MDR McDermott International Inc

McDermott International, Inc. (NYSE: MDR) announced today that its subsidiary, The Babcock & Wilcox Company ("B&W"), has signed a memorandum of understanding ("MOU") to supply eight identical supercritical coal-fired boilers and selective catalytic reduction ("SCR") systems as part of TXU's solid-fuel power generation program in Texas. The expected revenue from the full release of all purchase orders anticipated by the MOU exceeds $1 billion. The eight boilers, each with a capacity of 858 MW, will be B&W supercritical Spiral Wound Universal Pressure units, the largest of this kind under construction in the U.S. to date. The units will burn Powder River Basin coal. The SCR systems will be installed to reduce nitrogen oxides ("NOx") emissions to below the levels required by federal and state environmental standards. B&W's scope includes boiler pressure parts and auxiliary equipment such as pulverizers, sootblowers, fans and drives, flues and ducts and technical advisors for construction, commissioning and training. "B&W shares TXU's priorities in identifying solutions for both reliable power and reduced emissions," said David L. Keller, B&W president and chief operating officer. "This project represents the most significant North American boiler order in several decades, and we value the trust they have shown in B&W's proven track record in applying our technology and in our project management capability." B&W supplied its first supercritical boiler in 1957. Since that time, more than 98 supercritical units have been built to B&W's design, representing more than 64,000 MW of capacity worldwide. The new boilers will be installed at the following TXU power stations in Texas: Big Brown (Freestone County), Lake Creek (McLennan County), Martin Lake (Rusk County), Monticello (Titus County), Morgan Creek (Mitchell County), Valley (Fannin County) and two at Tradinghouse (McLennan County). Design of the boilers is currently underway at B&W's headquarters in Barberton. Babcock & Wilcox Beijing Company, B&W's joint venture company in China, will provide a majority of the pressure part fabrication. B&W's Diamond Power International, Inc. subsidiary will supply the sootblowers. Delivery of materials is scheduled to begin in 2007. The first unit is targeted to be online in the fall of 2009, with the rest online in sequence through mid-2010. TXU Corp., based in Dallas, Texas, manages a portfolio of competitive and regulated energy businesses. Its TXU Energy segment provides electricity and related services to 2.3 million electricity customers in Texas. More information can be found on TXU at www.txucorp.com. The Babcock & Wilcox Company is a subsidiary of McDermott International, Inc., a leading worldwide energy services company. McDermott's subsidiaries provide engineering, construction, installation, procurement, research, manufacturing, environmental systems, project management and facility management services to a variety of customers in the energy and power industries, including the U.S. Department of Energy. Additional information on McDermott can be obtained at www.mcdermott.com. In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott International, Inc. cautions that statements in this press release which are forward-looking and provide other than historical information involve risks and uncertainties that may impact McDermott's actual results of operations. The forward-looking statements in this press release include, among other things, the work scope, timing and the expected revenues associated with the TXU project, and that the signed MOU will progress into a final contract resulting in future purchase orders. Although McDermott's management believes that the expectations reflected in those forward-looking statements are reasonable, McDermott can give no assurance that those expectations will prove to have been correct. Those statements are made based on various underlying assumptions and are subject to numerous uncertainties and risks, including without limitation our inability to execute a definitive contract on the terms we have described and any delay, amendments or other changes to the project. If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected. For a more complete discussion of these risk factors, please see McDermott's filings with the Securities and Exchange Commission including its annual report on Form 10-K for the year ended December 31, 2005.