The extension of a supply agreement by MRC Global Inc.’s MRC U.S. operating company, McJunkin Red Man Corporation, with Marathon Oil Company MRO failed to exert upward pressure on the share price. Shares of MRC Global lost about 0.5% in the last full day of trading, likely due to broader market fundamentals.
McJunkin Red Man Corp. extended its supply contract with Marathon Oil for another five years. Marathon Oil is a premium multinational production and exploration company in Houston, mainly offering services in the Europe, Africa and North America.
As per the deal, MRC Global would continue to provide maintenance and repairing services for the projects of Marathon Oil, located in Bakken Shale, Eagle Ford, the Gulf of Mexico and the Rocky Mountain region.
The deal yet again reinforces MRC Global as Marathon Oil’s U.S. project service provider, besides adding some more years to a long-standing relationship of more than 25 years. In addition, by extending the deal, Marathon Oil aims to reduce the risks encountered from global supply chain challenges.
We believe the deal with Marathon Oil will support MRC Global’s organic growth initiatives going forward.
In the last reported quarter, MRC Global’s revenues increased 12.5% year over year to $1,512.1 million. The improvement was primarily driven by stronger international sales that rose 38.7% year over year, backed by $84.7 million of sales benefits achieved from the company’s acquired businesses.
MRC Global aims to improve the top line, primarily on the back of its inorganic growth strategies. However, we believe such investments involve higher working capital requirements, and as a result worsen the company’s aggregate debt burden.
MRC Global currently carries a Zacks Rank #5 (Strong Sell). Two better-ranked stocks in the industry include Agrium Inc. AGU, and Air Products & Chemicals Inc. APD. Both stocks hold a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment