A McDermott International, Inc. MDR-led consortium, which includes Baker Hughes, a GE company BHGE, recently received a contract from the South Korean company, POSCO DAEWOO Corp. for developing the Shwe gas field, offshore Myanmar. The consortium will help POSCO with the second phase of the development program for the field located off the coast of Western Myanmar.
The engineering, procurement, construction, installation contract (EPCIC) received by the McDermott-led consortium incorporates providing subsea umbilicals, risers and flowlines (SURF), and subsea production systems (SPS) for developing eight subsea wells that fall in the range of 279 feet (85 meters) to 466 feet (142 meters) of water depth. The contract requires the companies to demolish the old infrastructure and upgrade the subsea facilities that will be tied-back to the existing platform in the field.
The contract follows a front-end engineering and design (FEED) competition, which the consortium took part in 2017 and executed successfully. McDermott is expected to provide cost-effective technical solutions for the project’s development. The contract bolsters the company’s presence in the Asia-Pacific region, where energy demand is on the rise, triggered by economic growth.
Baker Hughes is expected to provide the SPS scope that incorporates eight Medium-water Horizontal Xmas Trees along with eight subsea production control systems with distribution gadgets, and topside controls.
McDermott will execute the contract from its office in Kuala Lumpur, Malaysia, while Baker Hughes’s office in Singapore will support the operations. McDermott’s Derrick Lay Vessel 2000 will be used for the SURF and SPS-related operations. McDermott stated that its portion of the contract is a large one, which according to the company’s definition, is valued in the range of $50-$250 million. Moreover, the contract will be included in McDermott’s second-quarter 2018 backlog. The consortium is expected to make the final delivery of the contract in 2022.
Price Performance
McDermott has lost 5.1% in the past year against 13.3% rally of its industry.
Zacks Rank and Stocks to Consider
Currently, McDermott has a Zacks Rank #3 (Hold). Investors interested in the Energy sector can opt for some better-ranked stocks like CNOOC Limited CEO and Delek US Holdings, Inc. DK, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hong Kong-based CNOOC is an integrated energy company. The company’s top line for 2018 is anticipated to improve 64.4% year over year, while its bottom line is expected to increase 124.3%.
Brentwood, TN-based Delek is an energy company. The company’s top line for 2018 is likely to improve 39.2% year over year, while its bottom line is expected to increase 326.2%.
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