DBS Group Research on June 5
KEPPEL Corp has secured a contract from Caspian Drilling Company Ltd, a subsidiary of the State Oil Company of Azerbaijan Republic (Socar), to build a semi-submersible drilling rig, which includes owner furnished equipment, worth about US$800 million.
Scheduled for delivery in Q4 2016, the rig will be built to Keppel Fels' proprietary DSSTM 38M design, which has been customised for the Caspian Sea's harsh environment condition. It is designed for a drilling depth of up to 40,000 ft and for operations in water depths of up to 1,000 metres. It has been modified to meet customer's requirement with an 800-metre self-contained eight-point mooring system designed to meet high wind speeds in the harsh Caspian environment.
The construction work of the rig will be carried out in Keppel's yard in Azerbaijan, Caspian Shipyard Company (CSC), with engineering, procurement and technical support from Keppel Fels. Its JV yard with Socar, Baku Shipyard LLC, will also undertake part of the fabrication of the pontoons and columns.
CSC was formed in 1997 through the landmark partnership between Keppel Fels and the Socar to form CSC. (Keppel has management control with an effective stake of 45 per cent.) CSC has emerged as the most reliable yard in the region, having achieved several firsts in the Caspian Sea, including first drilling rig and semi-submersible, placing it in a strong position to capture the growing Caspian market. There are three more semi-submersible orders in Socar's pipeline.
This contract will lift Keppel's year-to-date wins to S$3.1 billion, forming 52 per cent of our-full year assumption of S$6 billion. We continue to favour Keppel as the O&M preferred pick (target price: S$13.00) for its solid execution track record, global yard network, world-class proprietary designs and R&D capability.
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