Singapore’s Keppel Corp has secured five-year bareboat charters for two legacy jack-up rig newbuildings in deals worth a total of SGD 135m ($97.2m).

The two KFELS B Class rigs have been chartered to ADES Saudi Ltd from the fourth quarter of 2022. They will be employed in Saudi Arabia.

Rig markets have continued to tighten in 2022 with overall utilisation now at its highest level since 2015 and day rates rising noticeably for jack-ups and floaters, according to Clarksons.

The broker says the outlook for the jack-up market is optimistic, with demand expected to increase across 2022/23, underpinned by the strong activity of national oil companies.

“We continue to see strong demand for our rigs, and are actively pursuing more charters, as well as sales opportunities,” said Chris Ong, chief executive of Keppel Offshore & Marine (O&M).

“Our early success at securing new bareboat charters will not only enable us to start generating revenue and cash flows from the legacy assets but also improve the overall marketability of our rigs as we build up their operational track records.”

In April, Keppel O&M announced the termination of newbuilding rig contracts with Clearwater Capital Partners and Fecon International Corp.

The company said that two of these rigs FELS Asset Co 5 and FELS Asset Co 6 will be used in turn to fulfil the latest bareboat charter contracts.

Ownership of the legacy rigs is set to be transferred to a separate company as part of Keppel Corp’s recent deal to merge its O&M activities with those of Sembcorp Marine.

Keppel Corp will sell the legacy rigs and associated receivables for just over SGD 4bn to Asset Co which is jointly controlled Singapore-listed private equity fund company TIH Limited and Singapore sovereign wealth fund Temasek Holdings.

Keppel will hold a 10% equity interest in Asset Co and receive vendor notes and perpetual securities.