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Technip Raises 2011 Subsea Sales Outlook as Net Income Gains

Technip SA, Europe’s second-largest oilfield-services provider, reported a 17 percent increase in third-quarter profit and raised the target for sales from subsea projects amid high oil prices that could drive new projects.

“Many of the large oil companies have been challenged to reach their production targets,” Chief Executive Officer Thierry Pilenko said today on a conference call. “There is much stronger certainty on upstream projects because these are production related.”

Net income rose to 121 million euros ($170 million) from 103.4 million euros a year earlier, the Paris-based company said today in a statement. That matched the average estimate of eight analysts surveyed by Bloomberg. Sales gained 12 percent to 1.7 billion euros.

Technip now has “very strong visibility on subsea,” Kepler Capital Markets analyst Bertrand Hodee wrote today in a note, adding that he plans to revise upwards 2012 financial estimates.

Technip has said the market for flexible pipelines for offshore oil exploration and production is growing at a faster-than-expected pace. Saipem SpA, its largest European competitor, yesterday reported an increase in contract awards in the last quarter and kept its outlook for revenue and profit growth this year.

‘Volatile Backdrop’

“Despite the volatile economic backdrop, activity in the month of October has remained robust,” Technip said. “The high oil price, combined with increasing demand for gas, is driving upstream investments.”

The company raised a target for 2011 subsea revenue to more than 2.7 billion euros from a range of 2.6 billion to 2.7 billion euros. The outlook for group revenue was kept at 6.5 billion to 6.7 billion euros and one for a subsea operating margin remained at 16.5 percent to 17 percent. It’s also seeking an onshore/offshore margin of 6.5 percent to 7 percent.

“We feel very comfortable with this until the end of the year,” Chief Financial Officer Julian Waldron said on a conference call.

Technip had an order backlog of 10.12 billion euros at the end of September, compared with 9.41 billion euros at the end of June. The third-quarter order intake was 2.35 billion euros compared with 1.63 billion euros the previous year.

Prospects for pipelay, heavy construction and flexible pipe plants are “pretty firm” for the next 12 to 18 months, Waldron said.

Nigeria, Australia

The Engina and Brass LNG projects in Nigeria and the Wheatstone LNG and Ichthys developments in Australia may move ahead in the first half of 2012 while drilling and subsea building is restarting in the Gulf of Mexico, Pilenko said.

The company is “talking to” BP Plc about working on the Mad Dog field and others in the Gulf, he said. “The North Sea should have a strong season at least for 2012.”

Technip’s subsea operating margin was 16.9 percent in the third quarter compared with 16.7 percent a year earlier while the combined onshore-offshore margin was 7.1 percent compared with 6.1 percent.

Technip agreed in September to buy Global Industries Ltd. of the U.S. for $937 million in cash to expand in the market for underwater energy projects. U.S. regulators filed a lawsuit alleging insider trading in Global Industries shares days before the announcement of the deal.

“It is possible that we will close the acquisition earlier than expected,” Pilenko said today. There are no plans to divest any assets from Global Industries, he said.

Technip today announced an order worth about $1 billion through a 50-50 joint venture with Odebrecht Oil & Gas from Petroleo Brasileiro SA, Brazil’s state-controlled oil company, for two 550-ton vessel charters. The vessels will take three years to build with investment of $300 to $350 million per vessel.

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