Bargain Oil Services

5th Dec '08 by promethean

42 comments 18583 reads

Lamprell practically monpolises the Middle East rig refurbishment market. The Chief Exec stated that the last time there was an oil price slump rig refurbishment bookings rocketed... but it's stock is down from almost £6 to 75p in months. At September interims the company had $147m of cash on the balance sheet ... that's over half the current mcap. Considering the enterprise turned over these figures for H1 one has to wonder what is going on...

* Revenue: US$ 318.2 million up 29.3% (H1 2007: US$ 246.1 million)
* Adjusted operating profit: US$ 50.5 million up 15.2%* (H1 2007: US$ 43.9 million)
* Adjusted net profit: US$ 52.3 million up 15.7%* (H1 2007: US$ 45.2 million)
* Adjusted EPS (fully diluted): 26.11 cents up 15.6%* (H1 2007: 22.58 cents)

The sell off appears to be due to credit quality of some of their customers (as well as the unforgiving bear of course). Scorpion Offshore apparently may not be able to pay for 2 rigs... which may bring with it a $50m impairment... but even so, that's hardly a good reason for a $1.5bn markdown in market capitalisation. I guess the fear is that more small Middle East oilers may have similar problems at $50 oil.

I've added this one to my bargain watch portfolio.

Unlock with Email

Unlock with Google

Already have an account?
Login here

Dubai oil rig builder plans expansion

April Yee // $("html>head").prepend(""); $("html>head").prepend(""); //

Aug 17, 2011

Lamprell, the Dubai oil services company, plans to start up operations in Iraq to take advantage of a boom in oil exploration.

The Iraqi government is opening up virgin oilfields to international companies, and Lamprell is eager to get a slice of the work, from building rigs to planning the engineering.

It is in talks with potential partners to set up bases in Kurdistan and southern Iraq, home to major oilfields, said Nigel McCue, the chief executive of Lamprell.

"The market is promising and obviously there's been a lot of activity to date," he said. "We're hoping to get something established there before the end of the year."

Lamprell, one of the 350 largest companies listed on the London Stock Exchange, last month bought Maritime Industrial Services, a competitor, for US$336 million (Dh1.23 billion).

The acquisition of the Sharjah-based company, which brought with it a third UAE shipyard as well as footholds in Saudi Arabia, is part of Lamprell's effort to build up its position in the Middle East.

"Two thirds of the world's oil and gas reserves are in the Middle East, and yet we have very little exposure to it," said Mr McCue.

"We'll be looking at expanding the businesses throughout the region."

Chief in that expansion is Iraq, whose government pre-qualified 41 companies this month to bid for fresh exploration blocks.

That represents a pool of potential customers for Lamprell, which builds rigs for Saipem and Transocean, among the world's five largest oil contractors.

The rigs, given names such as "Jupiter" or "Perro Negro 4", ultimately serve producers from Saudi Aramco to Abu Dhabi National Oil Company seeking reserves deep underground.

// if(typeof(ord) == 'undefined') {var ord = ''; } if(typeof(surroundTag) == 'undefined') { var surroundTag = ''; } if(typeof(article) == 'undefined') { var article = ''; } if(typeof(category) == 'undefined') { var category = ''; } if(typeof(demographics) == 'undefined') { var demographics = ''; } if(typeof(vars) == 'undefined') { var vars = ''; } if(typeof(meta) == 'undefined') { var meta = ''; } if(typeof(Comp_Name) == 'undefined') { var Comp_Name = ''; } if(typeof(Country_Name) == 'undefined') { var Country_Name = ''; } if(typeof(Team_Name) == 'undefined') { var Team_Name = ''; } if(typeof(category) == 'undefined') { var category = ''; } if(typeof(admcdfp_sitelang) == 'undefined') { var admcdfp_sitelang = ''; } if(typeof(demographics) == 'undefined') { var demographics = ''; } var scriptval = 'tn.ae_business/business_energy;sz=300x250;tile=2;'+vars+';'+demographics+';'+surroundTag+';ar='+article+';lan='+admcdfp_sitelang+';!c='+category+';ord='+ord+'?'; var noscriptval = 'tn.ae_business/business_energy;sz=300x250;tile=2;ord=123456789?'; document.write('<\/script>'); //

One sticking point is if a global economic slowdown eats into energy demand, as the recession did in 2008. The oil price slumped that year from $147 to $36 a barrel.

"That had the effect of slowing down projects, and there was a hiatus in the decision making which did have an effect on us," said Mr McCue.

"We had to make cutbacks at that time."

This month the oil price has fallen as much as 20 per cent from highs earlier this year, and producers and consumers are forecasting a slump in demand growth.

But Mr McCue remained "bullish" on oil and insisted this year would not be a 2008 playback.

