Shares of the leading engineering and construction company Foster Wheeler AG (NASDAQ: FWLT) gained around 2% yesterday after a subsidiary of the company's Global Engineering and Construction Group received a contract from LNG Canada Development Inc. on May 20. The joint venture will work on a proposed liquefied natural gas export project, known as the LNG Canada Project, in Kitimat, British Columbia. The scope of the contract includes providing front end engineering and design (FFED) and project execution services. Though the financial details of the deal are kept under wraps, the contract will feature in the second-quarter booking of the company.
The subsidiary of FWLT's Global Engineering and Construction Group operates as a joint venture with affiliates of Chiyoda Corporation, Saipem S.p.A. and WorleyParsons. These subsidiaries of Chiyoda Corporation have strong core competence in handling LNG projects.
The LNG Canada Project has been designed in two processing trains, each with an annual production capacity of approximately six million tonnes. Further, the project will have the flexibility to add two trains. However, the sanction to proceed with the execution phase of the project is subject to approval from certain regulatory authorities and the financial investment division of LNG Canada.
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email and you'll also get Benzinga's ultimate morning update AND a free $30 gift card and more!
Foster Wheeler's Global Engineering and Construction Group operates worldwide and designs, engineers and constructs onshore and offshore upstream oil and gas processing facilities, natural gas liquefaction facilities and receiving terminals, gas-to-liquids facilities, oil refining, chemical and petrochemical, pharmaceutical and biotechnology facilities and related infrastructure, including power generation and distribution facilities, and gasification facilities. During the first quarter of 2014, the segment's operating revenues stood at $553.3 million, while its operating revenues (FW scope) totaled $443.6 million, up 4.5% from $424.7 million in the prior-year period. The upside in revenues was driven by increased volume of work and a healthy backlog level.
Prior to the Kitimat project, in Apr 2014, ENI S.p.A, an existing client of the Global Engineering and Construction Group, extended its contract with the company for two years. Per the agreement, Global Engineering and Construction Group will primarily provide basic and front-end engineering design for downstream, upstream, power and petrochemical projects across the world undertaken by five ENI business units, namely, ENI Refining & Marketing, ENI Exploration & Production, Enipower, Versalis and Syndial.
Foster Wheeler has been a market leader in the mid-stream and downstream oil and gas industry. In Feb 2014, AMEC plc, announced it plans to acquire all the issued and to-be-issued share capital of Foster Wheeler for about $3.3 billion or $32.69 per share. However, the AMEC deal is presently under scrutiny of many security litigation firms for any possible judiciary infringement.
Foster Wheeler currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector include Emcor Group Inc. (NYSE: EME), Sterling Construction Co. Inc. (NASDAQ: STRL) and Tutor Perini Corporation (NYSE: TPC). All three carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
EMCOR GROUP INC (NYSE: EME): Free Stock Analysis Report
FOSTER WHELR AG (NASDAQ: FWLT): Free Stock Analysis Report
STERLING CONSTR (NASDAQ: STRL): Free Stock Analysis Report
TUTOR PERINI CP (NYSE: TPC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research