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Dril-Quip Purchases OilPatch Technologies for $20 Million

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Dril-Quip, Inc. (DRQ - Free Report) recently announced that it has acquired The Technologies Alliance, Inc. d/b/a OilPatch Technologies (“OPT”) for about $20 million.

Dril-Quip’s price chart reveals that it has lagged the Zacks sub industry Oil Field Machinery & Equipment Industry, year to date. While the broader market has increased by 28%, Dril-Quip’s stock has increased by 16.7%. This announcement is expected to positively impact the stock price.

Subject to closing adjustments, the purchase has been funded with cash on hand.  Houston, TX-based OPT provides offshore riser systems and components, proprietary threaded connections and other products. The company, which was founded in 1990, remains focused on deepwater Spar and TLP Systems.

The acquirer believes that OPT’s product offerings will complement and further strengthen its position as a leading provider of Dry Tree Systems and related riser products.

Dril-Quip manufactures highly engineered offshore drilling and production equipment for deepwater severe-service applications and harsh environmental conditions. The company designs and manufactures subsea and surface wellheads, subsea and surface production trees, mudline hanger systems, specialty connectors, and associated pipe, drilling and production riser systems, wellhead connectors and diverters that are used on offshore rig equipment.

We view Dril-Quip as an attractive long-term investment, based on its highly engineered offshore drilling and production equipment for deepwater severe-service applications and harsh environmental conditions. The equipment supplier is also in excellent financial health with a sustainable free cash flow.

Dril-Quip’s results are heavily levered with continued strength in global deepwater drilling markets, especially in South America and the Asia-Pacific region. Given the operators’ long-term outlook on these projects, deepwater drilling and other related services will remain relatively stable in spite of the usual fluctuations in commodity prices.

Dril-Quip currently has a Zacks Rank #4 (Sell). Some better-ranked players in the same space include Braskem S.A. (BAK - Free Report) , Suncor Energy, Inc. (SU - Free Report) and Noble Midstream Partners L.P. . 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 posted a positive earnings surprise of 107.79% in the last reported quarter.

Suncor Energy posted a positive earnings surprise of 300.00% in the preceding quarter. It had an average earnings surprise of 40.55% in the four trailing quarters.

Noble Midstream Partners posted a negative earnings surprise of 77.78% in the last reported quarter.

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