Seatrium shares rose after the Singapore-based offshore and marine engineering company said it won contracts worth about 11 billion Singapore dollars (US$8.15 billion) to build two floating production storage and offloading vessels for Brazil’s national oil company, Petrobras.
Shares were 11% higher early Monday at S$1.71, on track for their largest one-day percentage gain since March 2022. The gains trimmed year-to-date losses to 27%.
Seatrium said Saturday it would begin construction on the vessels in the first quarter of 2025, with final delivery expected in 2029. Each FPSO will have a production capacity of 225,000 barrels of oil a day and gas processing capacity of 10 million cubic meters a day, and will deploy about 200 kilometers offshore of Rio de Janeiro.
Citi Research analyst Luis Hilado upgraded the stock to a buy rating from sell, saying that the contract win is a “positive surprise” that helps Seatrium’s long-term revenue outlook. He raised his order book win assumptions for fiscal year 2024 to S$15 billion from S$9 billion.
“We believe the overhang from impairments and arbitration that impeded the stock previously is likely priced in,” he said, highlighting that the new contracts “dwarfs” a S$250 million contract cancellation earlier this year.