Oilfield service provider TechnipFMC plc (FTI - Free Report) has been awarded a contract worth $4.2 billion by the Bahrain Petroleum Company (Bapco) for its only refinery, Sitra.
Per the contract, South Korea’s Samsung Engineering and Spain's Tecnicas Reunidas will join TechnipFMC for the Bapco Modernization Program, which is located on the Eastern coast of Bahrain. The project requires these companies to increase Sitra's capacity to 360,000 barrels per day (bpd) from its existing capacity of 267,000 bpd. The project is also aimed at increasing the energy efficiency of the refinery as well as meeting the environmental criteria. The modernization project is expected to improve the technologies used at the refinery, following which, even a low oil price environment would not affect its ability to earn good margins.
Per the deal, the project is expected to be completed by 2022 and will be carried out as an engineering, procurement, construction and commissioning (EPCC) contract. TechnipFMC will lead the project. The company believes that the contract will strengthen its leadership position in the oilfield service providing sector.
London-based TechnipFMC is a leading manufacturer and supplier of technology solutions for the energy industry. The company, which reached its current form following the January 2017 merger between Technip and FMC Technologies, is engaged in designing, producing and servicing technologically sophisticated systems and products for subsea, onshore/offshore, and surface projects.
Amid reduced activity and pricing pressure, TechnipFMC has been able to maintain attractive operating margins courtesy of its relentless cost reductions combined with excellent project execution. Continued strong execution on Yamal and an improving pipeline of projects have boosted the offshore/onshore segment of the company.
However, TechnipFMC’s subsea segment, which was once its largest and fastest growing unit, is facing revenue and margin pressure due to volatile pricing. In the recent quarter, Subsea revenues and profits declined a respective 37% and 71.3% year over year.
TechnipFMC has lost 18.6% of its value year to date compared with 31.1% decline of its industry.
Zacks Rank and Stocks to Consider
The company has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the oil and energy sector include ConocoPhillips (COP - Free Report) , Northern Oil and Gas, Inc. (NOG - Free Report) and Holly Energy Partners, L.P. (HEP - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based ConocoPhillips is a major global exploration and production company. The company’s sales for 2017 are expected to increase 24.4% year over year. The company delivered an average positive earnings surprise of 152.3% in the last four quarters.
Minnetonka, MN -based Northern Oil and Gas is an independent energy company. The company’s sales for the fourth quarter of 2017 are expected to increase 51.9% year over year. The company delivered an average positive earnings surprise of 175% in the last four quarters.
Dallas, TX-based Holly Energy is a production pipeline company. The company’s sales for 2017 are expected to increase 10.4% year over year. The company delivered a positive earnings surprise of 57.1% in the third quarter of 2017.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>