Keppel Offshore & Marine Ltd has through its wholly-owned subsidiaries[i] signed agreements for the utilisation of two KFELS B Class rigs to be deployed in Saudi Arabia.
These bareboat contracts are expected to generate revenue of about S$135 million for Keppel O&M including modification works to prepare them for deployment.The two rigs will be chartered by ADES Saudi Limited Company for a period of five years commencing in 4Q 2022.
Mr Chris Ong, CEO of Keppel O&M, said, “We are pleased to secure bareboat charter contracts for two of our jackup rigs, riding on improving conditions in the oil and gas market.
“These charters attest to the good demand for Keppel O&M’s proven state-of-the-art KFELS B Class rig in markets such as the Middle East where our proprietary design has established an unrivalled operational track record. With superior drilling efficiency and proven high performance, our modern KFELS B Class rigs are an economical and attractive proposition for operators and oil companies looking to ramp up exploration activities.”
According to a report by Clarksons Research published in April 2022, rig markets have continued to tighten in 2022, with overall utilisation now at its highest level since 2015 and dayrates rising noticeably for jackups and floaters. The outlook for the jackup market is optimistic, with demand expected to increase across 2022-23, underpinned by strong activity of national oil companies.
“We continue to see strong demand for our rigs, and are actively pursuing more charters, as well as sales opportunities. Our early success at securing new bareboat charters will not only enable us to start generating revenue and cash flows from the legacy assets but also improve the overall marketability of our rigs as we build up their operational track records,” Mr Ong said.
Keppel O&M had on 13 April 2022[ii] announced the termination of newbuild rig contracts with certain customers, which 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[iii] 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.