Double Deal for McDermott - Analyst Blog
01 Juni 2012 - 11:45AM
Zacks
Energy-focused engineering and
construction firm McDermott International Inc.
(MDR) announced that two of its subsidiaries have won contracts for
two different offshore projects across the globe. The company will
include both the contracts’ value in its second quarter 2012
backlog.
The first contract was awarded by
Heerema Marine Contractors Nederland BV for a fabrication work to
be used in a deepwater platform that is located 225 miles south of
New Orleans in the Gulf of Mexico. The work, which is slated to
begin during the second quarter of 2012, involves the construction
of 16 tendon buoyancy modules (TBMs). McDermott will conduct the
procurement, fabrication and loadout of the TBM facilities from its
Morgan City facility in Louisiana.
As for the second contract –
awarded by VAALCO Gabon Inc, an affiliate of Vaalco Energy
Inc. (EGY) – McDermott will execute a design, engineering
and procurement management work for the Etame platform. Houston,
Texas-based McDermott will also carry out a design engineering
contract for a potential Southeast Etame/North Tchibala (SEENT)
platform. Both these projects are located offshore Gabon, West
Africa. As per the contract details, McDermott will set up a safe,
reliable and conventional production facility that will have low
operational and maintenance issues.
Supported by efficient manpower and
a high technological base, the projects are expected to show
profitable results.
McDermott currently retains a Zacks
#3 Rank, which translates into a short-term Hold rating.
Given its geographic footprint in
high-growth regions, technology leadership and efficient execution
skills, the company is poised to benefit from strong industry
fundamentals for offshore construction activities through 2012 and
beyond.
However, the transfer of the ‘Power
Generation Systems’ and ‘Government Operations’ segments into a
separate, independent and publicly traded entity The
Babcock & Wilcox Company (BWC) has left McDermott with
a less diversified business, thereby heightening its risk
profile.
BABCOCK&WILCOX (BWC): Free Stock Analysis Report
VAALCO ENERGY (EGY): Free Stock Analysis Report
MCDERMOTT INTL (MDR): Free Stock Analysis Report
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