A top drilling firm has bemoaned the low fees contractors are receiving for leasing their rigs in the North Sea.
Patrick Schorn, the chief executive of Borr Drilling (OSLO: BORR), says the basin is currently “experiencing lower day-rate levels than the rest of the world”.
As such a short-term North Sea contract extension for the firm’s Prospector 1 rig will simply act as a “bridge”, before “favourable long-term commitments” are found elsewhere.
There are widespread concerns of an offshore rig exodus from the UK from within industry, as opportunities dry up and rates fail to keep pace with other regions.
More than 30 jack-up rigs have left Europe, Asia and the Americas for better opportunities in the Middle East in the last year, the North Sea chapter of the International Association of Drilling Contractors (IADC) said in February.
Days later Apache cancelled a contract with Diamond Offshore for its Ocean Patriot rig, blaming the windfall tax – its understood Dolphin Drilling has shelved plans to ring its Borgland semi-sub to the UK for the same reason.
The UK’s loss has been the Middle East’s gain, and Mr Schorn revealed that Borr recently sent another of its vessels to the region.
He said: “In July 2023, one of our customers in West Africa cancelled previously exercised options for our rig “Gerd”. Subsequently, we were immediately able to secure new work for the rig in the Middle East at economics which we view as even more favourable, and in a region where we see better long-term prospects.
“The change of contract for this rig will lead to some idle time before it commences its new contract in December 2023, which will impact results in the second half of this year, however this will improve our position in 2024 and beyond. We also intend to bring forward the rig’s periodic surveys during this idle period which will mitigate out of service periods previously anticipated in 2024.”
Mr Schorn comments on the global rig market were made as part of Borr’s second quarter and six month results for 2023.
Between April and June total operating revenue totalled $187.5 million, an increase of $15.5m, or 9%, compared to the first quarter of 2023.
As of the end of Q2, total contract revenue backlog was $1.65 billion, and to date the firm has been awarded seven new contracts and six extensions this year.
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