Borr Drilling
Annual Report 2017

Plain-text annual report

2017 subsidiaries, the "Group" or “Borr Drilling”) is an international up d ng 2017, 7 . of 31 December 2017, the Company’s fleet consisted of 26 jack up Borr Drilling’s strategy is to build a substantial fleet of jack up basis. n non , The first rig from PPL, the “Galar”, was delivered on November 15, of the “Gerd”, the second rig from PPL on January 4, 2018. On January 5, 2018, the first rig from Keppel, the “Saga”, was delivered. 31, 2017, Transocean’s entire jack Transocean’s fleet and five newbuild 228,600,000 , , , v , that is relevant to employees’ duties and responsibilities. We strive up up 2 . o instalments of US$159.5 million for the delivery of the “Galar” and the “Saga” from PPL and Keppel, respectively, in Q4 2017 (payment for the “Saga” was made in December 2017, rig delivered January US$87.0 million for the “Galar”. As of December 31, 2017, the Company’s cash and cash equivalents , 2017 Also in , 228,600,000 incentive program for the Company’s employees. warrants (“Warrants”) to Schlumberg construction at Keppel FELS Limited (“Keppel”) from Transocean up In December 2017, the “Frigg”, a 2013 built KFELS Super A class . In January 2018, “Norve”, a 2011 built BM C Pacific Class 400 jack BW Energy Dussafu B.V. (“BW Energy”) 160 days. “Galar” of US$87.0 million. Market d During 2017, up 3 Outlook 22 , . Risk Factors savings realised in our client base’s supply chains, and anticipated 2018. – $ companies exploring for or producing oil and/or natural gas (“E&P Companies”) are sensitive to changes in oil and natural gas prices. The Group’s focus will be on operations in the shallow water have a material adverse effect on the demand for the Group’s . Group’s operations. he Group’s revenue , pany’s business, financial condition, results of , d, up two , Company’s control. n adverse effect on the Company’s 4 In January 2018, the “Norve” commenced operations for BW On February 23, 2018, the Company took delivery of the “Gersemi”, On M arch 22, 2018, it was announced that Simon Johnson’s contract 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 75,658,500 69,604,141 36,786,801 23,319,900 21,250,000 18,781,437 17,071,440 15,662,000 11,126,800 9,096,082 8,750,000 8,113,785 7,840,658 7,496,000 6,486,532 5,344,283 5,107,200 4,642,850 4,290,700 4,273,958 Holdings Dnb Luxembourg S.A. J.P. M organ Bank Lux. 360,703,067 2,670 117,589,433 2,690 478,292,500 100.0% 75.5% Total top 20 shareholders 24.5 On January 4, 2018, the Company took delivery of “Gerd”, the On January 5, 2018, the company took delivery of “Saga” the first 5 As a consequence of the listing of Borr Drilling’s shares on the Oslo Board ’ ’ ’ ’ ’ ” “ ’ . ’ . on ’ ’ Company’s objects and purposes as unrestricted. This deviates from ’ 6 ng such Director’s Drilling’s website – The work of the Board of and the risks related to the Borr Group’s operations. The Board supervises the Company’s internal control systems. (cid:120) (cid:120) (cid:120) (cid:120) independent of the Company’s main shareholders. Further, i 7 four components. The first component is each individual’s fixed ividual’s position and Company’s results. valuation of the Company’s shares to the financial markets on a parties will find the Company’s latest news releases, financial Information to Borr Drilling’s shareholders shall be published on the Company’s website at the same time as it is sent to the shareholders. – The Board will seek to ensure that the Company’s business 8 (cid:120) (cid:120) Mission – – (cid:120) – . (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) working together and benefit from each other’s strengths. , 9 (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) (cid:120) Supply Chains Act and/or the U.S. Government’s Federal Borr Drilling conducts appropriate due diligence or “vetting” of Borr party’ agents who perform (cid:120) (cid:120) 10 (ii) that would affect the individual’s objectivity in carrying n ling’s designated Compliance Risks Officer, who has (cid:120) (cid:120) (cid:120) (cid:120) o (cid:120) (cid:120) 11 Consolidated Financial Statements Consolidated Financial Statements 2017 0.1 21.7 21.7 6 17 3 4 5 5 11 (88.0) Diluted loss per share 13 rigs Consolidated Financial Statements 2017 2016 19 10, 19 12, 13 6 7 11 6 16 16 8, 14 14 7, 8, 21 164.0 39.1 22.4 225.5 0.1 783.3 642.7 20.7 