How Does McDermott Company Work and What Drives Its Business Model?

McDermott Company delivers integrated engineering, procurement, construction, and installation for fixed and floating production facilities, subsea systems, and growing low-carbon projects such as HVDC offshore converter stations. The firm combines front-end engineering, detailed design, fabrication yards, and offshore installation in a single contract.

Clients – primarily NOCs and IOCs – pay for reduced interface risk, a single point of accountability, and faster delivery of revenue-generating assets. They value McDermott business model advantages in megaproject risk transfer and cost predictability via lump-sum, reimbursable, and hybrid contract structures.

Customers face fragmentation across dozens of suppliers, schedule slippage, and technical integration risk on complex offshore projects. McDermott reduces coordination overhead and delivers turnkey project delivery so operators avoid costly delays and scope gaps.

McDermott commands spending due to its ability to bid and execute large EPC contractor oil and gas contracts with consolidated margins across design, fabrication, and installation. In fiscal 2025 McDermott reported revenue of $5.2 billion and an order backlog of $9.1 billion, signaling scale economics and a deep bid pipeline.

McDermott International derives most revenue from long-term EPC and offshore engineering and construction contracts, including major LNG and oil & gas facilities. Backlog as of 2025 is about 18 billion USD, concentrated in the Middle East under the Saudi Aramco LTA and Qatar LNG projects.

Contracts combine lump-sum (fixed-price) scopes with reimbursable elements; profit recognition follows percentage-of-completion accounting, so revenue and margin realization track percent complete and approved change orders.

Post-2024 restructuring, McDermott prioritizes quality of backlog – projects with stronger margins and payment terms – raising expected cash conversion and lowering balance-sheet risk across subsea installation services and fabrication-yard work.

Cash inflows spike at engineering deliverables, mechanical completion, and client-accepted milestones; favorable reimbursable scopes and advance payments under the Saudi Aramco LTA further support liquidity.

Long-term work with Persian Gulf national oil companies (NOCs) anchors backlog and repeat business; low-cost regional production keeps projects viable across oil cycles. In 2025 McDermott Company carried a backlog near USD 18 billion, reflecting secured multi-year EPC contractor oil and gas work.

Large fabrication yards, integrated offshore engineering and construction teams, and subsea installation services create a high technical barrier to entry. These capabilities support McDermott business model execution across EPC, subsea and offshore construction contracts and help capture complex, higher-margin scopes.

Revenue concentration with Gulf NOCs and reliance on large fixed-price EPCI bids creates concentration risk; steel, labor, and freight inflation can flip slim project margins. McDermott cost control and margin drivers must offset these pressures to avoid repeat overruns seen industry-wide.

Professional judgment for 2025/2026 shows a stabilized yet high-leverage profile: the USD 18 billion portfolio provides revenue visibility and a defensive moat, but ultimate resilience hinges on executing without cost overruns and managing geopolitical tail risks. See Mission, Vision, and Values Analysis of McDermott Company for organizational context.