FMC Technologies Inc. (FTI) entered into a four-year subsea equipment supply agreement with Brazilian oil biggie Petroleo Brasileiro S.A. or Petrobras (PBR).

The first part of the order includes the delivery of 78 subsea trees valued at $900 million. The total order – involving supply of 130 subsea trees, subsea multiplex controls and related tools and equipment – is expected to fetch FMC Technologies approximately $1.5 billion in revenue.

These equipment will be utilized by Petrobras to support the exploration, drilling and development of oil and gas fields, offshore Brazil in water depths up to 8,200 feet.

FMC Technologies – whose presence in Brazil began in 1956 – will get the equipment developed and manufactured at facilities located in Rio de Janeiro, Brazil. The delivery of the equipages is slated to begin in 2014.

FMC Technologies has long-standing business ties with Petrobras and has supported many of the latter’s operational achievements through more than 500 subsea trees awarded over the past 30 years. Looking ahead, management at FMC Technologies seeks to strengthen the alliance between the two companies by being a part of Petrobras’ future offshore endeavors.

Houston, Texas-based FMC Technologies is a leading manufacturer and supplier of technology solutions for the energy industry and operates 27 manufacturing facilities in 16 countries.

The company has a diversified product portfolio, specialty service capabilities and proprietary technological expertise. Additional positives for FMC Technologies include a strong backlog position, growing international operations and a favorable outlook for subsea activity levels.

However, the uncertain commodity price outlook and soft global economy continue to weigh on the company. As such, we expect the growth potential of FMC Technologies to be restrained and see limited upside from current levels.

Hence, we maintain a long-term Neutral rating on the stock. FMC Technologies currently retains a Zacks #3 Rank, which is equivalent to a short-term Hold rating.

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