Keppel O&M returns to the black ahead of merger

Presenting Keppel Corp’s half year results CEO Loh Chin Hua said the outlook for offshore and marine continued to improve with the increasing oil price.

Keppel Offshore & Marine (Keppel O&M) was profitable in the first half of 2022 and the operating company, which is to be merged with Sembmarine and us minus legacy rigs owned by the group as a result of cancelled contracts, made a net profit of SGD94m ($68.2m) in the first half of the year.

In the first half of 2022 Keppel O&M booked in SGD256m of new orders taking its current orderbook to SGD4.4bn. Keppel is confident of further contracts from Petrobras in Brazil.

“In the latest Petrobras tender, Keppel O&M was selected as the only qualified bidder for the P-80 FPSO project. Keppel O&M is presently in advanced discussions for the P-80 contract as well as an option for a second FPSO,” Loh said. If awarded the two projects would add SGD8bn to Keppel O&M’s orderbook. Loh said the contracts would have 10% upfront deposits and milestone payments.

Speaking about the first half of the year Keppel O&M CEO Chris Ong said they had delivered six projects. “We have delivered one newbuild dredger, one wind turbine installation vessel leg structure, one wind turbine installation vessel upgrade, one FSRU conversion, one dredger jumboisation and one LNG carrier upgrade.”

In April Keppel announced it had reached a definitive agreement with rival Sembmarine for a merger with Keppel Offshore & Marine and the two companies are now working through approval processes including anti-trust filings in multiple markets. “We are making good progress in terms of applications for anti-trust. We believe we are on track for the completion of the transaction sometime in the fourth quarter,” Loh said.

Regarding legacy rigs that are not part of the merger Loh said they were “making good progress”. He commented: “The near-term shortage of modern rigs has led to an increase in enquiries, as well as utilisation and day rates for benign environment jack-ups and floaters.”

In May this year Keppel announced three – five-year bareboat charters for four jack-up rigs totalling SGD255m. Loh added they were talking to potential buyers for some of the rigs.

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