Speaking at Keppel’s first quarter results briefing ceo Loh Chin Hua said: “Global exploration and production (E&P) capex is anticipated to drop by about 10-15% this year.
“As it is, the offshore industry has been sliding deeper into the doldrums. Across the board, not a single drilling rig order has been placed since the start of this year, and rig inquiries have also not been converted into any new contracts.”
While Keppel says it does not expect low oil prices to last forever, it does not know how long it will take for them to stabilise.
In the first quarter Keppel Offshore and Marine inked SGD500m ($369m) in new contracts including a newbuild multi-purpose vessel and fabrication work for FPSO-related equipment.
“Examples of other niche, non-drilling solutions, which we are building, include accommodation semis, Plug & Abandonment jackups and liftboats,” Loh said. “Most of these projects are already a part of our substantial net orderbook of SGD11.3bn as at end-March 2015, which will keep our yards well-occupied for the next two years.”
Keppel Offshore & Marine reported Q1 2015 a net profit of SGD203m, down 12% on the same period in the previous year. The division reported flat revenues of SGD1.93bn for the first quarter.
On the issue of delays or cancellations Loh said it did not expect Sete Brasil to cancel its six semi-submersible rig projects with Keppel, following the recent corruption scandals at Petrobras and related Brazilian state oil and gas companies.
“At 31 March 2015, the first three of six DSS38E semisubmersibles that we are constructing for Sete Brasil were about 89%, 58% and 32% completed,” he said.
“As we had received payments for them up to November last year, as well as a 10% down payment for the remaining three units, we were in a net cash position for these projects at the end of the first quarter.”
For other customers they believe the likelihood of cancelations is low, however some customers have approached the yard for delays.
"We believe the risk of project cancellations for Keppel is low, although a couple of customers have approached us to defer their rig deliveries,” he said.
There have been requests for the delay of delivery of eight rigs, of which five were ordered by Transocean and three by Fecon.
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