Oil drilling equipment maker,
FMC Technologies Inc.
) was awarded a contract by the Norwegian oil major
), to manufacture and supply a Workover System (WOS) for the
Snorre B platform, located in the northern part of the
Statoil-operated Snorre oil and gas field. The contract is valued
at around $114 million in revenues.
FMC TECH INC (FTI): Free Stock Analysis
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The new WOS supplied by FMC Technologies will act as a
replacement for the earlier system and will aid Statoil in
enhancing the efficiency of the oil recovery process from the
subsea wells in the Snorre field. Management at FTI believes that
this WOS is aptly suited to Statoil's standardized subsea
equipment and will improve the overall performance of the rig.
Houston, Texas-based FMC Technologies is a leading manufacturer
and supplier of technology solutions for the energy industry. The
company has a diversified product portfolio, specialty service
capabilities and proprietary technological expertise.
As the subsea market bubble is fast expanding, FMC Technologies
is expected to benefit from its strong market presence. Also, the
company's long standing relation with energy sectors majors like
Royal Dutch Shell
) acts in its favor.
However, with markets remaining competitive and pricing likely to
be weak, we believe FMC Technology shares are fairly valued and
will not see much improvement in the near future. Also, a cut in
the earnings guidance in October from $2.10-$2.25 to $2.00-$2.10
per share cannot be ignored. Moreover, Oilfield service stocks
are extremely volatile and the correlation of their movement with
underlying business fundamentals is sometimes difficult to
Taking into consideration such factors, FTI currently holds a
Zacks Rank #4 (Sell), implying it is expected to underperform the
broader U.S. equity market over the next one to three months.