Sprint Pipeline Services, a unit of the East Construction
Services segment of
Primoris Services Corporation
) has secured a new underground contract from an important
midstream oil and gas customer worth $10 million. The deal covers
pipeline installation work in Texas.
Acquired in 2012, Sprint Pipeline provides a comprehensive range of
pipeline construction, maintenance, upgrade, fabrication and
specialty services primarily in the Southeast U.S.
The contract work of Sprint Pipeline includes boring three new
pipelines that will be fixed into the existing setup. These
pipelines will be connected to one of the largest oil refineries in
the U.S., located along the Gulf Coast of Texas. The construction
work has commenced and is expected be concluded in the third
quarter of 2014.
In Oct 2013, Sprint awarded around $90 million new contracts and
work authorizations. Majority of the work has been completed in the
first quarter of 2014, while several will be finished in the second
Primoris' East Construction Services segment recorded a sales
increment of 17.3% year over year to $223 million in the first
quarter of 2014. Revenues at Sprint Pipeline division increased
$9.4 million from pipeline projects in south Texas.
East Construction segment's gross profit rose 6.8% year over year
to $16 million. During the next four quarters, Primoris will
realize revenues of around 43% of the East Construction Services
Various tailwinds such as the aging pipeline system, oil and
natural gas pricing differentials and environmental regulation will
drive demand in Primoris' end-markets providing growth
opportunities both in the near and mid-term.
The company expects that production from the shale formations will
continue to increase. And the distance between production and
processing locations will provide opportunities for underground
construction operations, primarily Rockford and Sprint.
In addition, Primoris' strong balance sheet will allow flexible
continuation of investment in external and internal opportunities.
However, volatility in oil & gas prices remains headwinds in
the near term.
Dallas, TX-based Primoris is a specialty contractor and
infrastructure company that serves diverse end-markets. The company
also provides a wide range of construction, fabrication,
maintenance, replacement, water and wastewater as well as
engineering services to major public utilities, petrochemical
companies, energy companies, municipalities and other customers.
At present, Primoris has a Zacks Rank #3 (Hold). Some better-ranked
stocks in the building and heavy construction industry include
EMCOR Group Inc.
Sterling Construction Co. Inc.
Tutor Perini Corp.
). All these stocks carry a Zacks Rank #2 (Buy).
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PRIMORIS SERVCS (PRIM): Free Stock Analysis
EMCOR GROUP INC (EME): Free Stock Analysis
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