I've had a lot to say lately about the deepwater drillers, but today I'd like to turn to the guys that provide the key equipment for deepwater development projects after folks like Transocean
Let's start with Cameron
On its conference call, management pointed to two risks to the company's outlook: the threat of a "worldwide oversupply of gas," and the "fragile" economy. There are ways that Cameron could surprise to the upside as well. Deepwater projects awards show signs of picking up relative to their fairly slow pace over the past few years. The most high-profile potential award is for Total's
Turning to competitor FMC Technologies
So far in the first quarter, FMC has picked up two awards from Petrobras
While FMC management questioned the sustainability of the rebound in onshore activity, it sounds quite positive about the trends driving its critical subsea business. With such huge, stable customers driving the company's results in the offshore, I would feel pretty comfortable as well.
As far as stock valuations go, these two oil service stocks seem pretty fully valued today, especially given the anticipated earnings pullback. I would wait for the pendulum to swing toward greater pessimism before taking a position in Cameron or FMC.
Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his Motley Fool CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.
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