Keppel cancels three contracts

Singapore’s Keppel has terminated contracts with three different clients related to orders for a jack-up drilling rig, a tender-assist rig, and a liftboat.

The first contract was secured by Keppel O&M’s subsidiary, Keppel FELS, from TS Offshore in March 2014 to build a 500 feet water depth N Plus jack-up rig, worth about $500 million (TS Jasper). The rig was scheduled for delivery in 1Q 2017.

The second contract was signed in January 2015 and it was for a semi-sub tender-assist rig, the Sapura Raiqa.

The third contract was entered into in July 2015 with Crystal Heights Holdings Limited to build a high-specification liftboat, worth about $85 million. It was scheduled for delivery in 4Q 2017 and meant for operations in China, the Middle East and the Gulf of Mexico.

Last Friday 5 August 2022, Keppel FELS issued notices of termination for these contracts referring to the transfer of the identified asset to Rigco Holding in relation to the proposed combination of Keppel Offshore & Marine and Sembcorp Marine.

As a reminder, it was agreed that Keppel O&M would sell its legacy rigs and associated receivables to an Asset Co that would be 10%-owned by Keppel and 90%-owned by other investors, and transfer other out-of-scope assets to Keppel. The TS Jasper and the Sapura Raiqa are two of the identified assets to be transferred to Rigco Holding.

Explaining the reasoning behind these three terminations, Keppel said that, for the TS Jasper and the liftboat, the basis for termination is the failure of the respective clients to pay the outstanding amounts due and payable under each of the contracts. For Sapura Raiqa, the basis is the client’s conduct showing that it no longer intends to perform its remaining obligations under the contract, including but not limited to accepting delivery of the rig and making the remaining payments.

Following the termination of the contracts, Keppel FELS will retain all payments received under them and will retain ownership of the TS Jasper and the Sapura Raiqa, including the right to sell these vessels. The construction of the liftboat had not and will not be started.

Earlier this year, Keppel made a similar announcement when it terminated two separate contracts for a total of four jack-up rigs, keeping the payments and ownership of the rigs.

Just last week, Keppel AmFELS and Keppel Shipyard were awarded contracts worth around S$75 million or about $54 million for the refurbishment and completion of two floating production units (FPU). Following completion, these vessels will work in the Gulf of Mexico and Senegal.