McDermott Lands Brazilian Contract After News of Fabrication, Storage Business Sales

November 5, 2018

 

McDermott International says it has a new contract with Petrobras, following news that the Houston company is selling its pipe fabrication and tank storage businesses.

The engineering and construction company said the new contract, worth between $50 million and $250 million, is for the Rota 3 natural gas pipeline project in support of the Brazilian company Santos.

McDermott’s assignment includes design and engineering along with construction and installation of six miles of 24-inch pipe.

The company said it’s finished a review and decided that the tank storage and pipe fabrication businesses were not among its core businesses.

In a statement, McDermott said it “has determined that these operations offer limited pull-through or cross-selling opportunities and, in some cases, their ability to pursue third-party work aggressively can be hampered by internal considerations.

“As a result, McDermott is developing plans to seek buyers for each of the two businesses.”

The two businesses, to be sold separately, had combined 2017 revenues of about $1.5 billion, a 2017 backlog of $1.4 billion and about 5,350 employees.

The sale will take place next year and the company said it expects to net $1 billion from the sales, to be used to pay down debt.