CW In Focus| Major contract wins buoy McDermott’s Mena revenues

The company was awarded contracts for Saudi Aramco’s Safaniya Phases 5 and 6, Oman’s Liwa, Adnoc's Crude Flexibility programme

In Q2 2019, New York Stock Exchange-listed, American contractor, McDermott recorded revenues of $399m on the back of major contract wins from contributors such as Saudi Arabia’s Sasref and Saudi Aramco’s Safaniya Phases 5 and 6, Oman’s Liwa project, and Abu Dhabi National Oil Company’s (Adnoc) Crude Flexibility programme in Abu Dhabi.

The company’s operating income in the Mena region was 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. The company has noted eight million man-hours on the scheme without a lost-time incident.

The American company said its revenue opportunity pipeline, which comprised 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 that 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.

“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, Dickson added, while speaking about the company’s financial results.

In July 2019, the company bagged two EPCI contracts with a combined value of $4.5bn (SAR16.8bn) from oil and gas giant Saudi Aramco for Packages 1 and 4 of its Marjan Increment Development, with the contract wins which will be reflected in its Q3 2019 backlog.

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