KS Energy Charters Jackup
KS Energy Services will establish a 50:50 joint venture with Sinwa Limited, to acquire and subsequently charter (including operation) a new self-propelled jackup to a Central American based national oil company for use in the Gulf of Mexico. This is the second new self-propelled offshore jackup to be chartered to this client.
The value of the charter contract is approximately US $109.5 million over 5 years, comprising an initial fixed term of 3 years with an option to extend for another 2 years. At the end of the charter, the JV as owner of the rig will be able to re-deploy the asset for other operations.
The JV will have an initial paid up capital of US $500,000 and the total project cost will be funded by a combination of equity, shareholders' loans as well as bank borrowings. KS Energy will play a key role in the construction, installation, commissioning, supervision and the subsequent management of the rig. For these services, KS Energy will be entitled to an annual management fee from the JV. Both KS Energy and Sinwa intend to supply parts and other procurement services to support the rig operations.
The rig is under construction at a shipyard in North America and delivery of the completed rig to the Gulf of Mexico is expected by the end of 2007.
"As global demand for oil and gas remains robust, stepped up exploration and production activities by oil companies underpin the strong demand for the Group's value-add services in providing capital equipment", explained Mr. Chew Thiam Keng, the Managing Director of KS Energy. "The JV allows us to enhance our yield as well as secure long term recurring revenue by leveraging on our financial strength to selectively own capital equipment", Mr. Chew added.