Oil services company TechnipFMC won a $7.6 billion contract with Russia’s Novatek and its partners for the Arctic 2 LNG project in western Siberia, pushing TechnipFMC’s shares higher.
TechnipFMC’s Paris-listed shares rose 3.2% in early session trading, as analysts welcomed the new contract.
TechnipFMC said the consolidated value of the contract to it for Arctic LNG-2 was $7.6 billion and consisted of three LNG trains, each with a capacity of 6.6 million tons per annum (Mtpa).
“TechnipFMC’s announcement of the award of the $7.6 billion award for the 3-train Arctic LNG 2 project will, in our view, now see Technip’s Onshore/Offshore division report record backlog levels of more than $16 billion at 2Q19 [second-quarter 2019] results within overall group backlog level possibly over $25 billion, the highest level for the group backlog since 2Q15 [second-quarter 2015],” wrote brokerage Jefferies.
Jefferies kept a “buy” rating on TechnipFMC.
The Arctic LNG 2 project aims to develop more than 7 billion barrels of oil equivalent (Bboe) of resources.
Novatek holds a 60% stake in the project, while French oil and gas major Total, China’s CNPC, CNOOC, and Japan Arctic LNG consortium each hold 10%.
Novatek said on July 23 it had reached its target for participation in the project with the completion of stake sales, meaning it could now make a final investment decision.
The project is expected to have a total production capacity of 19.8 million tonnes per year, or 535,000 boe per day.
TechnipFMC, created by a 2016 merger of France’s Technip and U.S. rival FMC Technologies, had previously carried out design engineering and construction work on Novatek’s Yamal LNG project.
“We are extremely honored to be entrusted with this new contract by Novatek and its partners. We are leveraging our successful track record on the Yamal LNG project and notably the modular fabrication scheme,” Nello Uccelletti, president of onshore/offshore operations at TechnipFMC, said in a statement.
In a separate statement, the company said on July 23 its board had approved a quarterly cash dividend of $0.13 per ordinary share payable on or shortly after Sept. 4.