Keppel O&M secures deals for two jack-up rigs with ADES

Singapore’s Keppel Offshore & Marine has won a deal worth around S$135 million (about $97 million) with Saudi Arabia’s Public Investment Fund-affiliated company, ADES, for two jack-up rigs.

Keppel O&M revealed on Monday that it had signed agreements through its wholly-owned subsidiaries – FELS Asset Co 5 and FELS Asset Co 6 – for the utilisation of two KFELS B Class rigs, which would be deployed in Saudi Arabia.

These agreements stipulate that two rigs will be chartered by ADES Saudi Limited for a period of five years. The contracts are scheduled to start in the fourth quarter of 2022 and are expected to generate revenue of around $97 million, including modification works to prepare the rigs for deployment.

Chris Ong, CEO of Keppel O&M, remarked: “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. 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 unrivalled operational track record.”

According to Keppel O&M, these bareboat charter contracts are not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation for the current financial year.

“We continue to see strong demand for our rigs and are actively pursuing more charters, as well as sales opportunities. 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,” added Ong.

Back in April 2022, Keppel O&M informed about the termination of two contracts for four rigs. Within its announcement about the new bareboat charters, the firm confirmed that two of these rigs will be used to fulfil the latest contracts.

In addition, the company says that 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 of the proposed combination of Keppel O&M and Sembcorp Marine.

As a reminder, Keppel’s discussions with Sembcorp Marine regarding this merger finally bore fruit in late April 2022 and the two inked definitive agreements.

When it comes to Keppel O&M’s most recent deals, it is worth noting that the firm won contracts worth around $181 million last week for the integration of two FPSOs.