Fluor plans to sell off its Stork asset within the next 12-18 months, the company said, while also moving the unit’s results into discontinued operations in the first quarter of this year.
This comes as part of Fluor’s move away from oil and gas – and fixed price contracts.
Fluor “expects to divest [Stork] within a 12-18 month period”, said Fluor’s CFO Joseph Brennan.
By 2023, 70% of the company’s revenues should from “non-traditional oil and gas segments”, it said. As of 2024, Fluor aims to have 75% of its backlog under reimbursable contracts.
Fluor’s CEO David Constable said the company was reorienting to focus on four mega trends. The executive identified these as industry 4.0, energy transition, beyond globalisation and stakeholder engagement.
As part of this rethinking of the business, Fluor aims to cut its debt to capitalisation ratio from 52% currently, to below 40%. It plans to reduce debt by $300-500 million over the next 12 months.
There have been “numerous discussions” with customers on sharing risk and reaching fairer contract terms, Constable said. “You need to go in as partners, not as adversarial parties. Early days but seeing good discussion and dialogue with major customers, which are better suited to reimbursable costs.”
The engineering company is also in discussions with banks on its credit. Brennan said these were expected to be completed within the next 30 days.
Opportunities and lessons
Fluor also aims to be net zero for scope 1 and 2 emissions by the end of 2023. The company sees its role in mining as playing a role in this, through helping supply materials such as copper, aluminium, cobalt and lithium.
The company’s president for project execution Mark Fields also commented on some lessons learned from past practices. The former energy and chemicals unit had taken on work on a new type of floating production, storage and offloading (FPSO) vessel.
Fluor had not carried out the front-end engineering and design (FEED) “and yet we guaranteed its requirements. By not fully understanding the FEED package, the realised risk package resulted in cost growth not previously anticipated.”
Under the company’s current criteria, “this will not happen again”, Fields said.
LNG and gas processing will continue to be an important part of the company’s future, head of energy solutions Jim Breuer said. Fluor is working with JGC on the LNG Canada project, in western Canada.
The main cryogenic heat exchanger – the world’s largest – is substantially complete and due to be shipped to the site in March. “The project is 35% complete,” said the company’s Phil Clark.
Fluor has returned much of the workforce to the site, as local restrictions allow. While the overall schedule suggests there will be some delay, negotiations are under way on a “fair and equitable solution”, Clark continued.