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FMC Subsea Equipment in Demand

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Oil drilling equipment maker FMC Technologies Inc. ((FTI - Free Report) entered into a deal with privately-owned energy firm LLOG Exploration Company, LLC for the supply of subsea equipment. The estimated value of the contract is $30 million.

Per the deal, FMC Technologies will supply subsea trees, subsea manifold, multiphase meters, and a subsea distribution system for LLOG’s Who Dat field. The project is placed in a water depth of approximately 3,200 feet in the Gulf of Mexico, Mississippi Canyon Block 503. FMC Technologies expects to deliver the equipment this year.

Earlier in Dec 2011, FMC Technologies manufactured and supplied subsea production systems to LLOG for the Who Dat project. The contract was valued at $40 million.

FMC Technologies is well positioned in the subsea systems market and has received numerous attractive subsea contracts in the recent past from energy majors BP Plc (BP - Free Report) and Statoil ASA .

In January, FMC Technologies also won a contract to supply subsea equipment to LLOG for its Delta House project in the Gulf of Mexico Mississippi Canyon area. The value of this contract was $114 million.

FMC Technologies 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 1 to 3 months.

FMC Technologies’ strong backlog, which now stands at more than $5 billion, not only reflects steady demand from its customers but also offers long-term earnings and cash flow visibility. This enables the company to navigate uncertainty better than many of its peers.

However, FMC Technologies relies on its ability to develop and acquire essential products and technologies that drive its operational performance and growth. If its technologies or products become obsolete, or if it cannot bring these to market in a timely and competitive manner, it may face severe operational and financial difficulties.

Meanwhile, oilfield equipment maker Natural Gas Services Group Inc. (NGS - Free Report) with a Zacks Rank #2 (Buy), is expected to perform well in the coming 1 to 3 months.

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