Lamprell warns on 2017 revenues, announces rig delay

Lamprell warned on Tuesday that revenues in 2017 would take a hit from the challenging market environment as it said that delivery of the jackup drilling rig which had been scheduled for the second quarter has been delayed.

The oil services group said that during the final testing stage a technical issue arose with equipment supplied by an original equipment manufacturer (OEM) and this has resulted in a delay to the delivery of the rig.

In all other respects, the company has completed its workscope in making the rig ready for delivery.

Lamprell said the delay – the rig is now expected to be delivered by mid-August – could leave the group exposed to contractual remedies on the project including liquidated damages.

Still, the board expects the majority of the remedial costs and potential damages exposure as a result of this delay will be recoverable from the OEM, adding that it was fully committed to recovering such costs and damages legally, if required.

Also on Tuesday, the company said the still “very challenging” market environment will dent revenues next year.

Executive chairman John Kennedy said: “We are disappointed to experience this delay in the delivery of a rig project to one of our key clients. This has been caused by technical issues with critical equipment from an OEM and our project team is working closely, with both the OEM's technical experts and the client's project team, to resolve these issues and we believe we have a good recovery plan in place.

“We are committed to delivering the rig as soon as possible to our high standards of quality and reliability and to successfully completing all of our other rig projects."

At 1135 BST, Lamprell shares were down 5.3% to 69.57p.