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Saudi Aramco, Adnoc wins drive McDermott Mena to $399m in Q2'19

EPC milestones also achieved as H1 2019 Feed contracts valued at twice the amount of all Feed awards in 2018

McDermott has a strong track record of EPC projects in the Middle East.
McDermott
McDermott has a strong track record of EPC projects in the Middle East.

American contractor McDermott said its Q2 2019 revenues in the Middle East and North Africa (Mena), worth $399m, were buoyed by contributors such as Saudi Arabia’s Sasref and Saudi Aramco’s Safaniya Phases 5 and 6, Oman’s Liwa project, and Adnoc’s Crude Flexibility programme in Abu Dhabi, with the company’s operating income in the Mena region impacted “by transitioning from mature backlog to newer contracts”.

In a statement, McDermott said it noted a “record-level order intake” during Q2 2019, resulting its highest backlog in the Mena region to date.

Among McDermott’s new contract awards during the quarter were two megaprojects for Saudi Aramco located in the Marjan field.

McDermott’s work at Safaniya Phase 5 continued with close-out activities, and substantial completion is expected in Q3 2019.

Safaniya Phase 6 is also progressing, with fabrication of eight out of 11 decks and seven out of 10 jackets completed, with eight million man-hours noted on the scheme without a lost-time incident.

The American company said its revenue opportunity pipeline – comprising backlog, bids and change orders outstanding, and target projects – at the end of Q2 2019 was valued at $90.2bn.

McDermott said this opportunity pipeline was driven by its activities in the Mena; North Central, and South America; and Europe, Africa, Russia, and Caspian regions.

Across all its business units, McDermott reported revenues of $2.1bn in Q2 2019, posting a net loss of $146m for the period.

Excluding a $101m non-cash loss on the sale of its alloy piping products (APP) business, as well as restructuring, integration, and transaction costs of $31m, McDermott’s adjusted net loss for the second quarter of 2019 was $14m, and its adjusted operating income was $$71m.

President and chief executive officer of McDermott, David Dickson, said the company had booked $1.5bn in engineering, procurement, and construction (EPC) contracts as a result of the front-end engineering design (Feed) work it had delivered since its combination with CB&I in May 2018.

McDermott has booked more than $19bn in contract awards since combining with CB&I.

Dickson added that McDermott’s Feed awards in H1 2019 were worth more than double all its Feed contracts in 2018, both in terms of man-hours and dollar-value.

Commenting on McDermott’s financials, he continued: “Although the company reported mixed results for the second quarter of 2019, we are encouraged by the record-setting level of backlog and new awards.

“We are also pleased with the visibility we have into expected 2020 revenues, of which $7.4bn was already in backlog as of the end of the second quarter of 2019. This is well above the $4.2bn of 2019 revenues we had in backlog this time last year.

“Importantly, as of the end of the second quarter of 2019, legacy CB&I projects represented only about 14% of the current backlog. All the awards we've won since the combination were booked under McDermott's stringent risk management protocols,” Dickson added.

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