Borr Drilling (Buy, TP: NOK50.00) - Backbone secured in Mexico
We consider the key benefit from the 3-year extensions for its five jackups in Mexico to be improved earnings visibility. As the rigs had priced options for 2023, we consider it an ‘amend and extend’ arrangement with an implied dayrate for incremental backlog in 2024/2025 at USD140k. We have made no meaningful net EBITDA estimate changes over the 2023–2025e period, but accounting principles result in some fluctuations. We consider the contracts a solid datapoint for the jackup market, implying EV/EBITDA at a rig level of c4x on its current share price. We reiterate our BUY and NOK50 target price.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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