Blackford Dolphin Rig Under Repair at Keppel Verolme

Friday, June 27, 2008

The original contract signed on February 26, 2004 with Blackford Dolphin Pte Ltd (Owner), a subsidiary of Fred Olsen Energy ASA, for work to be carried on the Blackford Dolphin was $177m. The expected delivery date was in June 2007.
On July 20, 2007, an addendum was agreed upon, which took into account changes up to that point in time by the Owner. The contract value was increased to $239.5m with the delivery date revised to February 2008.
Since the addendum, there have been further revisions, including changes to the design of the rig, by the Owner. This has resulted in variation orders and a delay in the completion of the rig. While some variation orders were agreed upon and paid for by the Owner, outstanding and unresolved variation orders remain. The disputed amount is EUR 65.4 million. Both parties have yet to agree on an extended delivery date.
Pursuant to the terms of the addendum, Keppel Verolme has served a notice to advise the Owner that it expects to be paid for work that has been done. Under the contract terms, the company is confident that it would be paid in full for work completed before the vessel can be towed away.
Keppel Verolme is confident that it has a strong case in this dispute. In event the matter goes to arbitration, the resolution of the dispute shall be held at the Singapore Chamber of Maritime Arbitration. The contract is governed by Singapore laws.
Based on available facts, Keppel Corporation Limited (KCL), the parent company of Keppel Verolme, does not expect the matter to have material financial impact on KCL for the year 2008.
Completion of FLC - Aker Yards transaction scheduled for July
Aker Yards and the Russian company FLC expects to complete the transaction in which FLC buys 70 percent ownership in three yards in Ukraine and Germany in July 2008. The agreement was announced 25 March 2008. The one remaining item in the process before the transaction is concluded is to complete the process to obtain approval from the Ukraine competition authorities. This process has taken somewhat longer than anticipated, but FLC and Aker Yards expects that it will be possible to get this final approval shortly.