Keppel O&M signs charters for two “legacy” jack-ups

Keppel B Class jack=up rig

Keppel Offshore & Marine Ltd (Keppel O&M) has signed agreements for the utilization of two KFELS B Class rigs to be deployed in Saudi Arabia. The bareboat contracts are expected to generate revenue of about S$135 million (about US$97 million) 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 fourth quarter 2022.

Under the recently signed agreement for the merger of Keppel O&M and Sembcorp certain legacy rigs and receivables that Keppel O&M has gotten stuck are to be sold to a separate asset company that will be 90%-owned by other investors, with Keppel Corporation holding a 10% stake. These two rigs and their bareboat charter agreements are among those legacy rigs and will be transferred to the asset company when the merger completes.

“We are pleased to secure bareboat charter contracts for two of our jack-up rigs, riding on improving conditions in the oil and gas market,” said Keppel O&M CEO Chris Ong. “These charters attest to the good demand for Keppel O&M’s proven state-of-the-art KFELS B Class rig in markets such as the Middle East where our proprietary design has established an unrivaled operational track record. With superior drilling efficiency and proven high performance, our modern KFELS B Class rigs are an economical and attractive proposition for operators and oil companies looking to ramp up exploration activities.”

According to a report by Clarksons Research published in April 2022, notes Keppel O&M, rig markets have continued to tighten in 2022, with overall utilization now at its highest level since 2015 and dayrates rising noticeably for jack-ups and floaters. The outlook for the jackup market is optimistic, with demand expected to increase across 2022-23, underpinned by strong activity of national oil companies.

“We continue to see strong demand for our rigs, and are actively pursuing more charters, as well as sales opportunities,” said Ong. “Our early success at securing new bareboat charters will not only enable us to start generating revenue and cash flows from the legacy assets but also improve the overall marketability of our rigs as we build up their operational track records.”