Keppel O&M: Majority of orders in 2019 from gas and renewables

Singapore Keppel Corporation’s Offshore & Marine business division saw its revenue and profit increase in the third quarter of 2019. While the division is famous for its rig building capabilities, the company has so far this year secured one rig order, and 60 percent of contracts in the first nine months arrived from gas and renewables-related projects.

Keppel Corporation’s revenue, derived from four business segments – Offshore & Marine, Property, Infrastructure, and Investments, grew to around S$2 billion in the third quarter, up from $S1,3 billion a year ago. The company’s overall net profit fell to S$159 million, from S$227 million in the corresponding quarter of 2018.

The Offshore and Marine business saw revenue rise to S$632 million in the quarter, a 52 percent increase from S$416 million a year ago, due mainly to higher revenue recognition from ongoing projects. The Offshore Marine business’ 3Q profit was S$8 million, an increase compared to S$2 million reported in the third quarter last year.

Related: Offshore oil rig builder Keppel gets another renewable energy project /May 13, 2019/

Keppel O&M has been diversifying in the past few years, hurt by the lack of demand for offshore drilling rigs caused by rig oversupply and low oil prices.

In a comment on Thursday, Keppel said that the company’s efforts to build new capabilities and capture new opportunities were bearing fruit.

“Over the past four years, gas solutions and offshore renewables have contributed S$2.4 billion in new orders for Keppel O&M,” Keppel said.

Keppel O&M order book / Screenshot from Keppel 9M results slides
Keppel O&M order book and new orders / Screenshot from Keppel 9M results slides

In the first nine months of the year, Keppel’s Offshore & Marine business secured about S$1.88b in new contracts, comprising a semi-submersible rig, two FPSO conversions, an FLNG conversion, a dual-fuel dredger, an offshore high voltage direct current converter station and an onshore converter station, and 2 offshore wind farm substations – close to 60% of these new orders for LNG and renewables-related projects.

As for the deliveries so far this year, Keppel has delivered three jack-up rigs, an FPSO conversion, an FPSO modification/upgrade, an FSRU conversion, and three dredgers.

Earlier this week, Keppel delivered a KFELS B Class design Hermod jack-up rig to Borr Drilling. This is the fourth of eleven jack-up rigs that Keppel is building for Borr Drilling. Keppel O&M has previously delivered the Saga, Skald, and Thor jack-up rigs to Borr Drilling.

Keppel Offshore & Marine’s net order book currently stands at S$5.1 billion as of end-September 2019, excluding projects for Sete Brasil, compared to S$4.3 billion as at end-2018. Of the S$5.1 billion, the largest chunk is for gas solutions (S$2.7billion), followed by oil rigs (S1.2 billion), and renewables (S$0.7 billion). Keppel’s order book shows the company is set to deliver 17 offshore drilling rigs by 2022.

Keppel O&M order book / Screenshot from Keppel 9M results slides

Looking ahead, Keppel said it offshore and marine division would continue exploring new markets and opportunities, investing in R&D and building new capabilities.

“The Division is also actively capturing opportunities in production assets, specialized vessels, gas solutions, offshore renewables, and floating infrastructure, as well as exploring ways to re-purpose its technology in the offshore industry for other uses,” Keppel said.

Offshore Energy Today Staff

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