Keppel and Sembcorp Marine on the verge of getting massive jackup orders

But analysts prefer Keppel.

Maybank Kim Eng notes that the Singapore rig-builders, Keppel Corp and Sembcorp Marine could be on the verge of being awarded some large-scale jackup orders, according to Upstreamonline.

Here's more from Maybank Kim Eng:

Statoil could be on the verge of awarding new multi-year contracts for up to three Cat J (Gusto MSC CJ-70) jackup rigs. On top of that, Maersk Drilling could also be on the lookout for two more Gusto MSC CJ-70 jackups, according to Upstreamonline.

With both yards the only yards globally with a track record in constructing CJ-70 rigs, we believe they could be poised to benefit from any new orders. We prefer Keppel over Sembcorp Marine for its more robust margin outlook and stronger market share in the jack-up markets.

Race between Singapore and Korea: According to the same report, Statoil has nominated Jurong Shipyard (Sembcorp Marine) and Daewoo Shipbuilding & Marine Engineering (DSME) in South Korea as its preferred yards.

Noble Corp (OW/Pos), the driller in the running together with Seadrill (OW/Pos) for this award, is understood to be in discussions with both yards. Similarly, Maersk Drilling, which currently has three CJ-70s being built in Keppel, is also understood to be in discussions with the same yards.

Sizable additions to order books: Based on earlier orders with both yards, we estimate that the price of each rig could range between US$450-600mn. The potential award of three newbuilds could add cS$1-2bn to the order books of both companies.

Keppel remains upbeat on outlook for further rig orders: The company at its recent 1Q13 earnings call reiterated its positive outlook for rig orders and highlighted the continued high level of enquiries for semi-submersibles. The company remains hopeful of securing at least one semi-submersible order in 2H13. See Barclays Research: Keppel Corp.: Sector-leading margins, robust outlook.

Other established drillers could start to order? Following Ensco’s (OW/Pos) recent order of a KFELS B Class Bigfoot jackup rig, we believe other established drillers could look to capitalize on the current strength in jackup markets.

Other established drillers like Rowan (OW/Pos), Transocean (OW/Pos), Atwood (OW/Pos), Diamond Offshore (UW/Pos), etc. have either ordered KFELS B Class rigs before, or are currently building rigs with Keppel. Atwood and Transocean also currently own Sembcorp Marine’s PPL Pacific Class rigs.