UAE-based rig builder and engineering firm Lamprell says delivery of a jackup drilling rig, which had been scheduled for delivery in Q2 2016, has been delayed due to an issue with equipment supplied by an original equipment manufacturer.
According to a November 2015 presentation by Lamprell, the firm had been due to deliver a Le Tourneau S116E for Ensco, listed as the Ensco 1.
In April 2014, Ensco placed an order for two Le Tourneau jackups, Ensco 140 and 141, for use in the Middle East and with delivery mid-2016.
Lamprell says the rig is in its final stages of commissioning and has undergone a series of equipment proving tests in anticipation of delivery to the client. But, during final testing, a technical issue arose with equipment supplied by an original equipment manufacturer (OEM) and this has resulted in a delay to the delivery of the rig.
"More broadly, the market environment remains very challenging and this will impact our revenues in 2017." says Lamprell. "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."
John Kennedy, Executive Chairman for Lamprell, said: "We are disappointed to experience this delay in the delivery of a rig project to one of our key clients. 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 delay in the delivery of the Ensco 1 means that Lamprell could be exposed to contractual remedies on the project including liquidated damages.
However, it says: "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. Apart from the delivery of this rig, all other six rigs that Lamprell are currently constructing remain on schedule."