June 7, 2008
SembMarine unit and Keppel Fels secure contracts from Norway-listed Seadrill
By Michelle Tay
ROCKETING oil prices are causing plenty of pain worldwide, but they have ignited a gusher of gold for Singapore's blue-chip rig builders.
Firms are winning huge orders - seemingly by the day - from oil companies that see deep-water exploration as a way to find new fields and reduce their dependence on the Middle East.
Orders were pumping at full volume this week. PPL Shipyard, a unit of Sembcorp Marine (SembMarine), and Keppel Fels, a subsidiary of Keppel Offshore & Marine (Keppel O&M), yesterday secured contracts totalling $1 billion to build four rigs.
PPL Shipyard will build two deep-drilling offshore rigs worth a total of US$430 million (S$588 million). Keppel Fels has been contracted to build two similar rigs worth US$420 million.
The four rigs - all for Norway-listed Seadrill - will be able to drill down to 9,100m. They will be delivered in 2010.
These deals came after Keppel Fels secured a US$537 million contract on Monday to build an ultra-deepwater semi-submersible rig for Texan oil firm Ensco. That would be delivered in 2012.
Two days later, it announced that Brazilian oil and gas giant Petrobras had contracted the firm to build a rig worth US$385 million.
The shares of both firms have recovered well from their year lows. SembMarine is up more than 50 per cent from February, while Keppel Fels' parent, Keppel Corp, has advanced almost 30 per cent since its March slump.
But their bulging order books tell a more dramatic story of the sector's remarkable boom over the past three years.
SembMarine's total order book for jack-up and semi-submersible rigs was $4.4 billion in 2006 and $5.4 billion last year. Total orders this year are even better, standing so far at $6.7 billion, of which $1.86 billion comprise new deals.
Keppel Fels' orders at the end of 2005 were $7.2 billion, $10.5 billion a year later and $12.2 billion at the end of last year. It is now approximately $13.5 billion - with new orders, including yesterday's Seadrill deals, totalling $3.5 billion so far this year.
Keppel O&M chairman and chief executive Choo Chiau Beng said: 'In recent years, we have witnessed an unprecedented surge in demand for oil rigs. Ten years ago, we had about five newbuild rigs in our yard. Today, we have 43 in various stages of construction across our yards worldwide.'
He added that last year, half of the world's new jack-up rigs were delivered by Keppel O&M, which employs more than 27,000 worldwide.
Singapore now accounts for 70 per cent of the world's jack-up rig-building market with more work to come.
SembMarine said demand continues to be strong, with orders trending towards deepwater rigs as high energy prices make such costly ocean exploration and drilling much more viable.
Mr Alf Thorkildsen, chief executive of Seadrill Management, said: 'Our focus will continue to be on the deepwater segment.'
Financial services group Nomura reported last week: 'With high oil prices seemingly here to stay, oil companies should step up offshore prospecting, and we believe the boom in drilling activity will continue well into 2009 and 2010.'
It added that total exploration and production spending will rise by more than 11 per cent this year, marking the sixth consecutive year of double-digit growth. That means the flow of orders to Keppel Corp and SembMarine is likely to stay robust, with both firms developing sound track records with the big guns in the industry.
Mr Choo added: 'The level of inquiries and customer interest remains positive. This indicates that the rig market, in the next few years, will remain healthy.'
[Comment: The last time there was such good news for our rig builders, there was bad news down the road when the US$ dropped and their profits evaporated. I hope this time they have better sense and signed the contract in a more stable currency.]
SembMarine unit and Keppel Fels secure contracts from Norway-listed Seadrill
By Michelle Tay
ROCKETING oil prices are causing plenty of pain worldwide, but they have ignited a gusher of gold for Singapore's blue-chip rig builders.
Firms are winning huge orders - seemingly by the day - from oil companies that see deep-water exploration as a way to find new fields and reduce their dependence on the Middle East.
Orders were pumping at full volume this week. PPL Shipyard, a unit of Sembcorp Marine (SembMarine), and Keppel Fels, a subsidiary of Keppel Offshore & Marine (Keppel O&M), yesterday secured contracts totalling $1 billion to build four rigs.
PPL Shipyard will build two deep-drilling offshore rigs worth a total of US$430 million (S$588 million). Keppel Fels has been contracted to build two similar rigs worth US$420 million.
The four rigs - all for Norway-listed Seadrill - will be able to drill down to 9,100m. They will be delivered in 2010.
These deals came after Keppel Fels secured a US$537 million contract on Monday to build an ultra-deepwater semi-submersible rig for Texan oil firm Ensco. That would be delivered in 2012.
Two days later, it announced that Brazilian oil and gas giant Petrobras had contracted the firm to build a rig worth US$385 million.
The shares of both firms have recovered well from their year lows. SembMarine is up more than 50 per cent from February, while Keppel Fels' parent, Keppel Corp, has advanced almost 30 per cent since its March slump.
But their bulging order books tell a more dramatic story of the sector's remarkable boom over the past three years.
SembMarine's total order book for jack-up and semi-submersible rigs was $4.4 billion in 2006 and $5.4 billion last year. Total orders this year are even better, standing so far at $6.7 billion, of which $1.86 billion comprise new deals.
Keppel Fels' orders at the end of 2005 were $7.2 billion, $10.5 billion a year later and $12.2 billion at the end of last year. It is now approximately $13.5 billion - with new orders, including yesterday's Seadrill deals, totalling $3.5 billion so far this year.
Keppel O&M chairman and chief executive Choo Chiau Beng said: 'In recent years, we have witnessed an unprecedented surge in demand for oil rigs. Ten years ago, we had about five newbuild rigs in our yard. Today, we have 43 in various stages of construction across our yards worldwide.'
He added that last year, half of the world's new jack-up rigs were delivered by Keppel O&M, which employs more than 27,000 worldwide.
Singapore now accounts for 70 per cent of the world's jack-up rig-building market with more work to come.
SembMarine said demand continues to be strong, with orders trending towards deepwater rigs as high energy prices make such costly ocean exploration and drilling much more viable.
Mr Alf Thorkildsen, chief executive of Seadrill Management, said: 'Our focus will continue to be on the deepwater segment.'
Financial services group Nomura reported last week: 'With high oil prices seemingly here to stay, oil companies should step up offshore prospecting, and we believe the boom in drilling activity will continue well into 2009 and 2010.'
It added that total exploration and production spending will rise by more than 11 per cent this year, marking the sixth consecutive year of double-digit growth. That means the flow of orders to Keppel Corp and SembMarine is likely to stay robust, with both firms developing sound track records with the big guns in the industry.
Mr Choo added: 'The level of inquiries and customer interest remains positive. This indicates that the rig market, in the next few years, will remain healthy.'
[Comment: The last time there was such good news for our rig builders, there was bad news down the road when the US$ dropped and their profits evaporated. I hope this time they have better sense and signed the contract in a more stable currency.]
No comments:
Post a Comment