Keppel Fels, Ensco Team On $130M Rig

Keppel FELS Limited, the offshore arm of Keppel FELS Energy & Infrastructure Ltd., and ENSCO International Inc. have entered in an alliance agreement to build, own and operate an enhanced KFELS MOD V jack-up rig, with an estimated value of US$130 million. Under the terms of the agreement, Keppel FELS and ENSCO will own and fund 75% and 25% of the rig, ENSCO 102, respectively. Keppel FELS is responsible for the engineering and building of the rig, while ENSCO provides procurement services and is responsible for the project management during the construction of the rig. ENSCO will have the option to purchase the remaining 75% interest in the rig from Keppel FELS until two years after delivery of the rig. The option price for the period up to the delivery of the rig will be based on the final price payable to Keppel FELS for the construction of the rig. Thereafter, it will be subject to an agreed escalation in each of the two years remaining in the option period. By delivery, a joint venture company in which Keppel FELS and ENSCO will have 75% and 25% interest respectively, will be established to own the rig. ENSCO will manage the rig for the benefit of the joint venture company, until the earlier of the second anniversary of the rig delivery or the exercise of ENSCO's purchase option. ENSCO 102 has been under construction at Keppel FELS' Pioneer yard in Singapore since March 2000, and is expected to be delivered in the first quarter of 2002. Mr Carl Thorne, ENSCO's Chairman and Chief Executive Officer said, "This joint venture with Keppel FELS is in keeping with our commitment to carefully and intelligently increase our presence in the premium jack-up market. As this rig is already under construction, we will not be adding to overall supply, while still enhancing our market leadership position. Mr Tong Chong Heong, Managing Director of Keppel FELS said, "Keppel FELS has developed a close business relationship with ENSCO over the years. Our partnership on the ENSCO 102 is testimony of their confidence in us, and in the quality of our design which is well-accepted by international drilling contractors." The new rig will be an upgraded version of the ENSCO 101, which Keppel FELS successfully built and delivered in March 2000. It can work in water depths of up to 350 feet in the North Sea, and water depths in excess of 400 feet in environments such as the Gulf of Mexico or Southeast Asia. Like ENSCO 101, ENSCO 102 will have an advanced high capacity rack and pinion jacking system pioneered by Keppel FELS' Research and Development Team, Offshore Technology Development, and will feature the latest drilling technology. Keppel FELS is a leading shipyard for the global offshore oil and gas industry. Operating from well-equipped yards in Singapore, the United States and Azerbaijan and Brazil, it offers cutting-edge design engineering and custom-made construction for a whole range of offshore vessels. It is the offshore arm of Keppel FELS Energy and Infrastructure Ltd which is also engaged in two other core activities of energy and infrastructure development.