1,446.8 1,672.3 9.6 11.5 21.1 87.0 71.3 158.3 179.4 4.8 1,587.8 2.0 1,492.9 1,672.3 138.1 138.1 20.0 20.0 158.1 0.2 0.2 0.2 0.8 157.8 157.8 158.1 14 Consolidated Financial Statements 2017 31, 2016 6 12 10 9 11 7 6 18 8 up equivalents 8.2 47.9 20.1 1,415.0 12.7 87.0 1,506.3 25.9 138.1 164.0 0.4 0.2 139.2 13.0 152.2 138.1 138.1 15 Statements of Changes in Shareholders’ Equity Comprehensive equity Accumulated 5 5,000 77,500,000 0.8 77,505,000 228,600,000 162,500,000 x v 9,687,500 0.8 2.3 1.6 0.1 151.4 10.7 157.8 797.8 648,4 7.7 1.7 1.8 non 478,292,500 4.8 1,587.8 152.2 10.7 157.8 800.1 650.0 0.1 7.7 3.5 2.0 2.0 2.0 1,492.9 ‘Common shares and warrants issued subject to put option agreements’ and were then transferred back to equity upon completion of the v. x. 16 Consolidated Financial Statements “Group,” “our” and words of similar import refer to Borr Drilling and its consolidated companies. The use herein of such term “organisation”, “we”, “us”, “our” and “its”, or references to specific entities, is not intended to be a precise description ss otherwise required by the context, the term “Borr Drilling” refers to Borr Drilling Limited and the terms “Company,” “we,” “group”, . Unrealized gains and losses arising from transactions with associates are eliminated to the extent of the Company’s n investments that are deemed to increase an asset’s value for its remaining useful life are capitalized and depreciated over t 17 Consolidated Financial Statements two methods; a. income approach in which the fair value was estimated based on a calculation of the rig’s discounted future n Onerous contracts an asset or a liability at the purchase date. The Company’s onerous contracts relates to contracts for newbuildings share options issued under the Company’s employee of accumulated other comprehensive income in shareholders’ equity. Gains and losses are not realized until the securities are . 18 Consolidated Financial Statements are denominated in U.S. dollars. Accordingly, the Company’s reporting currency is also U.S. dol or losses on consolidation are recorded as a separate component of other comprehensive income in shareholders’ equity. Current and non The Company accounts for fair value in accordance with ASC 820, Fair Value M easurements and Disclosures (“ASC 820”). Fair 19 Consolidated Financial Statements hierarchy are considered observable inputs and the last is considered unobservable. The Company’s cash and cash equivalents v 20 Consolidated Financial Statements Basic earnings per share (“EPS”) is calculated based on the loss fo 2016 01, — 07, 21 Consolidated Financial Statements 09, In September 2015, the FASB issued ASU 2015 16, which amends Topic 805, “Business Combinations.” This amendment eliminates the requirement 40, “Disclosure of Uncertainties about an Entity’s Ability to continue as a Going Concern.” The amendments in this ASU provide guidance related to management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The a 17, which amends ASC Topic 740, “Income Taxes.” This amendment aligns the present ntracts with Customers,” supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition,” including most 35, “Revenue Recognition— —Contracts with Customers.” In summary, the core principle of Topic 606 is Type Contracts,” and creates new Subtopic 340 40, “Other 9 supe Recognition,” and Topic 932, “Extractive Activities—Oil and Gas” and provide improvements to narrow aspects of ASU No. 2014 scind certain SEC Staff Observer comments that are codified in Topic 605, “Revenue 16 15, 22 Consolidated Financial Statements 18, . 23 Consolidated Financial Statements 31, 2016 2017 3.2 4.4 14.9 21.7 , The computation of basic loss per share (“EPS”) is based on the weighted average number of shares outstanding during the peri 10 2016 is 609,531 2017 478,292,500 258,631,442 31, 2016 77,505,000 10,096,146 436,762. 24 Jack Asset transfers (“Galar”) Asset transfer (“Galar”) Consolidated Financial Statements 688.4 142.8 783.3 . 