QUOTE AND NEWS
TheStreet.com  Jan 23  Comment 
NEW YORK (TheStreet) -- Shares of McDermott International  , an engineering company focused on the energy and power industry, rose 3.93% to $2.38 in afternoon trading Friday as oil prices climbed following the death of King Abdullah of Saudi...
Benzinga  Jan 21  Comment 
McDermott International Inc. (NYSE: MDR) shares touched a new 52-week low of $2.145. UBS downgraded McDermott from Buy to Neutral. Forestar Group Inc. (NYSE: FOR) shares tumbled 3.73% to reach a new 52-week low of $13.69. Forestar Group shares...
TheStreet.com  Jan 20  Comment 
NEW YORK (TheStreet) -- Shares of oil company McDermott International were falling 6.3% to $2.22 Tuesday as oil prices resumed their recent declines. WTI crude oil for February delivery was falling 4% to $46.76 a barrel Tuesday morning. Brent...
TheStreet.com  Jan 13  Comment 
NEW YORK (TheStreet) -- Shares of McDermott International are lower by 7.22% to $2.44 in mid-afternoon trading on Tuesday, as some oil and related stocks fall today along with the price of the commodity. Crude oil (WTI) is down by 1.93% to...
TheStreet.com  Jan 12  Comment 
NEW YORK (TheStreet) -- Shares of McDermott International fell 8.77% to $2.60 as oil slumped 5% to near six-year lows on Monday, accelerating its months-long rout after Goldman Sachs slashed its short-term price forecasts and Gulf producers...
TheStreet.com  Jan 9  Comment 
NEW YORK (TheStreet) -- Shares of oil and gas engineering and construction company McDermott International  fell 6.19% to $2.81 in morning trading Friday as oil prices fell following a day of stabilization. WTI crude was down 0.86% to $48.37...
TheStreet.com  Jan 5  Comment 
NEW YORK (TheStreet) -- Shares of McDermott International are lower by 4.77% to $2.89 in mid-afternoon trading on Monday, as energy, oil, and related stocks decline along with the price of oil. Crude for February delivery is down by 4.21% to...




 
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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