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McDermott Gets Contract From Shell's Arm for Great White Frio


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McDermott International, Inc.MDR recently received a contract from Royal Dutch Shell plc's RDS.A subsidiary, Shell Exploration and Production Company, for its operations in the Great White Frio development. The subsea umbilical and flowline installation contract will be executed in the U.S. Gulf of Mexico's Alaminos Canyon Block 857. 

McDermott categorizes the contract as a sizeable one, the value of which falls in the range of $1-$50 million. The contract award is expected to be reflected in McDermott's fourth-quarter backlog. The company had a backlog of $11.5 billion at the end of the third quarter. It is expected to carry out management and engineering works for the project in Houston, TX.

The installation works of the contract require McDermott to induct a flexible flowline to a pipeline end termination from the well, set up of a 2,000-foot flying lead of steel and fit two electrical flying leads at 8,000-feet water depth. The installation works are expected to be completed in mid-2019.

Notably, the Great White oil and gas development falls in the Lower Tertiary Paleogene time period. Production from the project is expected to be processed at Shell's Perdido Regional Host production hub. The hub also processes output from the Silvertip and Tobago fields. Perdido Host boasts a daily processing capacity of 200 million cubic feet of gas and 100,000 barrels of oil.

Zacks Rank & Price Performance

McDermott is a fully vertically integrated company, providing engineering and construction solutions to the energy firms. With the acquisition of Chicago Bridge & Iron, McDermott ended up assuming the high debt load of the former.  The new entity carries a debt load of around $3.4 billion, restricting the financial flexibility of the firm. The company currently has a Zacks Rank #5 (Strong Sell). It has lost 62.9% in the past year compared with 19.4% collective fall of the industry it belongs to.

Stocks to Consider

Investors interested in the energy sector can opt for some better-ranked stocks given below:

Houston, TX-based Enterprise Products Partners L.P. EPD holds a Zacks Rank #1 (Strong Buy). The company's earnings for 2018 are expected to surge more than 36% year over year. You can see the complete list of today's Zacks #1 Rank stocks here .

Rome, Italy-based Eni S.p.A. E has a Zacks Rank #1. Its earnings for 2018 are expected to grow more than 100% from the 2017 level. 

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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 Symbols: EPD , MDR , RDS.A , E



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