937.7 642.7 for Hull B364 (TBN “Saga”) and Hull B365 (TBN “Skald”), respectively. A fu as newbuildings milestone payments for Hull B364 (TBN “Saga”) and Hull B365 (TBN “Skald”), respectively. Of the remaining US$ up 25 Consolidated Financial Statements onerous contracts for Hull B366 (TBN “Tivar”), Hull B367 (TBN “Vale”) and Hull B368 (TBN “Var”). up drilling rigs “Galar” and “Saga”, which were delivered in Nov Acquisition of Hercules Triumph (“Ran”) and Hercules Resilience (“Frigg”) , (“Hercules”) to purchase the “Business Combinations” The PPL Rigs “Galar”, “Gerd” “Gersemi” , “Business Combinations” Transocean Inc (“Transocean”). The transaction consisted of Transocean’s entire jack g eight rig owning companies in Transocean’s 26 Consolidated Financial Statements Name of acquired company 547.7 0.5 324.5 32.0 288.7 3.8 324.5 324.5 324.5 y 1, 2017, 31, 2017, $ 1, 2017, Borr $ 27 for an understanding of the Group’s financial position. The calculated depreciation in Q1 2 1, Consolidated Financial Statements 20.0 19.1 39.1 recognized in “Other comprehensive income” (“OCI”). – 2.6 10.3 4.4 5.1 22.4 . 28 Consolidated Financial Statements financing of the PPL rigs are not subject to financial covenants. The rig “Galar” 31, 2017, Hull B366 (TBN “Tivar”), Hull B367 (TBN “ ”) and Hull B368 (TBN “Var”). When entering into the agreement with Transocean a 87.0 71.3 158.3 . 2016 WAEP 2017 WAEP 9,155,000 9,155,000 3.60 3.60 29 Consolidated Financial Statements of the Company’s financial instruments were as follows: – non 1 1 1 1 2 2 1 1 2 164.0 39.1 20.7 15.4 60.6 87.0 9.6 11.5 56.2 164.0 39.1 20.7 15.4 60.6 87.0 9.6 11.5 56.2 138.1 13.0 138.1 13.0 0.2 0.2 Financial instruments included in the table above are included within ‘Level 1 and 2’ of the fair value hierarchy because the (Bermuda) Limited ("M agni Partners") and 1,937,500 warrants were issued to Ubon Partners AS ("Ubon”). 30 Consolidated Financial Statements 0.01 2.00 0.41 1.9 25 M ay 1, 2019 July 5, 2019 , In October 2017, the Company issued a further 4,736,887 warrants (“Warrants”) to Schlumberger as a consequence of a final col s in Shareholders’ 31 Consolidated Financial Statements Of S hares 9,687,500 9,473,774 9,473,774 9,687,500 S hare 0.01 0.01 Contractual 5 31, 2017 Related party transactions Holdings Limited (“ ”) Taran Holdings Limited (“Taran”), against Taran’s subscription of shares in the Company’s first private placement in Decem an’s payment obligations for its subscription of shares in the Company’s private placement in M arch 2017. Advokatfirmaet Wiersholm AS (“Wiersholm”) 2.1 2017 , 32 Consolidated Financial Statements .0 016. s into the Statement of Changes in Shareholders’ Equity in the second quarter of 2017. from M agni and Ubon (“Grantors”) through their individual companies, Primato AS (Rune M agnus Lundetr US$2.0. The employees’ companies shall pay an option premium o Meritus Trust Company Limited (“Meritus”) The majority of the Company’s transactions, assets and liabilities are denominated in U.S. negative effect on the value of the Company’s cash flows. The Company has not entered into derivative agreements to mitigate The Group’s listed equity securities are susceptible to market price risk arising from uncertainties about future values of t n n 33 Consolidated Financial Statements newbuildings could have a negative impact on the Group’s reputation and customer relationships. the Group’s business, financial condition and results of ope . low. g basis, S hare capital and shareholders The realizable value of the company’s assets would thereby be less its liabilities the “Frigg” 2017 0.27 0.10 0.37 34 Consolidated Financial Statements 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 2,670 2,690 75,658,500 69,604,141 36,786,801 23,319,900 21,250,000 18,781,437 17,071,440 15,662,000 11,126,800 9,096,082 8,750,000 8,113,785 7,840,658 7,496,000 6,486,532 5,344,283 5,107,200 4,642,850 4,290,700 4,273,958 360,703,067 117,589,433 478,292,500 15.8% 14.6% Skagen Kon Brown Brothers Dnb Luxembourg S.A. J.P. M organ Bank Luxembourg S.A. 75.5% 24.5 100.0% 29, 2018. Acquis at US$5 $241.3 43 n no 35 Consolidated Financial Statements 3, 2018 54,347,827 4.6 of “Gerd”, “Saga” and “Gersemi” The newbuildings “Gerd” and “Gersemi” were delivered in January and February, respectively, from PPL. “Saga” was delivered in January 2018 from 27 “ ” 17.0 on In January 2018, the rig “Norve” commenced operation for BW Energy Dussafu B.V. (“BW Energy”) in Gabon. The contract duration of 140 160 days 36 at the Board of Director’s Report includes a true and fair review of the development and performance of the business and the 8 _________________ ___________________ __________________ ___________________ Rask 

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