Oct. 10 (Bloomberg) -- Honeywell International Inc. Chief Executive Officer Dave Cote said he’s seeking more acquisitions linked to natural gas after agreeing to pay $525 million for a stake in a U.S. maker of gas-processing equipment.
Natural gas is “not the only trend I’ll bet the company on, but I do believe it’s a trend worth bidding on,” Cote said today in an interview at a Honeywell research center in Dhahran, Saudi Arabia.
A boom in gas production from U.S. shale deposits and increased consumption abroad are driving sales at Honeywell’s UOP unit, which provides services such as filtering impurities from the fuel. Honeywell said Oct. 1 it was buying a 70 percent stake in Tulsa, Oklahoma-based Thomas Russell Co., which provides equipment to recover natural gas liquids in the U.S.
“We will keep making acquisitions in natural gas and invest in the UOP unit to develop natural gas technology,” Cote said. “I’m a big believer in natural gas and in what that can do for the U.S. economy and many economies around the world.”
Buoyed by gas from shale formations, U.S. total marketed production of natural gas will average an estimated 68.9 billion cubic feet a day in 2012, according to the U.S. Energy Department. That’s the highest output since at least 1997 and 24 percent more than the 55.3 billion cubic feet a day in 2007.
Honeywell has an option to purchase the rest of closely held Thomas Russell. Cote said he will sell Thomas Russell’s technology on a global basis in less than a year after the transaction closes. Honeywell said last week it expects the deal to be completed this quarter.
Honeywell expects to win more contracts from petrochemical companies as shale gas drives construction projects, such as new cracker plants, Cote said.
Sales to the energy industry are helping temper a drop at Honeywell’s transportation unit. The Morris Township, New Jersey-based company pared the top and bottom ends of its annual sales forecast on July 18 by $200 million, to a range of $37.8 billion to $38.4 billion.
The Performance Materials and Technologies unit, driven by UOP, posted a 14 percent sales gain in the first half, to $3.16 billion. Sales at Transportation Systems fell 5.2 percent to $1.85 billion for the same period.
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