Keppel Offshore & Marine Ltd (Keppel O&M) has through its wholly-owned subsidiaries signed agreements for the utilisation of two KFELS B Class rigs to be deployed in Saudi Arabia.
These bareboat contracts are expected to generate revenue of about S$135M for Keppel O&M including modification works to prepare them for deployment. The two rigs will be chartered by ADES Saudi Limited Company for a period of five years commencing in 4Q 2022.
According to a report by Clarksons Research published in April 2022, rig markets have continued to tighten in 2022, with overall utilisation now at its highest level since 2015 and day rates rising noticeably for jackups and floaters. The outlook for the jackup market is optimistic, with demand expected to increase across 2022-23, underpinned by the strong activity of national oil companies.
Keppel O&M had on 13 April 2022 announced the termination of newbuild rig contracts with certain customers, which will be used in turn to fulfill the latest bareboat charter contracts.
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 and their bareboat charter agreements are part of Keppel O&M’s legacy rigs and will be transferred to Asset Co which 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.