Kentz Surges After Winning $2.3 Billion Australian Contract
Kentz Corp., an Irish oil and gas engineering company whose customers include Exxon Mobil Corp. (XOM) and Royal Dutch Shell Plc (RDSA), rose to a record in London trading after winning a $2.3 billion contract in Australia.
Kentz advanced 6.6 percent to 494.5 pence at the 4:30 p.m. close, the highest price since the shares were first sold in February 2008. The stock is up 54 percent this year.
The Clonmel, Ireland-based company said in a statement it won a contract for a joint venture with Chicago Bridge & Iron Company NV, or CB&I, at the Chevron Corp (CVX).-led Gorgon liquefied natural gas project on Western Australia’s Barrow Island.
Kentz, which had an order backlog of about $1.6 billion at the end of April, said last month it was bidding on further contracts at the Gorgon LNG and Pluto LNG projects in Australia. Energy companies including Chevron and Shell are investing in Australian LNG ventures to meet a projected increase in Asian demand for cleaner-burning alternatives to coal.
“This is an excellent project win for Kentz, lifting the backlog by almost 50 percent and providing good earnings visibility through 2013-2014,” Keith Morris, a London-based analyst at Evolution Securities Ltd., wrote in a report.
Kentz holds a 35 percent interest in the CB&I-Kentz joint venture, and the contract includes support for the construction of three LNG trains, or processing units, with a total capacity of 15 million tons a year.
CB&I rose 3.7 percent to $40.05 in New York trading at 11:29 a.m. local time.
“The contract commences immediately and is due to run until 2015 with peak activity in 2013 and 2014 and therefore the biggest impact on joint-venture profit contribution,” Morris said.
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