The London stock exchange-listed fabrication, engineering and contracting services company was due to deliver the rig in the second quarter of the year but uncovered a “technical issue” in the final stages of commissioning.
Lamprell has pegged the fault to equipment supplied by an original equipment manufacturer (OEM) and is working with the OEM’s technical experts and the client towards a revised delivery date of “mid-August”.
The resultant delay exposes Lamprell Group to contractual remedies including liquidated damages. However, it anticipates that the majority of the remedial costs and potential damages will be recoverable from the OEM and said its board is “fully committed to recover such costs and damages legally, if so required.”
Lamprell said that in all other respects, it had completed its workscope and stressed that the six other rigs it currently has under construction are on schedule.
"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."
While the name of the client was not disclosed, ENSCO ordered a jack-up in 2014 which was listed in a July 18 fleet status as being for delivery in July.
Meanwhile, Lamprell warned of continued market difficulties. “More broadly, the market environment remains very challenging and this will impact our revenues in 2017,” it said.
“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.”
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