FMC Technologies in Multi-Year Deal

Zacks

Oil drilling equipment maker FMC Technologies Inc. (FTI) entered into an agreement with clean technology company LiqTech International Inc. (LIQT) for the use of silicon carbide membrane technology in oil and gas applications.

Upon testing the silicon carbide membrane technology, FMC Technologies found it suitable for the development of water treatment systems and other services in the unconventional shale oil and gas sector.

In the hydraulic fracturing process, huge amounts of water and sand are injected into a well to increase the cracks in dense formations. Following this, a considerable amount of water returns to the surface that is to be injected into deep underground dumping wells. The silicon carbide membrane technology with its superior filtration capabilities will facilitate the treatment and reuse of this produced water.

LiqTech has granted FMC Technologies permission to use its membranes in oil and gas applications so that these can be converted into systems for further development.

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.

The company is particularly well positioned in the subsea systems market. It is the company’s largest and fastest-growing business, accounting for about two-thirds of its revenue.

Additionally, 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 has historically used bolt-on acquisitions to plug holes in its product/service portfolio. The company may find it difficult to complete accretive transactions in the future, which could negatively impact its growth rate.

Meanwhile, oilfield equipment makers Natural Gas Services Group Inc. (NGS) as well as Matrix Service Company (MTRX) with a Zacks Rank #2 (Buy), are expected to perform well in the coming 1 to 3 months.
 

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