Keppel FELS to terminate rig contract with Awilco

The latter failed to pay the instalment due on 9 June, entitling Keppel to terminate the deal.

Keppel FELS, a wholly-owned subsidiary of Keppel Offshore & Marine (KOM), has issued a notice of termination with Awilco Drilling’s wholly-owned subsidiary Awilco Rig 1, an SGX filing revealed.

The contract was for the construction of a drilling rig worth $590.71m (US$425m). This follows after Keppel FELS denied allegations from Awilco, claiming that the latter’s decision to terminate the contract was allegedly caused by certain breaches relating to the project management, schedule, resourcing and compliance. 

“Keppel FELS refutes the allegations by Awilco in the notice and has rejected the purported termination of the contract. Keppel FELS has continued to perform its obligations under the contract. Awilco has however failed to pay the instalment due on 9 June 2020,” the filing said.

The non-payment of the instalment made Keppel FELS entitled to terminate the contract, retain all payments received to date (approximately $72.21m or US$54m), seek compensation for the work done to date and claim ownership of the rig. Keppel FELS has also commenced arbitration to enforce its rights against Awilco.

“Keppel FELS does not expect any reversal of revenue recognised in respect of the cContract, and as previously announced, will continue to work with its advisors on the matter including evaluation of the need for impairment,” the firm said.