Keppel Takes Control of Legacy Rigs Amid Global Shortage of Premium Offshore Drilling Units
Singapore— Keppel Corporation is set to reclaim full control of 13 advanced oil rigs housed under Rigco Holding, positioning itself at the forefront of monetizing these legacy assets amid a projected shortage of premium offshore rigs. This move follows the merger of its offshore and marine unit with former rival Sembcorp Marine.
Through a selective capital reduction, Keppel will cancel non-Keppel shares in Rigco, transforming it into a wholly-owned subsidiary. The transaction will give Keppel access to $843 million in cash reserves as of September, which can be deployed to complete partially built rigs or pursue strategic initiatives.
A Strategic Shift Toward Asset Management
Keppel has reiterated its intention to remain outside the offshore and marine construction business. Instead, the company is pursuing an asset-light strategy by setting up the Keppel Offshore Infrastructure Fund. This fund will manage the 13 rigs, a 49% stake in offshore vessel operator Floatel, and other related assets, while attracting external capital to scale operations.
By managing these assets, Keppel aims to generate recurring income through management fees, adding a new revenue stream aligned with its strategic goals.
Capitalizing on Market Opportunities
The timing couldn’t be more opportune. The global offshore drilling fleet is ageing due to years of underinvestment during prolonged market downturns, creating a looming shortage of advanced rigs. High costs and long lead times for new constructions make Keppel’s existing inventory of modern rigs particularly valuable.
“The increasing shortage of premium drilling rigs presents a prime opportunity for Keppel to unlock value by offering operators cost-effective and faster solutions,” says Keppel CEO Loh Chin Hua.
Half of Rigco’s rigs are already contracted, generating stable cash flows. With industry utilization rates hovering around 90% in some segments and improving day rates, Keppel is well-positioned to capitalize on surging demand.
Reducing Risks and Unlocking Value
Keppel’s enhanced control over Rigco is expected to expedite the monetization of its legacy rigs, which will help the company reduce debt, reinvest in growth, and reward shareholders. CEO Loh emphasized that this move puts Keppel firmly in the “driver’s seat,” enabling better risk management and value realization.
“Securing control over Rigco will allow us to better monetize these assets amidst improving market conditions, unlocking funds for strategic reinvestment and shareholder rewards,” Loh stated.
Outlook: A Premium Play on Rig Shortages
Keppel’s maneuver comes as the offshore rig market rebounds, with the company poised to leverage its state-of-the-art rig fleet. By combining operational control with strategic asset management, Keppel aims to position itself as a critical player in addressing the rising demand for premium offshore rigs.
This development underscores Keppel’s transformation into a nimble, asset-light operator ready to seize opportunities in an evolving energy landscape. For investors, it signals a strategic pivot that aligns with long-term growth trends in the offshore energy sector.
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