Analysts warn of more risk that further clients of Singaporean rig builder Keppel Offshore & Marine may cancel their orders and forecast that a total 26% of the outfit’s S$12.5 billion (US$8.27 billion) order book could be slashed as the financial crisis deepens.
The predictions follow hot on the heels of last week’s news that the Singapore giant is faced with the cancellation of a number of new-building contracts totaling S$1.2 million. The orders, signed only a few months ago, with Scorpion Offshore, Seadrill and Lewek Shipping, represent almost 10% of the rig builder’s order book. Now analysts are not ruling out more dark clouds on the horizon. According to Merrill Lynch, excluding Seadrill and Scorpion Offshore, which have already announced their intention to review their rig orders, the “next most highly leverages listed customers” are Norway’s Skeie Drilling & Production, as well as PetroVietnam Drilling & Well Services (PV Drilling). Merrill Lynch said in a report that Skeie Drilling and Production has net debt of US$2.6 billion. It also had gearing of 2.9 times at 30 September, a sign of its heavy debt levels. The outfit has ordered three jack-up rigs from Keppel with scheduled delivery in 2010 and is fully financed with 11% equity and 89% debt. PV Drilling, an affiliate of Vietnam Oil & Gas, has net debt of S$251 million and a gearing ratio of one at 30 September. The company has outstanding orders for two jack-ups from Keppel scheduled for delivery in next year’s fourth quarter. Merrill Lynch estimates that 13% of Keppel’s current order book is attributable to Skeie, while 3% is attributable to PV Drilling.
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