Lamprell surges on news of Saudi Aramco JV

Shares in Lamprell surged on Wednesday as the UAE-based oil rig maker said it will form part of a joint venture led by Saudi Aramco to establish, develop and operate a maritime yard for the construction of offshore drilling rigs and vessels on the East Coast of Saudi Arabia.

Lamprell said the JV - which also includes the National Shipping Company of Saudi Arabia and Hyundai Heavy Industries - provides a critical point of entry to the Saudi market, with exposure to the world's largest oil company. In addition, it will enable the group to diversify its global reach and broaden its sector and product expertise.

The JV also gives Lamprell the opportunity to pre-qualify with Saudi Aramco to bid from its existing UAE facilities for a significant pipeline of non-rig Saudi work under the long-term agreement and general bid slate programmes.

The company expects to invest up to $140m over the course of the construction of the maritime yard from existing financial resources and future cash flows and will hold 20% of the JV's issued share capital, while Saudi Aramco will invest up to $350.7m.

Chief executive Christopher McDonald said: "We are excited to announce this transformational transaction which will not only make Lamprell a participant in potentially one of the largest yards in the Arabian Gulf but also provide access to the most important market in the industry and one of the largest players in the sector. The transaction will enable growth in scale beyond Lamprell's capability as a stand-alone entity and will allow the company to strengthen its competitive position through efficiencies, diversification and broader reach.

"Participation in the maritime yard also secures access to one of a limited number of companies globally that we believe will be receiving orders for and building new jackup drilling rigs in the near-to-medium term with significant component parts of the first two jackup drilling rigs expected to be subcontracted to Lamprell."

At 0930 BST, the shares were up 12.2% to 113.38p.