Jacobs Wins Contract in Canada - Analyst Blog

Jacobs Engineering Group Inc. (JEC) has received a contract from Suncor Energy to provide project management, engineering and procurement services to complete the scoping study and Design Basis Memorandum (DBM) for tailings and water transfer projects. These projects are a portion of the Tailings Reduction Operations (TRO) implementation at Suncor's oil sands mining, extraction and upgrading facility located 30 kilometers north of Fort McMurray, Alberta, Canada. Officials have not disclosed the contract value. 

TRO is Suncor's new initiative to implement a Mature Fine Tailings (MFT) drying process, which results in the dry material to be reclaimed in place or moved to another location for final reclamation. The process helps achieve a dryer landscape in a shorter period of time and allows for accelerated reclamation timelines, shrinking the environmental footprint of oil sands mining operations. 

With annual revenues exceeding $12 billion, Jacobs is one of the world's largest and most diverse providers of technical, professional and construction services. Its major competitors are Foster Wheeler AG (FWLT) and Fluor Corp. (FLR). 

The company’s diversification in terms of markets, geography and services will continue to facilitate future growth. Moreover, Jacobs’ cost focus puts it in a dominant position to expand margins under difficult economic circumstances. 

At the end of the quarter, the company’s net cash position grew to $1 billion, up $254 million from the previous quarter and over $450 million from the beginning of 2009. This is a great story from an investment perspective. Jacobs has a strong balance sheet, which is expected to grow at a compound rate of 15% over the long term. 

Jacobs is among those infrastructure stocks that may benefit from the coming construction boom. Looking forward, as banks get healthy and are willing to lend and the next round of stimulus begins, investors can expect infrastructure projects to increase.
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