Keppel to add finishing touches to Noble Dave Beard. Keppel Offshore & Marine (Keppel O&M), through Keppel FELS Brasil SA (Keppel FELS Brasil), announced the award of contract from new customer, Noble Drilling (Noble), for the completion of an ultra-deepwater semi rig, Noble Dave Beard (the Beard). The contract requires Keppel FELS Brasil to perform mechanical completion of the Beard, as well as assist in the commissioning and installation of customer specified equipment. Upon its completion, the Beard will be chartered to Petrobras for work in offshore Brazil.

A check on Noble's website revealed that Noble first awarded Dalian New Shipyard in China for the construction of this semi newbuild in 2005, with expected delivery in Dec 2008. However, the Chinese yard failed to deliver as per schedule and Noble is currently in discussions with Petrobras on potential penalties. While we do not think this has any impact on Keppel's contract with Noble, we believe Noble could have engaged an established yard, like Keppel, to perform the finishing touches to the Bearddue to Keppel's reputation, track record and the time urgency. We opine Keppel FELS Brasil's yard located in Angra dos Reis, near Noble's customer, Petrobras, gave them the edge over Sembcorp Marine, though the latter previously secured Noble's two semi submersible conversion contracts, Noble Danny Adkins and Noble Jim Day.

Also secured two other contracts. Keppel O&M, through Keppel Shipyard, also secured two other contracts. The first contract was from long-standing customer, Bumi Armada, for which Keppel Shipyard would be building a derrick lay barge for pipe laying operations in waters of up to 100m in depth, while the second contract was from Single Buoy Moorings to install four new modules and modify the existing topsides and turret.

No changes made to our estimates, recommendation stays at NEUTRAL.We have made no changes to our earnings estimates as the three contracts totalled S$300m vs. our Keppel's new contract assumptions of S$2.2b for FY09. Our recommendation stays at Neutral, with a slight revision to our target price to S$4.55 (from S$4.48 previously), following adjustments to our sum-of-the-parts valuation.