McDermott Gets EPCC Contract From Maersk Oil In North Sea

Energy-focused engineering and construction company McDermott International, Inc. (NYSE:MDR) recently announced that it has landed an engineering, procurement, construction and commissioning (EPCC) services contract from Maersk Oil for the latter's Tyra Redevelopment project. It is located in the Danish sector of North Sea.

The contract value is expected to be in the range of $500-$700 million. With this contract, McDermott is returning to the North Sea. It also aligns with the company's growth strategy. Per McDermott, Maersk Oil will be provided with the full suite of EPCC services for seven topside structures, six connecting bridges and six jacket extensions. McDermott has plans to carry out the project as part of two separate work packages. One of the packages will assume Tyra East G platform’s gas processing topside of around 18,188 tons, which will include two 100 meters connecting bridges weighing 468 tons and 771 tons. A 137-meter long flare is also included in this package.

Another package will assume a total of four wellhead topsides for Tyra East B and Tyra East C, along with two riser topsides at Tyra West E. It also incorporates four connecting bridges that are expected to weigh in the range of 60-1,102 tons.

The company has expressed its intention to use the office in Kuala Lumpur, Malaysia for performing project management, engineering and supply chain management. It also plans to use its fabrication yard at Batam Island of Indonesia for fabrication and assembling the structures.

McDermott, which is set to merge with Chicago Bridge & Iron, expects to start working on the project from early 2018. It expects to complete the two work packages by Feb 1, 2020 and Feb 1, 2021, respectively. The contract will be reflected in the company's backlog for the fourth quarter of 2017.

About McDermott

Incorporated in 1959, Houston, TX-based McDermott is an engineering and construction company, solely focused on the offshore oil and gas business. McDermott primarily serves the worldwide offshore oil and gas field developments, including the front-end design and detailed engineering, fabrication and installation of offshore drilling and production facilities, as well as the installation of marine pipelines and subsea production systems.

Additionally, the company provides project management and procurement services. It operates in most major offshore oil and gas producing regions under three main reporting segments: Asia Pacific, Americas and the Middle East.

McDermott has declined 9.8% year to date compared with 18.5% fall of its industry.

Zacks Rank and Stocks to Consider

McDermott has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the oil and energy sector are Northern Oil and Gas, Inc. (NYSE:NOG) , Holly Energy Partners, L.P. (NYSE:HEP) and Delek US Holdings, Inc. (NYSE:DK) . All these companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Minnetonka, MN-based Northern Oil and Gas is an independent energy company. Its sales for the fourth quarter of 2017 are expected to grow 51.9% year over year. The company pulled off an average positive earnings surprise of 175% in the last four quarters.

Dallas, TX-based Holly Energy is a production pipeline company. Its sales for 2017 are expected to improve 10.4% year over year. The company came up with a positive earnings surprise of 57.1% in the third quarter of 2017.

Brentwood, TN-based Delek is an integrated energy company. Its sales for 2017 are expected to increase 44.7% year over year. The company delivered a positive earnings surprise of 19.1% in the third quarter of 2017.

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