Keppel O&M receives US$160 million payment for delivery of first jackup rig

KEPPEL Corporation’s : BN4 0% offshore and marine (O&M) arm, Keppel O&M, has received a payment of about US$160 million following the delivery of the first of three jackup rigs to ADNOC Drilling Company PJSC (ADNOC Drilling). 

In a press statement on Thursday (Nov 24), Keppel said the three rigs were part of a series of five rigs that Keppel Fels – Keppel O&M’s wholly-owned subsidiary – had been building for Borr Drilling. 

The construction contracts for the three rigs have since been novated by Borr Drilling to ADNOC Drilling, Keppel said.

As part of the novation agreement, Keppel O&M will receive full payments for each of the two remaining rigs on delivery. 

Keppel O&M also expects to receive at least US$352 million for all three rigs between 2022 and 2023, and this is in addition to downpayments that Keppel O&M had initially received from the previous customers for the rigs.

 Tan Leong Peng, managing director for new builds at Keppel O&M, said that with the novation of the three jackup contracts to ADNOC Drilling, the company has “even greater certainty” of delivering the remaining rigs, receiving more cash payments sooner, and reducing Keppel O&M’s financial exposure to the legacy assets. 

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“Our high-quality and cost-effective KFELS B Class family of rigs have a strong track record in the Middle East. Since the start of 2022, all nine of our proprietary jackup rigs have been contracted for deployment in the Middle East,” said Tan. 

“As drilling rig utilisation rates continue to increase, we are seeing more demand for high-quality rigs that our legacy rigs are well suited to meet.”

As part of the definitive agreements Keppel has signed in connection with the proposed O&M transactions with Sembcorp Marine, these rigs are part of Keppel O&M’s legacy rigs, and such rigs – as well as any sales proceeds – will be transferred to Asset Co that is majority-owned by external investors on legal completion.

Shares of Keppel closed on Thursday at S$7.49, up 0.8 per cent or S$0.06.