Keppel and Sembcorp to benefit from new Brazilian orders

21 rigs are awaiting the big shipping lines by 12 September.

According to CIMB, favourable newsflow on Petrobras rigbuilding orders appears imminent for the shipyards as Upstream reported that Sete Brasil could ink the final contracts for the remaining 21 rigs by 12 September.

Here's more from CIMB:

The publication also suggested that SMM has received the LOI for the remaining five drillships worth S$5bn. This follows Keppel’s Apr 12 announcement of the LOI for five semi-subs (S$5.2bn). Our top pick is SCI as it is less
susceptible to volatile prices and is the cheapest at 6x CY13 EV/EBITDA vs. KEP and SMM’s 11x.

Upstream reported that Sete Brasil has signed LOIs with four shipyards to build the remaining 21 rigs. The shipyards are Keppel BrasFELS, Odebrecht, Sembcorp Marine’s Estaleiro Jurong Aracruz and Engevix. Petrobras is also expected to sign the back-to-back charters with Sete Brasil between July and September 2012.

We believe that final construction contracts with the shipyards could coincide with Petrobras’s signing of charter contracts. There has been no announcement from Sembcorp Marine on the LOI as we think that pricing negotiations could still be ongoing, with room for improvement. Success in clinching Petrobras orders should put the Singapore yards on track for our 2012 contract wins target of S$9.2bn for Keppel and S$10.2bn for Sembcorp Marine.

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