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Technip Surges After Winning Major Offshore Contracts

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April 24, 2014

Techip’s Deep Blue operates at the Cascade Chinook development in the Gulf of Mexico, image (c) Technip, All Rights Reserved

By Tara Patel

April 24 (Bloomberg) — Technip SA, Europe’s largest oilfield-services provider by market value, rose to the highest level in almost six months after saying it has received major contracts from oil companies even as industry spending slows.

“We have not yet seen a slowdown,” Chief Executive Officer Thierry Pilenko said today on a conference call, citing recent orders in Angola, Brazil, Indonesia and the North Sea and expected future revenue from Yamal LNG in the Russian Arctic.

A contract for the Kaombo project in Angola is worth $3.5 billion for Technip and partner Heerema, the company said in a statement. It also got a “very large” order for the country’s Block 15/06, while Yamal LNG is in the same size category.

That will help the company weather a slowdown in the oil and gas industry, with Total SA, Royal Dutch Shell Plc and Chevron Corp. among customers planning to rein in spending.

The stock rose as much as 7.4 percent to 82.20 euros, the highest since Oct. 30, and was at 81.95 euros by 10:38 a.m. in Paris.

Technip sees subsea division margins bouncing back this quarter after warning last year of an unusually low figure in the first three months as it started a plant in Brazil, completed Gulf of Mexico projects and increased maintenance.

It today beat analyst estimates with a first-quarter drop in net income to 67.2 million euros ($93 million) from a restated 116.2 million euros a year before, the Paris-based company said. The average of 10 analyst estimates compiled by Bloomberg was for net income of 62.4 million euros. The company affirmed its financial targets for this year and next.

Subsea Division

Contracts for Yamal LNG may come “quite soon,” Chief Financial Officer Julian Waldron told analysts today on a call. “We expect a rebound in subsea margins in the second quarter.”

Technip’s order intake was 2.9 billion euros in the quarter, bringing its contract backlog to a restated 15.4 billion euros, according to today’s statement.

Subsea-division operating margins fell to 5.5 percent in the first quarter from 12.7 percent a year before. Onshore- offshore operations fell to 5.9 percent from 6.8 percent.

The oil services provider reiterated a goal for subsea margins of at least 12 percent in 2014. The division’s revenue will grow to 4.35 billion to 4.75 billion euros this year, it said, adding that the targets don’t take into account earnings from Yamal LNG. Onshore-offshore revenue will be 5.4 billion to 5.7 billion euros, with margins of 6 percent to 7 percent.

Copyright 2014 Bloomberg.


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