KBR Receives Near-Shore FLNG FEED Contract From Lloyd - Analyst Blog

Pioneer technology, engineering, procurement and construction company KBR Inc. KBR recently won a contract of undisclosed value from Liquefied Natural Gas developer Lloyds Energy Ltd. The deal requires KBR to develop a near-shore floating LNG Front End Engineering Design (“FEED”) within the first half of first-quarter 2016.

Per the contract, KBR will be responsible for providing integrated topsides and hull engineering design services to a TPA floating natural gas liquefaction plant (“FLNG”) with a capacity of 2.5 million tons.

Lloyds aspires to replace the capital-intensive onshore LNG developments with near-shore FLNG technology. Under this initiative, the project will set up the LNG processing facilities, along with associated utilities and power generation centre, in big FLNG barges, which will be tied to a 3.5 km-long jetty. The barges will also contain LNG storage for easier operation.

For Lloyds, KBR is the perfect choice for the project contractor; as both companies have witnessed similar FLNG teams with full asset-cycle exposure ranging from concept development to long-term asset management.

The latest contract adds another feather to the cap of KBR that already enjoys strong foothold in the LNG market. The company’s unmatched technical experience and industry knowledge allows it to own one-third of the world's operating LNG capacity across Africa, Asia, the Middle East and Australia.

Also, the company’s FEED experience of Coral South FLNG project at Mozambique is expected to improve performance of the current contract. Revenues earned from this contract will be registered in KBR’s second-quarter 2015 unfulfilled order backlog for the Engineering & Construction and Technology & Consulting business lines.

Last month, the company won a coveted contract from one of the world’s largest chemical firm, OJSC Togliattiazot (ToAZ) that will also supplement the revenues of Engineering & Construction business lines (read more: KBR Wins Licensing & Design Services Contract from ToAZ).

These apart, we believe KBR’s pre-FEED contract for FLNG in the Black Sea and healthy backlog levels in EPC ammonia urea projects in North America, as well as other LNG projects will support its growth in the long run. Given the company’s past winning spree, coupled with its track record of on-time project deliveries, KBR’s future shines bright.

KBR currently carries a Zacks Rank #2 (Buy). Other well-ranked stocks in the industry include AECOM ACM, VSE Corp. VSEC and Willdan Group, Inc. WLDN. All three stocks carry the same Zacks Rank as KBR.

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