Monday 20 March 2017

Borr Drilling has inked a letter of intent to acquire the entire jack-up fleet of Transocean in a proposed deal worth around $1.35 billion.

The drilling start-up, backed by Norwegian investor Tor Olav Troim, will pick up 10 operational rigs plus another five units under construction at Singapore yard Keppel Fels as Switzerland-based Transocean sheds non-core assets to focus on its main deep-water business.

Confirming the deal on Monday, Borr said in a statement it has also raised $800 million through an equity offering at $3.50 per share to finance the transaction, having paid Transocean an initial deposit.

It was earlier reported the Oslo-based player was close to finalising the deal at an expected price of $1.2 billion cited by a source.

Borr stated the deal value includes the remaining contract backlog for the operating rigs – of which five are currently cold-stacked - as well as outstanding yard instalments for the newbuilds.

The transaction remains subject to the parties executing definitive agreements and satisfying formal closing conditions, including approval from the boards of both companies, and is expected to be completed by the end of May this year.

Borr has stated it intends “to acquire and operate modern drilling assets purchased at a significant discount to the newbuild cost price” as it capitalises on cheap rig assets being offloaded by distressed players or, as in this case, companies seeking to cut their fleet exposure amid a market slump.

Troim, who is backing Borr through his investment fund Magni Group, was the former right-hand man of shipping and offshore billionaire John Fredriksen before the pair parted ways in 2014.

Fredriksen apparently intends to give his ex-sidekick a run for his money in the rig market after launching a new outfit, Northern Drilling, with backing from his investment vehicle Seatankers.

Northern has now acquired semi-submersible West Mira from Hyundai Samho Heavy Industries, after Fredriksen-backed Seadrill earlier cancelled its order for the newbuild at the South Korean yard due to delayed delivery.

The company is also reported to have an option to acquire drillship Bollsta Dolphin from Hyundai after the unit was earlier cancelled by Fred Olsen Energy for the same reason.

Northern, which is like Borr to be traded on Oslo's over-the-counter shares market, is reportedly set to apply for a full listing on the Oslo bourse later this year in conjunction with a fresh equity issue to raise cash for further rig deals.