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BP Awards Shah Deniz Project to Wood Group - Analyst Blog

Oil giant, BP plc ( BP ) has awarded a $60 million (36 million pounds) call-off contract to British energy services company Wood Group Kenny (WGK) for this year under the 2007 Global Agreement.

The contract requires Wood Group Kenny to render engineering and project management services for the Shah Deniz 2 Subsea Execute phase. This contract in Azjerbaijan is an extension of the subsea engineering work already in process under the BP Global Agreement. The deal entails engineering and project management services in the North Sea, Angola and Gulf of Mexico.

Azerbaijan's largest gas field, Shah Deniz, brought online in 2006, is being developed by BP, Statoil ASA ( STO ), SOCAR and others. Wood Group has been associated with BP's project since 2008 and has provided engineering support by appraising, selecting and defining phases of this major project. The latest contract further strengthens the ties between these two companies.

Shah Deniz I has an annual production capacity of about 10 billion cubic meters (bcm) of natural gas. Moreover, gas field Shah Deniz II is projected to yield 16 bcm of gas annually from 2019, with 10 bcm allocated for Europe and 6 bcm for Turkey.

BP's strategy of offloading non-core upstream properties will prove beneficial over time, while creating a portfolio with potentially stronger growth from a smaller base. Additionally, BP's position in the Woodford, Haynesville, Fayetteville, Eagle Ford and Utica shale plays, along with its vast resource base and knowledge in unconventional gas, will aid its natural gas operations going forward.

At present, BP carries a Zacks Rank #3 (Hold). Some better-ranked oil and gas stocks like Encana Corp ( ECA ) and Matrix Service Co. ( MTRX ) are attractive picks in the near term. Both of these stocks sport a Zacks Rank #1 (Strong Buy).

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BP PLC (BP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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