STOCKS TELEGRAPH

Tag: fossil fuels

  • Borr Drilling, Ltd. (BORR) Stock Exhibits Minor Volatility as Mexican Operations Continue to Develop

    Borr Drilling, Ltd. (BORR) stock prices were up by a marginal 0.22% as of the market closing on July 6th, 2021, bringing the price per share up to USD$0.81 at the end of the trading day. Subsequent premarket fluctuations have seen the stock dip by 0.83%, bringing it down to USD$0.8050.

    ATM Program

    July 6th, 2021 saw the company announce its at-the-market program and Equity Distribution Agreement with Clarksons Platou Securities, Inc. as their sales agent. Dated for July 6th, 2021, this move will see the company offer for sale from time to time a cumulative total of USD$40 million of BORR’s common shares to be listed on the New York Stock Exchange. Capital generated from the program will be allocated towards general corporate purposes, including, but not limited to, repaying debt obligations.

    Existing Partnership

    June 15th, 2021 saw the company announced the success of the review of the performance and cost efficiency of its five rigs that it operates as a part of a joint venture with its Mexican partner facilitating the provision of integrated well services for Pemex. The services started in May 2019 and have resulted in incremental production of roughly 125,000 barrels of oil per day from the 21 wells drilled as of mid-June 2021. The program has seen a request for an extension, with the five Borr Drilling rigs expected to be employed until the end of 2022.

    Memorandum of Understanding

    In accordance with the extension, BORR and its Mexican partner have entered into a Memorandum of Understanding that will see the implementation of certain changes in the structures of existing joint ventures. The move will see the Mexican partner buying BORR’s 49% stake of the integrated services JVs Opex and Akal. BORR expects gaining access to a gross amount of USD$28 million as a result of the move.

    Scope of Collaboration

    Concurrently, the company will also acquire an incremental 2% stake of the joint ventures performing drilling services from its Mexican partner, resulting in a 51% majority ownership position. The drilling joint ventures will continue earning day rates from regular drilling contracts with its main customers Opex and Akal. The company hopes to streamline its Mexican operation while reducing risk, leading to a more stable cash flow over time. The closing of the transaction is expected for Q3 2021.

    Future Outlook for BORR

    Armed with the flexibility afforded by the ATM program and the extension of its existing collaboration, BORR is poised to capitalize on the expanded scope of upcoming opportunities presented to it. Investors are hopeful that the company will be able to leverage the resources at their disposal to drive further gains.

  • Overseas Shipholding Group, Inc. (OSG) Stock Skyrockets as Meme Stock Phenomenon Continues

    Overseas Shipholding Group, Inc. (OSG) stock prices were up by 0.48% as of the market closing on July 1st, 2021, bringing the price per share up to USD$2.10 at the end of the trading day. Subsequent pre-market fluctuations saw the stock surge by 33.81%, bringing it up to USD$2.81.

    Net Loss Reports

    Net loss for the first quarter of 2021 was reported at USD$15.9 million, representing a net loss of USD$0.18 per diluted share. This is a significant fall from the USD$25.1 million in net income reported in the same quarter of the prior year, representing net income of USD$0.28 per diluted share. A USD$19.2 million gain associated with the acquisition of the Alaska Tanker Company was a significant contributor to the year-over-year difference.

    Sale of Overseas Gulf Coast

    April 2021 saw the company enter into a contractual agreement that would see OSG sell Overseas Gulf Coast for USD$32.5 million. As per the negotiated sale terms, the transaction was recorded as a USD$5.4 million loss for the first quarter of 2021. The unencumbered asset was sold to general additional liquidity that the company plans to allocate to different areas of need.

    Disheartening Financials

    Shipping revenues for Q1 2021 were down 19.4% to USD$81.3 million from the USD$100.9 million reported in the first quarter of 2020. With the onset of the global pandemic having hit the company especially hard, its woes were compounded by Winter Storm Uri shutting down U.S refineries, thereby further reducing transportation demand. TCE revenues were down 32.5% million at USD$65.5 million for Q1 2021, as compared to Q1 2020. Q1 2021 Adjusted EBITDA was down 88.2% from USD$52.8 million in Q1 2020 to USD$6.2 million in Q1 2021.

    Meme Stock Phenomenon

    With no recent news coverage or significant change in fundamentals, OSG seems to find itself becoming the latest target of the meme stock phenomenon that has taken over the stock market as of late. Driven by retail investors who use the social media platform Reddit, underdog companies with high short interests find themselves being pumped in a coordinated short squeeze. In the absence of sound bases for investing in the company, this phenomenon carries a great level of inherent risk and volatility.

    Future Outlook for OSG

    Armed with the fortuitous expansion of their equity value, OSG finds itself at the cusp of new opportunities that it can capitalize on to usher in more organic growth. Investors are hopeful that management will continue to leverage the resources at their disposal to facilitate significant and sustained increases in shareholder value.