FMC Technologies Expects Cost Increases on Sonatrach Project
FMC Technologies says that its FMC SOFEC Floating Systems subsidiary expects higher costs associated with the installation of an offshore oil loading project in Algeria for Sonatrach-TRC, the Algerian Oil and Gas Company. The total cost increase is approximately $18 million, or $0.16 per diluted share, and will be reflected in the first quarter results for 2005.
These cost increases come from several areas. A portion of these costs relates to extended testing and installation costs of the offshore pipelines. These costs and the associated delays were caused in part by bad weather conditions and in part by sealing issues discovered during the final testing of pipeline connections. Additional costs were also incurred due to engineering design changes at three onshore pump stations. Lastly, project engineering and project management costs have increased as a result of these additional onshore and offshore requirements.
These estimates of total project costs reflect management's best
estimates. There may be additional costs, which are difficult to forecast with
current information, as the project proceeds toward its commissioning. The
offshore oil loading project contract was awarded in 2002 and is scheduled for
completion in the third quarter of 2005.
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