Keppel Offshore & Marine Ltd has, through its wholly-owned subsidiary, Keppel FELS Limited signed a letter of intent with Awilco Drilling for the proposed construction of a semisubmersible drilling rig for harsh environment use, with the option to build up to a further three units.
The details and terms of an agreement relating to the transaction have not yet been finalised and are still subject to ongoing negotiations and discussions between the parties. “The Company will make the relevant announcement when the definitive agreement has been finalised and entered into,” a press statement issued by Keppel Corporation said.
However, according to The Business Times, Singapore, Awilco’s presentation on the transaction mentioned that the UK-based drilling contractor is raising equity of USD 65 million to fund the construction. According to Awilco, the construction price is approximately USD 425 million.
Singapore-based, global investment bank UOB Kay Hian noted, “Assuming Keppel Corp decides to pursue this project, the contract win will lift Keppel Corp’s orderbook to S$4.4 billion (up 15 per cent) from S$3.9 billion as of end-17. However, the low construction price suggests that margins will be low,”
Delivery for the semi-sub is due March 2021, with an option to delay the delivery by up to a year. Following Awilco’s presentation, 10 per cent of the payment will be given upfront, with the second 10 per cent installment paid two years later, and the remaining 80 per cent on delivery.
(Reference: The Business Times)
Sea News, February 28