WRAPUP 1-Fluor, McDermott show where the energy activity is
* Fluor gives weaker outlook; McDermott Q3 beats estimates
* Fluor feels brunt of energy slump, outlook "cautious"
* McDermott benefits from offshore oil & gas building boom
* Fluor shares down 6 percent, McDermott shares flat
SAN FRANCISCO, Nov 9 (Reuters) - Third-quarter results from two big U.S. engineering and construction companies on Monday offered a timely snapshot of where money is and isn't being spent right now in the oil and gas business.
On the one hand, Fluor Corp (FLR.N) took a $1.2 billion hit to its backlog of orders -- now $28 billion -- due to exposure to an indefinitely delayed Russian gas processing facility.
This and a reduced 2009 profit outlook weighed on the shares of the sector's largest publicly traded company, which fell 6 percent in after-hours trading. [ID:nN09277429]
While the Russian drilling market has shown signs of improvement recently, a collapse in natural gas prices in the past year has jolted energy companies exposed to the country.
McDermott International Inc (MDR.N), however, reported surprisingly good profit growth and flat revenue compared with a year ago, as strength in its offshore business offset weakness on the power generation side. [ID:nN09267397]
Chief Executive John Fees, in a statement to accompany the results, declared himself "exceptionally pleased" with the strong performance from its offshore oil & gas segment -- which accounted for more than 60 percent of its quarterly revenue.
McDermott's third-quarter net profit rose 38 percent to $118.1 million, or 50 cents per share, from $85.6 million, whereas analysts had expected a profit of 40 cents per share, according to the average on Thomson Reuters I/B/E/S.
Because of the longer lead times involved, demand has held up well for offshore services, particularly in new deepwater developments such as Brazil -- already borne out by companies such as Cameron International Corp (CAM.N). [ID:nN02453485]
It is likely Fluor was responding to this trend last December when it set up a business unit to focus specifically on offshore oil and gas. Then in August, Fluor joined forces with Global Industries Ltd (GLBL.O) to pursue oil and gas projects in the Middle East and North Africa.
Chief Executive Alan Boeckmann said spending had shifted toward the exploration and production side, both offshore and onshore, and that this area was one of its target areas for potential acquisitions, along with infrastructure businesses.
"The clients' capital programs have definitely shifted away from the downstream, where it had been over the last couple of years. And so ... the prospects out there reflect that," Boeckmann told analysts on a conference call on Monday. Continued...
