Offshore rig builder Lamprell expects next year to be a difficult one – even more than the current one – as it on Friday lowered revenue guidance for 2017.
The UAE-based company posted an almost a break-even profit for the first half of the year, coming up with a net income of $1.1 million, an improvement from a net loss of $4.4 million a year ago.
Revenue fell significantly to $159,2 million, down from $451 million a year ago amid adverse market conditions, especially in the jack-up rig construction segments, and low levels of orders in 2016 and so far in 2017.
Lamprell continues to expect the full year 2017 overall to be a difficult one, and has lowered the full year revenue guidance to $370-390 million, as a result of the slow pace of the new major contract awards.
Revenue expectations for 2018 is even lower, down ten percent compared to 2017, despite a perceived improvement in market condition.
“We do not expect to see the potential improvement in market conditions impacting our business in 2018 due to the lag between improved market conditions and project awards in our business streams.We are encouraged by increased levels of bidding activity but do not expect to
see revenue growth until 2019 on the basis of such awards in late 2018. ” the CEO Christopher McDonald Chief Executive Officer.
All Eyes on Saudi Aramco
Lamprell has this year signed an agreement to become a part of a joint venture company with Saudi Aramco, Bahri and HHI that will establish and operate a maritime yard in the Kingdom of Saudi Arabia.
As part of the deal Saudi Aramco and JVCo will sign an offtake agreement for construction of 20 offshore jack-up drilling rigs over a 10-year period as well as provision of MRO services for jackup drilling rigs. The offtake agreement allows Saudi Aramco to nominate its newly-formed Saudi drilling joint venture between Saudi Aramco and Rowan as the offtaker.
According to Lamprell, until the maritime yard is operational, JVCo is expected to subcontract some of this work, with significant component parts of the first two jackup drilling rigs expected to be subcontracted to Lamprell’s yards in the UAE in 2018.
Furthermore, the company’s CEO said that one of the key Group priorities was s the strategic partnership with Saudi Aramco,”one of the few oil and gas
majors still committed to rig commissioning in the current market.”
“The joint development of a major maritime facility in the Middle East region will provide new revenue streams for Lamprell and the Group is also in the process of pre-qualifying to bid for a long-term agreement with Saudi Aramco. The outcome of this highly competitive process is expected to be announced in the coming six months. If successful, Lamprell would have access to a significant project pipeline of non-rig work – awards under the long-term agreements with existing contractors amounted to USD 4 billion in 2016 alone,” McDonald said.