Rosy earnings outlook for Dubai rig maker Lamprell

Dubai-based oil rig maker says it has delivered four major projects in the first half of the year.

The Dubai-based rig maker Lamprell expects its full-year earnings to be ahead of expectations after its order book grew in the first quarter.

In a statement on the London Stock Exchange, it said earnings would be heavily weighted towards the first half of the year.

“We have also seen improved performance in the first half in our land rig services business,” it said in a statement. “Our bid pipeline remains strong.”

Lamprell’s shares were trading at 160.50 pence in early trading, up 3.22 per cent from Friday’s close.

In the first six months this year, it delivered four major projects and bagged two rig orders from Ensco and Shelf Drilling.

It also won a contract award last month from the UAE’s PetroFac Emirates for 29 oil production modules. Lamprell expects to complete the delivery of the modules between the second quarter of next year and the first quarter of 2016.

In May, it won a contract to deliver two mobile offshore drilling platforms to Dubai-based Shelf Drilling, for US$370 million. These are expected to be delivered in 2016 and 2017.

A month earlier, it won a $390m contract from London’s Ensco for two mobile offshore drilling platforms. These are expected to be delivered in 2016.

Analysts have improved their forecast following Lamprell’s statement.

Daniel Slater, an analyst at the UK stockbroker Arden Partners, said in a note that the company’s full- year sales could touch $996m this year, and $999m in the next.

In terms of the order book “we know that 2014 is pretty much covered and around two-thirds of 2015 is covered post the recent contract wins,” he said. “We would like to see further of contract wins to drive growth via the top line as there will be a limit to the gains the company can make through margin reduction.”

Arden has increased Lamprell’s price target to 165 pence from 135 pence and has a “neutral” recommendation on the shares. That is a gain from its share price on July 1 last year, when it was 126.47 pence. Lamprell’s net profit was $36.4m last year, after a low year in 2012 when its net loss was $111.2m.

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