Oil drilling equipment maker Cameron International Corp. ( CAM - Analyst Report ) recently received a supply contract from the Iraqi firm Rumaila Operating Organization (“ROO”) – a joint venture of state-owned South Oil Company, BP plc ( BP - Analyst Report ) and the China National Petroleum Corporation.

The deal, estimated at around $100 million, involves the supply of equipments for new wells and rehabilitation of existing wells. The contract also includes the aftermarket services terms for the next three years.

Cameron management highlights that this contract will strengthen the company’s business ties with the government of Iraq. Cameron also stated that that it will extend major support in the form of parts, service, equipment storage and deployment for the development of the Rumaila oil field from their new facility in Iraq.

Houston, Texas-based Cameron is a leading 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: Drilling & Production Systems; Valves & Measurement; and Process & Compression Systems.

We believe Cameron enjoys a dominant market position and its strong backlog of $7 billion offers ample visibility to its earnings growth and cash flow prospects.

The company is also well poised to benefit from the improving subsea activity levels through 2012 and beyond. In this regard, Cameron has signed numerous subsea equipment deals with industry giants like BP plc, Petroleo Brasileiro S.A. or Petrobras ( PBR - Analyst Report ) , Statoil ASA ( STO - Analyst Report ) and Chevron Corporation ( CVX - Analyst Report ) .

In early June, Cameron struck a subsea supply deal with Chinese oil producer CNOOC Ltd ( CEO - Analyst Report ) , whereby the former will deliver subsea production systems to the latter. These systems will be utilized for the development of the offshore “Panyu 35-1/2" gas field in the South China Sea.

However, shares of the company are fairly valued at current levels, considering the sensitivity of Cameron’s business to gas/oil price volatility, as well as exploration and production spending patterns, costs, geo-political risks, competition and the advent of new technologies.

Hence, we are maintaining our long-term Neutral recommendation on the stock. Cameron is currently a Zacks #3 Rank (Hold) stock, implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.