Keppel's semisub rig deal with Naftogaz fails to push through

It was a US$1.2b contract.

According to OCBC, Keppel Corporation (KEP) announced that the conditional contract between Keppel FELS Ltd and Ukraine’s Naftogaz to construct two semisubmersible drilling rigs will not be taking effect.

Though the US$1.2b worth of contract was inked in Dec last year, it was also mentioned earlier that the contract will only be effective if certain conditions were met.

Here's more from OCBC:

As they were not fulfilled within the timeline that was specified, the contract will not turn effective. We do not view this as a cancellation of order, and we note that the contract amount was also not part of Keppel’s announced net order book of S$12.8b as at 31 Dec 2012.

Though there may be a negative knee jerk reaction with this news, we maintain our BUY rating with S$12.68 fair value estimate and a forecasted dividend yield of 3.7% over a one-year time frame.

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