Markets and Investing
ENERGY & OFFSHORE | Staff Reporter, Singapore
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Keppel seals $175m deal with Seadrill

This latest order for a semisubmersible drilling tender brings Keppel's order book t a whopping $9.9billion.

DMG says the outlook for the offshore marine sector remains robust current high crude oil prices are significantly above the investment threshold of major exploration and production companies.

Here's more from DMG:

Adding a new contract to its backlog; re-iterate BUY. Keppel announced that they have secured a US$142m (S$175m) order for a semisubmersible drilling tender from Seadrill. We estimate that total YTD order wins climbed to S$6.8b and outstanding order book is now at S$9.9b. We think Keppel is on track to hit our full-year new order forecast of S$9b.

Repeat unit for a long standing customer. The award-winning KFELS SSDT 3600E drilling tender will be the eighth drilling tender ordered by Seadrill since the design was first delivered in 1994. The latest drilling tender is expected to be delivered in 2Q13. We expect margins to be in the mid teens for this unit. 

Key risks to our recommendation are: (1) project execution risks; (2) decline in crude oil prices below the investment threshold of oil majors at around US$75/bbl; (3) deterioration in newbuild financing.  

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