FMC Technologies Inc.: Depth Perception

Dec. 17, 2008
Subsea equipment manufacturer helps oil giant achieve record depth.

Milestones can mean different things at different times. Most of the time, they force one to look back on that which already has been accomplished. However, certain milestones can provide a powerful incentive to look toward a future of new possibilities.

FMC Technologies Inc., a manufacturer of subsea production and processing systems for the oil and gas industry, is likely to focus on the latter, considering its equipment was recently used to set a new subsea deepwater completion record that reached a depth of 9,356 feet. According to the IW 50 Best Manufacturer for 2008, the previous record was 8,995 feet and had stood since July 2007.

Oil giant Shell Oil Co. used FMC's standard enhanced vertical deepwater tree system to set the new world record during a project at the refiner's Silvertip field in the Gulf of Mexico, which is located about 200 miles south of Houston. John Gremp, FMC's executive vice president said the milestone is an important accomplishment for both companies.

"Deepwater development continues to play a significant role in the future of energy production, Gremp added. "We are pleased that our innovative technologies remain instrumental in the advancement of deepwater projects.

Less than two weeks later, the company announced two new contracts with Norwegian energy provider StatoilHydro. FMC has signed on to manufacture and supply additional subsea equipment for the company's Asgard Field and Heidrun North projects, which are both located in the Norwegian sea. The Asgard Field contract is valued at approximately $68 million in revenue, while Heidrun North is expected to bring in another $45 million.

"We have a strong relationship with StatoilHydro, including joint efforts to develop IOR [increase oil recovery] technology," said Tore Halvorsen, FMC's senior vice president of global subsea production systems. "We are pleased to assist them in their efforts."

FMC Technologies Inc.
At A Glance

FMC Technologies Inc.
Houston, Texas
Primary Industry: Machinery
Number of Employees: 11,000
2007 In Review
Revenue: $4.6 billion
Profit Margin: 6.56%
Sales Turnover: 5.78
Inventory Turnover: 5.78
Revenue Growth: 21.76%
Return On Assets: 12.17%
Return On Equity: 34.18%

All the positive news reinforces the company's third-quarter 2008 earnings report, which were released on Nov. 6. The company posted a 28% increase in revenue compared with the third quarter of 2007. Operating profit for FMC's energy production systems was up 44% for the quarter, while profits from energy processing systems jumped 12% over the same time last year.

FMC's chairman, president, and CEO Peter Kinnear said he was pleased with the growth of revenues and profits in the company's third quarter results. "We are reaffirming diluted earnings per share guidance for 2008 in a range of $2.60 to $2.70. Our guidance projects growth of approximately 36% over the 2007 diluted earnings from continuing operations," Kinnear said.

Kinnear was also the subject of change on the management front, as FMC announced in October that he was named chairman of the board of directors. Kinnear, who succeeds former chairman Joseph Netherland, will continue his role as president and CEO.

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