McDermott Wins Pipeline Installation Project in the Middle East
Offshore oil and gas-focused engineering and construction firm, McDermott International Inc. MDR has signed a deal with an upstream oil and gas operator for pipeline installation in the Middle East.
McDermott will be in charge of engineering, procurement, fabrication, transportation and installation of offshore pipelines. This project will be handled on a fast track basis and is expected to be completed by the end of 2016. Moreover, the proceeds from the contract will be reflected in McDermott’s first-quarter 2016 backlog.
McDermott has a strong presence in most major offshore producing regions around the world including the Middle East. Despite the ongoing oil price slump, the company has been witnessing steady growth due to efficient cost management and improved execution of projects.
Moreover, a large number of contracts that the company recently received added to its already robust backlog. In Feb 2016, McDermott was awarded a transportation and installation contract by one of its clients, Woodside, for the Greater Western Flank Phase 2 Project. The company also entered into an agreement with a Larsen & Toubro subsidiary to get exclusive access to the Indian Deepwater market.
Last month, McDermott reported stellar fourth-quarter 2015 adjusted earnings of 6 cents per share as against the year-ago quarter earnings of 3 cents. Also, in the fourth quarter the company’s backlog improved to $4,231.4 million from $3,600.9 million a year ago.
Houston, TX-based McDermott is solely focused on the offshore oil and gas business. Given its broad product portfolio and impressive geographic footprint, the company is in a better position to weather the currently uncertain environment in the energy engineering and construction space.
McDermott holds a Zacks Rank #2 (Buy), implying that the stock will outperform the broader U.S. equity market over the next one to three months.
Other favorably placed players in the energy sector are SunPower Corporation SPWR, Petróleo Brasileiro S.A. - Petrobras PBR.A and Braskem S.A. BAK. All these stocks sport a Zacks Rank #1 (Strong Buy).
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