Borr Drilling continues to consolidate jack-up drilling rig market

By the end of the month, Borr Drilling’s acquisition of Paragon Offshore Ltd for an estimated US$232.5 million should be finalised.

The addition of Paragon’s 31 jack-ups (and one semi-submersible) will make Borr the largest jack-up owner in the world, with 57. It will also be the second-largest provider of offshore rigs, measured in fleet size, just four units behind the newly-merged Ensco-Atwood, according to analyst firm Rystad Energy.

This move brings together the fourth and sixth largest jack-up providers to create an entity controlling 10% of the world’s jack-ups. However, Borr is expected to scrap many of the acquired rigs.

Oddmund Føre, vice president of oilfield service research at Rystad Energy, said: “Borr’s strategy has always been to consolidate the jack-up market and focus on operating modern high-spec rigs. Hence, they put a very low value on the older rigs which is reflected in the transaction price.”

Upon completion, Borr will own 24 premium jack-ups built after 2000.

“The timing is perfect for Borr Drilling as the signs of a recovering market are starting to appear,” Mr Føre said. “Contracted utilisation for jack-ups has been holding steady at the low to mid-50% level since early 2017, but during fourth quarter 2017 we saw an increase in new mutual contracts, contract durations, and leading-edge day rates for premium jack-ups.”

Source: Energy-pedia