Keppel delivers jackup rig to Grupo R in sale and leaseback deal

KEPPEL Offshore & Marine (Keppel O&M) has delivered a jackup rig to Mexican driller Grupo R as part of a sale and leaseback agreement, the group said in a statement on Wednesday.

As part of the deal, Grupo R has entered into an agreement with FELS Asset Co, a wholly owned subsidiary of Keppel O&M.

FELS Asset will purchase the rig - Cantarell IV - from Grupo R for US$179 million, or the equivalent of the balance contract value of the rig. Cantarell IV will then be leased back to Grupo R on a bareboat charter at competitive day rates over five years, Keppel said.

Grupo R's parent company, IPC, will provide a guarantee on Grupo R's payment obligations.

Under the bareboat charter, Grupo R has the right to purchase the rig at a pre-determined price; after the five-year mark, FELS Asset also has the option to require Grupo R to purchase the rig at a pre-agreed price, Keppel said.

The rig will be deployed to work in offshore Mexico, under an integrated drilling contract for offshore wells secured by IPC with Mexican state-owned oil company Pemex. This is slated to commence in early May this year, Keppel added.

Chris Ong, CEO of Keppel O&M, said: "This transaction demonstrates how we are able to leverage the strengths of Keppel O&M to achieve win-win solutions for all stakeholders. Keppel FELS will be able to deliver the rig at full value; Grupo R will be able to lease the rig to begin operations in Mexico; and Keppel O&M will benefit from acquiring a quality rig at attractive commercial terms, while generating regular and predictable cash flows from the charter at a good rate of return.

"As Mexico develops its oil and gas reserves, more high-specification rigs such as the KFELS B Class rigs will be needed. We have previously delivered 10 such rigs to Mexico which have delivered robust, efficient and economical performances."

Separately, Grupo R's CEO Jose Ramiro Garza said: "We are pleased to be able to partner Keppel to bring this rig to work for Pemex in Mexico. The fields where the rig will operate is expected to produce up to 210,000 bpd (barrels per day) of crude and 350 million mmcfd (million cubic feet per day) of natural gas by 2020, resulting in more opportunities for the rig to be deployed in future."

In addition, Keppel also noted that this is the first rig equipped with its proprietary RigCare digital solutions that will "significantly transform the efficiency, safety and operability of the rig".

It added that the deal will not have any material impact on the net tangible assets, or earnings per share of Keppel Corp for the financial year ending Dec 31, 2019.

As at 2.07pm on Wednesday, Keppel Corp shares were trading at S$6.28, up 2.6 per cent, or 16 Singapore cents.