SRJ Technologies Group (ASX: SRJ) has executed a joint venture agreement with CAPSA Engineering & Contracting to provide asset integrity services for a gas infrastructure portfolio owned by a national oil company (NOC) in the Middle East.
SRJ subsidiary First Avenue General Contracting, which secured the deal, will collaborate with CAPSA to execute the scope of work on the US$23.8 million four-year contract.
The deal strengthens SRJ’s status as an asset integrity and maintenance partner across the United Arab Emirates, Saudi Arabia, Qatar, and the UK, while at the same time reflecting the confidence in the company’s technical capability, safety record, and service quality.
Individualised Scopes of Work
Under the terms, the NOC will assign individual orders (or call-offs) detailing the commercial terms and performance requirements of each job, including proposed value and estimated timing.
Each call-off will be treated as a separate project with its own scope-of-work matrix, profit and loss statement, and cash-flow profile.
The joint venture partners will share the risks and rewards from the collaboration based on each party’s contribution.
SRJ and CAPSA will be responsible for their allocated scope including management, personnel, materials, equipment, and associated financing.
They will also incur any losses, penalties, liabilities, costs, damages, or third-party claims that may arise.
No Revenue Estimates
SRJ will be paid for the works and services it executes, however the company said it could not reliably estimate the amount and timing of revenues and margins due to the fluctuating volume and nature of each call-off.
“It is our expectation that circa 50% of the total contract value, across the total duration of four years, will flow to SRJ,” it said.
“We will update the market as material call-offs are received against the joint venture agreement.”
SRJ will continue to advance new joint venture opportunities to further accelerate its regional growth and pathway to direct tendering with the NOC.
