Singapore-based Keppel Offshore & Marine (Keppel O&M) has delivered the first of the three newbuild jack-up rigs novated to Abu Dhabi’s Adnoc Drilling — the largest drilling company in the Middle East by fleet size.
Keppel O&M confirmed the rig has been handed over by its wholly-owned subsidiary Keppel Fels on Thursday.
The three rigs were part of a series of five rigs Keppel Fels had been building for Borr Drilling, it noted.
In October, Keppel O&M said it has “entered into an agreement with Borr Drilling and certain of its subsidiaries to, among other things, accelerate the delivery of three jack-up rigs to Borr Drilling (or a third party whom Borr Drilling intends to sell the rigs to) between October 2022 and July next year”.
“The construction contracts for the three rigs have since been novated by Borr Drilling to Adnoc Drilling, and this is the first of three rigs to be delivered to Adnoc Drilling,” Keppel stated.
Adnoc Drilling recently said that it agreed to buy a trio of jack-up rigs for $320 million, without naming the previous owner.
Upstream understands the three rigs acquired by Adnoc are being built at the Keppel yard and will be delivered to the Emirati player by next year.
Keppel O&M noted that “it has received a full payment of approximately $160 million having delivered the first rig”.
“As part of the novation agreement, Keppel O&M will also receive full payments for each of the two remaining rigs on delivery,” it added.
The Singapore player stated it now “expects to receive at least $352 million for all three rigs between 2022 and 2023”.
“This is in addition to down payments Keppel O&M had initially received from the previous customers for the rigs,” it said.
Tan Leong Peng, managing director for new builds at Keppel O&M, noted that “with the novation of the three jack-up contracts to Adnoc Drilling”, the company has even greater certainty of delivering these rigs, “receiving more cash payments sooner, and reducing Keppel O&M’s financial exposure to the legacy assets”.
The company said that its “KFels B Class family of rigs have a strong track record in the Middle East” and, since early this year, all nine of its proprietary jack-up rigs have been contracted for deployment in the Middle East.
“As drilling rig utilisation rates continue to increase, we are seeing more demand for high-quality rigs that our legacy rigs are well suited to meet,” Keppel O&M stated.
Acquisitions and mobilisations of jack-ups have gained momentum in the Middle East this year, with national oil companies in the region eyeing fleet expansions to help scale up their oil production.
Keppel O&M recently secured charters for two more of its jack-ups with ADES Saudi for drilling offshore Saudi Arabia.
Earlier this year, consultancy firm Westwood Global Energy said 2022 had witnessed a busier offshore rig market in the Asia-Pacific region, even though local operators are not responsible for all the demand.
A total of 15 jack-ups will have left Southeast Asia for contracts with Saudi Aramco by late 2022 or early 2023, the consultancy noted.