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Released December 20, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--The market for engineering, procurement and construction (EPC) services in the Oil & Gas Industry is about to see a big shakeup, as heavyweights McDermott International Incorporated (NYSE:MDR) (Houston, Texas) and Chicago Bridge & Iron Company N.V. (NYSE:CBI) (CB&I) (The Hague, Netherlands) have agreed to merge. The all-stock deal, which has an estimated value of $6 billion, is expected to close in the second quarter of 2018. Industrial Info is tracking more than $12 billion in active projects involving McDermott, and more than $127 billion in active projects involving CB&I.
There's no word on what the new firm will be named, but McDermott will hold 53% of the merged company, and its chief executive officer (CEO), David Dickson, will serve as the new CEO. McDermott, which focuses on offshore developments, has benefited over the past few years from lucrative deals in Australia and the Middle East. Meanwhile, CB&I, which focuses on North American onshore developments, incurred heavy quarterly losses over the same period, as oil and gas exploration companies have slowed spending on expansions amid low prices.
McDermott is involved in $3.68 billion in active projects in Australia, according to Industrial Info's project database, including one of the key developments in the booming LNG market: INPEX Corporation's (Tokyo, Japan) $2.3 billion in subsea infrastructure for the Ichthys LNG upstream project, the largest subsea project in the world, which will supply an 8.9 million-metric-ton-per-year LNG production plant under construction in Darwin. Construction on the plant itself, however, has been halted following the death of a worker in late November. For more information, including details on the 20 production wells to be drilled, see Industrial Info's project report.
Industrial Info is tracking $2.28 billion in active offshore projects in the Middle East involving McDermott, most of which are in conjunction with Saudi Aramco (Riyadh, Saudi Arabia). One EPC project for Aramco ahead of schedule is a pair of $125 million equipment replacements on two gas and oil separation (GOSP) platforms in the Marjan field. Both involve the installation of steel-tube control umbilicals and fiber-optic cables to replace aging components, and are set to be completed toward the end of first-quarter 2018. For more information, see Industrial Info's project reports on GOSP-2 and GOSP-3.
Industrial Info also is tracking more than $418 million in offshore projects involving McDermott in Qatar, which were signed with state-owned Qatar Petroleum (Doha, Qatar).
Weak Oil Prices Took Toll on CB&I
Earlier this year, CB&I announced it would sell its technology business and focus its efforts on the liquefied natural gas (LNG), petrochemical, refining and natural gas-fired generation industries. But as talks with McDermott about the technology business developed, both parties began to favor a full merger.
Among the projects that proved to be difficult for CB&I were four major, U.S.-based engineering projects that recorded heavy charges in second-quarter 2017: Two natural gas combined-cycle (NGCC) projects--AES Corporation's (NYSE:AES) (Arlington, Virginia) $600 million IPL Eagle Valley project in Martinsville, Indiana, and Calpine Corporation's (NYSE:CPN) (Houston, Texas) $760 million York Energy Center in Delta, Pennsylvania, which accounted for $181 million in charges, and two LNG projects--Sempra Energy's (NYSE:SRE) (San Diego, California) $10 billion Cameron LNG Liquefaction Plant near Hackberry, Louisiana, and Freeport LNG Development LP's (Houston, Texas) $5.5 billion initial train at the Freeport LNG liquefaction and export plant in Freeport, Texas--accounted for $367 million.
All four projects remain under construction and are set to be completed at various times in 2018. Earlier this week, Sempra reached a settlement agreement with CCJV, a joint venture between an affiliate of CB&I and Chiyoda International Corporation, related to the Cameron LNG project that it said would lead to all three trains at Cameron producing LNG in 2019. Calpine, on the other hand, was forced to sell its assets to private-equity firm Energy Capital Partners (Short Hilly, New Jersey) in a deal worth an estimated $17 billion; earlier this year, executives at Calpine blamed "struggles" at CB&I for the commercial operation date for York Energy Center being pushed back into early 2018.
