UAE-based Lamprell, a leading rig builder and provider of contracting services to the oil and gas and industries, said it will consolidate its operations within one yard for the time being as part of its overhead reduction programme.
“The Jebel Ali facility has been mothballed from January 2020. The Sharjah facility currently hosts some of the work on the Moray East project and will be closed upon its completion later this year. The Hamriyah yard is our largest facility and continues to operate, offering various expansion opportunities should the Group require additional space,” a Lamprell statement said.
These actions allow for the group to gradually grow fabrication volumes whilst significantly improving efficiency and reducing its cost base, it added.
The measures translate into an approximately $23 million reduction in overheads for 2020, of which over 90 per cent relates to cash overheads.
Subject to audit, the restructuring will result in a non-cash impairment charge of Intangible and Immovable assets in Sharjah of approximately $13.2 million in the 2019 financial statements. In 2020 there will be an estimated one-off charge of $7.5 million which relates to the demolition costs in Sharjah and staff termination costs.
Lamprell is also planning for low levels of critical-only capital expenditure at our facilities, with a total value below $10 million in 2020.
Further to the earlier overhead cost savings detailed above, and in order to conserve cash and protect the business during this period of unprecedented market conditions, Lamprell has taken the following additional actions:
Reduced fees, salaries and allowances for our board, senior management, and all of our professional staff by 25 per cent for the next six months.
Where operationally feasible, we have also placed staff on reduced working hours for those that are underutilised and used other measures such as unpaid leave.
Redundancies, regrettably, have also been implemented where there is no medium-term horizon for staff to be used.
“We expect these measures to save approximately $10 million in 2020, and we will continue to consider scope for further action as the crisis develops,” the Lamprell statement said.
“We are operating in a period of unprecedented global uncertainty, focusing on the safety and sustainability of our operations and the health and wellbeing of our employees,” said Christopher McDonald, CEO of Lamprell.
“Amidst industry-wide insecurity and distress, we continue to deliver our projects safely and reliably and we remain focused on strict financial discipline to sustain a healthy balance sheet and progress our strategy,” he added.
