Borr Drilling Limited (BDRILL) Announces First Quarter 2018 Results
Hamilton, Bermuda, May 31, 2018: Borr Drilling Limited (“Borr”, “Borr Drilling” or the “Company”) announces results for the first quarter of 2018, ending March 31.
Highlights
• Completed the acquisition of Paragon Offshore Limited (“Paragon”)
• Completed equity offering of US$250 million at a subscription price of US$4.60 per share on March 23, 2018 to fund the Paragon acquisition
• The “Norve” commenced operations for BW Energy Dussafu B.V. (“BW Energy”) in Gabon in January
• Three newbuilds were delivered in the quarter, the “Gerd” and the “Gersemi” from PPL Shipyard Pte Ltd. (“PPL”), and the “Saga” from Keppel FELS Limited (“Keppel”)
• Mr Patrick Schorn, Executive Vice President - Wells in Schlumberger, joined the Board of Directors
• Mr Svend Anton Maier appointed Chief Executive Officer of the Company, replacing Mr Simon Johnson on March 22, 2018.
Subsequent events
• Announced the sale of 14 rigs en bloc, bringing the total number of divestments to 26 rigs from the beginning of the year in Borr and Paragon combined. 25 rigs have been delivered to the new owner, and none of the rigs will re-enter the international jack-up drilling market post the transaction.
• Secured a US$200 million non-amortising revolving bank loan facility with two-year duration
• Placement of US$350 million in principle amount of convertible bonds with a five-year tenor, coupon of 3.875% and conversion premium of 37.5%. In addition, entered into call spread agreement enhancing economic conversion premium to 75%.
• Signed agreements to acquire five jack-up drilling rigs from Keppel for a total consideration of US$742.5 million in May 2018
The Consolidated Financial Statements and the Board of Directors report is available in the files enclosed
Consolidated Statement of Operations (Financial Performance & Operating Results)
Three months ended March 31, 2018
Operating revenues were US$10.6 million for the three months ended March 31, 2018 (US$ nil in Q1 2017). The project for Total E&P Nigeria Limited (“Total”) for the “Frigg” commenced late in December 2017. The drilling campaign for BW Energy for the “Norve” commenced in January 2018.
Total operating expenses were US$62.8 million for the three months ended March 31, 2018 (US$4.9 million in Q1 2017). Total operating expenses consists of rig operating and maintenance expenses, depreciation, amortisation and impairment of non-current assets and general and administrative expenses.
Total rig operating, maintenance expenses and lay-up costs were US$22.5 million for the three months ended March 31, 2018 (US$2.3 million in Q1 2017). Rig operating and maintenance expenses increased by US$20.2 million in Q1 2018 compared to Q1 2017. The increase is primarily driven by operational costs for the rigs “Frigg” and “Norve”.
Total depreciation, amortisation and impairment of non-current assets were US$12.2 million for the three months ended March 31, 2018 (US$1.0 million in Q1 2017). Depreciation in Q1 2018 increased by US$11.2 million compared to Q1 2017 as a result of a larger fleet of jack-up drilling rigs.
Total general and administrative expenses were US$10.2 million for the three months ended March 31, 2018 (US$1.6 million in Q1 2017). The increase of US$8.6 million compared to Q1 2017 was primarily a result of termination benefits and various professional fees in connection with the acquisition of Paragon, a larger organization and additional offices due to more rigs in operations. On a run-rate basis at present activity levels, the G&A is expected to be around US$25m excluding non-cash employee share option charges for the next 12 months.
Gain from bargain purchase was US$38.1 million for the three months ended March 31, 2018 (US$ nil in Q1 2017). This relates to non-cash bargain purchase gain on the Paragon acquisition.
Total restructuring expenses were US$17.9 million for the three months ended March 31, 2018 (US$ nil in Q1 2017). This relates solely to termination payments and close-down costs linked to Paragon acquisition.
Other financial expense was US$19.7 million for the three months ended March 31, 2018 (US$ nil in Q1 2017). The increase relates to unrealized loss on forward contracts of US$20.0 million. As of May 30, 2018, this forward position has since end of the quarter increased in value with approximately US$25 million.
Paragon is included in the consolidated statement of operations from March 29, 2018. Paragon contributed with operating revenues of US$1.1 million and operating expense of US$2.2 million resulting in operating loss for the period ending March 31, 2018 of US$1.1 million.
Consolidated Balance Sheet
The Company had total assets of US$2,137.3 million as of March 31, 2018 (December 31, 2017: US$1,672.3 million). Total assets increased by US$465.0 million compared to December 31, 2017 primarily as a result of the acquisition of Paragon Offshore in the first quarter and delivery of the three newbuildings “Saga”, “Gerd” and “Gersemi”. The Company took ownership of 22 jack-up drilling rigs and one semisubmersible when acquiring Paragon, whereof 15 rigs are classified as held for sale at the end of the quarter. The acquired jack-up drilling rigs’ estimated fair value is US$261 million. The delivery financing accepted on the two newbuildings, “Gerd” and “Gersemi” was US$174.0 million.
As of March 31, 2018, total equity was US$1,670.1 million which corresponds to an equity ratio of 78.1 percent. As of December 31, 2017, total equity was US$1,492.9 million which corresponds to an equity ratio of 89.3 percent.
Total liabilities as of March 31, 2018, were US$467.2 million (December 31, 2017: US$179.4 million). The increase is mainly attributable to US$174.0 million in long-term debt related to the delivery financing for the two newbuildings “Gerd” and “Gersemi”, liability to shareholders related to the March private placement of US$27.6 million and unrealized loss on forward contracts of US$15.5 million.
Consolidated Statement of Cash Flows
Three months ended March 31, 2018
Net cash flow used in operating activities was US$42.7 million for the three months ended March 31, 2018 (December 31, 2017: negative US$32.6) and is explained by the net operating loss. Cash-flow was negatively impacted by the Paragon close down costs. This is expected to be significantly less in the coming quarters.
Net cash flow used in investing activities was US$214.7 million for the three months ended March 31, 2018 (December 31, 2017: 1,447.8). The investment activities primarily relate to the acquisition of Paragon, net of cash acquired of US$198.3 million.
Net cash flow provided by financing activities was US$144.9 million (December 31, 2017: 1,506.3) during the three months ended March 31, 2018 and relates to the March 2018 Private Placement raising net proceeds of US$211.5 million (Tranche 1) and paid down US$89.3 million for the outstanding term loan of Paragon, including accrued interest and breakage fee.
As of March 31, 2018, the Company’s cash and cash equivalents amounted to US$51.5 million (December 31, 2017: US$164.0 million). The available liquidity as of today, net of the up-front payment to Keppel of US$288 million, is in excess of US$300million.
The Consolidated Financial Statements and the Board of Directors report is available in the files enclosed
May 31, 2018
The Board of Directors
Borr Drilling Limited
Hamilton, Bermuda
Questions should be directed to:
Svend Anton Maier: Chief Executive Officer, Borr Drilling Management DMCC
+ 971 4 448 7501
Rune Magnus Lundetræ: Chief Financial Officer, Borr Drilling Management AS
+47 22 48 30 00
About Borr Drilling
Borr Drilling Limited is an international drilling contractor incorporated in Bermuda in 2016 and listed on the Oslo Stock Exchange from August 30, 2017. The Company owns and operates jack-up drilling rigs of modern and high specification designs and provides services focused on the shallow water segment to the offshore oil and gas industry worldwide.
Please visit our website at: www.borrdrilling.com