Singapore-based Keppel has signed a five-year lease contract for its AD110 drilling rig worth around $51 million with Arabian Drilling Company. This agreement, signed through Keppel's subsidiary RigCo Holding, will run from 2026 to 2030 and will directly extend the current lease contract.
Drilling Rig Operations in Saudi Arabia
Currently, the AD110 rig is operational off the coast of Saudi Arabia for an undisclosed client of Arabian Drilling Company. This rig is part of the drilling rigs that were transferred to Saudi Arabia under lease contracts in 2022. Keppel has stated that this new extension reflects the ongoing demand for modern, high-specification drilling units in the Middle East.
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Keppel's Financial and Investment Strategy
This contract comes as Keppel seeks to monetize its remaining offshore drilling assets through the Keppel Offshore Monetisation fund, established with the support of American investment firm Apollo Global Management. This fund was created under a program announced in July this year to gradually convert up to 10 old rigs with a total program value of approximately SGD 3.7 billion (equivalent to USD 2.9 billion).
Transfer of Operational Rigs to the Fund
Six operational rigs, including the AD110, are earmarked for initial transfer to this fund, provided the necessary conditions are met. Apollo has agreed to invest up to $1.5 billion in this manner, and the first six rigs are expected to be acquired for an approximate value of SGD 1.2 billion.
Other Keppel Projects
Keppel has also recently signed a contract with Seatrium to complete four unfinished rigs worth over SGD 500 million (USD 390 million). This project includes a seventh-generation drilling rig, a rig suitable for harsh conditions, and two mid-water semi-submersibles.
The Singaporean group has stated that it is looking to extend and renew contracts for other rigs to strengthen contracted cash flows and enhance asset values ahead of planned sales.
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