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Oceaneering (OII) Clinches $120-$183M Contracts With Petrobras

Oceaneering International, Inc. OII, a leading supplier of offshore equipment and technology solutions to the energy industry, declared that its Manufactured Products segment won two major contracts with Petrobras PBR, Brazil's state-run oil and gas company, through a competitive bidding process.These contracts are expected to generate net revenues between $120 million and $183 million.

Let’s delve into the details of these contracts, the significance of the products being supplied and the broader impact on Oceaneering and the offshore energy sector.

Overview of the Contracts

Scope and Scale of the Contracts: Per the terms of the contracts, OII would supply up to 362 kilometers or approximately 225 miles of steel tube and thermoplastic electro-hydraulic umbilicals. These umbilicals are essential for controlling subsea production systems and are critical components in offshore oil and gas operations. Additionally, OII would provide associated subsea distribution hardware, further demonstrating the comprehensive nature of its deliverables.

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Manufacturing and Delivery Timeline: The manufacturing of these products is scheduled to take place at Oceaneering’s Niteroi, Brazil facility. The facility is strategically located to serve the offshore oil and gas industry in Brazil, one of the world's most active regions for deepwater exploration and production. The final delivery of the products is expected in the fourth quarter of 2027, highlighting a long-term commitment to these projects.

Significance of the Contracts

Economic Impact: The expected revenues from these contracts represent a substantial economic boost for OII. This influx of capital is anticipated to support further innovations and expansions within the company, thereby enhancing its ability to compete globally in the offshore energy market.

Technological Advancements: The contracts highlight OII’s capability to deliver advanced technological solutions. The steel tube and thermoplastic electro-hydraulic umbilicals are state-of-the-art products designed to withstand the harsh conditions of deepwater environments. This reinforces Oceaneering’s reputation as a leader in subsea technology and engineering.

Strategic Importance for Oceaneering

Strengthening Market Position: Roderick A. Larson, president and CEO of Oceaneering, stated that these contracts demonstrate OII's confidence in the durability and commitment of its customers to the resurgent deepwater markets. The company's position as a reliable offshore energy provider has been strengthened by the acquisition of these significant contracts.

Enhancing Brazilian Operations: The successful bid for these contracts demonstrate the capability and reliability of OII’s manufacturing operation in Brazil. This not only enhances OII’s operational footprint in Brazil but also highlights the strategic importance of its Niteroi facility in meeting the demands of the offshore industry.

Oceaneering’s Commitment to Quality and Safety

Delivering Quality Work: OII’s ability to secure these contracts through a competitive bidding process is a testament to its commitment to delivering quality work. The company’s focus on innovation and excellence ensures that it is capable of meeting the high standards required by industry leaders like Petrobras.

Ensuring Safety: In addition to quality, safety remains a paramount concern for OII. The company’s rigorous safety protocols and commitment to operational integrity ensure that all projects are completed without compromising the well-being of its workforce or the environment.

Prospects and Market Trends

Resurgence of Deepwater Markets: The award of these major contracts indicates a resurgence in deepwater market activities. As global energy demand continues to grow, the exploration and production of deepwater oil and gas resources are expected to play a crucial role in meeting this demand.

Oceaneering’s Role in Future Projects: With these contracts, OII is well-positioned to take advantage of future opportunities in the offshore energy sector. Its proven track record and ongoing commitment to technological advancement are expected to lead to further contracts and collaborations with major industry players.

Conclusion

The securing of these significant contracts with Petrobras marks a milestone for OII. The extensive supply of steel tube and thermoplastic electro-hydraulic umbilicals, along with subsea distribution hardware, showcases Oceaneering’s technological prowess and strategic capabilities. As the offshore energy sector continues to grow, OII's commitment to quality, safety and innovation positions it as a leading force in the industry.

Zacks Rank and Key Picks

Currently, OII and PBR carry a Zacks Rank #3 (Hold) each.

Investors interested in the energy sector might look at some better-ranked stocks like Archrock, Inc. AROC and Sunoco LP SUN, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is valued at $2.96 billion. The company currently pays a dividend of 66 cents per share, or 3.49%, on an annual basis.

AROC, together with its subsidiaries, works as an energy infrastructure company in the United States. The company operates under two segments — Contract Operations and Aftermarket Services.

Sunoco is valued at $5.4 billion. It is a major wholesale motor fuel distributor in the United States, distributing over 10 fuel brands through long-term contracts with more than 10,000 convenience stores, ensuring consistent cash flow.

SUN’s extensive distribution network across 40 states provides a robust and reliable source of income and the Brownsville terminal expansion should add to its revenue diversification.

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Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report

Sunoco LP (SUN) : Free Stock Analysis Report

Oceaneering International, Inc. (OII) : Free Stock Analysis Report

Archrock, Inc. (AROC) : Free Stock Analysis Report

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