Starting '08 With an Offshore Splash

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In my oil patch preview of the year ahead, I tapped ongoing deepwater activity as an investment theme for 2008. With the first day of trading now complete, we have certainly gotten off on the right foot -- and I'm not even talking about crude oil grazing the $100 mark.

Total SA (NYSE: TOT), the operator of the deepwater Pazflor project offshore Angola, dished out some highly anticipated contracts last week, but the recipients didn't reveal themselves until yesterday. A consortium of Technip and Acergy SA (Nasdaq: ACGY) has pulled down a $1.8 billion engineering, procurement, and construction contract, while FMC Technologies (NYSE: FTI) has landed a nearly $1 billion supply contract.

Pazflor, in which StatoilHydro (NYSE: STO), ExxonMobil (NYSE: XOM), and BP (NYSE: BP) hold minority interests, will be the third development project in this particularly prolific offshore block. It's a monster, encompassing four different fields that will flow to a single platform with a capacity of 200,000 barrels per day. Interestingly, both light and heavy oil reservoirs are being targeted.

Another noteworthy technical point is that gas/liquid separation will be carried out on the seabed, thus freeing up valuable platform space. This is where a specialist like FMC comes in handy -- it just recently snapped up the remaining shares of a Belgian separation specialist. (If this talk of separation makes it suddenly difficult for you to separate your eyelids, the chart of NATCO Group (NYSE: NTG) ought to give you a jolt. This small, underfollowed company has both generated phenomenal returns for, and demonstrated respect for, its owners.)

This contract award is probably most gratifying for Acergy shareholders, who have experienced a bumpy ride lately. A few more contracts like this would turn things around in a hurry.

Related Foolishness:

• Acergy failed to ace its quarter.
• More on the deepwater dance.