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SembMarine secures US$166m contract for work on Teekay Offshore vessel

SUBSIDIARIES of Sembcorp Marine (SembMarine) and Teekay Offshore Partners have signed a US$166 million agreement for engineering, procurement and construction works related to the modification, repair and life extension of Teekay's Petrojarl Varg FPSO (floating production storage and offloading) ship.

The deal - signed by Sembcorp Marine Rigs & Floaters and Teekay's Varg LLC - will see work on the vessel completed in July 2020, Sembmarine said in a Singapore Exchange filing on Monday morning. The work includes detailed engineering, fabrication, installation and integration of the topside process skid; overhauling of existing internal turret and power generation; and repair and life extension of the vessel's hull, tanks and various systems onboard.

Upon completion, the Petrojarl Varg FPSO will be operated by privately-owned Alpha Petroleum Resources Limited and deployed at the Cheviot field development and the Peel satellite accumulation, both located within the UK Continental Shelf Blocks 2/10B, 2/15A and 3/11B in the North Sea.

The agreement's effectiveness will be conditional on Alpha Petroleum Resources satisfying certain conditions which include finalising its debt facilities with a consortium of lenders and obtaining approval from relevant authorities for its final field development plan for the Cheviot Field.

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Sembmarine expects a positive contribution to its earnings from the contract, but does not expect the contract to have any material impact on the group's net tangible assets and earnings per share for the year ending Dec 31, 2018.

Sembmarine last traded at S$1.86 apiece on Oct 19.