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Oil drilling equipment maker, Cameron International Corp. , provided an update on its $540 million subsea equipment supply deal for the Rosebank development in the U.K. North Sea.

Leading integrated energy firm Chevron Corp. – operator of the Rosebank project – has decided to postpone oil development from the field owing to speculations regarding the viability of the project. Increasing oil production expense has raised concerns and thus, Chevron will re-evaluate the development and work to enhance the economics of the venture. While Chevron has a 40% ownership in the field, Norway-based Statoil ASA owns 30%. OMV and Dong Exploration & Production hold 20% and 10%, respectively.

Cameron reveals that it will continue to operate on the subsea equipment award and will also go on working with Chevron to progress the economics of the Rosebank oil field development. Cameron could generate $30 million in revenues from its scope of the oil project in 2014.

The Rosebank agreement was signed in the third quarter of 2013 between OneSubsea – a joint venture between Cameron and Schlumberger Ltd. – and Chevron. According to the contract, OneSubsea will provide vertical monobore subsea trees with retrievable process modules, 6-slot manifolds, and production control systems for the development of offshore U.K.-based Rosebank oil field. Cameron expected the deliveries to commence in 2014.

Houston, Texas-based Cameron is a manufacturer of pressure control equipment used in onshore, offshore, and subsea applications for oil and gas drilling, production, and transmission. The company operates through three segments, namely, Drilling & Production Systems, Valves & Measurement and Process & Compression Systems.

Cameron lost its leading position as a supplier of subsea production systems (Christmas trees) in the last few years. While the new order bookings should help improve the company’s market share, we do not expect it to attain its former leadership.

Cameron currently holds a Zacks Rank #5 (Strong Sell), implying that it is expected to significantly underperform the broader U.S. equity market over the next one to three months.

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