Cameron Revives Petrobras Deal - Analyst Blog
September 08 2011 - 1:56PM
Zacks
Oil drilling equipment maker Cameron International
Corporation (CAM) has announced that it has renewed and
extended its CAMSERV aftermarket services contract with
Petroleo Brasileiro S.A. or Petrobras (PBR). The
original deal was signed in 2007.
Per the agreement, Cameron will render the aftermarket services
and support, including inspection, maintenance, repair and
remanufacturing, storage and offshore installation for the
development of Petrobras’ fields offshore Brazil.
Cameron, which will execute the deal from its upgraded service
center in Macae (Brazil), expects to reap more than $150 million in
revenue over the next three years.
Headquartered in Houston, Texas, Cameron shares long-standing
business ties with the Brazilian state controlled energy giant with
the former lending immense support to manufacturing, service and
research and development (R&D) projects in that country.
Cameron’s association with Petrobras is highlighted through various
agreements over the latter’s exploration and production
programs.
In mid-January 2011, Cameron received 27 subsea trees and a
related equipment supply order worth $74 million from Petrobras, to
be used for the development of offshore fields in Brazil. This was
followed by Cameron’s plans to invest approximately $30 million in
two R&D plants in Brazil and a Memorandum of Understanding with
Petrobras in March.
We believe that Cameron has a diversified product portfolio,
specialty service capabilities and proprietary technological
expertise. Other positives for Cameron include a strong backlog
position, growing international operations and a favorable outlook
for subsea activity levels.
However, shares of the company are fairly valued at current
levels, considering the sensitivity of Cameron’s business to
gas/oil price volatility, as well as exploration and production
spending patterns, costs, geo-political risks, competition and the
advent of new technologies.
Hence, we expect Cameron to perform at par with other industry
players and maintain our long-term Neutral recommendation.
CAMERON INTL (CAM): Free Stock Analysis Report
PETROBRAS-ADR C (PBR): Free Stock Analysis Report
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