McDermott Gets Australian Equus Development Project Contract

McDermott International, Inc. MDR recently inked a memorandum of understanding (MOU) with Western Gas Corp. to become the exclusive development partner in the Equus Gas Project, located in the Western part of Australia. Baker Hughes, a GE company BHGE serves as a partner in the project. The companies received a contract award from Western Gas, which expects them to back up Equus Gas Project’s planning phases.

McDermott is expected to participate in the pre-front end engineering design (pre-FEED) and front-end engineering design (FEED) works with Western Gas, until a final investment decision (FID) is reached, which is most likely to take place in late 2019. Baker Hughes will accompany McDermott in these commitments. McDermott’s portion of the contract is expected to be valued in the range of $1-$50 million, which is likely to be incorporated in the fourth-quarter backlog.

io Oil & Gas Consulting, a joint venture between McDermott and Baker Hughes, is expected to carry out the pre-FEED support work, which is expected to be completed in the second quarter of 2019. This move is expected to lead to an efficient plan for the development of the project, which is located around 200 kilometers north-west of Onslow. In November 2017, Western Gas acquired the project from Hess Corp. HES.

Once the FID is reached, McDermott and Baker Hughes will likely receive a new contract for the project’s engineering, procurement, construction, installation and commissioning (EPCIC) work. Under this contract, McDermott is expected to provide evaluation of the reservoir, drilling and completions, subsea, production facilities, an export pipeline, a liquid natural gas facility and a gas connection space.

Price Performance

McDermott has lost 64.6% in the past year compared with 32% collective fall of the industry it belongs to.

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Currently, McDermott has a Zacks Rank #5 (Strong Sell). Investors interested in the energy sector can opt for a better-ranked stock given below:

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