Keppel Cancels Three More Rig Contracts From the Offshore Boom Era
In a reminder of the boom and bust heyday of offshore drilling in the mid-2010s, Keppel Corp. has canceled three more rig construction contracts which were placed right before the offshore downturn and were never fully paid up.
Keppel has had to renegotiate more than a few orders over the past eight challenging years, including the protracted dispute with UK-based rig operator Awilco Drilling over a $425 million semisub order. Earlier this year, it also canceled a total of four jackups originally ordered by Clearwater and Fecon.
Keppel's latest housecleaning announcement covers three contracts, all from 2014-15, the end of the last ordering boom cycle. The contracts include a deal with TS Offshore Limited to build a 500-foot water depth jackup rig worth about $500 million, the TS Jasper; a contract for the construction of a semisub, the Sapura Raiqa; and a contract for an $85 million liftboat for Crystal Heights Holdings.
According to Keppel, TS Offshore Limited and Crystal Heights did not pay the amounts owed under their respective contracts. In the case of the future liftboat Sapura Raiqa, "the client’s conduct [shows] that it no longer intends to perform its remaining obligations," including making remaining payments and taking delivery.
The TS Jasper and Sapura Raiqa contracts were already earmarked for transfer to Keppel's nonperforming asset division, Rigco. This separate business group was set up in early 2021 as part of Keppel's restructuring program, and it is tasked with maintaining unwanted rigs and marketing them for sale or charter.
Keppel O&M, Keppel's rigbuilding division, is nearing the completion of a long-anticipated merger with Singaporean competitor Sembmarine. The Competition & Consumer Commission of Singapore (CCCS) is currently reviewing the proposed merger and taking public feedback on the competition impacts of the tie-up.