"We're seeing a very large order book and a big pipeline," said Mr McCue.

"We're not seeing any slowdown."

Lamprell is also finding a growing segment of its order book coming from a competitor to fossil fuels - wind.

Offshore turbines require special vessels when they are installed, and Lamprell is building more such ships as the EU approaches a 2020 deadline to source one fifth of its power from renewables.

"Between the UK, Germany, Denmark and the European countries, demand is very high," said Mr McCue.

"Prices [for electricity] will increase and you can see the capital investment is taking place."

Dubai is a good place to plan for picking up business in Kurdistan, certainly, DNO run their regional operations out of Dubai while Dana Gas, also very active in Kurdistan, are based in adjacent Sharjah.

Man Siarad

19th Nov '10

Yesterday's IMS announcing the impending closure of the Thailand yard came as quite a shock to the market, with a heavy mark-down, despite the announcement of a new contract award.

http://www.investegate.co.uk/Article.aspx?id=201011181529313837W

A drop to below 300 p looks a little overdone to me. The cloasure sounds like good, cautious sense. The core business in the UAE seems to be doing okay

The Group maintains a substantial order book extending to 2012 which at the end of October was approximately US$ 725 million, excluding the EDC contract, comprising approximately US$ 647 million from EPC projects and approximately US$ 64 million from offshore construction projects, including offshore wellhead platforms, Floating Production, Storage and Offloading units and accommodation modules. The Group's financial position has not changed significantly from 30 June 2010, however, cash and bank balances have improved largely as a result of additional customer advances.

ohisay

9th Dec '10

Well somebody thought that Velosi was a bargain .- 60% uplift to yesterdays price.

http://www.advfn.com/p.php?pid=nmona&article=45577494&symbol=L^VELO

The directors of Azul and the Velosi Directors are pleased to announce
today that they have reached agreement on the terms of a recommended cash offer
to be made by Azul, to acquire the entire issued and to be issued ordinary share
capital of Velosi.

? Under the terms of the Offer, Velosi Shareholders will receive, for each
Velosi Share held, 165 pence in cash. The Offer values the entire existing
issued and to be issued ordinary share capital of Velosi at approximately
GBP87.8 million and represents a premium of:

? 61.4 per cent. to the Closing Price of 102.25 pence per Velosi Share on 8
December 2010;

22nd Feb '11

A new contract award announced by Lamprell today

http://www.investegate.co.uk/Article.aspx?id=201102220700076051B

A new offshore rig. No price given, but presumably worth a decent amount.

After the drift downwards in recent weeks, this may give LAM a bit of a boost

28th Mar '11

Lamprell's preliminary results out today

http://www.investegate.co.uk/Article.aspx?id=201103280700066770D

Highlights:

2010 FINANCIAL RESULTS

· Revenue: US$ 503.8 million, up 18.4% (2009: US$ 425.5 million)

· Operating profit: US$ 69.5 million, up 149.1%* (2009: US$ 27.9 million)

· Net profit: US$ 66.6 million, up 134.5%* (2009: US$ 28.4 million)

· Proposed final dividend: 9.50 cents (5.88 pence) per ordinary share (2009: 3.80 cents)

· EPS (fully diluted): 33.25 cents, up 134.2%* (2009: 14.20 cents)

· Cash and bank balances as at 31 December 2010 of US$ 210.2 million (31 December 2009: US$ 67.8 million) with zero debt

· Order book as at 28 February 2011 of US$ 962 million (31 October 2010: US$ 725 million)

* For the current year stated before reflecting exceptional charges arising from the closure of Lamprell Asia Limited amounting to US$ 1.4 million (2009: nil).

Impressive - and the market's reaction suggests that they're better than expected.

3rd May '11

An RNS today announcing US $ 57 million in new contracts so far this year

http://www.investegate.co.uk/Article.aspx?id=201105030700307483F

Lamprell (ticker: LAM), a leading provider of specialist engineering services to the international oil & gas and renewables industry, is pleased to announce that during the first four months of 2011 orders have been secured from multiple clients to undertake a number of jackup rig upgrade and refurbishment projects, with a combined contract value of approximately US$ 57 million. These projects include contracts valued in aggregate at US$ 14.7 million for Nabors International Limited rigs "655" and "656" and at US$ 27.5 million for conversion works to the Rig 'Burj', owned and operated by Burj LLC, part of the Millennium Offshore Services group. The Rig 'Burj' is a multi-purpose jackup unit capable of operating in water depths of 330 feet which is to be converted into an accommodation platform for upwards of 250 personnel.

Since the figures given only account for US $ 42.2 million, presumably the remainder is accounted for by this contract announced in February, for which no value was given ?

The preliminary results, announced 28th March (see above) said this:

Order book as at 28 February 2011 of US$ 962 million (31 October 2010: US$ 725 million)

So the order book might now be just over the US $ 1 billion mark.

