B&W Awarded Environmental Control Equipment Contract.

HOUSTON -- McDermott International, Inc. (NYSE:MDR) announced today that its subsidiary, The Babcock & Wilcox Company ("B&W"), received a contract in the fourth quarter of 2006 valued at more than $100 million from Public Service Company of New Mexico ("PNM") to design, supply and erect low nitrogen oxide ("NOx") burners, baghouses and related equipment for the utility's San Juan Generating Station in Waterflow, N.M.

B&W's contract includes the supply of 42 DRB-4Z[R] low NOx burners, overfire air systems, baghouses and ash handling systems, and activated carbon injection systems for mercury control for Units 3 and 4 at the San Juan Station. Units 3 and 4 are 550-megawatt boilers originally supplied by B&W in 1980. In 1998, B&W modified a scrubber system that had been provided by another supplier with a B&W limestone forced oxidation flue gas desulfurization system.

"We are extremely pleased that PNM has once again demonstrated its confidence in our technology, in our project team and in our construction capabilities," said David L. Keller, B&W president and chief operating officer. "We look forward to another successful project together and to helping PNM continue to meet its environmental goals and serve its many customers in the region."

"This contract allows us to add our latest retrofit low NOx burner design to San Juan's units," added Brandon Bethards, B&W senior vice president and general manager, Fossil Power Division. "With this addition, and our previously installed scrubbers and other environmental equipment, San Juan will be an outstanding model for other plants looking to lower emissions of NOx, sulfur dioxide and mercury."

Engineering is underway at B&W's Barberton headquarters. Babcock & Wilcox Construction Co., Inc. will provide erection services. Unit 4 is scheduled to go into service in the fall of 2007, with Unit 3 scheduled to go into service in spring 2008.

PNM is a subsidiary of PNM Resources, an energy holding company based in Albuquerque, N.M. PNM provides electric utility service to 426,000 customers and natural gas service to 481,000 customers in New Mexico. The company also sells power on the wholesale market in the West. PNM Resources stock is traded primarily on the NYSE under the symbol PNM. For more information, see the company's Web site at PNM.com.

The Babcock & Wilcox Company is a subsidiary of McDermott International, Inc., a leading worldwide energy services company. McDermott's subsidiaries provide engineering, construction, installation, procurement, research, manufacturing, environmental systems, project management and facility management services to a variety of customers in the energy and power industries, including the U.S. Department of Energy. Additional information on McDermott can be obtained at www.mcdermott.com.

In accordance with the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, McDermott International, Inc. cautions that statements in this press release which are forward-looking and provide other than historical information involve risks and uncertainties that may impact McDermott's actual results of operations. The forward-looking statements in this press release include, among other things, the value, work scope and timing associated with the San Juan Station project. Although McDermott's management believes that the expectations reflected in those forward-looking statements are reasonable, McDermott can give no assurance that those expectations will prove to have been correct. Those statements are made based on various underlying assumptions and are subject to numerous uncertainties and risks, including without limitation change orders and other modifications to contracts. If one or more of these risks materialize, or if underlying assumptions prove incorrect, actual results may vary materially from those expected. For a more complete discussion of these risk factors, please see McDermott's annual report on Form 10-K for the year ended December 31, 2005 filed with the Securities and Exchange Commission.