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Oceaneering Wins Award for Shell's Vito Deepwater Project

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Oceaneering International, Inc. (OII - Free Report) recently clinched an award from Subsea 7 SA (SUBCY - Free Report) to provide umbilical and flying leads for Royal Dutch Shell plc’s (RDS.A - Free Report) Vito-Deepwater project in the Gulf of Mexico (GoM). Houston-based supplier of integrated technology solutions will commence the product design and engineering work on the project later this month.

Manufacturing is likely to commence in 2019 at the Oceaneering facility in Panama City and the contract is expected to be completed by the second quarter of 2020. The financial details of the contract have been kept under wraps.

Last month, Oceaneering secured two long-term contracts from Petrobras and Equinor ASA (EQNR - Free Report) . Oceaneering will support Petrobras’ intervention and completion works in Brazil through supplying and operating three drill pipe riser systems with installation workover control systems through a four-year contract. Through a three-year contract from Equinor, Oceaneering will provide electric remotely operated vehicle (E-ROV) system powered by battery, which will be used for subsea inspection, repairing activities and maintenance purposes.

The recent contract for Shell’s deepwater project along with other awards has buoyed Oceaneering’s optimism surrounding the offshore activity levels. The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Deepwater development activities have been severely affected by the crude downturn. However, with the recovering oil prices, this segment of the oil industry is gradually picking up pace. Superior technology, capital efficiency, efficient execution and structural re-engineering are enabling companies to remain competitive in the deepwater industry.

The Vito project is another Shell’s multibillion-dollar project authorized in May 2018. Though Shell did not disclose the cost of the project yet, it is known to have sliced its price tag around 70% from the original project design. The Vito project — with a capacity of around 100,000 barrels of oil equivalent per day — is set to commence oil production from 2021. Shell has been making remarkable progress in forging ahead with its deepwater projects of late. The European oil giant also kick-started the first phase of its deepwater Kaikias project in GoM one year prior to the scheduled date.

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