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Lamprell (LSE:LAM) seemed to regain some shareholder confidence this morning as its share price gained nearly 13% to 89.20 pence on the London Stock Exchange. The stock has been languishing since 16 May 2012 when it dropped 167.00 pence following a profit warning issued by Lamprell.
The Big Picture
In the May 16th announcement the company adjusted it full-year profit forecast from £75.2 million to £38.5 million. Lamprell cited unanticipated delays in component deliveries and cost overruns that would delay the deliver of a Hull 108 rig platform currently under construction for the revised estimates. The stock took another 24 pence hit on 7 June 2012 when the company adjusted its forecast a second time to £27.5 million. That same day, Chairman Jonathan Silver announced that he would be stepping down in the wake of shareholder grumblings over the company’s executive pay plan.
What Happened Today
Lamprell released two announcements this morning that place the company in a more favourable light. One of those announced the appointment of John Kennedy, an engineer with executive experience in the oil and gas production sector, as Non-executive Chairman, effective immediately. Mr. Kennedy’s experience includes successful stints as Executive Vice President of Haliburton and Executive Chairman of Wellstream Holdings.
The second press release announced that Lamprell had successfully delivered the Hull 108 Super M2 self-elevating drilling platform to Compañia Perforadora Mexico, and had delivered it on time, exceeding previous expectations. Lamprell had announced the contract for the rig, which can drill to depths of 30,000 feet, on 28 December 2011. Revenue from the sale and delivery of the rig will allow Lamprell to pay off £45 million of acquisition and construction loan debt.
Executive Comments
In addition to his “welcome aboard comments” about Mr. Kennedy, Lamprell CEO, Nigel McCue said that “We are delighted to be announcing the delivery of this rig on schedule and we continue to believe the Gulf of Mexico represents an exciting market for Lamprell.”
Perhaps more significant for shareholders, he added, “We are also pleased to be clearing the debt related to the acquisition of MIS and also the project debt, which is in line with the commitments made at the time we acquired MIS. We believe this demonstrates the underlying strength of the Group’s balance sheet.”
Company Spotlight
Lamprell is a leader in providing diversified engineering and contracting services to the on and off shore oil and gas exploration industry. Based in the United Arab Emirates, Lamprell specialises in production of new and refurbishing of older offshore drilling rigs for use in the Gulf of Arabia. The company has facilities in Saudi Arabia, Kuwait, and the cities of Hamriyah, Sharjah and Jebel Ali in the UAE. The company currently employs over 14,000 people.
