STOCKS TELEGRAPH

Tag: Oil and Gas

  • 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.

  • Devon Energy (NYSE: DVN) Announces Merger Agreement With WPX Energy

    Devon Energy (NYSE: DVN) Announces Merger Agreement With WPX Energy

    Devon Energy Corporation (NYSE: DVN) started Monday’s session with a strong performance as its stock price rally by more than 5%. The company’s strong performance has highlighted the positive sentiments of investors after the company has announced that it is planning to buy WPX Energy Inc. for $2.56 billion as it is trying to boost its presence in the Delaware portion of the prolific shale field.

    The merged company which will be named Devon Energy will get benefits from improved scale, enhanced margins, higher free cash flow, and the financial strength to speed up the return of cash to shareholders through an industry-first “fixed plus variable” dividend strategy. The transaction is anticipated to close in the first quarter of 2021. Both the company’s boards of directors have unanimously approved the decisions.

    As per the agreement, all the shareholders of WPX will get the equal exchange ratio of 0.5165 shares of Devon common stock for each share of WPX common stock owned. After the execution of transactions, WPX shareholders will own 43 percent of the combined company on a fully diluted basis while Devon shareholders will own approximately 57 percent of the combined company.

    Devon Energy Corporation (NYSE: DVN) shares were trading up 5.27% at $9.29 at the time of writing on Monday. Devon Energy Corporation (DVN) share price went from a low point around $4.60 to briefly over $26.42 in the past 52 weeks, though shares have since pulled back to $9.29. It has moved up 101.75% from its 52-weeks low and moved down -64.86% from its 52-weeks high. Devon Energy Corporation’s market cap has remained high, hitting $3.43 billion at the time of writing.

    The merger agreement will speed up Devon’s transition to a business model that prioritizes free cash flow generation overproduction growth. The merger agreement will maintain a strong balance sheet and liquidity of the company. This agreement will create one of the largest oil producers in the US and it also increases the scale and diversification.