Oil drilling equipment maker FMC Technologies Inc. (FTI) entered into a manufacture and supply contract with Hibernia Management and Development Company Ltd. (“HMDC”).
The financial terms of the deal were not disclosed.
Per the terms of the contract, FMC Technologies has the provision to supply up to six subsea injection trees and wellheads, one manifold and associated control systems to the Hibernia Southern Extension Project. FMC will manufacture all the equipment at its plants in St. John's and Houston, with deliveries slated for the second quarter of 2013.
The project forms an expansion of the Hibernia field that is situated on the Grand Banks, about 200 miles southeast of St. John's, Newfoundland and Labrador. The field is estimated to reserve approximately 1.395 billion barrels of oil.
The major shareholder of HMDC is ExxonMobil Corp. (XOM) with a 33.125% interest. The other co-partners include Chevron Corp. (CVX) – 26.875%, Suncor Energy (SU) – 20%, Canada Hibernia Holding – 8.5%, Murphy Oil Corporation (MUR) – 6.5% and Statoil ASA (STO) – 5%.
Houston, Texas-based FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry and operates 25 manufacturing facilities in 15 countries.
We believe that FMC Technologies is favorably positioned in the subsea systems market and remains highly upbeat regarding this offshore venture. There exists long-term earnings visibility given a strong order flow and backlog for subsea products and services.
However, the uncertain commodity price outlook along with a soft global economy compels us to maintain our long-term Neutral recommendation on the stock. FMC Technologies currently retains a Zacks #3 Rank, which translates into a short-term 'Hold' rating.
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