Keppel Offshore & Marine (Keppel O&M) subsidiary Keppel FELS has signed a master agreement with Borr Drilling for the sale of five jackup rigs for approximately $745 million.
Borr will pay a first installment of $288 million within 20 business days of the effective date of the master agreement, and the remaining amounts are payable within five years from the respective delivery dates of each individual rig, on a seller’s credit with interest at market rates.
The master agreement will take effect upon the satisfaction of certain conditions, including Borr raising sufficient funds, and the entry into relevant sales and purchase agreements for the individual rigs. The total price of the five rigs excludes any down payments made by the respective original owners.
The rigs currently are under construction by Keppel FELS to the KFELS B class designs. They are scheduled to be delivered progressively from Q4 2019 to Q4 2020, with one rig to be delivered in 2019 and four rigs in 2020.
Chris Ong, CEO of Keppel O&M, said, “The agreement with Borr Drilling demonstrates that rig owners continue to look for reliable, high-quality rigs, such as the KFELS B Class, to maximize efficiency and productivity. This is a win-win agreement for all parties and enables Keppel O&M to further improve our cashflow, minimize the holding risks of the projects and clear several of the deferred orders. We look forward to providing Borr Drilling with another five premium, safe and cost-efficient rigs and continuing our strong partnership.”
Svend Anton Maier, CEO of Borr, added, “We are pleased to be getting another five high-quality jackup rigs from Keppel FELS on top of the five we acquired earlier. Our partnership with Keppel is crucial as it enables us to provide the market with the latest in jackup rig technology, safety and operability. This is an opportune time for us to grow our fleet of highly capable jackup rigs as the market is showing signs of recovery from the bottom of the business cycle.”
The sale is not expected to have a material impact on the net tangible assets or earnings per share of the parent company Keppel Corp. for the current financial year. It is not expected to result in any project writedowns.