In an effort to reinforce its presence in the Latin American energy sector, Cameron International Corporation (CAM) announced plans to invest approximately $30 million in two research and development (R&D) plants in Brazil. In this regard, the company has signed a Memorandum of Understanding (MoU) with Brazilian oil giant Petroleo Brasileiro S.A. (PBR), or Petrobras S.A.
Oilfield equipment provider, Cameron stated that Sao Paulo State based Jacarei plant will be involved in providing leading-edge testing capabilities, inclusive of a hyperbaric chamber, and a high-pressure flow loop for utilization in testing and qualifying compact separators and measurement equipment. Additionally, Cameron will carry out its research work in Brazil via Center of Excellence, located in the joint technological experimentation center Universidade Estadual de Campinas (UNICAMP) compound in Campinas.
Cameron management also announced the recent acquisition of Brazil-based surface equipment production firm Vescon Equipamentos Industriais Ltda. With this deal, Cameron will gain access to a larger market share in the country, confirming its position as an industry leading surface equipment provider.
Headquartered in Houston, Texas, Cameron has shared ties with the Brazilian oil and gas industry for the past fifteen years with the company lending immense support to manufacturing, service and R&D projects in that country. The company’s long-standing association with Petrobras is highlighted through various agreements over the latter’s exploration and production programs. In mid-January 2011, Cameron received 27 subsea trees and related equipment supply order worth $74 million from Petrobras, to be used for the development of the offshore fields in Brazil.
Given the diversified product portfolio, specialty service capabilities and proprietary technological expertise, we believe that Cameron is poised to sustain its growth momentum in the coming months. However, we maintain our Neutral rating on the company considering the uncertain commodity price outlook, international business risks and soft global economic conditions.
Cameron currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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