Due to payment term of 20/80 or 10/90, most of the reveune recognition happening from 3-4 years from now.
Revenue Forecast looking stable ahead
Due to the nature of repeated orders; the Operating Margin should be stable if not improving
Keppel FELS Limited (Keppel FELS), a wholly owned subsidiary of Keppel Offshore & Marine (Keppel O&M), has secured a contract to build a repeat KFELS Super A Class harsh environment jackup rig from a subsidiary of Ensco plc (NYSE: ESV) for around US$265 million.
Scheduled for delivery in 2Q 2016, it will be the fourth ENSCO 120 Series jackup rig that Ensco has ordered from Keppel FELS since 2011. As part of the contract, Ensco has an option to order another similar rig.
Mr Tong Chong Heong, Chief Executive Officer of Keppel O&M, said, "We are pleased that Ensco, which has the largest fleet of premium jackup rigs in the world, continues to expand its fleet of harsh environment jackup rigs with Keppel FELS. It marks the strength of our reputation for providing proven rigs that are the best in class.
"Customers come to us because we have the experience and expertise to come up with solutions that can meet their needs. We are able to stay ahead of the competition because we have the R&D resource and execution capabilities to deliver customised and differentiated rig designs that are high performance, cost efficient and reliable. We are encouraged that established drilling contractors such as Ensco continue to value rigs of quality and the Keppel promise of on-schedule project execution."
The ENSCO 120 Series rigs are based on the KFELS Super A Class, which is an enhancement of the proven KFELS MOD V-A Class jackup and features its proprietary and superior jacking and fixation system that has a perfect track record operating in a variety of environments. To date, over 2,800 jacks designed by Keppel FELS' Offshore Technology Development unit have been installed in the jackup rigs built to KFELS' proprietary designs.
Keppel FELS delivered the first ENSCO 120 Series jackup, ENSCO 120, earlier this year, which has been chartered to Nexen and is about to begin work in the North Sea. ENSCO 121 and ENSCO 122 are also contracted for multi-year terms in the North Sea following delivery from Keppel FELS.
Mr Dan Rabun, Chairman and CEO of Ensco plc, said, "Through the ENSCO 120 Series, we are expanding our fleet of ultra-premium harsh environment jackup rigs that have a significant performance advantage in harsh environments around the world.
"Customer acceptance of the ENSCO 120 Series design has been remarkably strong because the rig has proprietary, patented technology that significantly increases the operational efficiencies in harsh environments. The Ensco patented cantilever system, strong jacking system, and deep well capabilities of the ENSCO 120 Series rigs, paired with our skilled crew's knowledge and experience, are a winning combination for our customers.
"When developing a new series of rigs, we believe in choosing a winning design and standardising it to achieve greater efficiencies. Having looked at shipyards around the world, we have always come back to Keppel over the years because of their ability to consistently provide industry-leading rig designs in a timely and reliable manner."
The ENSCO 120 Series rigs can operate in water depths of 400 feet and drill to depths of 40,000 feet. It features advanced automated drilling systems with 2.5 million pounds of static hook load, a spacious deck and comprehensive amenities for the comfort of a 145-person crew. It also has an offline stand building capability to handle drill pipes efficiently, boosting overall rig performance and productivity.
For enhanced operational safety, the rigs are equipped with the latest pinion overload detection, rack phase difference detection, and brake failure and overload protection devices, thus meeting even the stringent Health, Safety and Environment (HSE) standards of various sectors in the North Sea.
The above contract is not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.