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Lamprell lowers 2015 expectation on oil price drop

Lamprell lowers 2015 expectation on oil price drop
UAE rigbuilder Lamprell expects its 2015 revenues to be 10% below previous expectations, as a lower oil price causes belt-tightening among its clients.

The company stated that it expects the market to become more challenging, as it anticipates "intense competition with a large number of players chasing fewer projects, leading to increased pressure on margins".

The timing of its current projects has made for a strong 2014, outperforming the group's own expectations, as a number of construction milestones led to cash flowing in. Projections for 2015 had previously forecast a "broadly flat" year in line with 2014 in revenue terms, although with a less favourable construction cycle for its cash position as many projects will be in their early stages.

The group's net cash position at the end of the year was $275m, which is expected to grow in the short term before being reduced as 2015 wears on.

Lamprell considers itself to be in a strong position as the market enters a difficult period, citing its strong balance sheet and normal levels of contract coverage going into 2015. The difficulty it sees is in securing the remaining revenues for 2015.

"The company will undertake mitigating actions to preserve margins and to offset the impact on our financial performance in the event of a further downturn in the market," it added.