12 Apr 2012

Keppel to build five DSS^TM 38E semis for US$4.12 billion for Sete Brasil

Keppel Offshore & Marine Ltd (Keppel O&M), through its subsidiaries, Keppel FELS Brasil S.A. and Estaleiro BrasFELS Ltda, has signed a Letter of Intent (LOI) with Sete Brasil Participações S.A. (Sete Brasil), for the design and construction of five additional semisubmersible (semi) drilling rigs based on Keppel's proprietary DSS^TM 38E design.

The aim of the LOI is to facilitate Keppel O&M's preparation work on these potential projects, pending the signing of the final construction contracts. The total value of the contracts, if and when successfully agreed and executed between Keppel O&M and Sete Brasil, will be approximately US$4.12 billion.

Earlier in December 2011, Keppel O&M secured one semi to be built to the same DSS^TM 38E design from Sete Brasil. Like the first rig, the additional five rigs are intended to support Brazil's exploration of its vast proven offshore oil and gas resources.

The DSS^TM 38E design is an enhancement of Keppel's proven fifth generation deepwater solution, the DSS^TM 38. With improved capability and operability, the DSS^TM 38E is well suited to meet the stringent requirements of the deepwater "Golden Triangle" region, comprising Brazil, Africa and the Gulf of Mexico.

Sete Brasil's Chief Executive Officer, Mr Joao Carlos Ferraz, said, "We have entered into this LOI for five additional semis from Keppel, as we are confident of Keppel's strong track record in the design and construction of deepwater rigs, as well as their established yard in Brazil. It is full steam ahead for us in growing our fleet of rigs and vessels to support the E&P activities in offshore Brazil, and we need to partner shipyards like Keppel which can deliver the quality rigs in a timely manner which we are looking for."

Mr Tong Chong Heong, Chief Executive Officer, Keppel O&M, said, "We are pleased that Sete Brasil is moving ahead with the decision to order five additional semis on top of the first DSS^TM 38E semi ordered late last year. With our proven track record at our Angra yard in Brazil, we believe we are in a good position to continue to contribute effectively to the growth of Brazil's oil and gas industry."

Jointly developed and owned by Keppel's Deepwater Technology Group and Marine Structure Consultants, the DSS^TM 38E design is an innovative and cost-effective design. It is rated to drill to depths of 10,000 metres below the rotary table in 3,000 metres water depth. Its operational displacement is approximately 45,000 tonnes. Each rig will have accommodation facilities to house a crew of up to 160 men. The vessel is designed to stay in position via eight Azimuthing thrusters and the configurations comply with the American Bureau of Shipping Dynamic Positioned System (DPS-3) requirements.

The transaction mentioned above is not expected to have a material impact on the net tangible assets or earnings per share of Keppel Corporation Limited for the current financial year.

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About Keppel Offshore & Marine
Keppel Offshore & Marine (Keppel O&M), a wholly-owned subsidiary of Keppel Corporation Limited, is a global leader in offshore rig design, construction and repair, ship repair and conversion, and specialised shipbuilding. Its near market, near customer strategy is bolstered by a global network of 20 yards in the Asia Pacific, Gulf of Mexico, Brazil, the Caspian Sea, Middle East and the North Sea regions. Integrating the experience and expertise of its yards worldwide, Keppel O&M aims to be the provider of choice and partner for solutions for the offshore and marine industry.

Keppel O&M established its yard in Brazil, BrasFELS, in 2000. It has gone on to achieve many firsts for the Brazilian offshore industry, including the construction of some of the world's largest floating production units, P-52, P-51 and P-56 for Petrobras.

The yard, located in Angra does Reis, is currently working on a number of projects, including the upgrade of two drillships for Noble, the construction of the P-61 Tension Leg Wellhead Platform for Petrobras and Chevron, as well as the building of the first DSSTM38E semi for Sete Brasil. It is also integrating the topside modules for FPSO Cidade Da Sao Paolo for a joint venture company between MODEC and Toyo Offshore Production Systems.

Apart from the Angra dos Reis location, Keppel O&M is currently developing a 7.6 ha specialised shipbuilding facility, Keppel Singmarine Brasil, in Navegantes, Santa Catarina. Ahead of its opening, the yard has already secured two contracts from operators in Brazil to construct a series of six harbour tugs and two large-sized 4500dwt Platform Supply Vessels.

About Sete Brasil
Sete Brasil is a Brazilian company established in December 2010 and formed by seven Brazilian finance investors, including banks and the four biggest Brazilian pension funds, besides Petrobras. The company specialises in chartering drilling rigs for Brazil's pre-salt exploration.

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