Keppel FELS to build three jackups worth US$650 million for new customer

Keppel FELS Limited (Keppel FELS), a wholly owned subsidiary of Keppel Offshore & Marine (Keppel O&M), has secured contracts to build three high-specification KFELS B Class jackup rigs worth about US$650 million from new customer Fecon International Corp. (Fecon).

Backed by experienced industrial entrepreneur, A.P. Dobrov, Fecon is a new player to the offshore oil and gas industry, and is targeting the growing offshore drilling markets of Africa, Middle East, and Southeast Asia. In addition, Fecon's leadership team has extensive connections, experience and knowledge of working in Russia and has identified offshore drilling in Russia as a strategic market with good growth opportunities.

The three rigs are scheduled to be delivered progressively within 2H 2016.

Mr A.P. Dobrov, a representative of Fecon said, "The International Energy Agency estimates oil demand in the world to increase by 1.3 million barrels per day in 2014¹ and Barclays has forecast global E&P spending to reach a new record of US$723 billion in 2014, an increase of 6.1% from US$682 billion in 2013². There is a need for more high specification jackup rigs as the replacement cycle continues and we believe the robust KFELS B Class rig will be the most efficient rig in the greatest number of locations.

"Building three premium rigs at the same time will enable us to accelerate our presence in this industry and establish ourselves as a serious drilling contractor in the market. Being a new player, teaming up with the world's leading rig builder, Keppel FELS, will help fast track our entry into the market. Their track record of delivering on time, without incidents and on budget will ensure we get maximum value and returns on our investment."

The cost-effective and high-performance KFELS B Class rig is able to operate in water depths of up to 400 feet and drill to 30,000 feet deep. Customised to Fecon's requirements, the three jackup rigs will each have a full 15,000 psi BOP system, 75-feet cantilever outreach and be able to accommodate 150 persons.

Mr Wong Kok Seng, Managing Director (Offshore) of Keppel O&M and Managing Director of Keppel FELS said, "We are pleased that new customer Fecon has chosen to build three KFELS B Class rigs as the basis for their fleet of jackups. Our KFELS B Class rigs are the industry benchmark for jackup rigs with more than 50 delivered and operating successfully in various parts of the world including Southeast Asia, the Middle East, Gulf of Mexico and the Black Sea. I am confident these rigs for Fecon will be just as successful wherever they are deployed.

"Their efficiency, reliability, ease of operation as well as safety and environmental features make them the default rig of choice for both experienced and new operators. With these new orders, Keppel O&M currently has 27 KFELS B Class rigs on order."

Developed by Keppel's technology arms, Offshore Technology Development and Bennett Offshore, the KFELS B Class is customised to operate in a wide variety of environments and features an enhanced leg design for added robustness. The design incorporates Keppel's advanced and fully-automated high capacity rack and pinion jacking system, and Self-Positioning Fixation System.

The KFELS B Class provides maximum uptime with reduced emissions and discharges. For its environmental-friendly features, the KFELS B Class design was bestowed the prestigious Engineering Achievement Award from the Institution of Engineers Singapore in 2009.

The above 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.

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CW8888's own estimate on Keppel Order Book:

 

New customer Fecon International Corp. (Fecon).

 

Not bad!

 

Still can secure a new customer with three orders at one go. USD 217m per piece. Comparable to the previous order at USD 218.