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Alcoa Inc. (AA - Analyst Report) has announced that its oil and gas business will supply 17,400 feet of aluminum alloy drill pipe (AADP) for offshore drilling survey projects. Further, the company stated that the 5-inch diameter drill pipe will be used by geophysics and seafloor mapping firm Fugro McClelland Marine Geosciences of Houston and Fugro Singapore PTE, LTD, at water depths of up to 1.8 miles.

The surveys are conducted in order to verify whether a site is geologically suitable for the construction of offshore oil and gas drilling or production platforms. Alcoa’s alloy drill pipes have high strength and are connected with steel joints, which provide a lightweight solution for deep water drilling, leading to increased cost effectiveness.

Fugro generally defines processes and interprets data related to the earth's surface, soils and rocks beneath while providing advice based on the results to clients in many sectors. Fugro decided to use Alcoa’s AADP due to its weight, which is about half of steel. AADP will enable Fugro to double the offshore operating depth. The company also decided to collaborate with Alcoa as the latter is a global leader in aluminum, which can support its efforts with advanced metallurgical technology and innovation.

Pennsylvania-based Alcoa Inc. is among the world’s leading producers of primary and fabricated aluminum and alumina. A week ago, Alcoa released its fourth quarter and full year 2012 results. The company posted a profit (from continuing operation) of $242 million or 21 cents per share in the fourth quarter compared with a loss of $193 million or 18 cents a share reported in the year-ago quarter. The results were boosted by a gain of $178 million ($161 million post-tax) associated with a hydroelectric project asset sale.
Excluding one-time items, Alcoa earned $64 million or 6 cents a share in the quarter, in line with the Zacks Consensus Estimate. The company’s midstream and downstream businesses delivered profits and its cost-cutting measures also supported the results.

Revenues decreased 1.5% year over year to $5,898 million in the fourth quarter, but were ahead of the Zacks Consensus Estimate of $5,579 million. The company provided an upbeat demand outlook for 2013, backed by a recovery in the Chinese economy.

Alcoa competes with Aluminum Corporation Of China Limited and RioTinto plc. (RIO - Analyst Report). The company retains a short-term Zacks Rank #3 (Hold). We currently have a long-term Neutral recommendation on the stock.

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