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Air Products (APD) Inks Industrial Gases Deal With Sonatrach

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Air Products and Chemicals, Inc. (APD - Free Report) and Africa’s largest state-owned oil and gas company, Sonatrach, have inked two gas production and delivery deals worth $100 million. The deals will be conducted through HELIOS, the joint venture (JV) of the companies

The deal enables Sonatrach to recover helium from two existing liquefied natural gas (LNG) facilities — GL1Z and GL3Z. The recovered gas will be delivered to HELIOS' existing liquid helium plant in Arzew. Notably, the facility is a vital part of Air Products' total global helium source portfolio. Per the company, the new feedstock will boost the amount of liquid helium produced by the plant.

Per Air Products, the connection of the HELIOS plant to Sonatrach's other LNG facilities in Arzew further testifies how unlocking Algeria's helium potential can diversify the helium supply chain and improve the reliability of supply for customers in Europe and Africa.

Another major component of the deal is that Air Products will design and build two new air separation plants in Algeria, which HELIOS will own and operate. One unit will be based in the Hassi Messaoud District and the other will be located in Arzew. Once operational, the plants will produce oxygen, nitrogen and argon. These gases will be supplied to the Maghreb and Algerian markets through Sonatrach's subsidiary — COGIZ.

Air Products’ shares have lost 5.6% in the past six months compared with the industry’s decline of 16.5%.



The company’s net income in fourth-quarter fiscal 2018 (ended Sep 30, 2018) declined around 3.4% year over year to $452.9 million or $2.05 per share. However, adjusted earnings rose 14% year over year to $2.00 per share, matching the Zacks Consensus Estimate.

Air Products projects adjusted earnings for fiscal 2019 in the range of $8.05-$8.30 per share, reflecting a 10% increase at the midpoint year over year. Moreover, it expects adjusted earnings in the range of $1.85-$1.90 per share for first-quarter fiscal 2019, up 5% at the midpoint year over year. The company also anticipates capital expenditure of $2.3-$2.5 billion for fiscal 2019.

Zacks Rank & Other Stocks to Consider

Air Products currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space are CF Industries Holdings, Inc (CF - Free Report) , Methanex Corporation (MEOH - Free Report) and The Mosaic Company (MOS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have gained 24.5% in the past year.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have rallied 20.8% in a year’s time.

Mosaic has an expected long-term earnings growth rate of 7%. The company’s shares have rallied 58.9% in the past year.

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