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» FMC Technologies, Inc. Presents at Bank of America Merrill Lynch 2011 Global Energy Conference, Nov-15-2011 09:00 AM
Although these forward-looking statements are based on our current expectations, beliefs and assumptions regarding future developments and business conditions, they are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by these statements.Known material factors that could cause our actual results to differ from our projected results are described in our 10-K, 10-Q, and other filings with the SEC. We wish to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise. I will now turn the call over to John Gremp, FMC Technologies' Chairman, President and CEO. John T. Gremp Good morning. Welcome to our second quarter 2012 conference call. With me today are Maryann Seaman, our CFO; and Bob Potter, our Executive Vice President. I'll start with some highlights from the quarter. Maryann will provide specifics on our financial performance, and then we'll open up the call for your questions. Our second quarter operating profit was a record $203 million and revenue was $1.5 billion. Earnings were $0.46 per diluted share for the quarter, which represented an 18% increase over the prior year quarter. Looking at the overall market, the Subsea industry continued to see a healthy level of awards in the second quarter, and the expectation that this year's industry award total will exceed 2011 by more than 50%, appears almost certain. This increase in Subsea activity will rebuild backlogs and drive improved pricing. North America shale activity continues to shift from dry gas to liquid-rich plays that now account for over 70% of the market. Liquid plays have also begun to show some signs of risk, as the natural gas liquids prices have fallen at a more significant rate than oil.
U.S. rig counts are essentially unchanged sequentially and remain at levels that provide some confidence in the sustainability of the repair and replacement portion of our fluid control business and our surface wellhead business in North America.Looking at the Subsea results, revenue for the quarter in Subsea Technologies increased 18% over the prior year quarter and 6% sequentially. For the year, we continue to expect to generate approximately $4 billion in Subsea revenue. Subsea margins increased in the quarter as project execution improved. The Laggan-Tormore project in the North Sea reached a critical milestone when the Subsea manifolds were delivered in May, as required by the customer. This project is now near completion. Subsea Technologies inbounded $878 million of orders in the quarter, which included 17 subsea trees. Our backlog now stands at $4.3 billion. Following the end of the quarter, we received a $200 million award for Statoil's Gullfaks South field development in the North Sea. The project includes 7 subsea production trees and 2 manifolds. This development has potential extensions for an additional estimated 30 subsea trees, with the possible additional value exceeding $600 million. In addition to Statoil, conversations with our frame agreement customers remain very positive, and are focused on their large multi-year portfolios of offshore assets and how to best develop these projects. With $55 to $60 per barrel, appearing to be the level many operators are using to justify these deepwater developments, and access to international reserves for most international oil companies, continuing to be largely limited to deepwater basins, we remain optimistic on the prospects for the subsea market over the coming years. When we look at the subsea market regionally, both Africa and the Gulf of Mexico activity will be substantial, and many of our frame agreement partners have major developments in these areas.
In West Africa, the largest project in the region, Total's Ingenu [ph] development in Nigeria should be awarded before the end of the year.Multiple large projects in Angola are also likely to be awarded over the coming 12 to 18 months and activity in Ghana is also on track to see coming awards. Read the rest of this transcript for free on seekingalpha.com