Borr Drilling Stock

Borr Drilling Limited operates as an offshore shallow-water drilling contractor providing worldwide offshore drilling services to the oil and gas industry.

The company’s primary business is the ownership, contracting and operation of jack-up rigs for operations in shallow-water areas (i.e., in water depths up to approximately 400 feet), including the provision of related equipment and work crews to conduct oil and gas drilling and workover operations for exploration and production customers. The company owns 22 rigs with an additional two jack-up rigs scheduled to be delivered by the third quarter of 2025. Upon delivery of these newbuild jack-up rigs, the company will have a fleet of 24 premium jack-up rigs, which refers to rigs delivered from the yard in 2000 or later.

The company is one of the largest international operators of drilling rigs within the jack-up segment and the shallow-water market is its operational focus. Jack-up rigs can, in principle, be used to drill exploration wells, i.e. explore for new sources of oil and gas or new production wells in an area where oil and gas is already produced; the latter activity is referred to as development drilling.

The company contracts its jack-up rigs primarily on a dayrate basis to drill wells for its customers, including integrated oil companies, state-owned national oil companies and independent oil and gas companies. During 2022, the company’s top five customers by revenue, including related party revenue were Perfomex (Perforaciones Estrategicas e Integrales Mexicana S.A. de C.V.), PTTEP (PTT Exploration and Production Public Company Limited), ENI Congo S.A., Vaalco Gabon S.A. and Addax Petroleum S.A. A dayrate drilling contract generally extends over a period of time covering either the drilling of a single well or group of wells, or covering a stated term.

The company operates in significant oil-producing geographies throughout the world, including the North Sea, Mexico, West Africa, South East Asia and the Middle East.

Business Strategies

The company’s strategies are to deploy high-quality rigs to service the industry; become a preferred provider in the industry; and establish high-quality operations.

Fleet

The company’s drilling fleet consists of 22 rigs, of which all are premium jack-up rigs. In addition, the company has agreed to purchase two additional premium jack-up rigs to be delivered during the third quarter of 2025. The company defines premium jack-up rigs as rigs built in 2000 or later and which are suitable for operations in water depths up to 400 feet with an independent leg cantilever design. All but one of the company’s rigs were built after 2013 and as of December 31, 2022, the average age of its fleet was 6.0 years.

As of December 31, 2022, the company had 22 jack-up rigs, of which one rig was ‘warm stacked’, meaning the rig is kept ready for redeployment and retain a maintenance crew. The company also had two newbuild rigs under construction which are expected to be delivered in 2025. As of December 31, 2022, the company had zero rigs ‘cold stacked’, meaning the rig is stored in a harbor, shipyard or a designated offshore area and the crew is reassigned to an active rig or dismissed.

Each rig in the company’s fleet is certified by the American Bureau of Shipping (ABS), enabling universal recognition of its equipment as qualified for international operations.

Customers

The company’s customers are oil and gas exploration and production companies, including integrated oil companies, state-owned national oil companies and independent oil and gas companies. As of December 31, 2022, the company’s largest customers in terms of revenue were Perfomex, PTTEP, ENI Congo S.A., Vaalco Gabon S.A. and Addax Petroleum S.A. The company’s jack-up rigs are contracted to customers for periods between a couple of months, to several years.

As of December 31, 2022, excluding its joint venture operations in Mexico, the company had 16 operating or committed jack-up rigs in total, including six in South East Asia, five in West Africa, one in the North Sea, one in Mexico and three in the Middle East. The Technical Utilization and Economic Utilization for the company’s drilling fleet, excluding Mexico operations, was 98.9% and 98.1%, respectively during 2022.

Joint Venture and Partner Relationships

The company participates in joint venture drilling operations in Mexico and may participate in additional joint venture drilling operations in the future.

Mexico

In February 2019, the company, along with its local partner in Mexico, CME (Proyectos Globales de Energia y Servicos CME, S.A. DE C.V.), successfully tendered for a contract to provide integrated well services (IWS) to Pemex (Petróleos Mexicanos). In March 2019, the company’s subsidiary, Borr Drilling Mexico S. de R.L. de C.V. (BDM), and a CME subsidiary, Opex (together with BDM, the Contractor), entered into a contract for the provision of IWS to Pemex (the Cluster 2 Contract). The company guaranteed the performance of the Contractor’s obligations under the first Pemex Contract and its subsidiary, Borr Mexico Ventures Limited (BMV) participated as shareholder in the joint venture arrangements in connection with the Cluster 2 Contract (the IWS JVs). In June 2019, the company finalized the IWS JVs structure and with effect from June 28, 2019, BMV owned a 49% interest in both Opex (Opex Perforadora S.A. de C.V.) and a second joint venture entity, Perfomex and CME owned the remaining 51%. Operations under the first Pemex Contract commenced in August 2019. The Pemex Cluster 2 Contract was extended in December 2019 to include a third rig. In December 2019, the company also participated with CME to take an assignment of a second integrated contract with Pemex under a similar structure for two further rigs (the Cluster 3 Contract and, together with the Cluster 2 Contract, the Pemex Contracts). For the purposes of these additional contracts, two new subsidiaries were incorporated with the same shareholding interests as Opex and Perfomex; Akal (Perforadora Profesional AKAL I, SA de CV) was established to deliver IWS to Pemex, and Perfomex II to deliver drilling, technical, management and logistics services to Akal. Operations under the Cluster 3 Contract commenced in March 2020.

