Keppel Corp 01 (May 08 - Dec 14)

[winston]

Keppel says clients may cancel orders worth S$1.2bln

SINGAPORE, Nov 27 (Reuters) - Keppel Corp (KPLM.SI: Quote, Profile, Research, Stock Buzz), the world's top offshore oil rig builder, warned on Thursday that three clients may cancel orders worth S$1.2 billion ($794.2 million), a sign companies may hold back on exploration amid falling oil prices.

The contracts, signed earlier this year, involve a semisubmersible for Scorpion Offshore (SCORE.OL: Quote, Profile, Research, Stock Buzz), two jackup rigs for Seadrill and a support vessel for Lewek Shipping, the Singapore firm said in a statement.

Construction work has not yet started on these projects, for which Keppel has received downpayment.

The three firms were reviewing their options on the contracts and the deals may not necessarily be called off, a Keppel spokeswoman said.

Keppel posted a 10 percent rise in third quarter profits and said in October its S$13 billion order book, which stretches to 2013, was robust and well diversified. It said then expansion in rig fleets could be constrained by tight credit.

It benefitted from a jump in oil exploration in recent years, but crude futures prices CLc1 have slid by almost $100 a barrel since hitting a peak above $147 in July, as the credit crunch and recession fears dent demand and investor sentiment.

[winston]

Goldman downgrades Keppel, Sembcorp Marine to sell

SINGAPORE, Nov 28 (Reuters) - Goldman Sachs on Friday cut its rating on Singapore oil rigbuilders Keppel Corp and Sembcorp Marine to "sell" from "hold", following Keppel's announcement on Thursday that customers may cancel three orders worth $871 million.

"We believe the latest headwind could be a major setback for investors attracted to the sector's relatively defensive earnings, previously backed by a perceived secured order backlog. This may no longer be the case," Goldman said in a report.

Goldman set a target price of S$3.40 for Keppel, below Thursday's last traded price of S$4.80, while its target for Sembcorp Marine is S$1.00 against the closing price of S$1.77.

[readnlearn]

From DBS Vickers: Negative news flow on rig builders from Petrobras and Scorpion.
Petrobras reveals huge short-term borrowing. Petrobras announced that it has borrowed US$878m short-term loan from Caixa, a state-owned bank, in October. Petrobras explained that this forms part of its annual US$4b borrowings to partly finance the US$112b capex plans for the 2008-12 periods. Also, this recent borrowing is related to the one-time costs due to temporary difference in unforeseen taxes and the credit condition is deemed to be more stable in Brazil's banking system.
May have a negative impact on new orders from Petrobras in 2009. The Brazilian Congress has signaled its intention to summon Caixa's and Petrobras' CEOs to give more details on the amount and the chosen source of the borrowings, given that not much public information is given on the loan. Should the Congress' findings reveal more long-term financing issue for Petrobras, it would likely have a negative impact on new orders win for local rig builders in 2009.

Keppel Corp’s current order book has an estimated S$1.8b exposure to Petrobras. Keppel Corp's current exposure to Petrobras relates to the construction of P-56, a semisubmersible FPU, amounting to an estimated total contract value of S$1.8b, or about 10% of the group's total secured orders that are due for delivery after 2008. This production unit is due for delivery in 4Q10. SembCorp Marine’s exposure to Petrobras relates to possible US$0.9-1.0b new contract win in 2009. SembCorp Marine does not have any existing order from Petrobras in its current order book. However, we believe that it is among the frontrunner for the newbuild order that Petrobras may place for the P-62, a FPSO and a clone of P-54. The contract could be valued for about US$0.9-1b. This contract, which we initially expect to be awarded in 1Q09, may now be postponed should Petrobras has more long-term financing issue. As a recap, the P-62 is a FPSO capable of producing 180,000 b/d of oil, storing 1.8 million barrels of oil and compressing 211.89 MMcf of natural gas.

Immediate financing issue drives Scorpion’s contract review. Scorpion Deepwater, a special purpose vehicle company owned by Scorpion Offshore, separately revealed that it might not be able to secure financing to meet future milestone payments for the construction of a semi-submersible rig by Keppel FELS. Even though Scorpion Offshore has issued a parent company guarantee to Keppel FELS, we note that Scorpion Offshore's gross gearing is already a high 1.3x. Specifically, Scorpion Deepwater mentioned that it has thus far not been able to secure financing for this particular project, with scheduled completion date in 2011. Probability of cancellation for Scorpion contract is now higher. Since the possible changes to this rig building contract is driven by the inability to access cash from capital markets, which is an exogenous factor to the parties involved, there is now a higher probability that it may be cancelled. We believe that milestone payment changes or delivery delays would have been the preferred choice, if the contract review is due to deliberate cash conservation plans by client amidst a still tight credit market.

Scorpion has paid an estimated 18% of deposits to Keppel Corp and other equipment suppliers. Scorpion Deepwater also mentioned that it has to-date paid US$74m deposits to Keppel FELS and other equipment suppliers, which we estimate to be equivalent to about 18% of the contract value of about US$405m.

