Chicago Bridge & Iron Company N.V. (CBI)

CBI 
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Chicago Bridge & Iron Co. (CBI)

Q3 2010 Earnings Call

October 26, 2010 05:00 pm ET

Executives

Philip Asherman - President and CEO

Lasse Petterson - COO

Dan McCarthy - President of Lummus Technology

Ron Ballschmiede - CFO

Analysts

Scott Levine - JP Morgan

Joe Ritchie -Goldman Sachs

Jamie Cook - Credit Suisse

Graham Mattison - Lazard Capital Markets

Robert Connors - Stifel Nicolaus

Andrew Kaplowitz - Barclays Capital

John Rogers - D.A. Davidson

Avi Fisher - BMO Capital Markets

Marty Malloy - Johnson Rice & Company

Rob Norfleet - BB&T Capital Markets

Guy Baber - Simmons & Company

Presentation

Operator

Good afternoon. Before beginning today's call, the company would like to caution you regarding forward-looking statements. Any statements made or discussed today that do not constitute or are not historical facts, particularly comments regarding the company's future plans and expected performance are forward-looking statements that are based on assumptions the company believes are reasonable, but are subject to a range of uncertainties and risks that are summarized in the company's press release and the SEC filings. While forward-looking statements represent management's best current judgment as to what may occur in the future, the actual outcome or results may differ materially from what is expressed or implied in any such statements.

I would now like to turn the call over to Mr. Philip Asherman, President and CEO of CB&I.

Philip Asherman

Thank you. Good afternoon and thank you for joining us to discuss our results in the third quarter. With me today is Ron Ballschmiede, CB&I's Chief Financial Officer; Lasse Petterson, our Chief Operating Officer; and, Dan McCarthy, President of Lummus Technology. After some brief comments, we will open the call for your questions.

For today's agenda, Lasse will begin with a summary of our operations for CB&I Lummus and Steel Plate Structures business sectors, followed by Dan McCarthy who will provide an update of current activities in Lummus Technology. Ron Ballschmiede will then discuss our financial results for the quarter, and then I'll conclude with a few summary remarks before opening the call for your questions.

I'll now turn the call over to Lasse for discussion of the CB&I Lummus and Steel Plate Structures. Lasse?

Lasse Petterson

Good afternoon. I take a moment to highlight some of our major projects on the way worldwide. I'll stop for the Peru LNG liquefaction project, we have just transferred the project over to the clients two weeks ahead of schedule and only 45 months after first starting work on the project. Peru LNG has been a great success completed on-time and on-budget at a lower cost per ton of product than any other recently built liquefaction facility. We are currently in discussions on other LNG liquefaction project prospects that have stemmed from our success in Peru.

In Colombia, construction is underway on the REFICAR refinery project in Cartagena. Currently, we have more than 900 employees dedicated to this EPC project including employees at site and in our engineering centers. That number will eventually increase to more than 5000 workers.

We are now in the process of heavy recruiting and training and expect to train more than 1500 local crafts worker for the project by year end. In Chile, the Quintero LNG project is fully operational and had been turned over to the client. We are completing final punch list and are in the process of demobilizing from the site.

In the US, Phase I of the Golden pass LNG plant in Texas is now mechanically complete. The first LNG ship docked this last Thursday. We expect the LNG to be uploaded this week to initiate cool down. Phase I includes 255,000 cubic meter LNG tanks and one ship berth. Phase II which is on schedule for completion in January includes three additional tanks and one additional ship berth. Also in the US, we are progressing the detailed engineering for our new 200 million cubit foot natural gas processing plant Occidental in California. We expect to mobilize to the site by year end. We announced this US$280 million EPC project in the last quarter.

Our US nuclear business is progressing steadily. We have mobilized back to a project site in Georgia where we will be constructing two containment vessels. The equipment and materials for the bottom head for one of the units has been delivered. Now, we are in the early stages of mobilizing on another southeastern nuclear project where we are also constructing two containment vessels.

In Canada, we continue to work on the [indiscernible] oil sands project. The engineering for the extraction units and associated vessels will be substantially completed by year end. Work on the foundations is progressing well and we expect the majority of the foundations to be completed in the next few weeks.

In the UK, our work on Isle of Grain LNG project is complete. Now, we are in the process of demobilizing from the site. In Qatar, the Pearl gas-to-liquid project for Shell is now on schedule for completion by year end. Seven of the total of nine startup blocks has been successfully turned over to the client.

In Abu Dhabi, the GASCO LPG project engineering and procurement for the storage tanks and interconnecting mechanical and electrical works are in the final stages. Construction of the LPG and after storage tanks and foundations for the mechanical systems is progressing well.

We've also been award several smaller storage tanks projects in the Middle East where our Steel Plate Structures business continue to be robust. In China, we just successfully harder tested the first of the two LNG tanks that are part of the two of the Fujian LNG import terminal project. The tank insulation is ready to begin and we are on schedule to complete the project in early 2011 well ahead of original plan.

Our Papua New Guinea gas conditioning plant project is well underway. We anticipate mobilizing to the height site in the PNG Highlands in November. On July 27, we issued a news release about $190 million LNG storage tanks award which we can now confirm is associated with PNG LNG project. That award includes the engineering procurement fabrication and construction of 260,000 cubic meter LNG tanks for the project.

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