FMC in Supply Pact - Analyst Blog

By Zacks Equity Research,

Shutterstock photo

Oil drilling equipment maker FMC Technologies Inc. ( FTI ) has entered into a deal with Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras ( PBR ) for the supply of subsea equipment. The estimated value of the contract is $130 million.

Per the deal, FMC Technologies will supply three manifolds, tools, spare parts and system integration with subsea controls for Petrobras' pre-salt fields, located offshore Brazil. The manifolds will be installed in water depth of about 8,200 feet and the equipment will be manufactured in Brazil.

Development engineering and system integration testing of the equipment will take place at FMC Technologies' technology center in Rio de Janeiro. The company expects to deliver the equipment from the beginning of 2015.

FMC Technologies also signed a renewed Framework Agreement with energy major Statoil ASA ( STO ). The contract is for 5 years and can be extended for 3 more years. This deal comes on the back of a previously announced agreement by Statoil.

In this contract, FMC Technologies will provide subsea operation services for the development on the Norwegian Continental Shelf and will keep providing installation services, asset management, equipment intervention and well access services.  

FMC Technologies currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.

FMC Technologies' strong backlog, which now stands at more than $5 billion, not only reflects steady demand from its customers but also offers long-term earnings and cash flow visibility. This enables the company to navigate uncertainty better than many of its peers.

However, FMC Technologies relies on its ability to develop and acquire essential products and technologies that drive its operational performance and growth. If its technologies or products become obsolete, or if it cannot bring these to market in a timely and competitive manner, it may face severe operational and financial difficulties.

Meanwhile, oilfield equipment maker Natural Gas Services Group Inc. ( NGS ) with a Zacks Rank #2 (Buy), is expected to perform well in the coming 1 to 3 months.

FMC TECH INC (FTI): Free Stock Analysis Report

NATURAL GAS SVC (NGS): Free Stock Analysis Report

PETROBRAS-ADR C (PBR): Free Stock Analysis Report

STATOIL ASA-ADR (STO): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: FTI , NGS , PBR , STO

More from


Follow on:

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by