Dril-Quip Asia Pacific Pte Ltd - a wholly owned affiliate of
U.S. equipment supplier
) - has clinched a supply contract from Sabah Shell Petroleum
Company Limited - a business wing of integrated energy firm
Royal Dutch Shell plc
).The contract entails Dril-Quip to provide drilling and
production tools and related services for the development of
Shell Malikai tension-leg platform (TLP) project, situated off
the cost of Malaysia.
Per the deal, Dril-Quip will supply subsea wellheads, tensioner
systems, risers, production trees, injection trees, and tieback
connectors. Dril-Quip expects the deliveries to commence in 2014.
The Shell Malikai TLP development will process roughly 60,000
barrels of liquids per day and compress 50 million cubic feet of
gas per day.
The tension-leg offshore platform will be connected to the sea
bed with tendons − long steel tubular structures - that will
provide stability in spite of the sea waves.
Houston, Texas-based Dril-Quip manufactures highly engineered
offshore drilling and production equipment for deepwater
severe-service applications and harsh environmental conditions.
Dril-Quip designs and manufactures subsea and surface wellheads,
subsea and surface production trees, mudline hanger systems,
specialty connectors, and associated pipe, drilling and
production riser systems, wellhead connectors and diverters,
which are used on offshore rig equipment.
Dril-Quip enjoys a favorable position given its solid backlog and
a debt-free balance sheet. This gives it the financial
flexibility to take advantage of new growth opportunities while
returning capital to shareholders. We expect large orders in 2013
from the Gulf of Mexico (GoM) and Brazil, with rising demand and
activity level in these regions.
However, in the subsea capital equipment area, Dril-Quip's
competitive position is fairly weak in the more lucrative large
and complex deepwater segment. Despite its strenuous efforts over
the last couple of years, it has made little headway in gaining
market share from larger competitors.
Dril-Quip 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.
In the energy sector,
Helmerich & Payne Inc
Range Resources Corporation
) display better fundamentals and currently carry a Zacks Rank #1
DRIL-QUIP INC (DRQ): Free Stock Analysis
HELMERICH&PAYNE (HP): Free Stock Analysis
ROYAL DTCH SH-A (RDS.A): Free Stock Analysis
RANGE RESOURCES (RRC): Free Stock Analysis
To read this article on Zacks.com click here.