April 12, 2012 / 10:45 AM / in 6 years

UPDATE 1-Singapore's Keppel gets $4.12 bln Brazil rig order

By Kevin Lim and Eveline Danubrata

SINGAPORE, April 12 (Reuters) - Keppel Corp has signed a letter of intent to build five semisubmersible rigs for Sete Brasil for around $4.12 billion, paving the way for what will be the biggest-ever deal for the Singapore firm.

Keppel, the world’s biggest oil rig builder, had a net orderbook of S$9.4 billion ($7.5 billion) at the end of 2011 with deliveries extending to 2015. The latest deal, along with two other contracts announced earlier this month, will ensure its yards are kept busy over an even longer period.

Sete Brasil, which specialises in chartering drilling rigs for Brazil’s pre-salt exploration, is owned by seven Brazilian investors including national oil company Petrobras.

Sete Brasil in December placed a firm order for one Keppel rig as companies step up exploration in waters off Brazil, which has the potential to become a major oil exporter.

“The news should be positive for the share price tomorrow. We have been expecting this deal, but now it’s confirmed and it’s quite a big addition to the order book,” said Yeak Chee Keong, an analyst at Maybank Kim Eng.

Out of 26 analysts tracking Keppel, 23 have a buy or strong buy rating, while three have a hold recommendation, according to Thomson Reuters data.

Should the Sete Brasil letter of intent lead to a firm order, Keppel will build the rigs at its yard in Brazil, which it established in 2000.

“With six orders, the yard in Brazil will be busy, but we are looking at expanding the yard,” a Keppel spokeswoman said when contacted by Reuters.

Keppel and Singapore rival Sembcorp Marine, the world’s number two rig builder, have seen strong orders over the past year as oil companies step up exploration activity amid stubbornly high oil prices.

Keppel shares closed 2 percent higher at S$11.24 on Thursday. The shares have risen 21 percent so far this year.

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