UK’s Lamprell sees tough year ahead

LONDON: Oil rig builder Lamprell Plc lowered its revenue forecast for this year and said it expected to start seeing a recovery in activity only in 2018.

Lamprell said it expected 2017 to be probably its toughest year yet, despite early signs of recovery in drilling activity.

“We do see early signs of optimism, but caution remains the watchword,” Chief Executive Christopher McDonald said, adding that it would be another 12-18 months before it sees any flows to the service sector.

The company expects 2017 revenue to be in the lower half of its earlier forecast range of $400 million (£320 million) to $500 million, in the absence of large project deliveries in the second half of the year.

Lamprell, like its peers, has been cutting costs as oil explorers have slashed spending and cancelled contracts to counter a more-than-2-year rout in oil prices.

The company said it had cut about 20 per cent of its administrative staff in 2016, leaving it with 1,031 core admin employees. The company had a total workforce of 5,762 employees at the end of 2016. Lamprell raised the total impact of the settlement related to a delay in delivery of a jack-up rig to Ensco Plc to $42.6 million as cost estimate of additional services rose to $17.6 million from $10 million.

The company said in July that it had taken a $25 million exceptional charge to its 2016 revenue due the settlement. — Reuters