Keppel Corporation has terminated two rig-building contracts after customers neither took delivery of the completed rigs nor pay the balance due.
One of the contracts was from Oct 2013 of two jackup rigs to be built for an affiliate of Clearwater Capital Partners. One of the two rigs, worth US$200 million, remains undelivered.
The other contract to be terminated dates from Feb 2014. It is to build three so-called high-specification KFELS B Class jackup rigs for Fecon International. The contract is worth US$650 million.
With the termination of the contracts, Keppel will retain all payments already received as well as ownership of the rigs, including the right to sell.
“The relevant contracts are being terminated as part of ongoing efforts to explore other options, such as the sale and charter of these rigs,” says Keppel.
The company adds that the termination of these contracts will not have any material financial impact for the current FY2022.
Keppel for years did a roaring business building rigs on behalf of oil explorers and producers until the multi-year slump hit this segment hard.
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Keppel shares closed April 13 at $6.62, up 1.07% for the day and up 28.05% year to date.
