Shell's (SHEL) BSP Extends Wood Partnership Offshore Brunei
Brunei Shell Petroleum (“BSP”), a subsidiary of Shell plc SHEL, has announced the extension of Wood's existing offshore services contract by an additional two years, taking the collaboration to February 2026.
This contract extension, valued at approximately $250 million, will include a range of services, with a primary focus on maximizing the production capacity and efficiency of BSP's top 20 offshore installations responsible for about 80% of the nation's oil and gas production.
Details of Contract Extension
The contract will also entail brownfield engineering, procurement, construction, commissioning services, and management of BSP's offshore marine fleet. Wood's Operations business unit will oversee the execution of this cost-reimbursable contract, with efforts to reduce associated emissions, while enhancing production capabilities.
Wood's involvement in the extended offshore services contract with BSP will cover a broad range of critical services to rejuvenate and upgrade BSP's core assets. With a specific focus on BSP's top 20 offshore installations, the company will strive to optimize production capacity and operational efficiency.
The endeavor will include brownfield engineering, involving the refurbishment and enhancement of existing facilities, as well as the procurement, construction and commissioning of services required to ensure seamless operations.
Significance of the Contract
The contract extension between BSP and Wood holds strategic importance for both parties. For BSP, it represents a crucial step in its rejuvenation project, focusing on upgrading core assets responsible for a substantial portion of the country's oil and gas production.
The extension demonstrates the confidence BSP places in Wood's capabilities and expertise to deliver critical projects. Moreover, it signifies progress in Wood's strategic focus on reimbursable projects and complex work in critical industries, showcasing the company's commitment to performance excellence and safe operations. The contract extension also underlines the significance of sustainable energy security in the region and highlights Wood's dedication to minimizing environmental impact.
Local Employment and Global Support
Under this contract, Wood will engage approximately 1,500 personnel, a substantial 65% being based in Brunei. This approach aligns with Wood's commitment to empowering local communities and supporting the development of a skilled workforce in Brunei.
Additionally, the project will receive support from Wood's office in Manila, Philippines, showcasing the company's ability to provide global support and expertise to deliver successful projects in the region.
Conclusion
The extension of Wood's offshore services contract with BSP until 2026 marks a significant development in enhancing Brunei's oil and gas production capacity, and promoting sustainable practices. Wood's Operations business unit will rejuvenate core assets, maximize capacity and reduce emissions. The partnership emphasizes reimbursable projects, local talent and promoting energy security.
Zacks Rank and Key Picks
Currently, SHELcarries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Evolution Petroleum EPM and Global Partners GLP, sporting a Zacks Rank #1 (Strong Buy), and NGL Energy Partners NGL, carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum is worth $268.48 million. EPM currently pays a dividend of 48 cents per share or 5.95% on an annual basis.
The company currently has a forward P/E ratio of 7.30. In comparison, its industry has an average forward P/E of 10.40, which means that EPM is trading at a discount to the group.
Global Partnersis valued at $1.04 billion. In the past year, GLP shares have risen 44.8%.
The partnership currently has a forward P/E ratio of 9.01. In comparison, its industry has an average forward P/E of 14.10, which means that GLP is trading at a discount to the group.
NGL Energy Partners is valued at $526.39 million. In the past year, NGL units have risen 180.9%.
The partnership currently has a forward P/E ratio of 4.59. In comparison, its industry has an average forward P/E of 14.10, which means that NGL is trading at a discount to the group.
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