UAE-based offshore oil rig builder Lamprell has yet to receive a firm order for the construction two jack-up rigs for which it signed a letter of intent in December 2018.
As previously reported by Offshore Energy Today, Lamprell in December 2018 received a Letter of Intent for the subcontract of two newbuild jack-up drilling rigs from IMI.
IMI a joint venture responsible for the management of the multi-billion dollar maritime and offshore yard being built in Saudi Arabia’s Ras Al-Khair. The members of IMI are Saudi Aramco, Lamprell, Bahri, and Hyundai Heavy Industries.
The letter of intent signed late in 2018 stipulated that Lamprell would be awarded the contract for the construction and delivery of two jack-up drilling units.
The rigs would be built collaboratively between the IMI and Lamprell for delivery to IMI’s end client ARO Drilling for operations offshore Saudi Arabia.
The plan was for Lamprell to carry out most of the fabrication work for both jack-up rigs at its Hamriyah yard, in the United Arab Emirates while maximizing work in Saudi Arabia to approximately 15% of the scope of work.
However, in its results presentation on Thursday, Lamprell said the firm order for the two rigs has still not been placed.
“Due to the prolonged downturn in the oil and gas industry and specifically the slow pace of recovery for day rates in the drilling industry, IMI continues to review exact technical and commercial requirements and the timing for an award of the first two rigs with its client, and we will update the market as and when awarded,” Lamprell said.
Revenue guidance narrowed.
Presenting its first half 2019 results on Thursday, Lamprell reported revenue of $106,4 million compared to 1H 2018 revenue of $155,1 million. Of the total revenue, 47% is attributed to the oil & gas business stream and 53% to renewables (jackets for offshore wind farms).
Lamprell’s net loss widened to $51,9 million. For comparison, 1H 2018 net loss of was $21.9 million.
“The acceleration of progress on the Moray East [ offshore wind ] project will result in a stronger revenue generation in the second half of the year. The EPCI segment, which currently includes the East Anglia One and Moray East [ offshore wind ]projects, generated USD 61.9 million,” Lamprell said.
Revenue from rig refurbishment projects amounted to $13.2 million. The contracting services businesses contributed $31.3 million to total Group revenue.
Lamprell has reminded that, due to ongoing delays with a number of core project awards, the company’s 2019 revenue guidance was narrowed to USD275-350 million, with 100% of the bottom end of the range covered.
“The high end of the range is contingent on new awards. Further details relating to the uncertainties are set out in Note 2.1. We anticipate further year-on-year revenue growth in 2020 and will be in a position to provide a revenue forecast range as we gain more clarity on awards in the next six months,” Lamprell said.
The company has also said it has we have submitted multiple bids with Saudi Aramco, since being added to the oil giant’s Long-Term Agreement program (LTA) in November 2018.
“As a new entrant to the program, we expect any initial awards to be of smaller scope as client gains confidence in our capabilities. Whilst we have no visibility or influence on timing of awards, we anticipate to see some news flow from early 2020 onwards,” Lamprell said.
Also, while hoping for the oil sector orders to materialize, Lamprell is also boosting its renewable energy capabilities, as it expects a significant number of offshore wind farm projects to be sanctioned over the coming 5-10 years.
Citing the expected offshore wind growth, the company said it has continued investing in equipment and operational set-up of the Hamriyah facility, to be more efficient and productive.
“These improvements will help to make Lamprell more competitive when bidding on new projects in the renewables sector and ensure better control throughout the complex execution process,” Lamprell said.
Offshore Energy Today Staff
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