Jacobs Engineering Group Inc. (JEC - Analyst Report), a technical professional services company, received a program management contract from Southern California Gas Co. (SoCalGas), a subsidiary of Sempra Energy (SRE - Analyst Report). SoCalGas is engaged in the delivery of natural gas to approximately 20.9 million consumers, in and around central and Southern California.
The contract involves managing the Pipeline Safety Enhancement Program of the company, which was initiated as per state regulations of pressure testing of all the gas pipelines. The contract, with its value still undisclosed, has a duration of five years. It also bears five extension options of one year each.
The contract will be executed in phases of which until now only the phase 1A has been implemented. This phase consists of various operations such as pressure testing pipelines, replacing some of the existing pipelines along with upgrading or replacing mainline valves as deemed necessary. The approval to execute the program is still awaited from the California Public Utilities Commission (CPUC).
This contract, being the first one with SoCalGas, the world’s largest natural gas distribution utility, is expected to usher in new opportunities for operational expansion for Jacobs in the same field. With this deal, the total contract count moves up to five in the year 2013. The company will announce its first quarter 2013 results today after the market closes. The Zacks Consensus Estimate for the quarter is 76 cents, with an expected year-over-year increase of 8.38%.
Jacobs is one of the world's largest and most diverse providers of technical, professional and construction services. The stock currently holds a Zacks Rank #3 (Hold). Its peers Willdan Group (WLDN - Snapshot Report) and National Technical Systems Inc. hold a Zacks Rank #2 (Buy).