Viking Offshore & Marine Limited will venture into the mainstream offshore rig-building and rig charter market by partnering Singaporean rig building veteran Mr Chan Kwan Bian to construct a drilling jack-up rig at a cost of approximately US$180 million, the company announced today.
The rig is a cantilever drilling jack-up CJ46-X100-D GustoMSC designed for use in water depth up to 375 feet and can accommodate 120 men during operation. SGX Catalist-listed Viking said its newly set up investment holding subsidiary Viking Asset Management Pte Ltd (“VAM”) has entered into a conditional Sales and Purchase Agreement to acquire a 30% – stake, valued at US$5.4 million, in Smart Earl Investment Pte Ltd (“SEI”), an investment vehicle belonging to Mr Chan, that has the rights to build the jack-up rig. The purchase consideration will be satisfied in cash and will be funded partly through the cash proceeds from the rights-cum-warrants issue completed in May 2013.
Mr Chan is a renowned industry veteran within the offshore and marine industry with extensive experiences in the rig and shipbuilding space. He was also a co-founder of Labroy Marine Ltd, a then – SGX listed offshore and marine specialist which was sold to Dubai Drydocks World LLC for S$2.4 billion in January 2008. The drilling rig will be built by China Merchant Heavy Industries (Shenzhen/Jiangsu) Co Ltd (“CMHI”), a state-owned Chinese yard with extensive experience in offshore rig building, and which, is one of the best offshore yards in the world.
Mr Daniel Lin, Executive Director of Viking and son of Mr Andy Lim, Chairman and controlling shareholder of Viking, has been appointed the Chief Executive Officer of VAM, responsible for the success of this partnership.
Mr Daniel Lin commented, “Viking has been offered an exceptional opportunity to participate in the fast growing rig building and rig charter market with an attractive proposition. The contractual terms extended to SEI and Viking give us the opportunity to build and co-own a jack-up rig without straining our cashflow and funding ability.”
Mr Daniel Lin added that, “ Through this investment, Viking has initiated its move into the mainstream offshore and marine business, in line with the asset – based strategic growth initiative it had planned for. This foray into the offshore rig market is timely to capitalize on the market view that jack-up rigs of this capacity are expected to see demand outstripping supply in the next few years.”
“Our investment and partnership allows Viking to leverage on the rig building experience and track record of our partner – people who have been there, done it successfully and still have the fire to do it again,” he further added.
The contract to build the jack-up rig is expected to complete with in 26 months, with Mr Chan’s team to provide the overall project management of the rig contract with CMHI. This also opens up the opportunity for Viking to participate in providing the complementary equipment and engineering services to the rig construction. The joint venture intends to resell or charter the rig to prospective Viking customers in the South East Asia region. The acquisition by Viking is subject to shareholders’ approval at an extraordinary general meeting to be convened.
Press Release, November 4, 2013