Keppel has launched a program to monetize up to 10 legacy offshore drilling rigs through a newly established Keppel Offshore Fund (KOF), in a transaction valued at approximately $2.86 billion (S$3.7 billion) that will expand its funds under management and generate proceeds from non-core assets.
Under the program, Keppel will divest six operational modern jack-up rigs to the fund in 2026 for about $930 million (S$1.2 billion), while up to four additional uncompleted rigs could be progressively transferred between 2027 and 2028, subject to certain conditions.
Funds, accounts and entities managed by Apollo Global Management have agreed to invest $1.5 billion in the fund, while Keppel will retain a stake through an indirect subsidiary.
The six rigs being divested this year comprise the AD 110, AD 120, ADM 683, ADM 684, ADM 685 and ADM 686, all modern jack-up drilling rigs. The additional assets that could be transferred later include the Jasper harsh-environment jack-up, Can Do drillship, and the Nordic Winter and Nordic Spring harsh-environment semisubmersibles.
Keppel said the transaction would contribute about $930 million (S$1.2 billion) towards its 2026 asset monetization target, increase its funds under management by approximately $3 billion (S$3.9 billion), and improve its balance sheet while creating recurring fee income through management of the new fund.
The company expects to receive about $478 million (S$611 million) in cash this year from the initial six-rig transaction. If the remaining four rigs are completed and transferred to the fund, Keppel could receive an additional $988 million (about S$1.3 billion) in aggregate cash proceeds.
“This transaction marks a further milestone in Keppel’s transformation. It establishes a clear pathway for the progressive monetisation of the legacy rigs. By repositioning the six operational rigs and potentially another four rigs, within Keppel’s fund management platform, we are expanding our FUM and will earn recurring management fees.
“At the same time, through our stake in KOF, we will remain invested alongside our Limited Partner, Apollo, in a high-quality modern rig fleet, positioning us to benefit from the improving long-term outlook and tight supply in the rig market,” said Chief Executive Officer Loh Chin Hua.
Keppel noted the transaction comes as offshore drilling fundamentals improve amid high rig utilization, limited newbuild activity over the past decade and structural supply constraints that have tightened the market for modern offshore rigs.
The company said it expects to recognize an accounting loss of approximately $71.3 million (S$92 million), including the recycling of foreign currency translation losses, from the divestment of the six operational rigs in its first-half 2026 results.
The transaction remains subject to regulatory approvals and other customary closing conditions. Keppel said the remaining three legacy rigs - the DRU 1 and DRU 2 benign-environment semisubmersibles and the Sapura Raiqa semisubmersible drilling tender rig - are not included in the program and will be considered for separate monetization options.
Subscribe
