ExxonMobil Corporation (XOM) has awarded a contract of $750 million to Samsung Engineering Company and Tripatra Engineering. The contract entails construction of production facilities at the Banyu Urip field in the Cepu oil and gas block in Java.
The project, slated to begin this month, confers Samsung Engineering Company and its Indonesian partner Tripatra Engineering rights to handle all procedures, ranging from design to procurement, construction and pilot operations by July 2014. Full field production is expected to commence soon afterward, pending regulatory approvals.
The deal marks a major milestone for ExxonMobil as it is the first of the five engineering, procurement and construction contracts for work on major facilities at the development. The company has raised its estimate of recoverable resource under full development to 450 million barrels, on the basis of appraisal drilling.
ExxonMobil’s unit, Mobil Cepu Ltd., retains the operatorship of the field with 45% interest while Pertamina holds another 45% interest and four local government companies hold the remaining 10%.
After the completion of field development, 165,000 barrels of oil per day is expected from facilities that include 49 wells on three well pads, a central processing facility, and a 60 mile (95 kilometer) pipeline to transfer the processed oil to a 1.7 million barrel floating storage and offloading (FSO) unit in the JavaSea. Crude oil would be transferred to markets through tankers.
ExxonMobil holds a Zacks #3 Rank, which translates into a Hold rating for a period of one to three months. We are Neutral on the stock for the long term and expect it to perform in line with broader market indices. ExxonMobil faces tough competition from ConocoPhillips (COP) and BP Plc (BP).
