Samsung Heavy Shares Gain on Shell’s Platform Orders (Update1)

July 29 (Bloomberg) -- Samsung Heavy Industries Co., the world’s second-largest shipyard, rose to a 10-month high after winning a contract to build liquefied natural gas production and storage platforms for Royal Dutch Shell Plc.

Samsung Heavy climbed as much as 8 percent to 33,100 won, the highest intraday price since Sept. 29, and traded at 32,400 won as of 11:34 a.m. in Seoul. The stock has climbed 43 percent this year, compared with a 36 percent rise in the benchmark Kospi index.

Shell, Europe’s largest oil company, yesterday awarded the contract to Samsung Heavy and Technip SA to design, construct and install floating LNG facilities over 15 years. The market expectation is that Shell may order as many as 10 units worth about $5 billion each, Samsung Heavy said today in a statement.

“Samsung Heavy is the only shipbuilder that has any experience in building this type of product, which puts it in a very good position to win other orders,” said Cho In Karp, an analyst at Good Morning Shinhan Securities Co. in Seoul.

Samsung Heavy is also in talks with companies in Europe, including in the Netherlands, France and Norway, for similar orders, the Seoul-based company said in its statement. Under the Shell contract, Samsung Heavy will have the right to provide all the LNG floating platforms needed by the oil producer, it said.

To contact the reporter on this story: Kyunghee Park in Hong Kong at kpark3@bloomberg.net

To contact the editor responsible for this story: Teo Chian Wei at cwteo@bloomberg.net