UK-based oilfield service provider TechnipFMC plc FTI has been awarded two major subsea contracts by Petrobras S.A. PBR, a Brazilian oil and gas major. These contracts are seen to be a significant step toward the development of the hydrocarbon resources in Brazil’s offshore oil fields.
TechnipFMC claims that manufacturing and servicing of all the equipment will be done locally to ensure that the country benefits from these contracts and its pre-salt reserves develop continually.
FTI Stock to Gain From Twin Contracts
Flexible Pipe Technology: The major terms of the first contract between TechnipFMC and Petrobras include designing, engineering and manufacturing flexible riser pipes, along with providing associated services like packing and storage. The first contract bagged by TechnipFMC is considered to be substantial as it is valued between $250 million and $500 million in inbound orders.
The award of this contract, along with the previous pre-salt venture of TechnipFMC in Búzios 6-9 fields, validates the company’s leadership in flexible pipe technology and standardized equipment platforms. Investors should know that Buzios is the second-largest field in Brazil by production, after the Tupi field, both situated in Santos Basin.
Subsea Production Systems on Three Offshore Oil Fields: The terms of the second contract include designing, engineering and manufacturing the subsea production systems by TechnipFMC for deployment on the Atapu 2, Sepia 2 and Roncador projects. The company would also provide some additional services like installation support, life-of-field services and additional equipment. The second contract is equally significant for TechnipFMC as the company expects to win between $75 million and $250 million in inbound orders.
The Atapu and Sepia fields, which are in their second development phase, began production in 2020 and 2021, respectively. With the new floating production, storage and offloading (FPSO) vessel, P-84, in the Atapu field, 225,000 barrels of oil per day will be added to its production capacity. The Sepia fields will also get similar production capacity with the introduction of a new FPSO vessel, P-85. Petrobras holds the majority of the stake in both these fields in partnership with other oil majors.
Meanwhile, Brazil’s fifth-largest oil field, Roncador, is being operated by Petrobras with a 75% equity holding. The company started its operations in this field with the Increased Oil Recovery project. With the award of the abovementioned two major contracts to TechnipFMC, this field’s production capability will further get a boost.
FTI’s Zacks Rank and Key Picks
TechnipFMC is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry. Currently, FTI has a Zacks Rank #2 (Buy).
Investors interested in the energy sector might look at some other stocks like PEDEVCO Corp. PED and VAALCO Energy EGY. While PEDEVCO currently sports a Zacks Rank #1 (Strong Buy), VAALCO Energy carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
PEDEVCO Corp. is an oil and gas company engaged in the acquisition and development of energy projects in the U.S. and Pacific Rim countries. Over the past 30 days, the Zacks Consensus Estimate for PED's 2024 earnings has improved by 33.3%.
VAALCO Energyis an independent energy company principally engaged in acquiring, developing and producing crude oil and natural gas. The Zacks Consensus Estimate for EGY’s 2024 earnings indicates 4.8% year-over-year growth.
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Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
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