Oil drilling equipment maker FMC Technologies Inc. (FTI - Free Report) has entered into a deal with Brazil's state-run energy giant Petroleo Brasileiro S.A., or Petrobras (PBR - Free Report) for the supply of subsea equipment. The estimated value of the contract is $130 million.
Per the deal, FMC Technologies will supply three manifolds, tools, spare parts and system integration with subsea controls for Petrobras’ pre-salt fields, located offshore Brazil. The manifolds will be installed in water depth of about 8,200 feet and the equipment will be manufactured in Brazil.
Development engineering and system integration testing of the equipment will take place at FMC Technologies' technology center in Rio de Janeiro. The company expects to deliver the equipment from the beginning of 2015.
FMC Technologies also signed a renewed Framework Agreement with energy major Statoil ASA (STO - Free Report) . The contract is for 5 years and can be extended for 3 more years. This deal comes on the back of a previously announced agreement by Statoil.
In this contract, FMC Technologies will provide subsea operation services for the development on the Norwegian Continental Shelf and will keep providing installation services, asset management, equipment intervention and well access services.
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.