MDR: MDR: Energy Diversified

In volatile markets, such as the one we are in, it is good to find diversification. Diversification is important due to the large movements within sectors fueled by traders. This should continue going forward as there isnt any transperancy. Things are clearing up a little, at least in my eyes. We have a much worse housing/mortgage market. The Fed speak on the last meeting basically told us that there hands are tied. There is no way to strengthen the US dollar without hurting the housing market even worse. Since it is a major factor in the stability of the economy it will take presidence over current inflationary pressures. The market will start to stabilize by the end of the year as we get a better idea of how the housing market will do and also with respect to oil prices. I still think oil is a bubble. This is backed by the promise of OPEC to bring more oil on line in the upcoming years. When investors describe a bubble, they just don't know how long it will be. Nothing goes straight up and vice-verse. If the bubble bursts or oil continues to go up, it still benefits this company. Backlog for deep spec drill ships and rigs are at all time highs, and continue to increase as it is cost effective to use these methods to obtain oil. Looking at my call on theupdown.com 119 days ago, MDR is up 19.62%, as higher oil prices are already getting a longer term feel, even with OPEC stating that they will be upping production in the next to years exponentially. Their current statement that we will see $150 oil, has put extreme pressure on the bears. I looks like the chart will run past $150, and hit $159, but that is just an estimate on market momentum. The only thing now that will pressure oil to the downside is demand. Pricing could pressure that towards the end of the year, but that wont help the market as the Scrooge will ruin Christmas this year. Some companies are well positioned even in this environment. MDR is placed very well on the basis of their diversity of busnesses. Their company is involved in offshore oil and gas construction, power generation systems, and government operations. All three are doing well and should continue to for years to come. Currently, there is a bull market with respect to offshore drilling. This is due to a lack of new land finds with respect to BTU deposits in oil and gas. These rigs have backorders all over the world as higher prices make it feasable to drill areas that were just too expensive at one time. Also, the world is expanding into more power generation equipment as emerging markets need more energy to support growth and mature markets need to upgrade and add. Government projects are always expanding and MDR's specific work with respect to nuclear powered vessels will continue to power their company. Their power generation expertise currently has a backlog of 5 gigawatts. Their are capitalizing on government requirements to clean up current coal fired plants to make them more environmentally friendly. They believe they will be a major player in the upcoming builds of nuclear power plants as they have a world wide reach. MDR states that based on the EIA, from 2005 to 2030, the world energy demand will be 41% higher. This means in the next 25 years that there will need to be 50 nuclear reactors (1000 MW), 261 coal fired plants (600 MW), 279 natural gas plants (400 MW), and 93 new renewable builds (100MW). They also plan to capitalize on CO2 being a regulated pollutant. Oxy-coal combustion is being studied to be provided as a retrofit system. They also have a team to develop new technologies. Their government contract segment is 95% DOE contracts. This is focused on nuclear so the military will not have to use so much oil to carry out their operations. They also will use nuclear, to position themselves in the future with respect to energy. They are currently servicing reactors and will participate in new builds in the future. They currently have 13 nuclear reactors in operation and 1.6 GW to be refurbished. As of March 31st of 2008, MDR had $10.2 billion in backlog. The majority is in oil and gas, followed by commercial coal and nuclear, and lastly government nuclear contracts. About $5 billion of their backlog will be realized during the remainder of 2008, with a little under $3 billion next year and about $2.5 billion in 2010. 2007 was a good year for MDR. They have seen their revenues increase since 2004. That year they had $3.281 billion and in 2007 they had $5.632 billion. Operating income jumped from $389 million in 2006 to $716 million last year. When compared to their peers, they are outperforming. If we look at their 2007 numbers, we see their net income was number one beating the likes of FLR, and FWLT. Their earnings yield was also the best. Looking forward MDR should continue their run as they have made $330 million in bolt on acquisitions in the 2nd and 3rd quarter of last year. They also declared a 2 for 1 stock split, and received a credit rating increase. I still think this stock is a buy and a long term growth story from their businesses. Look for good movement in the short and long term.