Wellstream unveils a £40m Brazilian deal
Nov 15 2007 by Graeme King, The Journal
OIL pipeline manufacturer Wellstream has unveiled a £40m contract with a key customer in South America.
The Walker-based company, which floated on the stock market earlier this year, has signed a deal with Petroleo Brasileiro SA – known as Petrobras – to supply pipelines during 2008.
Yesterday’s announcement will form part of a larger agreement between the two companies to cover all Petrobras’s requirements throughout the year.
That ‘heads of agreement’ deal is currently being negotiated between the two firms.
The flowlines and risers to be supplied by Wellstream will be used in the Marlim Sul Module 2 (P-51) offshore development off the coast of Brazil.
Wellstream has enjoyed a phenomenal honeymoon period since joining the London Stock Exchange on April 26 this year.
The company’s shares debuted at 320p, valuing the business at £318m, and have since risen astronomically, ending trading yesterday at 975p, up 5p on the day, making the company worth £971m.
Wellstream was crowned Company of the Year at this year’s North-East Business Awards, such has been its impact on the region’s business landscape.
Yesterday, Jason Nunn, head of investor relations for Wellstream, said: “Each year, we sign up a contract which details the next year’s work with Petrobras, and that framework is made up of a series of projects.
“This is one project that is part of that framework – it’s one step along the way.”
Mr Nunn said the contract with Petrobras was likely to be completed at the company’s plant in Niteroi, Brazil.
He added: “The Brazilian plant is running along nicely, and we have started to put through a mix of projects, which is more in line with what we do in Newcastle.
“This contract will probably be fulfilled in Brazil, but we are not sure yet. The Newcastle plant is continuing to perform well. Production remains strong, and the ramp up in Brazil is going well.
“We have brought in a fourth shift down there, so we are now producing 24 hours a day, seven days a week.”
Petrobras is a public/private Brazilian oil company with its headquarters in Rio de Janeiro. It was founded in 1953 and was the country’s only oil producer up until 1997.
Today, more than half of the company is owned by the Brazilian government but it also has private shareholders.
