Petrofac Limited (POFCY - Free Report) recently announced that it was provisionally awarded an engineering, procurement and construction (EPC) contract with Algerian state-run energy company Sonatrach. The contract is valued at $600 million, which is expected to be formally signed by both the companies next month.
The three-year contract enables Petrofac to work on EPC1 of the Tinhert Field Development Project, which is located in Ohanet, approximately 1,500 kilometers southeast of Algiers. The EPC1 will deliver an inlet separation and compression center for the project. Notably, the scope of work incorporates a 400-kilometer network of pipelines connecting 36 wells, as well as commissioning, commencement and testing the performance of the facilities related to the project.
Petrofac is operating in Algeria for more than 20 years and the contract will bolster its presence in the country. The company had previously worked with Sonatrach in the Alrar and Reggane projects, which came online in 2018, in Algeria.
In March 2018, Sonatrach decided to inject $250 million in the Tinhert gas field to ramp-up production from 5 million cubic feet (Mcf) per day to 20 Mcf by 2020.
Headquartered in the U.K., Petrofac is among the major oilfield service providers, involved in designing and maintaining oil facilities. Over the past year, the stock has rallied 56.9% against the 3.6% collective decline of the stocks belonging to the industry.
Zacks Rank and Stocks to Consider
Currently, Petrofac has a Zacks Rank #3 (Hold). Investors interested in the energy sector can opt for some better-ranked stocks like McDermott International, Inc. , Subsea 7 S.A. (SUBCY - Free Report) and Helix Energy Solutions Group, Inc. (HLX - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston, TX-based McDermott is an equipment provider for energy companies. The company’s top line for 2018 is likely to improve 145% year over year. In the last four reported quarters, the company delivered an average positive earnings surprise of 101.7%.
Luxembourg-based Subsea is an oilfield service providing company. In the last four reported quarters, the company delivered an average positive earnings surprise of 318.6%.
Houston, TX-based Helix Energy’s bottom line surpassed the consensus mark in three of the last four quarters, with the average positive earnings surprise being 66.7%.
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