Oil drilling equipment maker
Cameron International Corp.
(
CAM
) recently received a supply contract from the Iraqi firm Rumaila
Operating Organization ("ROO") - a joint venture of state-owned
South Oil Company,
BP plc
(
BP
) and the China National Petroleum Corporation.
The deal, estimated at around $100 million, involves the supply
of equipments for new wells and rehabilitation of existing wells.
The contract also includes the aftermarket services terms for the
next three years.
Cameron management highlights that this contract will strengthen
the company's business ties with the government of Iraq. Cameron
also stated that that it will extend major support in the form of
parts, service, equipment storage and deployment for the
development of the Rumaila oil field from their new facility in
Iraq.
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.
We believe Cameron enjoys a dominant market position and its
strong backlog of $7 billion offers ample visibility to its
earnings growth and cash flow prospects.
The company is also well poised to benefit from the improving
subsea activity levels through 2012 and beyond. In this regard,
Cameron has signed numerous subsea equipment deals with industry
giants like BP plc,
Petroleo Brasileiro S.A.
or
Petrobras
(
PBR
),
Statoil ASA
(
STO
) and
Chevron Corporation
(
CVX
).
In early June, Cameron struck a subsea supply deal with Chinese
oil producer
CNOOC Ltd
(
CEO
), whereby the former will deliver subsea production systems to the
latter. These systems will be utilized for the development of the
offshore "Panyu 35-1/2" gas field in the South China Sea.
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 are maintaining our long-term Neutral recommendation
on the stock. Cameron is currently a Zacks #3 Rank (Hold) stock,
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
BP PLC (BP): Free Stock Analysis Report
CAMERON INTL (CAM): Free Stock Analysis Report
CNOOC LTD ADR (CEO): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
PETROBRAS-ADR C (PBR): Free Stock Analysis
Report
STATOIL ASA-ADR (STO): Free Stock Analysis
Report
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