) received a front-end engineering and design (FEED) contract
from Pacific NorthWest LNG Ltd, a subsidiary of PETRONAS -
Malaysia's state-owned oil company, and Japan Petroleum
Exploration Co., Ltd. (JAPEX). The contract will be executed for
a world scale LNG project in British Columbia. KBR will also
enter into a partnership with JGC Corporation for the
The project is targeted towards processing shale gas produced
in the North Montney region of British Columbia into LNG and
providing detailed engineering work for LNG plant with an annual
capacity of 12 million tons. Though the financial details of the
contract were not disclosed, the size and volume of the project
envision a significant revenue increase for the company. In
addition, it will also help KBR with better resource allocation
among other projects currently ongoing in British Columbia.
During the last few quarters, a number of new contracts have
been showering upon KBR. Two of them were turnaround contracts.
These include a contract from a leading chemical company to
perform turnaround services for its pyrolysis gasoline (pygas)
unit on the US Gulf Coast and another from
Suncor Energy Inc
) to provide turnaround services for its refinery in Edmonton,
Massive new supplies of natural gas have been discovered in
the U.S., which lead the domestic price to fall nearly 70% below
international price. These low prices are creating a windfall for
businesses that are big consumers of it and thus will also fetch
big profits for the companies that help them expand. KBR is an
industrial construction and engineering businesses that
specialize in hydrocarbon, chemical and petrochemical industries
and is benefiting extensively from the demand boost for its
services. This demand shows no sign of abating in the near future
given the exceptional prospects for additional new contracts over
the next 7 to 10 years as demand for low price gasoline
Under such a prospective scenario, we expect KBR stocks to
experience a revision and show a rising trend in coming quarters.
It is to be noted that KBR also recently hit a 52 week high level
on May 15, with a price of $32.82, beating its previous high of
$32.65 attained on March 28, 2013.
KBR currently has Zacks Rank #3 (Hold). Other stocks from the
same sector that look promising include Michael Baker Corporation
) with a Zacks Rank #1 (Strong Buy), and Harris & Harris
Group, Inc. (
) with a Zacks Rank # 2 (Buy).
BAKER (MICHAEL) (BKR): Free Stock Analysis
KBR INC (KBR): Free Stock Analysis Report
SUNCOR ENERGY (SU): Free Stock Analysis
HARRIS & HARRIS (TINY): Get Free Report
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