Lamprell First Half Results Beat Expectations

By Eric Haun
Thursday, August 28, 2014
Muhaiyimat project for National Drilling Company (Photo: Lamprell)

Lamprell today announced its financial results for the first half of 2014, reporting results ahead of expectations due to strong operational performance and early results from savings initiatives, generating improved margins.

Revenues rose by $125.7 million against H1 2013 as a result of the high H1 activity levels and phasing of construction activity during the period. According to Lamprell, successful rights issue and refinancing provides a strong financial platform and enables delivery of long-term growth strategy.

James Moffat, Chief Executive Officer for Lamprell, said, “Our continued focus on operational excellence has resulted in a strong first half performance that has exceeded our expectations. At the same time our safety track record has been world class. In 2014, we are delighted to have rebuilt our order book, winning significant awards from both new and existing customers. We are making good progress implementing our refreshed growth strategy based on our core markets and are already beginning to see the benefits of a stronger balance sheet. While we anticipate lower revenues in the second half of the year, we expect the outturn for the full year to be ahead of our expectations.”

John Kennedy, Nonexecutive Chairman for Lamprell, said, “Lamprell has achieved a great deal in the first half of 2014. We have delivered a strong operational and financial performance, made good progress in converting our pipeline and successfully completed a rights issue and a major debt refinancing. The business is now well-positioned to deliver on its refreshed growth strategy and to create long-term value for all stakeholders.”

Lamprell’s operational highlights

  • Strong operational performance in all core markets enhances Lamprell’s track record for project execution
  • Successful delivery of two jackup rigs to National Drilling Company, the 13,200-metric-ton production utilities and quarters deck to Nexen for use in North Sea sector and a new self-propelled jackup vessel to Seajacks
  • Largest and one of the most complex rig conversion and refurbishment projects in Lamprell’s history delivered to the client after the period end
  • Over $900 million of new awards since January 2014 including multi-rig awards from each of Ensco and Shelf Drilling, as well as an award from Petrofac for modules to be deployed in Abu Dhabi
  • As of June 30, 2014, backlog of $1.2 billion (December 31, 2013: $0.9 billion) with bid pipeline increasing to approximately $4.9 billion (December 31, 2013: $4.7 billion)
  • World class safety record continues on various projects including ten million man-hours without a lost-time incident on Nexen project
  • Project Evolution, a program to deliver material productivity improvements and cost efficiencies, is progressing well and generating some early returns

Lamprell’s current trading and outlook

  • Five newbuild jackup drilling rigs to be delivered between November 2014 and March 2015
  • Order book rebuilt and now extending out to Q2 2017
  • Continued strong demand for our core markets as demonstrated by increased bid pipeline
  • All ongoing major projects progressing well
  • Revenue expectations for FY 2014 unchanged; lower revenue levels expected in H2 2014 compared to H1 2014 due to timing of build cycles and reduced activity in onshore and offshore construction market
  • Full year outturn anticipated to be ahead of expectations predominantly due to projected continuing strong operational performance and initial savings from procurement activities
  • As previously announced, revenue for FY2015 expected to be broadly flat on FY2014 with significantly fewer major project completions in FY2015
  • Drive to target further reductions in overheads

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