KCA Deutag - comment

Further positive news from KCA Deutag this morning confirming our recovery thesis. KCA Deutag has entered into a 10+2yr contract for four rigs that is likely to commence in H2 2023. The value including the 2yr extension is $550m, which is c. $11.5m per rig per annum, in line with our expectations of rig revenue.

More importantly, KCA Deutag have the contract through a majority-owned subsidiary to build the four highly automated rigs. KCA Deutag will invest $100m to build the new rigs in the Sultanate of Oman. This cash investment may dampen the requests by shareholders for a special dividend of cash on balance sheet but contract wins for the engineering segment further supports valuation of the group. Overall, this announcement highlights the continued recovery by KCA Deutag.