Baker Hughes Clinches Major LNG Deal From Qatar Petroleum
Baker Hughes Company BKR recently won a major deal to supply multiple main refrigerant compressors (MRCs) from its long-time partner Qatar Petroleum. The North Field East (NFE) project of Qatargas will receive the supply from Baker Hughes.
The deal marks one of the biggest liquefied natural gas deals for the company in the past five years. The MRCs order includes 12 gas turbines and 24 centrifugal compressors. The project is expected to enhance Qatari LNG production capacity to 110 million tons per annum (MTPA) from 77 MTPA by 2025. The financial terms of the deal are yet to be disclosed.
The deal strengthens the bond between the companies, which are working together for more than two decades. Qatargas is currently operating six LNG “mega-trains”, which use Frame 9E gas turbine refrigerant compressors supplied by Baker Hughes. Four more such trains will be added to the project to boost production by 33 MTPA.
Importantly, the NFE project will have the latest compression technology to efficiently reduce emissions from operations. Baker Hughes expects that its technology will enable to decrease 60,000 tons of carbon dioxide emissions from each train every year without sacrificing any LNG production. The technology will likely be able to decrease 5% emissions compared with the previous technologies. The compression trains for the project are also expected to be produced using a more efficient process.
Baker Hughes’ facilities located in Florence and Massa of Italy will be used for manufacturing, testing and packaging of the gas turbine/compressor trains. The LNG expansion project is expected to come online by 2025-end. The next capacity enhancement project at the site, the North Field South will likely increase LNG output capacity to 126 MTPA.
Notably, Baker Hughes expects substantial growth from a series of profitable international LNG contracts. With growing demand for clean energy needs, countries around the world are investing in LNG terminals. Hence, the company’s plan to extend its reach beyond oil fields to capitalize on contracts for manufacturing turbines and associated equipment that are being used in LNG export terminals is commendable.
Price Performance
Baker Hughes’ shares have gained 25% in the past six months compared with 33.7% rise of the industry it belongs to.
Zacks Rank and Stocks to Consider
Baker Hughes currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include Halliburton Company HAL, Equinor ASA EQNR and Pioneer Natural Resources Company PXD, each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Halliburton beat the Zacks Consensus Estimate for earnings in three of the last four quarters and met on another occasion, with an average surprise of 45%.
Equinor’s bottom line for 2021 is expected to skyrocket 118.2% year over year.
Pioneer Natural’s bottom line for 2021 is expected to surge 182.6% year over year.
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