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McDermott posts $1.9bn loss amid stock price plunge, project cost overruns

David Dickson, president and CEO of McDermott
David Dickson, president and CEO of McDermott

Houston oilfield service company McDermott International posted another steep loss during the third quarter amid falling stock prices and cost overruns on multiple projects, including two liquefied natural gas plants near the Bayou City.

In a Monday afternoon filing with the U.S. Securities and Exchange Commission, McDermott reported a nearly $1.9 billion loss on $2.1 billion of revenue during the third quarter. The figures were down from the $2 million profit on $2.3 billion of revenue during the third quarter of 2018.

The third quarter figures translated into a loss per share of $10.37, which was down from an earnings per share of  one penny during the same time period last year.

McDermott missed Wall Street expectations of $2.46 billion of revenue and a loss per share of 72 cents.

In its SEC filing, the company blamed the loss on $1.5 billion of impairments, most of which were related to its recent stock price plunge and cost overruns on at least six projects from the company’s North, Central and South America division.

Market rumors that the company had retained a Chapter 11 advisory firm sent the company’s stock falling from $5.88 per share to $1.58 per share over two days in mid-September. The company’s stock closed trading on Monday at $1.73 per share.

During the third quarter, McDermott reported “unfavorable changes in cost estimates” for its engineering, procurement and construction work on the Cameron LNG export terminal in Louisiana, Freeport LNG in Texas, power plant projects, various petrochemical projects and an offshore oil project for Mexico’s Petroleos Mexicanos, or Pemex.

McDermott did not post a release date and time for its third quarter earnings and did not schedule an investors call to discuss the results, which is a widely adopted practice for publicly traded companies.

Looking ahead, the company claims that it has a backlog of $20.1 billion worth of projects.

Founded in 1923, McDermott provides design, engineering and construction services to petrochemical plants, liquefied natural gas plants and offshore oil and natural gas facilities.

The company has more than 32,000 employees in 54 nations. The Houston company posted a $2.7 billion loss on $6.7 billion of revenue in 2018.

McDermott’s third quarter earnings mark four consecutive quarters of losses for the troubled Houston oilfield service company.

This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.

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