How Does McDermott Company Work?

How is McDermott reshaping energy infrastructure today?

McDermott enters 2026 with a revitalized backlog exceeding $30 billion, pivoting toward energy transition projects while delivering large-scale EPCI services across 54 countries with about 30,000 specialists.

As a vertically integrated EPCI contractor, McDermott converts complex offshore and onshore engineering into turnkey revenue, supported by record Middle East awards and recent financial restructurings.

Discover strategic context in McDermott Porter's Five Forces Analysis

McDermott operates a vertically integrated EPCI model delivering end-to-end engineering, procurement, construction and installation for offshore and onshore energy assets, offering a single point of accountability that reduces interface friction and speeds delivery.

Vertically integrated EPCI

McDermott company operations center on a unified EPCI approach that spans FEED to commissioning, improving cost certainty and schedule control for clients.

Offshore and subsea capability

In offshore, McDermott designs and builds fixed and floating production facilities, pipelines and subsea systems supported by a fleet of specialty marine vessels.

Strategic fabrication yards

Fabrication hubs in Jebel Ali (UAE), Batam (Indonesia) and Altamira (Mexico) enable large-module pre-assembly in controlled yards, cutting offshore hook-up time and safety exposure.

Onshore modular and storage solutions

The onshore division, including CB and I Storage Solutions, focuses on LNG liquefaction, hydrogen storage and refining via proprietary storage tech and modular construction.

By controlling supply chain and using modularization, McDermott business model reduces client risk and accelerates project schedules, an advantage valued by GCC state-owned enterprises where local-content scores are high.

Key operational value drivers

Core strengths that define How McDermott works and its market value:

• Single-point accountability across EPCI lowers interface disputes and claims.
• Pre-assembly in fabrication yards shortens offshore installation windows and improves safety.
• Proprietary storage technologies and modularization support global LNG export and hydrogen projects.
• Decades-long regional presence yields strong local-content scores and competitive positioning with state-owned clients.

Recent data: McDermott reported a backlog exceeding $14 billion in 2025 and has completed modular megaprojects reducing offshore hookup timelines by up to 30% in comparable programs; see further market context at Target Market of McDermott.

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McDermott's revenue model centers on long-term large-scale contracts—fixed-price and reimbursable—combined with FEED-to-EPCI pull-through, subsea vessel utilization and regional concentration to drive margins and cash flow.

Contract Types

Primary revenue comes from fixed-price (lump-sum) and reimbursable (cost-plus) contracts that define risk and margin.

Segment Mix

Approximately 65% of revenue is from Offshore and Subsea; the rest from Onshore and storage solutions.

Geographic Concentration

The Middle East accounts for over 50% of turnover, enhancing operational efficiency and logistics.

2025 Revenue

Estimated fiscal 2025 revenue reached approximately $8.5 billion, supported by high subsea vessel utilization.

Monetization Levers

FEED awards, technology licensing and specialized maintenance services add recurring and higher-margin income streams.

Risk Management

Shift to hybrid contract structures post-2023/2024 inflationary pressures balances client and contractor risk.

Revenue capture emphasizes early engagement, asset-backed services and regional execution scale to maximize EPCI pull-through and asset uptime.

Key Revenue Drivers

How McDermott works financially revolves around contract mix, vessel fleet utilization and regional project density that enable predictable cash flows.

• FEED-to-EPCI pull-through increases probability of securing construction phases.
• Hybrid contracts introduced to mitigate inflation and supply-chain cost volatility.
• Technology licensing and long-term maintenance contracts provide recurring revenue.
• Operational concentration in the Middle East yields logistics and utilization advantages.

Further reading on market positioning and peers is available in Competitors Landscape of McDermott.

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McDermott’s recent milestones and strategic shifts reposition the firm for large-scale EPCI work and the energy transition, leveraging restored financial capacity and expanded Net Zero Infrastructure capabilities.

Financial restructuring (mid-2024)

The company completed a comprehensive restructuring in mid-2024 that eliminated legacy debt and secured a $2.2 billion letter of credit facility, restoring bonding capacity to pursue mega-projects.

Net Zero Infrastructure expansion (2025)

In 2025 McDermott expanded its Net Zero Infrastructure business and won major North Sea contracts for carbon capture modules, adapting offshore expertise for low-carbon projects.

Asset ownership and fleet capability

Owning fabrication yards and high-spec vessels such as the Amazon and DLV 2000 enables ultra-deepwater installation, schedule control and higher margins during upcycles.

Incumbency via long-term contracts

A Long-Term Agreement with a major national oil company provides a steady baseline of brownfield and greenfield work, underpinning revenue stability and predictable backlog.

Key strategic moves strengthened McDermott company operations, clarified how McDermott works in low-carbon markets, and reinforced the McDermott business model around EPCI, asset control and client incumbency.

Competitive edge — three pillars

McDermott’s competitive advantage rests on technical complexity, asset ownership and geographical incumbency, supported by decades of execution data and validated by recent contracts.

• Technical complexity: proven EPCI capability for substructures, pipelines and modular CCS units, reducing execution risk.
• Asset ownership: fabrication yards and vessels deliver schedule certainty and margin capture versus asset-light peers.
• Geographical incumbency: LTAs and regional presence secure repeat work and improve bid accuracy.
• Data-driven bidding: a proprietary execution database enhances risk assessment and cost forecasting for large-scale energy projects.

Relevant metrics: post-restructuring available credit of $2.2 billion, restored bonding capacity enabling bids on projects commonly valued at several billion dollars, and 2025 Net Zero contract awards in the North Sea reflecting a strategic revenue diversification toward low-carbon services; see Revenue Streams & Business Model of McDermott for additional context on McDermott company structure and main revenue streams.

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McDermott holds a top-tier position in global EPCI markets, leading volume for large offshore platforms in the Middle East while facing contract volatility and geopolitical concentration risks; its near-term horizon hinges on converting a $30 billion backlog into sustained free cash flow and on growing energy-transition work to meet management targets.

Industry position

McDermott competes with Saipem, TechnipFMC and Subsea 7 in EPCI and is arguably the market leader by volume for large-scale offshore platforms in the Middle East, giving it scale advantages in heavy engineering and fabrication.

Competitive strengths

Strengths include integrated EPCI capabilities, proprietary CB and I storage expertise, and a diversified project footprint that supports both traditional oil & gas and low-carbon infrastructure bids.

Principal risks

Key risks are fixed-price contract exposure where unforeseen subsea conditions or supply-chain disruptions can erode margins, plus geopolitical instability concentrated in the Middle East backlog.

Transition risk

As the industry shifts to renewables, McDermott must demonstrate transferability of heavy-engineering skills to offshore wind, carbon storage and hydrogen to avoid stranded-capability risk.

Operationally, execution and selective bidding are critical to convert backlog into cash while managing margin exposure across fixed-price EPCI contracts and volatile input costs.

Future outlook to 2027 and beyond

Management aims for 25 percent of backlog from energy-transition projects by 2030; current activity includes bids for large carbon sequestration hubs and green ammonia export terminals leveraging storage expertise.

• Record backlog of $30 billion provides 3–5 year revenue visibility if programs are executed to plan
• Dual demand: sustained traditional hydrocarbon projects plus accelerating low-carbon infrastructure creates multiple revenue streams
• Priority: restore operational excellence, improve margins on fixed-price work and convert backlog to robust free cash flow
• Measured bidding and project selection will reduce downside from contract-and-regional concentration

For detailed analysis of strategic positioning and growth initiatives, see Growth Strategy of McDermott

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