Rockford Corporation, a unit of the West Construction Services segment of Primoris Services Corporation (PRIM) has secured a new underground contract worth over $80 million for three major midstream operators.
The contract work comprises a mixture of well hookups. The well hookups join the wellhead to the processing equipment which is used to separate oil and gas before it goes into the tank batteries or through the meters run to the midstream companies.
The project also involves the installation of 42 miles of natural gas and natural gas liquids pipelines for the midstream operators that are located in the Marcellus Shale regions of Pennsylvania and West Virginia. The construction work starts immediately and is scheduled to be completed in this year.
Though it is common for Primoris to win contracts, the last two months were especially opportune for the company as it won major underground contracts during the period. On May 21, ARB Inc., a unit of the West Construction Services segment of Primoris secured a new underground contract from a major utility customer worth $200 million. The deal covers pipeline safety and replacement work in Southern California.
Further on Jun 2, Sprint Pipeline Services, a unit of the East Construction Services segment of Primoris secured an underground contract from an important midstream oil and gas customer worth $10 million. The deal covers pipeline installation work in Texas.
Primoris’ West Construction Services segment recorded a sales increment of 12.7% year over year in the first-quarter of 2014. The segment’s gross profit increased 10% year over year to $31.7 million. During the next four quarters, Primoris is expected to realize revenues of around 98% of the West Construction Services segment backlog.
The company’s strong balance sheet will provide the flexibility for continuous investment in external and internal opportunities. In addition, various tailwinds such as the aging pipeline system, oil and natural gas pricing differentials and environmental regulations will drive demand in Primoris’ end-markets providing growth opportunities both in the near and mid-term.
Dallas, TX-based Primoris is a specialty contractor and infrastructure company that serves diverse-end markets. The company also provides a wide range of construction, fabrication, maintenance, replacement, water and wastewater as well as engineering services to major public utilities, petrochemical companies, energy companies, municipalities and other customers.
At present, Primoris has a Zacks Rank #4 (Sell). Some better-ranked stocks in the building and heavy construction industry include Simpson Manufacturing Co., Inc. (SSD), Quanex Building Products Corp. (NX) and United Rentals, Inc. (URI). While Simpson Manufacturing sports a Zacks Rank #1 (Strong Buy), Quanex Building and United Rentals carry a Zacks Rank #2 (Buy).
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