A renewed burst of investment in oil production is leaving oilfield services companies scrambling to keep up, as producers seek safer and more advanced wells to drill in deeper waters.
Oil and gas industries springing back to life
Oil and gas contractors across the Emirates are adding thousands of jobs as producers demand safer and more advanced drilling platforms and restart stalled investment projects.
Lamprell, the UAE oil and gas engineering specialist, said it had a bid pipeline of almost US$5 billion (Dh18.36bn), refitting existing rigs and building new platforms with additional capabilities.
The company has increased its staff to 13,000 to cope, and it may add a further 1,000 by the end of the year.
Petrofac, a UK oilfield services company that operates in Abu Dhabi and Sharjah, also announced its first major contracts with GDF Suez to service its operations in the North Sea.
"It's a bit of a scramble in order to explore and develop these oil and gasfields around the world," said Samuel Ciszuk, a Middle East energy analyst at IHS Global Insight. "Right now, that's all being geared up."
Oil companies are renewing their expansion plans, drawn up as crude hit $147 per barrel in the summer of 2008, after initially scaling back some projects following shortages of rigs, materials and skilled workers, he said.
Although crude fell sharply during the following years as the financial crisis depressed economic growth, oil prices have recovered this year.
Brent crude futures have risen 18.8 per cent since January to $112.07 per contract, reaching highs of $126.74 in April.
Signs are emerging that investment is returning to oil production and exploration, creating significant opportunities for oilfield service companies.
Lamprell reported net profits of $18.6 million for the first half of the year, a decline of 53.1 per cent on the same period last year, with earnings depressed as it bore the cost of acquiring a rival based in Sharjah to cope with the size of its order book.
But the company's sales more than doubled during the same period to $383.6m, boosted by $316m of new contracts.
In May, Lamprell fully acquired Maritime Industrial Services (MIS) for 1.83bn Norwegian kroner (Dh1.25bn) in an effort to expand its facilities and the size of its workforce. The company also announced a $226m rights issue the same month.
Lamprell's management hopes the acquisition will aid the processing of its $869m order book, of which MIS accounts for $110m, and a pipeline of bids potentially worth $4.7bn.
The company was caught by surprise by an increase in orders starting in the second half of last year, much of it related to maintenance and upgrades requested by oil producers following BP's Deepwater Horizon rig disaster, said Nigel McCue, Lamprell's chief executive.
Oil producers were also looking for larger, more advanced rigs capable of drilling in deeper waters, said Scott Doak, the company's chief financial officer.
The company's shares rose as much 5.5 per cent in mid-afternoon trade in London. Lamprell's acquisition had left it well positioned to capture spending on exploration and production in the region, said Ryan Kauppila, an oil and gas analyst at Citigroup.
"The MIS acquisition not only expands yard capacity but offers them a foothold into some select onshore businesses throughout the Middle East, including Iraq, which is a critical geography for the industry this decade," he said.
Separately, Petrofac announced it would provide support and maintenance for GDF Suez's operations in the North Sea, in a move that will create 100 jobs.
Two contracts signed with the French company, the world's biggest utility firm by market capitalisation, are worth a total of £30m (Dh179.2m) over three years, with an additional two-year option.
Petrofac's shares rose as much as 5.95 per cent yesterday.