Energy-focused engineering and construction firm McDermott International (MDR) announced that one of its units has received a subsea infrastructure contract from Vetco Gray Australia Pty Ltd. The transaction, valued in excess of $50 million, will be included in McDermott’s fourth-quarter 2010 bookings. The project calls for McDermott to make 12,000 tons of subsea structures and spools for Chevron Corp’s (CVX) Gorgon liquefied natural gas (“LNG”) venture in Australia.
Chevron Australia holds approximately 47% operated interest in the A$43 billion ($37 billion) Gorgon development. The other partners are ExxonMobil Corp. (XOM) and Royal Dutch Shell PLC (RDS.A). The Gorgon gas fields, off the coast of Western Australia, are estimated to contain 40 trillion cubic feet of gas deposits with an expected economic life of at least 40 years from the time of start-up. Chevron has said that the venture will have an annual capacity to produce 15 million tons of LNG, with the first shipment expected in 2014.
The contract, which will be supported by McDermott’s manufacturing facility at Batam Island, Indonesia, encompasses the fabrication of various eight-slot, six-slot and four-slot manifolds, including pipeline termination structures, pipeline end terminations, spools, well jumpers and subsea pig launchers/receivers. The Texas-based engineering-to-project management service provider is due to commence engineering work later this year, with contract completion expected during the fourth quarter of 2012.
The order – McDermott’s second Gorgon win following a deal to supply 60 pre-assembled racks and units earlier this year – further solidifies the company’s strategic positioning as a SURF (“Subsea Infrastructure, Umbilicals, Risers & Flowlines”) service provider in the high growth Asia-Pacific market.
McDermott, which currently retains a Zacks #5 Rank (short-term Strong Sell rating), primarily serves the worldwide offshore oil and gas field developments, including the front-end design and detailed engineering, fabrication and installation of offshore drilling and production facilities, as well as installation of marine pipelines and subsea production systems.
Additionally, the company provides project management and procurement services. It operates in most major offshore oil and gas producing regions, including the U.S., Mexico, Canada, the Middle East, India, the Caspian Sea and Asia Pacific.
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