HOUSTON - SLB (NYSE: SLB) has been awarded a contract by bp for the supply of a subsea boosting system for the deepwater Kaskida project in the U.S. Gulf of Mexico, the company announced today. The contract marks the first engineering, procurement, and construction (EPC) agreement for a subsea boosting system between SLB's OneSubsea joint venture and bp.
The system is designed to provide artificial lift, a method used to increase pressure within the reservoir and encourage oil to the surface, which is essential for maximizing production from the Kaskida field, bp's first Paleogene field development. The project aims to expedite the recovery of reserves with minimal energy consumption.
Mads Hjelmeland, CEO of SLB OneSubsea, expressed enthusiasm about expanding their relationship with bp into the subsea processing domain, emphasizing the system's potential to enhance the project's productivity.
The scope of the project includes a high-pressure subsea pump solution, an integrated power and controls umbilical, and associated topside equipment. This technology is a critical component of bp's strategy to maximize output from its deepwater assets.
SLB, a global technology company focused on energy innovation, has a presence in over 100 countries and employs a workforce representing numerous nationalities. The company is involved in oil and gas innovation, digital transformation, industry decarbonization, and the development of new energy systems.
SLB OneSubsea, a joint venture backed by SLB, Aker Solutions, and Subsea7, operates out of Oslo and Houston and employs around 10,000 people worldwide. The venture is committed to driving a new era in subsea operations by leveraging digital and technological advancements to optimize oil and gas production and support the transition to sustainable energy sources.
The announcement is based on a press release statement and includes forward-looking statements that are subject to risks and uncertainties. These statements are not guarantees of future performance and actual results may differ materially from those projected.
In other recent news, SLB, the world's largest oilfield company, has been under scrutiny for its continued operations in Russia amid calls for stricter sanctions by a group of bipartisan U.S. Representatives. Despite the ongoing sanctions, SLB has reportedly expanded its activities in Russia, signing new contracts and importing equipment worth nearly $18 million. Meanwhile, several financial firms have adjusted their outlook on SLB's shares. TD Cowen has lowered its price target from $68.00 to $65.00, while maintaining a Buy rating. Similarly, Susquehanna has reduced its price target to $56 from $60, but kept a positive rating on the stock. Stifel also trimmed its price target for SLB to $60, maintaining a Buy rating, and Citi reduced its target to $54 while keeping a Buy rating.
SLB's recent third-quarter earnings report showed revenues of $9.2 billion, with an adjusted EBITDA margin of 25.6%. The company's Digital & Integration division saw a revenue increase, driven by digital sales. However, Well Construction revenue experienced a decline. Despite this, SLB demonstrated a commitment to shareholder returns, repurchasing over $500 million worth of shares in the third quarter. Additionally, the anticipated sale of the Palliser property in Canada is expected to help SLB exceed its return targets, with projections now set to surpass the $3.0 billion mark in 2024 and its $4.0 billion target in 2025. These developments are part of the recent news surrounding SLB.
InvestingPro Insights
SLB's recent contract win with bp for the Kaskida project aligns well with the company's strong financial position and market performance. According to InvestingPro data, SLB boasts a market capitalization of $58.05 billion and has demonstrated solid revenue growth of 12.4% over the last twelve months. This growth trajectory supports the company's ability to secure and execute large-scale projects like the subsea boosting system for bp.
InvestingPro Tips reveal that SLB has maintained dividend payments for an impressive 54 consecutive years, reflecting the company's financial stability and commitment to shareholder returns. This long-standing dividend history could be particularly appealing to investors looking for steady income in the volatile energy sector.
Moreover, SLB operates with a moderate level of debt, which provides financial flexibility to undertake significant projects and investments in new technologies. This prudent financial management is crucial for a company involved in capital-intensive ventures like deepwater oil and gas production.
For investors seeking a deeper understanding of SLB's potential, InvestingPro offers 11 additional tips that could provide valuable insights into the company's prospects and valuation. These tips, along with real-time metrics, can help investors make more informed decisions about SLB's stock in light of developments like the bp contract.
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