Keppel: Industry Fundamentals Still Strong
Keppel Corporation reported a net profit of S$414 million (USD 352.8 million) in the third quarter of 2014, down 9% year on year mainly due to lower profit contribution from its property division, the company said.
In the first nine months of 2014, Keppel achieved a net profit of S$1,159 million, comparable to the same period in 2013.
“At Keppel, we believe that with the depleting reserves and aging fleet, the industry fundamentals are still strong. IOCs are kicking the can down the road but at some point they would have to spend to replenish reserves, and drilling contractors would have to replace their old fleet with new, safer and technologically superior rigs,” Chief Executive Loh Chin Hua said.
The Offshore & Marine Division has secured year-to-date about S$3.7 billion worth of new contracts. Apart from new innovative solutions like the GOLAR HILLI FLNG conversion and the KFELS N Plus jackup, the company said it had acquired some new customers like Fecon International, Gulf Drilling International, TS Offshore and UMW Oil & Gas in their latest contracts.
“With a net orderbook of S$12.7 billion stretching into 2019, we are in a position to go after quality work that will translate into meaningful earnings. Our prudence in selecting such projects along with our focus on executing well to earn the best risk-adjusted returns have contributed to a stable operating margin of 14.6% for the first nine months of this year, comparable to 14.8% achieved over the same period last year.”
Keppel has secured a second letter of intent from Golar LNG, within two months of signing the USD 735 million contract to convert the first FLNG vessel.
“We hope to seal this very soon. With the introduction of FLNG vessels, global FLNG capex is expected to experience a significant increase over the next six years, amounting to about US$65 billion by 2020. Keppel is looking forward to participate more meaningfully in the growth of this FLNG market. To this end, we have opted to take a 10% stake in the first project, Golar Hilli,” Hua added.