Borr Drilling reported that it invested $ 5.9 million in its OPEX subsidiary, a Pemex partner.

Overall, Borr Drilling is an offshore shallow water drilling contractor that provides global offshore drilling services to the oil and gas industry.

The company reported that it issued a performance guarantee to OPEX for the duration of its contract with Pemex.

Likewise, the company has carried out a valuation exercise to reasonably value the guarantee granted, using the inferred debt market method and subsequently assigning an alpha category credit rating, adjusting the country risk and the probability of default.

It subsequently recognized a liability of $ 5.9 million within other long-term liabilities and added $ 5.9 million to the investment in the OPEX joint venture.

Borr Drilling and Pemex

In February 2019, the company, together with its local partner in Mexico, CME, successfully tendered a contract to provide integrated well services to Pemex.

On March 20, 2019, its subsidiary, Borr Drilling México S. de R.L. de C.V. (BDM), and a CME subsidiary, Opex (together with BDM, the «Contractor»), entered into a contract for the provision of integrated well services to Pemex (the «Cluster 2 Contract»).

Borr Drilling Limited guarantees the fulfillment of the Contractor’s obligations under the first Contract of Pemex and its subsidiary, BMV participated as a shareholder in the joint venture agreements in relation to the Cluster 2 Contract (the «Mexican JV»).

In June 2019, the structure of the Mexican joint venture was completed and, as of June 28, 2019, BMV has a 49% stake in both Opex and a second joint entity, Perfomex. CME owns the remaining 51%.

Operations under the first Pemex Contract began in August 2019. The Pemex Cluster 2 Contract was extended in December 2019 to include a third team.

In December 2019, it also participated with CME to assume an assignment of a second integrated contract with Pemex under a similar structure for two additional platforms (the «Cluster Contract 3» and together with the Cluster Contract 2, the «Pemex Contracts»).

For the purposes of these additional contracts, two new subsidiaries with the same participation interests as Opex and Perfomex were incorporated: Akal to provide integrated well services to Pemex and Perfomex II to provide drilling, technical, management and logistics services to Akal .

Alliances in Mexico

On June 28, 2019, it entered into a binding agreement to acquire 49% of the shares in Perfomex, and OPEX, entities incorporated in 2019 by Proyectos Globales de Energía y Servicios CME, S.A. DE C.V. («CME»), a Mexican oil and gas services company, for the purpose of performing integrated drilling services under contracts with Petróleos Mexicanos (Pemex).

 OPEX

As part of the share purchase agreement for 49% of OPEX shares, it also entered into other trade agreements with this related party.

Provides management services through a management services agreement at an additional cost. During 2019, it provided services worth 1.3 million dollars.

Borr Drilling has provided a guarantee valued at $ 5.9 million to support OPEX’s operations under contracts with Pemex. Perfomex, in which it owns 49%, provides drilling services under drilling contracts with OPEX per day.

As of December 31, 2019, it had awarded $ 100,000 of funds to OPEX.

Perfomex

As part of the signing of the share purchase agreement for 49% of Perfomex shares, it also entered into other commercial agreements with the same entity.

It provides two unmanned platforms for Perfomex to fulfill its contract with OPEX. During 2019, it recognized $ 2.4 million in revenue.

It also provides international and local personnel for offshore operations of platforms and administrative services at an additional cost. During 2019, it recognized $ 2.6 million in related party income for the provision of these services.

At the end of 2019, it has provided $ 30.7 million of funds to Perfomex, some of which it hopes to convert to capital in the short term.

Akal

As part of the signing of the share purchase agreement for 49% of Opex shares, it also entered into other trade agreements with this related party.

Provides management services through a management services agreement at an additional cost. In 2019, it provided services worth zero. Perfomex II, in which we own 49%, provides drilling services under drilling contracts with Akal per day. As of December 31, 2019, he had provided zero dollars of funds to Akal.

Perfomex II

As part of the signing of the share purchase agreement for 49% of the shares in Perfomex II, it also entered into other commercial agreements with the same entity. It provides three unmanned platforms for Perfomex II to fulfill its contract with Akal.

During 2019, it recognized zero income. Borr Drilling also provides international and local personnel for offshore operations of platforms and administrative services at an additional cost. During 2019, it recognized $ 200,000 of related party income for the provision of these services. As of December 31, 2019, it has provided zero dollars of funds to Perfomex II.