LAM.L Regulatory News (LAM)

8 Jan 2008 07:00

Lamprell plc08 January 2008 8 January 2008 LAMPRELL PLC ("Lamprell" or the "Company") PRE-CLOSE TRADING UPDATE FOR THE YEAR ENDED 31 DECEMBER 2007 Lamprell (symbol: LAM), a leading provider of specialist engineering services tothe international oil & gas industry based in the UAE, today announces itspre-close trading update ahead of the announcement of its audited preliminaryresults for the year ended 31 December 2007 which is expected to be made on 26March 2008. 2007 PRE-CLOSE TRADING HIGHLIGHTS • Strong performance across all key business areas • Board anticipates 2007 net profit will be at the upper end of market expectations* • Expected cash and bank balances as at 31 December 2007 approximately US$150 million • Order book as at 31 December 2007 is approximately US$580 million (31 August 2007: US$507 million) * Range between US$77.3 million and US$82.7 million (pre exceptional charges) Commenting on the performance Chairman and Chief Executive Officer, PeterWhitbread, said: "Lamprell is delighted to report that performance in all key business areas hasbeen strong throughout the year and our expansion into Engineering, Procurementand Construction ("EPC") contracts, with new build liftboat and jackupactivities, is progressing well. With the recent contract awards and strongbusiness environment for oil services, Lamprell is well positioned to achieveanother year of strong growth in 2008." Enquiries: Lamprell plc (+44 20 7638 9571)Peter Whitbread, Chairman and Chief Executive OfficerDavid Moran, Chief Operating Officer JPMorgan Cazenove, London (+44 20 7588 2828)Nick GarrettMalcolm Moir Citigate Dewe Rogerson, London (+44 20 7638 9571)Media enquiries: Martin Jackson/Kate LehaneAnalyst enquiries: Scott Fulton Overview Lamprell's strong operational performance has continued in the second half ofthe year. This performance reflects the successful implementation of the Group'scorporate strategy. Specifically, Lamprell has maintained its competitiveadvantage within its core business activities, whilst expanding into EPCcontracts with the signing of new build liftboat projects with SeajacksInternational Ltd in February 2007 and new build jackup drilling rig projectswith the Scorpion Group in July and December 2007. Lamprell has deliveredprojects throughout 2007 both on time and to a consistently high quality. In theabsence of any unforeseen circumstances, the Board anticipates the Group'srevenue and earnings for 2007 will be at the upper end of market expectations. Upgrade and refurbishment of offshore jackup rigs During the year Lamprell has executed refurbishment work on 24 jackup rigs atLamprell's Sharjah and Hamriyah facilities. These refurbishment projects havebeen successfully undertaken for a number of international clients. Notably, theNabors 660, the largest refurbishment project Lamprell has undertaken to date,is now in the commissioning phase ready for delivery to Nabors early in 2008. New build offshore jackup rigs The engineering and procurement phase of the LeTourneau Super 116 E designScorpion 'Offshore Freedom' is proceeding on schedule and the hull constructionis well underway at the current Hamriyah facility. As announced in December2007, Scorpion has awarded Lamprell a second contract to construct the Scorpion'Offshore Mischief'. This rig has an identical design to the 'Offshore Freedom'and the procurement phase of this project is significantly advanced, ready forconstruction to commence at the current Hamriyah facility in the second quarterof 2008. New build construction for the offshore oil and gas sector Lamprell's Jebel Ali facility has grown strongly in 2007 with a number of keyprojects being delivered during the second half of the year. Notably, the firsttwo Kashagan barges were delivered to SBM, as were process modules to Saipem andAker. In addition, the engineering and procurement phase for the two Seajacksharsh environment, special purpose, self propelled four legged jackup liftboatsis proceeding ahead of schedule with the construction of the two hulls havingcommenced. Oilfield engineering services The upgrade and refurbishment of land rigs and associated works such as theconstruction of land camps and the inspection and overhaul of mechanical androtary equipment has performed well throughout 2007 and Lamprell have worked on9 land rig projects during the year. The signing of a Memorandum ofUnderstanding with LeTourneau Technologies in the year has resulted in thecommencement of a new build 2000 hp land rig. The drilling package will besupplied by LeTourneau and completion of the new unit is scheduled for May 2008. Operational developments The contract for the detailed design of Lamprell's new facility at the HamriyahFree Zone has been awarded and is proceeding according to schedule. The marineworks contract, including the dredging of the access channel and quay wallconstruction work, has been awarded by the Hamriyah Free Zone Authority and theselected contractor has started mobilising equipment ready to start work inearly 2008. The construction of Lamprell's office and production facilities willcommence in the second quarter of 2008 ready for the facility to be operationalat the beginning of 2009. In addition to this new facility, new offices areunder construction at the Jebel Ali facility and there continues to be anongoing investment in construction equipment to support the growth in revenue atall the facilities. Market overview The oil and gas construction sector has been very buoyant throughout 2007 and isforecast to remain so through 2008 and beyond. Oil and gas explorationactivities in the Middle East continue to increase and this has created anincrease in demand for offshore jackup drilling units in the region.Consequently many drilling contractors have relocated jackup rigs from otherregions into the Middle East and this trend is expected to continue during 2008.These additional units, as well as the existing units based in the region, willcontinue to provide a long term refurbishment workload for Lamprell. The market for new build construction for the offshore oil and gas sector isalso very strong, with the global capital expenditure backlog continuing togrow. This market includes Floating Production, Storage and Offloading ("FPSO")systems and fixed platform topsides which are the core focus for Lamprell'sJebel Ali operation. The FPSO sector in general offers considerable promisewell into 2010 and is now being expanded to include enhanced recovery facilitiesand mobile storage solutions such as Floating Liquefied Natural Gas andCompressed Gas to Liquids, Mobile Offshore Production Units and re-gasificationunits. This high level of development and construction is reflected in ourcurrent 'proposals' pipeline and we are confident of our future participation inthe provision of fabrication services to multiple providers across the sector.As a result Lamprell expects that it will continue to expand in this businessarea throughout 2008 and beyond. Outlook As at 31 December 2007 the total order book is approximately US$580 million andextends to the end of 2009. This order book provides a substantial foundationfor our expected ongoing revenue growth and in addition there are a significantnumber of potential contracts that have been identified as likely prospects foraward across all of our business activities. The contracted order book combinedwith the potential projects will allow Lamprell to maintain its momentum andgrowth as we move into 2008. Ends Notes to editors • Lamprell, based in the UAE, has played an increasingly prominent role in the development of the offshore industry in the Arabian Gulf for over 30 years, in later years providing specialised services to the offshore oil and gas industry. • Lamprell's two primary facilities are in Port Khalid, in the Emirate of Sharjah, and in the Jebel Ali Free Zone, in the Emirate of Dubai, both of which are in the UAE. • The principal markets in which Lamprell operates, and the principal services it provides, are: - Upgrade and refurbishment of offshore jackup rigs; - New build construction for the offshore oil and gas sector, includingFloating Production, Storage and Offloading systems and other offshore andonshore structures; and - Oilfield engineering services, including the upgrade and refurbishment of land rigs. Lamprell has grown strongly over the last three years, driven by buoyantconditions in the oil and gas industry and the increase in capacity with theopening of its facility in the Jebel Ali Free Zone in 2002. This information is provided by RNS The company news service from the London Stock Exchange