Borr Drilling, a Norwegian contractor of shallow-water drilling rigs, warned on Monday that the company continued to face a “very challenging” financial situation after reporting $61.9 million in net loss for the third quarter.
The company said it continued talks with its creditors to improve its liquidity and it was ready to take part in the industry’s consolidation as a number of its peers filed for bankruptcy protection after the latest oil market crash.
“As a result of this difficult market environment, combined with payment delays in Mexico, a large amount of debt and significant newbuild obligations, the company continues to face a very challenging financial situation in the fourth quarter and going into 2021,” Borr said in its quarterly report.
The company said its Mexican operations, the largest contributor to the quarterly results, has recently experienced a slowdown in payments from Mexican national oil company Pemex, causing operational challenges.
The quarterly results were also negatively affected by $7.6 million costs directly related to the COVID-19 pandemic and $2.2 million severance costs due to staff reduction, Borr added.
“In the third quarter we operated the lowest number of active rigs since the start of the COVID pandemic, which was the result of contract cancellations and suspensions caused by operators pushing out their anticipated work scope,” Borr’s Chief Executive Patrick Schorn said.
The company had seven rigs in operation in the third quarter, out of the fleet of 28 jack-up rigs, including five rigs under construction. Since then, it added several rigs in the North Sea and Malaysia.
“The offshore drilling industry will likely change significantly during the next 12-18 months and we are determined to contribute positively in this process, creating value for our investors, customers and other stakeholders,” Borr said.
The company’s Oslo-listed shares were down 8.9% by 0918 GMT Monday, underperforming a wider European oil and gas index, which was down 1.6%.
(Reporting by Nerijus Adomaitis, editing by Gwladys Fouche)