Keppel to reap US$1.2-1.3bn from 6 jack-up new orders

YTD order wins stood at $5.2b.

According to Phillip Securities Research, Keppel announced yesterday that it has secured a US$240mn (S$300mn) jack-up drilling rig order from repeat customer, Mexico’s Perforadora Central. 

The firm also recently announced that it has signed a Memorandum of Understanding (MOU) with Pemex to jointly develop, own and operate a yard in the Port of Altamira, Mexico.

Total yard development cost is expected to be approximately US$400mn, with the first phase at about US$150mn. In addition, the first phase of this yard facility will support construction of 6 KFELS B Class jack-up rigs for Pemex.

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Albeit no specific value is disclosed for the 6 jack-up new orders that come along with the MOU, we estimate a potential US$1.2-1.3bn worth of contract for Keppel, assuming price of US$200-217mn per rig.

Investors may be concern with increased execution risks due to the operating of a new overseas yard, however we think such risks could be minimized by similar-designed rigs as well as “closeness” to its US yard AmFELS.

YTD, Keppel has secured S$5.2bn worth of orders or 88% of our order estimate for FY13E of S$5.9bn. Both the new order and MOU reaffirm and strengthen Keppel’s competitive advantage of ‘near market, near customer’ strategy in meeting local content requirements.