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April 14, 2020

Covid-19 impact: Borr Drilling faces early termination of contracts

Borr Drilling has received a series of notices of early contract terminations as the oil and gas industry continues to battle the impact of Covid-19 crisis.

By Aninda Chakraborty

Borr Drilling has received a series of notices for early contract terminations from ExxonMobil and BW Energy.

ExxonMobil has given notice of early termination for the rigs ‘Gerd’ and ‘Groa’, offshore Nigeria. Originally, the contracts were scheduled to run until April 2021 and May 2021, respectively. In a statement, Borr Drilling noted: “The contracts for both rigs require 180 days’ notice for early termination.

“The company is in discussions with Exxon Mobil with regards to planning the discontinuity of operations for both rigs following the early termination notices.”

Additionally, BW Energy has sent a notice to Borr Drilling terminating the operations of Norve operating in Gabon. The rig stopped its operations around three months ahead of earlier estimations.

Borr Drilling has also received a termination notice for the semi-submersible ‘MSS1’. However, the company is entitled to an early termination fee as per contract provisions.

In the North Sea, the Prospector 5 has reached Harwich following its campaign with Neptune. However, its follow-on customer, Perenco, decided not to proceed with the previously announced contract. Its next contract will be with CNOOC, from Spetember 2020.

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Given the current circumstances, Borr Drilling anticipates further termination notices.

On the other hand, the company said it was pleased to receive letters of award for two of its premium jack-ups for works in the Asia Pacific region.

The rigs are slated to being operational in the third quarter of this year. The duration of the two contracts will be for 365 days and 200 days respectively, excluding options.

The net impact of these early terminations and new contracts is expected to hit Borr’s total revenue backlog by $16m.

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