How did McDermott International, Ltd. grow from a Texas construction shop into a global EPCI leader?
McDermott International, Ltd. traces a century-long journey from local construction to global EPCI projects; its history shows strategic wins and painful restructurings. Market signals in 2025-project wins, restructuring milestones, and backlog recovery-underline why this history matters.
Studying McDermott's turning points-mergers, bankruptcies, and asset rebuilds-shows how capital intensity and contract risk shaped its path. See product insight: McDermott SWOT Analysis
How Did McDermott Get Started?
McDermott International, Ltd. traces to May 31, 1923, when 24-year-old Ralph Thomas McDermott won a contract in Eastland, Texas, to build 50 wooden drilling rigs and formed J. Ray McDermott & Company with his father John Raymond McDermott to serve the Texas oil boom.
How McDermott Got Started
Ralph T. McDermott founded J. Ray McDermott & Company in 1923 to fabricate land rigs and oilfield structures, leveraging family lumber and construction expertise to meet urgent onshore drilling needs during the Texas oil boom.
- Founding year: 1923
- Founders: Ralph Thomas McDermott and John Raymond McDermott
- Original idea: build wooden drilling rigs and provide basic oilfield construction services
- What shaped the launch: rapid Texas oilfield expansion and local demand for turnkey rig construction
Early operations emphasized modular, on-site fabrication and simple erection techniques; by solving immediate physical needs for wildcatters, the firm established a repeatable business model that underpins the McDermott Company history and McDermott International timeline.
J. Ray McDermott's first contracts were small but scalable; revenues were modest initially, yet the firm reinvested earnings into material yards and crew training, enabling expansion into larger land-based fabrication and, later, offshore platform components-an evolution central to the McDermott corporate growth narrative.
Key early metrics: initial contract for 50 wooden rigs in 1923; within a decade the firm had established regional fabrication yards, setting the stage for later major offshore engineering projects by McDermott and future mergers and acquisitions that reshaped the business.
For a broader perspective on the company's values and later strategic moves, see What McDermott Company Stands For
McDermott SWOT Analysis
- Complete SWOT Breakdown
- Fully Customizable
- Editable in Excel & Word
- Professional Formatting
- Investor-Ready Format
How Did McDermott Become What It Is Today?
McDermott International, Ltd. grew from a Texas fabrication shop into a global EPCI oilfield contractor by following oil exploration westward, pivoting offshore in 1947, and vertically integrating marine assets and engineering capabilities through successive decades of expansion.
Early regional growth and relocation to Houston
Founded in Eastland, Texas, the firm moved to Luling and then to Houston in 1932 to stay close to emerging oil activity. That relocation positioned McDermott Company history to serve land-based drilling and fabrication customers across Texas oilfields.
Pivot to offshore platforms and marine capability
In 1947 McDermott designed and installed the first steel template platform out-of-sight-of-land in the Gulf of Mexico for Superior Oil, marking the company's move from land to sea. By 1949 it commissioned Derrick Barge 4, the first vessel purpose-built for offshore construction, seeding its future EPCI model.
Scale, fleet build-out, and international reach
Through the latter 20th century McDermott scaled by adding heavy – lift and pipelay vessels and expanding overseas; by the 2000s it executed projects in over 54 countries and worked for national oil companies and international supermajors. This geographic reach underpins the McDermott International timeline and McDermott corporate growth narratives.
Vertical integration as the defining evolution
Transitioning from a fabrication shop to an integrated engineering, procurement, construction and installation (EPCI) provider defined McDermott's evolution: owning specialized vessels, in – house engineering, and procurement lowered coordination cost and enabled delivery of complex subsea and floating facility projects. This business model in oil and gas construction drove major offshore engineering projects by McDermott and shaped later strategic moves, including mergers and acquisitions and the CB&I acquisition impact.
Key milestone datapoints: first offshore steel template platform in 1947, Derrick Barge 4 launched in 1949, operations across 54 countries by the 2000s; subsequent decades included large M&A and project wins, a Chapter 11 restructuring in 2020, and post – bankruptcy reorganization and asset rationalization through 2025. Read more on clients and served markets at Who McDermott Company Serves
McDermott PESTLE Analysis
- Covers All 6 PESTLE Categories
- No Research Needed – Save Hours of Work
- Built by Experts, Trusted by Consultants
- Instant Download, Ready to Use
- 100% Editable, Fully Customizable
The Moments That Changed McDermott Everything?
Between 2018 and 2020 McDermott Company history pivoted from aggressive growth to survival: the 2018 CB&I merger saddled McDermott International, Ltd. with heavy debt and operational strain, LNG project losses pushed the firm into Chapter 11 on January 21, 2020, and a surgical restructuring completed June 30, 2020 reset the balance sheet.
| Year | Turning Point | Why It Mattered |
| 2018 | Merger with CB&I | Created a premier integrated energy services firm but added large liabilities and complex project backlog, altering McDermott corporate growth trajectory. |
| 2018-2019 | Losses on Gulf Coast LNG projects | Contract execution and margin shortfalls amplified liquidity stress and raised bankruptcy risk. |
| January 21, 2020 | Chapter 11 filing | Forced a comprehensive restructuring and halted prior high-risk expansion strategy. |
| June 30, 2020 | Emergence from bankruptcy | Eliminated 4.6 billion USD in debt and sold Lummus Technology for 2.725 billion USD, enabling a new capital structure and strategic reset. |
| Post-2020 | Strategic refocus | Shift toward disciplined project selection, LNG and decarbonization infrastructure to improve margins and reduce execution risk. |
The innovations, pivots, crises, and decisions that most clearly changed McDermott International timeline were the 2018 CB&I acquisition, project execution failures on large LNG contracts, the Chapter 11 restructuring that cut over 4.6 billion USD in debt, and the sale of Lummus Technology for 2.725 billion USD, which together forced a durable shift in project selection and risk appetite.
