TechnipFMC Wins Subsea Contract for Liuhua Field From CNOOC

TechnipFMC plc FTI recently secured a contract from CNOOC Limited CEO to support the Liuhua development project in the South Sea China. The engineering, procurement and construction (EPC) contract clinched by TechnipFMC will require the company to design, procure and construct a subsea system. This will comprise twenty units of enhanced horizontal subsea tree, along with control systems, wellheads, manifolds and intervention workover control systems. The contract also entails installation and commissioning services, along with providing local services support base in China.

The contract reinforces the close association of TechnipFMC with CNOOC, which is one of the major oil and gas exploration companies in China. The value of the contract has not been disclosed yet, however the EPC award further boosts TechnipFMC’s presence in China.

Notably, the subsea segment, which was once the largest and fastest growing unit of TechnipFMC, has been facing challenges in its revenues over the past few quarters, amid a volatile pricing scenario. In fact, the subsea revenues witnessed a sequential decline in each of the trailing four quarters. However, with the massive recovery in crude prices of late, many energy companies are slowly increasing their spending on the upstream projects, translating into more contracts for the oilfield service providers like TechnipFMC.

Concurrently, the subsea orders of the company have gradually started building up. In fact, in the last reported quarter, the company’s subsea segment secured new orders worth $1.2 billion, including contracts from Energean Oil & Gas, Sabah Shell Petroleum Company Ltd and LLOG Exploration for the Karish field development project, Gumusut-Kakap phase 2 project and Who Dat field in Mexico, respectively. Total subsea backlog of TechnipFMC stood at more than $6.1 billion as of Mar 31, 2018.

Notably, with its Subsea 2.0 platform, along with multiple new product technologies and integration activities, the company remains confident that the subsea orders are likely to gain traction in 2018 and witness continued growth in 2019. In the next couple of years, the company anticipates huge subsea opportunities in projects like Liza Phase 2 and Golfinho, Zinia, Vito, and Johan Sverdrup, Bonga SW among others.

Zacks Rank and Key Picks

TechnipFMC currently carries Zacks Rank #3 (Hold).

TechnipFMC plc Price

 

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