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Transocean to sell entire jack-up fleet to new offshore driller

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Norwegian offshore drilling contractor Borr Drilling, formerly known as Magni Drilling, is planning to buy 15 jack-up drilling rigs from Swiss-based Transocean for $1.35 billion. 

Borr Drilling announced on Monday the signing of a letter of intent with Transocean for the acquisition of 15 high-specification jack-up rigs.

The transaction consists of Transocean’s entire jack-up fleet, including ten rigs already in the fleet and five newbuilds under construction at Keppel FELS Limited, which Transocean has been postponing for a while now. The latest agreement with Keppel entailed the deferral of the five new jack-ups until 2020.

Borr said that total consideration for the transaction is expected to be approximately $1.35 billion and includes remaining contract backlog and remaining yard installments to Keppel FELS for the five newbuilds. The board of directors of Keppel FELS has pre-approved the novation of the new-building contracts.

Keppel also confirmed on Monday that it has entered into a heads of agreement with Borr Drilling whereby the construction contracts for the five jack-up rigs will be novated to Borr Drilling.

Borr Drilling will take over the contracts and undertake the remaining payment installments to Keppel FELS. The price for each rig is $216 million, compared to the original price of $219 million, Keppel said. Borr Drilling will also make a down payment of $275 million.

Keppel further said that the first three rigs will now be delivered between 2017 and 2018, while the remaining two rigs will be delivered in 2020.

Borr added that, in line with what has been agreed between the parties, a deposit has been paid from Borr to Transocean.

The driller also said on Monday it has secured financing for the transaction through a private placement of equity securities. The company is raising $800 million in new equity consisting of 228,600,000 new shares at a price of $3.5 per share.

The transaction is subject to the parties executing definitive agreements and satisfying formal closing conditions, including a final approval from the boards of directors of both companies. The completion of the transaction is expected to take place before the end of May 2017.

Borr Drilling was formed last year with the ambition of acquiring and operating drilling assets in order to take advantage of opportunities in a rapidly changing oil and gas industry. The company’s management includes former Seadrill CFO, Rune Magnus Lundetræ, who is now Borr CEO. The company’s COO, Svend Anton Maier, also worked for Seadrill in a period from 2007 until 2016.

Late last year, Borr agreed to buy a pair of 2013-built jack-up drilling rigs from the bankrupt Hercules Offshore. The rigs were delivered to the Norwegian driller in January.

Offshore Energy Today Staff

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