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McDermott (MDR) Wins Phase 3 of the FEED Contract From POSCO

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McDermott International (MDR - Free Report) recently secured a major front-end engineering design (FEED) contract from POSCO INTERNATIONAL Corporation.

McDermott has been contracted for the phase three stage of Shwe gas field development. Located 70 kilometers offshore Myanmar, the Shwe gas field’s FEED contract comprises provision of new compression platform along with some modification in the existing platform as well as a bridge link.

The contract services, scheduled to take place in the third quarter of 2019, will be carried out at McDermott’s Center of Engineering Excellence in Kuala Lumpur, Malaysia. The work is expected to be completed by second-quarter 2020. This contract win will be added to McDermott’s third quarter, 2019 backlog.

In 2017, McDermott took part in the FEED competition and its successful execution of the FEED followed by the EPCIC tender led to its contract award of the phase two developmental stage of the Shwe gas field project. This in turn fetched the company the phase three expansion work of the project.

The Shwe field development consists of the Shwe, Shwe Phyu and Mya gas fields, located in blocks A-1 and A-3 of the Bay of Bengal.

Shares of McDermott, the oilfield equipment provider, have plummeted 88.7% in a year, comprehensively wider than the industry's 49.6% decline. Particularly, the stock tanked 70% in the past week to a 16-year low following rumours of a potential bankruptcy circulated in the media.

However, this Houston-based company recently witnessed an enormous upsurge of nearly 75% in its stock price. This uptrend follows the declaration that McDermott is mulling over divesting its industry-leading Lummus Technology business after arousing prospective buyers’ interest. The phase three of the Shwe project might as well help the company retrieve its stock price at a decent level.

Zacks Rank & Key Picks

McDermott carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include BP Midstream Partners (BPMP - Free Report) , Dril-Quip, Inc. (DRQ - Free Report) and TC Pipelines, LP (TCP - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BP Midstream’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.

Dril-Quip earnings beat the Zacks Consensus Estimate in three of the previous four quarters.

TC Pipelines earnings beat the Zacks Consensus Estimate in three of the last four quarters.

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