack-up rig count to significantly surpass 400 units in the next twelve months, which will push utilization to more than 95% for modern rigs.”
Borr on Friday posted rotal operating revenues of $92.9 million, a net loss of $69.3 million and Adjusted EBITDA of $1.8 million for the fourth quarter of 2019. Total operating revenues of $334.1 million, a net loss of $308.1 million and Adjusted EBITDA of $(2.6) million for the full year 2019
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