Oil drilling equipment maker
Cameron International Corp.
) recently received a supply contract from South Korea-based STX
Offshore & Shipbuilding Co. Ltd. Per the contract, Cameron
will provide an entire drilling equipment package to be used by a
12,000 foot ultra deepwater drillship
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The deal, estimated at around $275 million, will be the first
complete rig package by Cameron for a new drillship.
Cameron management highlights that this contract will strengthen
the company's business of providing complete drilling equipment
packages for drillships. Prior to this contract, Cameron
successfully delivered full equipment packages for jackup
drilling rigs to TTS Energy.
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 has signed
numerous subsea equipment deals with industry giants like
Petroleo Brasileiro S.A. or Petrobras
Earlier this month, Cameron with
) announced the formation of OneSubsea - a joint venture (JV)
between the subsea units of both the companies to capitalize on
the growing demand for deepwater drilling.
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 stock with a Hold
rating over the next one to three months.