A $74M Order in Cameron's Kitty - Analyst Blog

Oilfield equipment provider, Cameron International Corporation (CAM) announced that it has been awarded a supply order worth $74 million by Petrobras (PBR).

Under the terms of the contract, Cameron will deliver 27 subsea trees and related equipment to Petrobras. These equipages will be used for the development of the latter's offshore fields in Brazil. Cameron will supply the trees over a period of four years commencing from the first quarter of 2011.

This agreement forms the last leg of a $500 million deal between the aforesaid companies signed in September 2009. The scope of the deal includes the supply of 138 net subsea Christmas trees along with installation supported by 18 sets of running tools. Cameron had received the supply order of the first 111 trees and associated equipment with the signing of the agreement.

Cameron management believes that this contract will strengthen the business ties between the two companies as well as expand its investment opportunities in the Brazilian market. We believe that the company is favorably positioned to reap benefits from the growing demand for subsea equipment/services in the coming quarters.

Houston, Texas-based Cameron is also scheduled to deliver an order of subsea production systems, worth $230 million, to Chevron Corporation (CVX) in the third quarter of 2011. The order comprises twelve 15,000-psi subsea trees, production control systems, four manifolds and associated connection systems, as well as engineering and project management services for Stage I of Jack & St. Malo subsea development in the Gulf of Mexico.

We are maintaining our long-term Neutral recommendation on the stock. Cameron currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

 
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