John Wood Group PLC (LON:WG.) has inked a six-year contract with oil major Royal Dutch Shell PLC (LON:RDSA) to provide asset management services to its Malampaya deepwater gas-to-power project in the Philippines.
The FTSE 250 technical and engineering services provider said that it would provide maintenance services, as well as modifications and shutdown support under the contract, which would cover Shell’s onshore facilities in Batangas and offshore assets in the Malampaya field near Palawan Island.
READ: John Wood Group leaves full-year outlook unchanged
Wood said the contract would also add to its own support for the Malampaya project, where it has provided integrity management services for subsea pipelines since 2001 in addition to front-end engineering design and construction services in the late 1990s and early 2000s.
Robin Watson, chief executive of Wood Group, said the contract win was “a powerful example of a revenue synergy achieved by the combination of Amec Foster Wheeler and Wood Group's broad capabilities and depth of experience”, adding that the contract would grow the company’s business in South-East Asia.
The Malampaya project, of which Shell holds a 45% stake, is one of the largest investments in the history of the Philippines, with the gas field producing around 380 million standard cubic feet per day of natural gas.
In a note to clients, analysts at Barclays PLC (LON:BARC) upped their target price for the firm to 690p from 630p, citing a stronger US dollar as a key factor while also raising the group’s revenue forecast by 6.5%.
However, the bank also left its rating for the stock at ‘underweight’, saying that net debt levels had remained “stubbornly around US$1.5bn” and there had as yet been “no tangible signs” of a deleveraging.
In early morning trading Monday, Wood Group shares were up 1.9% at 672.4p.
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