Singapore: Keppel to Build Two Jackups Worth US$416 Million for Discovery Offshore

Keppel FELS Limited (Keppel FELS) has secured a contract worth about US$416 million from Discovery Offshore S.A. (Discovery Offshore) to construct two harsh environment jackup rigs based on the proprietary KFELS Super A Class design.

The rigs are scheduled for delivery in 1H and 2H 2013 respectively. The construction, marketing and operation of both units will be managed by NASDAQ-listed Hercules Offshore, Inc. (Hercules Offshore), which is a leading global operator of jackup and liftboat assets.

Discovery Offshore has options to order two additional jackup units as part of its contract with Keppel FELS. If exercised, the options for the additional units will bring the total contract value to above US$840 million.

The new KFELS Super A Class brings together winning features of the company’s proven jackup rig designs to provide operators with a viable and cost-effective solution for harsh environments and cold climate areas.

Mr Wong Kok Seng, Managing Director of Keppel FELS, said, “The KFELS Super A Class debuts at an opportune time when the industry is looking for newer and higher performance assets, which offer improved safety and better efficiency.

“This North Sea-compliant rig would be able to operate efficiently in virtually all parts of the world outside Norway and the Arctic. Discovery Offshore’s acceptance of the KFELS Super A Class design attests to its potential, as well as our ability and commitment to deliver.

“We are confident of completing these rigs to the satisfaction of our customer, and look forward to nurture this partnership with them.”

Customised to meet the requirements of Discovery Offshore for high-specification jackups that can be safely deployed in most areas worldwide, the rigs will be capable of operating in water depths of 400 feet and drilling depths of 35,000 feet.

For greater operational safety, the KFELS Super A Class is equipped with the latest pinion overload detection, rack phase difference detection, and brake failure and overload protection devices, thus even meeting the stringent Health, Safety and Environment (HSE) standards of the UK sector in the North Sea.

In addition to having strong drilling capabilities and cantilever load performance, the KFELS Super A Class includes a spacious deck and amenities to accommodate 150 men.

Mr John T. Rynd, President and Chief Executive Officer of Hercules Offshore, said, “These rigs will be among the most capable jackups in the world, and have been designed to meet the exacting requirements of our most demanding customers. With the improving outlook for the offshore drilling industry, we believe that the rig design chosen by Discovery Offshore will be well positioned to take advantage of these positive long-term fundamentals over an extended period of time.”

The above contract is not expected to have material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.

About Discovery Offshore

Discovery Offshore is a newly established Luxembourg-based company with a focus in ultra high-specification jackups. Managed by Hercules Offshore, Discovery will leverage the former’s long-standing relationships with oil majors, national oil companies and independent oil companies.

About Hercules Offshore

Headquartered in Houston, Hercules Offshore, Inc. operates a fleet of 30 jackup rigs, 17 barge rigs, 65 liftboats, three submersible rigs, one platform rig and a fleet of marine support vessels. The Company offers a range of services to oil and gas producers to meet their needs during drilling, well service, platform inspection, maintenance and decommissioning operations in several key shallow water provinces around the world.

About Keppel FELS

Keppel FELS is a subsidiary of Keppel Offshore & Marine Ltd (Keppel O&M), a wholly-owned company of Keppel Corporation Limited. Keppel O&M is a leader in offshore rig design, repair and construction, ship repair and conversion and specialised shipbuilding. Its near market, near customer strategy is bolstered by a global network of 20 yards and offices in the Asia Pacific, Gulf of Mexico, Brazil, the Caspian Sea, Middle East and the North Sea regions. Integrating the experience and expertise of its yards worldwide, the group aims to be the provider of choice and partner for solutions for the offshore and marine industry.

[mappress]

Source:Kepcorp , January 27, 2011;