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Shares of oil rig builders Keppel Corp (KPLM.SI) and Sembcorp Marine (SCMN.SI) rose on Monday as investors expect the firms to continue winning orders, especially for more technologically advanced rigs.
Shares of Keppel Corp and Sembcorp Marine rose as much as 1.9% each. At 0351 GMT, Keppel shares were up 1.4% at $11.48 on a volume of 2 million shares, while Sembcorp gained 0.6% at $5.40 with 3.1 million shares changing hands.
“The fourth quarter was a very strong quarter in terms of order wins. The whole market is bullish that this trend will continue at least in the first half of 2011,” said Jason Saw, an analyst at DMG & Partners Research.
“Premium jack-ups are in demand and utilisation is high, so everybody is rushing to build the rigs and most of the orders will probably come to Keppel and Sembcorp Marine,” he added.
Saw has a “buy” rating and target price of $12 on Keppel Corp, as well as a “neutral” call on Sembcorp Marine with a $5.30 target price.
Higher quality jack-up rigs that offer greater safety or allow faster drilling command higher day rates than conventional ones.
