Singapore-based rig builder Keppel Offshore & Marine has secured bareboat charter deals for two of its KFELS B Class rigs to be deployed in Saudi Arabia.
The two rigs will be chartered by the drilling contractor ADES for a period of five years, starting in the fourth quarter of 2022.
To remind, Keppel O&M in April announced newbuild rig contract terminations with an affiliate of Clearwater Capital Partners, and Fecon International, for rigs ordered in October 2013 and February 2014, respectively.
Now, some of these rigs will be used in turn to fulfill the bareboat charter contracts with ADES.
"These bareboat contracts are expected to generate revenue of about S$135 million for Keppel O&M including modification works to prepare them for deployment," Keppel O&M, which last year said it would exit the offshore rig building business, said.
Chris Ong, CEO of Keppel O&M, said, “We are pleased to secure bareboat charter contracts for two of our jackup 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. With superior drilling efficiency and proven high performance, our modern KFELS B Class rigs are an economical and attractive proposition for operators and oil companies looking to ramp up exploration activities.”
Rig Markets Tighten
Keppel O&M has cited a Clarksons research published in April 2022, according to which rig markets have continued to tighten in 2022, with overall utilization now at its highest level since 2015 and dayrates rising noticeably for jackups and floaters.
"The outlook for the jackup market is optimistic, with demand expected to increase across 2022-23, underpinned by strong activity of national oil companies," the company said.
“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,” Ong said.
As previously reported, Keppel O&M is expected to merge with Sembcorp Marine. As part of the merger agreement, these two rigs and their bareboat charter agreements are part of Keppel O&M’s legacy rigs. They will be transferred to Asset Co that is majority-owned by external investors on legal completion.