FMC Technologies Inc. (FTI), maker of oil drilling equipment, has received a contract extension offer for two years by Island Offshore Management AS.
Per the deal, FMC Technologies will render Light Well Intervention (:LWI) services, which are expected to be executed from Island Constructor vessel of Island Offshore, for the development of the wells controlled by an affiliate of BP plc (BP), a British energy giant. The services are expected to be delivered in 2014 and 2015.
FMC Technologies is in a long-standing business relationship with Island Offshore, and the recent contract extension offer is a part of it. FMC Technologies’ management reveals that LWI services will help to extract crude oil from subsea wells by significantly minimizing the cost of operation.
Houston, Texas-based FMC Technologies is a major manufacturer and supplier of technology solutions for the industry of energy. FMC Technologies conducts its operations in three segments: Subsea Technologies, Surface Technologies and Energy Infrastructure.
FMC Technologies’ strong backlog 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 the market in a timely and competitive manner, it may face severe operational and financial difficulties.
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.
Two firms in the energy sector that are expected to significantly outperform the broader U.S. equity market over the next 1 to 3 months are EPL Oil & Gas Inc. (EPL) and SemGroup Corporation (SEMG). Currently, both the firms sport a Zacks Rank #1 (Buy).
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