FMC Tech to Supply ROVs to Tidewater

Zacks

Oil drilling equipment maker FMC Technologies Inc. (FTI) has contracted with offshore vessel owner, Tidewater, to deliver six work-class Remotely Operated Vessel (:ROV) systems for the subsea operations business of the latter. The deal will fetch $30 million in revenues for FMC Tech.

The integrated Heavy Duty work-class ROV systems will be supplied by FMC Technologies' Schilling Robotics business unit. These ROV systems will help Tidewater to expand its reach in the global oil and gas market and provide service to the oil and gas offshore construction and Inspection, Maintenance, and Repair markets.

Houston, Texas-based FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry. The company has a diversified product portfolio, specialty service capabilities and proprietary technological expertise.

As the subsea market bubble is fast expanding, FMC Technologies is expected to significantly benefit from its strong market presence. The subsea technology segment was the largest contributor to the record backlog of $7,365.7 million that the company reported in its third quarter earnings results. FMC Technologies is also set to benefit from the long standing relation it has with energy sectors majors like Royal Dutch Shell (RDS.A) and Petrobras (PBR).

However, with markets remaining competitive and pricing likely to be weak, we believe FMC Technology shares are fairly valued and will not see much improvement in the near future. Management’s 2013 earnings guidance cut from $2.10–$2.25 to $2.00–$2.10 per share cannot be ignored either.

All these factors are incorporated in the Zacks Rank #3 (Hold) that the company currently holds, implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
    
Meanwhile, one can consider better-ranked energy sector stocks like SM Energy Company (SM) that currently sports a Zacks Rank #1 (Strong Buy).
 

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