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The Zacks Analyst Blog Highlights: FMC Technologies, Dutch Shell, Petrobras, Statoil and Patterson-UTI Energy

June 10, 2013

CHICAGO, June 10, 2013 /PRNewswire/ — Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include FMC Technologies Inc. (NYSE:FTI-Free Report), Dutch Shell plc (NYSE:RDS.A-Free Report), Petrobras (NYSE:PBR-Free Report), Statoil ASA (NYSE:STO-Free Report) and Patterson-UTI Energy Inc. (Nasdaq:PTEN-Free Report).

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Today, Zacks is promoting its ”Buy” stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Friday’s Analyst Blog:

FMC Subsea Equipment in Demand

Oil drilling equipment maker FMC Technologies Inc. (NYSE:FTI-Free Report) has entered into a deal with one of the largest integrated energy firms in the world, Royal Dutch Shell plc (NYSE:RDS.A-Free Report) for the supply of subsea equipment.

Per the deal, FMC Technologies will supply 12 enhanced vertical deepwater trees and controls for Shell’s series of projects in the Gulf of Mexico. FMC Technologies is well positioned in the subsea systems market and has received numerous attractive subsea contracts in the recent past from energy majors Petroleo Brasileiro S.A., or Petrobras (NYSE:PBR-Free Report) and Statoil ASA (NYSE:STO-Free Report).

This is not FMC Technologies’ first deal with Shell. The company has been supplying subsea equipment to Shell for last 20 years. Last month, FMC Technologies signed a contract to supply such equipment to Shell for the Stones field ultra deepwater project. The field is situated at a water depth of roughly 9,600 feet, in the Gulf of Mexico’s Walker Ridge block.

With the success of these supply contracts, FMC Technologies is on an expansion path. It looks forward to more such opportunistic deals in 2013 to gain significant market share. We believe such accomplishments will help FMC Technologies garner profits in the upcoming quarters.

Additionally, FMC Technologies’ strong backlog, which now stands at more than $5 billion, not only reflects steady demand from its customers but also offers long-term earnings and cash flow visibility. This enables the company to navigate uncertainty better than many of its peers.

However, FMC Technologies relies on its ability to develop and acquire essential products and technologies that drive its operational performance and growth. If its technologies or products become obsolete, or if it cannot bring these to market in a timely and competitive manner, it may face severe operational and financial difficulties.

FMC Technologies currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.

Patterson-UTI: 185 Rigs at Work

Onshore contract driller Patterson-UTI Energy Inc. (Nasdaq:PTEN-Free Report) declared that its May 2013 drill rig count averaged 185, down from 189 in the previous month. The company operated 184 rigs in the U.S. and 1 in Canada in May, compared with 186 rigs in the U.S. and 3 in Canada during Apr this year.

Patterson-UTI’s activity levels in the U.S. peaked in early Oct 2008 with a rig count of 275. From then through the second quarter of 2009, the company witnessed a steep and rapid decline in rig count on the back of decreased demand, largely caused by lower commodity prices for natural gas and tighter access to credit.

However, with natural gas prices looking up amid signs of economic stabilization, Patterson-UTI’s monthly rig count numbers have recovered sharply. In fact, its current rig count is up more than 3 times from a low of 60 in May 2009.

Houston, Texas-based Patterson-UTI Energy is one of the largest onshore contract drillers in the U.S. with more than 300 land-based rigs that operate primarily in the oil and natural gas producing regions of North America.

Buoyed by Patterson-UTI’s growing premium land rig fleet and the expected demand uptick for such services; we are confident about the company’s near to medium term outlook. However, we remain wary of increased labor costs for contract drilling that may lead to slower margin growth going forward.

This accounts for Patterson-UTI’s current Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

Today, Zacks is promoting its ”Buy” stock recommendations. Get #1Stock of the Day pick for free.

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