Statoil ASA (STO) has awarded a $43 million contract to FMC Technologies Inc. (FTI) in order to support workover operations at four fast-track fields in the North Sea. This goes to show the effort that the company is making to increase productivity in the North Sea region.
As per the agreement, FMC will manufacture and provide eight workover adapters for horizontal subsea production trees, five adapters for drill pipe landing strings and topside controls. The equipment, which will be manufactured at FMC’s facility in Kongsberg, Norway are scheduled for release from the second quarter of 2012.
The workover system would be used by Statoil to carry out intervention activities on its subsea wells to enhance performance and boost oil recovery. The company also plans to bring about additional flexibility and consistency to the total workover system portfolio.
This contract follows a contract worth $2.47 billion awarded by Statoil to Songo Offshore a day earlier. The contract was for building two category D semi-submersible rigs for use on the Norwegian Continental Shelf (NCS).
Though the company has operations in all major hydrocarbon-producing regions of the world, it has an upstream focus on the NCS. We appreciate Statoil’s endeavor to improve recovery of resources in mature fields.
Statoil had earlier said that its 2011 oil and gas production would be flat or lower compared with the 2010 level, owing to field maintenance. With production targets now being lowered, we believe that the key risk is the basic operating cost.
Statoil has a Zacks #4 Rank, which translates into a Sell rating for a period of one to three months. However, we are Neutral on the company for the long term. The company faces tough competition from Exxon Mobil Corporation (XOM) and ConocoPhillips (COP).
