FWLT (MM)

Foster Wheeler AG’s (FWLT) subsidiary Global Engineering and Construction Group won a contract from Sasol to execute the technical part of a viability study for a planned gas-to-liquids facility in Canada. The study is being carried out by a partnership of Sasol and Talisman Energy. It is expected that the technical part of the study will be completed during the fourth quarter of 2011.

At the facility, Sasol’s GTL technology will be used to convert Shale gas to GTL naphtha, diesel and liquefied petroleum gas. The value of the contract for Foster Wheeler is not yet disclosed and will be added to the company’s 2011 bookings.

Apart from the technical work, Foster Wheeler will also estimate the cost of the feasibility study, which will help Sasol and Talisman Energy to evaluate the economic feasibility of the facility. The evaluation result is expected in the second half of 2012.    

North America has significant shale gas resources resulting in building interest in potential monetization alternatives. Focus is also being made on conversion of shale gas into liquid transportation products to take advantage of the price dislocation between gas and oil products. Foster Wheeler’s Business Solutions Group has developed leading GTL solution, which will be combined with Sasol’s GTL technology for the planned GTL facility in Canada.   

Foster Wheeler AG is based in Zug Switzerland, but its operational headquarters are in Clinton NJ USA. The majority of Foster’s revenues and new businesses originate from outside the United States.  The company serves the following industries: Oil and Gas; Oil Refining; Chemical & Petrochemical; Pharmaceutical; Environmental; Power Generation; and Power Plant Operation and Maintenance. Major competitors of Foster Wheeler are Fluor Corporation (FLR) and Jacobs Engineering Group Inc. (JEC).

We continue to maintain a Neutral rating on Foster Wheeler, with a Zacks #4 Rank (Sell recommendation) over the next one-to-three months.

 
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