Keppel Corporation had a recent business update published yesterday as well as took some questions during the update call.
On the update call was CEO of Keppel Corporation Loh Chin Hua and the CEO of Keppel Offshore & Marine, they both answered the following questions from Lim Siew Khee, CGS-CIMB Research.
Can we hear a little bit more about your plans on the rigs? Since you said that you have received more enquiries, are we letting them go, are we selling them? What are we doing? Or must we wait for the O&M divestment deal to be completed to decide what is the next course of action?
LCH: I will ask Chris Ong to talk about the rigs.
CO: I do not think there is a concept of “wait”. First, we have our organic plan that is also ongoing. So, Rig Co is still ongoing and the management is actively looking for solutions for the rigs, even though there is an Asset Co discussion. What we are saying here is that activities in the market have picked up. There are operators looking for assets to deploy. But it will be more the bareboat charter type of deals. We think that a clear sale would be sometime down the road. In order to keep the rig asset hot, I think a bareboat charter is a good way to get it occupied.
Are you saying that you have started to bareboat charter, or you are still waiting for something?
CO: Bareboat charter discussions have always been ongoing. It depends on when the charter will commence. So what I'm saying is that there are more enquiries to talk about bareboat charters.
LCH: Just to round this up, we are seeing enquiries going up on bareboat charters on the back of improving utilization rates. Day rates have not started to move yet, although we do expect that they will move pretty soon once the utilization rate goes above 80% or more. We think that the fundamental rig demand is actually improving with the improving oil price. Of course, the monetization of the assets is something that we would like to do as soon as possible. Given what we have seen so far, we believe that this monetization will probably happen in the next three to five years.
Are we saying that maybe in the next quarter or so we will be hearing some of the rigs already securing bareboat charters? Or must utilization rates reach 80%, and not at current rates of 70%?
LCH: The current day rates would make it commercially feasible for some of these bareboat charters to happen, but things do not just happen overnight. We are working on it, and we do believe that there will be good opportunities for us to do bareboat charters in the periods coming up.
Source: Keppel
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