Jacobs Engineering Group Inc. (JEC - Analyst Report), one of the world's largest and most diverse providers of technical, professional, and construction services, recently announced winning of two strategic contracts.
The first is a design contract from Saudi Kayan Petrochemical Company to develop a process design package (PDP) and front end engineering design (FEED) package targeted to build ultra-high-molecular-weight polyethylene (UHMWPE) plant in the Industrial City of Jubail, Kingdomof Saudi Arabia.
However, the second one is an extension contract for 2012 from Peoples Gas Light and Coke Company. The contract includes providing program and construction management services, alongside consultancy support for Peoples Gas' accelerated main replacement program (AMRP) in Chicago.
Headquartered in Riyadh, Saudi Kayan Petrochemical Company is an affiliate of Saudi Basic Industries Corporation (SABIC). It ranks among the world's top petrochemical companies and is a market leader in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers. Winning a contract from such a significant industry player reflects client confidence on Jacobs in delivering strategic projects.
Jacobs expects this contract to mark the commencement of a significant and long-term relationship with SABIC, which will, in turn, strengthen the company’s foothold in the Kingdomof Saudi Arabia. Value of the contract has not yet been disclosed by the officials. Jacobs will be executing the project from its Winnersh, UK and Al-Khobar offices.
On the other hand, the contract from the regulated natural gas delivery company Peoples Gas, a subsidiary of Integrys Energy Group Inc. , involves upgrading the existing low-pressure gas distribution system to a modern, safe and reliable medium-pressure system. This $2.5 billion investment program is the largest single capital investment undertaking in Peoples Gas' history.
Awarding an extension contract with such complex project reflects client satisfaction on Jacobs and holds the sheer hope of retaining the long standing relationship in times ahead.
Jacobs provides stiff competition to other industry players including Fluor Corporation (FLR - Analyst Report) and Foster Wheeler AG . We currently maintain a Neutral recommendation on the company. The stock also bears a Zacks #3 Rank, which implies a short-term (1-3 months) Hold rating.