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BP in Service Deal with Oceaneering

28 December 2011

BP Plc (BP) has awarded a three-year Field Support Vessel Services contract to Oceaneering International Inc (OII).

Per the contract, Oceaneering will provide project management, engineering, and vessel services offshore Angola on Blocks 18 and 31, beginning February 1, 2012.

Two chartered vessels – the Ocean Intervention III and the Bourbon Ocean team 101 – equipped with Oceaneering work class remotely operated vehicles and capable of operating in 3,000 meters of water have been contracted under the deal.

Beginning in early January 2012, Oceaneering will mobilize its chartered vessel, Ocean Intervention III, from the U.S. Gulf of Mexico (GoM) to Angola. The contract scope of work extends to light subsea construction, inspection, maintenance, and repair services on existing and future subsea infrastructure.

After the commencement date, a third vessel may be provided by Oceaneering as per the provision of the contract, at BP's option.

In a separate announcement, BP has also entered into a contract with FMC Technologies (FTI) for manufacture and supply of additional subsea equipment for its deepwater projects off Angola.

BP has placed an order for four subsea trees, control systems, wellheads, tubing hangers, well jumpers and subsea distribution systems with FMC Technologies with expected delivery in 2013.

All equipment will be manufactured at FMC's Kongsberg, Norwayand Dunfermline, Scotland facilities. The final assembly and testing will be carried out at FMC’s facility in Angola.

The planned growth of high margin production in the GoM, Angola, North Sea, Brazil, Australia and India will likely boost unit profit, cash flow and investment returns. Angola remains one of the world’s major centre for oil and gas exploration, development and production. BP has a long-term commitment in Angola and being among the largest foreign investors in the country is going to be positively influenced going forward.

BP holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period for one to three months. For the long term, we maintain a Neutral rating on the stock.