Keppel kept at ‘hold’ by UOB with $6.40 target despite TS Jasper rumours

SINGAPORE (June 14): UOB Kay Hian is maintaining its “hold” call on Keppel Corp with $6.40 target despite market talk that the five-year contract for TS Jasper, currently under construction at Keppel, might be terminated.

The rig, ordered by Falcon Energy for US$500 million ($677 million), is currently chartered to Xcite Energy and is due for delivery in 2017.

However, Xcite is at risk of not being able to secure funding for its Bentley field development, potentially jeopardising the rig contract. It reported in its 1Q16 report having US$14 million ($19 million) in cash on its balance sheet, with a US$139 million bond due June 30. Xcite is currently trying to negotiate terms with its bondholders, on top of trying to finalise rig contract terms for TS Jasper.

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