Mondo Visione  Feb 4  Comment 
Thank you. And let me thank Bloomberg for the opportunity to speak today. This is, as you know, a critical period for the UK’s financial sector. We are just a few weeks away from implementing one of the most important reforms in...
MarketWatch  Jan 26  Comment 
The U.K. Treasury said on Tuesday Andrew Bailey will take over the helm as chief executive of the Financial Conduct Authority and serve a five-year term. Bailey, who is currently deputy governor of the Bank of England, will succeed Tracey...
guardian.co.uk  Jan 20  Comment 
John Griffith-Jones also criticises George Osborne for publicly announcing withdrawal of candidate to lead regulator The chair of the City watchdog has defended the organisation against accusations of government interference, as he expressed...
Forbes  Jan 20  Comment 
It’s personal. U.S. Vice President Joe Biden, SAP’s Bill McDermott, and most of the other 2,500 other political, science and business leaders attending the World Economic Forum in Davos, Switzerland this week, have direct or indirect...
guardian.co.uk  Jan 9  Comment 
Financial Conduct Authority chief Tracey McDermott rejects senior MP’s claim that there has been a ‘weakening of resolve’ The acting chief executive of the City watchdog has denied claims it has gone soft on banks following the decision to...
Clusterstock  Jan 8  Comment 
Britain's finance regulator is having a bad start to the New Year. Its acting CEO, Tracey McDermott, says she doesn't want to keep her job. She has only been in the role four months. A source tells Business Insider that her decision is a surprise....
Insurance Journal  Jan 8  Comment 
U.K. Financial Conduct Authority’s acting top executive withdrew from the race to take the role permanently after manning the post following the government’s ouster of the last head. Chief Executive Officer Tracey McDermott interviewed for...
Mondo Visione  Jan 7  Comment 
The Financial Conduct Authority (FCA) confirms that Acting Chief Executive Tracey McDermott decided in early December to withdraw from the process to appoint the permanent Chief Executive of the FCA. The Treasury-led recruitment process is...
Financial Times  Jan 7  Comment 
UK’s financial watchdog accused of bowing to pressure by taking softer line on City regulation
Financial Times  Jan 7  Comment 
It would have been wrong to replace watchdog chief with a close lieutenant


McDermott International (NYSE: MDR) is a leading engineering and construction company, with specialty manufacturing and service capabilities. McDermott focuses on executing complex offshore oil and gas projects worldwide, such as fixed and floating production facilities, pipelines, and subsea systems. McDermott’s customers include major energy companies. While the side effects of the BP (BP) Deepwater Horizon incident have made McDermott's Atlantic operations unprofitable, it may benefit from favorable offshore drilling legislation being considered by the U.S. Congress.

Business Growth

McDermott's revenues for the 2011 first quarter were $899.2 million, an increase of 78 percent, compared to $504.9 million in the corresponding period of 2010. The year-over-year increase was primarily due to increases in the Asia Pacific and Middle East segments as a result of higher marine activity on large engineering, procurement, construction and installation projects. These gains were partially offset by lower revenues in the Atlantic segment.[1]

Trends and Forces

Side effects of the BP (BP) Deepwater Horizon oil spill have made McDermott's Atlantic operations unprofitable

McDermott's Atlantic segment has reported a net loss, a side effect of the BP (BP) Deepwater Horizon oil spill. An explosion and fire aboard Transocean's Deepwater Horizon drilling rig off the coast of Louisiana ruptured an oil well, causing the worst oil spill in U.S. history. President Barack Obama ordered a six-month moratorium on drilling in waters 500 feet and deeper as the government investigated the disaster.[2] As a result, the Bureau of Ocean Energy Management, Regulation and Enforcement has been slow to issue new drilling permits in the Gulf of Mexico. This has adversely impacted McDermott's business in the Atlantic.

To help return the Atlantic segment to profitability, McDermott has installed new management, begun cutting costs and recently won new project contracts.[3]

New state and federal legislation favors the offshore drilling industry

Senators John Kerry, Lindsey Graham, and Joe Lieberman have drafted legislation that would boost the supply of domestically produced oil and natural gas, both on- and offshore. The legislation is intended to maximize tax revenue for states that opt to drill oil.[4] Although offshore drilling has traditionally been a controversial topic, the government is beginning to move forward legislation that will benefit the offshore drilling industry. Increasing levels of offshore drilling off the coast of the U.S. will benefit McDermott, as there will be more projects available for its Atlantic segment.


The substantial capital costs involved in becoming an offshore construction contractor create a significant barrier to entry into the market. McDermott, however, faces competition from regional competitors, engineering firms, fabrication facilities, pipelaying companies, and shipbuilding companies.[5]


  1. McDermott Investor Relations: "McDermott Reports Net Income from Continuing Operations of $68.8 Million, $0.29 Per Fully Diluted Share for the 2011 First Quarter"
  2. [http://www.forbes.com/2010/06/09/diamond-offshore-oil-markets-equities-bp.html Forbes: "Offshore Oil Companies Under The Microscope" 9 June 2010.]
  3. McDermott 10-K 2010: Letter to Shareholders
  4. Sumfolio: "Offshore Drillers Could See Upside"
  5. McDermott 10-K 2009, Competition, p. 7

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