Oceaneering (OII) to Use Island Pride for GoM Operations - Analyst Blog

Oilfield services provider, Oceaneering International Inc. (OII) has signed a contract with Island Offshore Shipping International AS to use Island Pride − a multi-service subsea support vessel – owned by the latter for a span of two years.

Oceaneering will likely utilize Island Pride to enhance its ability of purveying light construction and life-of-field services in the ultra deep waters of U.S. Gulf of Mexico (GoM) and other markets outside the U.S. Moreover, the vessel will be used for hardware installations as well as inspection, maintenance, and repair (IMR) projects.

Oceaneering added that hardware installations will consist of subsea trees, umbilicals, flying leads and flowline jumpers. The IMR developments will likely comprise chemical well stimulation and hydrate remediation.  

The company believes that the vessel will be available for operations in the GoM by the first half of Jan 2015.

Houston, TX-based Oceaneering International primarily serves the global offshore oilfield industry with engineered products and services. The company also offers inspection work, subsea products and services.

On the earnings front, the company has consistently performed well, beating the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 2.76%. In the last reported quarter, the company surpassed the Zacks Consensus Estimate by 3 cents owing to robust performance by the Subsea Products and Remotely Operated Vehicles segments.

However, along with the third-quarter earnings release, Oceaneering International narrowed its 2014 earnings per share guidance to $3.95–$4.00 from $3.95–$4.05. Also, most brokerage firms have lowered estimates for the company's current quarter as well as full-year estimates, making us cautious.

As a result, Oceaneering carries a Zacks Rank #3 (Hold), implying that it will perform in line with the broader U.S. market in the next one to three months.

Meanwhile, one can look at better-ranked players in the energy sector like Murphy USA Inc. (MUSA), SandRidge Mississippian Trust I (SDT) and Sandridge Mississippian Trust II (SDR). All the stocks sport a Zacks Rank #1 (Strong Buy).