McDermott Inks Shipyard Contract - Analyst Blog
01 January 2013 - 3:50AM
Zacks
Hydro Marine Services, Inc. – a
subsidiary of energy-focused engineering and construction firm
McDermott International Inc. (MDR) has inked a
contract with Keppel Singmarine Pte Ltd. for the construction and
design of deepwater pipelay (S-Lay) vessel of high specification.
The latter is a subsidiary of Singapore-based Keppel Offshore &
Marine Ltd.
The S-Lay vessel is a dynamically-positioned vessel with a
2,000-ton crane. This high-spec vessel is provisionally named
Derrick Lay Vessel 2000 or DLV2000. It will be constructed in
Singapore and is slated to be delivered within 2.5 years.
DLV2000, which will be developed by Marine Technology Development
(MTD), the company’s ship design arm – will be able to support
advanced deepwater pipelay operations thereby allowing pipelines to
be installed at depths of up to 10,000 feet. The transit speed of
this vessel is expected to be 12 knots, which can go to a maximum
level of up to 14 knots. The vessel is also expected to carry up to
400 personnel.
DLV2000 – will be the second newly built vessel for the McDermott
fleet. Earlier in August, the company had signed a deal for the
construction of High Capacity pipelay vessel. The vessel was
tentatively named Lay Vessel 108 or LV108.
Incorporated in 1959, Houston, Texas-based McDermott International
is an engineering and construction company, solely focused on the
offshore oil and gas business. McDermott primarily serves the
worldwide offshore oil and gas field developments, including the
front-end design and detailed engineering, fabrication and
installation of offshore drilling and production facilities, as
well as installation of marine pipelines and subsea production
systems.
Additionally, the company provides project management and
procurement services. It operates in most of the major offshore oil
and gas producing regions, including the U.S., Mexico, Canada, the
Middle East, India, the Caspian Sea and Asia Pacific.
McDermott currently retains a Zacks #5 Rank, which translates into
a short-term Strong Sell rating. We are also maintaining a
long-term Underperform recommendation on the stock.
Based on the company’s exclusive focus on the offshore oil and gas
business and the tentative commodity price outlook, we harbor a
cautious sentiment for the company over the near term. We further
believe that the transfer of the ‘Power Generation Systems’ and
‘Government Operations’ segments into a separate, independent and
publicly traded entity – The Babcock & Wilcox
Company (BWC), has left McDermott with a less diversified
business, thereby heightening its risk profile.
BABCOCK&WILCOX (BWC): Free Stock Analysis Report
MCDERMOTT INTL (MDR): Free Stock Analysis Report
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