UPDATE: Lamprell Gets $317M Abu Dhabi Pact For Two Jackup Rigs

(Rewrites, adds analyst comments and background.) By Iain Packham Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Lamprell PLC (LAM.LN) said Wednesday it has received a $317 million contract to provide jackup rigs to National Drilling Company, or NDC, Abu Dhabi with options for a further two rigs, worth $158.5 million each and exercisable up to 12 months from Aug. 1. Each option includes additional optional equipment orders valued at $12.6 million. The provider of specialist engineering services to the international oil and gas and renewables industry said work on the first rig will start Aug. 1 with delivery scheduled for the middle of the second quarter 2012. One of the rigs being built for NDC was originally ordered by Norway's Riginvest in June 2008 for delivery in 2010. The value of the contract at the time was $186 million but Riginvest ran into financing issues and work on the rig was delayed, leaving Lamprell with a hole in its order book. Lamprell will repay Riginvest a portion of the contract advance it initially received upon termination of the original agreement which will end when the contract between NDC and Lamprell is signed. The cancellation of the Riginvest contract will create a material one-off accounting gain in the company's financial statements for 2010, Lamprell said, adding that the amount cannot be determined at this stage. The rigs will consist of triangular hulls and three 310 foot truss type legs per rig, allowing drilling in depths of up to 200 feet of water with a rated drilling depth of 30,000 feet. J.P. Morgan Cazenove analyst Andrew Dobbing said putting this problematic legacy contract behind it will enable Lamprell to move into a new era of significant potential earnings security and growth, adding that he had anticipated a jackup contract this year and as such has left his 2010 forecasts unchanged. Dobbing has penciled in revenue of around $100 million from this contract in 2010 and $130 million in 2011. Based on announced contracts he estimates that 66% of revenue for 2010 ($431 million), 71% for 2011 ($509 million) and 47% for 2012 ($559 million) are now covered. Dobbing said that while the contract value is lower than the original $186 million for Riginvest, on a like-for-like basis it should be assumed the $12 million additional equipment will be included, and these are smaller units. Shares at 0924 GMT up 13.9 pence, or 6.7%, at 260.0 pence outperforming a slightly lower FTSE 250 Market--down 0.38% -By Iain Packham, Dow Jones Newswires; 44-20-7842-9269; iain.packham@dowjones.com (END) Dow Jones Newswires July 28, 2010 05:27 ET (09:27 GMT)