Their decision came after successfully raising funds through a convertible loan to facilitate the exercise of one of the company's construction options for deep gas drilling.
In February 2004, the Skeie Group entered into option agreements with two rigbuilders when it contracted the shipyards to construct a jackup each. One of rigbuilders was Keppel FELS which offered its KFELS Super B class design.
Explaining the decision, Mr. Bjarne Skeie, Executive Chairman of Sinvest ASA, said, "We have chosen to build another rig with Keppel FELS because the market interest in the KFELS Super B class jackup rig is strong.
"The KFELS Super B class jackup is a more superior deep gas drilling rig compared to other competing rigs, with its proven performance in the hookload, mud system and power generator capabilities."
Construction of the second rig is expected to be completed in around 26 months.
Mr. Tong Chong Heong, Managing Director/Chief Operating Officer of Keppel Offshore & Marine Limited and Managing Director of Keppel FELS, said, "We have anticipated a growing demand for deep gas drilling jackups, and have committed resources to develop the KFELS Super B design to meet this demand.
"This investment is proving to be a right one. The KFELS Super B is set to become the new benchmark for ultra deep well drilling rigs in deeper waters and harsher conditions."
Since its introduction in 2000, four KFELS B class jackups have already been gainfully deployed in different parts of the world, with five more, including this project, currently under construction.
The KFELS Super B class rig to be built is a further enhancement of the standard KFELS B class. It will have the capability of operating in water depths of up to 350 feet and ultra deep drilling of down to 35,000 feet. It is fully High Pressure and High Temperature compliant with its 15,000 psi and 130 degrees Celsius rating.
The rig is arranged for effective usage in production drilling mode from new or existing wellhead platforms. Its cantilever skidding system enables the well centre to be moved within a 70x30 ft envelope with full set-back. The rig is further arranged with the capability to allow skid-off to an adjacent wellhead platform.
It is further designed to allow jacking with full pre-load in a single stage operation, in order to minimize time lost during jacking and pre-load operations.
The demand for jackups such as the KFELS Super B class rigs is driven by a growing interest in natural gas prospecting in deeper waters to ease the tight market situation in the demand and supply of natural gas in the short to medium term.
This tight situation is created by a decline in supply due to the depletion of existing shallow water reserves and the lack of new exploration and production (E&P) initiatives in the previous two decades.
Meanwhile, demand for natural gas continues to rise. In the US market alone, demand for natural gas is expected to grow by approximately 2% per annum. Prices of natural gas in the country, which accounts for around 25% of the world's total consumption, have doubled compared to a decade ago.
Keppel FELS is the world leader in the design and construction of jackup rigs, having built 60% of the world's fleet on order in the last decade. It is a wholly-owned subsidiary of Singapore-listed Keppel Corporation Limited, through Keppel Offshore & Marine Limited, which has a network of 16 yards around the world to be close to its market and customers.
Involved primarily in investments relating to the offshore industry, Sinvest ASA is a public company quoted on the Oslo stock exchange. The privately owned Skeie Group AS is the major shareholder of Sinvest ASA.
The contract secured is not expected to have any material impact on the net tangible assets and earnings per share of Keppel Corporation for the financial year ending 31 December 2004.
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