Oil drilling equipment maker Cameron International Corporation announced that it has won a contract from Esso Exploration and Production Nigeria Limited (EEPNL) − an affiliate of U.S. energy behemoth ExxonMobil Corporation (XOM - Free Report) . The award calls for Cameron to provide subsea production systems for the development of Erha North Phase 2 deep-water project, located offshore Nigeria.
Per the deal, Cameron will supply two water injection trees, five subsea production trees, three manifolds, production and topside controls and related tools. The company expects the delivery of the subsea production systems to commence in 2014.
The order is part of Cameron’s strong and longstanding relationship with Nigeria. The company also believes that the contract will be able to enhance the skills of its Nigerian labors, while allowing partnerships with the local suppliers.
Houston, Texas-based Cameron is a leading manufacturer of pressure control equipment used in onshore, offshore, and subsea applications for oil and gas drilling, production, and transmission. The company operates through three segments: Drilling & Production Systems, Valves & Measurement, and Process & Compression Systems.
The company stands to benefit from improving subsea activity levels in the near future. In this regard, Cameron International has signed numerous subsea equipment deals with industry giants like BP plc (BP - Free Report) and Petroleo Brasileiro S.A. or Petrobras (PBR - Free Report) .
Cameron’s strong backlog provides ample visibility for its earnings growth and cash flow prospects going forward. Its existing backlog of nearly $7.6 billion provides cushion in the current uncertain environment.
The company, which used to be a leading supplier of subsea production systems (Christmas trees) lost market share to competitors in the last few years. While the new order bookings should help improve the company’s market share position, we do not expect it to attain its former leadership position.
Cameron currently carries 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.