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Lamprell plc (LAM)

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Friday 27 November, 2015

Lamprell plc

Trading update

RNS Number : 1432H
Lamprell plc
27 November 2015
 

 

 27 November 2015

 

LAMPRELL PLC
("Lamprell" or "Company" and with its subsidiaries the "Group")

 

TRADING UPDATE

 

Strong operational performance and on track to deliver 2015 results in line with previous guidance

 

Lamprell (ticker: LAM), a leading provider of fabrication, engineering and contracting services to the energy industry, issues the following trading update for the period from 27 August 2015 to date.

 

The Group continues to deliver strong operational performance across all of its facilities. All current projects are progressing well and Lamprell's yards are seeing high levels of activity.  In the last few weeks the Company successfully completed the load out of the first pipe racks for the UZ750 project, which will be installed in Abu Dhabi, with other phased deliveries to be made in the coming months. This project also achieved a major milestone by reaching two million manhours without a day away from work case, with the Jebel Ali yard now having operated for more than three years without a single day away from work case. The Group has seen further awards from Petrofac and as a result the original contract award of 26 pre-assembled racks has now grown to a total of 45 pre-assembled racks, units and modules.   

 

There are currently seven concurrent jackup rigs being constructed in the Hamriyah yard, a record for the Group, which was made possible following the recent completion of the yard optimisation measures. The implementation of Project Evolution is progressing well, with most of the activities completed and the remainder to be delivered in early 2016. In November the panel line achieved its full run-rate of six panels a day. The savings and efficiency benefits resulting from this investment programme are contributing to maintaining the Group's competitive position, by offsetting some of the pressure on margins experienced in the currently challenging environment worldwide in the oil & gas services sector.

 

The Group remains on track to deliver 2015 results in line with previous guidance. As previously indicated, Lamprell's results for 2015 will be heavily weighted towards the second half of the year due to the phasing of construction. As a result, over the last few months, the Group has increased its project workforce by approximately 1,500 people in line with the increased activity.

 

The rig refurbishment segment, as previously reported, is experiencing modest levels of new awards reflecting subdued levels of activity as compared to last year. Separately, our clients have been using Lamprell's facilities to stack their rigs, with a total of eight rigs currently located across our yards. In addition, Lamprell has started the process of marketing its first land rig based on its own proprietary design. There has been considerable interest in the rig and the Group will be giving demonstrations of its capabilities to clients during the coming months.

 

The Group has maintained its strong pipeline with high levels of bidding for new work, although the number of projects proceeding to award has suffered from the current market challenges. Whilst Lamprell's overall bid-to-win ratio has remained healthy throughout the year, the number of awards has slowed down across the sector, which has impacted the speed of the conversion of the pipeline into backlog. The Group continues to view its exposure to the Middle East region as an important factor in its current and near-term business performance, and is targeting a number of major regional projects for conversion into backlog.  The Group recently agreed with its largest client, the National Drilling Company of Abu Dhabi ("NDC"), to extend the outstanding two options and a new additional one, on its next jackup rigs, now due to expire at the end of the first quarter of 2016.

 

The search for a new Chief Executive Officer to replace James Moffat following his planned retirement in June 2016 is progressing. The Board will make further announcements in this regard in due course.

 

 

James Moffat, Chief Executive Officer, Lamprell, said:

 

"While Lamprell isn't immune to on-going headwinds in the oil & gas markets, we are pleased to see that our early implementation of the efficiency measures under Project Evolution has positioned the Group to be competitive, which will be key for our future success. These actions have allowed us to retain and even build our project workforce, improve our efficiency levels to maintain operational performance, and remain commercially competitive in an environment of increased pricing pressure. From this position of relative strength, we remain positive about Lamprell's longer term prospects as the pipeline is strong with a firm focus on conversion."

 

 

The Group's Full Year 2015 financial results are expected to be announced on 23 March 2016.

 

- Ends -

 

 

Enquiries:

 

Lamprell plc

 

John Kennedy, Executive Chairman

+971 (0) 4 803 9308

James Moffat, Chief Executive Officer

+971 (0) 4 803 9308

Tony Wright, Chief Financial Officer

+971 (0) 4 803 9308

Natalia Erikssen, Investor Relations

+44 (0) 7885 522989



 


Tulchan Communications, London


Martin Pengelley

                         +44 (0) 207353 4200





 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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