Offshore oilfield equipment manufacturer, FMC Technologies Inc. (FTI - Free Report) has entered into a deal with CNR International – a wholly owned subsidiary of independent oil and gas explorer Canadian Natural Resources Ltd. (CNQ - Free Report) – for supply of subsea equipment.
Per the deal, FMC Technologies will supply three manifolds, six subsea trees, eight wellheads, associated topside control systems and a Subsea Control System including subsea distribution systems for the Baobab field, situated in Block CI-40, roughly 16 miles offshore Ivory Coast, West Africa. The subsea equipment is slated to be delivered in 2014. The field started its production by the second half of 2005 and is currently producing 65,000 barrels of oil and 15 million cubic feet of natural gas per day.
Earlier in January, FMC Technologies received a $114 million contract from LLOG Exploration Company, LLC. Also, in December last year, the company signed a $33 million subsea equipment supply contract with Norwegian oil and gas company Statoil ASA (STO - Free Report) .
Incorporated in 2000, Houston, Texas-based FMC Technologies, Inc. is a leading manufacturer and supplier of technology solutions for the energy industry. The company, which operates 27 manufacturing facilities in 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.
FMC Technologies shares currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
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 and manifold and tie-in systems.
Nevertheless, like other oil services and equipment suppliers, 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.