Elliott Gue has long been among the advisory world's leading experts on the energy sector. Among his recommendations for his Energy & Income Advisor are some specialized firms that apply technology to oil services.

Third quarter results at TechnipFMC (FTI) indicate challenges for its surface and subsea equipment divisions. In contrast, the engineering unit management that the firm plans to spin off posted generally solid numbers.

A slower environment for North American drilling negatively impacted the surface operations, while subsea order backlog had softer margins that offset the favorable impact of sales growth during the quarter. The company, however, remains a preferred service provider for LNG and integrated subsea project scope.

The engineering and construction company spinoff appears to be on track for a close in the first half of 2020. At that point, management has indicated it will increasingly focus on subsea operations, which along with service technologies deployed outside North America will account for 89 percent of the remaining company.

During the earnings call, management stated it expects the Middle East to lead its surface technologies operations, with subsea driven in part by emerging markets like Mozambique.

The spun off company will have 56 percent of its backlog related to future work on a handful of major LNG projects where it has a clear advantage over rivals in experience and execution.

These skill sets could eventually make both the remaining TechnipFMC and the engineering spinoff takeover targets for larger rivals, including Halliburton (HAL) and Schlumberger (SLB).

But whether than happens or not, the selloff following management’s cautious outlook is another opportunity to buy the stock on the cheap pre-spinoff.

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