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FMC Technologies Inc. (FTI - Analyst Report), maker of oil drilling equipment, entered into a deal with Total Upstream Nigeria Ltd, an affiliate of integrated oil and gas company TOTAL SA (TOT - Analyst Report).

Per the contract, FMC Technologies will purvey subsea trees and wellheads, manifolds, installation tooling, flowline connection systems, and related control systems, for the development of the Egina field. The oil field is situated off the coast of Nigeria and the delivery of the equipment is expected to start in 2015. FMC Technologies estimates the value of the order to be roughly $1.2 billion. Moreover, the company reveals that this oil field development is going to be the largest subsea project in West Africa, till date.

FMC Technologies is well positioned in the subsea systems market. It is the company’s largest and fastest-growing business, accounting for about two-thirds of revenues. FMC Technologies has received numerous attractive subsea contracts in the recent past from energy majors that include Petroleo Brasileiro S.A., or Petrobras (PBR - Analyst Report) and Statoil ASA (STO - Analyst Report).

Additionally, with a major portion of its total revenue coming from outside the U.S., FMC Technologies’ international operations are expected to be a key growth driver going forward. We have identified Latin America, Asia Pacific and the Middle East as the key markets in this regard.  

On the flip side, FMC Technologies relies on its ability to develop and acquire essential products and technologies that drive its operational performance and growth. If its technologies and/or products become obsolete, or if it cannot bring them to market in a timely and competitive manner, it may face severe operational and financial dilemmas.

Houston, Texas-based FMC Technologies currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.     
 

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