Jacobs Bags New Contract from Shell

Jacobs Engineering Group Inc. (JEC - Analyst Report), a construction services provider, received a contract from Shell Company of Australia Ltd., a subsidiary of Royal Dutch Shell Plc. (RDS.A - Analyst Report), for Shell’s Clyde Terminal Project, based in Sydney, Australia. The contract value was not disclosed.

According to the agreement, work for the contract will be carried on by Jacobs’ operations at its units in Sydney and Melbourne. The contract involves the conversion of the Clyde Refinery and associated satellite Gore Bay Terminal into competitive product import terminals. Jacobs is expected to provide a Basic Design and Engineering Package (BDEP) for the same.

Subsequent to shareholders’ approval in July 2011, it was decided in June 2012 that the Clyde refinery will cease its operations from September 2012, and will be eventually converted into a terminal. The refinery covers around 40% of Sydney’s petroleum requirements along with 50% of New South Wales’ needs.

The Clyde Terminal is currently used to provide services to the Sydney airport while helping Shell to distribute its fuels to the New South Wales market. Subsequent to regulatory approvals, Jacobs will also be needed to provide Engineering, Procurement and Construction Management (EPCm) services to the project.

Prior to this contract, Jacobs was involved in bringing about clean fuel upgrades for another project for Shell Australia, at the Shell Geelong and Clyde refineries. Jacobs’ association with Shell is not confined to Australia alone. In August last year, the company received a contract from Shell Global Solutions International B.V., Shell’s European subsidiary, to provide engineering and project management services to its European downstream assets, over a term of five years.

Jacobs currently holds a Zacks Rank #3 (Hold). Other stocks worth a look in the services industry are AECOM Technology Corporation (ACM - Snapshot Report) and Tyco International (TYC - Analyst Report); both holding a Zacks Rank #2 (Buy).