QUOTE AND NEWS
Forbes  7 hrs ago  Comment 
In recent trading, shares of McDermott International, Inc. (NYSE: MDR) have crossed above the average analyst 12-month target price of $5.08, changing hands for $5.14/share. When a stock reaches the target an analyst has set, the analyst logically...
Mondo Visione  Jul 22  Comment 
22 July 2016 The Treasury Committee publishes correspondence between Rt Hon. Andrew Tyrie MP, Chairman of the Committee, and Tracey McDermott, former Acting Chief Executive of the Financial Conduct Authority (FCA), in relation to the...
Benzinga  Jun 2  Comment 
Achaogen, Inc. (NASDAQ: AKAO) disclosed that it achieved more than 50 percent patient enrollment in its ongoing final stage EPIC registration clinical trial of plazomicin. According to the company, Achaogen is developing plazomicin, its lead...
TheStreet.com  Jun 2  Comment 
OPEC members are meeting to decide whether or not to freeze or to cut oil production. Nymex crude oil futures hit $50 per barrel last week, anticipating action to keep prices at $50 or above. Investors in shares of Diamond Offshore and...
Clusterstock  Jun 2  Comment 
Andrew Tyrie, the chair of the influential Treasury Select Committee in parliament, wrote to Britain's financial watchdogs to ask them how they regulate crowdfunding, after a string of high-profile failures for "crowd" backed...
Benzinga  May 16  Comment 
McDermott International, Inc. (NYSE: MDR) satisfied all conditions to the amendment to its Senior Secured Credit Agreement. As a result, a part extended the maturity of credit facility to April 22, 2019 or January 15, 2019 if the term loan remains...




 
TOP CONTRIBUTORS

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.

Competition

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]

References

  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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