(BFM Bourse) – The seamless steel tube specialist announces that it has won major orders from the American LLOG Exploration Offshore. The agreement will be for the supply of line pipe to the Salamanca deepwater development project, located off the US Gulf Coast.
It was this weekend’s stock tip. Vallourec is still up 2.2% after winning “significant orders” in the Gulf of Mexico from LLOG Exploration Offshore, one of the largest private exploration and production companies in the United States.
The contract in question is for the delivery of 25,000 tonnes of line pipe for the Salamanca deepwater development project, located off the US Gulf of Mexico coast. The financial terms of the contract between Vallourec and LLOG Offshore Exploration have not been disclosed.
The equipment ordered from Vallourec includes in particular 52 km of thick X70 grade line pipes and 111 km of X65 grade pipes required for the risers and flowlines of the oil and gas export lines. The tubes will be manufactured and then machined by Vallourec’s two Brazilian sites located in Minas Geiras.
An increase in gross operating income in 2022
The start of the business year is looking good for the manufacturer of seamless tubes, whose 2022 results will be published at the end of next February. On the sidelines of its third quarter results, Vallourec then confirmed its gross operating profit target, which should be between 650 million and 750 million euros, as well as its objectives in terms of cash consumption.
Cash generation is, in fact, strictly monitored because the group remains indebted, with a net debt of 1.5 billion euros at the end of September. Last summer, the group had disappointed and consumed more cash than expected. But the best is yet to come promises Valliourec, which confirmed that over the whole of the second half of 2022, free cash flow would be positive, thanks to “the strong performance expected” in the last quarter of the year.
Still on the sidelines of its quarterly results, the company also assured that its “New Vallourec” plan, announced last May, was on the “right track”. This strategy aims to turn the group around by favoring value over volume and rationalizing the group’s portfolio.
In purely financial terms, this project should make it possible to generate 230 million euros in additional gross operating income, with a full effect from the second quarter of 2024, and to generate positive free cash flow even at the bottom of the cycle, c that is to say when the economic situation is not very buoyant.
Sabrina Sadgui – ©2023 BFM Bourse
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