MRC Global's Contract Wins from BP
One of the leading distributors of pipes, valves and fittings, MRC Global Inc. (MRC) strengthened its relationship with BP plc (BP), with the latter awarding many contracts to the former.
Recently, MRC Global received a contract from BP Products North America, Inc., a subsidiary of BP, to supply maintenance, repair and operating (MRO) goods and services. The contract also entails MRC Global to provide carbon and stainless steel pipe, valves and fittings (:PVF) and related materials, to another subsidiary of BP, namely, BP Refining and Marketing North America. The value of the contract, scheduled to expire in 2018, remained confidential.
Additionally, MRC Global entered into various downstream contracts with other subsidiaries of BP including, BP Chembel NV in Belgium, BP Chemicals Limited in the United Kingdom and BP Europa SE – BP Nederland and BP Raffinadererij Rotterdam B.V. in the Netherlands.
Earlier this month, MRC Global’s subsidiary, McJunkin Red Man Corporation inked an agreement with BP International Ltd. The five-year agreement entails that McJunkin Red Man will provide pipes, fittings and flanges to BP’s Global Projects Organization.
These contracts aim at strengthening the long-term association of the two companies. MRC Global and BP have been associated with each other for the past 30 years. Over the past four quarters, MRC Global has generated as much as $85 million of revenues from BP, wherein downstream sales accounted for $42 million.
MRC Global had a disappointing third-quarter 2013, where upstream sales declined 10.0% year over year to $588.1 million and midstream sales were down 6.6% year over year to $377.3 million. Downstream sales in the quarter were $348.3 million, down 11.5% year over year. However, management is optimistic of a sequential improvement in all markets, including upstream, downstream and midstream, in coming quarters.
MRC Global currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Xylem Inc. (XYL) and The Middleby Corporation (MIDD). While Xylem carries a Zacks Rank #1 (Strong Buy), Middleby holds a Zacks Rank #2 (Buy).
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