Keppel O&M wins repeat rig order worth $578m

Keppel Corp's offshore and marine unit has clinched a repeat rig construction contract worth about US$425 million (S$578 million) from Awilco Drilling.

The terms of the order are subject to finalisation and the signing of definitive agreements within 15 days, Keppel said in a filing on the Singapore Exchange late on Friday. Keppel Offshore & Marine's (Keppel O&M) Keppel FELS will be undertaking the contract.

The mid-water, semi-submersible drilling rig for harsh environment use is scheduled to be completed in the first quarter of 2022. The rig is being built to Moss Maritime's CS60 ECO MW design, and is meant for mid-water operations in depths of up to 1,500m in north-western Europe.

The repeat order represents the exercise of an option that Awilco had as part of an earlier US$425 million contract for a similar rig signed in March last year. Awilco has independent options to order up to another two rigs to be exercised in 2020 and 2021.

Keppel O&M executive director of offshore Tan Leong Peng said in a statement: "Work on the first rig is progressing well and we will be able to benefit from economies of scale and cost efficiencies from undertaking a repeat project. For this second rig, we will be able to leverage the engineering and construction process of the first rig to further improve productivity."

Awilco chairman Sigurd E. Thorvildsen said: "We have exercised the first of our three options because we see growing demand for such mid-water, harsh environments rigs in north-western Europe. Our partnership with the world's leading rig builder, Keppel, enables us to offer our customers confidence in receiving a high specification rig that is purpose-designed, setting a new environmental standard and equipped with the latest technology. The progress on the first rig has been exemplary and we look forward to receiving this second rig with the hallmark Keppel quality, reliability, timeliness and safety."

Keppel share closed at S$6.10 on Friday before the announcement.

A version of this article appeared in the print edition of The Straits Times on March 11, 2019, with the headline 'Keppel O&M wins repeat rig order worth $578m'. Print Edition | Subscribe