KBR, Inc. KBR recently secured a turnkey engineering, procurement and construction (“EPC”) contract from Liquefied Natural Gas Ltd’s (“LNGL”) wholly owned subsidiary Magnolia LNG (“MLNG”). The company plans to book this contract under backlog of unfilled orders for its E&C business segment, depending on the pace of work.

MNLG is developing a liquefied natural gas (“LNG”) facility at the Port of Lake Charles, LA that calls for KBR’s EPC services. As a matter of fact,  KSJV, the joint venture between KBR and SK Enginnering & Construction is in charge of executing the project which is primarlily led by KBR.

The purview of the EPC service includes provisioning for meticulous engineering, procurement and construction of four LNG production trains, two 160,000 m3 full-containment LNG storage tanks, LNG marine & ship loading facilities, and supporting infrastructure. Moreover, the EPC project promises to produce 7.6 millions tons per year of LNG from the four trains, each of which possesses design capacity of 2 million tons per annum (mtpa).

Further, KBR plans to include LNGL’s highly advanced Optimized Single Mixed Refrigerant technology in the plant design to make it efficient as well as environmental friendly. Engineering and procurement work for the project is scheduled to commence immediately, subject to final regulatory approval; while construction mobilization will likely begin by the first quarter of 2016. Also, the “Limited Notice to Proceed” will presently dictate the project’s detailed design and early construction planning, and full-fledged work will begin with the final release plan in 2016.

According to industry reports, after the four trains become commercially operational, KSJV might also qualify for annual revenue share of up to $30 million over a 15-year period.

KBR remains optimistic about the performance of its key business segments in 2015, based on favorable industry trends and its ability to capitalize on them. For the E&C segment, the company expects to reap synergies from LNG, FLNG, oil & gas and ammonia/urea projects. Also, the company holds a proven record of winning lucrative contracts that successfully complement its growth.  We believe that further activities undertaken in the Magnolia LNG project will act as a key driver of growth, going forward.

Currently, KBR holds a Zacks Rank #2 (Buy). Other stocks worth considering in the sector include Dycom Industries Inc. DY, Jiangsu Expressway Co. Ltd. JEXYY and Zhejiang Expressway Co. Ltd. ZHEXY. All three stocks carry the same Zacks Rank as KBR.

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