KepCorp

OCBC Research 23 Dec


Keppel Corporation: Secures US$809m semi-sub rig from Sete Brasil

Summary: Keppel Corporation (KEP) announced that its O&M arm has secured a contract worth about US$809m from a subsidiary of Sete Brasil for the design and construction of a semi-submersible drilling rig based on KEP’s proprietary DSS 38E design. This semi-sub is part of KEP’s proposal submitted to Sete Brasil in Jul this year for Petrobras’ 21-rig tender – recall that KEP has partnered drillers/contractors such as Odbrecht Oil & Gas and QGOG to offer to build six semi-sub rigs. The semi-sub is scheduled for delivery in 4Q15, and will be used to support the exploration of Brazil’s deep-sea oil and gas reserves. Along with news this week that SMM will be starting construction on its new integrated yard in Brazil, we think that more orders related to Petrobras’ rig tender may be forthcoming for both KEP and SMM. Including this latest win, KEP has secured new orders worth about S$9.8b YTD. Maintain BUY with S$12.02 fair value estimate.