Singapore rig builder Keppel Offshore & Marine (Keppel O&M) will send another two jack-up rigs to the Middle East in a deal worth up to S$120 million (US$87.2 million) as the oil and gas market improves.
“The rigs will be chartered to an established drilling company in the Middle East for deployment in 4Q 2022 for a period of three years, with options for a year’s extension. Total revenue from the charters, including the options and modification works by Keppel O&M to prepare the rigs for on-site operations, is expected to be up to S$120m,” Keppel said in a statement today.
These contracts come on the back of two bareboat charters to Saudi Arabia announced by Keppel O&M on 9 May 2022, reflecting the growing demand for Keppel’s high-quality jack-up rigs amidst the improving oil and gas market, noted the company.
Chris Ong, CEO of Keppel O&M, said, “we have built a strong track record and trust in the industry for delivering rigs that are robust, versatile and capable of working in a wide variety of geographies. The multiple charter contracts that we have recently secured reflect the improving market sentiments, and attest to the value we are able to provide to rig operators with our proven KFELS B Class rigs.”
“With jack-up utilisation rates increasing, we are also seeing demand for rig charters and sales enquiries improve. Putting the legacy rigs to work will improve the overall marketability of these assets while reducing holding costs. As we secure more bareboat charter contracts, our legacy rigs will become increasingly valuable to both rig operators as well as potential investors,” he added.
Keppel O&M on 13 April 2022, announced the termination of newbuild rig contracts with with an affiliate of Clearwater Capital Partners, and Fecon International, those rigs will be used in turn to fulfil the latest bareboat charter contracts.
As part of the definitive agreements Keppel Corporation has signed in connection with the proposed combination of Keppel O&M and Sembcorp Marine, these two rigs and their bareboat charter agreements are part of Keppel O&M’s legacy rigs and will be transferred to Asset Co that is majority-owned by external investors on legal completion.
The above bareboat charter contracts are not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the current financial year.