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Ormat (ORA) Unit Inks $36M EPC Contract with Cyrq Energy

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Ormat Technologies, Inc.’s (ORA - Free Report) affiliate, Ormat Nevada Inc., has entered into a $36 million Engineering, Procurement and Construction (EPC) contract with an affiliate of Cyrq Energy, Inc. (Cyrq).

Details of the Contract

Cyrq Energy will be provided with one air-cooled Ormat Energy Converter (OEC) for its Soda Lake geothermal power project in northern Nevada. The project is scheduled to be complete in the first half of 2018.

Benefits of the Contract

The new OEC will replace Cyrq Energy’s two operating power plants, which were commissioned by Ormat in the late 1980s and early 1990s, respectively, in a bid to accelerate generation and reduce operating costs.

Thanks to its ability to win regular orders from customers, the company’s backlog as of Nov 7, 2016 was $204 million. The abovementioned contract will add to its existing backlog and strength revenues at this segment over the next two years.

Advantages of OEC

The OEC will enable geothermal developers to efficiently and economically use the full range of naturally occurring geothermal resources found all over the world – from low-temperature geothermal water to high-pressure steam.

Given the U.S. government’s ongoing focus on reducing carbon pollution, we expect to see increasing usage of the OEC going forward. At present, geothermal electricity assets in the country generated nearly 3,442 MW of electricity.

A Similar Contract

Ormat recently signed a contract for a 16 MW geothermal power plant in China. The company will supply the air-cooled OEC to this project, which is scheduled to be complete in the second quarter of 2017.

The contract is in line with Ormat’s strategy of expanding its global footprint to drive growth.

Price Movement

Ormat has largely outperformed the Zacks categorized Other Alternative Energy industry. The company’s current rate of return is 35.6%, compared to the industry’s decline of 16.9% over the last 12 months.

The company has delivered an average positive earnings surprise of 25.48% in the last four quarters. Its 2017 earnings estimates have moved up from $2.03 to $2.05 in the last 60 days.

The stock prices have been going up on the back of proactive growth initiatives like expansion to new ventures, mergers & acquisitions and improved efficiencies.

Zacks Rank & Key Picks

Ormat carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the Oil – Energy sector include Transmontaigne Partners L.P. , McDermott International, Inc. and W&T Offshore, Inc. (WTI - Free Report) .

Transmontaigne Partners delivered an average positive earnings surprise of 5.53% in the trailing four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

McDermott International recorded an average positive earnings surprise of a whopping 474.04% in the trailing four quarters. The company flaunts a Zacks Rank #1 as well.

W&T Offshore, carries a Zacks Rank #2 stock, recorded an average positive earnings surprise of 31.49% in the trailing four quarters.

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