Keppel Cinches $405MM Contract to Build Scorpion's Rig

Scorpion Offshore signed a contract with Keppel FELS Limited to construct its proprietary DSS 38 deepwater semisubmersible (semi) rig at Keppel’s shipyard in Singapore. Construction is expected to span 42 months with delivery in the 4th quarter of 2011 at an anticipated cost of approximately $700 million, including owner furnished equipment, commissioning, project management and financing costs.

Keppel’s contract with Scorpion is subject to the fulfillment of certain conditions by mid July 2008. It is valued at $405 million. The amount excludes owner-supplied drilling and subsea equipment. 
This rig will be a dynamically-positioned, four column semisubmersible capable of drilling wells to 8,500 meters in water depths up to 2,400 meters. The rig was ordered pursuant to a Letter of Commitment (“LOC”) from Petroleo Brazileiro SA for operations beginning prior to June 2012. The LOC has a duration of 6 years with potential revenue of approximately $1.1 billion plus operating cost inflation adjustments throughout the contract term. The cashflow from this contract will result in full payout of the cost of the rig during the initial contract term.
This entry by Scorpion into the deepwater segment of the offshore drilling business is the result of the continued execution of the Company’s original strategy. Scorpion’s semisubmersible contract is its second contract with Petrobras with the Offshore Defender having begun operations in Brazil in March. The addition of this deepwater semisubmersible to Scorpion’s fleet will supplement its ultra premium jackup strategy.
"The DSS 38 model was developed from our years of experience as a rigbuilder and keen understanding of operating requirements in the deepwater region bordered by Brazil, West Africa and the Gulf of Mexico.  It is significant that Scorpion has entrusted Keppel to build this premium design as its first semi for Petrobras. This demonstrates the growing recognition of our DSS 38 model as a choice deepwater rig for offshore Brazil. We look forward to strengthen our partnership with Scorpion with this high quality rig," said Tong Chong Heong, Managing Director & Chief Operating Officer of Keppel O&M.

The DSS 38 is rated to drill to depths of 30,000 feet below mud line in just over 9,000 feet water depth. With operational displacement of approximately 38,000 tonnes, the DSS 38 has housing facilities for a crew of up to 130 men. It has both vertical and horizontal riser storage. The eight 3000kW azimuth thrusters configuration are designed to keep the vessel in position. All configurations comply with the American Bureau of Shipping Dynamic Positioned System (DPS-2) requirements.

With the latest rig, Keppel FELS will be constructing three DSS 38 rigs including two units for Queiroz Galvao, three DSS 21 rigs for Maersk Contractors and one DSS 51 rig for Transocean. Designed by Keppel O&M’s Deepwater Technology Group and Marine Structures Consultants of the Netherlands, the first DSS series semisubmersible, Maersk Explorer, began operations in 2003.

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