The rig stock Borr Drilling rose on the Oslo Stock Exchange after Tuesday’s update, but eventually turned down. The brokerage house Kepler Cheuvreux calls for caution.
Late Tuesday night, the hard-pressed rig company Borr Drilling announced a couple of new crisis measures.
The Tor Olav Trøim company will raise between 40-50 million dollars and has also refinanced billion debt, which will strengthen liquidity by more than 700 million dollars over the next two years.
Have nothing to say for the total debt
Kepler Cheuvreux writes in an update on Wednesday that it expects the new equity to last until the second half of 2021. That is when the brokerage believes that the very heavy rig market is starting to show signs of improvement again.
The calculation is based on Kepler Cheuvreux’s eyes that the Trøim company burns cash for 20-25 million dollars per quarter in the future.
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Meglerhuset will take a closer look at its estimates on Borr Drilling later, but emphasizes already now:
– There are still reasons to be cautious in our view, it appears, despite the fact that the new equity “expands Borr’s” runway “and increases the option value in the share”.
Kepler Cheuvreux has recently stated that Borr’s financial profile is not attractive, in light of a rig market that is expected to continue to be under pressure related to utilization and daily rates.
It is also pointed out that the crisis measures have no significant effect on Borr’s total debt level, which Kepler Cheuvreux believes is the main reason why investors stay away from the rig company.
The stock jump evaporated
The Borr Drilling share occasionally ticked up on the Oslo Stock Exchange on Wednesday, but at 2 pm the rise has evaporated. The rig share was at the stock exchange opening up over ten percent.
The company now has a market value of NOK 1.1 billion, while pricing at the turn of the year was NOK 8 billion.
Kepler Cheuvreux has a “reduction” recommendation on the rig share, with a price target of NOK 2.
The company suffered a large loss in the second quarter due to major write-downs. A total of 970 million kroner evaporated, of which around half a billion was due to shaving of rig values.
The rig industry suffered a major blow during the oil downturn in 2014 and still had not managed to recover when the corona crisis sent oil prices to the bottom again this winter.
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