Oil drilling equipment maker FMC Technologies Inc. (FTI) signed an agreement with British major BP plc (BP) whereby the former will manufacture and deliver additional subsea equipment to the latter. The supplied equipments will be utilized by BP to support the current Block 18 deepwater projects offshore Angola.
The scope of the contract involves the supply of four subsea trees, control systems, wellheads, tubing hangers, well jumpers and subsea distribution systems. However, the companies did not disclose the financial terms of the contract.
FMC will manufacture the equipment at its Kongsberg, Norway and Dunfermline, Scotland facilities, while assembly and testing will be done at the company’s site in Angola. The deliveries are slated to start in 2013.
The contract forms a part of FMC Technologies’ strong and longstanding relationship with BP. The former has supported a number of BP projects across the world including the pioneering developments such as Thunder Horse in the Gulf of Mexico and Greater Plutonio offshore West Africa.
Houston, Texas-based FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry and operates 25 manufacturing facilities in 15 countries.
We maintain a long-term Neutral rating on the stock. FMC Technologies currently retains a Zacks #3 Rank, which is equivalent to a short-term Hold rating.
FMC Technologies has a diversified product portfolio, specialty service capabilities and proprietary technological expertise. Additional positives for FMC Technologies include a strong backlog position, expanding international operations and a favorable outlook for subsea activity levels.
However, we remain concerned about the uncertain commodity price outlook and a soft global economy that continue to weigh on the company. Additionally, with markets remaining competitive and pricing likely to be weak, we expect FMC Technologies’ growth potential to be restrained and see limited upside from the current level.
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