QUOTE AND NEWS
TheStreet.com  48 min ago  Comment 
NEW YORK (TheStreet) -- Shares of McDermott International are rallying in afternoon trading today, higher by 1.05% to $3.37, as West Texas Intermediate crude rebounds. West Texas Intermediate erased earlier losses, moving higher by 1.82%...
Benzinga  6 hrs ago  Comment 
In a report published Wednesday, Imperial Capital analyst Scott Levine reiterated an In-Line rating on McDermott International, Inc. (NYSE: MDR), but lowered the price target from $5.00 to $4.00. In the report, Imperial Capital noted, "We are...
Motley Fool  Mar 3  Comment 
A surprise profit has shares of this energy infrastructure company moving significantly higher today.
TheStreet.com  Mar 3  Comment 
NEW YORK (TheStreet) -- Shares of McDermott International were gaining 22.8% to $3.21 Tuesday after the oilfield engineering company beat analysts' estimates for earnings in the fourth quarter. McDermott reported earnings of 3 cents a share...
Benzinga  Mar 3  Comment 
In a report published Tuesday, Credit Suisse analyst Jamie Cook reiterated an Outperform rating and $3.50 price target on McDermott International, Inc. (NYSE: MDR). In the report, Credit Suisse noted, "MDR reported Q4'14 EPS of $0.03, ahead of...
Benzinga  Mar 3  Comment 
In a report published Tuesday, D.A. Davidson analyst John B. Rogers reiterated a Buy rating and $2.50 price target on McDermott International, Inc. (NYSE: MDR). In the report, D.A. Davidson noted, "Reported EPS of $0.03 for the fourth quarter....
Benzinga  Mar 3  Comment 
Analysts at DA Davidson upgraded McDermott International Inc. (NYSE: MDR) from Neutral to Buy. The price target for McDermott International is set to $2.50. McDermott International shares have dropped 64.92% over the past 52 weeks, while the...
Benzinga  Mar 3  Comment 
Benzinga  Mar 3  Comment 
McDermott International (NYSE: MDR) shares jumped more than 22 percent in the extended session Monday after the Houston-based engineering and construction company posted better than expected fourth quarter earnings results along with a revenue...




 
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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