TechnipFMC Looks to Play Role in $93 Billion of Projects as it Faces Rough Oil & Gas Market

Researched by Industrial Info Resources (Sugar Land, Texas)--Engineering and construction giant TechnipFMC plc (NYSE:FTI) (Houston, Texas) is bracing for a financial blow as it faces the same challenges bedeviling its clients in the Oil & Gas Production Industry. The company expects to see about $2.4 billion in asset impairment charges when it reports quarterly earnings, driven by growing uncertainty and weaker prices in the oil and gas markets. Industrial Info is tracking more than $93 billion in global projects involving TechnipFMC, including more than $24 billion worth in the U.S. and Canada.

Click on the image at right for a graph detailing TechnipFMC's active U.S, and Canadian projects, by industry sector.

The bulk of the writedowns involves $1.7 billion related to "reduced market capitalization" in TechnipFMC's subsea assets. The company is preparing to begin work in the coming months on two subsea infrastructure installation projects for BP plc (NYSE:BP) (London, England) in the Gulf of Mexico: the $450 million third phase at the Atlantis offshore platform and the $125 million second phase at the Thunder Horse offshore platform.

Additionally, LLOG Exploration Company LLC (Covington, Louisiana) is proposing $300 million in subsea infrastructure at its Shenandoah development in the Gulf of Mexico, which would not begin construction until the third quarter at the earliest. For more information, see Industrial Info's reports on the Atlantis, Thunder Horse and Shenandoah projects.

On the plus side, the company is reporting "significant growth" in its backlog related to liquefied natural gas (LNG) projects. One of the largest projects of this kind is Southern California Telephone & Energy's (Temecula, California) 5.25 million-metric-ton-per-year Monkey Island LNG Production Facility in Cameron, Louisiana, which would include three 160,000-cubic-meter LNG storage tanks and a shipping terminal. The project, which would not begin construction until mid-2023 at the earliest, would be supported by a natural gas pretreatment unit. For more information, see Industrial Info's project reports on the LNG facility and pretreatment unit.

Among TechnipFMC's projects set to finish construction later this year are three units for Sasol Limited's (NYSE:SSL) (Johannesburg, South Africa) Lake Charles Chemical Complex in Westlake, Louisiana: the $800 million Guerbet alcohol unit, which is expected to produce 30,000 tons per year; the $800 million Ziegler 2 alcohol unit, which is expected to produce 173,000 tons per year; and the $500 million alumina unit, which is expected to produce 30,000 tons per year. The units, which have kickoff dates ranging from early 2015 through late 2016, are slated to wrap up in the fourth quarter. For more information, see Industrial Info's project reports on the Guerbet alcohol, Ziegler 2 alcohol and alumina units.

Despite the setback related to writedowns, TechnipFMC executives expect full-year 2019 revenues to hit the company's guidance midpoint of $13.5 billion, with margins for adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) meeting or exceeding guidance for all major business segments.

It is unclear whether the writedowns will affect TechnipFMC's plans to split into two publicly traded companies, TechnipFMC and Technip Energies. Last month, the company announced the separation "is well on track" for completion in the second quarter of 2020.

According to the company, Technip Energies would be a leading engineering and construction firm, "well positioned to capture LNG opportunities as a result of its disciplined project delivery model, diversified capabilities and track record." The new TechnipFMC would be a "fully-integrated technology and services provider, continuing to drive energy development."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.