Keppel Stays Positive On Deepwater Rig Demand for 2H 2012

Singapore's Keppel Corp, the world's largest oil rig builder, said Thursday in an earnings statement that it remains positive on the demand for deepwater rigs despite a drop in its offshore and marine division's net profit for the second quarter ending June 30, 2012. 

The company's posted statement on Thursday shows that Keppel Offshore & Marine's revenue for second quarter ending June 30, 2012, rose 54-percent year-on-year to $1.6 billion (SDG2 billion), but its net profit fell 4-percent to $198 million (SDG249 million) for the same period. Keppel Offshore & Marine's margins are likely to stay "constrained" because of "aggressive pricing" by rival rig builders, Keppel's CEO Choo Chiau Beng said in the earnings statement. Keppel Offshore & Marine's net order-book as of end-June was ($6 billion) S$7.6 billion with deliveries extending until 2015. 
"We were more watchful of [Keppel Offshore & Marine's] operating margin, which came in a tad lower than our expected range," Maybank Kim Eng investment analyst Yeak Chee Keong told Rigzone on Friday. 
Commenting on the outlook for Keppel Offshore & Marine for the rest of this year, Choo said that Keppel is optimistic about the offshore business opportunities in Africa and Brazil. 
"Given the tight supply of deepwater rigs, we believe that there will be returning orders for semisubmersibles. Brazil, in particular, will require a large number of offshore rigs and support vessels," Choo added. 
"A tight rig market with rising utilization rates and an aging rig profile would continue to support the rig-building business. Demand for FPSOs is also expected to grow as more oil fields move towards the development stage," Yeak remarked.
Keppel's recent wins in Africa and Brazil are two FPSO upgrading projects.
Keppel announced on July 12, 2012, that it had won a FPSO upgrading contract worth $200 million from Singapore-established MODEC and Toyo Offshore Production Systems through its unit Keppel FELS Brasil. The contract is for the fabrication and integration of topside modules for the FPSO Cidade de Mangaratiba MV24 at Keppel FELS Brasil's BrasFELS yard in Angra dos Reis, Rio de Janeiro, Brazil. Work on the FPSO is scheduled to be completed by 2Q, 2014. 
Keppel had also reported on April 4, 2012, that it had won a contract from SBM Offshore to refurbish and upgrade an existing FPSO vessel, FPSO Xikomba. Keppel's scope of work on the FPSO comprises of life extension, refurbishment and upgrading of existing topside modules and turret mooring system as well as the installation and integration of new topside modules. The FPSO is leased by Eni Angola for 12 years for the development of Block 15/06, offshore Angola. Work on the FPSO is scheduled to be completed by 3Q, 2013. 


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