Shares in FMC Technologies (FTI) hit a 52-week high on 10 April, closing at $55.27 as it secured new contracts for subsea equipment and services with Norway’s Statoil (STO), Brazil’s Petrobras (PBR) and Tullow Ghana.
Norway’s Statoil has renewed an agreement with FMC Technologies to provide subsea operations services for its Norwegian Continental Shelf projects. The extended agreement runs for five years with a possible three-year extension and is worth around $1.48 billion.
At the same time, FTI has signed a four-year agreement to continue services with Brazilian major Petrobras for offshore equipment and services for the company’s subsea fields. The financial details of this one are not available.
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Late last month, FMC Technologies signed a five-year agreement with Tullow Ghana to provide subsea services for its developments in the Jubilee field in the West African country.
FMC Technologies has been performing impressively lately, with around 2 million shares traded over 30 days as of 10 April. The company is a global leader in subsea equipment and services, with a market cap of $12.23 billion and a debt/equity ratio of 88.54.
Subsea production could rival traditional offshore production in less than 15-20 years, and expected market growth for subsea facilities should hit $130 billion in 2020, up from around $27 billion in 2011.
Subsea capital expenditure is set to grow at 14.8% to 2017, according to Infield Systems, and driving this growth is investment in Northern Europe, West Africa, Brazil and the US Gulf of Mexico.
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Analysts expect E&P companies to invest more than $19 billion in subsea production equipment in 2013 alone--and up to $33 billion by 2017.
North Europe and South America are the two biggest venues to look at here for FMC expansion. There are almost 75 subsea oil and gas projects in existence in North Europe, with Norway taking the clear lead, followed by the UK.
In South America, there are eight subsea projects online, with most of them in Brazil, and one in Trinidad & Tobago. Significant subsea growth is expected here as Petrobras ups its estimates of pre-salt finds that could be a major boost to the country’s reserves. Pre-salt projects will absorb almost 40% of subsea investment.
By. Charles Kennedy of Oilprice.com