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TechnipFMC (FTI) Slashes Capex to Weather Oil Price Drop

Per daily reports, the oil price has been persistently displaying a downward curve following the coronavirus pandemic’s adverse impact on global energy demand and Saudi Arabia’s price war with Russia. As a result, the outlook for all industries in the energy sector business seems bearish. Thus, energy players are ramping down their operational activities by trimming capital budgets.

Recently, TechnipFMC plc FTI announced steps to "rationalize" its planned capital spending for the current year in response to the sudden oil price slump. This London-based-based company slashed its 2020 capex guidance by 30% to $300 million from the prior expectation. Further, it anticipates annual cost reductions in excess of $100 million for the Surface Technologies segment, resulting from a severe drop in North American activity. It also expects to cut back $30 million from Corporate expenses annually.

Despite the sickly economic condition, this Zacks Rank #3 (Hold) TechnipFMC maintains a strong financial position. By the end of last year, the company had $5.2 billion in cash and cash equivalents, of which it is free to spend $2.2 billion beyond joint ventures. Further, the company has a revolving credit facility worth $2.5 billion to aid its liquidity. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Importantly, TechnipFMCwill not only benefit from its key adopted measures but will also continue to keep the commodity price movement on its radar, further aligning itself with the capex adjustment plans in response to a volatile price scenario.

In 2019, this Seabed-to-surface oilfield equipment and services provider announced its plan to split into two companies, namely TechnipFMC and Technip Energies. It intends to separate its engineering and construction business from its technology-focused subsea and surface operations, thereby creating two independent, publicly-traded companies. However, in March, the company decided to halt the spin-off due to the ongoing market instability.

TechnipFMC plc Price

TechnipFMC plc Price
TechnipFMC plc Price

TechnipFMC plc price | TechnipFMC plc Quote

Other Companies Bridling Costs

Reacting to the current downbeat market territory, TechnipFMC joins other oilfield service players including Halliburton Company HAL, Schlumberger Limited SLB and ProPetro Holding PUMP. These industry participants intend to overcome the tough times while maintaining financial flexibility and operational excellence. Notably, strengthening the companies’ cash-boxes at a time when oil prices look to yield zero profits to most producers is indeed a judicious step.

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TechnipFMC plc (FTI) : Free Stock Analysis Report
 
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