Oil rig maker Lamprell said on Friday it would raise about $120 million to boost its productivity after returning to profit last year despite growing risk in the sector.
Chief executive officer James Moffat said the rights issue marked “the final piece of the jigsaw puzzle in our recovery”, which had started around 18 months ago.
It will be used to support investment, facilitate debt refinancing and reduce operating costs following its return to profitability, the Dubai-based company said.
It announced it had secured in April a $390 million deal with drilling contractor Ensco for the construction of two rigs.
“It has been a good start to 2014 as we have continued to build on the successful performance and results from 2013. We are particularly pleased to have started converting our substantial bid pipeline into contract wins,” Lamprell Chairman John Kennedy said.
Lamprell has said it expects revenue to fall slightly over the next two years as it focuses on winning new orders after a disastrous 2012 riddled by profit warnings and senior staff changes.
“Whilst market conditions remain competitive and delays in construction project awards continue to be a feature of the industry, our order book is healthy and our bid pipeline is substantial,” the firm said in its interim management statement.
The oil and gas sevices sector, which provides engineering, production and maintenance, has suffered over the past year from oil producers’ budget-cutting and slower contract awarding.
In April, Lamprell delivered a 13,000-tonne production rig to Chinese-owned operator Nexen for the development of the Golden Eagle area in the North Sea.
Lamprell reported a pre-tax profit of $40 million for last year following a $111 million loss in 2012 due to a failed expansion into wind turbine vessels.
“The key area where we have strengthened the team is in commercial and business development,” Moffat told Reuters.
“Lamprell has never really been out in the market, we were highly reliant on our clients coming back to us. We’ve modified that now and hired a couple of heavyweights to lead that effort.”
The company said the 5-for-16 rights issue would be priced at 88 pence a share, a discount of 39.7 percent to the closing price on 15 May, and it was supported by the group’s principal shareholder.-Reuters
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