Offshore oilfield equipment manufacturer FMC Technologies Inc. (FTI) entered into an agreement with the Australian unit of Royal Dutch Shell plc (RDS.A) for the supply of subsea production and associated topside systems. These equipments will be utilized for the development of Shell’s Prelude field in Broome, Western Australia.
Under the terms of the deal, the Australian subsidiary of FMC Technologies would execute installation and commissioning services of the project. The company expects to receive orders related to the deal over the rest of year.
The scope of the contract includes supply of seven large bore subsea production trees, production manifolds, riser bases, subsea control systems and other associated equipment. These equipages will be delivered from FMC's operational plant in the Asia-Pacific.
Located in the Browse Basin at a water depth of approximately 820 feet, the $11 billion Prelude field is Shell's first venture to use the floating liquefied natural gas facility. The project is scheduled to come online in 2016, with a production capacity of 3.6 million ton of liquefied natural gas, 1.3 million ton of condensate and 400,000 ton of liquefied petroleum gas annually.
FMC Technologies shares a long-standing relationship with Shell that is expected to strengthen over time. Last December, the companies signed a five-year Enterprise Framework Agreement to cooperate on projects in the Gulf of Mexico.
Incorporated in 2000, Houston, Texas-based FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry and operates 27 manufacturing facilities in 16 countries.
We believe that FMC Technologies is favorably positioned for earnings growth in the coming months, considering its leading access to subsea production systems, including subsea trees, controls and manifold and tie-in systems. Additionally, order flow and backlog for subsea products and services are also expected to be healthy and trend higher.
However, with volatile oil and gas fundamentals, competitive market and weak pricing, we expect the company to perform at par with the industry and maintain our long-term Neutral rating. FMC Technologies currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
FMC TECH INC (FTI): Free Stock Analysis Report
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