KBR, Inc. (KBR) recently received a licensing and engineering design services contract from Malaysia-based olefins and polyolefins provider, Lotte Chemical Titan Holding Sdn. Bhd. The contract was included in the third-quarter backlog of the company’s Hydrocarbons segment (under unfilled orders) but the financial terms were kept under the wraps. The news, coming on Dec 2, did not provide much momentum to the company shares which remained flattish.
The scope of the contract requires KBR to extend its catalytic olefins technology to enhance the olefins production for Lotte Chemical Titan. The company’s catalytic olefins technology efficiently converts low-value olefinic, paraffinic or mixed streams to propylene and ethylene, which hold higher value in the market. This apart, KBR will be providing basic engineering design services for the plant. KBR’s services are also required for the renovation of a steam-cracker plant located in the Asia Pacific. The services will enable diversification of the plant feedstock while boosting its capacity for olefin production.
In the recently reported third-quarter 2014 results, KBR’s Hydrocarbons segment posted a sales increase of 53.6% year over year to $559 million. The revenue growth came on the back of developments in the downstream engineering, procurement and construction (“EPC”) activities in ammonia, urea and ethylene projects, over key regions like North America. This apart, developments in oil and gas projects across the world also benefited the segment.
KBR currently carries a Zacks Rank #3 (Hold). Better-ranked stocks that can be considered at the moment include AECOM Technology Corporation (ACM), Willdan Group, Inc. (WLDN) and Progressive Waste Solutions Ltd. (BIN). All three stocks sport a Zacks Rank #1 (Strong Buy).
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