) announced that it has extended its contract with oilfield
services firm Subsea 7 for approximately $300 million.
BP PLC (BP): Free Stock Analysis Report
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The deal includes subsea construction, inspection, repair as well
as maintenance services for the Foinaven and Schiehallion fields in
the UK North Sea. The five-year contract extension will begin in
2013 and will continue till 2017.
Per the terms of the contract, Subsea 7's multi-purpose support
vessel - Subsea Viking - will offer widespread support services
mainly for BP's operations in the two fields, west of Shetland and
for other assets of BP located elsewhere in the North Sea.
Located on Blocks 204/19 and 204/24a at a water depth of about 450
meters, the Foinaven field represents the first UK deepwater
oilfield to be developed on the Atlantic margin.
On the other hand, the Schiehallion field is situated about 161
kilometers west of the Shetland Islands on Blocks 204 and 205. The
water depth extends from 350 to 400 meters.
The contract extension is expected to be a positive for BP as this
strengthens its relation with Subsea 7, which has helped BP in
sustaining activities under tough conditions prevalent in the west
of Shetland since 1998.
Further, BP's new strategy of active portfolio management, higher
exploration activity, ae nd refining and marketing repositioning is
expected to generate value for shareholders.
BP - which recently intended to offload its Texas City refinery as
well as other properties to Ohio-based
Marathon Petroleum Corp.
) in an effort to realign its downstream portfolio - has a Zacks #3
Rank, which is equivalent to a Hold rating for a period of one to
three months. Longer term, we maintain our Neutral recommendation.