Oil drilling equipment maker
Cameron International Corporation
) announced that it has won a contract from Esso Exploration and
Production Nigeria Limited (EEPNL) − an affiliate of U.S. energy
). The award calls for Cameron to provide subsea production
systems for the development of Erha North Phase 2 deep-water
project, located offshore Nigeria.
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Per the deal, Cameron will supply two water injection trees, five
subsea production trees, three manifolds, production and topside
controls and related tools. The company expects the delivery of
the subsea production systems to commence in 2014.
The order is part of Cameron's strong and longstanding
relationship with Nigeria. The company also believes that the
contract will be able to enhance the skills of its Nigerian
labors, while allowing partnerships with the local suppliers.
Houston, Texas-based Cameron is a leading manufacturer of
pressure control equipment used in onshore, offshore, and subsea
applications for oil and gas drilling, production, and
transmission. The company operates through three segments:
Drilling & Production Systems, Valves & Measurement, and
Process & Compression Systems.
The company stands to benefit from improving subsea activity
levels in the near future. In this regard, Cameron International
has signed numerous subsea equipment deals with industry giants
Petroleo Brasileiro S.A. or Petrobras
Cameron's strong backlog provides ample visibility for its
earnings growth and cash flow prospects going forward. Its
existing backlog of nearly $7.6 billion provides cushion in the
current uncertain environment.
The company, which used to be a leading supplier of subsea
production systems (Christmas trees) lost market share to
competitors in the last few years. While the new order bookings
should help improve the company's market share position, we do
not expect it to attain its former leadership position.
Cameron currently carries a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next one to three months.