Fluor Corporation’s FLR joint venture FDH was recently selected by Kuwait National Petroleum Company (“KNPC”) to provide engineering, procurement and construction (“EPC”) services for two of its packages. The company has paid $2.6 billion in the bidding process to secure the contract for third quarter of 2015.
FDH, a JV between Fluor, Daewoo Engineering and Construction, and Hyundai Heavy Industries, aims at providing EPC services to global clients. Currently, the JV is working on one of the packages for KNPC’s Clean Fuels project, while work is expected to begin soon for the new contract.
A host of facilities are included in these two KNPC packages, namely, multiple process units, utilities and infrastructure. All of these will contribute to the development of the new Kuwait-based Al-Zour oil refinery project. On completion, this refinery will become one of the largest oil refining plants in the world with a production capacity as high as 615,000 barrels per day.
We believe the recent contract wins highlights Fluor’s service efficiency and this trend will likely continue in the future as well. Last month, Fluor was selected by PTT Global Chemical Public Company (“PTTGC”) to offer front-end designing and engineering services for a petrochemical complex at Belmont County. Moreover, the firm was selected by Sasol Group Technology to offer services for small and medium oil and gas projects.
However, ongoing volatility in commodity prices and increasing competition in the industry continue to bother Fluor. This apart, an inclination toward globalization has triggered a trend of consolidation across all industries, especially in the engineering and construction sector. This is proving to be a major concern for the Zacks Rank #3 (Hold) company.
Some better-ranked stocks in the industry are ACCO Brands Corporation ACCO, Global Brass and Copper Holdings, Inc. BRSS and Precision Castparts PCP. While both ACCO Brands Corporation and Global Brass and Copper Holdings sport a Zacks Rank #1 (Strong Buy), Precision Castparts holds a Zacks Rank #2 (Buy).
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