BORR - Borr Drilling: Record Profits Ahead As Rig Fleet Is Sold Out
2024-02-08 09:30:00 ET
Summary
- Capacity in Borr's industry is virtually sold out, with utilization rates currently standing at 94%.
- The company has locked in forward revenues at highly favorable day rates, with further room to add as day rates continue to climb.
- Even if rates stagnate, Borr will generate +$500 million in 2024 EBITDA, allowing them to quickly deleverage and return capital to shareholders.
- I estimate that Borr has 100% upside if it ultimately trades at a mere 6.0x of the projected 2024 EBITDA.
Jackup Rigs: An Industry Primer
Jackup rigs are mobile seaborne barges which are owned by oil and gas equipment and services firms. They operate in the shallower continental shelf ("shelf" oil) at depths up to 400 feet. This compares against their deep-water drillship cousins which operate at depths up to 12,000 feet. Below is a helpful graphic distinguishing the various types of marine drilling rigs.
( source )
A jackup services firm generates revenue by contracting out its fleet of rigs to various E&Ps and national oil companies at a contracted day rate over a specified period of time. It then pays to operate and maintain the fleet of rigs and is ultimately left with the residual profit....
Borr Drilling: Record Profits Ahead As Rig Fleet Is Sold Out