Sembcorp Marine's share price continued to forge ahead yesterday, in spite of news of a yard incident on Sunday that injured three workers and damaged a rig under construction for New York-listed drilling giant Noble Corporation.
The authorities have asked SembMarine to stop the use of all dockside cranes at the yard while investigations proceed.
The counter jumped 7.5 cents, or 4.7 per cent, to $1.655 in a broader rally across the oil and gas sector as traders continued to pile in on hopes that crude prices have bottomed out.
The latest gain marked a 26 per cent surge over the stock's most recent low of $1.315 on Jan 18.
A SembMarine spokesman said in a statement that the damage to the jack-up rig, which is being built at the Tanjong Kling yard under a US$592 million (S$824.6 million) contract, is believed to be minor.
He added that the rig's scheduled delivery in the second quarter of this year will not be affected.
The incident took place on Sunday afternoon during a lifting operation, when a shore crane lifting a bundle of scaffold planks from the rig to the quayside came into contact with another crane on the rig, said the spokesman.
Three male foreign workers near and on board the Noble Lloyd Noble sustained minor injuries. One of them was certified well at a hospital, while the other two have been discharged after hospital treatment.
"Sembcorp Marine is continuing to monitor the condition of the injured workers as their health and well-being remain our most important priority. We are also assisting the Ministry of Manpower (MOM) with the incident investigation," said the spokesman.
MOM issued a statement yesterday on the request to SembMarine to stop using dockside cranes at the yard. "A full maintenance and inspection by an authorised examiner have to be carried out to certify that it is in good condition and safe for use before the use of the cranes can resume. Investigations are ongoing."
SembMarine is also working with Noble Corp to "assess the damage to the Noble Lloyd Noble", said the company spokesman.
The rig has been contracted for a four-year drilling campaign with Statoil during the third quarter of 2016, with a commencement date of no later than March 1, 2017.
DBS analyst Ho Pei Hwa in a note on Wednesday called the incident "unfortunate", given that Noble Lloyd Noble is "one of the handful of newbuild rigs which are backed by charter contract and not under deferment pressure".
"We believe the bulk of the additional cost required to repair the damaged rig should be covered by insurance," she said.
"As for potential delay penalties, it would likely depend on the extent of delay, negotiation with owner and findings of the investigation.
"In any case, this puts shipyards at a disadvantage, particularly in such a tough time. The incident could also result in some reputational loss and confidence on SembMarine's execution."
Ms Ho maintains a "fully valued" call on the stock, with a target price of $1.24.