Parties involved are trying to find a solution now, failing which the construction contract may be terminated. Negative impact on local rig builders’ share prices. These series of negative news flow follows Keppel Corp’s announcement last Thursday that 3 of its customers, namely Seadrill, Scorpion Offshore, and Lewek Shipping, (which collectively represents an estimated 9.7% of Keppel Corp's total secured orders for delivery after 2008), are reviewing their contracts with the group. Indeed, these reveal fresh evidence that the global credit crunch is spreading faster than expected to the rig builders’ supposedly more cash-rich customers. Expect rig builders’ share prices to come under further selling pressure. We remain CAUTIOUS on the Shipyard Sector and the rig builders, who are expected to be increasingly vulnerable to order delivery delay possibility. We maintain our FULLY VALUED rating on Keppel Corp, with fair value of S$3.58. SembCorp Marine remains a HOLD, with fair value of S$1.90.

[millionairemind]

Singapore Companies
Published December 8, 2008

KepCorp set to deliver rig ahead of time
Rig is second order for Indian company Virtue Drilling
By LYNETTE KHOO

KEPPEL Corp's offshore and marine unit said it is on track to deliver its second jack-up rig for Virtue Drilling, an associate of India's Jindal Drilling & Industries, ahead of schedule and without incidents.

Silver lining: Nine Keppel jack-up rigs worth US$1.5b have been ordered by Indian firms in the last 5 years
This rig, named Virtue I, has been contracted by India's Oil and Natural Gas Corporation (ONGC) in the Indian Ocean for a period of five years. The first rig, Discovery I was delivered in September, 49 days ahead of schedule and without incidents.

The two jack-up rigs for Jindal was built with Keppel Fel's proprietary KFELS B Class design, which was launched in 2000. Over the last five years, Indian drilling contractors have ordered a total of nine KFELS B Class jackup rigs from Keppel FELS, with a total contract value of US$1.5 billion.

Speaking at the naming ceremony over the weekend, Lee Boon Yang, Minister for Information, Communications and the Arts, noted that partnership between India and Singapore has grown since the signing of the India-Singapore Comprehensive Economic Cooperation Agreement (CECA) in 2005.

Since its implementation, bilateral trade has grown by about 20 per cent every year.

Despite the difficult challenges ahead caused by the global downturn, Dr Lee said 'there will still be many opportunities for Singapore and Keppel to support India in the exploration and production of its rich oil and gas reserves.'

Keppel Offshore and Marine chairman and CEO Choo Chiau Beng noted that efforts by the Indian government to expand the local sector to reduce its dependence on oil imports augur well for supporting clusters in the long run.

This piece of news came as a silver lining against recent uncertainty over potential order cancellations by clients who were squeezed by the current credit crunch.

The contracts under review, signed a few months ago, involve a semi-submersible for Scorpion Offshore, two jack-up rigs for Seadrill and a multi-functional support vessel for Ezra Holdings' Lewek Shipping. Non-refundable deposits of between 5 per cent and 20 per cent have been placed but work has not started on the projects.

Keppel Corp shares were bashed in recent weeks on news that some customers are reviewing their options for contract orders worth $1.2 billion placed with its offshore and marine arm.

Its share price also took a hit from downgrades by at least four research houses - Goldman Sachs, CIMB, OCBC and Citi.

Citi analysts Horng Han Low and Rigan Wong said they downgraded Keppel Corp to 'hold' from 'buy' on lower earnings visibility due to potential order cancellations or postponements and slower flow of new orders for its offshore and marine business.

[millionairemind]

Keppel wins S$120m environment projects

By ANGELA TAN

Keppel Corporation said on Monday that the environmental subsidiaries of Keppel Integrated Engineering Limited have won two contracts worth almost S$120 million in Guadeloupe, France and Honduras.

The contracts were won by Keppel Seghers Begium NV and Keppel Seghers Latinoamerica SA.

In Guadeloupe, Keppel will design a new waste to energy plant for Valorgabar for completion in 2011.

In Honduras, Keppel will design for the first stage construction of the Bahia de Tela waste water treatment plant, which is expected to be completed by 2009.

[LenaHuat]

Bad news keep breaking out for KC:-

SINGAPORE - Singapore's Keppel Corp said on Tuesday it has decided to terminate a project to build a floating heavy lifter worth 140 million euros (US$191 million).

The firm said it had ceased work on the lifter after MPU Offshore Lift ASA, the firm that contracted the project, filed for bankruptcy in July 2008. -- REUTERS

[winston]

Keppel names Choo Chiau Beng group CEO
By ANGELA TAN

SINGAPORE - Marine conglomerate Keppel Corp said on Monday that chairman and chief executive Lim Chee Onn will step down from the chief executive role and pass the baton to Choo Chiau Beng, the head of the firm's rig and ship building arm.

