Thank heaven for the deep blue sea.
That gratitude was implicit as Houston-based FMC Technologies reported fourth-quarter earnings that benefited from demand for its offshore services during a tepid period for North American onshore business.
FMC Technologies manufactures and services a range of equipment including subsea production and processing systems, surface wellhead systems and high pressure fluid control equipment.
Executives who discussed the company’s fourth-quarter performance in a Wednesday conference call expressed long-term optimism about the subsea technology sector.
“Subsea processing and subsea services, those are the growth platforms that are going to materialize for a long period of time,” Gremp said.
FMC Technologies’ overall fourth-quarter net income rose 21 percent to $120.4 million from $99.2 million in the October-December period of 2011, it reported after markets closed on Tuesday.
Fourth-quarter revenue was $1.84 billion, up from $1.5 billion for 2011 and higher than analysts’ $1.72 billion consensus estimate.
Revenue from subsea technology rose 28 percent to $1.2 billion, the company reported, and operating income in the segment more than doubled to $151.2 million.
Operating income on FMC’s surface technologies sector, by contrast, dropped 15 percent to $64.6 million as a glut of drilling equipment in North America and a decline in natural gas drilling dealt a double whammy for onshore oil field services.
Company officials said FMC expects its recent acquisition of Canada-based Pure Technologies to expand business into shale additional plays. Both companies operate now in the Bakken shale that spans parts of the U.S.-Canada border.
“In the long term, the shale plays are a growth opportunity,” Gremp said. “Rig counts will increase.”
But the offshore sector is at the heart of FMC’s growth plans, as it seeks to win lucrative subsea processing contracts from the major operators.
It intends to target most of its planned $400 million capital budget for 2013 on its subsea technology, particularly in the Gulf of Mexico, where Exxon, Anadarko and Chevron are expected to announce new exploration in the coming year.
FMC Technologies shares rose $2.54 to $50.60 in midday trading Wednesday on the New York Stock Exchange.