Keppel FELS to Build $205M Jackup Rig for Delivery in 4Q09

Keppel FELS Limited will build a third KFELS B Class jackup drilling rig worth about $205 million for PetroVietnam Drilling & Well Services Corp.'s (PV Drilling) subsidiary PetroVietnam Drilling Investment Corp. (PVD Invest).

The agreement is subject to conditions being met by March 14, 2008.

This latest unit and PVD Invest's second rig PV Drilling II, which is already under construction at Keppel FELS, are scheduled for delivery in the fourth quarter of 2009 respectively.

The order for PV Drilling II was placed shortly after Keppel FELS delivered the first jackup rig PV Drilling I to PVD Invest two months ahead of schedule.

"It is estimated that there will be some 900 exploration wells in Vietnam over the next 15 years. We want to position ourselves to capture this market for specialized oil and gas services with the support of a strong and reliable shipyard that can deliver projects punctually, on budget and without incidents," said Do Van Khanh, CEO of PV Drilling and chairman of PVD Invest.

"We have found all these qualities in Keppel FELS. Having worked with them on several important projects, I am confident that they are the best people to help us build our highly specialized rig fleet," he added.

To meet the tight exploration schedule, PV Drilling intends to make capital investments of around $ 1.7 billion from now till 2025 to build and operate an 11-strong fleet of offshore and onshore rigs.

"We have built an enduring partnership with the PV Drilling Group on mutual understanding, teamwork and trust. We are honored that PVD Invest has chosen Keppel FELS time and again for their milestone projects," said Tong Chong Heong, managing director and COO of Keppel Offshore & Marine. "We are prepared to go the extra mile to help our partners meet the rapid demands of their market."

The latest KFELS B Class rig will be able to operate in water depths of 360 feet with a drilling depth of 30,000 feet. Versatility of this rig has been further enhanced to broaden its area of operability, by including features like engines that meet more stringent emission standards and lower spud can bearing pressure for operation in areas with soft soil conditions. Its living quarters is designed to accommodate up to 110 men, in 1-man and 2-men cabins.

The Keppel Group has been involved in the Vietnamese offshore market for more than 20 years since Keppel FELS first completed the Hoang Sa 1,200-tonne floating crane in 1984. It also built Vietnam’s first jackup rig, the Tam Dao I in 1988.

Beyond the offshore market, sister company Keppel Land has also entrenched its leading position with eight new real estate projects secured in 2007, while Keppel Integrated Engineering (KIE) is undertaking two wastewater treatment plants in Vietnam. KIE, through wholly owned Keppel Seghers, has also secured an in-principle agreement with the Ho Chi Minh City People's Committee for the first waste-to-energy plant in Vietnam.

The above is not expected to have material impact on the net tangible assets or earnings per share of Keppel Corporation for the financial year ending December 31, 2008.

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