FMC Tech Gets $125M Petrobras Job

Oil drilling equipment maker FMC Technologies Inc. (FTI – Analyst Report) announced the receipt of a $125 million contract from Brazilian state-run energy giant Petroleo Brasileiro S.A. (PBR – Analyst Report), or Petrobras S.A., to supply future subsea technology solutions for its oil and gas projects offshore Brazil.

FMC Technologies said that the deal – representing part of the equipment under a 107-tree frame agreement that was announced in February 2010 – includes the development of 32 subsea trees. The company expects delivery to begin in 2013.

FMC Technologies – whose presence in Brazil began in 1956 and currently consists of two manufacturing facilities in Rio de Janeiro and one service base in Macae – expects the latest agreement to further augment its strong presence in Brazil and play an important role in the development of systems that can effectively produce hydrocarbons in Brazil’s deepwater and pre-salt environments.

The company has a longstanding relationship with Petrobras and has supported many of the latter’s subsea processing achievements, in the process delivering over 300 subsea trees for their projects in Brazil. The latest order, together with FMC Technologies’ Technology Center in Rio de Janeiro – announced in July of 2010 and likely to be completed in the first half of 2011 – will further strengthen these collaborative efforts.

Houston, Texas-based FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry. The company, which operates 25 manufacturing facilities in 15 countries, is engaged in the designing, producing and servicing technologically sophisticated systems and products such as subsea production and processing systems, surface wellhead production systems, high pressure fluid control equipment, measurement solutions and marine loading systems for the oil and gas industry.

FMC Technologies shares currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock.

The company has a diversified product portfolio, specialty service capabilities and proprietary technological expertise. Additional positives for FMC Technologies include a strong backlog position, growing international operations and a favorable outlook for subsea activity levels.

However, the uncertain commodity price outlook and the soft global economy continue to weigh on the company. As such, we expect the growth potential of FMC Technologies to be restrained and see limited upside from current levels.