Expro Awarded $300 Million in Contracts During First Half
Expro International Group says that trading during the six months ending 30 September 2007 has seen a continuation of the positive growth momentum established in prior periods.
Market conditions for late cycle upstream oil and gas services have remained strong throughout the period. The effects of sustained global economic growth projections interacting with ever increasing supply challenges have created a new platform for oil and gas commodity prices. This platform is now well established above USD 60 per bbl and provides a positive backdrop for Expro to execute focused growth strategies aimed at helping our customers meet their extensive operational challenges.
Expro announces over USD 300 million in new contract awards in the first six months. The awards have been delivered by our worldwide operations, across a comprehensive range of products and services, for delivery on a phased basis over the next three years. Significant awards include:
New contracts totalling USD 40 million were secured in the North Sea. The increasingly service intensive UK sector was particularly active; now a late cycle province, where progressively smaller accumulations of hydrocarbons are connected, via subsea tie-back techniques, to the aging but comprehensive infrastructure. Awards from smaller but highly active operators including Perenco, Oilexeco and Venture Production are evidence of the ever changing characteristics of the UK North Sea and play heavily to Expro’s strength in this key technology segment. Our European business is also responsible for progress in the markets of the Former Soviet Union. In this area further progress was made in the Kazakhstan market with Ada oil and Agip ENI. The latter included an extension of our scope on the KPO contract.
Over USD 20 million of new orders were secured in North Africa and the Middle-East during the period, building on the previously announced major contract from Saudi Aramco in Saudi-Arabia. Multi service contracts were won with BP and BG in Algeria, Woodside and BG in Libya together with multiple welltesting contracts in Egypt.
Expro’s investments in deepwater technology had a very positive effect on progress in the offshore markets of West and South Africa. In total over USD 60 million of new awards were secured in the period. These markets are dominated by major international oil and gas operators as they seek to add reserves and production in these technically differentiated markets. Awards from Chevron, Agip ENI and Shell in Nigeria, increased scope from BP deepwater Angola, CNRL offshore Ivory Coast, Total and Noble in the Cameroon, Addax in Gabon and PetroSA for services offshore South Africa show the depth of Expro’s presence in these technology critical markets.
In the combined markets of Asia new contracts to the value of USD 15 million were secured in the period. Contracts included Cairn Energy and BG in India, Santos and Apache in Australia and Amerada Hess in Thailand.
A further USD 30 million of new contracts were secured in the deepwater Gulf of Mexico. This market is highly appreciative of Expro’s service quality and technology. In the period awards from Shell on their Mensa and Ursa assets, BHP on Shenzi and Genghis and ENI/Dominion on the Pegasus project were the most notable. The markets of the United States are pre-dominantly short term call-off in nature but the rise in the deepwater activity and subsequent tight supply in specialised equipment requires our customers to increase their planning cycle. This has resulted in better visibility in the offshore segment.
In Latin America where Expro has recently increased its presence, a total of over USD 30 million of new contract awards were secured in the period. Brazil was the single most active country with over USD 10 million of new business from Petrobras, Repsol and ENI. The Brazilian market is particularly active as Petrobras prepares to significantly increase offshore exploration and development activity levels out to 2010 and beyond. Mexico and Venezuela have also been active in the period. In the former Expro has been awarded a contract to support Pemex valued at USD 12 million to provide welltesting equipment on a purpose built test vessel. New business awards in Venezuela have held up well throughout a period of uncertainty in this market, with Expro securing new contracts with PDVSA and BP.
In addition to our international Regional infrastructure activities, our Connectors and Measurements business which supplies the global subsea markets from two centralised factories in Cumbria (UK) and Bomloe (Norway), continued to progress. Confirmed order backlog is currently USD 45 million. This is a leading measure of upcoming performance and is progressing in line with our expectations of expanding deepwater and subsea markets.
As our customers search for and develop increasingly difficult hydrocarbon prospects in deep water provinces, Expro is at the forefront of providing critical high reliability technologies and outstanding service quality. During the first half of 2007/08, Expro achieved three industry firsts in this area, providing our international customer base with new standards in technology achievement and quality.
Expro set a new deepwater record for North African exploration welltesting on the NEMED prospect, in over 7500 feet of water, for Shell offshore Egypt. This achievement follows the overall deepest water wellever tested offshore Brazil in 8993 feet performed by Expro last year.
In addition, operations on the first ever high pressure/high temperature subsea development commenced in the Tahiti field for Chevron during the period. Expro was selected to design and build next generation subsea tools critical to the safe installation of this deepwater field and successfully concluding the installation of the first phase of wells in this record breaking development during the first six months of the year.
These outstanding achievements were complemented by technical and commercial progress with AX-S lightweight subsea wireline intervention system and by a second successive RoSPA sector award for health and safety performance. Winning this prestigious award two years in succession is a first for an upstream services provider and has helped project Expro into the top 20 of ethical businesses on the FTSE.
Graeme Coutts, Group CEO commented: "I am very pleased with the pace of development at Expro. Our prior year activities have delivered increased exposure in markets which are appreciative of technology and service quality. The outlook for international late cycle upstream services remains good and we continue to invest to help our customers meet their needs, both short and long term. Technology and service quality which aid operational efficiency will be vital if we are to meet the challenge of adding global production against a backdrop of the ever accelerating decline of producing assets. We are confident of reporting good progress for the first half of the year and are very well placed for continued growth in the second half and beyond."
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