National-Oilwell Varco, Inc. (NOV), Cameron International Corporation (CAM): Five Reasons This Oilfield Services Company Looks Solid

2. The blowout preventer market is expanding
Since the Macondo well blowout, demand for BOPs have surged. Additionally, the American Petroleum Institute has redrawn blowout preventer standards and is also considering dual BOP designs as a part of increasing safety features. Cameron International Corporation (NYSE:CAM) has been leveraging the growing demand by opening BOP manufacturing facilities in the United Kingdom, Brazil, and other Asian locations. The higher safety standards also mean higher after-sales revenue opportunity. Each BOP stack needs a lead time of 18 to 24 months before delivery. Not many companies have the expertise to manufacture these 300-ton devices, which cost millions.

3. A steady progress in offshore rig construction
Taking a page out of National-Oilwell Varco, Inc. (NYSE:NOV)’s accretive acquisition-based growth strategy, Cameron acquired LeTourneau Technologies Drilling Systems from Joy Global Inc. (NYSE:JOY), and TTS Energy Division from Norway’s TTS Group. These acquisitions, in late 2011 and mid-2012, respectively, have enabled the Cameron to provide complete offshore rig packages.

For the first quarter, Drilling and Production Systems — Cameron’s largest segment — recorded a $227 million, or 22%, increase in revenue. In the same period, this segment bagged orders worth $2.7 billion as opposed to $1.7 billion during the first quarter of 2012. Total backlog as of March 31 has shot up to $8 billion from $4.4 billion a year before — a massive 78% growth.