Keppel Corp could secure more semi-sub orders from national oil firms

Statoil, Pemex and SOCAR in the shortlist.

Barclays said these three as well as other national companies will likely be purchasing harsh-environment semi-submersibles, which Keppel excels in making.

Here's more from Barclays Research:

Keppel announced that it has won a tender for Naftogaz’s two semi-submersibles. This potential contract win is a positive for the company, in what has been a very quiet year in terms of non-Petrobras semi-submersible orders. We believe the outlook for semi-submersible orders remains robust, despite the strong wave of orders for drillships in 2012. Keppel remains a front runner for any potential harsh environment semi-submersible tenders, in our view.

National oil companies expected to order more: We expect potential orders to also come from other national oil companies, including Statoil (EW, PT: NOK 170), Pemex (Mexico) and SOCAR (Azerbaijan), with some of these companies recently announcing tenders for new rigs. With harsh-environment regions, such as the North Sea, Black Sea and Caspian Sea, requiring harsh- environment semi-submersibles, we expect the pause in semi-submersible orders to only be temporary.

Near-market, near-customer strategy paying of: Naftogaz, Ukraine’s state-owned oil company, intends for the rigs to be used in the country’s Black Sea waters and we estimate that this potential order could be worth US$1.2-1.4bn. We believe Keppel’s strategy to be near to the key markets and close to its customers could have been an important factor in securing this win. Although these rigs are expected to be built in its Keppel FELS yards in Singapore, the experience of the company in building rigs in its yards in the Caspian Sea and Kazakhstan could have given its customers greater confidence in its ability to deliver rigs for the region.

Rig quality another important factor? Naftogaz began drilling with two KFELS B Class jack-up rigs earlier this year. These were rigs acquired from Standard Drilling (NR) and Seadrill (OW, PT: US$47). We believe the quality and now familiarity of Keppel’s KFELS B class rigs could be another factor in the company securing this tender win.

Companies negotiating contract terms: Keppel and Naftogaz are currently negotiating the contract terms, which include the pricing and delivery dates. Further details will be furnished by the company when the contract is officially signed