FMC Technologies Continues to See Losses on Sonatrach Project
FMC Technologies said that its FMC SOFEC Floating Systems subsidiary will report increased losses on its Sonatrach project, the offshore oil loading project in Algeria for Sonatrach-TRC, the Algerian Oil and Gas Company. The additional cost increase is approximately $9 million, or $0.08 per diluted share. This increase will bring the total loss on the contract, recorded in the first quarter of 2005, to approximately $27 million.
As previously announced, losses of $18 million were expected in the first quarter due to increased costs from extended testing and installation, largely related to the offshore work of the project, and cost increases for engineering design changes to the three onshore pump stations and for project engineering and management. This additional $9 million reflects higher costs for offshore pipeline installation, due in part to weather delays, and higher onshore pump station construction costs as well as a reexamination of total project costs.
"We are clearly disappointed with the cost increases we continue to experience on this project," said Peter D. Kinnear, Executive Vice President - FMC Technologies. "We expect to be ready for customer acceptance testing on June 30, 2005, at the Bejaia station, on July 31, 2005, at the Arzew station and on August 31, 2005, at the Skikda station. We continue to estimate project completion by the end of the third quarter of 2005."
These estimates of total project costs reflect management's best
estimates. There may be additional losses identified as the project proceeds
toward its commissioning.
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