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BP Awards Mad Dog Phase 2 Contract to OneSubsea, Subsea 7

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Energy giant BP Plc (BP - Free Report) recently declared that it has awarded a contract to OneSubsea and U.K.-based Subsea 7 for the development of Mad Dog Phase 2 project in the Gulf of Mexico (GoM). Notably, OneSubsea is part of oilfield services super major, Schlumberger Limited (SLB - Free Report) .   

The contract is valued at $300–$500 million, wherein OneSubsea will be responsible for the supply of subsea production system that includes subsea manifolds, trees, control system, single and multi-phase meters, water analysis sensors, intervention tooling and test equipment.

Subsea 7, on the other hand, is expected to be in charge of engineering, procurement, construction and installation of the Mad Dog Phase 2 project’s subsea umbilicals, risers, flowlines and related subsea architecture.

BP’s $9 billion Mad Dog Phase 2 development is likely to commence oil production by late 2021.

London-based BP is one of the largest integrated energy firms in the world and its shares have gained 13.3% over the last one year, outperforming the Zacks categorized Oil & Gas-International Integrated industry’s increase of 8.6%. BP's stock price movement is also better than other energy majors like Royal Dutch Shell plc and Exxon Mobil Corporation (XOM - Free Report) . Shell’s stock appreciated 13.3%, while Exxon Mobil’s stock depreciated 2.3% during the same time period.

However, the oil spill incident of 2010 in the BP-operated Macondo Prospect is still affecting the company. Although BP has cleared the huge litigation expenses related to the spill, it had to divest some of its best operating properties. The asset sales might hinder BP’s future cash generating opportunities going forward. The lost reserves/production from the group's asset sales cannot be ignored either.

BP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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