Opex and Akal were IWS contractors under the Pemex Contracts and within the structure of the IWS JVs. Opex and Akal entered into contracts with Schlumberger, and certain of its affiliates, and other third party contractors for the provision of IWS. Perfomex and Perfomex II were the entities subcontracted by Opex and Akal, respectively, to provide the other services required by Opex and Akal in order to comply with their respective obligations under the Pemex Contracts. In connection with the provision of drilling services by Perfomex and Perfomex II, the company’s rigs Grid, Gersemi and Galar (for the Cluster 2 Contract) and Odin and Njord (for the Cluster 3 Contract) were chartered to Perfomex and Perfomex II, respectively, under bareboat charter agreements. In addition to the rigs, the company provided technical and operational management for all jack-up rigs being operated through the IWS JVs.

In August 2021, the company's subsidiary BMV executed a Stock Purchase Agreement with Operadora (Operadora Productora y Exploradora Mexicana, S.A. de C.V.) for the sale of the company's 49% interest in each of Opex and Akal joint ventures, representing the company's disposal of the IWS operating segment, as well as the acquisition of a 2% incremental interest in each of Perfomex and Perfomex II joint ventures. The sale enabled the company to streamline its operations in Mexico, and focus on its dayrate drilling services provided by the remaining Mexican Joint Ventures.

Effective October 20, 2022, all five jack-up rigs Grid, Gersemi, Galar, Odin and Njord are contracted to Perfomex on bareboat charters, thereby consolidating activities for Perfomex's provision of traditional dayrate drilling and technical services to Opex. Effective from this date, Perfomex II continues to provide technical services to Opex, in addition to rig management services to external parties.

The company’s Mexican Joint Ventures may be used to provide drilling services utilizing other rigs owned by its subsidiaries and/or subsidiaries of CME and, if the company enters into further contracts with Pemex to provide drilling services, it may enter into other joint venture structures with CME in order to provide such services.

Geographical Focus

The company bids for contracts globally, however its geographical focus is South East Asia, Europe, Mexico, the Middle East, and West Africa.

Divestments

In November 2022, the company sold the Gyme, pursuant to an undertaking by the company under its most recent refinancing with PPL Shipyard Pte Ltd (PPL) completed in October 2022.

The company sold the rig ‘Tivar’ and was delivered to the buyer in November 2022.

In December 2022, the company sold the rigs ‘Huldra’ and the ‘Heidrun’ to an unrelated third party, and the rigs are scheduled to be delivered to the buyer in May 2023 and July 2023, respectively.

Regulation

The company’s operations are subject to numerous QHSE (quality, health, safety and environment) laws and regulations in the form of international treaties and maritime regimes, flag state requirements, national environmental laws and regulations.

The company’s jack-up rigs are certified as being in-class by the American Bureau of Shipping (ABS) and the company complies with the mandatory requirements of the national authorities in the countries in which its jack-up rigs operate.

Applicable international maritime regime requirements include, but are not limited to, the International Convention for the Prevention of Pollution from Ships; the International Convention on Civil Liability for Oil Pollution Damage of 1969; the International Convention on Civil Liability for Bunker Oil Pollution Damage of 2001 (ratified in 2008); the International Convention for the Safety of Life at Sea of 1974; the Code for the Construction and Equipment of Mobile Offshore Drilling Units, 2009; and the International Convention for the Control and Management of Ships’ Ballast Water and Sediments, effective as of 2017 (the BWM Convention). These conventions have been widely adopted by United Nation member countries, and in some jurisdictions in which the company operates, these regulations have been expanded upon.

Annex VI to MARPOL (International Convention for the Prevention of Pollution from Ships of 1973, as from time to time amended) sets limits on sulfur dioxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting substances. Annex VI applies to all ships and, among other things, imposes a global cap on the sulfur content of fuel oil and allows for specialized areas to be established internationally with even more stringent controls on sulfur emissions. For vessels 400 gross tons and greater, platforms and drilling rigs, Annex VI imposes various survey and certification requirements. Moreover, Annex VI regulations impose progressively stricter limitations on sulfur emissions from ships. Since January 1, 2015, these limitations have required that fuels of vessels in covered ECAs (Emission Control Areas), including the Baltic Sea, North Sea, North America and the United States Caribbean Sea ECAs, contain no more than 0.1% sulfur. For non-ECA-areas, a global cap on sulfur content of no more than 0.5% entered into force on January 1, 2020. Annex VI also established new tiers of stringent nitrogen oxide emissions standards for new marine engines, depending on their date of installation. All of the company’s rigs are in compliance with these requirements.

All of the company’s jack-up rigs considered in operational status are in full compliance with the staged implementation of the BWM Convention by the United Nation’s International Maritime Organization (IMO) guidelines.

Applicable environmental laws and regulations for the company’s operations include the Basel Convention, the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 (when it enters into force), as well as European Union regulations, including the E.U. Directive 2013/30 on the Safety of Offshore Oil and Gas Operations, Regulation (EC) No 1013/2006 on Shipments of Waste and Regulation (E.U.) No 1257/2013 on Ship Recycling.

The company is subject to rules and regulations governing protection of personal data, including the GDPR (General Data Protection Regulations of the European Union), repealing the 1995 European Data Protection Directive (Directive 95/46/EC) and any national laws within the European Economic Area (EEA) supplementing the GDPR.

History

Borr Drilling Limited was founded in 2016. The company was incorporated in Bermuda in 2016.