KS Drilling scraps ZPMC offshore rig order

Singapore’s KS Energy, via subsidiary KS Drilling, has reached an agreement with ZPMC to cancel a jack-up rig construction order signed in 2014.

“The termination agreement was reached following discussions between KS Drilling and ZPMC. Pursuant to the Termination Agreement, KS Drilling shall not take delivery of the Rig,“ KS Energy said.

“There is no material impact on the operations of the Group due to the Termination Agreement however the costs of construction relating to the Rig which were previously capitalized with a book value of US$12.6 million as at 31st March 2019 will be written off,” KS Energy said.

As previously reported, Singapore Exchange in April sought an answer from KS Energy on whether the company and the group could continue to operate as a going concern, that is, if it would be able to meet its obligations as and when they fall due.

The SGX query followed a report by independent auditor KPMG, which at the time highlighted that KS Energy’s current liabilities exceeded current assets, and pointed to the Group’s capital commitments of $489 million as at December 31, 2018, with “currently no financing arrangements put in place to meet the obligations.”

Related: KS Energy in $4.9M rig deal as auditor casts doubt on driller’s ability to stay afloat

The $489 million commitment was related to two newbuild jack-up rigs under construction in Chinese shipyards Cosco and Shanghai Zhenhua Heavy Industry Co, (ZPMC). While the ZPMC rig order has now been canceled, it is unclear what the status of the other rig under construction at Cosco yard is.

To remind, the drilling firm ordered the newbuild jack-up rigs from Cosco and Shanghai Zhenhua Heavy Industry in October 2011, and October 2014, respectively.

The first rig was originally to be delivered in February 2014, and the second in September 2016. According to KS’ recent statements, after several revisions of delivery dates, the Shanghai Zhenhua Heavy Industry-built rig was to be delivered on December 31, 2018 (now canceled), and the Cosco rig on December 2019.

Offshore Energy Today Staff

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