Lamprell says equipment problem delays jack-up delivery

Jack-up rigs under construction at a Lamprell facility Jack-up rigs under construction at a Lamprell facility

JULY 26, 2016 — United Arab Emirates(UAE) based Lamprell plc says that scheduled second-quarter 2016 delivery of a jack-up drilling rig has been delayed.

The rig is in its final stages of commissioning and has undergone a series of equipment proving tests in anticipation of delivery. During this final testing, says the company, "a technical issue has arisen with equipment supplied by an original equipment manufacturer (OEM) and this has resulted in a delay to the delivery of the rig. In all other respects, Lamprell has completed its workscope in making the rig ready for delivery."

"We are disappointed to experience this delay in the delivery of a rig project to one of our key clients," said Lamprell Executive Chairman John Kennedy. "This has been caused by technical issues with critical equipment from an OEM and our project team is working closely, with both the OEM's technical experts and the client's project team, to resolve these issues and we believe we have a good recovery plan in place. We are committed to delivering the rig as soon as possible to our high standards of quality and reliability and to successfully completing all of our other rig projects."

The revised date for delivery of the rig now expected to be in mid-August.

Lamprell says that the delay could expose it to contractual remedies, including liquidated damages, but that "the Board anticipates that the majority of the remedial costs and potential damages exposure as a result of this delay will be recoverable from the OEM. The Board is fully committed to recover such costs and damages legally, if so required."

Lamprell says that six other rigs that is currently constructing remain on schedule.

More broadly, says the company, "the market environment remains very challenging and this will impact our revenues in 2017. We will be providing guidance on this with our interim results on 22 September. Despite the difficult environment, our balance sheet and cash position remain strong and we have significant flexibility to further reduce our overhead costs if necessary.

Want more? Subscribe now!

News from NASDAQ