(Bloomberg) —
Offshore oil contractor Borr Drilling Ltd. expects virtually a 3rd of the world’s fleet of shallow-water rigs to be retired within the coming years due to their age, resulting in greater each day leasing charges.
Drilling close to the shore in water that’s lower than about 400 ft deep requires a particular rig that extends its legs all the way down to the seashore, holding the drilling platform above the water. And 30% of the marketplace for these so-called jack-up rigs is greater than 35 years previous, Patrick Schorn, chief govt officer for Borr, mentioned in an interview.
Of the roughly 102 million barrels a day of worldwide oil manufacturing, about 20% comes from shallow-water drilling, Schorn mentioned. It’s an usually neglected market in comparison with deepwater drilling, which instructions greater day charges and takes for much longer to see preliminary manufacturing. Borr, with its fleet of two dozen rigs, is among the world’s largest suppliers of recent, shallow-water drilling gear. Its rigs common 7 years in age, Schorn mentioned.
“Actual ache on this enterprise goes to be excessive day charges,” mentioned Schorn, who started his profession at SLB in 1991 earlier than leaving to run Borr in 2020. “We will argue about whether or not it occurs this 12 months or subsequent 12 months, however at a sure second, these very previous items are going to fall off a cliff, and that’s going to create fairly a little bit of points.”
After years of being one of many worst performing sectors of the worldwide oil market, offshore drilling is experiencing a renaissance as greater crude costs push producers out to sea once more. Borr on Wednesday posted earnings of 12 cents per share that missed expectations whereas reporting adjusted earnings earlier than curiosity, taxes, depreciation and amortization that surpassed analysts’ estimates. The corporate mentioned it’s anticipating elevated day charges for its rigs subsequent 12 months to result in higher money circulation.
The corporate’s US listed shares rose 4.4% to $6.78 at 2:59 pm in New York.
© 2024 Bloomberg L.P.
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