Energy-focused engineering and construction firm
McDermott International Inc.
) announced that one of its affiliates has won a contract from
Mexico's state oil monopoly Petroleos Mexicanos, or Pemex.
Per the agreement, McDermott will be involved in the
construction of the new Ayatsil-B drilling platform located in the
Ayatsil field in the Bay of Campeche. The scope of the contract
includes engineering, procurement, fabrication, pre-commissioning,
load-out and sea fastening of the Ayatsil-B eight-leg jacket and
McDermott will also execute the transportation and installation
analysis of the structure and impart necessary training to the
Pemex staff for facility operation and maintenance.
The agreement, financial terms of which were not disclosed, will
be taken into account in McDermott's second quarter 2012 backlog.
The contract work is expected to be completed during the third
quarter of 2013.
McDermott management remains highly confident about the
execution and performance of this contract that came in after
successful completion of the Pemex Kuil-A project.
Houston, Texas-based McDermott primarily serves the worldwide
offshore oil and gas field development activities, including
front-end design and detailed engineering, fabrication and
installation of offshore drilling and production facilities, as
well as installation of marine pipelines and subsea production
Given its geographic footprint in high-growth regions,
technology leadership and efficient execution skills, the company
is poised to benefit from strong industry fundamentals for offshore
construction activities through 2012 and beyond.
We believe order flow and backlog for McDermott's products and
services will continue to be healthy and trend higher in the
However, due to McDermott's exclusive focus on the offshore oil
and gas business and the tentative commodity price outlook, we
harbor a cautious sentiment for the company over the next few
quarters. We further believe that the transfer of the 'Power
Generation Systems' and 'Government Operations' segments into a
separate, independent and publicly traded entity
The Babcock & Wilcox Company
) has left McDermott with a less diversified business, thereby
heightening its risk profile.
McDermott currently retains a Zacks #3 Rank, which translates
into short-term Hold rating. We are also maintaining a long-term
Neutral recommendation on the stock.
BABCOCK&WILCOX (BWC): Free Stock Analysis
MCDERMOTT INTL (MDR): Free Stock Analysis
To read this article on Zacks.com click here.