Speaking at its delayed results briefing on Friday Keppel Corp ceo Loh Chin Hua said there had been no cancellation of rig newbuilding contracts. “There are headwinds…. our orderbook is of the highest quality and so we are ok.”
The briefing had been delayed from Thursday evening as Keppel finalised announcements for its plans to privatise its listed property arm Keppel Land.
As to whether customers were attempting to renegotiate contracts Keppel O&M ceo YY Chow said: “So far there are no requests for renegotiations of payment there have been some requests to push the delivery of two projects to the right. We are looking at that but there has been no agreement as yet.”
On the issue of options booked at its yards he said: “We still have valid options, so far nobody has cancelled any options but I suppose if the oil price stays at this level they will let the option lapse anyway.”
In terms of its current orderbook Chow said less than 20% jack-up rigs ordered at its yards did not have contracts, and all other newbuilding orders had contracts, apart from the drillship which Keppel is building on its account as it tries to break into that sector.
However, he sees a much less rosy picture for the Chinese that have moved aggressively into the rigbuilding market in recent years. “In China there are a lot of speculative orders there and in times like this they will face a lot of challenges.”
With its current backlog Keppel’s yards will be full this year, with 15 rig deliveries, while they are around 80% full for 2016, and around 60% for 2017.
The current difficult market due to the low oil price could present some expansion opportunities for Keppel.
Loh explained: “In times like this there will be opportunities that will come up and we constantly being approached on acquisitions that have close adjacency or bolt on These are things we can afford to look at because our balance sheet is strong.”
Meanwhile Chow quipped, “I would say that don’t waste a good crisis.”
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