McDermott International, Inc. MDR recently received a new design contract from Qatar Petroleum. The deal resulted from the state-run enterprise's strategy of pushing itself forward to meet its 2023 target of increasing the output of gas at the Persian Gulf's North field by 30%.
McDermott will have to provide a detailed design for the offshore jackets, which will be used in the expansion project in North field. Notably, the deal leads to the Engineering Procurement Construction Installation (EPCI) contract that is expected to be completed by the end of 2018. We would like to remind investors that the impending merger (expected to close on May 10, 2018) with Chicago Bridge & Iron, which is expected to flare up McDermott's EPCI business, will play a major role in the North field expansion project. The financial details of the deal have yet to be disclosed.
Qatar Petroleum anticipates the project to come online in 2019, which will boost liquid natural gas (LNG) production volumes from 77 million tons per annum to 100 million tons. The project - that will add around 1 million barrels of equivalent oil production to Qatar Petroleum's output basket - is part of a larger plan that incorporates six wellhead platforms, jackets and pipelines.
A subsidiary of Qatar Petroleum, Qatargas, in which oil majors like Exxon Mobil Corp. XOM , TOTAL S.A. TOT , Royal Dutch Shell plc RDS.A and ConocoPhillips hold shares, will execute the detailing of the project with McDermott.
Notably, McDermott has significant presence in the countries where state-owned entities continue to scout for production growth and new resources, helping the company win contracts regularly, irrespective of the commodity price environment. The new detailed design deal marks strong relationship with Qatar Petroleum, which will benefit the company in the future as well.
Price Performance and Zacks Rank
Incorporated in 1959, Houston, TX-based McDermott is an engineering and construction company, which gained 18.8% last month compared with 13.5% growth of its industry . McDermott currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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