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Oil drilling equipment maker FMC Technologies Inc. (FTI - Analyst Report) entered into a deal with energy major BP Plc (BP - Analyst Report) for the manufacture and supply of subsea equipment.

Per the deal, FMC Technologies will supply 2 manifolds and related control equipment to support water injection in the Thunder Horse field. The field is located in water depths of approximately 6,300 feet in the Gulf of Mexico Mississippi Canyon area. FMC Technologies’ scope of supply also includes numerous pipeline end terminations, flowline and well jumper kits, and umbilical termination assemblies. The subsea equipment is slated to be delivered in first half of 2013.

Earlier in January, FMC Technologies won contracts from LLOG Exploration Company, LLC and CNR International – a wholly owned subsidiary of independent oil and gas explorer Canadian Natural Resources Ltd. (CNQ - Analyst Report) – for the supply of subsea equipment.

FMC Technologies shares currently retain a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months. The company is expected to release its fourth quarter earnings on Feb 12, before the opening bell.

As is the case with other oil services and equipment suppliers, the results for FMC Technologies are directly exposed to oil and gas prices, which are inherently volatile and subject to complex market forces. A potential drop in prices could curtail deepwater drilling and subsea equipment demand, thereby affecting the company’s revenues, earnings and cash flow.

Additionally, FMC Technologies operates manufacturing facilities in 15 countries outside the U.S., and approximately three-fourths of its sales are generated internationally. The company’s operating areas include economically and politically volatile regions such as North Africa, West Africa, the Middle East, Latin America and the Asia Pacific. Instability and unforeseen changes in these markets may have an adverse impact on FMC Technologies’ operations and earnings.

However, oilfield equipment maker McDermott International (MDR - Analyst Report), with a Zacks Rank #2 (Buy), is expected to perform well in the coming one to three months.

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