Oil drilling equipment maker Cameron International Corp. (CAM) announced the receipt of a $230 million contract from energy behemoth Chevron Corp. (CVX). The deal calls for Cameron to provide subsea production systems to Chevron-operated Jack & St. Malo fields in the deepwater Gulf of Mexico.
Cameron further said that the contract includes 12 subsea trees, production control systems, four manifolds and associated connection systems, plus engineering and project management services. The company expects delivery to begin in the second half of 2011 and continue through mid-2013.
The order is part of Cameron’s ongoing Advanced Supplier Relationship with Chevron and will provide the company’s high-pressure, high-temperature deepwater technology to support the Stage I of the Jack & St. Malo development.
Cameron recently posted better-than-expected third-quarter 2009 results despite pricing pressure and reduced order flow. A healthy backlog of $5.1 billion, coupled with Cameron’s strong financial health, growing international operations, and the still favorable outlook for the deepwater offshore markets should help the company weather the current downturn better than most of its peers.
However, the industry-wide slump still continues to weigh on the company’s profits and the scenario is unlikely to change much during the next few quarters. Consequently, we see the stock performing in line with the broader market and rate it as Neutral.
Houston, Texas-based Cameron International Corporation, previously known as Cooper Cameron Corporation, is a leading manufacturer of pressure control equipment used in onshore, offshore, and subsea applications for oil and gas drilling, production, and transmission.
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