No wonder Nigel McCue sounds upbeat:

Commenting on the announcement, Chief Executive Officer, Nigel McCue, said:

"We are pleased to announce these recent contract wins, demonstrating the renewed activity we are experiencing in the rig refurbishment and upgrade market and representing a strong improvement from the lower levels of expenditure experienced in the second half of 2010. We believe these awards reflect our strong reputation for quality and service."

PS: Thanks to TGG on the Fool for flagging up the RNS

19th May '11

Two RNSs from Lamprell this morning

1. IMS

http://www.investegate.co.uk/Article.aspx?id=201105190700178977G

2. announcement of the purcahse of Oslo-listed Maritime Industrial Services Co. Ltd. Inc. ("MIS"), to be funded by a rights issue and new bank facilities

http://www.investegate.co.uk/Article.aspx?id=201105190700278979G

MIS, with its principal operations based in Sharjah in the UAE, is a diversified engineering and contracting group focused on the energy sector. It offers a range of engineering and contracting services to the oil, gas and energy industry spanning the hydrocarbons delivery chain, from exploration drilling through to delivery to downstream customers. MIS operates primarily in the UAE, Kuwait and Saudi Arabia and divides its operations into six main business lines, including: new build, upgrade and refurbishment, EPC services, fabrication, H₂S safety services and technical services. For the financial year ended 31 December 2010, MIS recorded profit before tax of US$37.1 million and, as at 31 March 2011, MIS had gross assets of US$351.6 million.

So a healthy bit of consolidation in the UAE services sector.

The rights issue - 3 for 10 - at 232 pence per share, compared to today's opening price of 351 p, seems rather generous.

Fangorn

Indeed it does seem overly generous....yet the market seems to like it, up 12% or so to 390.

Strange old world this investing malarky

7th Jun '11

AGM statement, to be issued at today's AGM in Dubai

Fairly bullish in tone.

http://www.lamprell.com/lamprell/investors/rns/rnsitem?id=4279308&t=popup

29th Jun '11

A good take-up on the rights issue - 98.96 per cent.

Mind you, it was so heavily discounted, I can't say I'm surprised !

http://www.lamprell.com/lamprell/investors/rns/rnsitem?id=4323171&t=popup

30th Jun '11

And the Lamprell offer for MIS has been accepted for 99.76 per cent of shares.

http://www.lamprell.com/lamprell/investors/rns/rnsitem?id=4326265&t=popup

17th Aug '11

An interesting story in today's The National' in Abu Dhabi - Lamprell are planning to extend into both Iraqi Kurdistan and southern Iraq.

http://www.thenational.ae/business/energy/dubai-oil-rig-builder-plans-expansion

30th Aug '11

Lamprell half-yearly report out today

http://www.lamprell.com/lamprell/investors/rns/rnsitem?id=4471866&t=popup

H1 2011 FINANCIAL RESULTS

· Revenue: US$ 383.6 million up 102.6% (H1 2010: US$ 189.3 million)

· Adjusted operating profit: US$ 30.1 million up 45.4%* (H1 2010: US$ 20.7 million**)

· Adjusted net profit: US$ 27.0 million up 39.9%* (H1 2010: US$ 19.3 million**)

· Adjusted EPS (fully diluted): 12.41 cents up 40.2% (H1 2010: 8.85 cents**)

· Proposed interim dividend: 4.00 cents (2.44 pence) per ordinary share (H1 2010: 3.50 cents**)

· Successful completion of rights issue raising gross proceeds of US$ 226 million

· Cash and bank balances, including rights issue proceeds, as at 30 June 2011 of US$ 357 million (31 December 2010: US$ 210 million)

· Order book as at 31 July 2011 of US$ 869 million (March 2011: US$ 1,090 million)

* For the current six-month period stated before reflecting exceptional charges for various legal and professional charges amounting to US$ 8.4 million (H1 2010: US$ nil) incurred in connection with the acquisition in July 2011 by Lamprell plc of all of the issued share capital of Maritime Industrial Services Co. Ltd. Inc.

