Fti Undersea
Source: FMC Technologies.

The energy boom in the U.S. has many investors focused on popular shale plays in previously little-known areas like the Bakken in North Dakota. But another consequence of the high oil prices that have prevailed in the market in recent years is that relatively expensive deepwater drilling projects have become economically feasible, and that has led to greater interest in the companies that provide the equipment necessary to exploit them. For drilling companies, deepwater projects have a lot of risk, but FMC Technologies (NYSE:FTI) seeks to help its exploration and production company clients with components for processing oil and gas while it's still far below the surface of the ocean. This afternoon, FMC reported its third-quarter results, and investors were curious to see whether the company could keep profiting from interest in hard-to-reach energy finds thousands of feet underwater. Let's take a closer look at those results.

How FMC dug deep and squeezed out more profits 
FMC Technologies produced somewhat mixed results from its investors' perspective. Revenue of $1.98 billion was 15% higher than year-ago levels and was also just slightly ahead of what most investors had expected, but net income of $169.8 million equated to just $0.72 per share, which was slightly lower than the $0.74 that formed the consensus prior to the release.

Still, FMC trumpeted certain aspects of its success. Even with the shortfall, earnings were 46% higher than in the year-ago period, with particular strength in both of its two key segments. Revenue growth from Subsea Technologies accelerated to 16% year-over-year, and the smaller but still essential Surface Technologies business saw an even steeper growth rate of 22%. Moreover, operating profits jumped to record levels for both segments, with operating margins for the Subsea segment soaring by nearly five full percentage points to 15.7%.

Fti Surface Well
Source: FMC Technologies.

At the same time, though, FMC's future doesn't look quite as certain as it has in the past. Inbound order activity fell to $1.75 billion, with gains in the Surface Technologies segment getting crushed by an almost 40% plunge in Subsea Technologies orders. The same trend showed up in overall backlogs, with the Subsea segment leading the company down to $6.83 billion, down about 7%.

That didn't stop CEO John Gremp from making several positive comments about FMC's strongest areas. In particular, Surface Technologies results earned praise from Gremp, as he noted how FMC "delivered record earnings on the growth of our North American fluid control business as well as continued strong performance in our international surface wellhead business." At the same time, growing contributions from the subsea segment also helped put FMC in a better position to deliver more profits going forward.

What FMC Technologies sees ahead

Fti Robotics

Source: FMC Technologies.

On a positive note, FMC Technologies boosted its guidance range for earnings per share for the full year. The company now expects to earn between $2.75 and $2.85 per share, after adjusting for one-time gains and charges earlier this year. That's a nickel higher than the range FMC had provided in the second quarter, continuing the upward momentum based on the strength in the Surface Technologies segment as well as solid views of the health of the energy market in North America.

The problem, though, is that recent price action in the oil market has reduced the economic incentives for drillers to exploit deepwater opportunities, and that could cause problems for the company moving forward. Although FMC Technologies will earn some recurring revenue from customers simply to keep existing operations adequately maintained, it can't thrive unless customers are installing new equipment to serve newly drilled areas. Moreover, competitors Cameron International (NYSE:CAM) and General Electric (NYSE:GE) are among the many companies that could seek to take advantage of the success that FMC has found, with solid reputations of their own in the energy industry that could potentially take away some business that would otherwise go to FMC.

For now, FMC Technologies remains excited about all of its prospects and especially about its land-based operations. Yet investors should keep a close eye on the oil and gas markets to make sure that fundamentals in the industry continue to support profitable operations. If exploration and production companies start to pull back on their capital spending, then FMC could be one of the first casualties. In an industry in which investors want quick results, that could be problematic for the company's stock going forward.

Dan Caplinger owns shares of General Electric Company. The Motley Fool recommends FMC Technologies. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.