TechnipFMC Buys Majority Stake In Norwegian Subsea Unit

TechnipFMC plc (NYSE:FTI) recently agreed to acquire 51% stake in Norwegian Island Offshore group's subsea unit, Island Offshore Subsea AS.

The services provided by the subsea unit - which has around 80 employees - include Riserless Light Well Intervention (RLWI) project management and engineering services that are used for plug & abandonment (P&A). The subsidiary also conducts well completion and riserless coiled tubing operations.

How Will the Acquisition Benefit TechnipFMC?

TechnipFMC’s subsea segment, which was once the largest and fastest growing unit of the company, is facing revenue and margin pressure due to a volatile pricing scenario. In the recent quarter, Subsea revenues and profits declined 37% and 71.3% year over year, respectively.

The strategic cooperation agreement between the companies is expected to enable TechnipFMC to provide RLWI services internationally. The move is also likely to improve the acquirer’s revenues in the coming quarters. We note that TechnipFMC and Island Offshore have worked together earlier to increase output from more than 500 subsea wells.

TechnipFMC's vice president of Offshore Integrated Services, Odd Strømsnes, is expected to be the Managing Director of the acquired unit.

Price Performance

TechnipFMC has gained 1.3% in the last year against the 20.5% decline of its industry.

About TechnipFMC

London-based TechnipFMC is a leading manufacturer and supplier of technology solutions for the energy industry. The company, which reached its current form following the January 2017 merger between Technip (PA:FTI) and FMC Technologies, is engaged in designing, producing and servicing technologically sophisticated systems and products for subsea, onshore/offshore, and surface projects.

Zacks Rank and Stocks to Consider

TechnipFMC has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the oil and energy sector are Cabot Oil & Gas (NYSE:COG) , Pioneer Natural Resources (NYSE:PXD) and Suncor Energy (NYSE:SU) . Both Cabot and Pioneer Natural Resources sport a Zacks Rank #1 (Strong Buy) while Suncor Energy has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX -based Cabot is an independent energy company. Its sales for the fourth quarter of 2017 are expected to grow 35.9% year over year. Earnings for 2017 are expected to be up 342.9%.

Irving, TX- based Pioneer Natural Resources is an independent oil and gas exploration and production company. Its earnings for the fourth quarter of 2017 are expected to increase 49.1% year over year. The company delivered a positive average earnings surprise of 67.6% in the last four quarters.

Suncor Energy is a Calgary, Canada based integrated energy company. Its revenues for the fourth quarter of 2017 are expected to increase 5.5% year over year. The company delivered a positive earnings surprise of 57.7% in the third quarter of 2017.

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