Smith International Inc. (SII) has been awarded a significant multi-service contract by Cabinda Gulf Oil Company Limited, a subsidiary of Chevron Corporation (CVX). The contract is entrusted to one of the three reportable segments of Smith − M-I SWACO.
The M-I SWACO segment is a 60/40 joint venture with Schlumberger (SLB), providing drilling and completion fluid system, engineering and technical services to the oil and gas industry. In addition, these operations provide oilfield production chemicals, besides manufacturing and marketing equipment and services required for solids control, particle separation, pressure control, rig instrumentation and waste management.
The contract has a term of six years and is expected to start operating in June this year, with an anticipated revenue of $800 million. The contract provides an option for the extension of two more years and includes drilling and completion fluids, drilling waste management, filtration, wellbore clean up tools and vessel cleaning and related services.
While this contract is one of the largest individual multi-service contracts throughout West Africa, it also affirms the excellent customer service and product performance that M-I SWACO continues to provide to customers. M-I SWACO is still in a solid position in Smith’s revenue mix. In 2009, it alone generated more than 50% of the company’s total revenue.
Although a significant portion of the company’s consolidated revenue (48% in 2009) was generated in North America, Smith’s profitability was driven in a large part by the business levels in international markets and offshore activity levels. This latest contract is a case in point.
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