Matrix Composites & Engineering secures $44m subsea buoyancy module contract in Brazil

Perth-based Matrix Composites & Engineering (ASX: MCE) has secured a $44 million contract for the supply of a subsea umbilicals, risers and flowlines (SURF) product to a major deepwater project in Brazil run by oilfield services giant Saipem.

The contract covers the production and delivery of SURF distributed buoyancy modules for a floating production storage and offloading (FPSO) system and will utilise Matrix’s state-of-the-art carbon fibre syntactic foam technology and certified modules and clamping systems.

The modules are designed to support the project’s subsea production riser system, which transfers petroleum from the sea floor to the FPSO.

They are designed to operate in water depths of more than 2,000 metres.

All equipment will be built utilising Matrix’s existing capacity at its advanced composites production facility in Henderson, with manufacturing scheduled to begin during the first quarter of the 2024 financial year.

Full delivery of the project is expected in the same year.

New phase of growth

Matrix chief executive officer Aaron Begley said the contract signifies a new phase of growth for the company.

“Our ability to methodically capitalise on the resurgence of activity in traditional offshore buoyancy markets this year has culminated in this very substantial purchase order,” he said.

“We now have around $77 million of secured work carrying us through until the end of the 2024 financial year, which gives us a strong financial platform as we continue to enhance our diversification in the energy and resources sectors and broaden our capabilities into clean energy renewables.”

South American market

The Saipem order follows a $16 million order in August to supply SURF modules for offshore specialist contractor Subsea 7 to use in the construction of a deepwater project in South America.

Following this win, Matrix announced it would start pursuing similar opportunities in the South American market as logistics disruptions among major oil and gas project proponents across the globe ease.

Convertible note issue

Earlier this month, Matrix raised $7.48 million via a convertible note issue to boost its working capital as it brings on new work and advances its growth strategy.

The note is secured and convertible in full or part at $0.35 per share, representing a 64% premium to Matrix’s 14-day volume weighted average share price of $0.213.

It has a three-year term to maturity and a 10.5% coupon rate.

“After diligent consideration of various funding options, we were pleased to reach this agreement with the team at Collins Street Asset Management who support our long-term growth vision,” Mr Begley said.

“The funding will enable us to deliver on our robust pipeline of current work and gives us financial muscle to target the next phase of business growth.”