Rig-builder Lamprell swung to a small profit of US$1.1 million in the first half but said its bid pipeline for 2018 jumped to $3.1 billion in a market that will remain “challenging.”
The UAE-based shipyard operator’s revenues dropped to $159.2 million in the first half of 2017 compared to $451.3 million in the same period a year earlier, when it made a loss of 4.4 million.
Despite significant cost cuts, Lamprell was hit by continued margin pressure
Its order backlog fell to $300 million at the end of June 2017 compared to $393 million at the end of 2016.
The builder said its bid pipeline increased to $3.1 billion at the end of June this year compared $2.5 billion at the end of 2016.
Lamprell said the increased bid pipeline was “underpinned by opportunities in core markets as well as new strategic initiatives in the renewables and EPC sectors; while the increased levels of bidding activity are encouraging, we do not expect to see revenue growth from potential contract awards until 2019.”
CEO Christopher McDonald said Lamprell continues to be well positioned with a strong balance sheet, and the company’s strategy is designed to support near-term resilience and secure long-term sustainable growth.
“The business continues to deliver solid results broadly in line with our expectations despite the challenging market environment,” said McDonald. “Our balance sheet remains robust due to the combination of the efficiency measures we have taken over the past two years and our tight cost control measures. This places us in a good position to be cost competitive and maintain our discipline in bidding for new work.”
Earlier this year, Lamprell signed up with Saudi Aramco, Bahri and Hyundai Heavy Industries to create a major new maritime yard in Saudi Arabia, which CEO McDonald said will establish a significant long-term foothold in the largest and one of the most dynamic oil and gas markets.
The joint-venture will sign an offtake agreement for construction of 20 offshore jackup drilling rigs over a 10-year period as well as provision of MRO services for jackup drilling rigs. A significant components part of the first two jackup drilling rigs is expected to be subcontracted to Lamprell’s yard in the UAE in 2018 before the Saudi maritime yard becomes operational.
“The project will further strengthen our position in the region and will provide exposure to significant new opportunities in a key market for the energy industry,” he said.
Lamprell, which has fabrication facilities in Hamriya, Sharjah and Jebel Ali, delivered three rigs in the first half of this year; two jack-up rigs were delivered to NDC and one rig was delivered to Shelf Drilling. It also delivered 45 modules to Petrofac for use on the Upper Zakum project in Abu Dhabi.