22 Mar 2022 14:01
22 March 2022
LAMPRELL PLC("Lamprell" and with its subsidiaries the "Group")
RESERVATION AGREEMENT SIGNED FOR MORAY WEST OFFSHORE WIND FARM PROJECT
Further to the exclusivity agreement announcement on 24 January 2022, Lamprell is pleased to announce that it has signed a capacity reservation agreement for the Moray West Offshore Wind Farm. The reservation agreement secures capacity in Lamprell's Hamriyah yard for the work as the project moves towards financial close and full contract award. Ocean Winds is developing the Moray West project. Ocean Winds is the result of a 50-50 joint venture between EDP Renewables (EDPR) and ENGIE, with a presence in eight countries.
The base scope of work is for the supply of 62 transition pieces, which includes 60 wind turbine generator transition pieces and two transition pieces for the two offshore substations, as well as for the shipping of the 62 transition pieces to a marshalling harbour in the UK.
With contractual negotiations successfully concluded, and subject to the final investment decision on the Moray West project, a full notice to proceed for this very large contract* is anticipated early in the second half of 2022.
In anticipation of this and similar other awards in the Renewables business unit, the Group has commenced a significant yard upgrade programme, including the construction of a state-of-the-art renewables production line, through which we will be able to construct jacket components, transition pieces and monopiles**, thereby expanding the Group's capacity and product offering. This major capital expenditure project is expected to double Lamprell's annual renewables revenue capacity while lowering unit production costs and materially improving margin contribution on offshore wind foundations projects.
The Group continues to assess its future financing options to deliver its strategy, improve its fabrication capacity and strengthen the Group balance sheet as it seeks to access higher margin, larger scope projects in both renewables and oil and gas end markets. The funding strategy may include additional equity, project specific financing, including small working capital facilities with Saudi banks, and hybrid facilities with a view to complete in H1 2022.
Christopher McDonald, CEO of Lamprell said:
"Having previously executed a large scope project for the Moray East wind farm, I am delighted that we have been able to offer a competitive solution for Moray West. The placing of such reservation agreements is a very positive sign of forward planning and addressing limited capacity in the offshore wind fabrication industry. We look forward to working closely with the team from Ocean Winds in the period ahead.
"In responding to the increasing demands on capacity in the expanding renewables sector, we have been making modifications and significant enhancements in our Hamriyah yard during the course of the past 3 years in order to provide added value for our clients. The Group will continue to invest in its facilities to further strengthen our standing as a leading fabricator of offshore wind foundations and deliver significant improvement in our financial performance."
*Lamprell has reviewed its definition of contract values as a result of recent changes in its bid pipeline. The new ranges are listed below:
Small contract: value below USD 50 million
Medium-sized contract: between USD 50 million and up to USD 100 million
Large contract: over USD 100 million and up to USD 200 million
Very large contract: over USD 200 million
** Transition pieces
The transition piece of a fixed offshore wind turbine is a reinforced part of the support structure that is connected to the wind turbine tower. These structural elements present unique features and are critical components of offshore wind turbines, contributing to the structural soundness and reliability of offshore wind turbines.
Monopile/transition pieces
Monopiles are a simple steel pile made by steel tubes and cones which sit beneath the turbine tower, typically through a transition piece. The monopile is inserted between 10 and 20 metres into the seabed depending on the stability of the seabed, extending the turbine tower under water and into the seabed.
Transition pieces form, together with the monopiles, the foundation of the turbines. The transition piece includes various functionalities such as access for maintenance, cable connections for the energy produced by the turbine and the corrosion protection for the foundation. The transition piece is fixed on the foundation structure, whether monopile or jacket, and consists of thick walled tubes constructed from rolled plates of an offshore steel quality.
This announcement contains information in relation to the execution of a reservation agreement for a potential contract award which is deemed by the Company to constitute inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014 (as amended) as it forms part of the domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (as amended)]
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Notes to editors
Lamprell is a leading provider of services to the international energy sector. Driving strategy and growth through its Renewables, Oil & Gas and Digital business units, underpinned by almost half a century of expertise, the Group has worked hard to establish its reputation for delivering projects safely, on time and to budget.
The Group has firmly established its international credentials in the renewables sector as well as continuing to build on its traditional oil and gas credentials. We are recognised for building complex offshore and onshore process modules and platforms, fabricating and refurbishing jack-up rigs and liftboats.
Lamprell employs more than 5,000 people across multiple facilities, with its primary facilities located in Hamriyah, in the UAE. Combined, the Group's facilities cover approximately 800,000m2 with over 1.5 km of quayside. In addition, the Group has facilities in Saudi Arabia (through a joint venture agreement). Lamprell is listed on the London Stock Exchange (symbol "LAM")."
Moray West offshore wind farm project
Moray West is a new offshore wind project, with permission in place to construct up to 85 turbines in the outer Moray Firth. Once constructed, the project will provide a secure, reliable source of energy for up to 640,000 homes. The project is aiming to be fully operational in 2024/25.