Get 40% Off
🔥 This hedge fund gained 26.16% in the last month. Get their top stocks with our free stock ideas tool.See stock ideas

McDermott (MDR) Secures New EPCI Contract In Arabian Gulf

Published 11/12/2017, 08:53 PM
Updated 07/09/2023, 06:31 AM
COP
-
DEN
-
MDR_old
-
BAK
-

Energy-focused engineering and construction company McDermott International, Inc. (NYSE:MDR) recently announced that it has received an engineering, procurement, construction and installation ("EPCI") contract from a customer in the Middle East. The news follows the company's strong third-quarter results, which showed a 72% year-over-year increase in quarterly revenues.

McDermott's customer in the Middle East, possibly Saudi Aramco, has provided the contract for a project in the Safaniya oil field in the Arabian Gulf. Although the financial details of the deal are yet to be announced, the project is expected to be worth $750 million to $1.5 billion. It is part of Saudi Aramco’s new $4.5 billion worth energy-related agreements.

McDermott will start working on the project immediately. Per the company, the impact of the project will be reflected in its fourth-quarter 2017 backlog. In this context, we would like to remind investors that as of Sep 30, McDermott had a backlog of $2.4 billion. While 85% of the total backlog is related to offshore operations, the remaining 15% pertains to subsea operations.

The company's strong foothold in the Middle East is expected to enable it to execute the project smoothly with its engineering and procurement teams in Dubai, Chennai and Al Khobar, Saudi Arabia. Per the company, its facilities in Saudi Arabia's Dammam and Jebel Ali, located in Dubai will carry out the construction work while its vessels will be charge of installation.

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 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.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

We appreciate McDermott’s broad product portfolio, diversified geographical footprint, good market position and strong relationship with national oil companies. However, due to the company’s exclusive focus on the offshore oil and gas business and the uncertain commodity price scenario expected over the next few quarters, investor sentiment toward the company is likely to remain lukewarm.

Price Performance

McDermott has gained 3.4% year to date against 20.7% 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 include Braskem S.A. (NYSE:BAK) , ConocoPhillips (NYSE:COP) and Denbury Resources Inc. (NYSE:DNR) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Braskem’s sales for 2017 are expected to increase 12.1%% year over year. The company delivered an average positive earnings surprise of 47% in the last four quarters.

ConocoPhillips’ sales for the fourth quarter of 2017 are expected to increase 2.7% year over year. The company delivered an average positive earnings surprise of 152.3% in the last four quarters.

Denbury Resources’ sales for the fourth quarter of 2017 are expected to increase 4.8% year over year. The partnership delivered an average positive earnings surprise of 125% in the last four quarters.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>



McDermott International, Inc. (MDR): Free Stock Analysis Report

Braskem S.A. (BAK): Free Stock Analysis Report

Denbury Resources Inc. (DNR): Free Stock Analysis Report

ConocoPhillips (COP): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.