FWLT (MM)

Foster Wheeler AG’s (FWLT) subsidiary Global Engineering and Construction Group received engineering, procurement and construction management (EPCm) contract from Engen Petroleum Limited (Engen). The services will be employed at Engen’s Durban Refinery in South Africa for its new multi-products pipeline feeder lines and infrastructure project.

Contract value for Foster Wheeler is undisclosed and has been included in second-quarter 2011 bookings of the company. The project involves building a pipeline network from Engen’s depots connecting the pipeline of Transnet, the principal operator of South Africa's fuel pipeline system. This link will improve Engen’s access to key developed product markets in the South African interior.

This is the largest award till date for Foster Wheeler from Engen. Foster Wheeler has successfully delivered several projects in South Africa.

Longer term, Foster Wheeler believes that world demand for electrical energy will continue to grow and that solid-fuel-fired steam generators will continue to fill a significant portion of this incremental generating capacity. The fuel-flexibility of CFB steam generators enables them to burn a variety of fuels other than coal and produce carbon-neutral electricity when fired by biomass. In addition, the company’s steam generators can be designed to incorporate supercritical technology, which significantly improves efficiency and reduces emissions.

However, the company is subject to various environmental laws and regulations in the countries in which it operates. If it fails to comply with these laws and regulations, it may incur significant costs and penalties that could materially adversely affect its business, financial condition, results of operations and cash flows. Its business may be adversely impacted by regional, national and/or global requirements to significantly limit or reduce greenhouse gas emissions in the future.

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 #3 Rank (Hold recommendation) over the next one-to-three months.

 
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