KS Energy commissions the construction of two drilling rigs worth USD 388 million

The two rigs are based on LeTourneau WORKHORSE®Class design. The addition of the two new rigs will increase the fleet-size to 12 rigs. Cost of rigs to be funded through internal sources and borrowings. LeTourneau will be supporting COSCO Shipyard on this project

SINGAPORE, 26 May 2011 – Mainboard listed KS Energy Ltd (“KS Energy” or the “Group”) announced that it has contracted COSCO Nantong Shipyard Co. Limited (“COSCO Shipyard”) to build two new jackup rigs. The total project cost is estimated at US$388 million (approx S$483 million), which includes project management, drilling and handling tools, spares and capitalized interest.

The construction will build two drilling rigs based on the LeTourneau Technologies, Inc. (“LeTourneau”) WORKHORSE® Class design with expected delivery date of 27 months and 32 months respectively, from the contract effective dates.

When completed, both rigs will be capable of operating in water depth of up to 400 feet and a rated drilling depth of 35,000 feet. Each rig can also accommodate 150 personnel on board.

“To be a global player in the drilling business, we have to have a large fleet to cater to different market needs. The addition of these two rigs will increase our fleet to 12 rigs, which includes 4 jack-up rigs,” said Mr. Kris Wiluan, Chairman and CEO of KS Energy.

Presently KS Energy has 6 land rigs, a lift boat, 2 jack-up rigs and an accommodation rig. Two of its jack-up rigs – the KS MedStar and the KS Endeavor are drilling in Egypt and West Africa.

This latest move is part of the Group’ strategy aimed at growing and expanding its drilling operations. Following the consolidation of its distribution business last year, the Group is now moving towards consolidating its drilling business.

sgxstockpicker says: The new orders are of good specifications and are good for KS Energy's drilling business. However, from Keppel Corp's announcement, there are other players who have taken the opportunity to upgrade or expand their jackup rig fleet. Since it takes about 2-4 years to complete the rig, the material impact will also take just as long to be reflected in KS Energy's financial performance.

Show me where the money will go, not where it has gone

The following is an abridged version of what Teh Hooi Ling wrote on her "show me the money" column. I have read her earlier article on the use of the Piotroski F-score and I think that beginners who can try to come up with such a scoring matrix, will make a positive step in improving their investing process.

Most of the companies that she has listed out as a result of using the F-score, are all very big companies. This will end up neglecting to include small cap stocks that have the potential for supernormal returns, volatility notwithstanding. That said, it is possible while during portfolio construction to use a separate screen altogether when allocating money for small caps. To be sure, Teh has written on how to select small cap stocks before.

In search of good long candidates (Link here)