Keppel to Build Repeat Jackup Rigs Worth $772M
Latest contracts boost value of new orders secured year-to-date to over S$6.4 billion.
Keppel FELS Limited's (Keppel FELS) returning customer, Oslo-listed S.D. Standard Drilling Plc (Standard Drilling), has ordered four repeat KFELS B Class rigs worth US$772 million. Successive deliveries of these units are scheduled between 2H2013 and 1H2014.
Standard Drilling ordered its first jackup rig from Keppel FELS in November 2010 with two options. In addition, it acquired two jackups under construction as well as two option rigs from Clearwater Capital Partners LLC (Clearwater), another Keppel FELS customer, in a transaction where Clearwater became the largest shareholder of Standard Drilling. Standard Drilling now has a combined fleet of seven KFELS B Class rigs, all being built exclusively at Keppel FELS.
The four new orders from Standard Drilling have also brought the total value of contracts secured by Keppel Offshore & Marine for the year-to-date to more than S$6.4 billion.
Mr Wong Kok Seng, Managing Director of Keppel FELS, said, "With a strong operating track record in various parts of the world, the KFELS B Class has become the industry's benchmark solution and features strongly in the fleets of today's leading offshore drillers.
"In a span of less than six months, we have secured new orders for 19 KFELS B Class series rigs, including these latest contracts. In ordering four repeat rigs at once, Standard Drilling has demonstrated its industry foresight, as well as reaffirmed the market's confidence in our proprietary design and quality execution."
Mr Rob Petty, Managing Partner of Clearwater Capital Partners and Director of Standard Drilling, said, "We are proud to announce this exciting transaction that combines the Clearwater rigs into Standard Drilling and creates a pure play jackup company with seven KFELS B Class rigs. We have great confidence in Keppel FELS and their ability to deliver these next generation rigs on time and on budget.
"Clearwater is committed to Standard Drilling, where the board has come together to form the largest single portfolio of newly built jack up rigs so vital to the burgeoning market demand for new rigs with high specifications. With our fellow Directors and shareholders we are focused on establishing Standard Drilling as a best in class operator and building a top tier management team to complement the premium assets we are creating at Keppel FELS.
"We see a unique opportunity to grow an Asian centric industrial drilling operator given the high levels of drilling activity in South East Asia, the Middle East and West Africa which continues to anchor and build strong demand for premium jackup rigs. We are committed to furthering the growth of Standard Drilling."
Mr Espen Lundaas, CFO of Standard Drilling, said, "The newbuild activity that we see in today's market is driven by a need for a global fleet renewal, which is expected to increase in the future. As long as there are rigs available in the market, the high-end units will be preferred over the older and second rated ones.
"This provides strong impetus for us to fast track fleet expansion, in catering to higher levels of drilling activity in the Middle East, the Mediterranean, South East Asia and West Africa.
"Our view that Keppel FELS is the best shipyard partner for Standard Drilling is reinforced by the fact that they have delivered majority of the KFELS B Class units ordered within budget, and either on time or early."
Keppel FELS and its offshore yards have delivered 33 KFELS B Class series rigs for operations in various parts of the world to date. Developed by Keppel's technology arm, Offshore Technology Development, the KFELS B Class jackup is designed to provide maximum uptime with reduced emissions and discharges. For its environmental-friendly features, the KFELS B Class design was bestowed the Prestigious Engineering Achievement Award from Institution of Engineers Singapore in 2009.
Readily upgradable to higher performance capabilities, the KFELS B Class rig incorporates Keppel's advanced and fully-automated high capacity rack and pinion elevating system, and Self-Positioning Fixation System. When completed, Standard Drilling's rigs will be able to operate in water depths of 400 feet, drilling depth of 30,000 feet and accommodate 120 men.
"We thank Standard Drilling for entrusting Keppel FELS with the construction of its premium fleet of seven KFELS B Class jackup rigs. We seek to entrench this win-win partnership by delivering the rigs to our customer's highest satisfaction," Mr Wong added.
The above contracts are not expected to have material impact on the net tangible assets or earnings per share of Keppel Corporation Limited (KPELF) for the current financial year.