On Mar 13, offshore oil and gas-focused engineering and construction firm, McDermott International Inc. (MDR) informed that its Thebaud Sea, a Dive Support Vessel (:DSV), has been contracted for an emergency pipeline repair work, off the coast of the United Arab Emirates. McDermott also mentioned that this contract would be part of the company’s first quarter backlog.
This marks the third contract for the DSV in the past few months, indicating the rise in demand for such fast service proving vessels. The demand is attributable to the fact that pipeline failures could significantly restrict production and thus affect revenues. Additionally, health, safety and environmental issues also back the need for high-speed execution of the repair work.
McDermott has accomplished several such Emergency Pipeline Repair Systems jobs for different clients. The company stated that its operational knowledge and expertise in such work lead to tailor-made solutions. This boosts client confidence and results in additional work.
Houston, Texas-based McDermott is an engineering and construction company, solely focused on the offshore oil and gas business. McDermott primarily serves the worldwide offshore oil and gas field developments, including front-end design and detailed engineering, fabrication and installation of offshore drilling and production facilities, as well as installation of marine pipelines and subsea production systems. Additionally, the company provides project management and procurement services.
The company reported poor numbers all through 2013, missing the Zacks Consensus Estimate for earnings in all the four quarters. For the most recently reported quarter, McDermott reported a loss of 80 cents against the Zacks Consensus Estimate of earnings of 16 cents. Things do not look too good for the company in the near term as well.
Thus, McDermott currently has a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked players in the energy sector like Range Resources Corp. (RRC), Patterson-UTI Energy Inc. (PTEN) and Helmerich & Payne, Inc. (HP). All these stocks currently sport a Zacks Rank #1 (Strong Buy).