Yesterday, leading engineering and construction company Foster Wheeler AG announced the receipt of twin contracts for both its segments: Global Engineering and Construction and Global Power Group.
The Global Power Group of Foster Wheeler recently received a contract from Marubeni Corporation to supply two pulverized coal arch fired steam generators, for an undisclosed sum. However, Foster Wheeler will include the contract under its first-quarter 2014 bookings.
The scope of the contract requires Foster to design and supply the two 300 MWe (gross megawatt electric) pulverized coal arch fired steam generators, specially designed to burn local Vietnamese anthracite coal while meeting applicable environmental requirements. These two steam generators will be installed at the Thai Binh Thermal Power Station for Vietnam Electricity (EVN).
The commercial operation of the first unit is expected to begin by Oct 2017 and unit 2 is expected to commence by Apr 2018.
This apart, on the same day, Foster’s Global Engineering and Construction Group’s existing client, ENI S.p.A., renewed its contract with Foster Wheeler for another two years. Per the agreement, Foster Wheeler primarily provides basic design and front-end engineering design for downstream, upstream, power and petrochemical projects across the world undertaken by five ENI business units including ENI Refining & Marketing, ENI Exploration & Production, Enipower, Versalis and Syndial.
Since the past decade and a half, Foster Wheeler has been working with ENI companies under a range of frame agreements. Under this agreement, Foster Wheeler will book the contracts as and when it received orders.
These deals come after Foster Wheeler’s announcement of it being acquired by AMEC plc on Feb 13. Per the agreement, AMEC will be acquiring all the issued and to-be-issued share capital of Foster Wheeler for about $3.3 billion or $32.69 per share.
However, the AMEC deal is presently under scrutiny by many securities litigation firms for any possible judiciary infringement. Recently, Levi & Korsinsky, LLP alleged a possible violation of judiciary duties in the deal, following which a complaint was filed.
Foster Wheeler has been a market leader in the mid-stream and downstream oil and gas industry, which provide it with a competitive edge. However, the company was witnessing a rising need for capacity additions in a number of developing countries.
At present, Foster Wheeler has a Zacks Rank #3 (Hold). However, some better-ranked players in the engineering and heavy industry worth a look include Quanta Services, Inc. (PWR - Free Report) , VESC Corp. and Willdan Group (WLDN - Free Report) . All three stocks carry a Zacks Rank #2 (Buy).