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Cameron Selling Jack-up Rig Business for $100M

Houston's Cameron International Corp., which last week agreed to a buyout by Schlumberger Ltd., is selling its offshore jack-up rig business to the U.S. subsidiary of Keppel Offshore & Marine for $100 million.

The oilfield equipment manufacturer agreed to sell its suite of jack-up rigs to Keppel Offshore & Marine USA Inc. The deal is an "opportune and strategic acquisition," Keppel CEO Chow Yew Yuen said.

Last week Schlumberger Ltd. agreed to buy Cameron for $14.8 billion to expand its technology portfolio and offer the first "complete" drilling and production systems (see Daily GPIAug. 26).

Included in the transaction announced Monday are Cameron's Letourneau jack-up rig designs, which offer offshore rigs with legs that are lowered to the seabed from the operating platform. The rigs usually work in water that is only a few hundred feet deep. Also included in the sale is the rig kit business and associated aftermarket services. The rig kits include jack-up leg components, elevating units/jacking systems and cantilever/skidding systems. Support equipment such as cranes and anchor winches are also options in the rig kits.

Keppel previously built 16 rigs using the Letourneau designs. By acquiring about 100 jack-ups and the designs, Keppel would be able to broaden its offerings in an "intensely competitive" market, Yuen said.

Keppel, whose corporate offices are in Singapore, also would gain access to customers that need help maintaining and repairing the rigs worldwide, as fleet owners look for ways to extend the life of their equipment in service. Keppel Offshore & Marine designs, constructs and repairs rigs, as well as conducting ship repairs and conversions.

"With the current low oil price we have a seen a slowdown in newbuild rig orders," Yuen said. "Rig owners are instead looking at repairing and upgrading their current fleet. We believe that we can make best use of our after sales service infrastructure to service rigs of both the Letourneau as well as Keppel FELS designs," which would be more cost effective.

The shallow water offshore market is challenging, according to Hercules Offshore Inc. CEO John Rynd. The Houston oilfield services contractor filed a prepackaged bankruptcy plan in mid-August (see Daily GPI, Aug. 17).

"The offshore drilling market is going through what is becoming one of the most challenging downcycles our industry has ever seen," Rynd said during a second quarter conference call in late July. "In a nutshell, there will be too many rigs facing too little work for the foreseeable future."

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