For more information, see Industrial Info's reports on the Eagle Valley, York Energy Center, Freeport LNG and Cameron LNG projects.
In a press release, McDermott and CB&I announced their new, Houston-based entity will have pro forma annual revenues of about $10 billion and a backlog of about $14.5 billion.
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/.
There's no word on what the new firm will be named, but McDermott will hold 53% of the merged company, and its chief executive officer (CEO), David Dickson, will serve as the new CEO. McDermott, which focuses on offshore developments, has benefited over the past few years from lucrative deals in Australia and the Middle East. Meanwhile, CB&I, which focuses on North American onshore developments, incurred heavy quarterly losses over the same period, as oil and gas exploration companies have slowed spending on expansions amid low prices.
McDermott is involved in $3.68 billion in active projects in Australia, according to Industrial Info's project database, including one of the key developments in the booming LNG market: INPEX Corporation's (Tokyo, Japan) $2.3 billion in subsea infrastructure for the Ichthys LNG upstream project, the largest subsea project in the world, which will supply an 8.9 million-metric-ton-per-year LNG production plant under construction in Darwin. Construction on the plant itself, however, has been halted following the death of a worker in late November. For more information, including details on the 20 production wells to be drilled, see Industrial Info's project report.
Industrial Info is tracking $2.28 billion in active offshore projects in the Middle East involving McDermott, most of which are in conjunction with Saudi Aramco (Riyadh, Saudi Arabia). One EPC project for Aramco ahead of schedule is a pair of $125 million equipment replacements on two gas and oil separation (GOSP) platforms in the Marjan field. Both involve the installation of steel-tube control umbilicals and fiber-optic cables to replace aging components, and are set to be completed toward the end of first-quarter 2018. For more information, see Industrial Info's project reports on GOSP-2 and GOSP-3.
Industrial Info also is tracking more than $418 million in offshore projects involving McDermott in Qatar, which were signed with state-owned Qatar Petroleum (Doha, Qatar).
Weak Oil Prices Took Toll on CB&I
Earlier this year, CB&I announced it would sell its technology business and focus its efforts on the liquefied natural gas (LNG), petrochemical, refining and natural gas-fired generation industries. But as talks with McDermott about the technology business developed, both parties began to favor a full merger.
Among the projects that proved to be difficult for CB&I were four major, U.S.-based engineering projects that recorded heavy charges in second-quarter 2017: Two natural gas combined-cycle (NGCC) projects--AES Corporation's (NYSE:AES) (Arlington, Virginia) $600 million IPL Eagle Valley project in Martinsville, Indiana, and Calpine Corporation's (NYSE:CPN) (Houston, Texas) $760 million York Energy Center in Delta, Pennsylvania, which accounted for $181 million in charges, and two LNG projects--Sempra Energy's (NYSE:SRE) (San Diego, California) $10 billion Cameron LNG Liquefaction Plant near Hackberry, Louisiana, and Freeport LNG Development LP's (Houston, Texas) $5.5 billion initial train at the Freeport LNG liquefaction and export plant in Freeport, Texas--accounted for $367 million.
All four projects remain under construction and are set to be completed at various times in 2018. Earlier this week, Sempra reached a settlement agreement with CCJV, a joint venture between an affiliate of CB&I and Chiyoda International Corporation, related to the Cameron LNG project that it said would lead to all three trains at Cameron producing LNG in 2019. Calpine, on the other hand, was forced to sell its assets to private-equity firm Energy Capital Partners (Short Hilly, New Jersey) in a deal worth an estimated $17 billion; earlier this year, executives at Calpine blamed "struggles" at CB&I for the commercial operation date for York Energy Center being pushed back into early 2018.
For more information, see Industrial Info's reports on the Eagle Valley, York Energy Center, Freeport LNG and Cameron LNG projects.
In a press release, McDermott and CB&I announced their new, Houston-based entity will have pro forma annual revenues of about $10 billion and a backlog of about $14.5 billion.
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/.
