Keppel FELS rejects contract termination request from Awilco Drilling

The company denies allegations on breaches.

Keppel FELS, a wholly-owned subsidiary of Keppel Offshore & Marine (KOM), has denied allegations by wholly-owned subsidiary of Awilco Drilling PLC, Awilco Rig 1, purporting to terminate the contract for the construction of a drilling rig worth about $590.71m (US$425m).

Awilco Drilling claims that this was allegedly caused by certain breaches relating to the project management, schedule, resourcing and compliance. Keppel FELS is currently considering its legal options and evaluating potential financial impact in consultation with its advisors.

The notice came shortly before the next payment instalment of $44.3m (US$31.875m) due from Awilco under the contract on 9 June, which was previously deferred in March 2020 at Awilco’s request.

Under the terms of the contract, an effective termination by Awilco might entitle it to return approximately $75.05m (US$54m) of payments already made with interest, or to pay for the work done by Keppel FELS and take over the rig.

The company has further reserved all its rights under the contract, including the right to retain the instalments already received and to seek compensation for the work done to date in the event that Awilco defaults in the payment of the 9 June instalment.

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