Dallas, Texas 11/12/2013 (Financialstrend) – The $1.91 billion oil and gas equipment supplier and service provider McDermott International Inc. (NYSE:MDR) has managed to post a robust close to 9% increase in its market valuation during trading last week, in spite of a big dip in its earnings and revenue. This net increase over all last week is even more commendable when looked at in the back drop of close to 8.6% drop in price valuations during trading on November 5, post the earnings call.
Commenting about the severe strain the firm is under, its president, chief executive officer and chairman, Stephen Johnson has been quoted as saying, “In the third quarter, we experienced additional vessel-related issues on our deepwater pipeline project in Malaysia. During the first of our 4 installation campaigns, our Lay Vessel 105 experienced mechanical failure and we identified additional configuration issues with the vessel’s back-deck installation equipment. The issues with the vessel which includes the lay tower tensioning system resulted in lower-than-anticipated productivity. We identified and resolved the root causes of these mechanical problems and believe the fix will be effective for the pipe-in-pipe work, which is just commencing.”
The net loss from operations is being linked to the drastic 33% drop in the revenue flow (in comparison to 3Q12) due to unplanned down time in its operations. In addition the company has also been buffeted by huge cost escalations in current projects in spite of underway restructuring efforts. The oil and gas drilling service provider reported net loss of $64 million in 3Q13 which translated to a -$0.27 per share.
The market’s discounting of the 3Q blip can be ascribed to the perceived potential of the firm given its big foot print across major oil producing geographies and execution experience in the deep sea and off shore oil rig operations space.