H1 2011 STATUTORY RESULTS

The statutory results for the six-month period (after reflecting the exceptional charges noted above) are as follows:

· Operating profit: US$ 21.6 million down 47.4% (H1 2010: US$ 41.1 million)

· Net profit: US$ 18.6 million down 53.1% (H1 2010: US$ 39.7 million)

· EPS (fully diluted): 8.55 cents down 53.1% (H1 2010: 18.23 cents)

H1 2011 OPERATIONAL HIGHLIGHTS AND MAJOR EPC PROJECTS

· A total of 26 jack up rigs have been worked upon at the Company's Hamriyah and Sharjah facilities during the first six months of 2011

· The Company has achieved a 2011 lost time injury frequency rate per million man-hours of 0.18, compared to the construction industry average of 2.83

· Significant savings continue to be realised from the Company's procurement and supply chain initiatives

· The Company's Enterprise Resource Planning system is on schedule to be operational in Q4 2011

· A further 40,000 m² plot has been procured on a long lease in Hamriyah, adjacent to our existing facilities

Commenting on the half year results Nigel McCue, Chief Executive Officer, Lamprell said:

"The first six months of 2011 have been encouraging for the Group. In February we announced the award by Greatship of a new contract to build a LeTourneau S116E jackup rig. This was followed, in March, with the announcement of a major contract with Weatherford for our Oilfield Engineering Services business. In addition we have remained active with rig upgrade and refurbishment projects.

It is particularly pleasing to note the strong health and safety performance of our operations, with lost a time injury frequency in the first half significantly below the industry average. This continues, nevertheless, to be an area of focus for the Group.

The acquisition of MIS, completed in July, is a transformational step for the Group. The complementary businesses, expanded regional footprint, and enhanced capacity, resources and expertise that the acquisition offers positions the business well for profitable growth. I take this opportunity to welcome both new customers and colleagues to the Lamprell Group and look forward to the exciting opportunities that lie ahead for the enlarged business.

Market conditions remain encouraging and the Group enjoys both a healthy order book, at US$ 869 million, and a strong bid pipeline at US$ 4.7 billion. As such the Board is confident of the prospects for the business, whilst remaining vigilant with regard to the risks posed by the volatile global economic climate."

snickers

16th Sep '11

not sure if i should crave anyone's indulgence for posting this under Lamprell, but here's a stock screen involving them..

data is from the FT. left to right indicates improving debt situation, moving upwards indicates share price related measures, up is overpriced. the green is the profit margin, the red the ROE. LAM (used to hold) and KENZ (i currently hold) aren't too shabby. and besides, there's no running thread on stockopedia for NBPO.

12th Oct '11

Lamprell has announced a provision for US $ 14.3 million on three contracts

http://www.uk-wire.com/Article.aspx?id=201110120700240225Q

Having substantially completed the detailed design phase of its fixed price windfarm liftboat projects, two currently under construction for Fred Olsen Windcarrier and one liftboat under construction for Seajacks 3 Ltd, the Company anticipates making a provision based on the cost to complete amounting in aggregate to USD 14.3 million. The vessels remain on schedule for delivery to the respective customers in 2012. This provision relates solely to these contracts and arises primarily as a result of increased labour requirements and additional material and subcontract costs. We are confident that similar issues do not affect our other ongoing projects.

2011 earnings still expected to be in line with market expectatiions, the sum is pretty small, and the SP currently marked down by 13.5% - nervousness continues to prevail...

LAM is back on my potential top-up list, though, in current circumstances, I'll wait awhile.

ignatius

15th Oct '11

Not strictly related to Lamprell, but a little discussed Norwegian company has just dropped onto my radar.

Fred Olsen Energy £FOE

Drill rig rental and contracting via Dolphin Drilling Ltd with some manufacturing bolt ons, including the famous Harland & Wolff yard in Belfast.

Fundamentals look okay. Headline figures are P/E = 5.8 with the dividend yield a healthy 6% or so by my calculator.

http://investing.businessweek.com/businessweek/research/stocks/snapshot/snapshot.asp?ticker=FOE:NO

At first glance I like it a lot. Will follow up if I get some time in the week.

Cheers,

Ignatius

19th Oct '11

Lamprell announced yesterday that Abu Dhabi's National Drilling Company, NDC, have exercised two options for more rigs

http://www.uk-wire.com/Article.aspx?id=201110180700143325Q

Two jack-up rigs, worth a total of US $ 333.3 million

A healthy addition to the order book, with the righs due for delivery in the first half of 2014.

28th Oct '11

Lamprell's new yard in Hamriyah, Sharjah was inaugurated yesterday

http://www.lamprell.com/lamprell/media/releases/2011/2011-10-27/2011-10-27.pdf

Plenty of space for new business.

1st Nov '11

Two new contracts, worth over US $ 200 million for Nexen's Golden Eagle development in the North Sea.

http://www.lamprell.com/lamprell/investors/rns/rnsitem?id=4659193&t=popup

8th Nov '11

And another contract, for a jack-up rig, for Jindal Pipes of Singapore.

http://www.lamprell.com/lamprell/investors/rns/rnsitem?id=5047113&t=popup

No value given,

18th Nov '11

Yesterday's IMS

http://www.lamprell.com/lamprell/media/releases/2011/ims-171111/ims-171111.pdf

Bargain Oil Services

Unlock the rest of this article with a 14 day trial

About the Author

Promethean

42 comments

Dubai oil rig builder plans expansion

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...