The Australian subsidiary of FMC Technologies Inc. (FTI”>FTI) has secured a manufacturing and supply contract from the domestic firm Woodside Energy Ltd. This deal will fetch FMC Technologies approximately $150 million in revenue.
Per the agreement, FMC Technologies will design, manufacture and deliver subsea production systems that will be utilized in the Greater Western Flank (GWF) Phase 1 Project. The scope of the contract involves the supply of six subsea production trees, six wellheads, two manifolds, subsea and topside controls and flowline connection systems.
FMC Technologies will begin the deliveries in the second half of 2012 and continue through 2013.
Woodside-operated Greater Western Flank project encompasses 16 fields located to the south west of the Goodwyn A (GWA) platform. The acreage is estimated to reserve up to 3 trillion cubic feet of recoverable gas and up to 100 million barrels of recoverable condensate.
The first phase of the GWF venture will feature the development of Goodwyn GH and Tidepole fields. Apart from Woodside, the other partners in the project are BHP Billiton Ltd (BHP”>BHP), BP plc (BP), Chevron Corporation (CVX”>CVX), Japan Australia LNG (MIMI) and Royal Dutch Shell plc (RDS.A).
With start-up scheduled in early 2016, the GWF project will likely enhance the existing infrastructure and lend investment support to the large resource ventures in Australia. GWF forms a part of the bigger multi-billion North West Shelf Project.
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.
FMC Technologies exhibits a diversified product portfolio, specialty service capabilities and proprietary technological expertise. Additional positives for the company include a strong backlog position, expanding international operations and a favorable outlook for subsea activity levels.
However, we remain concerned about the uncertain commodity price outlook and a soft global economy that continues to weigh on the company. Additionally, with markets remaining competitive and pricing likely to be weak, we expect FMC Technologies’ growth potential to be restrained and see limited upside from the current level.
We maintain a long-term Neutral recommendation on the stock. FMC Technologies currently retains a Zacks #3 Rank, which is equivalent to a short-term Hold rating.
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