These conversion contracts are to convert,
i) a LNG Carrier to a Floating Storage Unit (FSU) for MISC Bhd,
ii) a VLCC tanker to a Floating Storage and Offloading (FSO) unit for Dixstone Hldgs, an association btwn Perenco Group and Cameroon National Hydrocarbons Corp, iii) a tanker to a Floating Production Storage and Offloading (FPSO) unit for Bumi Armada.
Contracts deliveries range btwn end of this yr to 3Q12.
The new orders lift ytd orderbook to >$8b, a record high for KEP.
Separately, Asia Offshore Drilling, the 34% associate of Mermaid Maritime, said it would increase the water depth capacity for it 3 jackup rigs under construction with KEP, from 350 ft to 400 ft. The additional capex to extend the legs is estimated to be
However AOD will not exercise the last option for one more jacup rig at KEP. The option expires today.
No news has been heard from Dynamic Offshore, which also has an option for one rig at KEP that expires today.
KEP has 6 options outstanding worth US$1.25b, with most of them expiring end 2011.
While the contract wins and order upgrades are a slight positive, the lapsing of rig building options is an indication that the global uncertainty may be starting to impact the offshore sector. Recall, rig builders, being highly cyclical plays, were hard hit in the previous crisis, on concerns that demand for oil would drop in tandem with the decline in the world economy.
While the Street has mainly Buy calls on KEP, with TP ranging btwn $9.60 – 13.90, we highlight that many analysts have since lowered their earnings and TP forecasts. For eg, yday UOB cut KEP TP to $9.60 from $13.35, but retained its Buy rating.
3Q11 results dates for group of Keppel companies as follows