By Gerard Kreeft
Just when you thought that the drillers would be enjoying their seemingly extended prosperity—historically high day rates and a virtual monopoly on the rig market—a spoil sport has come to the party. Who? Keppel Ltd the rig-builder, based in Singapore.
In 2026, the company will be divesting 10 rigs to its new Keppel Offshore Fund which will be managed by Apollo adding approximately $928Million to their monetization plans.
KOF’s acquisition of the six rigs will be by cash from Apollo. Keppel will make 50% of the contributions to the Fund to acquire six operational rigs. An additional four rigs may be progressively divested to the Fund after their completion.
Keppel has built and delivered well over 100 offshore rigs to date, holding a major global market share for jack-up and semi-submersible rigs, though the company does not publish a single cumulative lifetime tally. Famous milestones include delivering a record 21 rigs in the single year of 2013 and completing over 50 units of just their flagship KFELS B.
Is Keppel now becoming a rig owner/player as well as a rig builder?
Mr. Piyush Gupta, Keppel’s newly appointed Chairman, has recently stated:
“ Keppel’s transformation goes further – it involves reshaping the underlying business itself, moving from an industrial conglomerate to an asset manager and operator. That is a fundamentally different kind of shift.”
Outgoing Keppel Chairman Mr. Danny Teoh when asked how he evaluated his 15-year tenure at the company stated:”Keppel is now one company. In the past, things were organised more around individual businesses…. Culture used to be shaped more strongly at the business level; today, there is much greater consistency and a stronger sense of a shared direction across the Company”.
Current Market Outlook
The Response of the Drillers
The announced Transocean/Valaris merger– an all-stock transaction valued at $5.8Billion—comes as no surprise. Leslie Cook, Principal Analyst, Upstream Supply Chain for Wood Mackenzie said, “Once finalized, Transocean will solidify their market leading position in the high spec ultra-deepwater rig market and become a top-five player in the high spec jack-up market.”
According to Rystad Energy in 2026-2027 the demand for benign floaters and drillships will increase to 120 units. The bulk will come from the 96 units listed below:
Noble Drilling with 25 deepwater floaters and drillships;
Odfjell Drilling with 8 deepwater units, owned or managed;
Saipem with 6 deepwater units;
Seadrill with 17 units;
Transocean+ Valaris with 42 units(33 drillships+ 9 semi-submersibles).
The merger between Transocean/Valaris means that the new entity controls almost 50% of the deepwater rig market.
The merger will create an offshore drilling giant with a combined enterprise value of roughly $17Billion. The new combination has a combined backlog of approximately $10Billion.
The combined fleet of 73 rigs consists of 33 ultra-deepwater drillships, 9 semisubmersibles, and 31 modern shallow-water jackups.
The merger will also significantly reduce Transocean’s debt by 50%.
The company has for years struggled with a mountain of debt: from a peak of nearly $10Billion in 2018-2019; the company’s debt load in mid-2025 was $6.55 billion. While other companies had gone through a painful Chapter 11—declaring bankruptcy—Transocean refused to go that route. According to one analyst “ it was a grave mistake at the business level, and the company is still paying for it.”
With day rates at historic highs–both for the deepwater and jackup fleets—there is reason for optimism. Yet is the Keppel Offshore Fund about to become a player of merit and spoil the party? The fleet is aging and new-builds will have to be constructed in the future. Is the Keppel Offshore Fund positioning itself to become both a player and builder?
The company has stated:
“…Following a decade of almost no newbuild activity, the global drilling fleet is ageing rapidly while the significantly higher cost, longer construction lead times and more stringent financing requirements for newbuild rigs, are expected to constrain future supply. These dynamics are expected to support sustained demand for high-quality modern offshore rigs, thus creating attractive opportunities for owners of such assets.”
The rig market is a market which must be followed with more than a passing interest.
Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was founder and owner of EnergyWise. He has managed and implemented energy conferences, seminars and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia and throughout Europe. Kreeft has Dutch and Canadian citizenship and resides in the Netherlands. He writes on a regular basis for Africa Oil + Gas Report, and guest contributor to IEEFA(Institute for Energy Economics and Financial Analysis). His book ‘The 10 Commandments of the Energy Transition ‘is on sale at https://books.friesenpress.com/store/title/119734000211674846/Gerard-Kreeft-The-10-Commandments of the Energy Transition.
