Keppel Corp has secured 2 contracts worth $170m for the conversion of a FPSO vessel and the repair of a semi-submersible drilling rig from repeat customers. Ytd, the group has won $1.9bn of new order, of which almost 90% was clinched in 1Q, suggesting that the group may be behind the $3-4bn consensus order assumption for this year.
The 1st contract is for the conversion of the VLCC into an FPSO facility is for Single Buoy Moorings and will be by 1Q12 while the 2nd rig repair contract awarded by Queiroz Galvão Óleo e Gás is due to be ready by Oct 10. Both these vessels will be deployed in Brazilian waters.
These contracts underscore Keppel’s close ties with Brazilian operators and continue to solidify its position as a potential beneficiary on the high capex required to develop Brazil’s massive offshore fields. It is currently in the running for both Phases 1 & 2 of Petrobras 28-rig tender, which is yet to be awarded. We maintain our Buy recommendation on KepCorp with target price of $11.07. The company will be releasing its 2Q10 earnings this evening.
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