Keppel O&M's 2Q 2015 Net Profit Falls 36% to $126M, Non-Drilling Focus Now

Keppel Corp. Ltd.'s subsidiary Keppel Offshore & Marine Ltd. (Keppel O&M) registered a 36 percent decline in net profit for the second quarter of 2015 (2Q 12015) to $126.20 million (SGD 173 million), compared to $196.97 million (SGD 270 million) a year ago amid the slump in global demand for new rigs, the Singapore conglomerate said in its release of financial results Thursday.

Revenue of the offshore and marine business slipped 23 percent in 2Q 2015 to $1.153 billion (SGD 1.580 billion), down from $1.504 billion (SGD 2.062 billion) last year, trimming Keppel O&M's contribution to Keppl Corp. by 3 percent to 65 percent.

During the first half of this year, Keppel O&M completed 12 major projects, including five jackups, two jackup repairs, a high-specification accommodation semisubmersible to Floatel International and a Depletion Completion Platform (DCP) to Shell by Keppel Subic Shipyard in the Philippines.

Meanwhile, the firm's net orderbook fell marginally during the quarter to $8.02 billion (SGD 11.0 billion), compared to $8.24 billion (SGD 11.3 billion) in 1Q 2015, with its yards expected to be kept busy through to 2020. The latest order, worth $684 million, came from Golar LNG,  with the latter ordering a floating liquefied natural gas (FLNG) facility from Keppel Shipyard earlier this week.

Looking ahead, Keppel believes that the drilling market will eventually recover.

"With the current low oil prices, we are likely to see an acceleration in the replacement cycle for aging rigs ... It is estimated that about 94 jackups and 27 floaters around the world are more than 30 years old. The scrapping of old rigs will hasten a rebalance of demand and supply in the offshore market and sow the seeds for the upturn," Keppel CEO Loh Chin Hua said in the press release.

Meantime, the company is turning its focus to the non-drilling market, where around 238 projects in the appraisal, planning, or bidding/final design stages worldwide could potentially require a floating production/ storage system.


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