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TechnipFMC Gets Hold of Subsea Contract for Payara Project

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TechnipFMC plc (FTI - Free Report) stated that it was awarded a contract by Exxon Mobil Corporation (XOM - Free Report) subsidiary Esso Exploration and Production Guyana Ltd. ("EEPGE") to supply subsea equipment for the Payara project in the Stabroek Block, 193 kilometers along the coast of Guyana with water depths of 1,500-1,900 meters.

EEPGE is the operator with a 45% interest in the Stabroek Block. Payara is the third project in the Stabroek Block, following the two phases of Liza. The development is homogeneous to that of Liza phase 1 and 2 and will own up to 45 wells including production wells, water injection wells and gas injection wells.

Per the contract, TechnipFMC will process and supply the subsea production system comprising 41 upright deep water trees, six flexible risers and ten plumbing manifolds in addition to other related tools and tie-in equipment. The contract’s value is estimated to be around $500 million to $1 billion. TechnipFMC also mentioned that it will carry forward the local hiring and training process to uphold the Payara project.

After getting clearance for field development from Guyana’s government, Exxon-Mobil made a final investment decision to go forward with the Payara project. The company expects Payara to yield up to 220,000 barrels of oil per day following the expected start-up in 2024. The $9 billion development is estimated to hold a resource base of 600 million oil barrels.

So far, 18 oil discoveries have been made in the Stabroek Block and a gross redeemable resource of eight billion oil equivalent barrels has been estimated including Liza and other successful exploration wells on Payara.

Apart from bringing in precious revenues for TechnipFMC, the agreement will further strengthen the company’s presence in Guyana. The company, through exceptional subsea technologies, is already involved in the Liza phase 1 and 2 projects offshore Guyana.

Company Profile & Price Performance

TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. The company’s shares have underperformed the oil and gas field services industry in the past six months. Its shares have declined 14.6% against the 20.7% increase of the composite stocks belonging to the industry.



Zacks Rank and Key Picks

TechnipFMC currently carries a Zack Rank #3 (Hold). Some better ranked players in the energy space are Laredo Petroleum Inc currently sporting a Zacks Rank #1 (Strong Buy) and Oceaneering International, Inc. (OII - Free Report) carrying a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, the Zacks Consensus Estimate for 2020 earnings for Laredo Petroleum has been raised 200.6%.

Oceaneering Internationalis expected to see earnings growth of 39% in 2020.

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