Keppel Offshore & Marine Ltd (Keppel O&M) has, through its wholly owned subsidiaries (FELS Asset Co Pte. Ltd and FELS Asset Co 2 Pte. Ltd), signed bareboat charter contracts with ADES Saudi Limited Company for two jackup rigs to be deployed in Saudi Arabia. This brings the total number of rigs Keppel O&M has on charter with ADES to four.
The charters will be for a period of 5 years, expected to commence in 1H 2023, and projected to generate total revenue of about SGD 155 million for Keppel O&M, which includes modification works to prepare the rigs for deployment.
These are the fifth and sixth bareboat charters secured by Keppel O&M this year, pointing to the continued demand for more high-quality drilling rigs of Keppel’s proven KFELS B Class design.
The two rigs to be used for these charters are the Cantarell III and Cantarell IV jackup rigs which were under bareboat charters with subsidiaries of Grupo R. These charters have since been terminated due to unremedied events of default under the bareboat charters by the charterers. The rigs, which will be renamed ADM685 and ADM686, are currently in Mexico and will be transported to Saudi Arabia for modification works before commencing their charters for ADES.
Tan Leong Peng, Managing Director (New Builds) of Keppel O&M, says, “We are pleased to receive a repeat contract from ADES for the charter of another two of our jackup rigs. These high-performance rigs have been operating successfully in Mexico and can be easily mobilised to work in Saudi Arabia. They are equipped with our AssetCare digitalisation solution which increases the efficiency, safety and operability of the rigs.”
“All of our KFELS B Class legacy jackup rigs have secured bareboat charters or are on contract, which reflects the value our rigs bring to rig operators and increases their marketability for sale to potential buyers and investors. Utilisation rates across both the jackup and floater segments have continued to trend upwards, and we are confident our versatile and robust legacy rigs will be in demand across a variety of markets,” he adds.
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 are part of Keppel O&M’s legacy rigs and they, as well as their bareboat charter agreements will be transferred to Asset Co 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.