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Floatec signs letter of intent to build oil platform in Brazil for Petrobras, Chevron

 

By EMILYN YAP



The project is reportedly worth US$1.1 billion but Floatec - the partnership between Keppel Offshore & Marine and J. Ray McDermott - has not officially clinched the contract.

'The contract is expected to be signed at a later date,' Keppel Corp announced yesterday. The letter of intent 'is not expected to have material impact on the net tangible assets or earnings per share of Keppel Corp for the current financial year'.

According to reports last month, Floatec had submitted a bid to build a P-61 Tension Leg Wellhead Platform for the Papa Terra heavy oil field in Brazil. The Papa Terra joint venture involves both Petrobras and Chevron.

Floatec was said to have beaten the only other bidder, Mitsui Ocean Development & Engineering Co (Modec). Some analysts believed that Floatec was in a good position to win the job.

The latest tender exercise was Petrobras's second attempt at awarding the oil platform deal. It first called for a tender late last year, which reportedly drew a US$1.96 billion offer from Floatec and a US$1.72 billion offer from Modec, among others.

The high bids, which came at a time of falling oil prices, led Petrobras to cancel the tender. According to a Sept 4 AmResearch report, Petrobras held talks with bidders and scaled down the project before calling for a re-bid.

The year has been particularly dry for rig builders because of the economic downturn. For instance, Keppel Corp's offshore and marine division did not win any orders during the second quarter.

'Since the beginning of the year, Keppel has secured just below $1 billion in new orders,' said the AmResearch report. 'Assuming a 50 per cent effective stake, this P-61 project could raise Keppel's new orders to $1.7 billion, which is still below our FY09F assumption of $4 billion.'

UBS Investment Research reckons that Keppel Corp could derive more benefits from the Floatec tie-up, which was set up to design, build and deliver deepwater floating production systems.

'Floatec is a very promising joint venture for Keppel, seen as contract driver,' it said in a Sept 3 report. 'This is especially in light of BP's large Tiber discovery in the US Gulf of Mexico, which we expect will require precisely the type of deepwater production platforms Floatec has focused on developing for the last four years.'

Keppel Corp shares rose two cents yesterday to close at $8.17.

 

 

 

A JOINT venture linked to Keppel Corporation has signed a letter of intent to build an oil platform for energy giants Petrobras and Chevron.

 

Sale of SPC generated $1.47B cash, Profit about $615m.

KLL rights took up $375m. ....balance cash = 1,470 - 375 = $1,095m

Tainjing Eco City project is estimated at RMB 40B....or approx S$8B. Although this investment will spread over several years, this will be a BIG hole for KepCorp.

Hope it works out fine and not turn out to be another Suzhou fiasco.