Synergies arise from Middle East fabricator merger

Offshore staff

SHARJAH, UAE – Offshore construction specialist Lamprell foresees new business opportunities as a result of its recently agreed takeover of local competitor MIS for $335 million.

The company also expects cost synergies of $11 million/yr following the merger, which gives Lamprell 925,318 sq m (9.96 million sq ft) of yard space and 2.2 km (1.37 mi) of quayside, making it one of the largest players in the Middle Eastern region.

The merger enhances Lamprell’s in-house engineering capabilities, providing extra capacity and resources, while adding numerous established businesses throughout the region.

Lamprell says this will allow the group to offer an integrated service in conceptual engineering, design engineering, and detailed engineering, which in turn should increase profit margins by removing the need to outsource design engineering.

Management has finalized the organizational structure of the enlarged group and identified savings. Physical relocation of the MIS management and finance teams has been completed and integration of yards is under way – the MIS facility in Sharjah is at an advanced stage of integration with the adjacent Lamprell yard.

To date this year Lamprell has worked on 26 rig upgrade and refurbishment projects at its Port Khalid and Hamriyah facilities in Sharjah. Activity in this sector continues to grow, representing a strong recovery from the lower levels of expenditure in the second half of 2010.

Projects included rigs 655 and 656 for Nabors, the Sagadrill 2 for Japan Drilling Co. and the Burj for Burj LLC. Work has included living quarter extensions, upgrade and refurbishment, structural steel renewal, piping replacement, and painting.

In the first half of this year Lamprell secured orders from several companies for jackup upgrades and refurbishment, with a combined contract value of $57 million, and there have been further awards since, along with requests for increased work scopes under existing contracts.

As for newbuild rigs, Lamprell currently is building four Le Tourneau Super 116E jackups at Hamriyah, two ordered in July 2010 by National Drilling Co. (NDC), Abu Dhabi for $158.5 million each.

One hull will be launched shortly, followed by the second this fall. Hull outfitting will then be completed and the drilling packages and remaining leg sections installed. The first rig should be delivered during mid-spring 2012 and the second at the end of next summer.

NDC has also extended its exercise period for options for two more jackups until Oct. 16, 2011.

Eurasia Drilling Co. placed a $210-million contract last November for one LeTourneau S116E jackup for delivery to the Caspian Sea. To aid shipment into this landlocked region, the rig is being constructed in modular form. Load-out of the modules is on schedule for 1Q 2012. The modules will be transported via the Volga Don canal to the Caspian Sea for final assembly and delivery in 2013.

The fourth jackup is under construction for Greatship following a contract award in February. Construction of the hull started this summer. The completed rig should be delivered at the end of 2012.

Last August 2010 Lamprell won a $40-million contract to construct a platform topside structure at the Jebel Ali yard comprising a two-level utility deck and a five-level accommodation module for 38 personnel. The project is being constructed to North Sea standards and should be delivered during 2012.

08/31/2011



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