Talisman, Sinpoec Hire Subsea 7
05 March 2013Talisman Sinopec Energy UK Limited has awarded the Norwegian seabed-to-surface engineering contractor Subsea 7 with a contract worth $285 million. Talisman Sinopec Energy is a joint venture (JV) between Talisman Energy Inc. (TLM - Analyst Report) and Sinopec International Petroleum Exploration and Production Corporation, a wholly owned subsidiary of Sinopec Group.
The scope of the contract includes project management, engineering, procurement as well as fabrication of a 17.5 kilometer production pipeline, water injection pipeline, gas lift pipeline and control umbilical to tie back the Shaw Field to the new Bridge-Linked Platform (BLP).
The deal also entails the installation of two 5-kilometre pipeline bundles, which will join the Cayley field to the BLP at the Montrose facility and support the redevelopment project in the area.
Subsea 7 is expected to commence the engineering and project management work immediately from its Aberdeen office, while offshore operations are likely to begin in 2014 and 2015.
In mid-Dec 2012, Sinopec closed a $1.5 billion deal for a 49% stake in Talisman’s North Sea business, resulting in the formation of a joint venture. Per the transaction announced in Jul 2012, Sinopec will provide 49% of the expenses for the capital program at the UK fields, including improving operating performance and carry out infill drilling.
The JV also awarded a 5-year frame agreement to Aker Solutions in mid-Jan with respect to maintenance, modifications and operations (MMO) contracts on its brownfield projects on the UK continental shelf. The contracts are in sync with the JV’s policy to improve operating performance that would result in extended field life and defer decommissioning.
Talisman holds a Zacks Rank #3, which is equivalent to a short-term Hold rating. However, there are other stocks in the oil and gas sector – Enerplus Corporation (ERF - Snapshot Report), Range Resources Corporation (RRC - Analyst Report) and NGL Energy Partners LP (NGL) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.