Acergy's About-Face

Six months ago, I told my Foolish friends not to count out offshore oil and gas contractor Acergy SA (Nasdaq: ACGY  ) . After a painful tax hit and a reshuffling of the top brass, the company is finally getting its sea legs.

Let's revel in Acergy's first-quarter financial results for a moment. High activity levels around the world, particularly offshore West Africa, lifted revenue by 12%. Strong project execution led to significant profitability improvements, raising adjusted EBITDA margins from 12.5% to 16%. That was good for a greater-than-20% boost to the bottom line.

The contracts are just rolling in for Acergy. In addition to the Total SA (NYSE: TOT  ) Pazflor award, contracts have come from EnCana (NYSE: ECA  ) , for work offshore Nova Scotia, and from Royal Dutch Shell (NYSE: RDS-A  ) (NYSE: RDS-B  ) , for the company's Perdido project. The latter marks Acergy's first award in the ultra-deepwater Gulf of Mexico.

As a result of these and other contracts, Acergy's backlog ballooned by 25% sequentially. Equally important, the company's project slate has pushed out further into the future, which enhances revenue visibility. At the end of the fourth quarter, 30% of backlog was for post-2008 work. That figure now stands at 52%.

I am confident that this subsea specialist is going to continue bagging big deals, and not simply because Transocean (NYSE: RIG  ) and Noble (NYSE: NE  ) are out there furiously spinning their drill bits. Acergy has undertaken a major fleet rejuvenation, the result of which is a roughly 10-year drop in the average age of its vessels. The company has achieved this while returning significant capital to shareholders, thanks to ample free cash flow that will increase going forward.

While Acergy has rebounded a bit so far in 2008, I still find it a compelling oil patch investment option, along with tumultuous twin Helix Energy Solutions (NYSE: HLX  ) .

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