Oceaneering secures $50 million Gulf of Mexico contract

HOUSTON - Oceaneering International, Inc. (NYSE:OII), a global provider of engineered services and products primarily to the offshore energy industry, has announced a significant contract win from a domestic independent energy company. The deal, valued at approximately $50 million, tasks Oceaneering with producing an electro-hydraulic steel tube dynamic umbilical for use in the Gulf of Mexico.

The manufacturing process for the roughly 27-kilometer (17-mile) umbilical is set to take place at Oceaneering's Panama City, Florida facility. The company has scheduled production to begin in 2025, with the final product expected to be delivered in the second quarter of 2026.

Shaun R. Roedel, Senior Vice President of Manufactured Products at Oceaneering, commented on the contract award, highlighting the trust and confidence customers have in Oceaneering's ability to safely and efficiently deliver high-quality manufactured products.

The forward-looking statements within the press release indicate Oceaneering's expectations regarding the revenue from the contract, the scope of work, and the production and delivery timelines. These statements are based on current information and expectations that are subject to risks, uncertainties, and assumptions.

Potential risks include counterparty performance and market conditions that could affect the business outcomes. The company's periodic filings with the Securities and Exchange Commission detail these and other risks.

Oceaneering serves a variety of industries, including offshore energy, defense, aerospace, manufacturing, and entertainment, with engineered services, products, and robotic solutions. This contract award is a testament to Oceaneering's position in the market and its ongoing business operations.

The information in this article is based on a press release statement from Oceaneering International, Inc.

In other recent news, Oceaneering International faced a downgrade from Barclays, moving from an Equalweight to an Underweight rating. The firm also adjusted its price target to $21, down from the previous $22, reflecting concerns about the company's growth prospects and free cash flow generation. Notably, Oceaneering International's projected mid-single-digit growth this year is largely due to the defensive nature of its portfolio.

This characteristic might impede the company's ability to significantly benefit from the expected double-digit increase in offshore upstream spending in the upcoming years. Approximately 80% of Oceaneering's revenue comes from its Energy segments, which generally have low growth profiles. One exception is the remotely operated vehicles (ROVs) business, contributing around 25% of revenue and experiencing a rise in pricing to multi-year highs.

Despite these improvements, Barclays cited the lack of clear earnings visibility and the absence of medium-term targets from the company's management as potential restrictions on future free cash flow generation. These recent developments indicate a less favorable view of Oceaneering International's stock performance potential from Barclays.

InvestingPro Insights

Oceaneering International, Inc. (NYSE:OII) has recently secured a promising contract, which may bolster investor confidence in the company's future performance. According to InvestingPro data, Oceaneering has a market capitalization of $2.21 billion and exhibits a P/E ratio of 20.15, which aligns closely with the adjusted P/E ratio for the last twelve months as of Q1 2024, standing at 20.3. The company's revenue growth is also notable, with a 15.29% increase in the last twelve months as of Q1 2024, reflecting its ability to expand its business operations effectively.

InvestingPro Tips highlight several key aspects of Oceaneering's financials and market behavior that investors might find valuable. Firstly, analysts have recently revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's profitability.

Moreover, Oceaneering is trading at a low P/E ratio relative to near-term earnings growth, which could suggest that the stock is undervalued and may present a buying opportunity for value-focused investors. It is worth noting, however, that the company does not pay dividends, which may influence the investment strategies of income-seeking shareholders.

Investors interested in a deeper dive into Oceaneering's financials and market performance can find additional analysis and metrics on InvestingPro. There are currently 9 more InvestingPro Tips available for OII, which can be accessed through a subscription. For those looking to subscribe, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

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