The frame agreement covers the supply of subsea systems and equipment for the potential expansion of and new developments in the Terra Nova field, which is the second largest field off Canada's East Coast, and other potential developments in the area. This agreement is for a period of three years, with options for three additional years.
The revenue from this agreement will be based on call-off work orders for specific subsea trees and associated equipment. If all the subsea trees that are contemplated under the agreement are actually ordered, FMC Technologies estimates that the total revenue will approximate $100 million over a three- year period. To date, one work order has been issued under the agreement, for equipment totaling approximately $8.7 million in revenue. The amount of revenue realized by FMC Technologies will depend on the amount and timing of project orders that Petro-Canada elects to place with FMC Technologies under the frame agreement.
The Terra Nova field is approximately 218 miles (350 kilometers) off the coast of Newfoundland and Labrador, where icebergs are commonly encountered. Production from the field began in January 2002.
"We have been working with Petro-Canada on three phases of the Terra Nova project, beginning in 1998," said Peter D. Kinnear, Executive Vice President - FMC Technologies. "We welcome the challenge of supplying projects such as this -- the world's first major subsea project in iceberg-infested waters. We are pleased to be chosen by Petro-Canada to continue to provide them with industry-leading subsea technology and solutions."
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