KBR, Inc. (NYSE: KBR) recently announced that its Hydrocarbons segment has received a couple of contracts from Agrium Inc. (NYSE: AGU) for its project Lone Star based in Borger, Texas. The financial terms for the same were not disclosed. Notably, the contracts were recorded in fiscal second-quarter and third-quarter 2013 bookings.
According to these contracts, KBR will provide engineering, procurement and construction (EPC) services to Agrium's new urea plant.
Agrium has intentions to ramp up the production facility at the plant to meet the rising demand in the North American agriculture industry. Once functional, the plant is expected to have a production capacity of 670,000 tons of urea and 700,000 tons of ammonia per annum.
KBR has been focusing on developing technological equipment to exploit the booming ammonia processing market worldwide. Apart from strengthening its position in the ammonia processing market, the above-mentioned contracts will enable KBR to further increase its market share in the hydrocarbon business.
In fiscal 2013, the segment accounted for more than 20% of the company's total revenue compared with 16% in the prior year. This growth reflects the increasing share of the segment in the company's business.
KBR's hydrocarbon segment provides services ranging from pre-feasibility studies to front-end engineering design through construction and commissioning of process facilities in both remote and developed areas around the world. In the last reported quarter (fourth-quarter 2013), revenues in the Hydrocarbons segment increased 24.8% year over year to $432 million. The revenue growth was driven by developments in the downstream ammonia, urea and ethylene projects in key regions like North America, Uzbekistan and Azerbaijan.
KBR currently holds a Zacks Rank #5 (Strong Sell). Some better-ranked stocks that can be considered at the moment include VSE Corp. (NASDAQ: VSEC) and Quanta Services, Inc. (NYSE: PWR). Both of these have a Zacks Rank #2 (Buy).
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