Technology and EPC Integration Shift
Combining CB&I's engineering with McDermott's execution aimed to offer full-scope EPC (engineering, procurement, construction) services; operational integration proved harder than forecast and exposed execution risk.
Strategic Pivot to Disciplined Project Selection
After emergence, management narrowed bid criteria and prioritized higher-margin LNG and decarbonization projects to stabilize returns and cash flow.
Acquisition Impact: CB&I Merger
The 2018 acquisition expanded capabilities and backlog but increased leverage and contract complexity, directly leading to the 2020 restructuring.
Leadership and Governance Changes
Bankruptcy prompted board and executive changes that enforced stricter capital discipline and revamped governance to prioritize risk management.
Market Shock: Contract and Margin Pressure
Cost overruns on Gulf Coast LNG contracts were the immediate market shock that exposed leverage and triggered the Chapter 11 process.
Defining Turning Point: 2020 Bankruptcy and Reset
The Chapter 11 filing and subsequent elimination of over 4.6 billion USD in debt plus the Who McDermott Company Competes With sale of Lummus for 2.725 billion USD most clearly changed McDermott's long-term trajectory.
McDermott SOAR Analysis
- Complete SOAR Analysis
- Effortlessly Communicate Your Business Strategy
- Investor-Ready Format
- 100% Editable and Customizable
- Clear and Structured Layout
What Does McDermott's Story Mean Today?
McDermott Company history shows a shift from unchecked scale to disciplined, diversified execution; its past bankruptcy and recoveries reveal an identity focused on engineering depth, risk recalibration, and deliberate growth into energy transition markets.
| Historical Pattern | Present-Day Meaning | Why It Matters |
|---|---|---|
| Rapid M&A and aggressive backlog accumulation (including CB&I acquisition impacts) | Shifted to measured bids and selective partnerships to protect margins | Reduces project execution risk; supports sustainable cash flow and restores investor confidence |
| Bankruptcy in 2020 driven by contract losses and leverage | Reorganized capital structure, retained engineering assets, rebuilt liquidity | Liquidity above 1.2 billion USD and improved balance sheet enable competitive bidding |
| Legacy subsea and offshore engineering expertise | Now applied to offshore wind and HVDC projects via partnerships (eg TenneT) | Positions the firm at the intersection of hydrocarbon upcycles and energy transition demand |
History shows a culture of engineering persistence
McDermott founding story and early years emphasize complex project execution; that legacy keeps technical rigor central to identity. Teams prioritize delivery on heavy EPC (engineering, procurement, construction) work, which still defines culture.
History reveals strategic caution after overreach
McDermott mergers and acquisitions taught a lesson: growth is now selective and partnership-driven. Management favors fixed-price discipline and backlog quality over pure scale.
Resilience shown through reorganization and pivot
The 2020 bankruptcy and subsequent restructuring demonstrate adaptability; the firm rebuilt operations and liquidity and now targets 25 percent of backlog in energy transition by 2026.
Clearest takeaway: disciplined integrator with hybrid portfolio
As of late 2025 McDermott International, Ltd. reported LTM revenue of 9.58 billion USD and a backlog of 17.5 billion USD; this supports the judgment that it is now a leaner, more disciplined energy integrator positioned to capture both oil and gas upcycles and renewable buildouts. Read more on operational change in How McDermott Company Runs.
McDermott VRIO Analysis
- Covers VRIO Analysis in Details
- Structured for Consultants, Students, and Founders
- 100% Editable in Microsoft Word & Excel
- Instant Digital Download – Use Immediately
- Compatible with Mac & PC – Fully Unlocked
Related Blogs
Frequently Asked Questions
McDermott began in 1923 when Ralph Thomas McDermott and his father John Raymond McDermott formed J. Ray McDermott & Company. Their first big job was building 50 wooden drilling rigs in Eastland, Texas, for the Texas oil boom, using family construction and lumber experience to meet urgent onshore drilling needs.
Disclaimer
All information, articles, and product details provided on this website are for general informational and educational purposes only. We do not claim any ownership over, nor do we intend to infringe upon, any trademarks, copyrights, logos, brand names, or other intellectual property mentioned or depicted on this site. Such intellectual property remains the property of its respective owners, and any references here are made solely for identification or informational purposes, without implying any affiliation, endorsement, or partnership.
We make no representations or warranties, express or implied, regarding the accuracy, completeness, or suitability of any content or products presented. Nothing on this website should be construed as legal, tax, investment, financial, medical, or other professional advice. In addition, no part of this site - including articles or product references - constitutes a solicitation, recommendation, endorsement, advertisement, or offer to buy or sell any securities, franchises, or other financial instruments, particularly in jurisdictions where such activity would be unlawful.
All content is of a general nature and may not address the specific circumstances of any individual or entity. It is not a substitute for professional advice or services. Any actions you take based on the information provided here are strictly at your own risk. You accept full responsibility for any decisions or outcomes arising from your use of this website and agree to release us from any liability in connection with your use of, or reliance upon, the content or products found herein.