KCA Deutag - comment

KCA announced this morning new contracts with Equinor in the North Sea totalling $450m, including the extension of contracts on 5 rigs and winning two additional platforms. As of November, 4 of the 5 were operating, with contract due to expire in H2 2024 (albeit with Equinor having the option to extend to October 2028).  It appears they have extended this contract.  The two new contracts (Njord and Heidrun platforms) extends KCA Deutag’s relationship with Equinor in the North Sea.  KCA Deutag already operate Cat J jack-up rigs for Equinor, contracted until March 20238.

The headline at $450m is nice, but in context, the business operates c.20 rigs generating c.$ 20-25 m revenue each.  Roughly, the 4 rigs (4 out of 5 operating) extended for 4 years would be $320m so new contracts is a net gain of $130m over a period of time. We remain positive on the name and this should aid a refinancing of the structure which the Company needs to address.