Keppel Limited

[specuvestor]

Lifting cost for fracking is cheaper than conventional wells?

With major oil field finds getting more expensive and development too risky, oil Co. will go into fracking.

This is a significant industry shift and it will result in less spending on rig.

[ValueBeliever]

http://www.rigzone.com/news/oil_gas/a/13...us_Outlook

Top dog in the industry. No question need to be asked further. Still got a further 18rigs awaiting delivery and in the meantime....

http://www.rigzone.com/news/article.asp?a_id=132794

[specuvestor]

^^ Yes and they are a function of weaker oil prices. And if we look at WTI trading at a big discount to Brent we will have a good idea of where the supply is coming from, not just from Middle East

But my question is where do u get the informaton that "Lifting cost for fracking is cheaper than conventional wells"?

[CityFarmer]

Keppel continue with its success in O&M sector...

(not vested)

Keppel wins fifth jackup contract from Gulf Drilling for $287 mil

Keppel FELS, the wholly-owned subsidiary of Keppel Offshore & Marine, said it has won a contract from Gulf Drilling International of Qatar to build a repeat high-specification KFELS B Class jackup rig worth US$227 million ($287 million).

As part of the contract, GDI has options for two more KFELS B Class rigs for deliveries in 2017.

The new jackup, named Halul, will be chartered to Qatar Petroleum for five years upon delivery.

Customised to GDI’s requirements, the rig is designed to operate in the higher ambient temperature of the Middle East.
...
http://www.theedgesingapore.com/the-dail...llion.html

[CityFarmer]

The orders keep coming...

(not vested)

Keppel secures $153 million in contracts from repeat customers

SINGAPORE (Oct 7): Keppel Corp's subsidiary Keppel Offshore & Marine says units Keppel Shipyard and Keppel Nantong Shipyard Co. have won contracts from repeat customers worth a total of $153 million.

Keppel Shipyard’s contract is for the conversion of a Floating Production Storage and Offloading (FPSO) vessel for Armada Cabaca, a subsidiary of Bumi Armada Berhad, while Keppel Nantong’s contract is to construct a submersible barge for Smit Shipping Singapore, a subsidiary of Royal Boskalis Westminster Group.
...
http://www.theedgesingapore.com/the-dail...omers.html

[greengiraffe]

These are essentials to cover fixed costs... the mega contracts are thinning with tighter margins...

The orders keep coming...

(not vested)

Keppel secures $153 million in contracts from repeat customers

SINGAPORE (Oct 7): Keppel Corp's subsidiary Keppel Offshore & Marine says units Keppel Shipyard and Keppel Nantong Shipyard Co. have won contracts from repeat customers worth a total of $153 million.

Keppel Shipyard’s contract is for the conversion of a Floating Production Storage and Offloading (FPSO) vessel for Armada Cabaca, a subsidiary of Bumi Armada Berhad, while Keppel Nantong’s contract is to construct a submersible barge for Smit Shipping Singapore, a subsidiary of Royal Boskalis Westminster Group.
...
http://www.theedgesingapore.com/the-dail...omers.html

[LLS]

what are the gross margins like?
well i think winning contracts is always better then nothing (letting the shipyards sit idle)

[Layman A]

Keppel Corp cut to "reduce" from "buy" by Nomura
Source: Frankie Ho | Publish date: Wed, 8 Oct 11:53 | >> Read article in News website
Nomura has downgraded its rating on Keppel Corp ( Financial Dashboard) to “reduce” from “buy” and cut its price target from $13.20 to $9.64, based on a sum-of-parts valuation.
The Japanese broking house expects a significant slowdown next year in global jack-up rig orders, and its FY2014 to FY2016 earnings estimates for Keppel are 7% to 18% below consensus forecasts.
“The key downside risk to consensus forecasts is the optimism on Keppel’s ability to replenish its rig building order book quickly and grow its offshore and marine revenue vs our view that the slowing jack-up rig orders since early 2014 will worsen in 2015,” Nomura analysts Chong Wee Lee and Abhishek Nigam said in a note today.
Keppel’s proprietary semi-submersible rig designs are unlikely to benefit from an expected recovery in orders for floaters from 2Q2015 as drill ships are preferred, they said.
Global jack-up rig orders may weaken next year because of near-term oversupply, with a 71% y-o-y rise in scheduled jack-up rig deliveries to 65 units in 2015, they said.
Of the 65 units, only 8% have been contracted.
Average charter rates for jack up rigs have also declined, while utilization rates peaked at 88.6% in April this year.
“This may affect Keppel’s order book visibility.”
The “saving grace” for Keppel’s offshore and marine division is that higher-margin offshore and conversion works and ship repair jobs provide a steady income to the group, they said.
“We expect 65% of Keppel’s order wins in 2015 to be related to conversion works on production units, which are insufficient to make up for the revenue dip from rig building projects.”
Shares of Keppel traded at $10.28, down 0.2%, at 0252 GMT.

[Shrivathsa]

Feb 17, 2014 : Nomura Analyst Report

"According to Nomura, Keppel has announced securing a US$650mn order from new customer Fecon International Corp. With this new order, Keppel has secured orders worth a combined S$1.07bn in 2014. This new order, like the order from UMW Oil and Gas secured on 6-Feb-2014, has been secured at a 5% premium to similar design orders secured in 2013.

Including this order, Keppel have now secured 4 JU orders in 2014 YTD worth a combined US$868mn (~S$1.07bn).

We highlight that Keppel alreadyhas a 6 JU MoU with Pemex that is in the negotiation stage and has 6 outstanding options with Transocean and Ensco.

With sustained high oil prices, we think there is sufficient demand in pockets for Singapore-based rig builders to meet their new order targets in FY14F.

In addition, in our recent discussions with both Keppel and Sembcorp Marine, they highlighted that they expect Mexico to continue to remain a strong region for newbuild JU demand, especially after the government’s decision to liberalise the energy sector"

Recommend Buy Price target 13.2 based on Sum of Parts.

Price of Keppel Corp on the day 10.49.

October 9, 2014, Nomura report, Price target 9.64, price today : 10.24.

I am not meaning to pick on Nomura, and yes, before anyone says it, all analysts are like this, i agree. However, one does expect some level of consistency, not flop about like this.

I guess if one were a contrarian buyer, this would be a good time to buy Keppel Corp

[Shrivathsa]

Hi LLS,

This link has a presentation which gives an indication, seems to be too high though at 23% gross profit margin.

Link to SBM Offshore Presentation

http://www.sbmoffshore.com/wp-content/up...tation.pdf

Bumi Armarda had a rough quarter and salvaged by FPSO

http://www.bursamarketplace.com/index.ph...rticle_pdf

Hope this helps

what are the gross margins like?
well i think winning contracts is always better then nothing (letting the shipyards sit idle)