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Friday, 5 September 2014

Keppel finalising contracts on second FLNG vessel conversion for Golar

Keppel Shipyard Ltd (Keppel Shipyard), a wholly-owned subsidiary of Keppel Offshore & Marine Ltd (Keppel O&M), wishes to announce that it is in the process of finalising contracts with Golar Gimi Limited (Golar Gimi), a subsidiary of Golar LNG Limited (Golar LNG), to perform the conversion of a second Moss LNG carrier, the GIMI, into a Floating Liquefaction Vessel (FLNGV).
Earlier on 3 July 2014, Keppel Shipyard was awarded a firm contract by Golar Hilli Corporation (Golar Hilli) to perform the world's first-of-its-type conversion of a Moss LNG carrier, the HILLI, into an FLNGV, and the contract included options for another two similar units. The forthcoming conversion award of the GIMI will mark the exercise of the first of these two options.

The work scope for Keppel Shipyard in converting the GIMI is expected to be similar to that for the HILLI. Keppel Shipyard will be responsible for the provision of the design, detailed engineering and procurement of the marine systems and all of the conversion-related construction services. It is also expected that Keppel Shipyard's scope will include engaging Black & Veatch to provide design, procurement and commissioning support services for the topsides and liquefaction process. Once again, Black & Veatch's established PRICO® technology is expected to be selected for the liquefaction process.

Mr Michael Chia, Managing Director (Marine & Technology), Keppel O&M, said, "We are happy that Golar LNG is looking into their second FLNGV conversion, and is finalising discussions with Keppel Shipyard to perform this second conversion. We look forward to the opportunity to collaborate once again with Black & Veatch, our trusted partner for the first conversion, on this potential second project. We are confident that together with Black & Veatch, we will be able to perform this second conversion to the high standards expected of us.

"This advanced discussion for the conversion of the GIMI, which follows just two months after the first firm contract with Golar Hilli, is testament to the industry's positive reception to FLNGV conversion solutions and its potential to bring small and mid-scale Liquefied Natural Gas (LNG) to market, ahead of other competing solutions."

A further announcement will be made upon the execution of a firm contract, which is expected by October 2014, for the conversion of the GIMI. Upon execution of the contract, full construction activities will only commence when Keppel Shipyard receives a notice to proceed which is expected to be given on or after 1 January 2015 but no later than November 2015.

The above is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation, the parent company of Keppel O&M, for the current financial year.

- End -


  1. Keppel Corporation Limited (the "Company" or "Keppel") wishes to announce that KSI Production Pte Ltd ("KSI"), an indirect wholly-owned subsidiary of the Company, has on 4 September 2014 entered into a sale and purchase agreement to acquire 50 ordinary shares ("Acquired Shares"), representing 10% shareholding interest in the total registered issued share capital of Golar Hilli Corporation ("Golar Hilli") from Golar GHK Lessors Limited ("Golar GHK") at a consideration of US$1 per Acquired Share (the "Acquisition").

    Golar Hilli is the owner of the Moss LNG carrier HILLI which, as announced on 3 July 2014, is scheduled to be converted into a Floating Liquefaction Vessel (FLNGV) by Keppel Shipyard Limited, another wholly-owned subsidiary of the Company. Both Golar GHK and Golar Hilli are subsidiaries of Golar LNG Limited, with Golar GHK currently being the sole shareholder of Golar Hilli.

    The Acquisition strengthens the alignment of strategic interests between Keppel Shipyard Limited and Golar LNG Limited, and reflects Keppel's confidence in the prospects of Golar Hilli, the world's first FLNGV conversion project. The Company also believes that this investment will provide an attractive risk-adjusted return.

    The aggregate cash consideration of US$50 was arrived at on a willing buyer willing seller basis, taking into account the book value and net tangible asset value of the Acquired Shares, being US$50 as at 1 September 2014, and was funded through the internal working capital of KSI. As part of the Acquisition, KSI will also be extending a shareholders' loan of US$21,688,029 to Golar Hilli, representing 10% of the total amount of shareholders' loan extended to Golar Hilli, taking into account Golar Hilli's capital expenditure.

    The Company will make a further announcement upon completion of the Acquisition ("Completion").

    In connection with the Acquisition, KSI has on the same day also entered into a shareholders' agreement with Golar GHK and Golar Hilli which will take effect upon Completion. The shareholders' agreement governs the relationship between Golar GHK, Golar Hilli and KSI with respect to the conduct of the business to be undertaken by Golar Hilli, which includes seeking opportunities, and entering into agreements, with respect to the deployment and use of the HILLI for natural gas liquefaction projects. Under the terms of the shareholders' agreement, Golar Hilli may issue cash calls on a pro rata basis to shareholders for future funding requirements for the construction, deployment, and commissioning of HILLI based on the anticipated budget limit of US$1.3 billion including contingency.

    None of the directors or controlling shareholders of the Company has any interest, direct or indirect, in the above transaction.

    The aforementioned transaction is not expected to have any material impact on the net tangible assets and earnings per share of the Company for the current financial year.

    A copy of the sale and purchase agreement will be made available for inspection during normal business hours at the registered office of the Company for a period of 3 months from the date of this announcement.

    - End -

  2. Golar LNG offers 27.83M shares of common stock by World Shipholding

    BofA Merrill Lynch, Citigroup, Goldman, Sachs & Co., Morgan Stanley and RS Platou Markets AS are acting as joint book-running managers and Arctic Securities, BNP PARIBAS, DNB Markets and Pareto Securities are acting as co-managers in the offering.

  3. The Board is pleased with the positive reception to the first speculative order of a liquefaction vessel and is confident that the Company has the capability to execute multiple projects before the latter part of this decade. Similar to Golar’s industry leading franchise in FSRUs, the ability to deliver a cost effective liquefaction solution in a timely fashion has created a significant first mover advantage from which the Board intends to derive maximum benefit. Given its positioning, the Company should, in partnership with Keppel and B&V, be capable of delivering 4-5 units before any of its competitors enter the market in a serious way. Such an aggressive strategy is however totally dependent on successful project execution, solid operation and also overall demand.

    Golar is in the early stages of discussions with a target to find a possible alliance with a dynamic and fast growing E&P company to acquire and develop stranded gas reserves. The pricing level for these assets seems attractive if FLNG technology can be used to monetize the value.


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