Keppel Offshore & Marine Ltd (Keppel O&M), through its wholly-owned subsidiary Keppel FELS Limited (Keppel FELS), has delivered the first of three jackup rigs to ADNOC Drilling Company PJSC (ADNOC Drilling).
The three rigs were part of a series of five rigs that Keppel FELS had been building for Borr Drilling. As set out in Keppel’s announcement dated 12 October 2022[1], Keppel O&M entered into an agreement with Borr Drilling and certain of its subsidiaries to, among other things, accelerate the delivery of three jackup rigs to Borr Drilling (or a third party whom Borr Drilling intends to sell the rigs to) between October 2022 and July 2023. The construction contracts for the three rigs have since been novated by Borr Drilling to ADNOC Drilling, and this is the first of three rigs to be delivered to ADNOC Drilling.
Keppel O&M has received a full payment of approximately US$160 million having delivered the first rig. As part of the novation agreement, Keppel O&M will also receive full payments for each of the two remaining rigs on delivery. Keppel O&M expects to receive at least US$352 million for all three rigs between 2022 and 2023. This is in addition to down payments Keppel O&M had initially received from the previous customers for the rigs[2].
Mr Tan Leong Peng, Managing Director (New Builds) of Keppel O&M said, “We are pleased to support ADNOC Drilling in the growth of their rig fleet and drilling operations with the delivery of the first of three newbuild rigs. Keppel O&M stands ready to support our customer with additional modification services as they prepare their rigs for deployment.
“With the novation of the three jackup contracts to ADNOC Drilling, we have even greater certainty of delivering these rigs, receiving more cash payments sooner, and reducing Keppel O&M’s financial exposure to the legacy assets.
“Our high quality and cost-effective KFELS B Class family of rigs have a strong track record in the Middle East. Since the start of 2022, all nine of our proprietary jackup rigs have been contracted for deployment in the Middle East. As drilling rig utilisation rates continue to increase, we are seeing more demand for high quality rigs that our legacy rigs are well suited to meet.”
The KFELS B Class family of designs are the industry benchmark for jackup rigs. It has proven its robustness and efficiency in many fields around the world over the years, including in the Middle East.
This first rig delivered is built to the KFELS Super B Class design, which is capable of operating in water depths of over 400 feet, drilling to depths of 35,000 feet, and drilling deep wells both vertically and horizontally. It will be equipped with an advanced and fully-automated high capacity rack and pinion jacking system, Self-Positioning Fixation System, and also has accommodation with full amenities for 150 persons.
As part of the definitive agreements Keppel Corporation has signed in connection with the proposed Offshore & Marine transactions[3], these rigs are part of Keppel O&M’s legacy rigs, and such rigs as well as any sales proceeds, will be transferred to Asset Co that is majority-owned by external investors on legal completion.
The abovementioned transaction will not have any material impact on the net tangible assets and earnings per share of Keppel Corporation Limited for the financial year ending 31 December 2022.