Keppel Corp - DBS Vickers

Keppel Corp announces another contract -
US$385m semisubmersible rig contract from
Brazilian driller
Just two days after announcing its last contract win, Keppel
Corp has secured another contract. The contract is valued at
US$385m and is a repeat order to build a semisubmersible
drilling rig for Brazilian driller, Queiroz Galvao Oleo e Gas
(QGOG). This price excludes the drilling and subsea
equipment which will be supplied by the customer, QGOG.
This rig will be built to the DSS 38 design jointly developed
by Keppel O&M's technology arm Deepwater Technology
Group and Marine Structures Consultants of The
Netherlands. It's design can operate in water depths of
9000ft and can meet the operational requirements in the
deepwater "Golden Triangle" region, comprising Brazil,
Africa and the Gulf of Mexico.
This latest rig, to be named Alpha Star, is a repeat order of
the first semisubmersible, Gold Star, which was awarded to
Keppel in August 2006. Gold Star will support Petrobras'
growth plans when delivered in 2H09, whilst Alpha Star may
be deployed in either offshore West Africa or South
America, when delivered in 2H2011.
With this, YTD wins will amount to S$2.8bn and account for
46% of our order win assumption of S$6bn. Order book
estimated to rise to S$13.9bn. No change to earnings
estimates as we have already assumed S$6bn of contract
wins for FY08.
We believe that contract flows over the last one week have
stemmed from Petrobras' requiring up to 12 drilling rigs
(could be a combination of jackups, semis and drill ships)
with delivery dates by mid 2012. Both yards are currently
able to deliver semis in both 2011 abd 2012 while for jackups,
delivery slots for delivery in 2010 are still available.
Maintain Hold, TP S$12.56.