UPDATE – Keppel Signs Rig-Building Pact With Sete Brasil Potentially Worth US $4.12 Bln

SINGAPORE (Dow Jones)–Keppel Corp. (BN4.SG) has signed a letter of intent with Sete Brasil Participacoes SA to design and build five additional semisubmersible drilling rigs, ahead of a potential deal valued around US$4.12 billion, the Singapore-based rig builder said Thursday.

The pact comes after Keppel’s offshore and marine arm secured a contract in December from the Brazilian drilling-rig holding company to build one semisubmersible rig, the company said in a statement.

Keppel said the letter of intent is meant to “facilitate (Keppel Offshore & Marine Ltd.’s) preparation work on these potential projects, pending the signing of the final construction contracts.” It didn’t specify when the latest deal could be finalized.

The December contract was worth US$809 million. All six rigs will be used in the exploration of Brazil’s offshore oil and gas fields, Keppel said.

Sete Brasil–backed by seven Brazilian companies including state oil giant Petroleo Brasileiro SA, or Petrobras–was formed to put financing in place for Petrobras’ massive rig-building program.

Analysts said the latest rig-order awards, while significant, have been anticipated for some time. Keppel and its Singapore-based peer Sembcorp Marine Ltd. (S51.SG) were seen as frontrunners to secure significant contracts from Brazil since Petrobras launched a 21-rig tender process last year.

The news “has been expected, and the main question was whether the contracts would come in a single package or in separate packages,” an analyst at a local brokerage said. Nonetheless, the “eye-catching headline could trigger a knee-jerk reaction” from investors, said the analyst, who declined to be named.

-By Chun Han Wong, Dow Jones Newswires

Copyright © 2012 Dow Jones & Company, Inc.

About the DSS^TM 38E Rig Design

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.

Jointly developed and owned by Keppel’s Deepwater Technology Group and Marine Structure Consultants, the DSS^TM 38E design 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.