Keppel delivers jackup rig to Grupo R in sale-and-leaseback deal

Singapore five-dollar note Photo by Leslie Shaffer

Keppel Offshore & Marine’s wholly owned subsidiary Keppel FELS delivered a jackup rig, called Cantarell IV, to Grupo R, which will sell it to FELS Asset and then lease it back, it said in a filing to SGX after the market close on Wednesday.

FELS Asset, which is wholly owned by Keppel O&M, will buy the rig for US$179 million (S$241.92 million), equivalent to the balance contract value of the rig, the filing said.

“Cantarell IV will be leased back to Grupo R on a bareboat charter at competitive day rates over five years,” Keppel said in the filing. “Under the bareboat charter, Grupo R has the right to purchase the rig at pre-agreed prices during the term of the bareboat charter. After the fifth year, FELS Asset may, at its discretion, put the rig to Grupo R at a pre-agreed price.”

The rig, which is a KFELS B Class designed for water depths of up to 400 feet, will be deployed directly to offshore Mexico, under an integrated drilling contract Grupo R’s parent IPC has secured with Mexican state oil company Pemex for offshore wells, Keppel said.

Chris Ong, CEO of Keppel O&M, called the deal a “win-win.”

“FELS will be able to deliver the rig at full value; Grupo R will be able to lease the rig to begin operations in Mexico; and Keppel O&M will benefit from acquiring a quality rig at attractive commercial terms while generating regular and predictable cash flows from the charter at a
good rate of return,” Ong said in the statement.

Ong added that Mexico would need more high-specification rigs, such as the KFELS B Class, as it develops its oil and gas reserves, with the company already delivering 10 rigs to the country.

Mexico has been looking to boost its exploration and production activity as its oil production is being depleted faster than its replenishment, the filing said.

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