FMC Signs LLOG Subsea Deal - Analyst Blog
December 09 2011 - 12:24PM
Zacks
FMC Technologies Inc. (FTI) has entered into an
agreement, worth $40 million, with LLOG Exploration Company, LLC.
Per the deal, the former will design, manufacture and deliver
subsea production systems that will be utilized to develop the Who
Dat project in the U.S. Gulf of Mexico.
The scope of the contract involves the supply of seven subsea
production trees and control systems. Equipments will be supplied
from FMC’s Houston operations and deliveries are slated to start in
2012.
Located at a water depth of 3,000 feet, the Who Dat field is in
the Mississippi Canyon Blocks 503 and 547. LLOG is the operator of
the project with a 67.5% interest.
FMC Technologies has collaborated with LLOG on various ventures,
since 2008 and remains committed to support the Gulf of Mexico
endeavors of the latter.
Houston, Texas-based FMC Technologies is a leading manufacturer
and supplier of technology solutions for the energy industry and
operates 25 manufacturing facilities in 15 countries.
We believe that FMC Technologies is favorably positioned in the
subsea systems market. It is the company’s largest and
fastest-growing business, accounting for about 70% of its total
revenue. Subsea products have seen an increase in interest, and we
expect earnings from this segment to strengthen in the coming
months.
FMC Technologies also enjoys the benefits of a diversified
product portfolio, specialty service capabilities and proprietary
technological expertise along with a strong backlog position and
growing international footprint.
However, the uncertain commodity price outlook and a soft global
economy continue to weigh on the company. As such, we expect FMC
Technologies’ growth potential to be restrained and see limited
upside from the current level. The company also faces stiff
competition from peers Cameron International Corp.
(CAM) and National-Oilwell Varco (NOV). Hence, we
maintain a long-term Neutral rating.
FMC Technologies currently retains a Zacks #3 Rank, which is
equivalent to a short-term Hold rating.
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