Mr Lim will stay with Keppel, the world's largest builder of offshore oil rigs, as non-executive chairman.

Mr Choo, who has been with Keppel for more than 35 years, will continue to serve as non-executive chairman of Keppel Offshore and Marine.

Tong Chong Heong will replace Choo as head of the offshore and marine arm.

Keppel, whose other businesses include infrastructure, oil refining and property, said the changes will take effect on Jan 1.

[millionairemind]

December 29, 2008, 12.47 pm (Singapore time)

Keppel wins US$138 mln marine deals

SINGAPORE - Singapore's Keppel Corp said on Monday its units have won S$200 million (US$138.2 million) worth of deals.

The new orders include the upgrading and conversion of a floating storage and offloading vessel into a floating oil production facility, the building of three tugboats and two offshore support tugs. -- REUTERS

[millionairemind]

Keppel loses US$405m Scorpion rig order, Lewek deal

By ANGELA TAN January 9, 2009, 7.56 pm (Singapore time)

Keppel Corp on Friday said Keppel FELS Limited and Scorpion Offshore have agreed to terminate the US$405 million rig contract on mutually acceptable terms.

The marine conglomerate added that Keppel Singmarine and Lewek Shipping are currently working towards an amicable mutual termination of their contract and this is expected to be finalised shortly.

Scorpion Offshore is working closely with Keppel FELS in the latter's exploratory discussions with interested third parties to take over the building of the semisubmersible.

'The outcome of these discussions are highly uncertain,' it added.

KepCorp said the cancellation of the Scorpion and Lewek Shipping contracts are not expected to have material impact on its net tangible assets or earnings per share for the financial year ending 2009.

Kep Corp said its wholly owned subsidiary of Keppel Offshore & Marine Limited (Keppel O&M), Keppel FELS Limited, and Seadrill Jack-Ups Ltd have agreed to continue with the building of the two jackups on revised terms that are mutually beneficial. The contract value of the two jackups is US$420 million.

Excluding the Scorpion and Lewek contracts, Keppel O&M's orderbook stands at about S$10.8 billion extending through to 2012.

[millionairemind]

ublished January 21, 2009

Fundamentals in oil & gas industry intact: Keppel
Keppel Fels expects to deliver as many as 14 rigs this year

By JAMIE LEE
THE fundamentals in the offshore and gas industry remain intact, Keppel Corp said yesterday as its unit, Keppel Fels, delivered the third of a fleet of four jack-up rigs to Maersk Drilling.

Mr Tong: 'Orderbook of $10.8 billion will keep us busy for next few years'

The fourth rig is on track for delivery in the second quarter.

Keppel - which is set to announce its results tomorrow - would selectively pursue new projects in the year ahead, said Tong Chong Heong, the newly appointed chief executive officer of Keppel Offshore & Marine (Keppel O&M). Keppel Fels is wholly owned by Keppel through Keppel O&M.

'The fundamentals in the offshore oil and gas industry remain intact. There is a need for drilling and production activities to support long term demand for energy,' Mr Tong said, adding: 'Our healthy balance sheet and orderbook of $10.8 billion will keep us busy for the next few years.' Keppel Fels expects to deliver as many as 14 rigs this year.

The upbeat note comes on the back of two scuppered deals announced recently by Keppel - a US$405 million semisub contract with Scorpion Offshore and a $69 million multi-function support vessel order from Ezra Holdings' unit Lewek Shipping.

Kim Eng analyst Rohan Suppiah is bracing for significant provisions or writedowns from cancelled orders and adjusted inventory, as well as the earnings shortfall from associate Singapore Petroleum Company.

'Potential provisions muddy (the) earnings outlook,' he wrote in a research note yesterday, saying that he expects Keppel's 2008 earnings per share to stand at 66 cents versus a consensus of 67 cents. Full-year net profit would come in at $1.05 billion, 7.1 per cent lower than $1.13 billion a year ago, Mr Suppiah estimated.

He added that offshore demand was 'firmly stuck in the doldrums', noting that besides the earlier order cancellations announced, Brazilian oil producer Petrobras had recently cancelled the tender processes for its P-61 tension leg platform and P-63 production storage and offloading (FPSO) projects because the bids were deemed too high amid current market conditions. The lowest P-61 bid stood at US$1.72 billion while the lowest P-63 bid was US$1.65 billion, Kim Eng said.

'This clearly indicates that customers are no longer willing to pay through the nose, unsurprising in the current oil price environment,' he said, though there has been no confirmation if Keppel and Semb Corp Marine had bid for either project.

'The wider implication is that national oil companies are balking at the current high prices being quoted, and implying that rig builders will have to trim their margins significantly in order to secure jobs,' he said, adding that the tight credit market renders a bleak outlook for the sector.

Kim Eng does not expect any writedowns to the landbank of Keppel's property unit, Keppel Land, but said outlook is 'unexciting' for the developer - which is reporting its results today.

Mr Suppiah kept a 'hold' rating on the stock.