Lamprell, the UAE oil equipment and services firm, reported an increase in profits of nearly one third last year as it shut down operations in Asia and prepared for expansions in the Gulf region.
The company, which builds and refurbishes the costly rigs used to drill for oil, has not suffered an industry-wide backlash from last year's disastrous oil spill in the Gulf of Mexico and is eyeing land for new production facilities in Sharjah, said Nigel McCue, its chief executive.
"While the full impact of the deepwater Macondo oil spill in the US Gulf of Mexico on the wider rig market has yet to fully unwind, many sector analysts are predicting a continuation in the new-build programmes as the market for higher specification rigs remains strong," Mr McCue wrote in an annual report released yesterday. The report comes as industry insiders await the results of Lamprell's US$332 million (Dh1.21 billion) talks this month to buy out its competitor Maritime Industrial Services (MIS), which also operates in the UAE. A deal would offer Lamprell footholds in new markets in Saudi Arabia and Kuwait.
That deal depends on the approval from MIS and would be a major win for Lamprell, said Phillip Lindsay, an analyst with ABN Amro based in London.
"It takes out a competitor," said Mr Lindsay. "It moves them a little bit higher up the value chain so they can do engineering services, because at the moment that's outsourced." Yesterday, Lamprell reported a 29 per cent increase in profits, from $61.8m in 2009 to $79.7m last year. Shares of the company, which is listed on the London Stock Exchange, were up slightly, reaching 376.40 pence in intraday trading.
"The market will continue to get excited if it's able to secure additional contracts," Mr Lindsay said.
Lamprell is in "advanced negotiation" to buy more land next to its base in Sharjah so it can build more equipment, Mr McCue wrote.
The company shut down operations in Thailand at the end of last year "due to poor current and forecast market conditions", according to a preliminary report released last month.
Competition from Singapore's shipyards has squeezed Lamprell, said Mr Lindsay. As Asian shipyards fill up, Lamprell could have a shot at contracts to build new rigs, especially those needed on a tight deadline.
