New Contracts Elongate JEC List - Analyst Blog
December 01 2011 - 7:30AM
Zacks
As the global economy dwindles over
fears of European crisis harming industrial growth, Jacobs
Engineering Group Inc. (JEC) takes a bold step forward in
the besieged continent; receiving a framework contract from
Electricite de France (EDF). The contract will offer owner
engineering services in support of gas infrastructure projects
across Europe, within a duration of four years.
Jacobs will be providing a wide
range of management, consultancy and design services. These include
– project management; permitting and administration; specifications
and conceptual design; procurement; and supervision of
construction. In a nutshell, infrastructure development for natural
gas storage, distribution through gas pipelines, underground
storage facilities and regasification terminals, fall within the
scope of the framework project awarded by EDF.
With this contract win, Jacobs is
expected to expand the scope of services in Europe, supporting EDF
in the development of its gas business. However, the value of the
contract has not yet been disclosed.
Jacobs’ contract winning spree has
not ceased with its support extension to the European gas business.
It also won two strategic contracts – a design and fabrication
contract by El Dorado Chemical Company and the other one – a
follow-on contract to provide advisory and assistance services for
the Air Armament Center (AAC).
The Chemetics unit of Jacobs
Engineering in Pickering, Ontario, Canada won the El Dorado
Chemical Company contract for three proprietary designed sulfuric
acid coolers to be installed in the company's acid plant in El
Dorado, Ark. The construction cost to El Dorado has been estimated
at $700,000.
The scope of work under the
contract involves the design and fabrication of drying, interpass
and final anodically protected sulfuric acid coolers. These coolers
will replace two of the original Chemetic coolers supplied in 1975
and another one supplied in 2008, during plant upgradation. The
contract is expected to custom design the coolers and the
associated water piping to meet the present and future operational
requirements of the plant. The contract has been valued at
$500,000.
This project is an excellent
example of Jacobs' unique ability to collaborate with its clients
for providing high value solutions, while reinforcing the company
as a leader in design and supply of proprietary equipment for the
sulfuric acid production industry.
El Dorado Chemical produces
concentrated nitric acid (CNA), sulfuric acid and weak nitric acid
at its facility. The company’s collaboration with Jacobs, in
designing and supplying of proprietary equipment for the sulfuric
acid production, will bring the engineering giant in the fore front
for providing high value solutions in the chemical industry.
On the other hand, the follow-on
contract awarded by U.S. Air Force Air Armament Center (AAC) at
Eglin Air Force Base (AFB), Fla. includes assistance toward
engineering and integration of all USAF air-launched weapon
systems; test and training range systems and numerous air combat
support systems through the Technical and Engineering Acquisition
Support (TEAS) 6 contract.
The contract is valued at $662
million with a total ordering period of 3 years, commencing on
December 2011
Jacobs already has a long-standing
relationship with the USAF's Air Armament Center. The follow on
contract is expected to provide integrated research, development,
acquisition, test and evaluation activities necessary to assist AAC
in delivering state of the art weapons to the Air Force.
Jacobs’ worldwide ever-increasing
contract list is a splendid indication of its strong position in
the infrastructure market across the globe. This, over time, has
been winning investor confidence and is expected to continue such
outlook further. The company directly competes with its peers, viz.
Fluor Corporation (FLR) and Foster Wheeler
AG (FWLT).
We currently hold a Neutral
recommendation on the stock. Jacobs has a Zacks #2 Rank, implying a
short-term (1-3 months) Buy rating.
FLUOR CORP-NEW (FLR): Free Stock Analysis Report
FOSTER WHELR AG (FWLT): Free Stock Analysis Report
JACOBS ENGIN GR (JEC): Free Stock Analysis Report
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