Oil drilling equipment maker FMC Technologies, Inc. (FTI - Free Report) has entered into a deal with Norwegian oil and gas firm Statoil ASA (STO - Free Report) for the supply of additional subsea equipment. The contract is worth around $33 million in revenue.
Per the deal, FMC Technologies will supply 10 production risers and tieback connectors for the Snorre field located in the Norwegian North Sea. For more than 20 years now, the company has been supplying equipments for the development of Statoil’s Snorre field. The subsea equipment will be delivered in 2015.
FMC Technologies is particularly well positioned in the subsea systems market and has received numerous attractive subsea contracts in the recent past. Earlier, in October, the company inked a deal with Total E&P Angola, a subsidiary of French oil and gas major TOTAL SA (TOT - Free Report) , for the supply of additional subsea equipment for the Pazflor field.
Incorporated in 2000, Houston, Texas-based FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry. The company, which operates 27 manufacturing facilities in about 16 countries, is engaged in designing, producing and servicing technologically sophisticated systems and products such as subsea production and processing systems, surface wellhead production systems, high pressure fluid control equipment, measurement solutions, and marine loading systems for the oil and gas industry. The company conducts its operations in three segments namely Subsea Technologies, Surface Technologies and Energy Infrastructure.
FMC Technologies shares currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.
Subsea products have seen an increase in interest and we expect earnings in this segment to strengthen – especially due to FMC Technologies’ leadership position in subsea production systems, including subsea trees, controls, manifold and tie-in systems. On the flip side, as is the case with other oil services and equipment suppliers, FMC Technologies’ results completely depends on the movement in 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.