FMC Technologies Inc. (FTI) won a contract worth $70 million from Statoil ASA (STO) to manufacture and supply subsea production equipment. The equipment will be used in the offshore oil and gas field Pan Pandora, situated at a water depth of approximately 950 feet in the Norwegian sector of the North Sea.
 
As per the contract, FMC Technologies will manufacture four subsea production trees, wellheads, choke modules and subsea control modules, as well as supply one manifold structure and associated tools and control systems. The company will construct and assemble the pieces of equipment at the facilities in Scotland and Norway based on a subsea standard solution designed by Statoil and FMC Technologies. Delivery of the equipment is expected to start in the second quarter of 2011.
 
The agreement also includes the option of supplying subsea production systems to three additional fields.
 
This is the third contract awarded to FMC Technologies by Statoil in 2010. In January, the former received a $40 million contract to design and supply subsea equipment for Statoil’s Snorre field, followed by another $62 million contract to manufacture and supply subsea production equipment to support the Marulk field in March.
 
The support extended by FMC management toward Statoil’s fast-track strategy will strengthen the relationship between these two companies, enabling the latter to achieve its first oil production in a 50% reduced time frame.
 
We expect FMC Technologies shares to outperform its peers over the next six to twelve months, given its dominant market share, technology leadership, growing international operations and big awards. Therefore, we retain our long-term Outperform recommendation.
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