KEPPEL Corp's offshore shipyard subsidiary Keppel Fels is to start building its first drillship sans contract, but analysts say the move is a sign that a firm contract with a major offshore rigowner or operator is underway.
The group said that following positive feedback and strong enquiries from the market, its management is proceeding with the building of its "Can Do" drillship with completion targeted for 2016.
Keppel said a further announcement will be made when a firm contract is secured for this drillship unit.
Unlike more conventional designs which focus on exploration drilling, Keppel's Can Do drillship is to be a state-of-the-art deepwater exploration, development and completion drilling vessel.
Macquarie, for one, expects Keppel to announce new drillship contracts early next year and has built in two drillship orders in its 2014 forecast new orders for the company.
In a report published on Dec 12, it said: "Once Keppel signs drillship orders with major oil companies or contractors, we believe it will put a dent in the Korean yards' dominance of the segment."
Thus far, Keppel has focused on building jack-up rigs and semi-submersibles drilling rigs.
Keppel Offshore & Marine's chief operating officer and chief executive-designate Chow Yew Yuen said of the company's foray into drillships: "As with all our market-established proprietary designs, our new Can Do drillship design was developed in close consultation with customers, major oil companies and vendors. The design is capable of handling next-generation 20,000 psi blowout preventers."
Among Keppel's regular clients which own and operate drillships are major US-listed drilling contractors Ensco, Noble and Transocean.
Ensco's entire fleet of 10 drillships was built by Korean yards; nearly its entire fleet of series Ensco 8500 semi-submersible drilling vessels, was, however, built by Keppel Fels.
Noble's new fleet of three Bully-class drillships have undergone extensive upgrades at Keppel's Brazil shipyards from 2009, in a job that would have given the group a track record in drillship upgrades.
A newbuild contract for a drillship can be worth between US$550 million and US$750 million.
As a pricing indication, Transocean recently placed a US$725 million order for a newbuild ultra-deepwater drillship with South Korea's Daewoo Shipbuilding and Marine Engineering, after being awarded a five-year drilling contract by US oil major Chevron.
Keppel has secured more than $6.5 billion in new orders year to date; its net order backlog stood at $13.6 billion as at end September.