SeekingAlpha  Sep 30  Comment 
By Hawkinvest: A couple of factors have sparked a sell-off in certain sectors of the market. While the major market averages remain near record highs, there are some bargains to take advantage of, if you take a closer look. The uptrend in the US...
DailyFinance  Sep 25  Comment 
McDermott International, Inc. (NYSE: MDR) (“McDermott” or the “Company”) announced today that the Company is scheduled to present at the Johnson Rice Energy Conference in New Orleans on Tuesday, September 30, 2014 at ...
Bloomberg  Sep 19  Comment 
SAP to Buy Concur for $7.4 Billion to Boost Cloud Sales SAP SE agreed to buy Concur Technologies Inc. for $7.4 billion in the biggest acquisition by the 42-year-old German...
TheStreet.com  Sep 18  Comment 
NEW YORK (TheStreet) -- Houston-based oil and gas services company McDermott International has struggled with losses on projects, but a turnaround -- and a profitable backlog -- looks to be on track. In the first six months of operations this...
SeekingAlpha  Sep 17  Comment 
By ValueStreet Research: The Babcock & Wilcox Company (NYSE:BWC) is a provider of equipment and services for power generation systems and North America's only specialty constructor of nuclear components, both to private industry and the US...
SeekingAlpha  Sep 16  Comment 
By Hawkinvest: I recently wrote about McDermott International (NYSE:MDR) as it has significant upside as management continues to make progress in restoring historical profitability. I also pointed out that there are also a number of "smart...
Benzinga  Sep 15  Comment 
McDermott International, Inc. (NYSE: MDR) (“McDermott”) is pleased to announce the successful completion of the Jack and St. Malo project for Chevron U.S.A. Inc. The project involved the installation of jumpers, flying leads, subsea pump...
SeekingAlpha  Sep 12  Comment 
By Alpha Gen Capital: McDermott International (NYSE:MDR) is making progress in their turnaround story but still has a long way to go to becoming a consistent growing enterprise. We think the reward is potentially compelling but the risk right now...
Benzinga  Sep 12  Comment 
McDermott International (NYSE: MDR) shares reached a new 52-week low of $6.43. McDermott's PEG ratio is -0.93. SeaDrill (NYSE: SDRL) shares fell 3.36% to touch a new 52-week low of $31.73. SeaDrill shares have dropped 29.79% over the past 52...
SeekingAlpha  Sep 12  Comment 
By Hawkinvest: McDermott International (NYSE:MDR) provides engineering and construction services to the oil and gas industry. In the past couple of years, this company has been challenged by some construction projects that were bid too low to...


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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