New Contracts Elongate JEC List - Analyst Blog

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As the global economy dwindles over fears of European crisis harming industrial growth, Jacobs Engineering Group Inc. ( JEC ) takes a bold step forward in the besieged continent; receiving a framework contract from Electricite de France ( EDF ). The contract will offer owner engineering services in support of gas infrastructure projects across Europe, within a duration of four years.

Jacobs will be providing a wide range of management, consultancy and design services. These include - project management; permitting and administration; specifications and conceptual design; procurement; and supervision of construction. In a nutshell, infrastructure development for natural gas storage, distribution through gas pipelines, underground storage facilities and regasification terminals, fall within the scope of the framework project awarded by EDF.

With this contract win, Jacobs is expected to expand the scope of services in Europe, supporting EDF in the development of its gas business. However, the value of the contract has not yet been disclosed.

Jacobs' contract winning spree has not ceased with its support extension to the European gas business. It also won two strategic contracts - a design and fabrication contract by El Dorado Chemical Company and the other one - a follow-on contract to provide advisory and assistance services for the Air Armament Center ( AAC ).

The Chemetics unit of Jacobs Engineering in Pickering, Ontario, Canada won the El Dorado Chemical Company contract for three proprietary designed sulfuric acid coolers to be installed in the company's acid plant in El Dorado, Ark. The construction cost to El Dorado has been estimated at $700,000.

The scope of work under the contract involves the design and fabrication of drying, interpass and final anodically protected sulfuric acid coolers. These coolers will replace two of the original Chemetic coolers supplied in 1975 and another one supplied in 2008, during plant upgradation. The contract is expected to custom design the coolers and the associated water piping to meet the present and future operational requirements of the plant. The contract has been valued at $500,000.

This project is an excellent example of Jacobs' unique ability to collaborate with its clients for providing high value solutions, while reinforcing the company as a leader in design and supply of proprietary equipment for the sulfuric acid production industry.

El Dorado Chemical produces concentrated nitric acid ( CNA ), sulfuric acid and weak nitric acid at its facility. The company's collaboration with Jacobs, in designing and supplying of proprietary equipment for the sulfuric acid production, will bring the engineering giant in the fore front for providing high value solutions in the chemical industry.

On the other hand, the follow-on contract awarded by U.S. Air Force Air Armament Center ( AAC ) at Eglin Air Force Base ( AFB ), Fla. includes assistance toward engineering and integration of all USAF air-launched weapon systems; test and training range systems and numerous air combat support systems through the Technical and Engineering Acquisition Support (TEAS) 6 contract.

The contract is valued at $662 million with a total ordering period of 3 years, commencing on December 2011

Jacobs already has a long-standing relationship with the USAF's Air Armament Center. The follow on contract is expected to provide integrated research, development, acquisition, test and evaluation activities necessary to assist AAC in delivering state of the art weapons to the Air Force.

Jacobs' worldwide ever-increasing contract list is a splendid indication of its strong position in the infrastructure market across the globe. This, over time, has been winning investor confidence and is expected to continue such outlook further. The company directly competes with its peers, viz. Fluor Corporation ( FLR ) and Foster Wheeler AG ( FWLT ).

We currently hold a Neutral recommendation on the stock. Jacobs has a Zacks #2 Rank, implying a short-term (1-3 months) Buy rating.


 
FLUOR CORP-NEW ( FLR ): Free Stock Analysis Report
 
FOSTER WHELR AG (FWLT): Free Stock Analysis Report
 
JACOBS ENGIN GR (JEC): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AAC , AFB , CNA , EDF , FLR

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