Keppel acquires LeTourneau jackup business for $100 million

Latest LeTourneau design, the Jaguar, was introduced at this year's OTC

AUGUST 31, 2015 — Keppel Offshore & Marine (Keppel O&M) is paying $100 million to acquire the LeTourneau jackup rig business from Cameron International. The news comes within days of the announcement that Cameron International is itself to be acquired by Schlumberger in a $14.8 billion merger.

Keppel subsidiary Keppel Offshore & Marine USA Inc. is acquiring the LeTourneau jackup rig designs, rig kit business, and aftermarket services, but not the idled LeTourneau shipyard in Vicksburg, MS.

Keppel notes that the LeTourneau jackup rig designs are established designs that have been popular with certain market segments and have a proven track record of operating in a variety of environments.

It says that the designs it is acquiring, which include the LeTourneau Super 116E, Workhorse, Super Gorilla XL and Jaguar, will add to its offerings in the jackup rig market.

With the acquisition, Keppel will be able to offer customers the LeTourneau rig designs through the sale of rig kits to shipyards, or deliver ready-to-drill rig solutions from Keppel shipyards worldwide. The rig kits include jackup leg components, elevating units/jacking system and cantilever/skidding system. Support equipment such as cranes and anchor winches are also options in the rig kits.

Keppel O&M has the expertise to build rigs of the LeTourneau design having previously completed 16 such rigs.

What is undoubtedly a major attraction of the deal in the current market is the provision of aftermarket services for the approximately 100 LeTourneau rigs currently operating around the world, many operators require servicing and repair of their rigs.

Keppel will be able to leverage its network of shipyards worldwide to meet this demand. Besides repairs, upgrades and modifications, jackups are required to undergo five-year Class recertification special periodic surveys.

Mr. Chow Yew Yuen, CEO of Keppel O&M, said, “This is an opportune and strategic acquisition as it will not only broaden our suite of jackup rig design offerings in this highly competitive sector, but also provide us with enhanced capabilities to service customers through the provision of expanded aftermarket sales and services. We are confident that the long-term fundamentals of the offshore rig market remain positive.

“With the current low oil price, we have seen a slowdown in newbuild rig orders. Rig owners are instead looking at repairing and upgrading their current fleet. We believe that we can make best use of our after sales service infrastructure to service rigs of both the LeTourneau as well as Keppel FELS designs. These are popular designs operating in many of the world’s offshore oil fields and rig owners can now utilise our global network of yards to service and maintain their rig assets cost-effectively.”