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Lamprell Backlog For Oil Rig Contracts At Record High

Lamprell Backlog For Oil Rig Contracts At Record High

Net profit up 11 pct to $73.8 mln; Bid pipeline $5.2 billion at end-Feb; EBITDA up 28.5 pct to $100.8 mln;p Shares up 4.5 pct

March 26, 2012 4:02 by

Oil rig maker Lamprell said on Monday its backlog of contract bids was at a record high as strong oil prices boost confidence in the sector.

The United Arab Emirates-based firm said it saw opportunities in Saudi Arabia, Iraq and Kurdistan this year and that the new-build area of its business, where revenues more than tripled in 2011, offered further growth.

“What is extremely pleasing is that our bid pipeline is at a high of 5.2 billion dollars, so we’re actually seeing strength continuing across the board in virtually all our business sectors,” Chief Executive Nigel McCue said.

“This inevitably dovetails in with the oil price, which is still very strong and certainly I’m bullish on the oil price.”

The price of oil has risen by 19 percent since mid-December, fueled by tensions between the West and Iran over its disputed nuclear programme, to trade at around $125 a barrel.

The firm is currently bidding on a number of projects in Iraq and Kurdistan and is close to completing a new joint venture with a prominent Kurdistan company, McCue said.

London-listed Lamprell’s upbeat outlook is underpinned by its existing backlog, Oriel Securities analystNick Copeman said, but the company faces competition from other firms chasing the same types of contract.

“I can’t see any issues today but it’s about demonstrating a) that you can win stuff and b) you can get the right pricing to make money from it,” he said.

Lamprell said 2011 net profit rose 11 percent to $73.8 million, before exceptional charges related to its acquisition of Norway’s Maritime Industrial Services Co (MIS), which amounted to $10.5 million.

The company’s acquisition of MIS had increased Lamprell’s capacity by 68 percent, McCue said, and added that the company was not seeking more acquisitions this year.

Lamprell also has around 25 percent of the global market in building liftboats for wind farms, which are used to transport equipment offshore and install turbines. McCue also sees growth for the company in this sector.


Lamprell, which started its first jackup rig conversion in 1974, said although its refurbishment business slowed in the second half of 2010, there were now signs of activity in the sector, driven by an upturn in the Saudi Arabian market.

Revenue rose 128 percent to $1.15 billion, with revenue from new-build projects accounting for $790 million. The firm’s order book stood at $1.2 billion at the end of 2011.

The company said earnings before interest, taxes, depreciation and amortisation for 2011 were $100.8 million, a 28.5 percent increase from the year before and ahead of consensus estimates of $91.4 million provided by the company.

Lamprell’s shares were 4.5 percent higher at 351 pence at 1005 GMT, having risen 18 percent since the beginning of the year. Oriel reiterated its ‘Buy’ rating on Lamprell and Copeman said if the firm wins more contracts the shares could rise.

Lamprell is proposing a final dividend of 8 cents per share, down from 9.5 cents last year when the company paid out more following a one-off exceptional gain.

By Clare Kane

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