TechnipFMC Awarded Substantial iEPCI™ Contract for Sparta Project
TechnipFMC (FTI) secures a significant contract with Shell for the first 20K psi subsea production systems project in the Gulf of Mexico. The project aims to enhance project economics and marks a milestone in high-pressure technology development.
The contract awarded to TechnipFMC by Shell for the Sparta development represents a significant milestone in the subsea engineering industry, given its incorporation of high-pressure systems rated up to 20,000 psi. This move indicates a growing trend towards high-pressure, high-temperature (HPHT) developments which can unlock previously inaccessible resources. The contract value, defined as 'substantial' by TechnipFMC's standards, places it between $250 million and $500 million, which is a noteworthy injection into TechnipFMC's revenue stream and could positively influence its financial performance in the upcoming quarters.
Investors should be aware that such projects can enhance TechnipFMC's market position and showcase its capability to execute complex engineering challenges. This could potentially lead to further contracts and strengthen investor confidence in the company's technological leadership and execution model. However, the high-technology nature of the project also carries inherent risks associated with the development and deployment of novel technologies and the potential for project delays or cost overruns.
From a financial perspective, the inclusion of this contract in the first quarter Subsea inbound orders could signal a positive outlook for TechnipFMC's Q1 earnings. The scale of the deal within the context of TechnipFMC's overall revenue and order backlog is substantial and it could lead to an upward revision of earnings forecasts by analysts. The long-term implications of successfully delivering on this project could also pave the way for future contracts of similar magnitude, enhancing the company's earnings visibility and growth trajectory.
However, stakeholders should monitor the project's progression closely, as any setbacks could impact not only the company's financials but also investor sentiment. Additionally, the capital expenditure required for such projects is significant and the return on investment will be critical to evaluate, particularly given the volatility in oil prices and potential shifts in the energy sector's regulatory landscape.
Legally, the engagement in high-pressure subsea production system projects like Sparta necessitates stringent compliance with environmental and safety regulations. The Gulf of Mexico is a region with a history of environmental scrutiny and any new development must adhere to the highest standards. TechnipFMC's ability to meet these standards can influence the project's timeline and costs.
Furthermore, the successful deployment of 20K technology could set a precedent for future projects in the industry, potentially influencing regulatory standards for HPHT operations. It's crucial for stakeholders to consider the regulatory trajectory and the potential legal challenges that might arise with the adoption of such advanced technologies in sensitive marine environments.
02/15/2024 - 04:15 PM
NEWCASTLE & HOUSTON --(BUSINESS WIRE)--
TechnipFMC (NYSE: FTI) has been awarded a substantial(1) contract by Shell plc (FTSE: SHEL) (AMS: SHELL) (NYSE: SHEL) for the first integrated Engineering, Procurement, Construction, and Installation (iEPCI™) project to use high-pressure subsea production systems rated up to 20,000 psi (20K).
The Company will manufacture and install subsea production systems, umbilicals, risers, and flowlines for Shell’s Sparta development in the Gulf of Mexico . The tree systems will be Shell’s first to be qualified for 20K applications and are engineered to meet the high-pressure requirements of this greenfield development.
Jonathan Landes , President, Subsea at TechnipFMC, commented: “Sparta will combine our leading-edge subsea technology with our proven integrated execution model, iEPCI™, providing improved project economics. We are excited to be working with Shell on 20K technology.”
(1) For TechnipFMC, a “substantial” contract is between $250 million $500 million
Important Information for Investors and Securityholders
Forward-Looking Statement
This release contains "forward-looking statements" as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. The words “expect,” “believe,” “estimated,” and other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. Such forward-looking statements involve significant risks, uncertainties and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. For information regarding known material factors that could cause actual results to differ from projected results, including our assumptions and projections regarding the expected benefits of the awarded contract, please see our risk factors set forth in our filings with the United States Securities and Exchange Commission, which include our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except to the extent required by law.
About TechnipFMC
TechnipFMC is a leading technology provider to the traditional and new energy industries, delivering fully integrated projects, products, and services.
With our proprietary technologies and comprehensive solutions, we are transforming our clients’ project economics, helping them unlock new possibilities to develop energy resources while reducing carbon intensity and supporting their energy transition ambitions.
Organized in two business segments — Subsea and Surface Technologies — we will continue to advance the industry with our pioneering integrated ecosystems (such as iEPCI™, iFEED™ and iComplete™), technology leadership and digital innovation.
Each of our approximately 21,000 employees is driven by a commitment to our clients’ success, and a culture of strong execution, purposeful innovation, and challenging industry conventions.
TechnipFMC uses its website as a channel of distribution of material company information. To learn more about how we are driving change in the industry, go to www.TechnipFMC.com and follow us on X (formerly Twitter) @TechnipFMC.
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Source: TechnipFMC plc
What contract did TechnipFMC (FTI) secure with Shell?
TechnipFMC secured a substantial contract for the first integrated Engineering, Procurement, Construction, and Installation (iEPCI™) project for high-pressure subsea production systems rated up to 20,000 psi (20K) for Shell's Sparta development in the Gulf of Mexico.
What is the significance of this contract for TechnipFMC (FTI)?
This contract marks a significant milestone for TechnipFMC as it combines leading-edge subsea technology with the integrated execution model, iEPCI™, to enhance project economics and meet high-pressure requirements.
Who commented on the collaboration between TechnipFMC (FTI) and Shell?
Jonathan Landes, President, Subsea at TechnipFMC, commented on the collaboration, highlighting the excitement to work with Shell on 20K technology.
What is the financial range of a 'substantial' contract for TechnipFMC (FTI)?
A 'substantial' contract for TechnipFMC is typically between $250 million and $500 million.
What will be included in the first quarter Subsea inbound orders for TechnipFMC (FTI)?
The award for the Shell contract will be included in the first quarter Subsea inbound orders for TechnipFMC.
