Keppel profitable. Offshore division breaks even

Singapore’s industrial conglomerate Keppel Corporation posted a revenue of S$1,6 billion for the third quarter of 2017, an increase S$158 million or 11% above that of 3Q 2016.

However, revenue from the Offshore & Marine Division, Keppel is mostly famous for, declined by S$136 million to S$380 million, 25 percent down from last year’s S$516 million because of lower volume of work.

The group net profit as a whole was S$291 million in the quarter, an increase versus 3Q 2016 S$225 million.

However, most of this comes from the company’s property division, S$198 million, and zero from the Offshore and Marine business, which reported a break-even result. The rig building business had posted a profit of $11 million in 3Q2016.

According to the CEO, Loh Chin Hua, faced with the global sector downturn, the offshore and marine business has been “rightsizing its operations” for what is expected to be an extended slowdown.

Keppel O&M’s headcount now stands at about 16,000, compared to more than 36,000 at the start of 2015.

Loh Chin Hua, Keppel CEO, said: “The Division will continue to focus on delivering its projects well, exploring new markets and opportunities, investing prudently in R&D and building new capabilities to position itself for the upturn. The Division is also actively capturing opportunities in production assets, specialised vessels and the growing gas market and exploring ways to repurpose its technology in the offshore industry for other uses.”

In the year to date, by September 30, the division has secured new contracts of about S$1 billion, mainly for newbuild dredgers and LNG-related vessels, as well as the conversion of Floating Production Storage Offloading units, Keppel said.

In the first nine months of 2017, Keppel O&M delivered seven major projects, namely four FPSOs, a semi, a subsea construction vessel and a crane vessel.

The Offshore & Marine Division’s net order book, excluding the Sete rigs, stands at $3.9 billion.

Looking ahead, when it comes to the offshore business, the CEO said there appears to be growing optimism on a nascent recovery in the offshore market, fuelled by the momentum in mergers and acquisitions, as well as recent secondary rig transactions.

“However, with continuing low utilization rates and a large supply overhang in the jack-up market, it will take time before we can expect to see orders for newbuild jack-ups. In the meantime, Keppel continues to seek opportunities in other markets, including production assets, Jones Act vessels, as well as LNG-related solutions,”  Loh Chin Hua  said.

Talking about the other, non offshore drilling markets, the company has recently delivered the Hilli Episeyo FLNG unit, the first unit of the kind to start production in Africa. This is also the world’s first converted Floating Liquefaction (FLNG) vessel.

Offshore Energy Today Staff

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